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AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇▇▇▇▇ INDUSTRIAL GROUP, INC.,
BRONZE ACQUISITION CORP.
and
BRIDGEPORT MACHINES, INC.
dated as of
April 23, 1999
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 23, 1999, by and among
▇▇▇▇▇▇▇ INDUSTRIAL GROUP, INC., a Delaware corporation ("Parent"), BRONZE
ACQUISITION CORP., a Delaware corporation and a wholly-owned Subsidiary of
Parent ("Merger Sub"), and BRIDGEPORT MACHINES, INC., a Delaware corporation
(the "Company").
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
Company have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
and Merger Sub pursuant to a merger (the "Merger") of the Merger Sub with and
into the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Merger Sub and the Company have approved this
Agreement and the Merger in accordance with the General Corporation Law of the
State of Delaware, and upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company has determined that the
per share consideration to be paid for the issued and outstanding shares of
Common Stock, $.01 par value, of the Company (the "Shares") in the Merger is
fair to the holders of such Shares and has resolved to recommend that the
holders of such Shares approve and adopt this Agreement and the Merger upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger; and
WHEREAS, as a condition and inducement to Parent's and Merger Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent, Merger
Sub and the Company are entering into Voting Agreements (collectively, the
"Voting Agreement") with Textron Inc., ▇▇▇▇▇▇ LBO Inc., State of Delaware
Employees Retirement Fund, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇. (collectively,
the "Principal Stockholders"), pursuant to which, among other things, the
Principal Stockholders have agreed to grant Parent a proxy with respect to the
voting of the Shares over which they have voting control, all upon the terms and
subject to the conditions set forth in the Voting Agreement;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.2 hereof), the Company and Merger Sub
shall consummate the Merger pursuant to which (a) Merger Sub shall be merged
with and into the Company and the separate corporate existence of Merger Sub
shall thereupon cease and (b) the Company shall be the surviving corporation in
the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the Laws of the State of Delaware.
(b) Pursuant to the Merger, (x) the Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation"), as in effect
immediately prior to the Effective Time, shall be the initial certificate of
incorporation of the Surviving Corporation and (y) the by-laws of the Company
(the "By-laws"), as in effect immediately prior to the Effective Time, shall be
the initial By-laws of the Surviving Corporation, each until thereafter changed
or amended as provided therein or by applicable law. The Merger shall have the
effects specified in the Delaware General Corporation Law (the "DGCL").
(c) The directors of Merger Sub at the Effective Time shall be the
initial directors of the Surviving Corporation until their respective successors
are duly elected and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and by-laws. The officers of the Merger Sub at the Effective Time
shall be the initial officers of the Surviving Corporation until their
respective successors are duly elected and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws.
1.2 Effective Time. Parent, Merger Sub and the Company will cause a
certificate of merger, or, if applicable, a certificate of ownership and merger
(as applicable, the "Certificate of Merger"), to be executed and filed on the
date of the Closing (as defined in Section 1.3) (or on such other date as Parent
and the Company may agree) with the Secretary of State of the State of Delaware
(the "Secretary of State") as provided in the DGCL. The Merger shall become
effective on the date on which the Certificate of Merger has been duly filed
with the Secretary of State or such time as is agreed upon by the parties and
specified in the Certificate of Merger, and such time is hereinafter referred to
as the "Effective Time."
1.3 Closing. The closing of the Merger (the "Closing") shall take place
at 10:00 a.m., local time, on a date to be specified by the parties, which shall
be no later than the third business day after satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
offices of Brown, Rudnick, Freed & Gesmer, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in writing by the
parties hereto.
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1.4 Stockholders' Meeting and Proxy Statement.
(a) The Company shall prepare, in consultation with Parent, and the
Company shall file with the SEC under the Exchange Act, subject to the other
provisions of this Agreement, proxy materials for the purpose of soliciting
proxies from holders of the Shares to vote in favor of the adoption of this
Agreement and the approval of the Merger at a meeting of the stockholders of the
Company to be called and held for such purpose (the "Special Meeting"). Such
proxy materials shall be used for the purpose of soliciting such proxies from
holders of the Shares (such proxy statement, together with any accompanying
letter to stockholders, notice of meeting and form of proxy, shall be referred
to herein as the "Proxy Statement"). Parent and the Merger Sub shall furnish to
the Company all information concerning Parent and the Merger Sub as the Company
may reasonably request in connection with the preparation of the Proxy
Statement. Parent and its counsel shall be given an opportunity to review and
comment on the Proxy Statement prior to its filing with the SEC. The Company, in
consultation with Parent, shall promptly respond to any SEC comments on the
Proxy Statement and shall otherwise use reasonable best efforts to resolve as
promptly as practicable all SEC comments thereon.
(b) A copy of the opinion of ▇▇▇▇▇▇ Brothers Inc. as to the fairness of
the Merger Consideration shall be delivered by the Company to Parent as of the
execution of this Agreement.
(c) Promptly following the resolution of all SEC comments on the Proxy
Statement, the Company shall distribute the Proxy Statement to its stockholders
and, pursuant thereto, shall call the Special Meeting in accordance with the
DGCL and subject to the other provisions of this Agreement, solicit proxies from
the stockholders of the Company to vote in favor of the adoption of this
Agreement and the approval of the Merger at the Special Meeting.
(d) The Company shall comply with all applicable provisions of and
rules under the Exchange Act and all applicable provisions of the DGCL in the
preparation, filing and distribution of the Proxy Statement, the solicitation of
proxies thereunder, and the calling and holding of the Special Meeting.
(e) Except as otherwise provided herein, the Company, acting through
its Board of Directors, shall include in the Proxy Statement the recommendation
of its Board of Directors that the stockholders of the Company vote in favor of
the adoption of this Agreement and the approval of the Merger, and shall
otherwise use reasonable best efforts to obtain the requisite vote of the
holders of the Shares pursuant to the DGCL and the Company's Certificate of
Incorporation in order to consummate the Merger.
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ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any Shares or any
shares of capital stock of Merger Sub:
(a) Merger Sub Capital Stock. Each issued and outstanding share of
Common Stock of Merger Sub shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation. \
(b) Cancellation of Treasury Stock and Merger Sub-Owned Stock. All
Shares that are owned by the Company or any Subsidiary of the Company and any
Shares owned by Parent, Merger Sub or any Subsidiary of Parent or Merger Sub
shall be cancelled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with Section 2.1 (b) and any Shares which
are held by stockholders exercising appraisal rights pursuant to Section 262 of
the DGCL ("Dissenting Stockholders")) shall be converted into the right to
receive $10.00 per share in cash, payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2,
without interest, or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Shares as determined in accordance with
Section 262 of the DGCL.
2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
bank, trust company or other Person, reasonably acceptable to the Company, to
act as agent for the holders of the Shares in connection with the Merger (the
"Paying Agent") to receive the funds to which holders of the Shares shall become
entitled pursuant to Section 2.l(c). At the Effective Time, Parent shall deposit
with the Paying Agent funds in an amount sufficient for the payment of the
Merger Consideration as provided herein. All interest earned on such funds shall
be paid to Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding
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Shares (the "Certificates"), whose Shares were converted pursuant to Section 2.1
into the right to receive the Merger Consideration (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
Paying Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, Parent shall cause the Paying Agent to pay to the
holder of such Certificate in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and any other taxes required by reason of the payment of the
Merger Consideration to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either 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 the Merger Consideration in cash as contemplated by this Section 2.2.
The right of any stockholder to receive the Merger Consideration shall be
subject to and reduced by any applicable federal backup withholding obligation.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Paying Agent shall be liable to
any holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
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2.3 Dissenters' Rights. Notwithstanding anything in this Agreement
to the contrary, if any Dissenting Stockholder shall demand to be paid the "fair
value" of such holder's Shares, as provided in Section 262 of the DGCL, such
Shares shall not be converted into or be exchangeable for the right to receive
the Merger Consideration except as provided in this Section 2.3 and the Company
shall give Parent notice thereof and Parent shall have the right to participate
in all negotiations and proceedings with respect to any such demands. Neither
the Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1.
2.4 Transfer of Shares After the Effective Time. No transfer of Shares
shall be made on the stock transfer books of the Surviving Corporation at or
after the Effective Time.
2.5 Stock Options . The Company shall use its reasonable efforts to
provide that, immediately prior to the Effective Time, each then outstanding
option to purchase Shares (in each case, an "Option"), whether or not then
exercisable, shall be returned to and cancelled by the Company and in
consideration of such return and cancellation and except to the extent that
Parent or Merger Sub and the holder of any such Option otherwise agrees, as soon
as reasonably practicable after the Effective Time, Parent shall cause the
Paying Agent to pay to the holders of the Options which have been returned and
cancelled to the satisfaction of Parent an amount in respect thereof equal to
the product of (A) the excess, if any, of the Merger Consideration over the
exercise price of each such Option and (B) the number of Shares previously
subject to the Option immediately prior to its cancellation (such payment to be
net of withholding taxes and without interest). The Company shall use its
reasonable efforts to cause the holders of such Options to consent to the
transactions contemplated by this Section 2.5, prior to the Effective Time. At
the Effective Time, Parent shall deposit with the Paying Agent funds in an
amount sufficient for the payment provided herein. All interest on such funds
shall be paid to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
3.1 Organization, Standing and Corporate Power. Each of the
Company and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority to carry on its
business as is now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation or licensed to do business and is in
good
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standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect on the Company. The Company has delivered to Parent complete and correct
copies of the certificate of incorporation of the Company and by-laws of the
Company, in each case as amended to the date of this Agreement, and has
delivered the certificates of incorporation and by-laws or other comparable
organizational documents of its Subsidiaries in each case as amended as of the
date of this Agreement. The respective certificates of incorporation and by-laws
or other comparable organizational documents of the Subsidiaries of the Company
do not contain any provision limiting or otherwise restricting the ability of
the Company to control such Subsidiaries.
3.2 Subsidiaries.
(a) Exhibit 21 to the Company's Annual Report on Form 10-K for
the fiscal year ended March 28, 1998 and Schedule 3.2 of the disclosure schedule
delivered by the Company to Parent at or prior to the execution of this
Agreement (the "Company Disclosure Schedule") together include all of the
Subsidiaries of the Company. Except as set forth in Schedule 3.2 of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of, or other
equity interests in, each Subsidiary of the Company have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by the
Company, free and clear of all Liens and 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).
(b) The Company does not directly or indirectly beneficially
own any securities or other beneficial ownership interests in any other entity
(including through joint ventures or partnership arrangements) other than (i)
the Subsidiaries of the Company, (ii) as disclosed in Schedule 3.2 of the
Company Disclosure Schedule and (iii) investments in publicly traded securities
constituting less than five percent of the outstanding equity of the issuing
entity.
3.3 Capital Structure. The authorized capital stock of the Company
consists of 13,000,000 Shares and 2,000,000 shares of preferred stock, par value
$.01 per share (the "Preferred Shares"). As of the date hereof, (i) 5,568,104
Shares were issued and outstanding and no Preferred Shares were issued and
outstanding, (ii) 255,998 Shares were reserved for issuance upon exercise of
outstanding Options pursuant to the 1994 Stock Option Plan and (iii) 46,500
Shares were reserved for issuance upon exercise of outstanding Options pursuant
to the 1994 Non-Employee Director Stock Option Plan. Except as set forth above
or on Schedule 3.3 of the Company Disclosure Schedule, as of the date of this
Agreement: (i) no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding; (ii) there are no
stock appreciation rights, phantom stock units, restricted stock grants,
contingent stock grants or Benefit Plans which grant awards of any of the
foregoing, and there are no other outstanding contractual rights to which the
Company is a party the value of which is based on the value of Shares; (iii) all
outstanding shares of capital stock of the Company are, and all of the
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Shares which may be exchanged for the Merger Consideration in the Merger will
be, when so exchanged, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights; and (iv) there are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote. Except as set
forth above, as of the date of this Agreement, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or of any of its Subsidiaries or obligating the Company or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
Except as set forth in Schedule 3.3 of the Company Disclosure Schedule, there
are no programs in place, nor any outstanding contractual obligations of the
Company or any of its Subsidiaries, to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries.
3.4 Authority; Noncontravention; Company Action. The Company has
the requisite corporate power and authority to enter into this Agreement and,
subject to approval of this Agreement by the holders of a majority of the
outstanding Shares, to consummate the Merger contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to approval of this Agreement by the holders
of a majority of the outstanding Shares. The Board of Directors of the Company
has unanimously approved this Agreement and the Merger for purposes of Section
203 of the DGCL (the "Section 203 Approval"). This Agreement has been duly
executed and delivered by the Company and, assuming this Agreement constitutes
the valid and binding obligation of Parent and Merger Sub, constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' fights generally and (ii) the remedy
of specific performance and injunctive relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. Except as set forth in Schedule 3.4 of the Company Disclosure
Schedule, the execution and delivery of this Agreement do not, and the
consummation of the Transactions contemplated by this Agreement including the
execution and delivery of the Voting 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 material benefit under, or result in the creation of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries under,
(i) the Certificate of Incorporation or By-laws of the Company or the comparable
charter or organizational documents of any of its Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture,
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lease or other agreement, instrument or Permit applicable to the Company or any
of its Subsidiaries or their respective properties or assets or (iii) any Law
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that, individually or in the
aggregate, would not (x) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or (y) have a Material
Adverse Effect on the Company. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is required
by the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the Transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) a preliminary Proxy Statement, (y) a
definitive Proxy Statement and (z) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and the
Transactions contemplated by this Agreement, (iii) the filing of the Certificate
of Merger with the Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (iv) as may be required by any applicable state securities or "blue
sky" Laws, (v) such filings as may be required under the Connecticut Transfer
Act, Conn. Gen. Stat. ss.ss.22a-134 et seq. and (vi) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) impair, in any material respect, the ability of the Company to
perform its obligations under this Agreement or (y) have a Material Adverse
Effect on the Company.
3.5 SEC Documents; Financial Statements. The Company has filed all
reports, proxy statements, forms, and other documents required to be filed by it
with the SEC under the Securities Act and the Exchange Act since March 30, 1996
(the "SEC Documents"). As of their respective dates, (i) the 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 SEC Documents, and (ii) none of the SEC Documents contained at the time
of their filing an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents are true and complete and complied at the time of their filing as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
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 the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in
Schedule 3.5 of the Company Disclosure Schedule and except as set forth
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in the SEC Documents filed and publicly available prior to the date of this
Agreement, and except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the most
recent consolidated balance sheet included in the SEC Documents filed and
publicly available prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in the notes
thereto.
3.6 Information Supplied. None of the information supplied or to
be supplied by the Company expressly for inclusion or incorporation by reference
in the Proxy Statement, will, on the date the Proxy Statement is first mailed to
the Company's stockholders and at the time of the Special 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 false or misleading.
The Proxy Statement will comply as to form in all material respects with 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 written information supplied
by Parent or Merger Sub specifically for inclusion or incorporation by reference
therein.
3.7 Absence of Certain Changes or Events. Except as set forth in
the SEC Documents or Schedule 3.7 of the Company Disclosure Schedule, since
January 2, 1999, (i) the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course, there has not been any
Material Adverse Change in the Company and (ii) neither the Company nor any of
its Subsidiaries has amended its Certificate of Incorporation or By-laws; (iii)
the Company has not split, combined or reclassified the Shares or any capital
stock of any of its Subsidiaries; (iv) neither the Company nor any of its
Subsidiaries has declared or set aside or paid any dividend or other
distribution payable in cash, stock or property with respect to the Company's
capital stock or that of any of its Subsidiaries (other than dividends or
advances from a wholly-owned Subsidiary of the Company to its parent or the
Company); (v) neither the Company nor any of its Subsidiaries has entered into
any employment or severance agreement with any officer, director or key employee
of the Company or any of its Subsidiaries; (vi) neither the Company nor any of
its Subsidiaries has increased in any manner the compensation or fringe benefits
of, or paid any bonus to, any director or officer thereof; and (vii) neither the
Company nor any of its Subsidiaries has changed its accounting methods, except
as required by GAAP or the SEC.
3.8 Litigation. Except as set forth in the SEC Documents or
Schedule 3.8 of the Company Disclosure Schedule or to the extent reserved for as
reflected on the Company's financial statements for the year ended March 28,
1998, there are (i) no suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, (ii) no complaints, lawsuits,
charges or other proceedings pending or, to the knowledge of the Company,
threatened in any forum by or on behalf of any
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present or former employee of the Company or any of its Subsidiaries, any
applicant for employment or classes of the foregoing alleging breach of any
express or implied contract of employment, any applicable Law governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, (iii) no judgments, decrees, injunctions or orders of
any Governmental Entity or arbitrator outstanding against the Company that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company; and (iv) none of the Intellectual
Property Rights is subject to any order, writ, judgment, injunction, decree,
determination or award that has, or would have, a Material Adverse Effect on the
Company.
3.9 Absence of Changes in Benefit Plans; SEC Disclosure. Except as
disclosed in the SEC Documents or Schedule 3.9 of the Company Disclosure
Schedule, there has not been any adoption or material amendment by the Company
or any of its Subsidiaries or any ERISA Affiliate (as defined in Section 3.10
hereof) of any Benefit Plan (as defined in Section 3.10 hereof) since March 28,
1998. Except as disclosed in Schedule 3.9 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any formal plan or
commitment to create any additional Benefit Plan or modify or change in any
material respect any existing Benefit Plan that would affect any employee or
terminated employee of the Company or a Subsidiary of the Company. Except as
disclosed in Schedule 3.9 of the Company Disclosure Schedule, all employment,
consulting, severance, termination, change in control or indemnification
agreements, arrangements or understandings between the Company or any of its
Subsidiaries and any current or former officer or director of the Company or any
of its Subsidiaries which are required to be disclosed in the SEC Documents have
been disclosed therein.
3.10 Employee Benefits; ERISA.
(a) Schedule 3.10 of the Company Disclosure Schedule contains
a true and complete list of each material bonus, deferred compensation,
incentive compensation, stock purchase, stock option, employment, severance or
termination pay, health insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement, other
than a non-material fringe benefit plan, sponsored, maintained or contributed to
or required to be contributed to (at any time during the past six years) by the
Company or any of its Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that is a member of a "controlled group"
within the meaning of section 4001 of the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated thereunder
("ERISA") of which the Company or a Subsidiary is a member or which is under
"common control" within the meaning of Section 4001 of ERISA, with the Company
or a Subsidiary, for the benefit of any employee or terminated employee of the
Company, its Subsidiaries or any ERISA Affiliate, whether formal or informal
(the "Benefit Plans").
11
(b) With respect to each Benefit Plan, the Company has
delivered to Parent a true and complete copy thereof (including all amendments
thereto), as well as true and complete copies of the two most recent annual
reports, if required under ERISA, with respect thereto; the two most recent
actuarial reports, if required under ERISA, with respect thereto; the two most
recent reports prepared with respect thereto in accordance with Statement of
Financial Accounting Standards No. 87, Employer's Accounting for Pensions; the
most recent Summary Plan Description, together with each Summary of Material
Modifications, if required under ERISA with respect thereto; if the Benefit Plan
is funded through a trust or any third party funding vehicle, the trust or other
funding agreement (including all amendments thereto) and the latest financial
statements thereof; and the most recent determination letter received from the
Internal Revenue Service with respect to each Benefit Plan that is intended to
be qualified under section 401 of the Internal Revenue Code of 1986, as from
time to time amended (the "Code").
(c) No Benefit Plan is subject to Section 412 of the Code or
Title IV of ERISA.
(d) Neither the Company, nor any Subsidiary of the Company,
nor any trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or any Subsidiary
of the Company, any such trust, or any trustee or administrator thereof, or any
party dealing with any Benefit Plan or any such trust could be subject to either
a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax
imposed pursuant to section 4975 or 4976 of the Code.
(e) No Benefit Plan is a "multiemployer pension plan," as
such term is defined in section 3(37) of ERISA.
(f) Each Benefit Plan which is intended to be "qualified"
within the meaning of section 401 (a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under section 501 (a) of the Code
and no event has occurred to cause the loss of such qualified or exempt status.
(g) Except as set forth in Schedule 3.10 of the Company
Disclosure Schedule, no Benefit Plan provides health, death or medical benefits
(whether or not insured) with respect to current or former employees of the
Company or its Subsidiaries beyond their retirement or other termination of
service (other than (a) coverage mandated by applicable Law or (b) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary)).
(h) Except as set forth in Schedule 3.10 of the Company
Disclosure Schedule, the consummation of the Transactions contemplated by this
Agreement, alone, will not (a) entitle any current or former employee or officer
of the Company or any Subsidiary to severance pay, unemployment compensation or
any other payment, (b) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer, (c) result in any
prohibited transaction described in section 406 of ERISA or section 4975 of the
Code for
12
which an exemption is not available, or (d) require the Company or any ERISA
Affiliate to fund or make any payments to any trust or other funding vehicle in
respect of any Benefit Plan.
(i) There are no pending, anticipated or, to the
knowledge of the Company, threatened claims by or on behalf of any Benefit Plan,
by any employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
3.11 Taxes.
Except as set forth on Schedule 3.11 of the Company Disclosure
Schedule:
(a) Each of the Company and each of its Subsidiaries has
timely filed (or has had timely filed on its behalf) all income Tax Returns and
all other material Tax Returns required to be filed by it, and all such Tax
Returns are true, complete and correct in all material respects. Each of the
Company and each of its Subsidiaries has paid (or has had paid on its behalf)
all income Taxes and all other material Taxes due and payable with respect to
periods for which Tax Returns were filed (whether or not shown as due on such
Tax Returns). The most recent financial statements contained in the SEC
Documents reflect adequate reserves in accordance with generally accepted
accounting principles for all Taxes not yet paid.
(b) Each of the Company and each of its Subsidiaries has
complied in all material respects with all applicable Laws relating to the
payment and withholding of taxes (including, without limitation, the withholding
of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions
under any applicable foreign Laws) and have, within the time and in the manner
prescribed by applicable Laws, withheld from employee wages and paid over to the
proper Governmental Entity all material amounts required to be so withheld and
paid over under all applicable Laws.
(c) No deficiencies for any Taxes have been proposed,
asserted or assessed (in writing) against the Company or any of its
Subsidiaries, (ii) no governmental authority is conducting an audit with respect
to income Taxes or any other material Taxes or any Tax Return of the Company or
any of its Subsidiaries, (iii) no extension or waiver of the statute of
limitations with respect to Taxes or any Tax Return has been granted by the
Company or any of its Subsidiaries, which remains in effect, (iv) none of the
Company or any of its Subsidiaries is a party to any agreement or arrangement to
allocate, share or indemnify another party for Taxes, and (v) there are no Liens
for Taxes upon the assets of the Company or any of its Subsidiaries, except for
Liens for Taxes not yet due.
(d) The Company is not, and has not been, a United States
Real Property Holding Corporation (as defined in Section 897(c)(2) of the Code)
on any "determination date" (as defined in Section 1.897-2(c) of the Treasury
regulations promulgated under the Code).
13
3.12 No Excess Nondeductible Payments.
(a) Except as set forth in Schedule 3.12 of the Company
Disclosure Schedule, no amounts payable as a result of the Transactions
contemplated by this Agreement under the Benefit Plans or any other plans or
arrangements will constitute a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(b) Neither the Company nor any of its Subsidiaries is a
party to any contract, agreement or other arrangement which could result in the
payment of amounts that could be nondeductible by reason of Section 162(m) of
the Code.
3.13 Compliance with Applicable Laws.
Except (i) as set forth in the SEC Documents or Schedule 3.13
of the Company Disclosure Schedule or (ii) where a Material Adverse Effect on
the Company would not result, to the knowledge of the Company:
(a) The Company and each of its Subsidiaries are
presently complying with all applicable Laws, and neither the Company nor any of
its Subsidiaries has received written notification of any asserted present or
past failure to so comply.
(b) Each of the Company and its Subsidiaries has in
effect or has timely filed applications for all Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business
substantially as now conducted, there are no appeals nor any other actions
pending to revoke any such Permits, and there has occurred no default or
violation under any such Permits.
(c) Each of the Company and its Subsidiaries is, and has
been, in compliance with all applicable Environmental Laws. There are no
circumstances or conditions that would be reasonably likely to prevent or
interfere with compliance by the Company or its Subsidiaries in the future with
Environmental Laws (or Permits issued thereunder).
(d) Neither the Company nor any Subsidiary of the Company
has received any written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental Entity or
private party, alleging violation of, or asserting any noncompliance with or
liability under or potential liability under, any Environmental Laws, except for
matters which are no longer threatened or pending or for which the Company or
its Subsidiaries are not subject to further requirements pursuant to an
administrative or court order, judgment, or a settlement agreement.
14
(e) During the period of ownership or operation by the
Company and its Subsidiaries of any of their respective current or previously
owned or leased properties, there have been no Releases of Hazardous Material
in, on, under or affecting such properties and none of the Company or its
Subsidiaries have disposed of any Hazardous Material or any other substance
either on said owned or leased properties or at other properties, in a manner
that has led, or could reasonably be anticipated to lead to a Release. Prior to
the period of ownership or operation by the Company and its Subsidiaries of any
of their respective current or previously owned or leased properties, no
Hazardous Material was disposed of at such current or previously owned or leased
properties, and there were no Releases of Hazardous Material in, on, under or
affecting any such property.
(f) Except for leases entered into in the ordinary course
of business, as to which no notice of a claim for indemnity or reimbursement has
been received by the Company, neither the Company nor any of its Subsidiaries
has entered into an agreement that may require it to pay to, reimburse,
guarantee, pledge, defend, indemnify, or hold harmless any Person for or against
any liabilities, damages or costs under or pursuant to Environmental Laws.
(g) Neither the Company nor any of its Subsidiaries has
treated, stored or disposed of "hazardous waste", as that term is defined in the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., analogous
state Laws, or the regulations promulgated thereunder, such that the Company or
any of its Subsidiaries would be required to obtain a Permit under said Laws for
such treatment, storage or disposal.
(h) The Company has provided to Parent true and correct
copies of all environmental studies and reports in its possession, prepared
within the last five years, relating to (i) the Company's and its Subsidiaries'
compliance with Environmental Laws; (ii) the environmental condition of the
Company's and its Subsidiaries' currently owned or leased properties, including,
but not limited to, the extent of any on-site contamination at any of such
properties, results of investigations at such properties, remedial action plans
for such properties, and asbestos surveys; and (iii) the environmental condition
of any properties formerly owned or operated by the Company or any of its
Subsidiaries, or of any other location at which the Company or any of its
Subsidiaries is subject to an environmental claim, including, but not limited
to, the extent of any on-site contamination at any such properties, results of
investigations at such properties, and remedial action plans at such properties.
(i) The Company has provided Parent with true and correct
copies of all agreements, except for leases entered into in the ordinary course
of business, by and between the Company and any party providing for or relating
to the indemnification of, or the indemnification by, the Company for
environmental claims (the "Environmental Agreements"), including, but not
limited to (i) the Purchase and Sale Agreement dated as of May 7, 1986 by and
between the Company and Textron, Inc. and (ii) the Settlement Agreement dated as
of June 22, 1994 by and between the Company and Textron, Inc. (such agreements
with Textron, Inc. are hereinafter referred to collectively as the "Textron
Agreements").
15
3.14 Intellectual Property.
(a) Except as set forth on Schedule 3.14(a) of the Company
Disclosure Schedule, the Company and/or its Subsidiaries own free and clear of
all Liens other than Permitted Liens, or is licensed or otherwise possesses
legally enforceable rights to use, all patents and all material trademarks
(registered or unregistered) service marks (registered or unregistered), trade
names, and copyrights and applications for any of the foregoing, computer
software, inventions, designs, know-how and other proprietary rights
(collectively, the "Intellectual Property Rights") that are necessary to the
business of the Company and its Subsidiaries as currently conducted.
(b) Schedule 3.14(b) of the Company Disclosure Schedule sets forth
a list of all patents, patent applications, registered trademarks, pending
trademark applications, registered copyrights and material common law trademarks
owned by the Company or any of its Subsidiaries.
(c) Schedule 3.14(c) of the Company Disclosure Schedule sets forth
a list of all material licensing agreements to which the Company or any of its
Subsidiaries is a party relating to the use of the Intellectual Property Rights.
(d) Each of the Company and each of its Subsidiaries owns or has
the right to use the Intellectual Property Rights in order to allow it to
conduct, and continue to conduct, its business as currently conducted in all
material respects, and the consummation of the Transactions contemplated hereby
will not alter or impair such ability, except where such alteration or
impairment would not have a Material Adverse Effect on the Company.
(e) Except as set forth on Schedule 3.14(e) of the Company
Disclosure Schedule, (i) to the knowledge of the Company and its Subsidiaries,
there are no pending oppositions, cancellations, invalidity proceedings,
interferences or re-examination proceedings with respect to the Intellectual
Property Rights, (ii) to the knowledge of the Company and its Subsidiaries,
neither the Company nor any of its Subsidiaries has received any written notice
from any other Person pertaining to or challenging the right of the Company or
any of its Subsidiaries to use any of the Intellectual Property Rights and (iii)
neither the Company nor any of its Subsidiaries has made any claim or has
knowledge of a violation or infringement by others of its rights to or in
connection with the Intellectual Property Rights which is still pending.
3.15 Properties.
(a) Each of the Company and each of its Subsidiaries has
sufficiently good and valid title to, or an adequate leasehold interest in, its
material properties and assets (including the Real Property) in order to allow
it to conduct, and continue to conduct, its business as currently conducted in
all material respects. Except as set forth in Schedule 3.15 of the Company
Disclosure Schedule, such material tangible properties and assets (including the
Real Property)
16
are sufficiently free of Liens to allow each of the Company and each of its
Subsidiaries to conduct, and continue to conduct, its business as currently
conducted in all material respects and the consummation of the Transactions
contemplated by this Agreement will not alter or impair such ability so as to
cause a Material Adverse Effect on the Company. Each of the Company and each of
its Subsidiaries enjoys peaceful and undisturbed possession under all leases,
except for such breaches of the right to peaceful and undisturbed possession
that do not materially interfere with the ability of the Company and its
Subsidiaries to conduct its business as currently conducted. Schedule 3.15 of
the Company Disclosure Schedule sets forth a complete list of all real property
and material interests in real property owned in fee by the Company or one of
its Subsidiaries (the "Fee Properties") and sets forth all real property and
interests in real property leased by the Company or one of its Subsidiaries as
of the date hereof (the "Leased Properties," together with the Fee Properties,
the "Real Property"). Schedule 3.15 also sets forth all locations at which
properties of the Company and its Subsidiaries are located, temporarily or
permanently, including all warehouses or similar Third Party storage or staging
facilities for such properties.
(b) All leases executed by the Company or its Subsidiaries as
lessee for the Leased Properties are in full force and effect and, except as set
forth on Schedule 3.15 of the Company Disclosure Schedule, the Company and its
Subsidiaries have received no written notices of default from any landlord which
default remains uncured as of the date hereof, and to their knowledge, neither
the Company nor its Subsidiaries is in default in any material respect under any
such leases.
(c) All leases executed by the Company or its Subsidiaries as
lessor or sublessor for the Real Property are in full force and effect and,
except as set forth on Schedule 3.15 of the Company Disclosure Schedule, there
exist no other tenants of the Real Property, the Company and its Subsidiaries
have received no written notices of default from any tenant which default
remains uncured as of the date hereof, and to the knowledge of the Company and
its Subsidiaries, no such tenant is in material default under any such leases.
(d) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule, the Company and/or its Subsidiaries have good, valid, marketable and
fee simple title to all the Fee Property, free and clear of all Liens other than
Permitted Liens.
(e) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule, all of the Real Properties have connections to sanitary sewer, water,
electricity, gas, telephone and all other necessary utilities and the Company
and/or its Subsidiaries do not know of any existing circumstances or conditions
which would result in a termination of such access or connections for any period
of time which termination would result in a Material Adverse Effect on the
Company.
(f) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule or where a Material Adverse Effect on the Company would not result, to
the knowledge of the Company, no fact or condition exists which would prohibit
adequate rights of access to and from
17
the Real Properties from and to public highways and roads, and the Company and
its Subsidiaries have not received written notice of any pending or threatened
restriction or denial, governmental or otherwise, upon such ingress or egress
which would adversely affect the operation of the Real Properties.
3.16 Contracts.
(a) Except as set forth in the SEC Documents or Schedule 3.16 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by (i) any "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any non-competition
agreement or any other agreement or obligation which purports to limit in any
respect the manner in which, or the localities in which, all or any material
portion of the business of the Company and its Subsidiaries, taken as a whole,
may be conducted, (iii) any agreement with any Affiliate of the Company, (iv)
any voting or other agreement governing how any Shares shall be voted or (v) any
agreement with any holder of 10% or more of the Shares (all contracts of the
type described in clauses (i), (ii), (iii), (iv) or (v) being referred to herein
as "Company Material Contracts"). Each Company Material Contract is valid and
binding on the Company (or, to the extent a Subsidiary of the Company is a
party, such Subsidiary) and is in full force and effect, and the Company and
each Subsidiary of the Company have, in all material respects, performed all
obligations required to be performed by them to date under each Company Material
Contract, except where such noncompliance, individually or in the aggregate,
would not have a Material Adverse Effect on the Company. Neither the Company nor
any Subsidiary of the Company knows of, or has received notice of, any violation
or default under (nor, to the knowledge of the Company, does there exist any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default under) any Company Material Contract,
except where such violation or defaults, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
(b) Except as disclosed in the SEC Documents or in Schedule 3.16
of the Company Disclosure Schedule or as provided for in this Agreement, neither
the Company nor any of its Subsidiaries is a party to any oral or written (i)
employment or consulting agreements not terminable on thirty (30) days' or less
notice, (ii) union or collective bargaining agreement, (iii) agreement with any
executive officer or other key employee of the Company or any of its
Subsidiaries the benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any of its Subsidiaries of the nature contemplated by this Agreement,
(iv) agreement with respect to any executive officer or other key employee of
the Company or any of its Subsidiaries providing any term of employment or
compensation guarantee or (v) agreement or plan, including any stock option,
stock appreciation right, restricted stock or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
18
3.17 Labor Relations. Except to the extent set forth in the SEC
Documents or Schedule 3.17 of the Company Disclosure Schedule, (i) the Company
and each of its Subsidiaries is, and has at all times been, in material
compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and is not engaged in any unfair labor practices
as defined in the National Labor Relations Act or other applicable Law, except
where the failure to comply would not be reasonably likely to cause a Material
Adverse Effect on the Company; (ii) there is no labor strike, slowdown, stoppage
or lockout actually pending, or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries; and (iii) neither the Company
nor any of its Subsidiaries is a party to or bound by any collective bargaining
or similar agreement with any labor organization.
3.18 Products Liability. Except as set forth in Schedule 3.18 of
the Company Disclosure Schedule, (i) there is no claim, action, suit or
proceeding pending before any Governmental Entity against the Company or any
Subsidiary of the Company in which a Product is alleged to have a Defect; and
(ii) to the knowledge of the Company and its Subsidiaries, no such claim,
action, suit or proceeding is threatened; other than claims, actions, suits or
proceedings referred to in clause (i) or (ii) of this Section 3.18 that would
not, if adversely determined, have, individually or in the aggregate, a Material
Adverse Effect on the Company.
3.19 Transactions with Affiliates. Except as disclosed in the SEC
Documents or Schedule 3.19 of the Company Disclosure Schedule, since March 28,
1998, there have been no transactions, agreements, arrangements or
understandings between the Company and its Affiliates that would be required to
be disclosed under Item 404 of Regulation S-K under the Securities Act.
3.20 Applicability of State Takeover Statutes. The Section 203 Approval
is valid and in full force and effect. Section 203 of the DGCL will not apply to
the Voting Agreement or the Merger. No other state takeover statute or similar
statute or regulation applies or purports to apply to the Merger or the other
Transactions.
3.21 Voting Requirements. The affirmative vote of the holders of a
majority of all the Shares entitled to vote approving this Agreement is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the Transactions contemplated by this
Agreement.
3.22 Brokers. No broker, investment banker, financial advisor or
other Person, other than ▇▇▇▇▇▇ Brothers Inc., the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's, financial
advisor's, or other similar fee or commission in connection with the
Transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has disclosed to Parent its fee
arrangements with ▇▇▇▇▇▇ Brothers Inc. and has provided Parent with true,
correct and complete copies of any agreements with respect to its fee
arrangements with ▇▇▇▇▇▇ Brothers Inc.
19
3.23 Opinion of Financial Advisor. The Company has received the
opinion of ▇▇▇▇▇▇ Brothers Inc., to the effect that, as of the date of this
Agreement, the consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent.
3.24 Full Disclosure. No representation or warranty by the Company
in this Agreement and no statement contained in the Company Disclosure Schedules
or certificate furnished or to be furnished by the Company to Parent or any of
its Representatives pursuant to the provisions hereof or in connection with the
Transactions, contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
3.25 Year 2000.
(a) To the Company's knowledge, except as set forth on
Schedule 3.25, all material computer-based systems and software of the Company
and its Subsidiaries (collectively, the "Computer Systems") will record, store,
process and present calendar dates falling on or after January 1, 2000 in the
same manner and with the same functionality as such Computer Systems record,
store, process and present calendar dates falling on or before December 31,
1999. To the Company's knowledge, except as set forth on Schedule 3.25, in all
other respects, such Computer Systems shall not in any way lose functionality or
degrade in performance as a consequence of such Computer Systems operating at a
date later than December 31, 1999.
(b) To the Company's knowledge, the projections and
business plans provided to the Parent in connection with this Agreement reflect
all expenses the Company and its Subsidiaries will reasonably need to incur in
order to convert, rewrite or replace any Computer System or programs as set
forth in Schedule 3.25 which are not currently Year 2000 Compliant (including
performance of all reasonable and prudent testing) as soon as is practicable
and, in any event, before the later of December 31, 1999 and the date such
system or program is scheduled to be placed in operation.
(c) "Year 2000 Compliant" means all Computer Systems and
programs of the Company and its Subsidiaries (i) being designed to be used prior
to, during and after calendar year 2000 without material error relating to date
data, (ii) being capable of operating without material error relating to the
production of the date data which represents or refers to different centuries or
more than one century, and (iii) being designed so that all date data fields,
date-related user interfaces, and other interfaces, include the indication of
century.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
4.1 Organization, Standing and Corporate Power.
(a) Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction in which each is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. Each of Parent
and Merger Sub is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect on Parent.
(b) Each of Hill-Loma, Inc., ▇▇▇▇▇▇ Grinder Corporation,
Fellows Corporation, ▇▇▇▇▇ & ▇▇▇▇▇▇ Vermont Corporation and J&L Metrology
Company, Inc., all of which are organized under the Laws of the State of
Delaware, are wholly-owned Subsidiaries, either directly or, in the case of J&L
Metrology, Inc., indirectly, of Parent.
4.2 Authority; Noncontravention. Parent and Merger Sub have the
requisite corporate power and authority to enter into this Agreement and to
consummate the Transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the Transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Parent and
Merger Sub, as applicable. This Agreement has been duly executed and delivered
by Parent and Merger Sub and, assuming this Agreement constitutes the valid and
binding obligation of the Company, constitutes a valid and binding obligation of
each such party, enforceable against each such party in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
The execution and delivery of this Agreement do not, and the consummation of the
Transactions contemplated by 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 to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of Parent
under, (i) the certificate of incorporation or by-laws of Parent or Merger Sub,
(ii) any Law applicable to Parent or Merger Sub or their respective properties
or assets, other than, in the case of clause (ii), any such conflicts,
violations, defaults,
21
rights or Liens that individually or in the aggregate would not (x) impair in
any material respect the ability of Parent and Merger Sub to perform their
respective obligations under this Agreement or (y) prevent or impede the
consummation of any of the Transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity or any other Person is required by Parent
or Merger Sub in connection with the execution and delivery of this Agreement or
the consummation by Parent or Merger Sub, as the case may be, of any of the
Transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form under the HSR Act, (ii) the filing with
the SEC of such reports and statements under the Exchange Act as may be required
in connection with this Agreement and the Transactions contemplated by this
Agreement, (iii) the filing of the Certificate of Merger with the Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (iv) as may be required by an
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) impair, in any material respect, the ability of Parent to perform
its obligations under this Agreement or (y) prevent or significantly delay the
consummation of the Transactions contemplated by this Agreement.
4.3 Information Supplied. None of the information supplied or to
be supplied in writing by Parent or Merger Sub expressly for inclusion or
incorporation by reference in the Proxy Statement will, on the date the Proxy
Statement is first mailed to the Company's stockholders and at the time of the
Special 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.
4.4 Operations of Merger Sub. Merger Sub was formed solely for the
purpose of engaging in the Transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the Transactions contemplated hereby.
4.5 Financing. Parent has obtained the financing commitments
detailed in the commitment letters dated as of March 25, 1999 (the
"Commitment"), true and correct copies of which have been previously delivered
to the Company. Upon receipt of the funds contemplated by the Commitment, Parent
will have sufficient funds to pay for the Shares acquired in the Merger.
4.6 Brokers. No broker, investment banker, financial advisor or
other Person, other than ING Baring ▇▇▇▇▇▇ ▇▇▇▇ LLC and the parties to the
Commitment, the fees and expenses of which will be paid by Parent, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Merger Sub.
22
ARTICLE V
COVENANTS
5.1 Interim Operations of the Company. After the date hereof, except as
specifically contemplated by this Agreement, the Company shall and shall cause
its Subsidiaries to carry on their respective businesses in the ordinary course
and use all reasonable best efforts consistent with good business judgment to
preserve intact their current business organizations, keep available the
services of their current officers and key employees and preserve their
relationships consistent with past practice with desirable customers, suppliers,
licensors, licensees, distributors and others having business dealings with them
to the end that their goodwill and ongoing businesses shall be unimpaired in all
material respects at the Effective Time. Without limiting the generality of the
foregoing, the Company covenants and agrees that, except (i) as expressly
contemplated by this Agreement, (ii) as set forth in Schedule 5.1 of the Company
Disclosure Schedule or (iii) as agreed in writing by Parent, after the date
hereof:
(a) neither the Company nor any of its Subsidiaries
shall, directly or indirectly, amend its Certificate of Incorporation or By-laws
or similar organizational documents;
(b) neither the Company nor any of its Subsidiaries
shall: (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Company's capital stock
or that of its Subsidiaries, except that a wholly-owned Subsidiary of the
Company may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly any
of the Company's capital stock or that of its Subsidiaries; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares issued upon the exercise of
Options outstanding on the date hereof in accordance with the Option Plans as in
effect on the date hereof; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the Subsidiaries of the Company;
(c) except as permitted by this Agreement, neither the
Company nor any of its Subsidiaries shall acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof
(including entities which are Subsidiaries of the Company or any of the
Company's Subsidiaries) or (B) any assets, including real estate, except
purchases in the ordinary course of business consistent with past practice and
capital expenditures permitted under Section 5.l(d);
(d) neither the Company nor any of its Subsidiaries shall
make any new capital expenditure or expenditures in an aggregate amount
exceeding $550,000, and provided such capital expenditures which do not exceed
said $550,000 are set forth in Schedule 5.1 of the Company Disclosure Schedule;
23
(e) neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business and except as otherwise
permitted by this Agreement, amend or terminate any contract or agreement where
such amendment or termination would have a Material Adverse Affect on the
Company, or waive, release or assign any material rights or claims;
(f) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
material property or assets other than sales of products to customers or in the
ordinary course of business and consistent with past practice;
(g) neither the Company nor any of its Subsidiaries
shall: (i) enter into any employment or severance agreement with or grant any
severance or termination pay to any officer, director or key employee of the
Company or any its Subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers; provided that the Company may hire key
employees to fill vacancies in positions created prior to the date hereof and
listed on Schedule 5.1 of the Company Disclosure Schedule.
(h) neither the Company nor any of its Subsidiaries
shall, except as required to comply with applicable Law or expressly provided in
this Agreement, (A) adopt, enter into, terminate, amend or increase the amount
or accelerate the payment or vesting of any benefit or award or amount payable
under any Benefit Plan or other arrangement for the current or future benefit or
welfare of any director, officer or current or former employee, except to the
extent necessary to coordinate any such Benefit Plans with the terms of this
Agreement, (B) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee, except as set forth in
Schedule 5.1 (C) pay any benefit not provided for under any Benefit Plan, other
than employee salaries in the ordinary course of business consistent with past
practice which is in excess of 1% of any employee's annual compensation, (D)
grant any awards under any bonus, incentive, performance or other compensation
plan or arrangement or Benefit Plan (including the removal of existing
restrictions in any Benefit Plans or agreements or awards made thereunder)
except as set forth in Schedule 5.1, (E) grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or (F) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Benefit Plan, except as set forth in Schedule 5.1. (i) neither
the Company nor any of its Subsidiaries shall:
(i) incur or assume any long-term debt or, except in the
ordinary course of business, incur or assume any short-term indebtedness
(including advances under the Company's existing revolving credit agreement) in
amounts not consistent with past practice; (ii) incur or modify any material
indebtedness or other liability except as set forth in Schedule 5.1 of the
Company Disclosure Schedule; (iii) assume,
24
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person; (iv) make
any loans, advances or capital contributions to, or investments in, any other
Person (other than to wholly owned Subsidiaries of the Company or to such
entities which are listed in Schedule 3.2 of the Company Disclosure Schedule or
customary loans or advances to employees or customers in the ordinary course of
business in accordance with past practice); (v) settle any material claims; or
(vi) enter into any material commitment or transaction unless it is in the
ordinary course of business consistent with past practice and not otherwise
specifically prohibited by this Section 5.1;
(j) neither the Company nor any of its Subsidiaries shall
change any of the accounting principles used by it unless required by GAAP or
the SEC;
(k) neither the Company nor any of its Subsidiaries shall
make any Tax election, unless required by law, or settle or compromise any
material Tax liability;
(l) neither the Company nor any of its Subsidiaries shall
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than (i) the
payment, discharge or satisfaction of any such claims, liabilities or
obligations in the ordinary course of business and consistent with past
practice, (ii) the payment,. discharge or satisfaction of any such claims,
liabilities or obligations in connection with the Transactions, (iii) the
payment, discharge or satisfaction of any such claims, liabilities or
obligations which in the aggregate do not exceed $100,000 and (iv) the payment,
discharge or satisfaction of any such claims, liabilities or obligations which
are reflected or reserved against in, or contemplated by, the consolidated
financial statements (or the notes thereto) of the Company and its consolidated
Subsidiaries and which in the aggregate do not exceed $100,000;
(m) neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business consistent with past practice,
waive the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any of its Subsidiaries
is a party; and
(n) neither the Company nor any of its Subsidiaries will
enter into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
5.2 Access; Confidentiality. Upon reasonable notice, the Company
shall (and shall cause each of its Subsidiaries to) afford to the
Representatives of Parent, including the Persons providing the Commitment,
reasonable access, during normal business hours during the period after the date
hereof and prior to the Effective Time, to such of its properties, personnel,
books, contracts, commitments and records as Parent may reasonably request, and,
during such period, the Company shall (and shall cause each of its Subsidiaries
to) furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of Federal or state securities Laws and (b) all
25
other information concerning its business, properties and personnel as Parent
may reasonably request. Notwithstanding anything in this Agreement to the
contrary, neither Parent, its Representatives, nor any Person providing the
Commitment shall have the right to conduct any environmental boring, sampling,
testing, or a Phase II review at any of the properties of the Company or its
Subsidiaries provided that such restriction shall not limit Parent's right to
conduct any environmental investigation with respect to events occurring after
the date hereof. Parent will remain bound by the terms of a confidentiality
agreement with the Company, dated as of January 19, 1999 (the "Parent
Confidentiality Agreement") and the Company will remain bound by the terms of a
confidentiality agreement with Parent dated as of April 20, 1999 (the "Company
Confidentiality Agreement"). Parent hereby acknowledges and agrees that all
Persons providing the Commitment and the Representatives of such Persons are
"Representatives" of Parent within the meaning of the Confidentiality Agreement.
5.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from any Governmental Entity and the making of
all necessary registrations and filings (including filings with any Governmental
Entity, if any) and the taking of all reasonable 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 any of the Transactions contemplated by this Agreement,
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; provided, however, that in connection with any filing or submission
or other action required to be made or taken by any Party to effect the Merger
and all other Transactions contemplated hereby, the Company shall not without
the prior written consent of Parent commit to any divestiture transaction and
Parent shall not be required to divest or hold separate or otherwise take or
commence to take any action that, in the reasonable discretion of Parent, limits
in any material respect its freedom of action with respect to, or its ability to
retain, the Company or any of its affiliates or any material portion of the
assets of the Company. In connection with and without limiting the foregoing,
the Company and its Board of Directors 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 by this Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Merger or
this Agreement or any other transaction contemplated by this Agreement, take all
action necessary to
26
ensure that the Merger and the other Transactions contemplated by this Agreement
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, this Agreement and the other Transactions contemplated by this
Agreement.
(b) Each of the Company, Parent and Merger Sub shall give
prompt notice to the other of (i) any of their representations or warranties
contained in this Agreement becoming untrue or inaccurate in any respect
(including in the case of representations or warranties receiving knowledge of
any fact, event or circumstance which may cause any representation qualified as
to the knowledge to be or become untrue or inaccurate in any respect) or (ii)
the failure by them to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by them under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.4 No Solicitation.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize (and shall use its reasonable efforts
not to permit) any officer, director or employee of, or any investment banker,
attorney or other advisor or representative of, the Company or any of its
Subsidiaries to, (i) solicit or initiate, or encourage, directly or indirectly,
the submission of, any Takeover Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information or data with
respect to, or take any other action to knowingly facilitate the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal, provided that
nothing contained in this Section 5.4 or any other provision hereof shall
prohibit the Company or the Company's Board of Directors from (i) taking and
disclosing to the Company's stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company's
stockholders as, in the good faith judgment of the Company's Board of Directors,
after receiving advice from outside counsel, is required under applicable law,
provided that the Company may not, except as permitted by Section 5.4(b)
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Merger or approve or recommend, or propose to approve or recommend any
Takeover Proposal, or enter into any agreement with respect to any Takeover
Proposal. Upon execution of this Agreement, the Company will immediately cease
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the Effective Time the Company may furnish information concerning its
business, properties or assets to any Person or group pursuant to
confidentiality agreements with terms and conditions similar to the
Confidentiality Agreement and may negotiate and participate in discussions and
negotiations, with such Person or group concerning a Takeover Proposal if:
27
(x) the Board of Directors of the Company determines in good
faith, after receiving advice from its financial advisor, that such
Person or group has submitted to the Company a Takeover Proposal which
is reasonably likely to be a Superior Proposal; and
(y) the Board of Directors of the Company determines in good
faith, based upon advice of its outside legal counsel, that the failure
to participate in such discussions or negotiations or to furnish such
information is reasonably likely to result in a breach of such Board's
fiduciary duties under, or otherwise violate, applicable Law.
The Company will promptly notify Parent of the existence of any proposal,
discussion, negotiation or inquiry received by the Company, and the Company will
immediately communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will promptly provide to Parent
copies of any written materials received by the Company in connection with such
proposal, discussion, negotiation or inquiry) and the identity of the party
making such proposal or inquiry or engaging in such discussion or negotiation,
except to the extent that the Board of Directors of the Company determines in
good faith, based upon advice of its outside legal counsel, that any such action
described in this sentence would be reasonably likely to result in a breach of
such Board's fiduciary duties under, or otherwise violate, applicable Law. The
Company will promptly provide to Parent any non-public information concerning
the Company provided to any other Person which was not previously provided to
Parent. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) to any such Takeover Proposal,
except to the extent that the Board of Directors of the Company determines in
good faith, based upon advice of its outside legal counsel, that any such action
would be reasonably likely to result in a breach of such Board's fiduciary
duties under, or otherwise violate, applicable Law.
(b) Except as set forth in this Section 5.4(b), neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Merger Sub, the approval or recommendation by the Board of Directors
of the Company or any such committee this Agreement or the Merger, (ii) approve
or recommend, or propose to approve or recommend, any Takeover Proposal or (iii)
enter into any agreement with respect to any Takeover Proposal. Notwithstanding
the foregoing, prior to the Effective Time the Board of Directors of the Company
may withdraw or modify its approval or recommendation of this Agreement or the
Merger, approve or recommend a Superior Proposal, or enter into an agreement
with respect to a Superior Proposal, in each case at any time after the fifth
business day following Parent's receipt of written notice from the Company
advising Parent that the Board of Directors of the Company has received a
Superior Proposal which it intends to accept, specifying the material terms and
conditions of such Superior Proposal, identifying the person making such
Superior Proposal.
5.5 Publicity. Except as required by Law, so long as this
Agreement is in effect, none of the Company, Parent or Merger Sub shall issue or
cause the publication of any press release or
28
other announcement with respect to the Merger, this Agreement or the other
Transactions contemplated hereby without prior consultation with the other
parties hereto.
5.6 Transfer Taxes. All liability for all recording fees, such as
deed stamps and similar fees imposed on the transfer of real or personal
property owned by the Company or any of its Subsidiaries or affiliates, whether
imposed on the Company, any of its Subsidiaries, the stockholders of the
Company, Merger Sub or Parent as a result of the Merger ("Transfer Taxes"),
shall be borne by Merger Sub, and Merger Sub shall file or cause to be filed all
Tax Returns relating to such Transfer Taxes which are due.
5.7 State Takeover Laws. Notwithstanding any other provision in
this Agreement, in no event shall the Section 203 Approval be withdrawn, revoked
or modified by the Board of Directors of the Company. If any state takeover
statute other than Section 203 of the DGCL becomes or is deemed to become
applicable to the Voting Agreement or the Merger, the Company shall take all
action necessary to render such statute inapplicable to all of the foregoing.
5.8 Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation set forth in the Certificate of Incorporation
and By-Laws of the Company, which provisions shall not be amended, repealed or
otherwise modified in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by Law.
(b) The Company shall, to the fullest extent permitted
under applicable Law or under the Company's Certificate of Incorporation or
By-Laws and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and, after the Effective Time, Parent or the Surviving
Corporation shall, to the fullest extent permitted under applicable Law or under
the Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each present and former director, officer or employee of the
Company or any of its Subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages and liabilities incurred in connection with, and amounts
paid in settlement of, any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative and wherever asserted,
brought or filed, (x) arising out of or pertaining to the Transactions or (y)
otherwise with respect to any acts or omissions or alleged acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the respective Certificate of Incorporation or By-Laws of the Company or the
Subsidiaries as in effect on the date hereof. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) any counsel retained by the Indemnified Parties for any
period after the Effective Time must be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, Parent or the Surviving
29
Corporation shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received, and (iii) Parent or the Surviving
Corporation will cooperate in the defense of any such matter; provided, however,
that Parent or the Surviving Corporation shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed). The Indemnified Parties as a group may retain only one law
firm to represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The
indemnity agreements of Parent and the Surviving Corporation in this Section
5.8(b) shall extend, on the same terms to, and shall inure to the benefit of and
shall be enforceable by, each person or entity who controls, or in the past
controlled, any present or former director, officer or employee of the Company
or any of its Subsidiaries.
(c) For a period of six years after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) on terms
(including the amounts of coverage and the amounts of deductibles, if any) that
are comparable to the terms now applicable to directors and officers of Parent,
or, if more favorable to the Company's directors and officers, the terms now
applicable to them under the Company's current policies; provided, however, that
in no event shall Parent or the Surviving Corporation be required to expend in
excess of 150% of the annual premium currently paid by the Company for such
coverage; and provided, further, that if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 150% of the annual premium. The Company
has provided Parent with copies of all of the Company's directors' and officers'
liability insurance policies which are currently in effect. The aggregate annual
premium payable by the Company under such policies is $49,500.
(d) This Section 5.8 shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of Parent and the Surviving Corporation and shall be enforceable by the
Indemnified Parties.
5.9 Connecticut Transfer Act. The Company shall prepare and
provide to Parent, prior to the consummation of the Merger, a Form III and an
Environmental Conditions Assessment Form ("ECAF") as required by the Connecticut
Transfer Act, Conn. Gen. Stat. ▇▇.▇▇. 22a-134 et seq., (the "Connecticut
Transfer Act") or such other form as may be required under the Connecticut
Transfer Act as hereinafter provided and provide such Form III and ECAF or other
such required form to Parent at least ten days prior to the consummation of the
Merger. The Company shall consult with Parent and accept Parent's reasonable
suggestions with respect to the contents of such Form III and ECAF or other
required form. Prior to the Effective Time, the Company shall execute the Form
III and ECAF as the certifying party and shall pay all costs of filing the Form
III and ECAF, and after the Effective Time, the Surviving Corporation shall
30
file the Form III and ECAF. If the Company and the Parent determine that a Form
III is not the required form under the Connecticut Transfer Act for the Merger,
the Company shall prepare and pay all costs associated with the required
Connecticut Transfer Act filing which filing shall be made by the Surviving
Corporation.
5.10 Financing. Between the date hereof and the consummation of the
Merger, the Company agrees to cooperate, and to cause its Representatives to
cooperate, in connection with the efforts of Parent and Merger Sub to obtain the
financing necessary to consummate the Transactions (the "Transaction
Financing"), provided that the Company shall not be required to pay any fees or
other costs with respect to the Transaction Financing prior to the consummation
of the Merger and that any agreements which the Company may enter into prior to
the consummation of the Merger relating to the obtaining of the Transaction
Financing shall be conditioned upon the occurrence of the consummation of the
Merger.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect and consummate the Merger shall be
subject to the satisfaction on or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Merger Sub, as the case may be, to the extent permitted
by applicable Law:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the holders of Shares as required by applicable Law, the
Company's Certificate of Incorporation and its By-Laws, in order to consummate
the Merger;
(b) any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated; and
(c) no statute, rule, regulation, order, decree or injunction
shall have been enacted, promulgated or issued by any Governmental Entity
precluding, restraining, enjoining or prohibiting consummation of the Merger.
6.2 Conditions to Obligations of Parent and the Merger Sub. The
obligation of each of Parent and Merger Sub to effect and consummate the Merger
shall be subject to the satisfaction of or waiver by Parent and the Merger Sub
prior to the Effective Time of the following additional conditions:
(a) the representations and warranties of the Company set
forth in Article III which are qualified as to materiality shall be true and
correct when made on the date hereof and shall be true and correct as of the
Effective Time as if made as of the Effective Time, except for
31
those representations and warranties which are qualified as to materiality and
are made as of a specific date, which shall be true and correct as of such date;
the other representations and warranties of the Company set forth in Article III
which are not so qualified as to materiality shall be true and correct in all
material respects when made on the date hereof and shall be true and correct in
all material respects as of the Effective Time as if made as of the Effective
Time, except for those representations and warranties which are not so qualified
as to materiality and are made as of a specific date, which shall be true and
correct in all material respects as of such date; provided, however, for
purposes of this Section 6.2(a), the representations and warranties of the
Company set forth in Section 3.7(i) shall not be deemed to be untrue or
incorrect in any material respect (i) if the financial performance of the
Company with regard to the revenues, results of operations or other financial
performance of the Company are materially consistent with the forecasts
previously furnished by the Company to Parent; (ii) if the Company or its
Subsidiaries lose on a net basis the services of less than 50 salaried employees
or 50 hourly employees; or (iii) by reason of any matter arising out of the
Company's relationship with Industrias Romi S.A.;
(b) the Company shall have performed or complied in all
material respects with its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Effective Time;
(c) the Company shall have delivered to Parent and the
Merger Sub a certificate of its President and Chief Financial Officer to the
effect that each of the conditions specified in clause (a) of Section 6.1 and
clauses (a), (b),
(d), (f) and (g) of this Section 6.2 is satisfied; (d) (i)
the Company shall have obtained all of the waivers, permits, consents, approvals
or other authorizations of Governmental Entities necessary to be obtained by it
to consummate the Merger, and effected all registrations, filings and notices
with respect to Governmental Entities necessary to be effected by it to
consummate the Merger; and (ii) at least ten days prior to the Closing, the
Company shall have delivered to Parent a draft Form III and ECAF or such other
required filing under the Connecticut Transfer Act; at the Closing, the Company
shall have delivered to Parent an executed Form III and ECAF or such other
required filing under the Connecticut Transfer Act for filing by the Surviving
Corporation following the Effective Date;
(e) the Company shall have obtained and delivered to
Parent and the Merger Sub copies of all consents, agreements or other evidence
of cancellation from the holders of all outstanding Options pursuant to Section
2.5;
(f) no action, suit or proceeding shall be pending or
threatened in writing before any Governmental Entity which is reasonably likely
to (i) prevent consummation of any of the Transactions contemplated by this
Agreement, (ii) cause any of the Transactions contemplated by this Agreement to
be rescinded following consummation or (iii) affect
32
materially and adversely the right of Parent to own, operate or control any of
the assets and operations of the Surviving Corporation following the Merger, and
no such judgment, order, decree, stipulation or injunction shall be in effect;
provided, however, that Parent shall contest or cooperate with the Company in
contesting, as applicable, the action, suit or proceeding and if any injunction
or order has been so issued, will use reasonable efforts to have it dismissed;
in the case of any action, suit or proceeding brought by a Person, other than a
Governmental Entity, the Company shall determine whether the consequences in
clauses (i), (ii) or (iii) of this Section 6.2(f) are reasonably likely to
occur, which determination shall be final and binding on Parent and Merger Sub;
(g) from the date of this Agreement to the Effective
Time, there shall not have been any event or development which results in a
Material Adverse Effect on the Company, nor shall there have occurred any event
or development which is reasonably likely to result in a Material Adverse Effect
on the Company; there shall not be deemed to have been any Material Adverse
Effect on the Company (i) if the financial performance of the Company with
regard to revenues, results of operations or other financial performance of the
Company are materially consistent with the forecasts previously furnished by the
Company to Parent; (ii) if the Company or its Subsidiaries lose on a net basis
the services of less than 50 salaried employees or 50 hourly employees; or (iii)
by reason of any matter arising out of the Company's relationship with
Industrias Romi S.A.;
(h) Parent and the Merger Sub shall have received from
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, or other counsel to the Company reasonably acceptable
to Parent, an opinion with respect to the matters set forth in Exhibit A
attached hereto, addressed to Parent and the Merger Sub and dated as of the
Closing Date; and
(i) that certain letter agreement (the "Textron Letter
Agreement") dated the date hereof by and between Textron Inc. and Parent which
confirms the obligations of Textron Inc. to indemnify the Surviving Corporation
following the Merger for environmental claims under the Textron Agreements and
contains the representations and warranties of Textron Inc. that the Textron
Agreements are the legal, valid and binding obligations of Textron Inc. and will
be, following the Effective Time, along with the Voting Agreement to which
Textron Inc. is a party, enforceable against Textron Inc., in accordance with
their terms, shall be in full force and effect as of the Effective Time.
6.3 Conditions to Obligations of the Company. The obligation of
the Company to effect and consummate the Merger shall be subject to the
satisfaction of or waiver by the Company prior to the Effective Time of the
following additional conditions:
(a) the representations and warranties of Parent and the Merger Sub set forth in
Article IV which are qualified as to materiality shall be true and correct when
made on the date hereof and shall be true and correct as of the Effective Time
as if made as of the Effective Time, except for representations and warranties
which are so qualified as to materiality and are
33
made as of a specific date, which shall be true and correct as of such date; the
other representations and warranties of Parent and the Merger Sub set forth in
Article IV which are not so qualified as to materiality shall be true and
correct in all material respects when made on the date hereof and shall be true
and correct in all material respects as of the Effective Time as if made as of
the Effective Time, except for those representations and warranties which are
not so qualified as to materiality and are made as of a specific date, which
shall be true and correct in all material respects as of such date;
(b) each of Parent and the Merger Sub shall have
performed or complied in all material respects with its agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Effective Time;
(c) each of Parent and the Merger Sub shall have
delivered to the Company a certificate of its President and Chief Financial
Officer to the effect that each of the conditions specified in clauses (a), (b),
(d) and (e) of this Section 6.3 is satisfied in all
respects; (d) Parent and the Merger Sub shall have obtained all waivers,
permits, consents, approvals or other authorizations necessary to be obtained by
them to consummate the Merger and effected all registrations, filings and
notices, necessary to be effected by them to consummate the Merger;
(e) no writ, order, decree or injunction of a
Governmental Entity shall have been entered against Parent, the Merger Sub or
the Company which prohibits the consummation of the Merger; provided, however,
that the Company shall have contested or cooperated with Parent or the Merger
Sub, as applicable, in contesting, the action suit or proceeding giving rise to
such writ, order, decree or injunction and shall have used reasonable efforts to
have the same dismissed; and
(f) the Company shall have received from ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ & Gesmer, counsel to Parent and the Merger Sub, an opinion with respect to
the matters set forth in Exhibit B attached hereto, addressed to the Company and
dated as of the Closing Date.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement shall not be terminated, and the Merger
shall not be abandoned, except in accordance with the provisions of this Article
VII, all strictly construed against the party seeking such termination. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time, whether before or after approval of this Agreement and the
Merger by the Company's Stockholders:
34
(a) by mutual written consent of the Board of Directors
of Parent and the Board of Directors of the Company;
(b) by either Parent or the Company, if any Governmental
Entity shall have issued an order (other than a temporary restraining order),
decree, or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger, and such order, decree ruling or other action shall have
become final and nonappealable, provided that the party seeking termination
shall have diligently contested such order, decree, ruling or other action;
(c) by either Parent or the Company, if this Agreement
and the Merger fail to receive the approval of that number of stockholders of
the Company necessary under Law to authorize and approve this Agreement and the
Merger;
(d) by either Parent or the Company, if the Board of
Directors of the Company shall have recommended or resolved to recommend to its
stockholders a Superior Proposal, or if the Company has approved a Superior
Proposal, each in accordance with Section 5.4(b), and provided that the Company
has complied with all provisions of Section 5.4, including the notice provisions
therein, and further provided that the Company makes simultaneous payment of the
Termination Fee; or
(e) by either Parent or the Company if, without fault of
and only in the absence of any breach under this Agreement by, the party
exercising the right of termination, the Merger shall not have been consummated
on or before December 31, 1999.
7.2 Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned by Parent, at any time prior to the Effective Time,
before or after the approval by the stockholders of the Company, if:
(a) the Closing conditions set forth in Section 6.2 shall
not have been satisfied; provided, however, that if such failure or failures are
capable of being cured prior to the Effective Time, such failure or failures
shall not have been cured within ten (10) days of delivery to the Company of
written notice of such failure;
(b) the Company shall furnish or disclose non public
information to a Third Party with respect to any Takeover Proposal, or shall
have resolved to do the foregoing, or if the Board of Directors of the Company
shall have recommended or resolved to recommend to its stockholders a Takeover
Proposal or if the Company has approved or effected a Takeover Proposal, whether
or not permitted under this Agreement; or
(c) if prior to the Effective Date, the Board of
Directors of the Company shall have withdrawn, or modified or changed in a
manner adverse to Parent or the Merger Sub, its approval or recommendation of
this Agreement or the Merger.
35
7.3 Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by the Company's stockholders, by action of the Board of
Directors of the Company, if:
(a) Parent or the Merger Sub shall have failed to comply
in any material respect with any of the covenants or agreements contained in
this Agreement such that the Closing condition set forth in Section 6.3(b) would
not be satisfied or if the Closing conditions set forth in Section 6.3(c), (d),
(e) and (f) shall not have been satisfied; provided, however, that if such
failure or failures are capable of being cured prior to the Effective Time, such
failure or failures shall not have been cured within ten (10) days of delivery
to Parent of written notice of such failure; or
(b) there exists a breach of any one or more
representations or warranties of Parent or the Merger Sub contained in this
Agreement such that the Closing condition set forth in Section 6.3(a) would not
be satisfied; provided, however, that if such failure or failures are capable of
being cured prior to the Effective Time, such failure or failures shall not have
been cured within ten (10) days of delivery to Parent of written notice of such
failure.
7.4 Procedure for Termination. If either Parent or the Company wish to
terminate this Agreement pursuant to this Article VII, written notice thereof
shall forthwith be given to the other.
7.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and abandonment
of the Merger pursuant to this Article VII, no party hereto (or any of its
directors, officers or Affiliates) shall have any liability or further
obligation to any other party to this Agreement, except as provided in Sections
3.22 and 4.6, the last sentence of Section 5.2, Article VII, Article VIII, and
except to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
(b) In the event of termination of this Agreement pursuant to
Section 7.1(c), or by Parent pursuant to (i) 7.2(a) as a result of a failure to
satisfy the conditions in Sections 6.2(a) (to the extent such failure results
from a breach by the Company of its representations and warranties hereunder),
6.2(b) or 6.2(d)(ii); (ii) Section 7.2(b); or (iii) Section 7.2(c), then the
Company shall, within five (5) business days thereafter, pay Parent by wire
transfer of immediately available funds to an account specified by Parent an
amount equal to all documented out of pocket reasonable fees and expenses
incurred by Parent and Merger Sub since January 1, 1999 (including the
reasonable fees and expenses of counsel, accountants, consultants and advisors,
and any commitment fees and other expenses paid to prospective lenders) in
connection with this Agreement and the Transactions contemplated hereby (the
"Parent Documented Expenses"); provided, however, the Parent Documented Expenses
which the Company shall pay in the event of termination of this Agreement
pursuant to Section 7.1(c) shall
36
not exceed $650,000 and the Parent Documented Expenses which the Company shall
pay in the event of termination of this Agreement pursuant to Section 7.2 shall
not exceed $500,000; and provided, further, that the Company shall not be
obligated to pay any Parent Documented Expenses if (i) Parent or the Merger Sub
shall have failed to comply in any material respect with any of the covenants or
agreements contained in this Agreement such that the Closing condition set forth
in Section 6.3(b) would not be satisfied; or (ii) there exists a breach of any
one or more representations or warranties of Parent or the Merger Sub contained
in this Agreement in any material respect such that the closing condition set
forth in Section 6.3(a) would not be satisfied.
(c) In the event of termination of this Agreement
pursuant to Section 7.1(d), the Company shall, within five (5) business days
thereafter, pay Parent by wire transfer of immediately available funds to an
account specified in writing by Parent a fee equal to the amount, if any, by
which $3.25 million exceeds the fee payable in such event by Textron Inc. to
Parent under the Voting Agreement to which Textron Inc. is a party (the
"Termination Fee").
(d) To the extent that the Termination Fee has for any
reason other than a material breach by Parent not already been paid and within
twelve (12) months after the termination of this Agreement the Company or any of
its Subsidiaries, or any Company Affiliate enters into a definitive agreement
with a Third Party with respect to a Takeover Proposal or a Takeover Proposal is
effected, then the Company shall, within five (5) business days after the
consummation of such Takeover Proposal, pay Parent by wire transfer of
immediately available funds to an account specified in writing by Parent the
Termination Fee less any Parent Documented Expenses previously paid by the
Company to Parent.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment and Modification. Subject to applicable Law, this Agreement
may be amended, modified and supplemented in any and all respects, whether
before or after any vote of the stockholders of the Company contemplated hereby,
by written agreement of the parties hereto at any time prior to the Closing Date
with respect to any of the terms contained herein; provided; however, that after
the approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce the amount or change the form
of the Merger Consideration or otherwise adversely affect the rights of
stockholders.
8.2 Nonsurvival of Representations and Warranties. Except as
otherwise provided herein, none of the representations and warranties in this
Agreement or in any schedule, instrument or other document delivered pursuant to
this Agreement shall survive the Effective Time. This Section 8.2 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
37
8.3 Notices. All notices and other communications hereunder shall
be in writing, writing and shall be deemed given upon receipt, and shall be
given to the parties at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub, to:
▇▇▇▇▇▇▇ Industrial Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. London, Esq.
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Company, to:
Bridgeport Machines, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇)-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
8.4 Interpretation.
(a) The words "hereof, "herein" and "herewith" and words
of similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified. Whenever the words "include," "includes" or "including" are
used in
38
this Agreement, they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined meanings
contained herein 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 mended, modified or
supplemented, including (in the case of agreements and instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to April 23, 1999. The phrase "to the knowledge of" the
Company or any Subsidiary thereof or any similar phrase shall mean such facts
and other information which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or any successor to the positions at the Company
occupied by any of the foregoing after the conduct of a reasonable investigation
by such officers. The phrase "made available" in this Agreement shall mean that
the information referred to has been actually delivered to the party to whom
such information is to be made available.
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
8.6 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement, the Voting Agreement and the Confidentiality
Agreement (including the documents and the instruments referred to herein and
therein): (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 hereof, and (b) except as provided in Section 5.8 are not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
8.7 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated unless the economic or legal substance of the
Transactions is affected in an adverse way to any party.
8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without giving
effect to the principles of conflicts or choice of law thereof or of any other
jurisdiction.
39
8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
8.10 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to -this Agreement or (c)
subject to the proviso of Section 8.1, waive compliance by the other parties
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
8.11 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 8.1 or an extension or waiver pursuant to Section
8.10 shall, in order to be effective, require in the case of Parent, Merger Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
8.12 Undertakings of Parent. Parent shall perform, or cause to be
performed, all obligations of Merger Sub under this Agreement.
8.13 Definitions. For purposes of this Agreement:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"Benefit Plans" has the meaning assigned thereto in Section 3.10.
"By-laws" has the meaning assigned thereto in Section 1.5.
"Certificate of Incorporation" has the meaning assigned thereto in
Section 1.5.
"Certificate of Merger" has the meaning assigned thereto in Section
1.6.
"Certificates" has the meaning assigned thereto in Section 2.2.
"Closing" has the meaning assigned thereto in Section 1.3.
"Closing Date" has the meaning assigned thereto in Section 1.3.
40
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Bridgeport Machines, Inc. a Delaware corporation.
"Company Confidentiality Agreement" has the meaning assigned thereto in
Section 5.2.
"Company Material Contracts" has the meaning assigned thereto in
Section 3.16(a).
"Computer Systems" has the meaning assigned thereto in Section 3.25(a).
"Connecticut Transfer Act" has the meaning assigned thereto in Section
5.9.
"Defect" means a defect or impurity of any kind, whether in design,
manufacture, processing, or otherwise, including, without limitation, any
dangerous propensity associated with any reasonably foreseeable use of a
Product, or the failure to warn of the existence of any defect, impurity, or
dangerous propensity.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Stockholders" has the meaning assigned thereto in Section
2.l(c).
"ECAF" has the meaning assigned thereto in Section 5.9.
"Effective Time" has the meaning assigned thereto in Section 1.2.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Environmental Agreements" has the meaning assigned thereto in Section
3.13(i).
"Environmental Laws" means all foreign, Federal, state and local Laws
relating to pollution or protection of human health, safety or the environment,
including, without limitation, Laws relating to Releases or threatened Releases
of Hazardous Materials into the outdoor environment (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling of
Hazardous Materials, and all Laws and regulations with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.10.
41
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fee Properties" has the meaning assigned thereto in Section 3.15.
"Governmental Entity" means any (i) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (ii) federal, state,
local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); or
(iv) body exercising, or entitled to exercise any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hazardous Materials" means all substances defined as hazardous
substances in the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. ss. 300.5, or substances defined as hazardous substances,
hazardous materials, toxic substances, hazardous wastes, pollutants or
contaminants, under any Environmental Law, or substances regulated under any
Environmental Law, including, but not limited to, petroleum (including crude oil
or any fraction thereof), asbestos, and polychlorinated biphenyls.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" has the meaning assigned thereto in Section
5.8(b).
"Intellectual Property Rights" has the meaning assigned thereto in
Section 3.14(a).
"Laws" means any administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, treaty, judgment, decree,
license or permit enacted, promulgated, issued, enforced or entered by any
Governmental Entity.
"Leased Properties" has the meaning assigned thereto in Section 3.15.
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on, or with respect to any asset, property or
property interest.
"Material Adverse Change" or "Material Adverse Effect" means, when used
in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any change or effect) that is materially adverse to the business, properties,
assets, prospects, financial condition or results of operations of such party
and its Subsidiaries taken as a whole.
42
"Merger" has the meaning assigned thereto in Section 1.5.
"Merger Consideration" has the meaning assigned thereto in Section 2.1.
"Merger Sub" means Bronze Acquisition Corp., a Delaware corporation.
"Option Plans" has the meaning assigned thereto in Section 2.5(b).
"Option" has the meaning assigned thereto in Section 2.5.
"Parent" means ▇▇▇▇▇▇▇ Industrial Group, Inc., a Delaware corporation.
"Parent Confidentiality Agreement" has the meaning assigned thereto in
Section 5.2.
"Parent Documented Expenses" has the meaning assigned thereto in
Section 7.5(b).
"Paying Agent" has the meaning assigned thereto in Section 2.2(a).
"Permit" means any Federal, state, local and foreign governmental
approval, authorization, certificate, filing, franchise, license, notice, permit
or right.
"Permitted Liens" means (i) Liens for Taxes which are not yet due or
delinquent or which are being contested in good faith, (ii) carriers',
warehousemen's, mechanics', materialmen's or other like Liens arising in the
ordinary course of business and securing obligations that are not due or which
are being contested in good faith, (iii) zoning restrictions, easements,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business and (iv) Liens or other
imperfections of title which, individually or in the aggregate, do not
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Company and its
Subsidiaries, taken as a whole.
"Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, labor union,
estate, trust, unincorporated organization or other entity, including any
Governmental Entity.
"Product" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce by
or on behalf of the Company or any of its Subsidiaries, including, without
limitation, any product sold in the United States by the Company or any of its
Subsidiaries as the distributor, agent, or pursuant to any other contractual
relationship with a non-U.S. manufacturer.
"Proxy Statement" has the meaning assigned thereto in Section 1.4.
43
"Real Property" has the meaning assigned thereto in Section 3.15.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including, without limitation, ambient air,
surface water, groundwater, and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground, water or property.
"Representative" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person or its
Subsidiaries).
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SEC Documents" has the meaning assigned thereto in Section 3.5.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Section 203 Approval" has the meaning assigned thereto in Section 3.4.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in the recitals.
"Significant Subsidiaries" has the meaning assigned thereto in Rule
1-02 of Regulation S-X of the SEC.
"Special Meeting" has the meaning assigned thereto in Section 1.4.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person (i)
owns, directly or indirectly, 50% or more of the outstanding voting securities
or equity interests, (ii) is entitled to elect at least a majority of the Board
of Directors or similar governing body, or (iii) is a general partner (excluding
such partnerships where such Person or any Subsidiary of such Person do not have
a majority of the voting interests in such partnership).
"Superior Proposal" means an unsolicited bona fide proposal by a Third
Party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than a majority of the Shares then outstanding or all or
substantially all of the assets off the Company, and otherwise on terms which
the Board of Directors of the Company determines in good faith to be
44
more favorable to the Company's stockholders by more than one hundred ten
percent (110%) than the Merger, based on advice of the Company's independent
financial advisor, for which financing, to the extent required, is then
committed or which, in the good faith reasonable judgment of the Board of
Directors of the Company, based on advice from the Company's independent
financial advisor, is reasonably capable of being financed by such Third Party
and which, in the good faith reasonable judgment of the Board of Directors of
the Company, is reasonably capable of being consummated within a period of time
not materially longer in duration than the period of time reasonably believed to
be necessary to consummate the Merger.
"Surviving Corporation" means Bridgeport Machines, Inc. after the
Merger.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any Person other than Parent, Merger Sub or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as defined
under Rule 13(d) of the Exchange Act) of all or a material portion of the assets
of the Company and its Subsidiaries, taken as whole, or 50% or more of any class
of equity securities of the Company pursuant to a merger, consolidation or other
business combination, sale of shares of capital stock, sale of assets, tender
offer, exchange offer or similar transaction with respect to the Company,
including any single or multi-step transaction or series of related
transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of the Company and
its Subsidiaries, taken as a whole, or 50% or more of the equity interest in the
Company.
"Taxes" mean any Federal, state, local or foreign net income, gross
income, receipts, windfall profit, severance, property, production, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer, stamp or environmental tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any Governmental Entity.
"Tax Returns" mean all returns, reports, or statements required to be
filed with any Governmental Entity with respect to any Tax (including any
attachments thereto), including, without limitation, any consolidated, unitary
or similar return, information return, claim for refund, amended return or
declaration of estimated Tax.
"Termination Fee" has the meaning assigned thereto in Section 7.5(c).
"Textron Agreements" has the meaning assigned thereto in Section
3.13(i).
"Textron Letter Agreement" has the meaning assigned thereto in Section
6.2(i).
"Third Party" has the meaning assigned thereto in this Section 8.13.
45
"Transactions" mean this Agreement and the transactions contemplated
hereby, including the Merger.
"Transaction Financing" has the meaning assigned thereto in Section
5.10.
"Transfer Taxes" has the meaning assigned thereto in Section 5.6.
"Year 200 Compliant" has the meaning assigned thereto in Section
3.25(c).
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
▇▇▇▇▇▇▇ INDUSTRIAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
BRONZE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
BRIDGEPORT MACHINES, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
47
