AGREEMENT AND PLAN OF MERGER
dated as of
October 17, 1997
among
COMPUTATIONAL SYSTEMS, INCORPORATED,
XXXXXXX ELECTRIC CO.
and
EMERSUB LVII, INC.
TABLE OF CONTENTS
---------------
Page
----
ARTICLE 1
The Merger
Section 1.1. The Merger......................................... 1
Section 1.2. Conversion of Shares............................... 2
Section 1.3. Surrender and Payment.............................. 2
Section 1.4. Stock Options...................................... 3
Section 1.5. Employee Stock Purchase Plan....................... 4
Section 1.6. Adjustments........................................ 4
Section 1.7. Fractional Shares.................................. 5
Section 1.8. Withholding Rights................................. 5
Section 1.9. Lost Certificates.................................. 5
ARTICLE 2
The Surviving Corporation
Section 2.1. Certificate of Incorporation....................... 5
Section 2.2. Bylaws............................................. 6
Section 2.3. Directors and Officers............................. 6
ARTICLE 3
Representations and Warranties of the Company
Section 3.1. Corporate Existence and Power...................... 6
Section 3.2. Corporate Authorization............................ 6
Section 3.3. Governmental Authorization......................... 7
Section 3.4. Non-contravention.................................. 7
Section 3.5. Capitalization..................................... 8
Section 3.6. Subsidiaries....................................... 8
Section 3.7. SEC Filings........................................ 9
Section 3.8. Financial Statements............................... 10
Section 3.9. Disclosure Documents............................... 10
Section 3.10. Absence of Certain Changes......................... 10
Section 3.11. No Undisclosed Material Liabilities................ 12
Section 3.12. Compliance with Laws and Court Orders.............. 12
Section 3.13. Litigation......................................... 12
Section 3.14. Finders' Fees...................................... 13
Section 3.15. Taxes.............................................. 13
Section 3.16. Employee Benefit Plans............................. 14
Section 3.17. Environmental Matters.............................. 16
Section 3.18. Opinion of Financial Advisor....................... 17
Section 3.19. Patents and Other Proprietary Rights............... 17
Section 3.20. Antitakeover Statutes.............................. 18
ARTICLE 4
Representations and Warranties of Parent
Section 4.1. Corporate Existence and Power...................... 18
Section 4.2. Corporate Authorization............................ 18
Section 4.3. Governmental Authorization......................... 18
Section 4.4. Non-contravention.................................. 19
Section 4.5. Capitalization..................................... 19
Section 4.6. SEC Filings........................................ 20
Section 4.7. Financial Statements............................... 20
Section 4.8. Disclosure Documents............................... 20
Section 4.9. Absence of a Material Adverse Change............... 21
Section 4.10. No Undisclosed Material Liabilities................ 21
Section 4.11. Compliance with Laws and Court Orders.............. 21
Section 4.12. Litigation......................................... 22
Section 4.13. Stock Ownership.................................... 22
Section 4.14. Finders' Fees...................................... 22
ARTICLE 5
Covenants of the Company
Section 5.1. Conduct of the Company............................. 22
Section 5.2. Stockholder Meeting; Proxy Material................ 23
Section 5.3. No Solicitation.................................... 23
Section 5.4. Access to Information; Confidentiality............. 25
ARTICLE 6
Covenants of Parent
Section 6.1. Obligations of Merger Subsidiary................... 26
Section 6.2. Voting of Shares................................... 26
Section 6.3. Director and Officer Liability..................... 26
Section 6.4. Registration Statement; Form S-8................... 27
Section 6.5. Stock Exchange Listing............................. 27
ARTICLE 7
Covenants of Parent and the Company
Section 7.1. Reasonable Best Efforts............................ 28
Section 7.2. Certain Filings.................................... 28
Section 7.3. Public Announcements............................... 28
Section 7.4. Further Assurances................................. 28
Section 7.5. Notices of Certain Events.......................... 28
Section 7.6. Tax-free Reorganization............................ 29
Section 7.7. Rule 145 Affiliates................................ 29
ARTICLE 8
Conditions to the Merger
Section 8.1. Conditions to the Obligations of Each Party........ 29
Section 8.2. Conditions to the Obligations of Parent and Merger
Subsidiary......................................... 30
Section 8.3. Conditions to the Obligations of the Company....... 30
ARTICLE 9
Termination
Section 9.1. Termination........................................ 31
Section 9.2. Effect of Termination.............................. 32
ARTICLE 10
Miscellaneous
Section 10.1. Notices........................................... 32
Section 10.2. Survival of Representations and Warranties........ 33
Section 10.3. Amendments; No Waivers............................ 33
Section 10.4. Expenses.......................................... 33
Section 10.5. Successors and Assigns............................ 34
Section 10.6. Governing Law..................................... 34
Section 10.7. Jurisdiction...................................... 34
Section 10.8. Waiver of Jury Trial.............................. 34
Section 10.9. Counterparts; Effectiveness....................... 34
Section 10.10. Entire Agreement................................. 35
Section 10.11. Third Party Beneficiaries........................ 35
Section 10.12. Captions......................................... 35
Section 10.13. Severability..................................... 35
Section 10.14. Specific Performance............................. 35
Section 10.15. Definitions and Usage............................ 35
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 17, 1997 among
Computational Systems, Incorporated, a Tennessee corporation (the "Company"),
Xxxxxxx Electric Co., a Missouri corporation ("Parent"), and Emersub LVII,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Subsidiary").
The parties hereto agree as follows:
ARTICLE 1
The Merger
Section 1.1. The Merger. (a) Subject to the terms and
conditions of this Agreement, at the Effective Time, Merger Subsidiary shall
be merged (the "Merger") with and into the Company in accordance with the
Tennessee Business Corporation Act (the "TBCA") and the Delaware General
Corporation Law (the "DGCL"), whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation
(the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein
the Company and Merger Subsidiary will file articles of merger (the "Articles
of Merger") with the Tennessee Secretary of State and a certificate of merger
(the "Certificate of Merger") with the Delaware Secretary of State and make
all other filings or recordings required by the TBCA and the DGCL in
connection with the Merger. The Merger shall become effective at such time
(the "Effective Time") as the Articles of Merger are duly filed with the
Tennessee Secretary of State and the Certificate of Merger is duly filed with
the Delaware Secretary of State (or at such later time as may be agreed in
writing by the parties hereto and specified in the Articles of Merger and the
Certificate of Merger).
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, powers, privileges and franchises and be subject
to all of the obligations, liabilities, restrictions and disabilities of the
Company and Merger Subsidiary, all as provided under the TBCA. The Merger
shall have the effects specified by the TBCA and the DGCL.
Section 1.2. Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof:
(a) each share of common stock, no par value per share, of the
Company ("Company Stock") outstanding immediately prior to the Effective Time
shall (except as otherwise provided in Section 1.02(b)) be converted into the
right to receive (the "Merger Consideration") (x) $5.93 in cash and (y) the
number of shares of common stock, $.50 par value per share, of Parent ("Parent
Stock") (rounded to the nearest ten-thousandth of a share) equal to the
quotient obtained by dividing (i) $23.72 by (ii) the average of the closing
prices of a share of Parent Stock as reported on the New York Stock Exchange
(the "NYSE") Composite Tape on each of the last ten trading days ending on the
trading day immediately preceding the date of the Effective Time; provided,
however, that if and to the extent necessary for the Merger to qualify as a
reorganization under Section 368(a)(2)(E) of the Code, the cash portion of the
Merger Consideration (as described in clause (x) above) shall be reduced and
the stock portion of the Merger Consideration (as described in clause (y)
above) shall be increased;
(b) each share of Company Stock held by the Company as treasury
stock or owned by Parent or any of its subsidiaries immediately prior to the
Effective Time shall be canceled, and no payment shall be made with respect
thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 1.3. Surrender and Payment. (a) Prior to the
Effective Time, Parent shall appoint an agent reasonably acceptable to the
Company (the "Exchange Agent") for the purpose of exchanging certificates
representing Company Stock (the "Certificates") for the Merger Consideration.
Parent will make available to the Exchange Agent, as needed, the Merger
Consideration to be paid in respect of shares of Company Stock. Promptly
after the Effective Time, Parent will send, or will cause the Exchange Agent
to send, to each holder of shares of Company Stock at the Effective Time
(other than the Company or Parent or any of its subsidiaries) a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use
in effecting the surrender of the Certificates for payment therefor.
(b) Each holder of shares of Company Stock that have been converted
into the right to receive the Merger Consideration will be entitled to receive,
upon surrender to the Exchange Agent of a Certificate, together with a
properly completed letter of transmittal, the Merger Consideration in respect
of each share of Company Stock represented by such Certificate. Until so
surrendered, each such Certificate shall, after the Effective Time, represent
for all purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
person (as defined in Section 10.15) other than the person in whose name the
Certificate is registered, it shall be a condition to such payment that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(d) After the Effective Time, there shall be no further
registration of transfers of shares of Company Stock. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and promptly exchanged for the consideration provided for, and in
accordance with the procedures set forth, in this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.3(a) that remains unclaimed by the
holders of shares of Company Stock six months after the Effective Time shall
be returned to Parent upon demand, and any such holder who has not exchanged
shares of Company Stock for the Merger Consideration in accordance with this
Section prior to that time shall thereafter look only to Parent for payment of
the Merger Consideration in respect of such shares of Company Stock.
Notwithstanding the foregoing, Parent shall not be liable to any holder of
shares of Company Stock for any amount paid to a public official pursuant to
applicable abandoned property laws.
(f) No dividends, interest or other distributions with respect to
securities of Parent constituting part of the Merger Consideration shall be
paid to the holder of any unsurrendered Certificates until such Certificates
are surrendered as provided in this Section. Upon such surrender, there shall
be paid, without interest, to the person in whose name the securities of Parent
have been registered, all dividends, interest and other distributions payable
in respect of such securities on a date subsequent to, and in respect of a
record date after, the Effective Time.
Section 1.4. Stock Options. At the Effective Time, each
option to purchase shares of Company Stock outstanding under any employee stock
option or compensation plan or arrangement of the Company, whether or not
exercisable, and whether or not vested, shall be deemed to constitute an
immediately exercisable option to acquire, on substantially the same terms and
conditions as were applicable to the original option to which it relates (a
"Substitute Option"), the same number of shares of Parent Stock as the holder
of such option would have been entitled to receive pursuant to the Merger had
such holder exercised such option in full immediately prior to the Effective
Time, at a price per share of Parent Stock computed in compliance with the
requirements of Section 424(a) of the Internal Revenue Code of 1986 (the
"Code"); provided, however, that the number of shares of Parent Stock that may
be purchased upon exercise of such Parent stock option shall not include any
fractional share and, upon exercise of such Parent stock option, a cash
payment shall be made for any fractional share based upon the closing price of
a share of Parent Stock on the NYSE on the last trading day of the calendar
month immediately preceding the date of exercise. Prior to the Effective
Time, the Company will use its best efforts to obtain such consents, if any,
as may be necessary to give effect to the transactions contemplated by this
Section. In addition, prior to the Effective Time, the Company will use its
best efforts to make any amendments to the terms of such stock option or
compensation plans or arrangements that are necessary to give effect to the
transactions contemplated by this Section; provided, however, that the Company
shall not be required to make any such amendment if the effect thereof would
be to change the treatment of any stock option or stock option plan under the
Code; provided, further, that in the event an optionee expressly waives the
accelerated vesting or exercisability of an option, whether provided for by
this Agreement or otherwise, the Substitute Option shall provide for a vesting
and exercisability schedule as if the transactions contemplated by this
Agreement had not occurred. Except as contemplated by this Section, the
Company will not, after the date hereof, without the written consent of Parent,
amend any outstanding options to purchase shares of Company Stock.
Section 1.5. Employee Stock Purchase Plan. As of the Effective
Time, the Company's 1995 Employee Stock Purchase Plan shall be terminated.
The rights of participants in such Plan with respect to any offering period
then underway under such Plan shall be determined by treating the last
business day prior to the Effective Time as the last day of such offering
period and by making such other pro-rata adjustments as may be necessary to
reflect the reduced offering period but otherwise treating such offering
period as a fully effective and completed offering period for all purposes of
such Plan. Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company's Employee Stock
Purchase Plan) that are necessary to give effect to the transactions
contemplated by this Section.
Section 1.6. Adjustments. If at any time during the period
between the date of this Agreement and the Effective Time, any change in the
outstanding shares of capital stock of Parent shall occur, including by reason
of any reclassification, recapitalization, stock split or combination, exchange
or readjustment of shares, or any stock dividend thereon with a record date
during such period, the Merger Consideration shall be adjusted appropriately.
Section 1.7. Fractional Shares. No fractional shares of
Parent Stock shall be issued in the Merger, but in lieu thereof each holder of
shares of Company Stock otherwise entitled to receive as a result of the
Merger a fractional share of Parent Stock will be entitled to receive a cash
payment representing such holder's proportionate interest in the net proceeds
resulting from the sale (after deduction of all expenses resulting from such
sale) on the NYSE through one or more of its member firms of the fractional
shares of Parent Stock all holders of shares of Company Stock would otherwise
be entitled to receive as a result of the Merger.
Section 1.8. Withholding Rights. Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable to any person pursuant to this Article such
amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of federal, state, local or foreign tax law.
To the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Stock in respect of which such deduction and withholding was made by
the Surviving Corporation or Parent, as the case may be.
Section 1.9. Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration to be paid in respect of the
shares of Company Stock represented by such Certificates as contemplated by
this Article.
ARTICLE 2
The Surviving Corporation
Section 2.1. Certificate of Incorporation. At the Effective
Time and without any further action on the part of the Company or Merger
Subsidiary, the certificate of incorporation of Merger Subsidiary in effect at
the Effective Time shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law, except that
Article 1 shall be amended to read "The name of the company is Computational
Systems, Incorporated".
Section 2.2. Bylaws. At the Effective Time and without any
further action on the part of the Company or Merger Subsidiary, the bylaws of
Merger Subsidiary in effect at the Effective Time shall be the bylaws of the
Surviving Corporation until amended in accordance with applicable law.
Section 2.3. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation and (ii) the
officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to Parent that, except as
disclosed in writing by the Company to Parent prior to the date hereof:
Section 3.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Tennessee and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a material adverse effect (as
defined in Section 10.15) on the Company. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the Company. The Company has heretofore delivered
to Parent true and complete copies of the certificate of incorporation and
bylaws of the Company as currently in effect.
Section 3.2. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby and thereby are within the Company's
corporate powers and, except for the required approval of the Company's
stockholders in connection with the consummation of the Merger, have been duly
authorized by all necessary corporate action. The affirmative vote of the
holders of a majority of the outstanding shares of Company Stock is the only
vote of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. No other vote of the holders
of the Company's capital stock is necessary in connection with this Agreement
or the consummation of the transactions contemplated hereby. This Agreement
constitutes a valid and binding agreement of the Company.
(b) The Company's Board of Directors, at a meeting duly called and
held, has (i) determined that this Agreement and the transactions contemplated
hereby (including the Merger) are fair to and in the best interests of the
Company's stockholders, (ii) approved and adopted this Agreement and the
transactions contemplated hereby (including the Merger), and (iii) resolved
(subject to Section 5.03(b)) to recommend approval and adoption of this
Agreement and the Merger by its stockholders.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of the Articles of Merger in accordance
with the TBCA, (b) the filing of the Certificate of Merger in accordance with
the DGCL, (c) compliance with any applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR Act"), the
Securities Act of 1933 ("1933 Act"), the Securities Exchange Act of 1934
("1934 Act"), foreign or state securities or Blue Sky laws, and (d) any other
filings, approvals or authorizations which, if not obtained, would not,
individually or in the aggregate, have a material adverse effect on the
Company or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 3.4. Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby do not and will not (i)
violate the certificate of incorporation or bylaws of the Company, (ii)
assuming compliance with the matters referred to in Section 3.3, violate any
applicable law, rule, regulation, judgment, injunction, order or decree, (iii)
require any consent or other action by any person under, constitute a default
under, or give rise to any right of termination, cancellation or acceleration
of any right or obligation of the Company or any of its subsidiaries or to a
loss of any benefit to which the Company or any of its subsidiaries is
entitled under any provision of any agreement or other instrument binding upon
the Company or any of its subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of the Company or any of its subsidiaries
or (iv) result in the creation or imposition of any Lien on any asset of the
Company or any of its subsidiaries except, in the case of clauses (ii), (iii)
and (iv), for such matters as would not, individually or in the aggregate,
have a material adverse effect on the Company or materially impair the ability
of the Company to consummate the transactions contemplated by this Agreement.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset.
Section 3.5. Capitalization. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Stock and 5,000,000
shares of preferred stock, no par value per share. No shares of preferred
stock have been issued. As of October 14, 1997, there were outstanding
5,052,173 shares of Company Stock and options to purchase an aggregate of
639,517 shares of Company Stock at an average exercise price of $13.80 per
share (of which options to purchase an aggregate of 229,211 shares of Company
Stock were exercisable). All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable. Except as set forth in this Section, except as disclosed in
writing by the Company to Parent prior to the date hereof and except for
changes since October 14, 1997 resulting from the exercise of employee stock
options outstanding on such date, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the
Company or other obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company. There are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any securities referred to in clauses (i), (ii) or (iii) above.
Section 3.6. Subsidiaries. (a) Each subsidiary (as defined in
Section 10.15) of the Company is a corporation or other entity duly
incorporated or organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all corporate
or other powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not, individually or in the aggregate, have a material
adverse effect on the Company. Each subsidiary of the Company is duly
qualified to do business and is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the Company. All material subsidiaries of the
Company and their respective jurisdictions of incorporation or organization
are identified in the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1996 ("Company 10-K").
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each subsidiary of the Company is owned
by the Company, directly or indirectly, free and clear of any Lien and free of
any other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests), other than any restrictions imposed under
the 1933 Act. Except as set forth in this Section, there are no outstanding
(i) shares of capital stock or other voting securities or ownership interests
in any of the Company's subsidiaries, (ii) securities of the Company or any of
its subsidiaries convertible into or exchangeable for shares of capital stock
or other voting securities or ownership interests in any of the Company's
subsidiaries or (iii) options or other rights to acquire from the Company or
any of its subsidiaries, or other obligation of the Company or any of its
subsidiaries to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any of
the Company's subsidiaries. There are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any of the securities referred to in clauses (i), (ii) or (iii) above.
Section 3.7. SEC Filings. (a) The Company has delivered or
made available to Parent (i) the Company's annual report on Form 10-K for its
fiscal year ended December 31, 1996, (ii) its quarterly reports on Form 10-Q
for its fiscal quarters ended after December 31, 1996, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since December 31, 1996 and
(iv) all of its other reports, statements, schedules and registration
statements filed with the Securities and Exchange Commission ("SEC") since
December 31, 1996 (the documents referred to in this Section being referred to
collectively as the "Company SEC Filings") . The Company's quarterly report
on Form 10-Q for its fiscal quarter ended June 30, 1997 is referred to herein
as the "Company 10-Q".
(b) As of its filing date, each Company SEC Filing complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act.
(c) As of its filing date, each Company SEC Filing filed pursuant
to the 1934 Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each such registration statement, as amended or supplemented,
if applicable, filed pursuant to the 1933 Act did not, as of the date such
statement or amendment became effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
Section 3.8. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of the Company included in the Company SEC Filings fairly present, in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments and the absence
of footnote disclosure in the case of any unaudited interim financial
statements). For purposes of this Agreement, "Company Balance Sheet" means
the consolidated balance sheet of the Company as of June 30, 1997 set forth in
the Company 10-Q and "Company Balance Sheet Date" means June 30, 1997.
Section 3.9. Disclosure Documents. (a) The proxy statement/
prospectus of the Company to be filed with the SEC in connection with the
Merger (the "Company Proxy Statement") and any amendments or supplements
thereto will, when filed, comply as to form in all material respects with the
applicable requirements of the 1934 Act. At the time the Company Proxy
Statement or any amendment or supplement thereto is first mailed to
stockholders of the Company and at the time such stockholders vote on the
approval of this Agreement and the Merger, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements contained therein, in the light of the circumstances under
which they were made, not misleading. The foregoing representations and
warranties will not apply to statements included in or omissions from the
Company Proxy Statement or any amendment or supplement thereto based upon
information furnished to the Company by Parent for use therein.
(b) None of the information furnished or to be furnished by the
Company to Parent for use in (or incorporation by reference in) the
Registration Statement (as defined in Section 4.08(a)) or any amendment or
supplement thereto will contain, at the time the Registration Statement or any
amendment or supplement thereto becomes effective or at the Effective Time,
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
contained therein not misleading.
Section 3.10. Absence of Certain Changes. Since the Company
Balance Sheet Date, the business of the Company and its subsidiaries has been
conducted in the ordinary course consistent with past practices and there has
not been:
(a) any event, occurrence, development or state of circumstances or
facts which would, individually or in the aggregate, have a material adverse
effect on the Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities
of, or other ownership interests in, the Company or any of its subsidiaries;
(c) any amendment of any material term of any outstanding security
of the Company or any of its subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any
of its subsidiaries of any material indebtedness for borrowed money other than
in the ordinary course and in amounts and on terms consistent with past
practices;
(e) any creation or other incurrence by the Company or any of its
subsidiaries of any Lien on any material asset other than in the ordinary
course consistent with past practices;
(f) any making of any material loan, advance or capital
contributions to or investment in any person other than loans, advances or
capital contributions to or investments in wholly-owned subsidiaries of the
Company made in the ordinary course consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
of its subsidiaries which would, individually or in the aggregate, have a
material adverse effect on the Company;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any of its subsidiaries relating to
its assets or business (including the acquisition or disposition of any
assets) or any relinquishment by the Company or any of its subsidiaries of any
contract or other right, in either case, material to the Company and its
subsidiaries, taken as a whole, other than transactions and commitments in the
ordinary course consistent with past practices and those contemplated by this
Agreement;
(i) any change in any method of accounting, method of tax
accounting, or accounting practice by the Company or any of its subsidiaries,
except for any such change required by reason of a concurrent change in
generally accepted accounting principles or Regulation S-X;
(j) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any of its subsidiaries, (ii)
increase in benefits payable under any existing severance or termination pay
policies or employment agreements, (iii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company or
any of its subsidiaries, (iv) establishment, adoption or amendment (except as
required by applicable law) of any collective bargaining, bonus, profit
sharing, thrift, pension, retirement, deferred compensation, compensation,
stock option, restricted stock or other benefit plan or arrangement covering
any director, officer or employee of the Company or any of its subsidiaries,
or (v) increase in compensation, bonus or other benefits payable to directors,
officers or employees other than in the ordinary course consistent with past
practices;
(k) any material labor dispute, other than routine individual
grievances, or, to the knowledge of the Company, any activity or proceeding
by a labor union or representative thereof to organize any employees of the
Company or any of its subsidiaries, which employees were not subject to a
collective bargaining agreement at the Company Balance Sheet Date, or any
material lockouts, strikes, slowdowns, work stoppages or threats thereof by or
with respect to such employees; or
(l) any tax election, other than those consistent with past
practice, not required by law or any settlement or compromise of any tax
liability in either case that is material to the Company and its subsidiaries,
taken as a whole.
Section 3.11. No Undisclosed Material Liabilities. There are
no liabilities of the Company or any of its subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a
liability, other than:
(a) liabilities or obligations provided for in the Company Balance
Sheet or disclosed in the notes thereto;
(b) other liabilities or obligations (including, without
limitation, liabilities and obligations incurred in the ordinary course of
business), which would not, individually or in the aggregate, have a material
adverse effect on the Company; and
(c) liabilities or obligations under this Agreement.
Section 3.12. Compliance with Laws and Court Orders. The
Company and each of its subsidiaries is and has been in compliance with, and
to the knowledge of the Company, is not under investigation with respect to
and has not been threatened to be charged with or given notice of any violation
of, any applicable law, rule, regulation, judgment, injunction, order or
decree, except for such matters as would not, individually or in the
aggregate, have a material adverse effect on the Company.
Section 3.13. Litigation. Except as set forth in the Company
SEC Filings prior to the date hereof, there is no action, suit, investigation,
audit or proceeding pending against, or to the knowledge of the Company
threatened against or affecting, the Company or any of its subsidiaries or any
of their respective properties before any court or arbitrator or any
governmental body, agency or official which would reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the
Company.
Section 3.14. Finders' Fees. Except for McDonald & Company, a
copy of whose engagement agreement has been provided to Parent, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
Section 3.15. Taxes. Except as set forth in the Company
Balance Sheet (including the notes thereto) and except as would not,
individually or in the aggregate, have a material adverse effect on the
Company, (i) all tax returns, statements, reports and forms (collectively, the
"Company Returns") required to be filed with any taxing authority by, or with
respect to, the Company and its subsidiaries have been filed in accordance
with all applicable laws; (ii) as of the time of filing, the Company Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities and the status of the Company and its subsidiaries;
(iii) the Company and its subsidiaries have timely paid all taxes (including
withholding tax on payments made by the Company and its subsidiaries) due and
payable with respect to all Company Returns which have been filed; (iv) the
Company and its subsidiaries have made adequate provision for all taxes
payable by the Company and its subsidiaries for which no Company Return has
yet been filed; (v) the charges, accruals and reserves for taxes with respect
to the Company and its subsidiaries reflected on the Company Balance Sheet
are adequate under United States generally accepted accounting principles
("GAAP") to cover the tax liabilities accruing through the date thereof; (vi)
there is no action, suit, proceeding, audit or claim now proposed or pending
against or with respect to the Company or any of its subsidiaries in respect
of any tax; (vii) neither the Company nor any of its subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (viii) neither the Company nor any of its
subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group other than one of which the Company was the common parent; (ix)
neither the Company nor any of its subsidiaries has any obligation under any
tax sharing agreement, tax allocation agreement, tax indemnification agreement
or any other agreement or arrangement pursuant to which the Company or any
subsidiary is or might be required to make any payment in respect of any tax
of any person (other than the Company or such subsidiary); (x) there are no
requests for rulings or determinations in respect of any tax or tax asset
pending between the Company or any subsidiary and any taxing authority; (xi)
neither the Company nor any subsidiary, nor any other person on behalf of the
Company or any subsidiary, has entered into any agreement or consent pursuant
to Section 341(f) of the Code; (xii) neither the Company nor any subsidiary
will be required to include any adjustment in taxable income for any
post-closing tax period under Section 481(c) of the Code (or any similar
provision of the tax laws of any jurisdiction) as a result of a change in
method of accounting for a pre-closing tax period or pursuant to the
provisions of any agreement entered into with any taxing authority with regard
to the tax liability of the Company or any subsidiary for any pre-closing tax
period; (xiii) except with respect to Company Returns with a taxable year
ended after December 31, 1993, all Company Returns have been examined by the
appropriate taxing authority or the period for assessment of the taxes in
respect of which such tax returns were required to be filed has expired; (xiv)
all deficiencies asserted or assessments made as a result of any examination
of any Company Return by any taxing authority have been paid in full; (xv)
none of the property owned by the Company or any of its subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h) of the Code;
and (xvi) there are no Liens for taxes upon the assets of the Company or any
of its subsidiaries except Liens for current taxes not yet due.
For purposes of this Section:
"post-closing tax period" means any tax period (or portion
thereof) beginning after the close of business on the date on which the
Effective Time occurs;
"pre-closing tax period" means any tax period (or portion
thereof) ending on or before the close of business on the date on which the
Effective Time occurs; and
"tax asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any other
credit or tax attribute which could reduce taxes (including without limitation
deductions and credits related to alternative minimum taxes).
Section 3.16. Employee Benefit Plans. (a) The Company has
provided Parent with a list identifying each material "employee benefit plan",
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), each material employment, severance or similar contract, plan,
arrangement or policy applicable to any director or officer of the Company and
each material plan or arrangement (written or oral) providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or
medical benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by the Company
or any of its affiliates (as defined in Section 10.15) and covers any employee
or former employee of the Company or any of its affiliates, or under which the
Company or any of its affiliates has any liability. Copies of such "employee
benefit plans" (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof have been furnished to
Parent together with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) prepared in connection with any such plan.
Such plans are referred to collectively herein as the "Company Employee Plans".
(b) Each Company Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations (including but not limited to ERISA and the
Code) which are applicable to such Plan, except where failure to so comply
would not, individually or in the aggregate, have a material adverse effect on
the Company.
(c) At no time has the Company or any person who was at that time
an affiliate of the Company maintained an employee benefit plan subject to
Title IV of ERISA.
(d) Each Company Employee Plan which is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified and, to the best knowledge of the Company, has been
so qualified during the period from its adoption to date, and each trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Code.
(e) No director or officer or, to the knowledge of the Company,
other employee of the Company or any of its subsidiaries will become entitled
to any retirement, severance or similar benefit or enhanced or accelerated
benefit solely as a result of the transactions contemplated hereby. Without
limiting the generality of the foregoing, no amount required to be paid or
payable to or with respect to any employee of the Company or any of its
subsidiaries in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(f) No Company Employee Plan provides post-retirement health and
medical, life or other insurance benefits for retired employees of the Company
or any of its subsidiaries.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its affiliates
relating to, or change in employee participation or coverage under, any
Company Employee Plan which would increase materially the expense of
maintaining such Company Employee Plan above the level of the expense incurred
in respect thereof for the 12 months ended on the Company Balance Sheet Date.
(h) At no time has the Company or any person that was at that
time an affiliate of the Company contributed to or been obligated to
contribute to a "multiemployer plan" (as defined in Section 3(37) of
ERISA).
Section 3.17. Environmental Matters. (a) Except as set forth
in the Company SEC Filings prior to the date hereof and except as would not,
individually or in the aggregate, have a material adverse effect on the
Company,
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review is pending or, to the knowledge of
the Company, is threatened by any governmental entity or other person
relating to or arising out of any Environmental Law;
(ii) the Company is and has been in compliance with all
Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or
any of its subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, arising
under or relating to any Environmental Law and there are no facts,
conditions, situations or set of circumstances which could reasonably
be expected to result in or be the basis for any such liability.
(b) Neither the Company nor any of its subsidiaries owns or leases
or has owned or leased any real property in New Jersey or Connecticut.
(c) The following terms shall have the meaning set forth below:
"Company" and "its subsidiaries" shall, for purposes of this
Section, include any entity which is, in whole or in part, a corporate
predecessor of the Company or any of its subsidiaries.
"Environmental Laws" means any federal, state, local or foreign
law (including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority
or other third party, relating to human health and safety or the environment or
to hazardous substances, wastes or materials.
"Environmental Permits" means, with respect to any person, all
permits, licenses, franchises, certificates, approvals and other similar
authorizations of governmental authorities relating to or required by
Environmental Laws and affecting, or relating in any way to, the business of
such person as currently conducted.
Section 3.18. Opinion of Financial Advisor. The Company's
Board of Directors has received the opinion of McDonald & Company, financial
advisor to the Company, to the effect that, as of the date of this Agreement,
the Merger Consideration is fair to the Company's stockholders from a
financial point of view.
Section 3.19. Patents and Other Proprietary Rights. The
Company and its subsidiaries have rights to use, whether through ownership,
licensing or otherwise, all patents, trademarks, service marks, trade names,
copyrights, trade secrets and other proprietary rights and processes of which
the Company is aware that are material to its business as now conducted
(collectively the "Company Intellectual Property Rights"). Except for such
matters as would not, individually or in the aggregate, have a material
adverse effect on the Company, (a) the Company and its subsidiaries have not
assigned, hypothecated or otherwise encumbered any of the Company Intellectual
Property Rights and (b) none of the licenses included in the Company
Intellectual Property Rights purports to grant sole or exclusive licenses to
another person including, without limitation, sole or exclusive licenses
limited to specific fields of use. The patents owned by the Company and its
subsidiaries are valid and enforceable and any patent issuing from patent
applications of the Company and its subsidiaries will be valid and enforceable,
except as such invalidity or unenforceability would not, individually or in the
aggregate, have a material adverse effect on the Company. The Company has no
knowledge of any infringement by any other person of any of the Company
Intellectual Property Rights, and the Company and its subsidiaries have not
entered into any agreement to indemnify any other party against any charge of
infringement of any of the Company Intellectual Property Rights, except for
such matters as would not, individually or in the aggregate, have a material
adverse effect on the Company. The Company and its subsidiaries have not and
do not violate or infringe any intellectual property right of any other
person, and neither the Company nor any of its subsidiaries have received any
communication alleging that it violates or infringes the intellectual property
right of any other person, except for such matters as would not, individually
or in the aggregate, have a material adverse effect on the Company. Except
for such matters as would not, individually or in the aggregate, have a
material adverse effect on the Company, the Company and its subsidiaries have
not been sued for infringing any intellectual property right of another
person. None of the Company Intellectual Property Rights or other know-how
relating to the business of the Company and its subsidiaries, the value of
which to the Company is contingent upon maintenance of the confidentiality
thereof, has been disclosed by the Company or any affiliate thereof to any
person other than those persons who are bound to hold such information in
confidence pursuant to confidentiality agreements or by operation of law.
Section 3.20. Antitakeover Statutes. The Board of Directors
of the Company has approved this Agreement and the transactions contemplated
hereby, and such approval satisfies the prior approval requirements of the
Tennessee Business Combination Act, and neither the Tennessee Control Share
Acquisition Act nor any other antitakeover or similar statute or regulation
applies or purports to apply to the transactions contemplated hereby or
thereby.
ARTICLE 4
Representations and Warranties of Parent
Parent represents and warrants to the Company that:
Section 4.1. Corporate Existence and Power. Each of Parent and
Merger Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and Parent
has all corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not, individually or in the aggregate,
have a material adverse effect on Parent. Parent is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on Parent. Parent has heretofore delivered to the
Company true and complete copies of the certificate of incorporation and
bylaws of Parent and Merger Subsidiary as currently in effect. Since the date
of its incorporation, Merger Subsidiary has not engaged in any activities
other than in connection with or as contemplated by this Agreement.
Section 4.2. Corporate Authorization. The execution, delivery
and performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and
have been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by Parent and Merger Subsidiary of this Agreement and
the consummation by Parent and Merger Subsidiary of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
the Articles of Merger in accordance with the TBCA, (b) the filing of the
Certificate of Merger in accordance with the DGCL, (c) compliance with any
applicable requirements of the HSR Act, the 1933 Act, the 1934 Act, foreign
or state securities or Blue Sky laws, and (d) any other filings, approvals or
authorizations which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect on Parent or materially impair the
ability of Parent to consummate the transactions contemplated by this
Agreement.
Section 4.4. Non-contravention. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) violate the certificate of incorporation or
bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 4.3, violate any applicable law, rule,
regulation, judgment, injunction, order or decree, (iii) require any consent
or other action by any person under, constitute a default under, or give rise
to any right of termination, cancellation or acceleration of any right or
obligation of Parent or any of its subsidiaries or to a loss of any benefit to
which Parent or any of its subsidiaries is entitled under any provision of any
agreement or other instrument binding upon Parent or any of its subsidiaries or
any license, franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets or business of
Parent or any of its subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of Parent or any of its subsidiaries
except, in the case of clauses (ii), (iii) and (iv), for such matters as would
not, individually or in the aggregate, have a material adverse effect on
Parent or materially impair the ability of Parent to consummate the
transactions contemplated by this Agreement.
Section 4.5. Capitalization. (a) The authorized capital stock
of Parent consists of 1,200,000,000 shares of Parent Stock, and 5,400,000
shares of preferred stock, $2.50 par value per share. No shares of preferred
stock have been issued. As of September 30, 1997, there were outstanding
440,803,685 shares of Parent Stock and options to purchase an aggregate of
6,697,920 shares of Parent Stock at an average exercise price of $34.77 per
share. All outstanding shares of capital stock of Parent have been duly
authorized and validly issued and are fully paid and non-assessable.
(b) The shares of Parent Stock to be issued as part of the Merger
Consideration have been duly authorized and when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and non-assessable and the issuance thereof is not subject
to any preemptive or other similar right.
Section 4.6. SEC Filings. (a) Parent has delivered or made
available to the Company (i) its annual report on Form 10-K for its fiscal
year ended September 30, 1996 (the "Parent 10-K"), (ii) its quarterly reports
on Form 10-Q for its fiscal quarters ended after September 30, 1996, (iii) its
proxy or information statements relating to meetings of or actions taken
without a meeting by Parent's stockholders held since September 30, 1996, and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since September 30, 1996 (the documents referred
to in this Section being referred to collectively as the "Parent SEC
Filings"). The Parent's quarterly report on Form 10-Q for its fiscal quarter
ended June 30, 1997 is referred to herein as the "Parent 10-Q".
(b) As of its filing date, each Parent SEC Filing complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act.
(c) As of its filing date, each Parent SEC Filing filed pursuant
to the 1934 Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each such registration statement as amended or supplemented, if
applicable, filed pursuant to the 1933 Act did not, as of the date such
statement or amendment became effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
Section 4.7. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of Parent included in the Parent SEC Filings fairly present, in conformity
with generally accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of Parent and its subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments and the absence of footnote disclosure
in the case of any unaudited interim financial statements). For purposes of
this Agreement, "Parent Balance Sheet" means the consolidated balance sheet of
Parent as of June 30, 1997 set forth in the Parent 10-Q and "Parent Balance
Sheet Date" means June 30, 1997.
Section 4.8. Disclosure Documents. (a) The registration
statement of Parent to be filed with the SEC with respect to the offering of
Parent Stock in connection with the Merger (the "Registration Statement") and
any amendments or supplements thereto will, when filed, comply as to form in
all material respects with the applicable requirements of the 1933 Act. At the
time the Registration Statement or any amendment or supplement thereto becomes
effective and at the Effective Time, the Registration Statement, as amended or
supplemented, if applicable, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements contained therein not misleading.
The foregoing representations and warranties will not apply to statements or
omissions included in the Registration Statement or any amendment or
supplement thereto based upon information furnished to Parent or Merger
Subsidiary by the Company for use therein.
(b) None of the information furnished or to be furnished by Parent
to the Company for use in (or incorporation by reference in) the Company Proxy
Statement or any amendment or supplement thereto will contain, at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company or at the time the stockholders vote on the
approval of this Agreement and the Merger, any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which
they were made, not misleading.
Section 4.9. Absence of a Material Adverse Change. Since the
Parent Balance Sheet Date, the business of Parent and its subsidiaries has been
conducted in the ordinary course consistent with past practices, and there has
not been any event, occurrence, development or state of circumstances or facts
which would, individually or in the aggregate, have a material adverse effect
on Parent.
Section 4.10. No Undisclosed Material Liabilities. There are
no liabilities of Parent or any of its subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation or set of circumstances which
could reasonably be expected to result in such a liability, other than:
(a) liabilities or obligations provided for in the Parent Balance
Sheet or disclosed in the notes thereto;
(b) other liabilities or obligations (including, without
limitation, liabilities and obligations incurred in the ordinary course of
business), which would not, individually or in the aggregate, have a material
adverse effect on Parent; and
(c) liabilities or obligations under this Agreement.
Section 4.11. Compliance with Laws and Court Orders. Parent
and each of its subsidiaries is and has been in compliance with, and to the
knowledge of Parent, is not under investigation with respect to and has not
been threatened to be charged with or given notice of any violation of, any
applicable law, rule, regulation, judgment, injunction, order or decree, except
for such matters as would not, individually or in the aggregate, have a
material adverse effect on Parent.
Section 4.12. Litigation. Except as set forth in the Parent
SEC Filings prior to the date hereof, there is no action, suit, investigation,
audit or proceeding pending against, or to the knowledge of Parent threatened
against or affecting, Parent or any of its subsidiaries or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official which would reasonably be expected to have, individually or
in the aggregate, a material adverse effect on Parent.
Section 4.13. Stock Ownership. As of the date of this
Agreement, Parent does not, directly or indirectly, beneficially own any
shares of Company Stock other than shares of Company Stock, if any, held in
employee benefit plans.
Section 4.14. Finders' Fees. No investment banker, broker,
finder or other intermediary who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement has been
retained by or is authorized to act on behalf of Parent or any of its
subsidiaries.
ARTICLE 5
Covenants of the Company
The Company agrees that:
Section 5.1. Conduct of the Company. The Company agrees that
from the date hereof until the Effective Time, except with the prior written
consent of Parent, the Company and its subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of
their present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
(a) the Company will not adopt or propose any change in its
certificate of incorporation or bylaws;
(b) the Company will not, and will not permit any of its
subsidiaries to, merge or consolidate with any other person or acquire a
material amount of assets of any other person;
(c) the Company will not, and will not permit any of its
subsidiaries to, sell, lease, license or otherwise dispose of any material
assets or property except (i) pursuant to existing contracts or commitments
and (ii) in the ordinary course consistent with past practice;
(d) the Company will not, and will not permit any of its
subsidiaries, to take any action that would make any representation and
warranty of the Company hereunder materially inaccurate in any respect at, or
as of any time prior to, the Effective Time;
(e) the Company will not, and will not permit any of its
subsidiaries to enter into any licensing agreement or other similar
arrangement with respect to any Company Intellectual Property Right; or
(f) the Company will not, and will not permit any of its
subsidiaries to, agree or commit to do any of the foregoing.
Section 5.2. Stockholder Meeting; Proxy Material. The Company
shall cause a meeting of its stockholders (the "Company Stockholder Meeting")
to be duly called and held as soon as reasonably practicable for the purpose
of voting on the approval of this Agreement and the Merger. In connection
with such meeting, the Company will (i) subject to Section 5.03(b), recommend
approval and adoption of this Agreement and the Merger by the Company's
stockholders, (ii) promptly prepare and file with the SEC, use its reasonable
best efforts to have cleared by the SEC and thereafter mail to its
stockholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (iii) use its reasonable best efforts
to obtain the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iv) otherwise comply with all legal
requirements applicable to such meeting.
Section 5.3. No Solicitation. (a) The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or permit
any officer, director or employee of or any investment banker, attorney or
other advisor or representative of the Company or any of its subsidiaries to,
directly or indirectly, (i) solicit, initiate or knowingly encourage the
submission of any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to the Company or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to lead
to a Takeover Proposal; provided, however, that if the Board of Directors of
the Company determines in good faith, based on the advice of outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law, the Company may in response
to any bona fide, written or publicly announced Takeover Proposal which was
not solicited by it and which did not otherwise result from a breach of this
Section, and subject to providing prior written notice of its decision to take
such action to Parent and compliance with Section 5.03(c), (x) furnish
information with respect to the Company pursuant to a customary
confidentiality agreement (as determined by the Company based on the advice
of its outside counsel) and (y) participate in negotiations regarding such
Takeover Proposal. For purposes of this Agreement, "Takeover Proposal" means
any proposal or offer for, or any expression of interest (by public
announcement or otherwise) by any person other than Parent or its affiliates
in, a merger or other business combination involving the Company or any of its
subsidiaries or any proposal or offer to acquire in any manner (including
through a joint venture with the Company), directly or indirectly, an equity
interest in not less than 30% of the outstanding voting securities of the
Company, or assets representing not less than 30% of the annual revenues or
net earnings of, the Company and its subsidiaries, taken as a whole.
(b) Except as expressly permitted by this Section, 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 Subsidiary, the approval or recommendation by such Board of Directors
or any such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal
or (iii) cause the Company or any of its subsidiaries to enter into any letter
of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to any Takeover
Proposal. Notwithstanding the foregoing, the Board of Directors of the
Company, to the extent that it determines in good faith, based on the advice of
outside counsel, that in light of a Superior Proposal it is necessary to do so
in order to comply with its fiduciary duties to the Company' stockholders under
applicable law, may terminate this Agreement solely in order to concurrently
enter into an Acquisition Agreement with respect to any Superior Proposal, but
only at a time that is after the fifth business day following Parent's receipt
of written notice advising Parent that the Board of Directors of the Company is
prepared to accept a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "Superior Proposal"
means any bona fide Takeover Proposal on terms which the Board of Directors
of the Company determines in its good faith reasonable judgment, based on the
written opinion of McDonald & Company or another financial advisor of
nationally recognized reputation (which opinion shall be provided promptly to
Parent), to be more favorable to the Company's stockholders than the Merger
and for which financing, to the extent required, is then committed. Nothing
contained herein shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
1934 Act.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section, the Company shall immediately advise
Parent orally and in writing of any request for information or of any Takeover
Proposal, or any inquiry with respect to or which could lead to any Takeover
Proposal, the material terms and conditions of such request, Takeover Proposal
or inquiry, and the identity of the person making any such Takeover Proposal
or inquiry and shall keep Parent fully informed of the status and material
details of any such Takeover Proposal, inquiry or request.
Section 5.4. Access to Information; Confidentiality. (a) From
the date hereof until the Effective Time, the Company will give Parent, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of the Company
and its subsidiaries and such financial and operating data and other
information as such persons may reasonably request and will instruct the
Company's employees, counsel and financial advisors to cooperate with Parent
in its investigation of the business of the Company and its subsidiaries;
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by the Company to Parent hereunder. If as a
result of any such investigation, Parent concludes that the Company has
breached any of its representations and warranties hereunder, it will so
notify the Company; provided, however that failure by Parent to so notify the
Company will not affect any of the rights or obligations hereunder of any of
the parties hereto. Without limiting the foregoing, such failure will not
operate as a waiver of any of Parent's rights under this Agreement, including,
without limitation, Parent's right to refuse to close pursuant to Section
8.02(a) or Parent's right to terminate pursuant to Section 9.01.
(b) Prior to the Effective Time and after any termination of
this Agreement, Parent will hold, and will use its reasonable best efforts to
cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the Company and its
subsidiaries furnished to Parent in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (a) previously known on a nonconfidential basis by
Parent, (b) in the public domain through no fault of Parent, (c) independently
developed by Parent without reference to Company information or (d) later
lawfully acquired by Parent from sources other than the Company, which sources
Parent believed, after reasonable inquiry, not to be prohibited from
disclosing such information by a contractual, legal or fiduciary obligation;
provided that Parent may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as
such persons are informed by Parent of the confidential nature of such
information and are directed by Parent to treat such information
confidentially. The obligation of Parent to hold any such information in
confidence shall be satisfied if it exercises the same care with respect to
such information as it would take to preserve the confidentiality of its own
similar information. If this Agreement is terminated, Parent will, and will
use its reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver
to the Company, upon request, all documents and other materials, and all
copies thereof, obtained by it or on its behalf from the Company in connection
with this Agreement that are subject to such confidence.
(c) Simultaneously with the execution of this Agreement,
the parties agree that the confidentiality agreement dated June 23, 1997
between Parent and the Company will terminate.
ARTICLE 6
Covenants of Parent
Parent agrees that:
Section 6.1. Obligations of Merger Subsidiary. Parent will
take all action necessary to cause Merger Subsidiary to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
Section 6.2. Voting of Shares. Parent agrees to vote all
shares of Company Stock beneficially owned by it in favor of adoption of this
Agreement at the Company Stockholder Meeting.
Section 6.3. Director and Officer Liability. (a) For six
years after the Effective Time, Parent will indemnify and hold harmless the
present and former officers and directors of the Company and its subsidiaries
in respect of acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's certificate of incorporation and bylaws in
effect on the date hereof; provided, however, that if any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of such claims shall continue until the final disposition of any and
all such claims. For six years after the Effective Time, Parent will cause
the Surviving Corporation to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof; provided that in satisfying its obligation under
this Section, Parent shall not be obligated to cause the Surviving Corporation
to pay premiums in excess of 150% of the amount per annum the Company paid in
the 12 months ended December 31, 1996, which amount has been disclosed by the
Company to Parent prior to the date of this Agreement.
(b) Parent shall cause the Surviving Corporation to keep in
effect in its by-law or charter provisions for a period of not less than six
years after the Effective Time (or, in the case of matters occurring prior to
the Effective Time which have not been resolved prior to the sixth anniversary
of the Effective Time, until such matters are finally resolved) which provide
for exculpation of director and officer liability and indemnification (and
advancement of expenses related thereto) of the past and present officers and
directors of the Company in respect of acts or omissions occurring prior to the
Effective Time to the fullest extent permitted by the TBCA which provisions
shall not be amended except as required by applicable law or except to make
changes permitted by law that would enhance the rights of past or present
officers and directors to indemnification or advancement of expenses in respect
of acts or omissions occurring prior to the Effective Time.
(c) If, after the Effective Time, Parent or Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers all or substantially all of its properties and assets to any person,
then, in each such case, proper provisions shall be made so that the
successors and assigns of Parent or Surviving Corporation, as the case may be,
shall assume all of the obligations set forth in this Section. The provisions
of this Section are intended for the benefit of and shall be enforceable by
each person who is now or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, an officer or director
of the Company or any of its subsidiaries.
Section 6.4. Registration Statement; Form S-8. Parent shall
promptly prepare and file with the SEC under the 1933 Act the Registration
Statement (and Registration Statements on Form S-8 as necessary to register
shares of Parent Stock underlying Substitute Options), and shall use its
reasonable best efforts to cause the Registration Statement (and such
Registration Statements on Form S-8) to be declared effective by the SEC as
promptly as practicable. Parent shall promptly take any action required to be
taken under foreign or state securities or Blue Sky laws in connection with
the issuance of Parent Stock in the Merger or pursuant to Substitute Options.
Section 6.5. Stock Exchange Listing. Parent shall use its
reasonable best efforts to cause the shares of Parent Stock to be issued in
connection with the Merger (and the shares of Parent Stock underlying
Substitute Options) to be listed on the NYSE, subject to official notice of
issuance.
ARTICLE 7
Covenants of Parent and the Company
The parties hereto agree that:
Section 7.1. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Section 7.2. Certain Filings. The Company and Parent shall
cooperate with one another (i) in connection with the preparation of the
Company Proxy Statement and the Registration Statement, (ii) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency, official, or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with the Company
Proxy Statement or the Registration Statement and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.3. Public Announcements. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange, will not issue any such press
release or make any such public statement prior to such consultation.
Section 7.4. Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Subsidiary, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
Section 7.5. Notices of Certain Events. Each of the Company
and Parent shall promptly notify the other party hereto of:
(a) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with
the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any breach of a representation or warranty given by
such party.
Section 7.6. Tax-free Reorganization. (a) Prior to the
Effective Time, each party shall use its reasonable efforts to cause the
Merger to qualify as a reorganization qualifying under the provision of
Section 368(a)(2)(E) of the Code.
(b) The Company shall use reasonable best efforts to obtain the
opinion referred to in Section 8.03(b).
Section 7.7. Rule 145 Affiliates. Within 45 days following
the date of this Agreement, the Company shall deliver to Parent a letter
identifying all known persons who may be deemed affiliates of the Company
under Rule 145 of the 1933 Act. The Company shall use its reasonable best
efforts to obtain prior to the Effective Time a written agreement from each
person who may be so deemed, substantially in the form of Exhibit A hereto.
ARTICLE 8
Conditions to the Merger
Section 8.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been approved by the
stockholders of the Company in accordance with the TBCA;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger;
(d) the Registration Statement shall have been declared effective
and no stop order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending before
or threatened by the SEC; and
(e) the shares of Parent Stock to be issued in the Merger (as well
as the shares of Parent Stock to be issued upon exercise of Substitute Options)
shall have been approved for listing on the NYSE, subject to official notice of
issuance, if applicable.
Section 8.2. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Effective Time, and the representations and warranties of the Company
contained in this Agreement and in any certificate or other writing delivered
by the Company pursuant hereto shall be true in all material respects at and as
of the Effective Time as if made at and as of such time; and
(b) Xxxxxx X. Canada and Xxxxxxx X. Xxxxx shall have entered into
employment agreements with the Company in form and substance reasonably
satisfactory to Parent.
Section 8.3. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) each of Parent and Merger Subsidiary shall have performed in
all material respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, and the representations and
warranties of Parent and Merger Subsidiary contained in this Agreement and in
any certificate or other writing delivered by Parent or Merger Subsidiary
pursuant hereto shall be true in all material respects at and as of the
Effective Time as if made at and as of such time; and
(b) the Company shall have received an opinion of Xxxxx, Day,
Xxxxxx & Xxxxx in form and substance reasonably satisfactory to the Company,
on the basis of certain facts, representations and assumptions set forth in
such opinion, dated the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization qualifying under
the provisions of Section 368(a) of the Code and that each of Parent, Merger
Subsidiary and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, such
counsel shall be entitled to rely upon certain representations from the
Company and certain shareholders of the Company, in each case in form and
substance reasonably satisfactory to such counsel, and upon representations
from Parent, substantially in the form of Exhibit B hereto.
ARTICLE 9
Termination
Section 9.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the Board of Directors of
the Company or Parent or the stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if
(i) the Merger has not been consummated on or before April
30, 1998; provided that the right to terminate this Agreement pursuant
to this Section shall not be available to any party whose breach of
any provision of this Agreement results in the failure of the Merger
to be consummated by such time;
(ii) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or if any
judgment, injunction, order or decree enjoining any party from
consummating the Merger is entered and such judgment, injunction,
order or decree shall have become final and non-appealable; or
(iii) this Agreement shall not have been approved and adopted
in accordance with the TBCA by the Company's stockholders at the
Company Stockholder Meeting (including any adjournment thereof); or
(c) by the Company in accordance with Section 5.03(b); provided
that in order for the termination of this Agreement pursuant to this paragraph
(c) to be deemed effective, the Company shall have complied with all
provisions of Section 5.03, including the notice provisions therein.
(d) by Parent if there is a breach of any representation,
warranty, covenant or agreement of the Company, which breach cannot be cured
and would cause the conditions set forth in Section 8.02(a) to be incapable of
being satisfied.
(e) by the Company if there is a breach of any representation,
warranty, covenant or agreement of Parent, which breach cannot be cured and
would cause the conditions set forth in Section 8.03(a) to be incapable of
being satisfied.
The party desiring to terminate this Agreement pursuant to this Section (other
than pursuant to Section 9.1(a)) shall give notice of such termination to the
other party.
Section 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that (i) the
agreements contained in Sections 5.04(b), 10.04, 10.06, 10.07 and 10.08 shall
survive the termination hereof and (ii) no such termination shall release any
party of any liabilities or damages resulting from any willful or grossly
negligent breach by that party of any provision of this Agreement.
ARTICLE 10
Miscellaneous
Section 10.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile transmission) and shall be given,
if to Parent or Merger Subsidiary, to:
Xxxxxxx Electric Co.
0000 X. Xxxxxxxxxx Xxx.
X.X. Xxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxx
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
if to the Company, to:
Computational Systems, Incorporated
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Canada
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
or such other address or fax number as such party may hereafter specify for
the purpose by notice to the other parties hereto. All such notices, requests
and other communications shall be deemed received on the date of receipt by
the recipient thereof if received prior to 5 p.m. in the place of receipt and
such day is a business day in the place of receipt. Otherwise, any such
notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
Section 10.2. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. This
Section shall not limit any covenant or agreement of the parties hereto, which
by its terms contemplates performance after the Effective Time.
Section 10.3. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, but
only if, such amendment or waiver is in writing and is signed, in the case of
an amendment, by each party to this Agreement or in the case of a waiver, by
the party against whom the waiver is to be effective; provided that after the
approval of this Agreement by the stockholders of the Company, there shall be
made no amendment that by law requires the further approval of the
stockholders of the Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 10.4. Expenses. (a) Except as otherwise provided in
this Section, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Parent in immediately available funds
by wire transfer an amount equal to the sum of Parent's reasonable
out-of-pocket expenses incurred in connection with this transaction (but not
to exceed $1 million) and an amount equal to $5 million promptly, but in no
event later than two business days, after the termination of this Agreement
pursuant to (A) Section 9.01(b)(iii); provided that a Takeover Proposal shall
have been publicly announced at any time prior to the date of the Company's
stockholder vote or (B) Section 9.01(c).
Section 10.5. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except that Parent
or Merger Subsidiary may transfer or assign, in whole or from time to time in
part, to one or more of their affiliates, the right to enter into the
transactions contemplated by this Agreement, but any such transfer or
assignment will not relieve Parent or Merger Subsidiary of its obligations
hereunder.
Section 10.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Delaware.
Section 10.7. Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated hereby may
be brought in any federal court located in the State of Delaware or any
Delaware state court, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding which is brought in any such
court has been brought in an inconvenient form. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 10.1 shall be deemed effective service of process on such party.
Section 10.8. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.9. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
No provision of this Agreement is intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
Section 10.10. Entire Agreement. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter
hereof and thereof.
Section 10.11. Third Party Beneficiaries. Except for the
agreements set forth in Article 1 and Section 6.03, nothing in this Agreement,
express or implied, is intended or shall be construed to create any third party
beneficiaries.
Section 10.12. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 10.13. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any parts. Upon
such a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent
possible.
Section 10.14. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof in
addition to any other remedy to which they are entitled at law or in equity.
Section 10.15. Definitions and Usage. (a) For purposes of this
Agreement:
"affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under common control
with such person.
"knowledge" of any person which is not an individual means the
knowledge of such person's officers after reasonable inquiry.
"material adverse effect" means, when used in connection with
Parent or the Company, any change, effect, event, occurrence or state of facts
that has had, or would reasonably be expected to have, a material adverse
effect on the business, operations, assets, liabilities, condition (financial
or otherwise) or results of operations of Parent and its subsidiaries, taken
as a whole, or the Company and its subsidiaries, taken as a whole, as the case
may be.
"officer" means in the case of Parent and the Company, any
executive officer of Parent or the Company, as applicable, within the meaning
of Rule 3b-7 of the 1934 Act.
"person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"subsidiary" means, with respect to any person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such person.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
1933 Act......................................... 3.3
1934 Act......................................... 3.3
Acquisition Agreement............................ 5.3(b)
Articles of Merger............................... 1.1(b)
Certificate of Merger............................ 1.1(b)
Certificates..................................... 1.3(a)
Code............................................. 1.4
Company.......................................... preamble
Company 10-K..................................... 3.6(a)
Company 10-Q..................................... 3.7(a)
Company Balance Sheet............................ 3.8
Company Balance Sheet Date....................... 3.8
Company Employee Plan............................ 3.16(a)
Company Intellectual Property Rights............. 3.19
Company Proxy Statement.......................... 3.9(a)
Company Returns.................................. 3.15
Company SEC Filings.............................. 3.07(a)
Company Stock.................................... 1.2(a)
Company Stockholder Meeting...................... 5.2
DGCL............................................. 1.1(a)
Effective Time................................... 1.1(b)
Environmental Laws............................... 3.17(c)
Environmental Permits............................ 3.17(c)
ERISA............................................ 3.16(a)
Exchange Agent................................... 1.3(a)
GAAP............................................. 3.15
HSR Act.......................................... 3.3
Lien............................................. 3.4
Merger........................................... 1.1(a)
Merger Consideration............................. 1.2(a)
Merger Subsidiary................................ preamble
NYSE............................................. 1.2(a)
Parent........................................... preamble
Parent 10-K...................................... 4.6(a)
Parent 10-Q...................................... 4.6(a)
Parent Balance Sheet............................. 4.7
Parent Balance Sheet Date........................ 4.7
Parent SEC Filings............................... 4.6(a)
Parent Stock..................................... 1.2(a)
Registration Statement........................... 4.8(a)
SEC.............................................. 3.7(a)
Stock Price...................................... 1.2(a)
Substitute Option................................ 1.4
Superior Proposal................................ 5.3(b)
Surviving Corporation............................ 1.1(a)
Takeover Proposal................................ 5.3(a)
TBCA............................................. 1.1(a)
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
XXXXXXX ELECTRIC CO.
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx
Assistant Vice President-Development
EMERSUB LVII, INC.
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxx
President
COMPUTATIONAL SYSTEMS,
INCORPORATED
By: /s/ Xxxxxx X. Canada
----------------------------------------
Xxxxxx X. Canada
Chairman of the Board and Chief
Executive Officer
EXHIBIT A
AFFILIATE'S LETTER
(__________________________________)
____________, 1997
Xxxxxxx Electric Co.
0000 X. Xxxxxxxxxx Xxx.
X.X. Xxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Computational Systems, Incorporated
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this
letter the undersigned may be deemed to be an "affiliate" of Computational
Systems, Incorporated, a Tennessee corporation ("Company"), as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement and Plan of
Merger dated as of October 17, 1997 (the "Agreement") among the Company,
Xxxxxxx Electric Co., a Missouri corporation ("Parent"), and Emersub LVII,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Subsidiary"), Merger Subsidiary will be merged with and into Company with
Company to be the surviving corporation in the merger (the "Merger").
As a result of the Merger, the undersigned will receive shares
of Common Stock, $.50 par value per share, of Parent (the "Parent Common
Stock") in exchange for shares owned by the undersigned of Common Stock, no
par value per share, of Company (the "Company Common Stock").
The undersigned represents, warrants and covenants to Parent and
Company that as of the date the undersigned receives any Parent Common Stock
as a result of the Merger:
A. The undersigned shall not make any sale, transfer or other
disposition of the Parent Common Stock in violation of the Act or the Rules
and Regulations.
B. The undersigned has carefully read this letter and the
Agreement and discussed the requirements of such documents and other applicable
limitations upon the undersigned's ability to sell, transfer or otherwise
dispose of the Parent Common Stock to the extent the undersigned felt
necessary with the undersigned's counsel or counsel for Company.
C. The undersigned has been advised that the issuance of Parent
Common Stock to the undersigned pursuant to the Merger will be registered with
the Commission under the Act on a Registration Statement on Form S-4.
However, the undersigned has also been advised that, since at the time the
Merger is submitted for a vote of the stockholders of Company, the undersigned
may be deemed to be an affiliate of Company, the undersigned may not sell,
transfer or otherwise dispose of the Parent Common Stock issued to the
undersigned in the Merger unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with Rule 145 promulgated by the Commission
under the Act, or (iii) in the opinion of counsel reasonably acceptable to
Parent, or pursuant to a "no action" letter obtained by the undersigned from
the staff of the Commission, such sale, transfer or other disposition is
otherwise exempt from registration under the Act; provided, however, that in
any such case, such sale, assignment or transfer shall only be permitted if,
in the opinion of counsel for Parent, such transaction would not have,
directly or indirectly, any adverse consequences for Parent with respect to
the treatment of the Merger for tax purposes.
D. The undersigned understands that Parent is under no obligation
to register the sale, transfer or other disposition of the Parent Common Stock
by the undersigned or on the undersigned's behalf under the Act or to take any
other action necessary in order to enable such sale, transfer or other
disposition by the undersigned in compliance with an exemption from such
registration.
E. The undersigned also understands that there will be placed on
the certificates for the Parent Common Stock issued to the undersigned or any
substitution thereof, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION INVOLVING COMPUTATIONAL SYSTEMS, INCORPORATED TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IN ACCORDANCE WITH THE
TERMS OF A LETTER AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF
AND PARENT, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF PARENT."
F. The undersigned also understands that unless the transfer by
the undersigned of the undersigned's Parent Common Stock has been registered
under the Act or is a sale made in conformity with the provisions of Rule 145
under the Act, Parent reserves the right to put the following legend on the
certificates issued to the undersigned's transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM
A PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION INVOLVING
COMPUTATIONAL SYSTEMS, INCORPORATED TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES HAVE NOT
BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in
paragraphs E and F above shall be removed by delivery of substitute
certificates without such legend if (i) the securities represented thereby
have been registered for sale by the undersigned under the 1933 Act or (ii)
Parent has received either an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to Parent, or a "no-action" letter obtained
by the undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.
G. The undersigned further understands and agrees that the
representations, warranties, covenants and agreements of the undersigned set
forth herein are for the benefit of Parent, Company and the Surviving
Corporation (as defined in the Merger Agreement) and will be relied upon by
such entities and their respective counsel and accountants.
H. The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of Parent and Company
that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws.
Execution of this letter should not be considered an admission
on the part of the undersigned that the undersigned is an "affiliate" of
Company as described in the first paragraph of this letter or as a waiver of
any rights the undersigned may have to object to any claim that the
undersigned is such an affiliate on or after the date of this letter.
Very truly yours,
By:
-----------------------
Name:
Title:
Accepted this ____ day of ___________________, 1997.
XXXXXXX ELECTRIC CO.
By:
----------------------------
Name:
Title:
EXHIBIT B
PARENT CORPORATION REPRESENTATION LETTER
[Effective Time]
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
In connection with the opinion to be delivered pursuant to
Section 8.3(b) of the Agreement and Plan of Merger (the "Agreement")(1) dated
October 17, 1997, among Xxxxxxx Electric Co., a Missouri corporation
("Parent"), Emersub LVII, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Subsidiary"), and Computational Systems,
Incorporated, a Tennessee corporation ("Company"), the undersigned officers
of Parent and Merger Subsidiary hereby certify and represent as to Parent and
Merger Subsidiary that the facts relating to the merger (the "Merger") of
Merger Subsidiary with and into Company pursuant to the Agreement and as
described in the Company Proxy Statement dated ________, 1997 (the "Proxy
Statement"), are true, correct and complete in all respects at the date hereof
and will be true, correct and complete in all respects at the Effective Time
and that:
----------
(1) References contained in this Certificate to the Agreement include, unless
the context otherwise requires, each document attached as an exhibit or
annex thereto.
1. The consideration to be received in the Merger by holders of
Company Stock was determined by arm's length negotiations between the
managements of Parent and Company.
2. Immediately after the Merger, to the knowledge of the
management of Parent, Company will hold at least 90% of the fair market value
of the net assets and at least 70% of the fair market value of the gross
assets held by Merger Subsidiary and Company immediately prior to the Merger.
For purposes of this representation, amounts paid by Company or Merger
Subsidiary to pay expenses in connection with the Merger, and all redemptions
and distributions (if any, except for regular, normal dividends) made by
Company in contemplation of the Merger will be included as assets of Company
or Merger Subsidiary, respectively, immediately prior to the Merger.
3. Prior to the Merger, Parent will be in control of Merger
Subsidiary within the meaning of Section 368(c) of the Internal Revenue Code
of 1986, as amended (the "Code"). Merger Subsidiary was formed in 1996, and at
no time has or will Merger Subsidiary conduct any business activities or other
operations of any kind other than the issuance of its stock to Parent prior
to the Effective Time.
4. Following the Merger, Parent has no present plan or intention
to cause Company to issue additional shares of stock that would result in
Parent losing control of Company within the meaning of Section 368(c) of the
Code.
5. Parent has no present plan or intention to liquidate Company,
to merge Company with or into another corporation, to sell, exchange, transfer
or otherwise dispose of any stock of Company or to cause Company to sell,
exchange, transfer or otherwise dispose of a substantial portion of its assets,
except for (i) dispositions made in the ordinary course of business, (ii)
transfers described in Section 368(a)(2)(C) of the Code, or (iii) asset
dispositions to the extent that all such dispositions, sale, transfer or
exchange of assets will not, in the aggregate, violate paragraph 2 of this
letter.
6. In the Merger, Merger Subsidiary will have no liabilities
(other than immaterial liabilities, if any, related to its incorporation)
assumed by Company and will not transfer to Company any assets subject to
liabilities.
7. Parent has no present plan or intention to cause Company,
following the Merger, (i) to cease to operate its historic business or (ii) to
cease to use a significant portion of its historic business assets in a
business.
8. Parent and Merger Subsidiary each will pay its or their own
expenses, if any, incurred in connection with or as part of the Merger or
related transactions. Neither Parent nor Merger Subsidiary has paid or will
pay, directly or indirectly, any expenses (including transfer taxes) incurred
by any holder of Company Stock in connection with or as part of the Merger or
any related transactions. Except as otherwise provided under Section 6.03 of
the Merger Agreement, neither Parent nor Merger Subsidiary has agreed to
assume, nor will it directly or indirectly assume, any expense or other
liability, whether fixed or contingent, of any holder of Company Stock.
9. There is no intercorporate indebtedness existing between
Parent and Company or between Merger Subsidiary and Company that was issued,
acquired or will be settled at a discount.
10. Neither Parent nor Merger Subsidiary is an "investment
company" within the meaning of Section 368(a)(2)(F) of the Code.
11. The payment of cash in lieu of fractional shares of Parent
Stock in the Merger is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares and does not represent
separately bargained-for consideration. The total cash consideration that
will be paid in the Merger by Parent or the Merger Subsidiary to holders of
Company Stock instead of issuing fractional shares of Parent Stock will not
exceed 1% of the total consideration that will be issued in the Merger to
holders of Company Stock. The fractional share interests of each holder of
Company Stock will be aggregated and, to the knowledge of the management of
Parent, no holder of Company Stock will receive cash in an amount equal to or
greater than the value of one full share of Parent Stock.
12. None of the employee compensation received by any
shareholder-employees of Company is or will be separate consideration for, or
allocable to, any of their shares of Company Stock to be surrendered in the
Merger. None of the shares of Parent Stock to be received by any
shareholder-employee of Company in the Merger is or will be separate
consideration for, or allocable to, any employment, consulting or similar
arrangement. Any compensation paid or to be paid to any shareholder of
Company who will be an employee of or perform advisory services for Parent,
Merger Subsidiary, Company, or any affiliate thereof after the Merger, will be
determined by bargaining at arm's length.
13. During the past 5 years, none of Parent or any subsidiary
thereof has owned or owns, beneficially or of record, any class of stock of
Company or any securities of Company or any instrument giving the holder the
right to acquire any such stock or securities (other than the Stockholder
Option Agreement between Parent and the Stockholder referred to therein).
14. The Merger Agreement and the documents described in the Merger
Agreement represent the entire understanding of Parent, Merger Subsidiary, and
Company with respect to the Merger.
15. Neither Parent nor Merger Subsidiary will take any position
on any Federal, state or local income or franchise tax return, or take any
other tax reporting position, that is inconsistent with the treatment of the
Merger as a reorganization within the meaning of Section 368(a) of the Code,
unless otherwise required by a "determination" (as defined in Section
1313(a)(1) of the Code) or by applicable state or local income or franchise
tax law.
16. Except pursuant to its pre-existing stock purchase program that
was commenced prior to 1997 and is scheduled to terminate in 2001 (although
such program may be extended by the board of directors of Parent), Parent has
no present plan or intention to reacquire any of its stock issued in the
transaction. Any stock reacquired pursuant to the stock purchase program will
be acquired (1) in the open market or from brokers or dealers and, although
such stock may include stock issued in the Merger, will not be knowingly
acquired from any shareholder of the Company or (2) from shareholders (other
than any shareholder of the Company) of Parent in privately negotiated
transactions.
Very truly yours,
XXXXXXX ELECTRIC CO.
By:
----------------------
Name:
Title:
EMERSUB LVII, INC.
By:
----------------------
Name:
Title:
