SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
(AMENDMENT NO. 7)
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
GRUMMAN CORPORATION
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(NAME OF SUBJECT COMPANY)
NORTHROP ACQUISITION, INC.
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(BIDDER)
Common Stock, $1.00 par value per share
(Including the Associated Rights)
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(TITLE OF CLASS OF SECURITIES)
40018110
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(CUSIP NUMBER OF CLASS OF SECURITIES)
Richard R. Molleur, Esq.
Northrop Corporation
1840 Century Park East
Los Angeles, CA 90067
(310) 553-6262
COPY TO:
Karen E. Bertero, Esq.
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071
(213) 229-7000
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$2,174,165,160.00 $434,833.03
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* For purposes of calculating fee only. Assumes purchase of 35,067,180 shares
of Common Stock, $1.00 par value per share, of Grumman Corporation at $62.00
per share.
** 1/50th of 1% of Transaction valuation. $420,806.16 was previously paid in
connection with the initial filing of the Schedule 14D-1 on March 14, 1994.
[_]CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
Amount previously paid: Not Applicable Filing party: Not Applicable
Form or registration no.: Not Applicable Date filed: Not Applicable
Page 1 of 4 Pages
This Amendment No. 7 amends and supplements the Tender Offer Statement on
Schedule 14D-1 dated March 14, 1994 (the "Schedule 14D-1"), of Northrop
Acquisition, Inc. (the "Purchaser") and Northrop Corporation ("Northrop"), as
amended, filed in connection with the Purchaser's offer to purchase all of the
outstanding shares of Common Stock, par value $1.00 per share, of Grumman
Corporation, a New York corporation (the "Company"), and the associated
preferred stock purchase rights, as set forth in the Schedule 14D-1, as amended
(the "Offer").
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
On March 31, 1994, Northrop sent a letter to the Company, a copy of which is
attached hereto as Exhibit (c)(12) and incorporated herein by reference in its
entirety. In response to that letter, the Company invited representatives of
Northrop to meet with representatives of the Company to negotiate the terms of
a possible business combination between the companies. Such negotiations
occurred on April 2 and April 3, 1994, as a result of which, on April 3, 1994,
Northrop, the Purchaser and the Company entered into an Agreement and Plan of
Merger dated as of April 3, 1994 (the "Northrop Merger Agreement"), a copy of
which is attached as Exhibit (c)(13) and incorporated herein by reference in
its entirety. On April 4, 1994, Northrop issued a press release with respect to
the Northrop Merger Agreement, a copy of which is attached as Exhibit (c)(14)
and incorporated herein by reference in its entirety.
ITEM 10. ADDITIONAL INFORMATION.
The response to Item 10 is hereby amended and supplemented as follows:
Pursuant to the Northrop Merger Agreement, Northrop has amended the terms
of the Offer to increase the price per Share to $62.00, and has revised the
conditions to the Offer to be as set forth on Annex A to the Northrop
Merger Agreement, a copy of which is included in Exhibit (c)(14) attached
hereto. The Section 912 Condition, the Supermajority Voting Condition and
the Rights Condition have been satisfied and are no longer conditions to
the Offer. In connection with the increase in the per Share price to be
paid in the Offer referred to above, the Expiration Date has been extended
to 12:00 midnight, New York City time, on Friday, April 15, 1994, unless
and until the Purchaser, in its sole discretion, shall have extended the
period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(c)(12) Letter dated March 31, 1994 from Northrop to the Company.
(c)(13) Agreement and Plan of Merger dated as of April 3, 1994 among
Northrop, the Purchaser and the Company.
(c)(14) Press release dated April 4, 1994.
Page 2 of 4 Pages
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated:April 4, 1994
NORTHROP CORPORATION
/s/ Richard R. Molleur
----------------------------------------
Name: Richard R. Molleur
Title: Corporate Vice President
NORTHROP ACQUISITION, INC.
/s/ Richard R. Molleur
----------------------------------------
Name: Richard R. Molleur
Title: Vice President and Secretary
Page 3 of 4 Pages
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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(c)(12) Letter dated March 31, 1994 from Northrop to the Company.
(c)(13) Agreement and Plan of Merger dated as of April 3, 1994
among Northrop, the Purchaser and the Company.
(c)(14) Press release dated April 4, 1994.
Page 4 of 4 Pages
[LETTERHEAD OF NORTHROP]
Chairman of the Board
President and
Chief Executive Officer
March 31, 1994
CONFIDENTIAL
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Board of Directors
Grumman Corporation
In care of Mr. Gene T. Sykes
Goldman, Sachs & Co.
85 Board Street
New York, New York 10004
Gentlemen and Mrs. Benson:
As you are aware, we have grave concerns with the fairness of the bidding rules
and procedures set forth in Dr. Caporali's March 28 letter. We continue to
desire an unimpeded opportunity to participate in a truly open and fair
procedure for bringing the bidding process to a conclusion without any
impediment to our responding to any bid made by Martin Marietta.
We strongly believe that a combination of Grumman and Northrop is in the best
interests of our mutual stockholders and other constituencies; and we wish to be
constructive in your effort to bring the bidding to a swift conclusion.
Accordingly, Northrop Corporation hereby offers to increase the price Northrop
will pay in accordance with the Merger Agreement as follows:
(1) An increased price of $66.00 per share if Martin Marietta's proposal
delivered to you at or before 5:00 p.m. New York time on March 31, 1994
(the "Martin Marietta Bid") contains a definitive offer to acquire all
outstanding shares of Grumman at a per share price of $64.01 through $66,
inclusive;
(2) An increased price of $65.00 per share if the Martin Marietta Bid
contains a definitive offer to acquire all outstanding shares of Grumman at
a per share price of $63.01 through $64, inclusive;
(3) An increased price of $64.00 per share if the Martin Marietta Bid
contains a definitive offer to acquire all outstanding shares of Grumman at
a per share price of $62.01 through $63, inclusive;
[LETTERHEAD OF NORTHROP]
Page 2
(4) An increased price of $63.00 per share if the Martin Marietta Bid
contains a definitive offer to acquire all outstanding shares of Grumman at
a per share price of $61.01 through $62, inclusive;
(5) An increased price of $62.00 per share if the Martin Marietta Bid
contains a definitive offer to acquire all outstanding shares of Grumman at
a per share price of $60.00 through $61 inclusive; or
(6) A per share price of $60 if Martin Marietta fails to provide a bid
letter or the Martin Marietta Bid does not contain a definitive offer of at
least $60 per share.
If Grumman shall choose to accept a bid from Martin Marietta at or above $66 per
share, we would urge Grumman to notify Northrop of the bid as we will give
serious consideration to topping such a bid.
The offer made herein shall be irrevocable until 9:00 a.m. New York time on
Monday, April 4, 1994.
We must require that, upon Grumman's acceptance of the offer made herein at a
particular price, Grumman shall certify to us in writing that such price is
established in accordance with the formula set forth herein.
We further advise you that Northrop reserves its right to solicit additional
bids or proposals intended to provide greater value to Grumman's stockholders or
other constituent communities than any agreement which may be entered into
between Grumman and Martin Marietta. Northrop does not agree with any
provisions of the bidding procedures that purport to limit Northrop's ability to
make such additional bids or proposals.
We expect that Grumman will honor the commitment it has made not to publicly
disclose or communicate to Martin Marietta the terms of this offer, and this
offer shall not be binding upon Northrop if it is so disclosed or communicated
prior to entering into a definitive merger agreement with us. We also expect,
and this offer is submitted on the condition, that Grumman will not enter into
any agreement with either Martin Marietta or Northrop, except on the terms
described in Dr. Caporali's March 28 letter.
[LETTERHEAD OF NORTHROP]
Page 3
Acceptance of this offer by Grumman Corporation shall constitute acceptance and
agreement to the Agreement and Plan of Merger submitted to you, pursuant to the
letter dated March 23, 1994, from our counsel, with a change in the second
"WHEREAS" clause of $60 to the dollar amount specified in Paragraph (1) through
(5) herein and a change in Section 4.2 to correct a typographical error therein,
to change the number 107,975,451, to 107,975.451.
Sincerely,
/s/ KENT KRESA
Kent Kresa
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AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 3, 1994
AMONG
NORTHROP CORPORATION,
NORTHROP ACQUISITION, INC.
AND
GRUMMAN CORPORATION
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TABLE OF CONTENTS
ARTICLE 1 THE OFFER................................................. 1
SECTION 1.1 The Offer........................................ 1
SECTION 1.2 Company Action................................... 2
SECTION 1.3 Boards of Directors and Committees; Section 14(f) 3
ARTICLE 2 THE MERGER................................................ 4
SECTION 2.1 The Merger....................................... 4
SECTION 2.2 Effective Time................................... 4
SECTION 2.3 Effects of the Merger............................ 4
SECTION 2.4 Certificate of Incorporation and By-Laws......... 4
SECTION 2.5 Directors........................................ 4
SECTION 2.6 Officers......................................... 4
SECTION 2.7 Conversion of Shares............................. 5
SECTION 2.8 Stock Option Plans; MIP.......................... 5
SECTION 2.9 Shareholders' Meeting............................ 5
ARTICLE 3 DISSENTING SHARES; EXCHANGE OF SHARES..................... 6
SECTION 3.1 Dissenting Shares................................ 6
SECTION 3.2 Payment for Shares............................... 6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 7
SECTION 4.1 Organization and Qualification; Subsidiaries..... 7
SECTION 4.2 Capitalization of the Company and its
Subsidiaries..................................... 8
SECTION 4.3 Authority Relative to this Agreement; Consents
and Approvals.................................... 9
SECTION 4.4 SEC Reports; Financial Statements................ 9
SECTION 4.4 Proxy Statement; Offer Documents................. 9
SECTION 4.6 Consents and Approvals; No Violations............ 10
SECTION 4.7 No Default....................................... 10
SECTION 4.8 No Undisclosed Liabilities; Absence of Changes... 10
SECTION 4.9 Litigation....................................... 10
SECTION 4.10 Compliance with Applicable Law................... 11
SECTION 4.11 Employee Plans................................... 11
SECTION 4.12 Environmental Laws and Regulations............... 11
SECTION 4.13 Rights Agreement................................. 12
SECTION 4.14 Brokers.......................................... 12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.. 12
SECTION 5.1 Organization..................................... 12
SECTION 5.2 Authority Relative to this Agreement............. 12
SECTION 5.3 Consents and Approvals; No Violations............ 12
SECTION 5.4 Proxy Statement; Schedule 14D-9.................. 13
SECTION 5.5 Financing........................................ 13
SECTION 5.6 No Prior Activities.............................. 13
SECTION 5.7 Brokers.......................................... 13
ARTICLE 6 COVENANTS................................................. 13
SECTION 6.1 Conduct of Business of the Company............... 13
SECTION 6.2 Other Potential Bidders.......................... 15
SECTION 6.3 Access to Information............................ 16
SECTION 6.4 Additional Agreements; Reasonable Efforts........ 16
SECTION 6.5 Consents......................................... 16
SECTION 6.6 Public Announcements............................. 16
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SECTION 6.7 Indemnification................................. 17
SECTION 6.8 Notification of Certain Matters................. 17
SECTION 6.9 Guarantee of Performance........................ 17
SECTION 6.10 Redemption of Rights............................ 17
ARTICLE 7 CONDITIONS TO CONSUMMATION OF THE MERGER................. 17
SECTION 7.1 Conditions to Each Party's Obligations to
Effect the Merger............................... 17
ARTICLE 8 TERMINATION; AMENDMENT; WAIVER........................... 18
SECTION 8.1 Termination..................................... 18
SECTION 8.2 Effect of Termination........................... 19
SECTION 8.3 Fees and Expenses............................... 19
SECTION 8.4 Amendment....................................... 20
SECTION 8.5 Extension; Waiver............................... 20
ARTICLE 9 MISCELLANEOUS............................................ 20
SECTION 9.1 Nonsurvival of Representations and Warranties... 20
SECTION 9.2 Entire Agreement; Assignment.................... 21
SECTION 9.3 Validity........................................ 21
SECTION 9.4 Notices......................................... 21
SECTION 9.5 Governing Law................................... 21
SECTION 9.6 Descriptive Headings............................ 21
SECTION 9.7 Parties in Interest............................. 21
SECTION 9.8 Counterparts.................................... 21
ii
TABLE OF DEFINED TERMS
CROSS REFERENCE
TERM IN AGREEMENT
Acquisition.......................................... Preamble
Balance Sheet........................................ Section 4.4(a)
Board................................................ Recitals
Certificates......................................... Section 3.2(b)
Code................................................. Section 4.11
Common Stock......................................... Section 4.2(a)
Company.............................................. Preamble
Company Permits...................................... Section 4.10
Company Securities................................... Section 4.2(a)
DGCL................................................. Section 2.1
Dissenting Shares.................................... Section 3.1
Effective Time....................................... Section 2.2
Environmental Claim.................................. Section 4.12
Environmental Laws................................... Section 4.12
ERISA................................................ Section 4.11
Exchange Act......................................... Section 1.3(b)
Exchange Agent....................................... Section 3.2(a)
Exchange Fund........................................ Section 3.2(a)
Financial Adviser.................................... Section 1.2(a)
Governmental Entity.................................. Section 4.6
HSR Act.............................................. Section 4.6
Lien................................................. Section 4.2(b)
Material Adverse Effect.............................. Sections 4.1(a) and 5.1
Merger............................................... Section 2.1
Merger Consideration................................. Section 2.7(a)
Minimum Condition.................................... Section 1.1(a)
1993 Financial Statement............................. Section 4.4
NYBCL................................................ Section 1.2(a)
Offer................................................ Recitals
Offer Documents...................................... Section 1.1(b)
Option............................................... Section 2.8(a)
Parent............................................... Preamble
Per Share Amount..................................... Recitals
Premium Amount....................................... Section 6.7(b)
Proxy Statement...................................... Section 4.5
Rights............................................... Section 4.2(a)
Rights Agreement..................................... Section 4.2(a)
Schedule 14D-9....................................... Section 1.2(b)
Securities Act....................................... Section 4.4
SEC.................................................. Section 1.1(b)
SEC Reports.......................................... Section 4.4(a)
Shares............................................... Recitals
Shareholders' Meeting................................ Section 2.9(a)
Stock Plans.......................................... Section 2.8(a)
Subsidiary........................................... Section 4.1(a)
Surviving Corporation................................ Section 2.1
Third Party.......................................... Section 8.3(a)
Third Party Acquisition.............................. Section 8.3(a)
1993 Financial Statements............................ Section 4.4
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 3, 1994, is among
NORTHROP CORPORATION, a Delaware corporation ("Parent"), NORTHROP ACQUISITION,
INC., a Delaware corporation and a wholly owned subsidiary of Parent
("Acquisition"), and GRUMMAN CORPORATION, a New York corporation (the
"Company").
WHEREAS, the Board of Directors of the Company (the "Board") has, in
light of and subject to the terms and conditions set forth herein, (i)
determined that each of the Offer and the Merger (each as defined below) is fair
to the shareholders of the Company and in the best interests of such
shareholders and (ii) approved and adopted this Agreement and the transactions
contemplated hereby and resolved to recommend acceptance of the Offer and
approval and adoption by the shareholders of the Company of this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall
amend its outstanding tender offer (the "Offer") to acquire all of the
outstanding shares of common stock, par value $1.00 per share, of the Company
(the "Shares"), together with the associated Rights (as hereafter defined), at a
price of $62.00 per Share (such amount, or any greater amount per share paid
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount"),
net to the seller in cash, in accordance with the terms and subject to the
conditions provided herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Acquisition and the Company hereby
agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.1 and none of the events or
conditions set forth in Annex A shall have occurred and be existing, Acquisition
shall use all reasonable efforts to consummate the Offer. Acquisition shall
accept for payment Shares which have been validly tendered and not withdrawn
pursuant to the Offer at the earliest time following expiration of the Offer
that all conditions to the Offer shall have been satisfied or waived by
Acquisition. The obligation of Acquisition to accept for payment, purchase and
pay for Shares tendered pursuant to the Offer shall be subject only to the
conditions set forth in Annex A hereto and to the further condition that a
number of Shares representing not less than two-thirds of the Shares then
outstanding on a fully diluted basis shall have been validly tendered and not
withdrawn prior to the expiration date of the Offer (the "Minimum Condition").
Acquisition expressly reserves the right to increase the price per Share payable
in the Offer or to make any other changes in the terms and conditions of the
Offer (provided that, unless previously approved by the Company in writing, no
change may be made which decreases the price per Share payable in the Offer,
which changes the form of consideration to be paid in the Offer, which reduces
the maximum number of Shares to be purchased in the Offer, which imposes
conditions to the Offer in addition to those set forth in Annex A hereto or
which broadens the scope of such conditions). It is agreed that the conditions
set forth in Annex A are for the sole benefit of Acquisition and may be asserted
by Acquisition regardless of the circumstances giving rise to any such condition
(including any action or inaction by Acquisition) or may be waived by
Acquisition, in whole or in part at any time and from time to time, in its sole
discretion. The failure by Acquisition at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination (which shall be made in good faith) by
Acquisition with respect to any of the foregoing
1
conditions (including, without limitation, the satisfaction of such conditions)
shall be final and binding on the parties. The Per Share Amount shall be paid
net to the seller in cash, less any required withholding of taxes, upon the
terms and subject to such conditions of the Offer. The Company agrees that no
Shares held by the Company or any of its subsidiaries will be tendered in the
Offer.
(b) As soon as practicable after the date hereof, Acquisition shall
file with the Securities and Exchange Commission (the "SEC") an amendment to its
Tender Offer Statement on Schedule 14D-1 dated March 14, 1994 with respect to
the Offer which will reflect the existence of this Agreement, amend the
conditions to the Offer in accordance herewith and contain a supplement to
Acquisition's Offer to Purchase dated March 14, 1994 and related letter of
transmittal (together with any supplements or amendments thereto, collectively
the "Offer Documents"). The Offer Documents will comply in all material
respects with the provisions of applicable federal securities laws and the
securities laws of the State of New York. The information provided and to be
provided by the Company, Parent and Acquisition for use in the Offer Documents
shall not, on the date filed with the SEC and on the date first published or
sent or given to the Company's shareholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Parent,
Acquisition and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect and Acquisition further
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws and the
securities laws of the State of New York.
SECTION 1.2. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board, at a meeting
duly called and held, has, subject to the terms and conditions set forth herein,
(i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to, and in the best interests of,
the shareholders of the Company, (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in all
respects and that such approval constitutes approval of the Offer, this
Agreement and the Merger for purposes of (A) Sections 902 and 912 of the New
York Business Corporation Law (the "NYBCL") and similar provisions of any other
similar state statutes that might be deemed applicable to the transactions
contemplated hereby, (B) paragraph 1(a) of Article SEVENTH of the Company's
certificate of incorporation and (C) Section 11(a)(ii)(B) of the Rights
Agreement, and (iii) resolved to recommend that the shareholders of the Company
accept the Offer, tender their Shares thereunder to Acquisition and approve and
adopt this Agreement and the Merger; provided, however, that such recommendation
may be withdrawn, modified or amended to the extent that the Board by a majority
vote determines in its good faith judgment, based as to legal matters on the
written opinion of legal counsel, that the Board is required to do so in the
exercise of its fiduciary duties. The Company consents to the inclusion of such
recommendation and approval in the Offer Documents. The Company further
represents that Goldman, Sachs & Co. (the "Financial Adviser") has delivered to
the Board its written opinion that the cash consideration to be received by the
shareholders of the Company pursuant to the Offer and the Merger is fair to such
shareholders. The Company has been authorized by the Financial Adviser to
permit, subject to the prior review and consent by the Financial Adviser (such
consent not to be unreasonably withheld), the inclusion of the fairness opinion
(or a reference thereto) in the Offer Documents, the Schedule 14D-9 and the
Proxy Statement. The Company hereby represents that it has terminated the
Agreement and Plan of Merger dated as of March 6, 1994 among Martin Marietta
Corporation, MMC Acquisition Corp. and the Company pursuant to Section
8.1(d)(ii) thereof.
(b) The Company hereby agrees to file with the SEC as soon as
practicable after the date hereof an amendment to its
Solicitation/Recommendation Statement on Schedule 14D-9 pertaining to the Offer
(together with any amendments or supplements thereto, the "Schedule 14D-9")
containing the recommendation described in Section 1.2(a) and to promptly mail
the Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 will
comply in all material respects with the provisions of
2
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's shareholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Acquisition in writing for inclusion in the
Schedule 14D-9. The Company, Parent and Acquisition each agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material respect
and the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to the holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. Notwithstanding anything to the contrary in this Agreement, if
the Board by majority vote determines in its good faith judgment, based as to
legal matters on the written opinion of legal counsel, that the Board is
required in the exercise of its fiduciary duties to withdraw, modify or amend
the recommendation of the Board, such withdrawal, modification or amendment
shall not constitute a breach of this Agreement.
(c) In connection with the Offer, the Company will promptly furnish
Parent and Acquisition with mailing labels, security position listings and any
available listing or computer files containing the names and addresses of the
record holders of the Shares as of a recent date and shall furnish Acquisition
with such additional information and assistance (including, without limitation,
updated lists of shareholders, mailing labels and lists of securities positions)
as Acquisition or its agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent, Acquisition and their affiliates, associates, agents and advisors shall
use the information contained in any such labels, listings and files only in
connection with the Offer and the Merger, and, if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
SECTION 1.3. Boards of Directors and Committees; Section 14(f). (a)
Promptly upon the purchase by Acquisition of Shares pursuant to the Offer and
from time to time thereafter, and subject to the last sentence of this Section
1.3(a), Acquisition shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as will give
Acquisition representation on the Board equal to the product of the number of
directors on the Board (giving effect to any increase in the number of directors
pursuant to this Section 1.3) and the percentage that such number of Shares so
purchased bears to the total number of outstanding Shares on a fully-diluted
basis, and the Company shall use its best efforts to, upon request by
Acquisition, promptly, at the Company's election, either increase the size of
the Board (subject to the provisions of Article EIGHTH of the Company's
certificate of incorporation) or secure the resignation of such number of
directors as is necessary to enable Acquisition's designees to be elected to the
Board and to cause Acquisition's designees to be so elected. At such times, and
subject to the last sentence of this Section 1.3(a), the Company will use its
best efforts to cause persons designated by Acquisition to constitute the same
percentage as is on the Board of (i) each committee of the Board (other than any
committee of the Board established to take action under this Agreement), (ii)
each board of directors of each subsidiary of the Company and (iii) each
committee of each such board. Notwithstanding the foregoing, the Company shall
use its best efforts to ensure that three of the members of the Board as of the
date hereof shall remain members of the Board until the Effective Time (as
defined in Section 2.2 hereof).
(b) The Company's obligation to appoint designees to the Board shall
be subject to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all action required pursuant to such Section and Rule in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under such Section and Rule in order to fulfill its
obligations under this Section 1.3. Acquisition will supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by such Section and
Rule.
3
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.3 and prior to the Effective Time, if there shall be
any directors of the Company who were directors as of the date hereof, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Acquisition or Parent or waiver of any of the
Company's rights hereunder, will require the concurrence of a majority of such
directors.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. At the Effective Time and upon the terms
and subject to the conditions of this Agreement and in accordance with the NYBCL
and the Delaware General Corporation Law (the "DGCL"), Acquisition shall be
merged with and into the Company (the "Merger"). Following the Merger, the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition shall cease.
Parent may, upon notice to the Company, modify the structure of the Merger if
Parent determines it advisable to do so because of tax or other considerations,
and the Company shall promptly enter into any amendment to this Agreement
necessary or desirable to accomplish such structure modification, provided that
no such amendment shall reduce the Merger Consideration.
SECTION 2.2. Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article 7, the parties
hereto will deliver a certificate of merger to the Department of State of the
State of New York and to the Secretary of State of the State of Delaware for
filing and make all other filings or recordings required by the NYBCL and the
DGCL in connection with the Merger. Prior to the filing referred to in this
Section 2.2, a closing will be held at the offices of Gibson, Dunn & Crutcher,
200 Park Avenue, New York, New York 10166 (or such other place as the parties
may agree) for the purpose of confirming all of the foregoing. The Merger shall
become effective at such time as such certificate of merger is duly filed by the
Department of State of the State of New York, or at such later time as is
specified in such certificate of merger (the time the Merger becomes effective
being referred to herein as the "Effective Time").
SECTION 2.3. Effects of the Merger. The Merger shall have the
effects set forth in the NYBCL (including, without limitation, Section 906
thereof) and the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.4. Certificate of Incorporation and By-Laws. (a) The
certificate of incorporation of the Company in effect at the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law. (b) The by-laws of the Company in
effect at the Effective Time shall be the by-laws of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 2.5. Directors. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 2.6. Officers. The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-Laws of the
Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
4
SECTION 2.7. Conversion of Shares. (a) Each Share issued and
outstanding immediately prior to the Effective Time (other than (i) Shares held
in the Company's treasury or by any of the Company's subsidiaries, (ii) Shares
held by Parent, Acquisition or any other subsidiary of Parent and (iii)
Dissenting Shares (as defined in Section 3.1 hereof)) together with the
associated Rights, shall, by virtue of the Merger and without any action on the
part of Acquisition, the Company or the holder thereof, be canceled and
extinguished and be converted into the right to receive, pursuant to Section
3.2, the Per Share Amount in cash (the "Merger Consideration"), payable to the
holder thereof, without interest thereon, upon the surrender of the certificate
formerly representing such Share, less any required withholding of taxes.
Parent and Acquisition shall take such action as may be necessary to cause
Acquisition to have outstanding, immediately prior to the Effective Time, the
same number of shares of common stock as the number of Shares then outstanding.
At the Effective Time, each outstanding share of the common stock, par value
$.01 per share, of Acquisition shall be converted into one share of common
stock, par value $1.00 per share, of the Surviving Corporation.
(b) Each Share held in the treasury of the Company and each Share held
by Parent, Acquisition or any subsidiary of Parent, Acquisition or the Company
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of Acquisition, the Company or the holder
thereof, be canceled, retired and cease to exist and no payment shall be made
with respect thereto.
SECTION 2.8. Stock Option Plans; MIP. (a) The Company shall use all
reasonable efforts to cause all holders of options ("Options") to purchase
Shares granted under the 1981 Stock Option Plan of the Company, the 1990 Stock
Option Plan of the Company, the 1992 Long Term Incentive Plan of the Company or
any predecessor stock option or stock plan of the Company (collectively, the
"Stock Plans") which are outstanding immediately prior to the Effective Time to
exercise such Options prior to the Effective Time. The Company shall take such
action as is necessary under the Stock Plans to cause any Options that remain
outstanding after the Merger to thereafter be exercisable for a short-term debt
instrument of the Surviving Corporation in a face amount (and with an interest
rate and other terms designed to provide a fair value) equal to an amount
determined by multiplying the Merger Consideration by the number of Shares for
which such Option was theretofore exercisable.
(b) Prior to the Effective Time, the Company shall use all reasonable
efforts to (i) obtain any consents from individuals who are entitled to awards
under the Company's Management Incentive Plan ("MIP") and (ii) make any
amendments to the terms of such plan that are necessary to provide for future
distributions thereunder to be paid in the form of cash (and not in the form of
Shares).
SECTION 2.9. Shareholders' Meeting. The Company, acting through the
Board, shall in accordance with applicable law:
(i) duly call, give notice of, convene and hold an annual or
special meeting of its shareholders (the "Shareholders' Meeting"), to
be held as soon as practicable after May 18, 1994 (provided that
Acquisition shall have purchased Shares pursuant to the Offer) for the
purpose of considering and taking action upon this Agreement;
(ii) subject to its fiduciary duties as determined in good faith
by a majority of the Board, based as to legal matters on the written
opinion of legal counsel, include in the Proxy Statement the
recommendation of the Board that shareholders of the Company vote in
favor of the approval and adoption of this Agreement and the written
opinion of the Financial Advisor that the cash consideration to be
received by the shareholders of the Company pursuant to the Merger is
fair to such shareholders; and
(iii) use all reasonable efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement and,
after
5
consultation with Parent and Acquisition, respond promptly to
any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and cause the Proxy Statement to be
mailed to its shareholders at the earliest practicable time following
the expiration or termination of the Offer and (B) subject to its
fiduciary duties as determined in good faith by a majority of the
Board, based as to legal matters on the written opinion of legal
counsel, to obtain the necessary approvals by its shareholders of this
Agreement and the transactions contemplated hereby. At such meeting,
Parent, Acquisition and their affiliates will vote all Shares owned by
them in favor of approval and adoption of this Agreement and the
transactions contemplated hereby.
ARTICLE 3
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.1. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in accordance
with Section 623 of the NYBCL ("Dissenting Shares") shall not be converted into
a right to receive the Merger Consideration, unless such holder fails to perfect
or withdraws or otherwise loses his right to appraisal. If, after the Effective
Time, such holder fails to perfect or withdraws or loses his right to appraisal,
such Shares shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration, without interest thereon.
The Company shall give Parent and Acquisition prompt notice of any demands
received by the Company for appraisal of Shares, and, prior to the Effective
Time, Parent and Acquisition shall have the right to direct all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent or
Acquisition, make any payment with respect to, or settle or offer to settle, any
such demands.
SECTION 3.2. Payment for Shares. (a) Prior to the Effective Time,
Parent and Acquisition shall designate a bank or trust company reasonably
acceptable to the Company to act as Exchange Agent in connection with the Merger
(the "Exchange Agent") pursuant to an exchange agency agreement providing for
the matters set forth in this Section 3.2 and otherwise reasonably satisfactory
to the Company. At or prior to the Effective Time, Parent or Acquisition will
provide the Exchange Agent with the funds necessary to make the payments
contemplated by Section 2.7(a) hereof (the "Exchange Fund").
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each record holder, as of the Effective Time, of an outstanding certificate
or certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates 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. Upon surrender to the Exchange Agent of a Certificate, together with
a duly executed letter of transmittal and any other required documents, the
holder of such Certificate shall receive in exchange therefor (as promptly as
practicable) the consideration set forth in Section 2.7(a) hereof, without any
interest thereon, less any required withholding of taxes, and such Certificate
shall forthwith be canceled. If payment is to be made to a person other than
the person in whose name a Certificate so surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer, that the signatures on the
Certificate or any related stock power shall be properly guaranteed and that the
person requesting such payment shall either pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the Certificate so surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the
6
provisions of this Section 3.2(b), each Certificate (other than Certificates
representing Shares held in the Company's treasury or by Acquisition, or by any
subsidiary of the Company or Acquisition, and other than Certificates
representing Dissenting Shares) shall represent for all purposes only the right
to receive for each Share represented thereby the consideration provided for
under this Agreement.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 3.
(d) From and after the Effective Time, the holders of Certificates
evidencing ownership of Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares except as
otherwise provided herein or by applicable law. Such holders shall have no
rights, after the Effective Time, with respect to such Shares except to
surrender such Certificates in exchange for cash pursuant to this Agreement or
to perfect any rights of appraisal as a holder of Dissenting Shares that such
holders may have pursuant to Section 623 of the NYBCL.
(e) Any portion of the Exchange Fund (including the proceeds of any
investment thereof) that remains unclaimed by the shareholders of the Company
for six months after the Effective Time shall be repaid to the Surviving
Corporation. Any shareholders of the Company who have not theretofore complied
with this Article 3 shall thereafter look only to the Surviving Corporation for
payment of their claims for the consideration set forth in Section 2.7(a) hereof
for each Share such shareholder holds, without any interest thereon.
(f) Notwithstanding anything to the contrary in this Section 3.2,
none of the Exchange Agent, Parent or the Surviving Corporation shall be liable
to a holder of a Certificate formerly representing Shares for any amount
properly delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If Certificates are not surrendered prior to
two years after the Effective Time, unclaimed funds payable with respect to such
Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition that, except as disclosed in the letter, dated the date hereof, from
the Company to Parent (the "Letter"):
SECTION 4.1. Organization and Qualification; Subsidiaries. (a) Each
of the Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below) on the Company.
The Company has heretofore delivered to Acquisition or Parent accurate and
complete copies of the certificate of incorporation and by-laws, as currently in
effect, of the Company and promptly will deliver to Acquisition and Parent
accurate and complete copies of the certificate or articles of incorporation and
by-laws, as currently in effect, of each of its significant subsidiaries (as
that term is defined in Regulation S-X of the General Rules and Regulations
under the Securities Act of 1933, as amended). When used in connection with the
Company or any of its subsidiaries, the term "Material Adverse Effect" means any
change or effect (other than changes or effects described in the Letter) that is
or is reasonably likely to be materially adverse to the business, results of
operations or condition (financial or otherwise) of the
7
Company and its subsidiaries, taken as whole, other than any change or effect
arising out of general economic conditions unrelated to any businesses in which
the Company is engaged.
(b) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in aggregate, have a Material Adverse Effect
on the Company.
SECTION 4.2. Capitalization of the Company and its Subsidiaries. (a)
The authorized capital stock of the Company consists of: 80,000,000 shares of
common stock, par value $1.00 per share (the "Common Stock"), of which, as of
February 28, 1994, 33,935,448 Shares were issued and outstanding and 10,000,000
shares of preferred stock, par value $1.00 per share, no shares of which are
outstanding. All of the Shares have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of February 28, 1994,
approximately 1,129,226 shares of Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding Options. As of February 28, 1994, performance share awards were
outstanding with respect to a maximum of 428,650 shares of Common Stock under
the Company's Long Term Incentive Plan with no more than an additional 30,000
shares of Common Stock payable as dividend equivalents with respect to such
share awards, and the number of all such shares (including shares under the
performance share awards and the dividend equivalent shares thereon) will be
doubled under such plan as a result of any change of control as defined therein.
As of February 28, 1994, 107,975.451 shares of Common Stock were deliverable in
settlement of deferred compensation under the MIP. Since February 28, 1994, no
shares of the Company's capital stock have been issued other than pursuant to
stock options already in existence on such date, and since February 28, 1994, no
stock options have been granted. Except as set forth above and except for the
rights (the "Rights") to, among other things, purchase Series A Junior
Participating Preferred Stock issued pursuant to the Rights Agreement, dated as
of February 18, 1988 (the "Rights Agreement"), between the Company and The Bank
of New York, as Rights Agent, there are outstanding (i) no shares of capital
stock or other voting securities of the Company, (ii) no securities of the
Company or any of its subsidiaries convertible into or exchangeable for shares
of capital stock or voting securities of the Company, (iii) no options or other
rights to acquire from the Company or any of its subsidiaries, and no
obligations of the Company or any of its subsidiaries to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company, and (iv) no equity
equivalents, interests in the ownership or earnings of the Company or any of its
subsidiaries or other similar rights (collectively, "Company Securities").
There are no outstanding obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any Company Securities.
(b) Except for directors qualifying shares, if any, all of the
outstanding capital stock of, or other ownership interests in, each subsidiary
of the Company, is owned by the Company, directly or indirectly, free and clear
of any Lien (as hereinafter defined) or any other limitation or restriction
(including any restriction on the right to vote or sell the same, except as may
be provided as a matter of law). There are no securities of the Company or any
of its subsidiaries convertible into or exchangeable for, no options or other
rights to acquire from the Company or any of its subsidiaries, and no other
contract, understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital stock
or other ownership interests in, or any other securities of, any subsidiary of
the Company. There are no outstanding contractual obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock or other ownership interests in any
subsidiary of the Company. For purposes of this Agreement, "Lien" means, with
respect to any asset (including, without limitation, any security) any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(c) The Shares and the Rights constitute the only class of equity
securities of the Company or any of its subsidiaries registered or required to
be registered under the Exchange Act.
8
SECTION 4.3. Authority Relative to this Agreement; Consents and
Approvals. (a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders, including Acquisition,
of two-thirds of the then outstanding Shares). This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(b) The Board has duly and validly approved, and taken all corporate
actions required to be taken by the Board for the consummation of, the
transactions, including the Offer and the acquisition of the Shares pursuant
thereto and the Merger, contemplated hereby, including but not limited to all
actions required to render the provisions of Section 912 of the NYBCL
restricting business combinations with "interested shareholders" inapplicable to
such transactions.
SECTION 4.4. SEC Reports; Financial Statements. (a) The Company has
filed all required forms, reports and documents with the SEC since January 1,
1990 (collectively, the "SEC Reports"), each of which has complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act each as in effect
on the dates so filed. The Company has heretofore delivered or promptly will
deliver to Acquisition or Parent, in the form filed with the SEC (including any
amendments thereto), (i) its Annual Reports on Form 10-K for each of the three
fiscal years ended December 31, 1991, 1992 and 1993, (ii) all definitive proxy
statements relating to the Company's meetings of shareholders (whether annual or
special) held since January 1, 1990 and (iii) all other reports (other than
Quarterly Reports on Form 10-Q) or registration statements filed by the Company
with the SEC since January 1, 1990. None of such forms, reports or documents,
including, without limitation, any financial statements or schedules included or
incorporated by reference therein, contained, when filed, any untrue statement
of a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company has also delivered to Parent or Acquisition a true and
complete copy of the audited consolidated financial statements of the Company,
including the notes thereto, for the fiscal year ended December 31, 1993 (the
"1993 Financial Statements"). The 1993 Financial Statements and the audited
consolidated financial statements of the Company included in its Annual Reports
on Form 10-K referred to in the first sentence of this Section 4.4(a) 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 consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended.
(b) The Company has heretofore made available or promptly will make
available to Acquisition or Parent a complete and correct copy of any amendments
or modifications, which have not yet been filed with the SEC, to agreements,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Exchange Act.
SECTION 4.5. Proxy Statement; Offer Documents. Any proxy or similar
materials distributed to the Company's shareholders in connection with the
Merger, including any amendments or supplements thereto (the "Proxy Statement"),
will comply in all material respects with applicable federal securities laws,
except that no representation is made by the Company with respect to information
supplied by Acquisition or Parent for inclusion in the Proxy Statement. None of
the information supplied by the Company in writing for inclusion in the Offer
Documents or provided by the Company in the Schedule 14D-9 will, at the
respective times that the Offer Documents and the Schedule 14D-9 or any
amendments or supplements thereto are filed with the SEC and are first published
or sent or given to holders of Shares, contain any untrue statement of a
material fact or omit to state any material fact
9
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the filing and
recordation of a certificate of merger as required by the NYBCL and the DGCL, no
filing with or notice to, and no permit, authorization, consent or approval of,
any court or tribunal or administrative, governmental or regulatory body, agency
or authority (a "Governmental Entity") is necessary for the execution and
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have a Material Adverse Effect on the Company. Neither
the execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws (or similar governing documents) of the
Company or of any its subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, other than
breaches or defaults under loan agreements resulting from the existence of
indebtedness on the part of Acquisition, or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
SECTION 4.7. No Default. None of the Company or any of its
subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (i) its certificate of incorporation or by-
laws (or similar governing documents), (ii) any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its subsidiaries is now a party or by which any of them or
any of their respective properties or assets may be bound or (iii) any order,
writ, injunction, decree, law, statute, rule or regulation applicable to the
Company, any of its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or defaults
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
SECTION 4.8. No Undisclosed Liabilities; Absence of Changes. Except
as and to the extent publicly disclosed by the Company, as of December 31, 1993,
neither the Company nor any of its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto) or, which would have, individually or in the aggregate, a
Material Adverse Effect on the Company. Except as publicly disclosed by the
Company, since December 31, 1993, neither the Company nor any of its
subsidiaries has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which would have, and there have been no events,
changes or effects with respect to the Company and its subsidiaries having,
individually or in the aggregate, a Material Adverse Effect on the Company.
SECTION 4.9. Litigation. Except as publicly disclosed by the
Company, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or any of their respective properties or assets before any
Governmental Entity which, individually or in the aggregate, would have a
Material Adverse Effect on the Company or would prevent or delay the
consummation of the transactions contemplated by this
10
Agreement. Except as publicly disclosed by the Company, neither the Company nor
any of its subsidiaries is subject to any outstanding order, writ, injunction or
decree which, insofar as can be reasonably foreseen, individually or in the
aggregate, in the future would have a Material Adverse Effect on the Company or
would prevent or delay the consummation of the transactions contemplated hereby.
SECTION 4.10. Compliance with Applicable Law. Except as publicly
disclosed by the Company, the Company and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
"Company Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. Except as
publicly disclosed by the Company, the Company and its subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so to
comply would not have a Material Adverse Effect on the Company. Except as
publicly disclosed by the Company, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity except that no representation or warranty
is made in this Section 4.10 with respect to Environmental Laws (as defined in
Section 4.12 below) and except for violations or possible violations which
individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future will not, have a Material Adverse Effect on the Company.
Except as publicly disclosed by the Company, no investigation or review by any
Governmental Entity with respect to the Company or any of its subsidiaries is
pending or, to the best knowledge of the Company, threatened, nor, to the best
knowledge of the Company, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which the Company reasonably
believes will not have a Material Adverse Effect on the Company.
SECTION 4.11. Employee Plans. All "employee benefit plans" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or contributed to by the Company and its
subsidiaries are in compliance with the applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), except for instances of
non-compliance that individually or in the aggregate would not have a Material
Adverse Effect on the Company.
SECTION 4.12. Environmental Laws and Regulations. (a) Except as
publicly disclosed by the Company, (i) the Company and each of its subsidiaries
is in material compliance with all applicable federal, state and local laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that individually or in the aggregate would not have a
Material Adverse Effect on the Company, which compliance includes, but is not
limited to, the possession by the Company and its subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; (ii)
neither the Company nor any of its subsidiaries has received written notice of,
or, to the best knowledge of the Company, is the subject of, any action, cause
of action, claim, investigation, demand or notice by any person or entity
alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim") that individually or in the aggregate would have a
Material Adverse Effect on the Company; and (iii) to the best knowledge of the
Company, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as publicly disclosed by the Company, there are no
Environmental Claims which individually or in the aggregate would have a
Material Adverse Effect on the Company that are pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries or, to the best knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law.
11
SECTION 4.13. Rights Agreement. The Company has taken all necessary
action so that none of the execution of this Agreement, the making of the Offer,
the acquisition of Shares pursuant to the Offer or the consummation of the
Merger will (i) cause the Rights issued pursuant to the Rights Agreement to
become exercisable, (ii) cause any person to become an Acquiring Person (as such
term is defined in the Rights Agreement) or (iii) give rise to a Distribution
Date or a Triggering Event (as each such term is defined in the Rights
Agreement).
SECTION 4.14. Brokers. No broker, finder or investment banker (other
than the Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to Acquisition or Parent) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company as
follows:
SECTION 5.1. Organization. Each of Parent and Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not in the aggregate have a
Material Adverse Effect (as defined below) on Parent or Acquisition. When used
in connection with Parent or Acquisition, the term "Material Adverse Effect"
means any change or effect that is materially adverse to the business, results
of operations or condition (financial or otherwise) of Parent and its
subsidiaries, taken as a whole, other than any change or effect arising out of
general economic conditions unrelated to any businesses in which Parent and its
subsidiaries are engaged.
SECTION 5.2. Authority Relative to this Agreement. Each of Parent
and Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
shareholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes a
valid, legal and binding agreement of each of Parent and Acquisition,
enforceable against each of Parent and Acquisition in accordance with its terms.
SECTION 5.3. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the HSR Act, and the filing and
recordation of a certificate of merger as required by the NYBCL and the DGCL, no
filing with or notice to, and no permit, authorization, consent or approval of,
any Governmental Entity is necessary for the execution and delivery by Parent or
Acquisition of this Agreement or the consummation by Parent or Acquisition of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have a material adverse effect on the ability of Parent or
Acquisition to consummate the Offer or the Merger. Neither the execution,
delivery and performance of this Agreement by Parent or Acquisition nor the
consummation by Parent or Acquisition of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws (or similar governing
documents) of Parent or Acquisition or any of Parent's subsidiaries, (ii) result
in a violation or
12
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Acquisition or any of Parent's
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Parent or Acquisition or
any of Parent's subsidiaries or any of their respective properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults which
would not, individually or in the aggregate, have a material adverse effect on
the ability of Parent or Acquisition to consummate the Offer or the Merger.
SECTION 5.4. Proxy Statement; Schedule 14D-9. None of the
information supplied by Parent or Acquisition in writing for inclusion in the
Proxy Statement or the Schedule 14D-9 will, at the respective times that the
Proxy Statement and the Schedule 14D-9 or any amendments or supplements thereto
are filed with the SEC and are first published or sent or given to holders of
Shares, and in the case of the Proxy Statement, at the time that it or any
amendment or supplement thereto is mailed to the Company's shareholders, at the
time of the Shareholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 5.5. Financing. Either Parent or Acquisition has or will
have sufficient funds available to purchase all of the Shares outstanding on a
fully diluted basis and to pay all related fees and expenses.
SECTION 5.6. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization, the making of the Offer or
the negotiation and consummation of this Agreement and the transactions
contemplated hereby, Acquisition has neither incurred any obligation or
liability nor engaged in any business or activity of any type or kind whatsoever
or entered into any agreement or arrangement with any person or entity.
SECTION 5.7. Brokers. Except for Salomon Brothers Inc (a true and
correct copy of whose engagement agreement has been provided to the Company), no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or
Acquisition.
ARTICLE 6
COVENANTS
SECTION 6.1. Conduct of Business of the Company. Except as
contemplated by this Agreement, during the period from the date hereof to the
time persons designated or elected by Acquisition or any of its affiliates shall
constitute a majority of the Board, the Board will not permit the Company or any
of its subsidiaries to conduct its operations otherwise than in the ordinary
course of business consistent with past practice. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the time persons designated or elected by Acquisition or any
of its affiliates shall constitute a majority of the Board, the Board will not,
without the prior written consent of Parent or Acquisition, permit the Company
or any of its subsidiaries to:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including,
13
without limitation, any stock options or stock appreciation rights), except as
required by agreements with the Company's employees under the Stock Plans as in
effect as of the date hereof or pursuant to the Rights Agreement, and except
deliveries of certificates for Shares issued prior to the date hereof pursuant
to the Company's Restricted Stock Award Plan, or amend any of the terms of any
such securities or agreements outstanding as of the date hereof, except as
specifically contemplated by this Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem or otherwise acquire any of its securities or any securities of its
subsidiaries;
(d) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings under existing lines of credit in the
ordinary course of business and in amounts not material to the Company and its
subsidiaries taken as a whole; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary course of business
consistent with past practice and in amounts not material to the Company and its
subsidiaries, taken as a whole, and except for obligations of wholly owned
subsidiaries of the Company; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company or customary loans or advances to employees in
the ordinary course of business consistent with past practice and in amounts not
material to the maker of such loan or advance); (iv) pledge or otherwise
encumber shares of capital stock of the Company or any of its subsidiaries; or
(v) mortgage or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon, except as disclosed in
the Letter;
(e) except as may be required by law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee in any manner, or
(except for normal increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company, and as required under existing
agreements or in the ordinary course of business generally consistent with past
practice) increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock appreciation rights or performance units);
(f) except as disclosed in the Letter, acquire, sell, lease or dispose
of any assets outside the ordinary course of business or any assets which in the
aggregate are material to the Company and its subsidiaries taken as a whole, or
enter into any commitment or transaction outside the ordinary course of business
consistent with past practice which would be material to the Company and its
subsidiaries taken as a whole;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(h) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(i) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any contract or
agreement other than in the ordinary course of business consistent with past
14
practice which would be material to the Company and its subsidiaries taken as a
whole; (iii) authorize any new capital expenditure or expenditures which,
individually, is in excess of $2,500,000 or, in the aggregate, are in excess of
$25,000,000; provided, that none of the foregoing shall limit any capital
expenditure already included in the Company's 1994 capital expenditure budget
previously provided to Parent or Acquisition; or (iv) enter into or amend any
contract, agreement, commitment or arrangement providing for the taking of any
action that would be prohibited hereunder;
(j) make any tax election or settle or compromise any income tax
liability material to the Company and its subsidiaries taken as a whole;
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and its
subsidiaries or incurred in the ordinary course of business consistent with past
practice;
(l) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby; or
(m) take, or agree in writing or otherwise to take, any of the actions
described in Sections 6.1(a) through 6.1(l) or any action which would make any
of the representations or warranties of the Company contained in this Agreement
untrue or incorrect as of the date when made or would result in any of the
conditions set forth in Annex A not being satisfied.
SECTION 6.2. Other Potential Bidders. The Company, its affiliates
and their respective officers, directors, employees, representatives and agents
shall immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or any
of its subsidiaries or any business combination with the Company or any of its
subsidiaries, other than as described in the Letter. The Company may, directly
or indirectly, furnish information and access, in each case only in response to
unsolicited requests therefor, to any corporation, partnership, person or other
entity or group pursuant to confidentiality agreements, and may participate in
discussions and negotiate with such entity or group concerning any merger, sale
of assets, sale of shares of capital stock or similar transaction involving the
Company or any subsidiary or division of the Company, if such entity or group
has submitted a written proposal to the Board relating to any such transaction
and the Board by a majority vote determines in its good faith judgment, based as
to legal matters on the written opinion of legal counsel, that failing to take
such action would constitute a breach of the Board's fiduciary duty. The Board
shall provide a copy of any such written proposal to Parent or Acquisition
immediately after receipt thereof and thereafter keep Parent and Acquisition
promptly advised of any development with respect thereto. Except as set forth
above, neither the Company or any of its affiliates, nor any of its or their
respective officers, directors, employees, representatives or agents, shall,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Acquisition, any affiliate or associate of Parent and Acquisition or any
designees of Parent and Acquisition) concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
subsidiary or division of the Company; provided, however, that nothing herein
shall prevent the Board from taking, and disclosing to the Company's
shareholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; provided, further, that the
Board shall not recommend that the shareholders of the Company tender their
Shares in connection with any such tender offer unless the Board by a majority
vote determines in its good faith judgment, based as to legal matters on the
written opinion of legal counsel, that failing to take such action would
constitute a breach of the Board's fiduciary duty.
15
SECTION 6.3. Access to Information. (a) Between the date hereof and
the Effective Time, the Company will give Parent and Acquisition and their
authorized representatives reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will permit Parent and Acquisition to make such inspections as
Parent and Acquisition may reasonably require and will cause the Company's
officers and those of its subsidiaries to furnish Parent and Acquisition with
such financial and operating data and other information with respect to the
business and properties of the Company and any of its subsidiaries as Parent or
Acquisition may from time to time reasonably request.
(b) Each of Parent and Acquisition will hold and will cause its
consultants and advisors to hold in confidence, unless compelled to disclose by
judicial or administrative process or, in the written opinion of its legal
counsel, by other requirements of law, all documents and information concerning
the Company and its subsidiaries furnished to Parent or Acquisition in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
Parent or Acquisition from sources other than the Company, or its directors,
officers, representatives or affiliates, (ii) in the public domain through no
fault of Parent or Acquisition or (iii) later lawfully acquired by Parent or
Acquisition on a non-confidential basis from other sources who are not known by
Parent or Acquisition to be bound by a confidentiality agreement or otherwise
prohibited from transmitting the information to Parent or Acquisition by a
contractual, legal or fiduciary obligation) and will not release or disclose
such information to any other person, except its auditors, attorneys, financial
advisors and other consultants and advisors in connection with this Agreement
who need to know such information. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained and, if
requested by or on behalf of the Company, Parent and Acquisition will, and will
use all reasonable efforts to cause their auditors, attorneys, financial
advisors and other consultants, agents and representatives to, return to the
Company or destroy all copies of written information furnished by the Company to
Parent and Acquisition or their agents, representatives or advisors. It is
understood that Parent and Acquisition shall be deemed to have satisfied their
obligation to hold such information confidential if they exercise the same care
as they take to preserve confidentiality for their own similar information.
SECTION 6.4. Additional Agreements; Reasonable Efforts. Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any filings that may be required under the HSR Act,
and any amendments to any thereof; (ii) the taking of all action reasonably
necessary, proper or advisable to secure any necessary consents under existing
debt obligations of the Company and its subsidiaries or amend the notes,
indentures or agreements relating thereto to the extent required by such notes,
indentures or agreements or redeem or repurchase such debt obligations; (iii)
contesting any pending legal proceeding relating to the Offer or the Merger and
(iv) the execution of any additional instruments necessary to consummate the
transactions contemplated hereby. Subject to the terms and conditions of this
Agreement, Parent and Acquisition agree to use all reasonable efforts to cause
the Effective Time to occur as soon as practicable after the shareholder vote
with respect to the Merger. In case at any time after the Effective Time any
further action is necessary to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall take all such necessary
action.
SECTION 6.5. Consents. Parent, Acquisition and the Company each will
use all reasonable efforts to obtain consents of all third parties and
governmental authorities necessary, proper or advisable for the consummation of
the transactions contemplated by this Agreement.
SECTION 6.6. Public Announcements. Parent, Acquisition and the
Company, as the case may be, will consult with one another before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without
16
limitation, the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange or the Nasdaq Stock Market, as determined
by Parent, Acquisition or the Company, as the case may be.
SECTION 6.7. Indemnification; Directors' and Officers' Insurance.
(a) Parent and Acquisition agree that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees and
agents of the Company and its subsidiaries as provided in their respective
charters or by-laws or otherwise in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect. To the maximum extent permitted by the
NYBCL, such indemnification shall be mandatory rather than permissive and the
Surviving Corporation shall advance expenses in connection with such
indemnification.
(b) Parent shall cause the Surviving Corporation to maintain in effect
for not less than three years from the Effective Time the policies of the
directors' and officers' liability and fiduciary insurance most recently
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the beneficiaries thereof so long
as such substitution does not result in gaps or lapses in coverage) with respect
to matters occurring prior to the Effective Time to the extent available
provided that in no event shall the Surviving Corporation be required to expend
more than an amount per year equal to 200% of the current annual premiums paid
by the Company (the "Premium Amount") to maintain or procure insurance coverage
pursuant hereto and further provided that if the Surviving Corporation is unable
to obtain the insurance called for by this Section 6.7(b), the Surviving
Corporation will obtain as much comparable insurance as is available for the
Premium Amount per year.
SECTION 6.8. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company, Parent or Acquisition, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 6.8 shall not cure such breach or non-compliance
or limit or otherwise affect the remedies available hereunder to the party
receiving such notice. Notwithstanding anything to the contrary herein, no
provision of this Agreement shall limit or restrict the right of the Board to
amend, rescind or take or omit to take any action pursuant to or under any
provision of the Rights Agreement; provided, however, that no such amendment,
action or omission will cause the acquisition of Shares pursuant to the Offer or
the consummation of the Merger to give rise to a Triggering Event.
SECTION 6.9. Guarantee of Performance. Parent hereby guarantees the
performance by Acquisition of its obligations under this Agreement and the
indemnification obligations of the Surviving Corporation pursuant to Section
6.7(a) hereof.
SECTION 6.10. Redemption of Rights. At Parent's request, the Company
will take such action as Parent may request to effectuate the redemption, at any
time after the purchase by Acquisition pursuant to the Offer of at least a
majority of the outstanding Shares, of the Rights.
ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger is
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
17
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of the Company by the requisite vote;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any U.S.
court or U.S. governmental authority which prohibits, restrains, enjoins or
restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired; and
(d) Acquisition shall have purchased Shares pursuant to the Offer.
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time, but prior to the Effective
Time:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action is or shall have become nonappealable;
(c) by Parent and Acquisition if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth in
Annex A hereto, Acquisition shall have (A) terminated the Offer or (B) failed to
pay for Shares pursuant to the Offer within 60 days following the date hereof;
(d) by the Company if (i) there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company and Acquisition shall have (A) terminated the Offer or (B) failed to pay
for Shares pursuant to the Offer within 60 days following the date hereof or
(ii) prior to the purchase of Shares pursuant to the Offer, a corporation,
partnership, person or other entity or group shall have made a bona fide offer
that the Board by a majority vote determines in its good faith judgment and in
the exercise of its fiduciary duties, based as to legal matters on the written
opinion of legal counsel, is more favorable to the Company's shareholders than
the Offer and the Merger, provided that such termination under this clause (ii)
shall not be effective until payment of the fee required by Section 8.3(b)
hereof;
(e) by Parent and Acquisition prior to the purchase of Shares pursuant
to the Offer, if (i) there shall have been a breach of any representation or
warranty on the part of the Company having a Material Adverse Effect on the
Company or materially adversely affecting (or materially delaying) the
consummation of the Offer, (ii) there shall have been a breach of any covenant
or agreement on the part of the Company resulting in a Material Adverse Effect
on the Company or materially adversely affecting (or materially delaying) the
consummation of the Offer, which shall not have been cured prior to the earlier
of (A) 10 days following notice of such breach and (B) two business days prior
to the date in which the Offer expires, (iii) the Company shall engage in
negotiations with any entity or group (other than Parent or Acquisition) that
has proposed a Third Party Acquisition (as defined below), (iv) the Board shall
have withdrawn or modified (including by amendment of the Schedule 14D-9) in a
manner adverse to Acquisition its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended another offer, or shall have
adopted any resolution to effect any of the foregoing or (v) the Minimum
Condition shall not have been satisfied by the expiration date of the Offer and
on or prior to
18
such date an entity or group (other than Parent or Acquisition)
shall have made and not withdrawn a proposal with respect to a Third Party
Acquisition; or (f) by the Company if (i) there shall have been a breach of
any representation or warranty on the part of Parent or Acquisition which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) there shall have been a material breach of any covenant or
agreement on the part of Parent or Acquisition and which materially adversely
affects (or materially delays) the consummation of the Offer which shall not
have been cured prior to the earliest of (A) 10 days following notice of such
breach and (B) two business days prior to the date on which the Offer expires.
SECTION 8.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than the provision of this Section 8.2 and Sections 6.3(b) and 8.3 hereof.
Nothing contained in this Section 8.2 shall relieve any party from liability for
any breach of this Agreement.
SECTION 8.3. Fees and Expenses. (a) In the event Parent and
Acquisition terminate this Agreement pursuant to Section 8.1(e)(i) or 8.1(e)(ii)
hereof, Parent and Acquisition would suffer direct and substantial damages,
which damages cannot be determined with reasonable certainty. To compensate
Parent and Acquisition for such damages, the Company shall pay to Parent the
amount of $20 million as liquidated damages immediately upon such a termination.
It is specifically agreed that the amount to be paid pursuant to this Section
8.3(a) represents liquidated damages and not a penalty.
(b) If
(i) Parent and Acquisition terminate this Agreement pursuant to
Section 8.1(e)(ii), (iii), (iv) or (v) hereof and, within 12 months
thereafter the Company enters into an agreement with respect to a
Third Party Acquisition, or a Third Party Acquisition occurs,
involving any party (or any affiliate thereof) (x) with whom the
Company (or its agents) had negotiations with a view to a Third Party
Acquisition, (y) to whom the Company (or its agents) furnished
information with a view to a Third Party Acquisition or (z) who had
submitted a proposal or expressed an interest in a Third Party
Acquisition, in the case of each of clauses (x), (y) and (z) after the
date hereof and prior to such termination; or
(ii) Parent and Acquisition terminate this Agreement pursuant to
Section 8.1(e)(iii), (iv) or (v), and within 12 months thereafter a
Third Party Acquisition shall occur involving a consideration for
Shares (including the value of any stub equity) in excess of the Per
Share Amount; or
(iii) the Company terminates this Agreement pursuant to
8.1(d)(ii) hereof,
the Company shall pay to Parent and Acquisition, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with such termination pursuant to Section
8.1(d)(ii), a fee, in cash, of $50,000,000, provided however that the Company in
no event shall be obligated to pay more than one such $50,000,000 fee with
respect to all such agreements and occurrences and such termination. In case
liquidated damages shall have been paid pursuant to Section 8.3(a) in connection
with such a termination, the amount so paid, minus an amount equal to the fees
and expenses that would have been collectible by Parent and Acquisition pursuant
to Section 8.3(c) but for the operation of clause (ii) of the parenthetical of
the first sentence thereof, shall be credited against the amount payable
pursuant to this Section 8.3(b).
19
"Third Party Acquisition" means the occurrence of any of the following
events (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than Parent, Acquisition or any affiliate thereof
(a "Third Party"); (ii) the acquisition by a Third Party of more than 30% of the
total assets of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of 30% or more of the outstanding Shares; (iv) the
adoption by the Company of a plan of liquidation or the declaration or payment
of an extraordinary dividend; or (v) the repurchase by the Company or any of its
subsidiaries of more than 20% of the outstanding Shares, other than a repurchase
which was not approved by the Company or publicly announced prior to the
termination of this Agreement and which is not part of a series of transactions
resulting in a change of control.
(c) Upon the termination of this Agreement for any reason prior to the
purchase of Shares by Acquisition pursuant to the Offer (other than (i)
termination by the Company pursuant to Section 8.1(f) hereof and (ii)
termination in circumstances requiring the Company to pay liquidated damages as
contemplated by Section 8.3(a) hereof) the Company shall reimburse Parent,
Acquisition and their affiliates (not later than one business day after
submission of statements therefore) for all actual documented out-of-pocket fees
and expenses, not to exceed $8,800,000, actually and reasonably incurred by any
of them or on their behalf in connection with the Offer and the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, fees payable to financing sources, investment bankers,
counsel to any of the foregoing, and accountants). Parent and Acquisition have
provided the Company with an estimate of the amount of such fees and expenses
and, if Parent or Acquisition shall have submitted a request for reimbursement
hereunder, will provide the Company in due course with invoices or other
reasonable evidence of such expenses upon request. The Company shall in any
event pay the amount requested (not to exceed $8,800,000) within one business
day of such request, subject to the Company's right to demand a return of any
portion as to which invoices are not received in due course.
(d) Except as specifically provided in this Section 8.3 each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
SECTION 8.4. Amendment. Subject to Section 1.3(c), this Agreement
may be amended by action taken by the Company, Parent and Acquisition at any
time before or after approval of the Merger by the shareholders of the Company
(if required by applicable law) but, after any such approval, no amendment shall
be made which requires the approval of such shareholders under applicable law
without such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
SECTION 8.5. Extension; Waiver. Subject to Section 1.3(c), at any
time prior to the Effective Time, each party hereto may (i) extend the time for
the performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of either party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of either
party hereto to assert any of its rights hereunder shall not constitute a waiver
of such rights.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
20
SECTION 9.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise; provided, however, that Acquisition may assign any or all of its
rights and obligations under this Agreement to any subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 9.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 9.4. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
if to Parent or Acquisition: Northrop Corporation
1840 Century Park East
Los Angeles, CA 90067
Attention: General Counsel
if to the Company to: Grumman Corporation
1111 Stewart Avenue
Bethpage, New York 11714-3580
Attention: General Counsel
Fax No. 516-575-2921
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.
SECTION 9.6. Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.7. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 6.7 and 9.2, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 9.8. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
21
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
NORTHROP CORPORATION
By: /s/ KENT KRESA
-----------------------------------------------
Name: Kent Kresa
Title: Chairman of the Board, President and Chief
Executive Officer
NORTHROP ACQUISITION, INC.
By: /s/ RICHARD R. MOLLEUR
-----------------------------------------------
Name: Richard R. Molleur
Title: Vice President
GRUMMAN CORPORATION
By: /s/ RENSO L. CAPORALI
-----------------------------------------------
Name: Renso L. Caporali
Title: Chairman of the Board and
Chief Executive Officer
22
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE AGREEMENT
AND PLAN OF MERGER TO WHICH THIS ANNEX A IS ATTACHED
Notwithstanding any other provisions of the Offer, Acquisition shall
not be required to accept for payment or pay for, and may delay the acceptance
for payment of, or the payment for, any Shares, and may terminate the Offer and
not accept for payment or pay for any Shares, if (i) immediately prior to the
expiration of the Offer (as it may be extended in accordance with the Offer),
the Minimum Condition shall not have been satisfied, (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or (iii) at any time on or after April 3, 1994 and prior
to the acceptance for payment of Shares, Acquisition makes a determination
(which shall be made in good faith) that any of the following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer, or any other
action shall have been taken, proposed or threatened, by any state or federal
government or governmental authority or by any U.S. court, other than the
routine application to the Offer, the Merger or other subsequent business
combination of waiting periods under the HSR Act, that presents a substantial
likelihood of (1) making the acceptance for payment of, or the payment for, some
or all of the Shares illegal or otherwise prohibiting, restricting or
significantly delaying consummation of the Offer, (2) imposing material
limitations on the ability of Acquisition to acquire or hold or to exercise
effectively all rights of ownership of the Shares, including, without
limitation, the right to vote any Shares purchased by Acquisition on all matters
properly presented to the shareholders of the Company, or effectively to control
in any material respect the business, assets or operations of the Company, its
subsidiaries, Acquisition or any of their respective affiliates, or (3)
otherwise having a Material Adverse Effect on the Company, Parent or
Acquisition; or
(b) any material adverse change shall have occurred or be threatened,
or Parent or Acquisition shall have become aware of any fact or circumstance,
that has had or is reasonably likely to have a Material Adverse Effect on the
Company; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange, (ii)
the declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (iii) the commencement
of a war, armed hostilities or other international or national calamity directly
or indirectly involving the United States and having a Material Adverse Effect
on the Company or materially adversely affecting (or materially delaying) the
consummation of the Offer, (iv) any limitation (whether or not mandatory), by
any U.S. governmental authority or agency on, or any other event that, in the
judgment of Acquisition, is reasonably likely to materially adversely affect,
the extension of credit by banks or other financial institutions, (v) from the
date of the Merger Agreement through the date of termination or expiration of
the Offer, a decline of at least 25% in the Standard & Poor's 500 Index or (vi)
in the case of any of the situations described in clauses (i) through (v)
inclusive, existing at the date of the commencement of the Offer, a material
acceleration or worsening thereof; or
(d) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Acquisition, any of its
affiliates, or any group of which any of them is a member shall have acquired
beneficial ownership of more than 30% of the outstanding Shares or shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Shares or a
merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries; or
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
23
(f) prior to the purchase of Shares pursuant to the Offer, the Board
shall have withdrawn or modified (including by amendment of the Schedule 14D-9)
in a manner adverse to Acquisition its approval or recommendation of the Offer,
this Agreement or the Merger or shall have recommended another offer, or shall
have adopted any resolution to effect any of the foregoing which, in the sole
judgment of Acquisition in any such case, and regardless of the circumstances
(including any action or omission by Acquisition) giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for payment.
24
NEWS NORTHROP
Public Information Northrop Corporation 1840 Century Park East,
Century City, Los Angeles, California 90067 Telephone 310 553-6262
FOR IMMEDIATE RELEASE
---------------------
NORTHROP TO ACQUIRE GRUMMAN FOR $62 PER SHARE CASH;
- ---------------------------------------------------
COMPANIES SIGN MERGER AGREEMENT
- -------------------------------
LOS ANGELES--April 4, 1994--Northrop Corporation announced today that it has
entered into a merger agreement with Grumman Corporation providing for the
acquisition of all of Grumman's outstanding shares for $62 per share cash. The
transaction is valued at approximately $2.17 billion.
Northrop said that the tender offer, made by its subsidiary Northrop
Acquisition Inc. on March 14, 1994, will be amended today to increase the price
offered to $62 per share in accordance with the merger agreement. The company
noted that the waiting period under the Hart-Scott-Rodino Act had previously
expired on March 30, 1994, and that the tender offer, as amended, will expire
at midnight, New York City time, Friday, April 15, 1994.
Northrop and Grumman together in 1993 would have had combined sales of over
$8 billion, a firm business backlog in excess of $13 billion, and more than
40,000 employees.
"We've said from the start that the combination of Northrop and Grumman is a
great strategic fit," said Kent Kresa, Northrop chairman, president and chief
executive officer. "This merger will enable Northrop to pursue its
primary business objective of being a key member of the nation's defense
industrial team well into the 21st Century."
Mr. Kresa noted that Northrop is paying a "fair price for Grumman, one that
will enable us to enhance profitability over the long term, beginning next
year." He said the
-more-
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NORTHROP TO ACQUIRE GRUMMAN FOR $62 PER SHARE CASH;
- ---------------------------------------------------
COMPANIES SIGN MERGER AGREEMENT
- -------------------------------
acquisition is expected to be "neutral" to Northrop's earnings this year, but
will become "increasingly accretive starting in 1995."
Mr. Kresa reaffirmed his earlier pledge to recommend to Northrop
stockholders that, upon completion of the transaction, the corporation's name be
changed to the Northrop Grumman Corporation. He also said Northrop would follow
through on its earlier statement to consider establishing the headquarters of
the electronics business component of Northrop Grumman on Long Island.
"All of us at Northrop are looking forward to working with our new
colleagues at Grumman," Mr. Kresa said. "Our respect for their heritage and
achievements is well known; our belief in their future is self-evident.
Together, we will work to build a stronger future for our customers, our
shareholders and our people."
Mr. Kresa reiterated the following specific business goals for the combined
Northrop Grumman Corporation:
--establish a leading position in development of integrated reconnaissance-
strike and battle management systems.
--integrate a world-class military aircraft design capability in both
tactical and surveillance aircraft.
--integrate a world-class military systems development capability in
surveillance, electronic warfare and combat systems, and systems for all
military platforms.
--achieve world-class levels of price competitiveness in commercial
aerostructures manufacturing.
--become the supplier of choice for large, highly complex integration
programs for the U.S. Government.
-more-
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NORTHROP TO ACQUIRE GRUMMAN FOR $62 PER SHARE CASH;
- ---------------------------------------------------
COMPANIES SIGN MERGER AGREEMENT
- -------------------------------
Northrop is headquartered in Los Angeles. Its major products include the
B-2 stealth bomber, AGM-137 Tri-Service Standoff Attack Missile, fuselages for
the U.S. Navy's F/A-18 strike fighter and Boeing 747 jetliner, "brilliant"
antiarmor submunitions and electronic countermeasures equipment for a wide
variety of aircraft.
Grumman is headquartered in Bethpage, N.Y. Its major products include the
Joint STARS and E-2C airborne surveillance systems, EA-6B and EF-111 airborne
electronic warfare systems, F-14 fighter/bomber, A-6 bomber, electronic test
equipment and combat systems, and structures and control surfaces for military
and commercial customers.
Northrop has financing commitments totaling $2.8 billion from Chase
Manhattan Bank N.A. and Chemical Bank. Salomon Brothers is financial advisor to
Northrop.
Details of the amended tender offer by Northrop Acquisition, Inc., will be
contained in an amendment to its Schedule 14D-1 filed with the Securities and
Exchange Commission today.
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