EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated as of August 22, 2005,
Among
WHIRLPOOL CORPORATION,
WHIRLPOOL ACQUISITION CO.
and
MAYTAG CORPORATION
<PAGE>
ARTICLE I THE
MERGER....................................................1
SECTION
1.01 THE
MERGER...........................................1
SECTION
1.02
CLOSING..............................................1
SECTION
1.03 EFFECTIVE
TIME.......................................1
SECTION
1.04
EFFECTS..............................................2
SECTION
1.05
CERTIFICATE OF INCORPORATION AND BY-LAWS.............2
SECTION
1.06
DIRECTORS............................................2
SECTION
1.07
OFFICERS.............................................2
ARTICLE II EFFECT ON THE
CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE
OF CERTIFICATES......................................2
SECTION
2.01 EFFECT ON
CAPITAL STOCK..............................2
SECTION
2.02 APPRAISAL
RIGHTS; STOCK OPTIONS; AFFILIATES..........4
SECTION
2.03 EXCHANGE
OF CERTIFICATES.............................5
ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.................9
SECTION
3.01
ORGANIZATION, STANDING AND POWER.....................9
SECTION
3.02 COMPANY
SUBSIDIARIES: EQUITY INTERESTS...............9
SECTION
3.03 CAPITAL
STRUCTURE...................................10
SECTION
3.04 AUTHORITY;
EXECUTION AND DELIVERY; ENFORCEABILITY...11
SECTION
3.05 NO
CONFLICTS; CONSENTS..............................12
SECTION
3.06 SEC
DOCUMENTS; UNDISCLOSED LIABILITIES..............13
SECTION
3.07
INFORMATION SUPPLIED................................15
SECTION
3.08 ABSENCE OF
CERTAIN CHANGES OR EVENTS................16
SECTION
3.09
TAXES...............................................17
SECTION
3.10 ABSENCE OF
CHANGES IN BENEFIT PLANS.................19
SECTION
3.11 ERISA
COMPLIANCE; EXCESS PARACHUTE PAYMENTS.........19
SECTION
3.12
LITIGATION..........................................23
SECTION
3.13 COMPLIANCE
WITH APPLICABLE LAWS.....................23
SECTION
3.14 LABOR
MATTERS.......................................24
SECTION
3.15
ENVIRONMENTAL MATTERS...............................24
SECTION
3.16
INTELLECTUAL PROPERTY...............................26
SECTION
3.17 BROKERS;
SCHEDULE OF FEES AND EXPENSES..............26
SECTION
3.18 OPINION OF
FINANCIAL ADVISOR........................27
<PAGE>
i
ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF PARENT AND SUB.............27
SECTION
4.01
ORGANIZATION, STANDING AND POWER....................27
SECTION
4.02 CAPITAL
STRUCTURE...................................27
SECTION
4.03
SUB.................................................28
SECTION
4.04 AUTHORITY;
EXECUTION AND DELIVERY; ENFORCEABILITY...29
SECTION
4.05 NO
CONFLICTS; CONSENTS..............................29
SECTION
4.06 SEC
DOCUMENTS; UNDISCLOSED LIABILITIES..............30
SECTION
4.07
INFORMATION SUPPLIED................................32
SECTION
4.08 ABSENCE OF
CERTAIN CHANGES OR EVENTS................33
SECTION
4.09
LITIGATION..........................................33
SECTION
4.10 COMPLIANCE
WITH APPLICABLE LAWS.....................33
SECTION
4.11
ENVIRONMENTAL MATTERS...............................33
SECTION
4.12
INTELLECTUAL PROPERTY...............................35
SECTION
4.13
FINANCING...........................................35
SECTION
4.14 BROKERS;
SCHEDULE OF FEES AND EXPENSES..............35
ARTICLE V COVENANTS
RELATING TO CONDUCT OF BUSINESS....................35
SECTION
5.01 CONDUCT OF
BUSINESS.................................35
SECTION
5.02 NO
SOLICITATION.....................................41
ARTICLE VI ADDITIONAL
AGREEMENTS........................................43
SECTION
6.01
PREPARATION OF PROXY STATEMENT AND FORM S-4;
STOCKHOLDERS MEETING................................43
SECTION
6.02 ACCESS TO
INFORMATION; CONFIDENTIALITY..............44
SECTION
6.03 REASONABLE
BEST EFFORTS; NOTIFICATION...............44
SECTION
6.04
ESPP................................................46
SECTION
6.05 BENEFIT
PLANS.......................................46
SECTION
6.06
INDEMNIFICATION.....................................49
SECTION
6.07 FEES AND
EXPENSES...................................49
SECTION
6.08 PUBLIC
ANNOUNCEMENTS................................51
SECTION
6.09 TRANSFER
TAXES......................................51
SECTION
6.10 RIGHTS
AGREEMENTS; CONSEQUENCES IF RIGHTS
TRIGGERED...........................................51
SECTION
6.11
STOCKHOLDER LITIGATION..............................52
SECTION
6.12 STOCK
EXCHANGE LISTING..............................52
<PAGE>
ii
SECTION
6.13
AFFILIATES..........................................52
SECTION
6.14 OTHER
ACTIONS BY PARENT.............................52
SECTION
6.15 SECTION
16(B).......................................52
ARTICLE VII CONDITIONS
PRECEDENT.........................................53
SECTION
7.01 CONDITIONS
TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER..........................................53
SECTION
7.02 CONDITIONS
TO OBLIGATIONS OF PARENT AND SUB.........53
SECTION
7.03 CONDITIONS
TO OBLIGATION OF THE COMPANY.............54
ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER............................55
SECTION
8.01
TERMINATION.........................................55
SECTION
8.02 EFFECT OF
TERMINATION...............................56
SECTION
8.03
AMENDMENT...........................................56
SECTION
8.04 EXTENSION;
WAIVER...................................56
SECTION
8.05 PROCEDURE
FOR TERMINATION...........................56
ARTICLE IX GENERAL
PROVISIONS...........................................57
SECTION
9.01
NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.......57
SECTION
9.02
NOTICES.............................................57
SECTION
9.03
DEFINITIONS.........................................58
SECTION
9.04
INTERPRETATION; DISCLOSURE LETTER...................59
SECTION
9.05
SEVERABILITY........................................59
SECTION
9.06
COUNTERPARTS........................................59
SECTION
9.07 ENTIRE
AGREEMENT; NO THIRD-PARTY BENEFICIARIES......59
SECTION
9.08 GOVERNING
LAW.......................................60
SECTION
9.09
ASSIGNMENT..........................................60
SECTION
9.10
ENFORCEMENT.........................................60
<PAGE>
iii
INDEX OF DEFINED TERMS
Defined Term
Location
------------------------------------------------------------------------------
"20-DAY AVERAGE
PRICE"........................................... 2.01(f)
"2005 BONUS
PLANS"............................................... 6.05(e)
"2006 BONUS
PLANS"............................................... 6.05(e)
"AFFILIATE"......................................................
9.03
"AFFILIATE
AGREEMENT"............................................ 6.13(a)
"ANTITRUST
LAWS"................................................. 6.03(b)(i)
"APPRAISAL
SHARES"............................................... 2.02(a)
"BOOK ENTRY
SHARES".............................................. 2.03(a)
"CASH
LTIPS".....................................................
2.02(b)(2)
"CERTIFICATE"....................................................
2.01(d)
"CERTIFICATE OF
MERGER".......................................... 1.03
"CLOSING"........................................................
1.02
"CLOSING
DATE"...................................................
1.02
"CODE"...........................................................
2.03(j)
"COMMON SHARES
TRUST"............................................ 2.03(e)(2)
"COMMONLY CONTROLLED
ENTITY"..................................... 3.10(a)
"COMPANY"........................................................
Preamble
"COMPANY BENEFIT
AGREEMENTS"..................................... 3.10(b)
"COMPANY BENEFIT
PLANS".......................................... 3.10(a)
"COMPANY
BOARD"..................................................
2.02(b)(1)
"COMPANY
BY-LAWS"................................................
3.01
"COMPANY CAPITAL
STOCK".......................................... 3.03(a)
"COMPANY
CHARTER"................................................
3.01
"COMPANY COMMON
STOCK"........................................... 2.01
"COMPANY DISCLOSURE
LETTER"...................................... Article III
"COMPANY
EMPLOYEES"..............................................
6.05(d)
"COMPANY MATERIAL ADVERSE
EFFECT"................................ 9.03
"COMPANY PENSION
PLANS".......................................... 3.11(a)
"COMPANY PREFERRED
STOCK"........................................ 3.03(a)
"COMPANY
RIGHTS".................................................
3.03(a)
"COMPANY RIGHTS
AGREEMENT"....................................... 3.03(a)
"COMPANY SEC
DOCUMENTS".......................................... 3.06(a)
"COMPANY STOCK
OPTION"........................................... 2.02(b)(1)
"COMPANY STOCK
PLANS"............................................ 2.02(b)(4)
"COMPANY STOCKHOLDER
APPROVAL"................................... 3.04(c)
"COMPANY STOCKHOLDERS
MEETING"................................... 6.01(d)
"COMPANY
SUBSIDIARY".............................................
3.01
"COMPANY TAKEOVER
PROPOSAL"...................................... 5.02(f)
"COMPETITIVELY SENSITIVE
INFORMATION"............................ 6.02(a)
"CONFIDENTIALITY
AGREEMENT"...................................... 6.02(a)
"CONSENT"........................................................
3.05(b)
"CONTRACT".......................................................
3.05(a)
"DGCL"...........................................................
1.01
<PAGE>
iv
"DISQUALIFIED
INDIVIDUAL"..................................... 3.11(e)
"EFFECTIVE
TIME".............................................. 1.03
"ENVIRONMENTAL
CLAIM"......................................... 3.15(i)(1)
"ENVIRONMENTAL
LAWS".......................................... 3.15(i)(2)
"ENVIRONMENTAL
PERMITS"....................................... 3.15(b)(i)
"ERISA".......................................................
3.11(a)
"ESPP"........................................................
2.02(b)(4)
"EXCESS
SHARES"............................................... 2.03(e)(1)
"EXCHANGE
ACT"................................................ 3.05(b)
"EXCHANGE
AGENT".............................................. 2.03(a)
"EXCHANGE
FUND"............................................... 2.03(a)
"EXCHANGE
RATIO".............................................. 2.01(f)
"EXCLUDED
PARTICIPANTS"....................................... 5.01(a)
"FILED COMPANY SEC
DOCUMENT".................................. Article III
"FILED PARENT SEC
DOCUMENT"................................... Article IV
"FORM
S4".....................................................
4.05(b)(iii)(A)
"GAAP"........................................................
3.06(b)
"GOVERNMENTAL ANTITRUST
ENTITY"............................... 6.03(b)(i)
"GOVERNMENTAL
ENTITY"......................................... 3.05(b)
"HAZARDOUS
MATERIALS"......................................... 3.15(i)(3)
"HSR
ACT".....................................................
3.05(b)
"INTELLECTUAL PROPERTY
RIGHTS"................................ 3.16
"JUDGMENT"....................................................
3.05(a)
"KNOWLEDGE"...................................................
9.03
"LAW".........................................................
3.05(a)
"LAZARD"......................................................
3.17
"LIENS".......................................................
3.02(a)
"MAXIMUM
PREMIUM"............................................. 6.06(b)
"MERGER"......................................................
Recitals
"MERGER
CONSIDERATION"........................................ 2.01(c)
"NEW
PLANS"...................................................
6.05(b)
"NON-U.S. BENEFIT
PLANS"....................................... 3.11(j)
"NON-CLEARANCE TERMINATION
FEE"................................ 6.07(d)
"NYSE"........................................................
2.01(f)
"OLD
PLANS"...................................................
6.05(b)
"OUTSIDE
DATE"................................................ 8.01(b)(i)
"PARENT"......................................................
Preamble
"PARENT
BOARD"................................................ 4.05(c)
"PARENT
BYLAWS"............................................... 4.02
"PARENT CAPITAL
STOCK"........................................ 4.02
"PARENT
CHARTER".............................................. 4.02
"PARENT COMMON
STOCK"......................................... 1.01
"PARENT DISCLOSURE
LETTER".................................... Article IV
"PARENT MATERIAL ADVERSE
EFFECT".............................. 9.03
"PARENT PREFERRED
STOCK"...................................... 4.02
"PARENT
RIGHTS"............................................... 4.02
<PAGE>
v
"PARENT RIGHTS
AGREEMENT"........................................ 4.02
"PARENT SEC
DOCUMENTS"........................................... 4.06(a)
"PARENT
SUBSIDIARY"..............................................
4.02
"PARTICIPANT"....................................................
3.08(iv)(A)
"PERMITS"........................................................
3.13
"PERSON".........................................................
9.03
"PRIMARY COMPANY
EXECUTIVE"...................................... 3.11(e)
"PROXY
STATEMENT"................................................
3.05(b)
"RELEASE"........................................................
3.15(i)(4)
"REPRESENTATIVES"................................................
5.02(a)
"RETENTION
BONUS"................................................ 6.05(d)
"RETENTION
POOL"................................................. 6.05(d)
"SARBANES-OXLEY
ACT"............................................. 3.06(d)
"SEC"............................................................
2.02(b)(3)
"SECTION
262"....................................................
2.02(a)
"SECURITIES
ACT"................................................. 3.06(b)
"SEVERANCE
PLAN"................................................. 6.05(f)
"SUB"............................................................
Preamble
"SUBSIDIARY".....................................................
9.03
"SUPERIOR COMPANY
PROPOSAL"...................................... 5.02(f)
"SURVIVING
CORPORATION".......................................... 1.01
"TAX
RETURN".....................................................
3.09(a)
"TAXES"..........................................................
3.09(a)
"TAXING
AUTHORITY"...............................................
3.09(a)
"TRANSACTIONS"...................................................
1.01
"TRANSFER
TAXES".................................................
6.09
"TRUST
AGREEMENT"................................................
3.11(i)
"US PENSION
PLAN"................................................ 3.11(c)
"VOTING COMPANY
DEBT"............................................ 3.03(a)
"VESTING
DATE"...................................................
6.05(d)
"TRITON".........................................................
6.05(b)
"TRITON
AGREEMENT"...............................................
6.05(b)
"VOTING PARENT
DEBT"............................................. 4.02
<PAGE>
vi
AGREEMENT AND PLAN OF MERGER dated as of August 22, 2005, among
WHIRLPOOL CORPORATION, a Delaware
corporation ("PARENT"), WHIRLPOOL ACQUISITION
CO., a Delaware corporation and a wholly
owned subsidiary of Parent ("SUB"), and
MAYTAG CORPORATION, a Delaware corporation
(the "COMPANY").
WHEREAS the respective Boards of Directors of Parent, Sub and
the
Company have approved the acquisition of
the Company by Parent on the terms and
subject to the conditions set forth in this
Agreement;
WHEREAS the respective Boards of Directors of Sub and the Company
have
approved and declared advisable this
Agreement and the merger (the "MERGER") of
Sub into the Company, on the terms and
subject to the conditions set forth in
this Agreement; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and
agreements in connection with the
Merger and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE
MERGER. On the terms and subject to the conditions set
forth in this Agreement, and in accordance
with the General Corporation Law of
the State of Delaware (the "DGCL"), Sub
shall be merged with and into the
Company at the Effective Time. At the
Effective Time, the separate corporate
existence of Sub shall cease and the
Company shall continue as the surviving
corporation (the "SURVIVING CORPORATION").
The Merger, the payment of cash and
shares of common stock, par value $1.00 per
share, of Parent ("PARENT COMMON
STOCK") in connection with the Merger and
the other transactions contemplated by
this Agreement are referred to herein as
the "TRANSACTIONS".
SECTION 1.02
CLOSING. The closing (the "CLOSING") of the Merger shall take
place at the offices of Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York,
New York 10153 at 10:00 a.m. on the second
business day following the
satisfaction (or, to the extent permitted
by Law, waiver by all parties) of the
conditions set forth in Section 7.01 (other
than those conditions that by their
nature are to be fulfilled at the Closing),
or, if on such day any condition set
forth in Section 7.02 or 7.03 has not been
satisfied (or, to the extent
permitted by Law, waived by the party or
parties entitled to the benefits
thereof and other than those conditions
that by their nature are to be fulfilled
at the Closing), as soon as practicable
after all the conditions set forth in
Article VII have been satisfied (or, to the
extent permitted by Law, waived by
the parties entitled to the benefits
thereof), or at such other place, time and
date as shall be agreed in writing between
Parent and the Company. The date on
which the Closing occurs is referred to in
this Agreement as the "CLOSING DATE".
SECTION 1.03
EFFECTIVE TIME. Prior to the Closing, Parent shall prepare,
and on the Closing Date or as soon as
practicable thereafter the Surviving
Corporation shall file with the Secretary
of State of the State of Delaware, a
certificate of merger (the "CERTIFICATE OF
MERGER")
<PAGE>
executed in accordance with the relevant
provisions of the DGCL and shall make
all other filings or recordings required
under the DGCL. The Merger shall become
effective at such time as the Certificate
of Merger is duly filed with such
Secretary of State, or at such subsequent
time as Parent and the Company shall
agree and specify in the Certificate of
Merger (the time the Merger becomes
effective being the "EFFECTIVE TIME").
SECTION 1.04
EFFECTS. The Merger shall have the effects set forth in
Section 259 of the DGCL.
SECTION 1.05
CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The certificate
of incorporation of the Company, as in
effect immediately prior to the Effective
Time, shall be the certificate of
incorporation of the Surviving Corporation
until thereafter changed or amended as
provided therein or by applicable Law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the
Surviving Corporation until
thereafter changed or amended as provided
therein or by applicable Law.
SECTION 1.06
DIRECTORS. The directors of Sub immediately prior to the
Effective Time shall be the directors of
the Surviving Corporation, until the
earlier of their resignation or removal or
until their respective successors are
duly elected and qualified, as the case may
be.
SECTION 1.07
OFFICERS. The officers of the Company immediately prior to the
Effective Time shall be the officers of the
Surviving Corporation, until the
earlier of their resignation or removal or
until their respective successors are
duly elected or appointed and qualified, as
the case may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01
EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the
part of the holder of any shares of
common stock, par value $1.25 per share, of
the Company ("COMPANY COMMON STOCK")
or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF
SUB. Each issued and outstanding share of capital
stock of Sub shall be converted into and
become one fully paid and nonassessable
share of common stock, par value $1.00 per
share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each
share
of Company Common Stock that is owned by
the Company, Parent or Sub shall no
longer be outstanding and shall
automatically be canceled and shall cease to
exist, and no consideration shall be
delivered or deliverable in exchange
therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Sections
2.01(b),
2.02(a) and 2.02(b), each issued and
outstanding share of Company Common Stock
shall be
<PAGE>
2
converted into the right to receive (x)
$10.50 in cash, without interest, and
(y) that number of validly issued, fully
paid and non-assessable shares of
Parent Common Stock equal to the Exchange
Ratio (together, the "MERGER
CONSIDERATION").
(d) EFFECT OF CONVERSION. From and after the Effective Time, all
of
the shares of Company Common Stock
converted into the Merger Consideration
pursuant to this Section 2.01 shall no
longer be outstanding and shall
automatically be canceled and retired and
shall cease to exist, and each holder
of a certificate (each a "CERTIFICATE")
theretofore representing any such shares
of Company Common Stock shall thereafter
cease to have any rights with respect
thereto, except the right to receive (i)
the Merger Consideration, (ii) any
dividends and other distributions in
accordance with Section 2.03(d) and 2.03(f)
and (iii) any cash to be paid in lieu of
any fractional share of Parent Common
Stock in accordance with Section
2.03(e).
(e) CHANGES TO STOCK. If at any time during the period between
the
date of this Agreement and the Effective
Time, any change in the outstanding
shares of capital stock of Parent or the
Company shall occur by reason of any
reclassification, recapitalization, stock
split or combination, split-up,
exchange or readjustment of shares, rights
issued in respect of Parent Common
Stock or any stock dividend thereon with a
record date during such period, the
Merger Consideration, the Exchange Ratio
and any other similarly dependent
items, as the case may be, shall be
appropriately adjusted to provide the
holders of shares of Company Common Stock
the same economic effect as
contemplated by this Agreement prior to
such event.
(f) DEFINITIONS. For purposes of this Agreement:
"EXCHANGE RATIO" means
the quotient obtained by dividing $10.50 by the
20-Day Average Price and rounding to the
nearest 1/10,000; provided that if the
20-Day Average Price is less than $75.1039,
the Exchange Ratio shall be 0.1398;
and if the 20-Day Average Price is greater
than $91.7937, the Exchange Ratio
shall be equal to 0.1144.
"20-DAY AVERAGE PRICE" shall mean the average (rounded to
nearest
1/10,000), of the volume weighted averages
(rounded to the nearest 1/10,000), of
the trading prices of the Parent Common
Stock on the New York Stock Exchange,
Inc. (the "NYSE") as reported by Bloomberg
Financial Markets (or such other
source as the parties shall agree in
writing) for each of the 20 consecutive
trading days ending on and including the
second trading day prior to the Closing
Date.
SECTION 2.02
APPRAISAL RIGHTS; STOCK OPTIONS; AFFILIATES.
(a) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement
to
the contrary, shares ("APPRAISAL SHARES")
of Company Common Stock that are
issued and outstanding immediately prior to
the Effective Time and that are held
by any person who is entitled to demand and
properly demands appraisal of such
Appraisal Shares pursuant to, and who
complies with, Section 262 of the DGCL
("SECTION 262") shall not be converted into
Merger Consideration as provided in
Section 2.01(c), but rather the holders of
Appraisal Shares shall be entitled to
the rights provided for under Section 262;
provided, however, that if any such
holder shall fail to perfect or otherwise
shall waive, withdraw or lose the
right to appraisal under Section 262, then
such holder's Appraisal Shares shall
be deemed to have been converted as of
<PAGE>
3
the Effective Time into, and to have become
exchangeable solely for the right to
receive, the Merger Consideration as
provided in Section 2.01(c) and unpaid
dividends and other distributions as
provided in Section 2.03(d). The Company
shall serve prompt notice to Parent of any
demands received by the Company for
appraisal of any shares of Company Common
Stock, and Parent shall have the right
to participate in and direct all
negotiations and proceedings with respect to
such demands. Prior to the Effective Time,
the Company shall not, without the
prior written consent of Parent, make any
payment with respect to, or settle or
offer to settle, any such demands, or agree
to do any of the foregoing.
(b) STOCK OPTIONS AND EQUITY AWARDS.
(1) The Board of Directors of the Company (the "COMPANY
BOARD"),
or the appropriate committee thereof, shall
take such action as is necessary so
that at the Effective Time, each
outstanding option to purchase shares of
Company Common Stock (a "COMPANY STOCK
OPTION") granted under the Company Stock
Plans, whether or not vested, shall cease
to represent a right to acquire shares
of Company Common Stock, and shall
thereafter constitute an option to acquire,
on the same terms and conditions as were
applicable to such Company Stock Option
pursuant to the relevant Company Stock Plan
under which it was issued and the
agreement evidencing the grant thereof
prior to the Effective Time, the number
(rounded to the nearest whole number) of
shares of Parent Common Stock
determined by multiplying (x) the number of
shares of Company Common Stock
subject to such Company Stock Option
immediately prior to the Effective Time by
(y) two times the Exchange Ratio. The
exercise price or base price per share of
Parent Common Stock subject to any such
Company Stock Option at and after the
Effective Time shall be an amount (rounded
to the nearest one hundredth of a
cent) equal to (A) the exercise price or
base price per share of Company Common
Stock subject to such Company Stock Option
prior to the Effective Time divided
by (B) two times the Exchange Ratio. The
parties acknowledge that as of the
Effective Time, all Company Stock Options
granted under the 2002 Employee and
Director Stock Incentive Plan, the 1998
Non-Employee Directors' Stock Option
Plan, the 2000 Employee Stock Incentive
Plan, the 1996 Employee Stock Incentive
Plan, the 1992 Stock Option Plan for
Executives and Key Employees and the 1989
Stock Option Plan for Non-Employee
Directors, if unvested, shall vest in full
and shall remain exercisable in accordance
with the terms of the applicable plan
documents and award agreements for each
such Company Stock Option. The parties
will make good faith efforts to make
equitable adjustments to ensure that the
conversions of Company Stock Options
contemplated by this Section 2.02(b)(1)
comply with Section 409A of the Code.
(2) At the Effective Time, (i) each restricted stock unit or
performance unit granted under the Company
Stock Plans, if unvested, shall vest
in full and be settled for a cash payment
to the holder of such award equal to
$10.50 plus (A) the Exchange Ratio times
(B) the closing price of the Parent
Common Stock on the Closing Date per unit;
and (ii) each award granted under the
Company's Performance Incentive Award Plan
and the Company's Executive Economic
Profit Plan (together, the "CASH LTIPS")
shall vest and be settled in cash
(based on a per share valuation equal to
$10.50 plus (A) the Exchange Ratio
times (B) the closing price of the Parent
Common Stock on the Closing Date) at
the Effective Time at 100% of target.
<PAGE>
4
(3) Parent shall take all corporate action necessary to assume
as
of the Effective Time the Company's
obligations under the Company Stock Options
and to otherwise effectuate the provisions
of this Section 2.02(b), and shall
reserve for issuance a sufficient number of
shares of Parent Common Stock for
delivery pursuant to the terms set forth in
this Section 2.02(b). Effective as
of the Closing Date, Parent shall file with
the U.S. Securities and Exchange
Commission (the "SEC") a registration
statement on an appropriate form or a
post-effective amendment to a previously
filed registration statement under the
Securities Act with respect to the Parent
Common Stock subject to Company Stock
Options and shall use its reasonable best
efforts to maintain the effectiveness
of such registration statement (and
maintain the current status of the
prospectus contained therein), as well as
comply with any applicable state
securities or "blue sky" laws, for so long
as such options remain outstanding.
(4) For purposes of this Agreement, "COMPANY STOCK PLANS" mean
the 2002 Employee and Director Stock
Incentive Plan, the 1998 Non-Employee
Directors' Stock Option Plan, the 2000
Employee Stock Incentive Plan, the 1996
Employee Stock Incentive Plan, the 1992
Stock Option Plan for Executives and Key
Employees, the 1989 Stock Option Plan for
Non-Employee Directors and the
Company's Employee Discount Stock Purchase
Plan (the "ESPP").
(c) COMPANY AFFILIATES. Anything to the contrary herein
notwithstanding, no shares of Parent Common
Stock (or certificates therefor)
shall be issued in exchange for any
Certificate to any "AFFILIATE" of the
Company (identified pursuant to Section
6.13) until such person shall have
delivered to Parent duly executed Affiliate
Agreements as contemplated by
Section 6.13. Such persons shall be subject
to the restrictions described in
such agreements, and such shares (or
certificates therefor) shall bear a legend
describing such restrictions.
SECTION 2.03
EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
appoint
the transfer agent for the Parent Common
Stock or such other exchange agent
reasonably acceptable to the Company (the
"EXCHANGE AGENT") for the purpose of
exchanging Certificates representing shares
of Company Common Stock and
non-certificated shares represented by book
entry ("BOOK ENTRY SHARES") for the
Merger Consideration. Parent will make
available to the Exchange Agent, at or
prior to the Effective Time, the cash and
Parent Common Stock to be delivered in
respect of the shares of Company Common
Stock (such cash and Parent Common Stock
being hereinafter referred to as the
"EXCHANGE FUND"). Promptly after the
Effective Time, Parent will send, or will
cause the Exchange Agent to send, to
each holder of record of shares of Company
Common Stock as of the Effective Time
a letter of transmittal for use in such
exchange (which shall specify that
delivery shall be effected, and risk of
loss and title to the Certificates
theretofore representing shares of Company
Common Stock shall pass, only upon
proper delivery of such Certificates to the
Exchange Agent or by appropriate
guarantee of delivery in the form
customarily used in transactions of this
nature from a member of a national
securities exchange, a member of the National
Association of Securities Dealers, Inc., or
a commercial bank or trust company
in the United States) in such form as the
Company and Parent may reasonably
agree, for use in effecting delivery of
shares of Company Common Stock to the
Exchange Agent. Exchange of any Book-Entry
Shares shall be effected in
accordance with
<PAGE>
5
Parent's customary procedures with respect
to securities represented by book
entry.
(b) EXCHANGE PROCEDURE. Each holder of shares of Company Common
Stock
that have been converted into a right to
receive the Merger Consideration, upon
surrender to the Exchange Agent of a
Certificate, together with a properly
completed letter of transmittal, will be
entitled to receive (A) one or more
shares of Parent Common Stock (which shall
be in non-certificated book-entry
form unless a physical certificate is
requested) representing, in the aggregate,
the whole number of shares of Parent Common
Stock, if any, that such holder has
the right to receive pursuant to Section
2.01(c) and (B) a check in the amount
equal to the cash portion of the Merger
Consideration, if any, that such holder
has the right to receive pursuant to
Section 2.01(c) and this Article II,
including cash payable in lieu of
fractional shares pursuant to Section 2.03(e)
and dividends and other distributions
pursuant to Section 2.03(d). No interest
shall be paid or accrued on any Merger
Consideration, cash in lieu of fractional
shares or on any unpaid dividends and
distributions payable to holders of
Certificates. Until so surrendered, each
such Certificate shall, after the
Effective Time, represent for all purposes
only the right to receive such Merger
Consideration and any dividends and other
distributions in accordance with
Sections 2.03(d) and 2.03(f), and any cash
to be paid in lieu of any fractional
share of Parent Common Stock in accordance
with Section 2.03(e).
(c) CERTIFICATE HOLDER. If any portion of the Merger Consideration
is
to be registered in the name of a person
other than the person in whose name the
applicable surrendered Certificate is
registered, it shall be a condition to the
registration thereof that the surrendered
Certificate shall be properly endorsed
or otherwise be in proper form for transfer
and that the person requesting such
delivery of the Merger Consideration shall
pay to the Exchange Agent any
transfer or other similar Taxes required as
a result of such registration in the
name of a person other than the registered
holder of such Certificate or
establish to the satisfaction of the
Exchange Agent that such Tax has been paid
or is not payable.
(d) DIVIDENDS AND DISTRIBUTIONS. No dividends or other
distributions
with respect to shares of Parent Common
Stock issued in the Merger shall be paid
to the holder of any unsurrendered
Certificates or Book-Entry Shares until such
Certificates or Book-Entry Shares are
properly surrendered. Following such
surrender, there shall be paid, without
interest, to the record holder of the
shares of Parent Common Stock issued in
exchange therefor (i) at the time of
such surrender, all dividends and other
distributions payable in respect of such
shares of Parent Common Stock with a record
date after the Effective Time and a
payment date on or prior to the date of
such surrender and not previously paid
and (ii) at the appropriate payment date,
the dividends or other distributions
payable with respect to such shares of
Parent Common Stock with a record date
after the Effective Time but with a payment
date subsequent to such surrender.
For purposes of dividends or other
distributions in respect of shares of Parent
Common Stock, all shares of Parent Common
Stock to be issued pursuant to the
Merger shall be entitled to dividends
pursuant to the immediately preceding
sentence as if issued and outstanding as of
the Effective Time.
(e) FRACTIONAL
SHARES.
<PAGE>
6
(1) No fractional shares of Parent Common Stock shall be issued
in the Merger, but in lieu thereof each
holder of shares of Company Common Stock
otherwise entitled to a fractional share of
Parent Common Stock will be entitled
to receive, from the Exchange Agent in
accordance with the provisions of this
Section 2.03(e), a cash payment in lieu of
such fractional shares of Parent
Common Stock representing such holder's
proportionate interest, if any, in the
proceeds from the sale by the Exchange
Agent in one or more transactions of
shares of Parent Common Stock equal to the
excess of (x) the aggregate number of
shares of Parent Common Stock to be
delivered to the Exchange Agent by Parent
pursuant to Section 2.03(a) over (y) the
aggregate number of whole shares of
Parent Common Stock to be distributed to
the holders of Certificates pursuant to
Section 2.03(b) (such excess being herein
called the "EXCESS SHARES"). As soon
as practicable after the Effective Time,
the Exchange Agent, as agent for the
holders of the Certificates representing
shares of Company Common Stock, shall
sell the Excess Shares at then prevailing
prices on the NYSE in the manner
provided in the following paragraph.
(2) The sale of the Excess Shares by the Exchange Agent, as
agent
for the holders that would otherwise
receive fractional shares, shall be
executed on the NYSE through one or more
member firms of the NYSE and shall be
executed in round lots to the extent
practicable. Until the proceeds of such
sale or sales have been distributed to the
holders of shares of Company Common
Stock, the Exchange Agent shall hold such
proceeds in trust for the holders of
shares of Company Common Stock (the "COMMON
SHARES TRUST"). Parent shall pay all
commissions, transfer taxes and other
out-of-pocket transactions costs,
including the expenses and compensation of
the Exchange Agent, incurred in
connection with such sale of Excess Shares.
The Exchange Agent shall determine
the portion of the Common Shares Trust to
which each holder of shares of Company
Common Stock shall be entitled, if any, by
multiplying the amount of the
aggregate proceeds comprising the Common
Shares Trust by a fraction, the
numerator of which is the amount of the
fractional share interest to which such
holder of shares of Company Common Stock
would otherwise be entitled and the
denominator of which is the aggregate
amount of fractional share interests to
which all holders of shares of Company
Common Stock would otherwise be entitled.
(3)
As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of
shares of Company Common Stock in lieu
of any fractional shares of Parent Common
Stock, the Exchange Agent shall make
available such amounts to such holders of
shares of Company Common Stock without
interest, subject to and in accordance with
this Section 2.03.
(f) NO FURTHER
OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid in accordance with the
terms of this Article II upon
conversion of any shares of Company Common
Stock shall be deemed to have been
paid in full satisfaction of all rights
pertaining to such shares of Company
Common Stock, subject, however, to the
Surviving Corporation's obligation to pay
any dividends or make any other
distributions with a record date prior to the
Effective Time that may have been declared
or made by the Company on such shares
of Company Common Stock in accordance with
the terms of this Agreement or prior
to the date of this Agreement and which
remain unpaid at the Effective Time, and
after the Effective Time there shall be no
further registration of transfers on
the stock transfer books of the Surviving
Corporation of shares of Company
Common Stock that were outstanding
immediately prior to
<PAGE>
7
the Effective Time. If, after the Effective
Time, any certificates formerly
representing shares of Company Common Stock
are presented to the Surviving
Corporation or the Exchange Agent for any
reason, they shall be canceled and
exchanged as provided in this Article
II.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund
that remains undistributed to the holders
of Company Common Stock for six months
after the Effective Time shall be delivered
to Parent, upon demand, and any
holder of Company Common Stock who has not
theretofore complied with this
Article II shall thereafter look only to
Parent and/or the Surviving Corporation
for payment of its claim for Merger
Consideration.
(h) NO LIABILITY. None of Parent, Sub, the Company or the
Exchange
Agent shall be liable to any person in
respect of any cash or Parent Common
Stock from the Exchange Fund delivered to a
public official to the extent
required by any applicable abandoned
property, escheat or similar Law. If any
Certificate has not been surrendered
immediately prior to such date on which the
Merger Consideration in respect of such
Certificate would otherwise irrevocably
escheat to or become the property of any
Governmental Entity, any such shares,
cash, dividends or distributions in respect
of such Certificate 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.
(i) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any
cash included in the Exchange Fund, as
directed by Parent, in (i) direct
obligations of the United States of
America, (ii) obligations for which the full
faith and credit of the United States of
America is pledged to provide for the
payment of all principal and interest or
(iii) commercial paper obligations
receiving the highest rating from either
Moody's Investor Services, Inc. or
Standard & Poor's, a division of The
McGraw Hill Companies, or a combination
thereof; provided that, in any such case,
no such instrument shall have a
maturity exceeding three months from the
date of the investment therein. Any
interest and other income resulting from
such investments shall be paid to
Parent.
(j) WITHHOLDING RIGHTS. Parent and the Exchange Agent shall be
entitled to deduct and withhold from the
consideration otherwise payable to any
holder of Company Common Stock pursuant to
this Agreement such amounts as are
required to be deducted and withheld with
respect to the making of such payment
under the Internal Revenue Code of 1986, as
amended, and the rules and
regulations promulgated thereunder (the
"CODE"), or under any other provision of
applicable federal, state, local or foreign
tax Law. To the extent that amounts
are so withheld and paid over to the
appropriate taxing authority by Parent or
the Exchange Agent, as applicable, such
withheld amounts shall be treated for
all purposes of this Agreement as having
been paid to the holders of the shares
of Company Common Stock in respect of which
such deduction and withholding was
made by Parent or the Exchange Agent.
(k) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen, defaced or destroyed, upon the
making of an affidavit of that fact by
the person claiming such Certificate to be
lost, stolen, defaced or destroyed
and, if reasonably required by the
Surviving Corporation, the posting by such
person of a bond in such reasonable amount
as the Surviving Corporation may
direct as indemnity against any claim that
may be made against it with respect
to such Certificate, the Exchange Agent
shall pay in respect of such lost,
stolen, defaced or destroyed
<PAGE>
8
Certificate the Merger Consideration with
respect to each share of Company
Common Stock formerly represented by such
Certificate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub that, except
as
set forth in the disclosure letter, dated
as of the date of this Agreement, from
the Company to Parent and Sub (the "COMPANY
DISCLOSURE LETTER") or in any
Company SEC Document filed and publicly
available prior to the date of this
Agreement (each, a "FILED COMPANY SEC
Document"):
SECTION 3.01
ORGANIZATION, STANDING AND POWER. Each of the Company and each
of its subsidiaries (each, a "COMPANY
SUBSIDIARY") (a) is duly organized,
validly existing and in good standing under
the laws of the jurisdiction in
which it is organized, other than defects
in such organization, existence or
good standing that, individually and in the
aggregate, would not reasonably be
expected to have a Company Material Adverse
Effect, and (b) has full corporate
power and authority and possesses all
governmental franchises, licenses,
permits, authorizations and approvals
necessary to enable it to own, lease or
otherwise hold its properties and assets
and to conduct its businesses as
presently conducted, other than such
corporate power and authority, franchises,
licenses, permits, authorizations and
approvals the lack of which, individually
and in the aggregate, would not reasonably
be expected to have a Company
Material Adverse Effect. The Company and
each Company Subsidiary is duly
qualified to do business in each
jurisdiction where the nature of its business
or the ownership or leasing of its
properties make such qualification necessary
or the failure to so qualify would
reasonably be expected to have a Company
Material Adverse Effect. The Company has
delivered to Parent true and complete
copies of the certificate of incorporation
of the Company, as amended to the
date of this Agreement (as so amended, the
"COMPANY CHARTER"), and the by-laws
of the Company, as amended to the date of
this Agreement (as so amended, the
"COMPANY BY-LAWS").
SECTION 3.02
COMPANY SUBSIDIARIES: EQUITY INTERESTS.
(a) Section 3.02(a) of the Company Disclosure Letter lists each
"SIGNIFICANT SUBSIDIARY", as such term is
defined in Rule 1-02 of Regulation S-X
under the Exchange Act and its jurisdiction
of organization. All the outstanding
shares of capital stock of each Company
Subsidiary have been validly issued and
are fully paid and nonassessable and are
owned by the Company, by another
Company Subsidiary or by the Company and
another Company Subsidiary, free and
clear of all pledges, liens, charges,
mortgages, encumbrances and security
interests of any kind or nature whatsoever
(collectively, "LIENS").
(b) Except for its interests in the Company Subsidiaries, the
Company
does not own, directly or indirectly, any
capital stock, equity membership
interest, partnership interest, joint
venture interest or other equity interest
in any person.
SECTION 3.03
CAPITAL STRUCTURE. (a) The authorized capital stock of the
Company consists of 200,000,000 shares of
Company Common Stock and 24,000,000
shares of preferred stock, par value $1.00
per share ("COMPANY PREFERRED STOCK"
and, together with the Company
<PAGE>
9
Common Stock, the "COMPANY CAPITAL STOCK").
At the close of business on July 31,
2005, (i) 79,943,633 shares of Company
Common Stock (each together with a
Company Right) and no shares of Company
Preferred Stock were issued and
outstanding, (ii) 37,206,960 shares of
Company Common Stock were held by the
Company in its treasury, (iii) 7,521,608
shares of Company Common Stock were
subject to outstanding Company Stock
Options and 891,921 additional shares of
Company Common Stock were reserved for
issuance pursuant to the Company Stock
Plans, (other than any shares reserved
under the Employee Discount Stock
Purchase Plan) and (iv) 4,000,000 shares of
Company Preferred Stock were
reserved for issuance in connection with
the rights (the "COMPANY RIGHTS")
issued pursuant to the Rights Agreement
dated as of February 12, 1998 (as
amended from time to time, the "COMPANY
RIGHTS AGREEMENT"), between the Company
and Computershare Investor Services, LLC,
as Rights Agent. Except as set forth
above, at the close of business on July 31,
2005, no shares of capital stock or
other voting securities of the Company were
issued, reserved for issuance or
outstanding. During the period from July
31, 2005 to the date of this Agreement,
(x) there have been no issuances by the
Company of shares of capital stock or
other voting securities of the Company
other than issuances of shares of Company
Common Stock pursuant to the exercise of
Company Stock Options outstanding on
such date as required by their terms as in
effect on the date of such issuance
and (y) there have been no issuances by the
Company of options, warrants or
other rights to acquire shares of capital
stock or other voting securities of
the Company. There are no outstanding stock
appreciation rights linked to the
price of the Company Common Stock that were
not granted in tandem with a related
Company Stock Option. All outstanding
shares of Company Capital Stock are, and
all such shares that may be issued prior to
the Effective Time will be when
issued, duly authorized, validly issued,
fully paid and nonassessable and not
subject to or issued in violation of any
purchase option, call option, right of
first refusal, preemptive right,
subscription right or any similar right under
any provision of the DGCL, the Company
Charter, the Company By-laws or any
Contract to which the Company is a party or
otherwise bound. There are not any
bonds, debentures, notes or other
indebtedness of the Company having the right
to vote (or convertible into, or
exchangeable for, securities having the right
to vote) on any matters on which holders of
Company Capital Stock may vote
("VOTING COMPANY DEBT"). Except as set
forth above, as of the date of this
Agreement, there are not any options,
warrants, rights, convertible or
exchangeable securities, "phantom" stock
rights, stock appreciation rights,
stock-based performance units, commitments,
Contracts, arrangements or
undertakings of any kind to which the
Company or any Company Subsidiary is a
party or by which any of them is bound (i)
obligating the Company or any Company
Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold,
additional shares of capital stock or other
equity interests in, or any security
convertible or exercisable for or
exchangeable into any capital stock of or
other equity interest in, the Company or
any Company Subsidiary or any Voting
Company Debt, (ii) obligating the Company
or any Company Subsidiary to issue,
grant, extend or enter into any such
option, warrant, call, right, security,
unit, commitment, Contract, arrangement or
undertaking or (iii) that give any
person the right to receive any economic
benefit or right similar to or derived
from the economic benefits and rights
occurring to holders of Company Capital
Stock. As of the date of this Agreement,
there are not any outstanding
contractual obligations of the Company or
any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of
capital stock of the Company or any
Company Subsidiary. The Company has made
available to Parent a complete and
correct copy of the Company Rights
Agreement, as amended to the date of this
Agreement.
<PAGE>
10
(b) The Company has delivered or made available to Parent a
true,
complete and correct list of all
outstanding Company Stock Options, the number
of shares of Company Common Stock subject
to each such Company Stock Option, the
grant dates, exercise prices, expiration
dates and vesting schedule of each such
Company Stock Option and the names of the
holders of each Company Stock Option.
All outstanding Company Stock Options are
evidenced by the forms of Company
Stock Option agreements delivered or made
available to Parent, and no Company
Stock Option agreement contains terms that
are materially inconsistent with, or
in addition in any material respect to, the
terms contained therein.
SECTION 3.04
AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY. (a) The
Company has all requisite corporate power
and authority to execute and deliver
this Agreement and to consummate the Merger
and the other Transactions to be
performed or consummated by the Company.
The execution and delivery by the
Company of this Agreement and the
consummation by the Company of the Merger and
the other Transactions to be performed or
consummated by the Company have been
duly authorized by all necessary corporate
action on the part of the Company,
subject, in the case of the Merger, to
receipt of the Company Stockholder
Approval. The Company has duly executed and
delivered this Agreement, and this
Agreement constitutes its legal, valid and
binding obligation, enforceable
against it in accordance with its terms,
subject to bankruptcy, insolvency,
fraudulent transfer, reorganization,
moratorium and similar laws of general
applicability relating to or affecting
creditors' rights, and to general equity
principles.
(b) The Company Board, at a meeting duly called and held, duly
adopted
resolutions (i) approving this Agreement,
the Merger and the other Transactions
to be performed or consummated by the
Company, (ii) determining that the terms
of the Merger and the other Transactions to
be performed or consummated by the
Company are fair to and in the best
interests of the Company and its
stockholders, (iii) directing that this
Agreement be submitted to a vote at the
Company Stockholders Meeting, (iv)
recommending that the Company's stockholders
adopt this Agreement and (v) declaring the
advisability of this Agreement.
Assuming that the representation set forth
in the second sentence of Section
4.03(c) is true and correct, such
resolutions of the Company Board are
sufficient to render inapplicable to Parent
and Sub and this Agreement, the
Merger and the other Transactions (i) the
restrictions on "BUSINESS
COMBINATIONS" contained in Section 203 of
the DGCL and (ii) the provisions of
Article Eleventh of the Company Charter. To
the Company's knowledge, no other
state takeover statute or similar statute
or regulation applies or purports to
apply to the Company with respect to this
Agreement, the Merger or any other
Transaction.
(c) Assuming that the representation set forth in the second
sentence
of Section 4.03(c) is true and correct, the
only vote of holders of any class or
series of Company Capital Stock necessary
to approve and adopt this Agreement
and the Merger is the adoption of this
Agreement by the holders of a majority of
the outstanding shares of Company Common
Stock entitled to vote thereon (the
"COMPANY STOCKHOLDER APPROVAL"). The
affirmative vote of the holders of Company
Capital Stock, or any of them, is not
necessary to consummate any Transaction
other than the Merger.
SECTION 3.05 NO
CONFLICTS; CONSENTS. (a) The execution and delivery by the
Company of this Agreement do not, and the
consummation of the Merger and the
other
<PAGE>
11
Transactions and compliance with the terms
hereof will not, conflict with, or
result in any violation of or default (with
or without the lapse of time or the
giving of notice, or both) under, or give
rise to a right of termination,
cancellation or acceleration of any
obligation or to loss of a material benefit
under, or to increased, additional,
accelerated or guaranteed rights or
entitlements of any person under, or result
in the creation of any Lien upon any
of the properties or assets of the Company
or any Company Subsidiary under, any
provision of (i) the Company Charter, the
Company By-laws or the comparable
charter or organizational documents of any
Company Subsidiary, (ii) any
contract, lease, license, indenture, note,
bond, agreement, permit, concession,
franchise or other instrument (a
"CONTRACT") to which the Company or any Company
Subsidiary is a party or by which any of
their respective properties or assets
is bound or (iii) subject to the filings
and other matters referred to in
Section 3.05(b), any judgment, order or
decree ("JUDGMENT") or statute, law
(including common law), ordinance, rule or
regulation ("LAW") applicable to the
Company or any Company Subsidiary or their
respective properties or assets,
other than, in the case of clauses (ii) and
(iii) above, any such items that,
individually or in the aggregate, would not
reasonably be expected to have a
Company Material Adverse Effect.
(b) No consent, approval, license, permit, order or
authorization
("CONSENT") of, or registration,
declaration or filing with, or permit from, any
federal, state, local or foreign government
or any court of competent
jurisdiction, administrative agency or
commission or other governmental
authority or instrumentality, domestic or
foreign (a "GOVERNMENTAL ENTITY"), is
required to be obtained or made by or with
respect to the Company or any Company
Subsidiary in connection with the
execution, delivery and performance of this
Agreement or the consummation of the
Transactions, other than (i) compliance
with and filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR ACT"), (ii) any
additional Consents and filings under any
foreign Antitrust Laws (including, if
applicable, the competition or antitrust
laws of Mexico and Brazil, and the
Competition Act (Canada)) or under the
Investment Canada Act (Canada), (iii) the
filing with the SEC of (A) a proxy or
information statement relating to the
adoption of this Agreement by the
Company's stockholders (the "PROXY
STATEMENT") and (B) such reports under, or
other applicable requirements of, the
Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), as may be
required in connection with this
Agreement, the Merger and the other
Transactions, (iv) the filing of the
Certificate of Merger with the Secretary of
State of the State of Delaware and
appropriate documents with the relevant
authorities of the other jurisdictions
in which the Company is qualified to do
business, (v) compliance with and such
filings as may be required under applicable
Environmental Laws, (vi) such
filings as may be required in connection
with the Taxes described in Section
6.09, (vii) filings under any applicable
state takeover Law and (viii) such
other items that, individually or in the
aggregate, would not reasonably be
expected to have a Company Material Adverse
Effect.
(c) The Company and the Company Board have taken all action
necessary
to (i) render the Company Rights Agreement
inapplicable to this Agreement, the
Merger and the other Transactions and (ii)
ensure that (A) neither Parent nor
any of its affiliates or associates is or
will become an "ACQUIRING PERSON" (as
defined in the Company Rights Agreement) by
reason of this Agreement, the Merger
or any other Transaction, (B) a
"DISTRIBUTION DATE" or a "SHARE ACQUISITION
DATE" (as each such term is defined in the
Company Rights Agreement) shall not
occur by reason of this Agreement, the
Merger or any other Transaction and (C)
the Company Rights shall expire immediately
prior to the Effective Time.
<PAGE>
12
SECTION 3.06 SEC
DOCUMENTS; UNDISCLOSED LIABILITIES. (a) The Company has
filed all reports, schedules, forms,
statements and other documents required to
be filed by the Company with the SEC since
January 1, 2003 pursuant to Sections
13(a) and 15(d) of the Exchange Act (the
"COMPANY SEC DOCUMENTS").
(b) As of its respective date, each Company SEC Document complied
as
to form in all material respects with the
requirements of the Exchange Act or
the Securities Act of 1933, as amended (the
"SECURITIES ACT"), as the case may
be, and the rules and regulations of the
SEC promulgated thereunder applicable
to such Company SEC Document, and did not
contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary in order to make the statements
therein, in light of the circumstances
under which they were made, not misleading.
Except to the extent that
information contained in any Filed Company
SEC Document has been revised or
superseded by a later filed Filed Company
SEC Document, none of the Company SEC
Documents contains any untrue statement of
a material fact or omits to state any
material fact required to be stated therein
or necessary in order to make the
statements therein, in light of the
circumstances under which they were made,
not misleading. The consolidated financial
statements of the Company included in
the Company SEC Documents (including the
related notes and schedules thereto)
comply as to form in all material respects
with applicable accounting
requirements and the published rules and
regulations of the SEC with respect
thereto, have been prepared in accordance
with generally accepted accounting
principles ("GAAP") (except, in the case of
unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a
consistent basis during the periods
involved (except as may be indicated in the
notes thereto) and fairly present,
in all material respects, the consolidated
financial position of the Company and
its consolidated subsidiaries as of the
dates thereof and the consolidated
results of their operations and cash flows
for the periods shown (subject, in
the case of unaudited statements, to normal
year-end audit adjustments).
(c) Other than liabilities or obligations (i) disclosed or
provided
for in the financial statements included in
the Filed Company SEC Documents or
(ii) incurred since March 31, 2005 in the
ordinary course of business, neither
the Company nor any Company Subsidiary has
any liabilities or obligations of any
nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to
be set forth on a consolidated balance
sheet of the Company and its consolidated
subsidiaries or in the notes thereto and
that, individually or in the aggregate,
would reasonably be expected to have a
Company Material Adverse Effect.
(d) Each of the principal executive officer and the principal
financial officer of the Company (or each
former principal executive officer and
former principal financial officer of the
Company, as applicable) has made all
certifications required under Sections 302
and 906 of the Sarbanes-Oxley Act of
2002 and the related rules and regulations
promulgated thereunder and under the
Exchange Act (collectively, the
"SARBANES-OXLEY ACT") with respect to the
Company SEC Documents, and the Company has
delivered to Parent a summary of any
disclosure made by the Company's management
to the Company's auditors and audit
committee referred to in such
certifications. For purposes of the preceding
sentence, "PRINCIPAL EXECUTIVE OFFICER" and
"PRINCIPAL FINANCIAL OFFICER" shall
have the meanings ascribed to such terms in
the Sarbanes-Oxley Act.
<PAGE>
13
(e) The Company has (i) designed and maintained disclosure
controls
and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange
Act) to ensure that material information
relating to the Company, including its
consolidated subsidiaries, that is required
to be disclosed by the Company in
the reports it files under the Exchange Act
is made known to its principal
executive officer and principal financial
officer or other appropriate members
of management as appropriate to allow
timely decisions regarding required
disclosure; (ii) designed and maintained a
system of internal control over
financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange
Act) sufficient to provide reasonable
assurance regarding the reliability of
financial reporting and the preparation of
financial statements for external
purposes in accordance with GAAP, including
reasonable assurance (A) that
transactions are executed in accordance
with management's general or specific
authorizations and recorded as necessary to
permit preparation of financial
statements in conformity with GAAP and to
maintain asset accountability and (B)
regarding prevention or timely detection of
any unauthorized acquisition, use or
disposition of assets that could have a
material effect on the Company's
financial statements; (iii) with the
participation of the Company's principal
executive and financial officers, completed
an assessment of the effectiveness
of the Company's internal controls over
financial reporting in compliance with
the requirements of Section 404 of the
Sarbanes-Oxley Act for the year ended
January 1, 2005, and such assessment
concluded that such internal controls were
effective using the framework specified in
the Company's Annual Report on Form
10-K for such year ended; and (iv) to the
extent required by applicable Law,
disclosed in such report or in any
amendment thereto any change in the Company's
internal control over financial reporting
that occurred during the period
covered by such report or amendment that
has materially affected, or is
reasonably likely to materially affect, the
Company's internal control over
financial reporting.
(f) The Company has disclosed, based on the most recent evaluation
of
internal control over financial reporting,
to the Company's auditors and the
audit committee of the Company Board (i)
any significant deficiencies or
material weaknesses in the design or
operation of internal control over
financial reporting which are reasonably
likely to adversely affect the
Company's ability to record, process,
summarize and report financial information
and (ii) any fraud, whether or not
material, that involves management or other
employees who have a significant role in
the Company's internal control over
financial reporting. The Company has
identified, based on the most recent
evaluation of internal control over
financial reporting, for the Company's
auditors any material weaknesses in
internal controls. The Company has provided
to Parent true and correct copies of any of
the foregoing disclosures to the
auditors or audit committee that have been
made in writing from January 1, 2003
through the date hereof, and will promptly
provide Parent true and correct
copies of any such disclosure that is made
after the date hereof.
(g) None of the Company Subsidiaries is, or has at any time
since
January 1, 2003 been, subject to the
reporting requirements of Sections 13(a)
and 15(d) of the Exchange Act.
(h) As of the date of this Agreement, to the knowledge of the
Company,
there is no applicable accounting rule,
consensus or pronouncement that has been
adopted by the SEC, the Financial
Accounting Standards Board, the Emerging
Issues Task Force or any similar body
<PAGE>
14
but that is not in effect as of the date of
this Agreement that, if implemented,
would reasonably be expected to have a
Company Material Adverse Effect.
(i) There are no pending (A) formal or, to the knowledge of the
Company, informal investigations of the
Company by the SEC, (B) to the knowledge
of the Company, inspections of an audit of
the Company's financial statements by
the Public Company Accounting Oversight
Board or (C) investigations by the audit
committee of the Company Board regarding
any complaint, allegation, assertion or
claim that the Company or any Company
Subsidiary has engaged in improper or
illegal accounting or auditing practices or
maintains improper or inadequate
internal accounting controls. The Company
will promptly provide to Parent
information as to any such matters that
arise after the date hereof.
(j) Since July 30, 2002, the Company has been in compliance in
all
material respects with the applicable
requirements of the Sarbanes-Oxley Act in
effect from time to time.
(k) Since the date of the Company's 2004 annual meeting of
stockholders, the Company has been in
compliance with the applicable corporate
governance listing standards of the NYSE in
all material respects.
SECTION 3.07
INFORMATION SUPPLIED.
(a) None of the information supplied or to be supplied by the
Company
for inclusion or incorporation by reference
in the Proxy Statement will, at the
date it is first mailed to the Company's
stockholders or at the time of the
Company Stockholders Meeting, contain any
untrue statement of a material fact or
omit to state any material fact required to
be stated therein or necessary in
order to make the statements therein, in
light of the circumstances under which
they are made, not misleading. The Proxy
Statement will comply as to form in all
material respects with the requirements of
the Exchange Act and the rules and
regulations thereunder, except that no
representation is made by the Company
with respect to statements made or
incorporated by reference therein based on
information supplied by Parent or Sub in
writing for inclusion or incorporation
by reference therein.
(b) None of the information supplied or to be supplied by the
Company
for inclusion or incorporation by reference
in the Form S-4 or any amendment or
supplement thereto will, at the time the
Form S-4 or any such amendment or
supplement becomes effective under the
Securities Act or at the time of the
Company Stockholders Meeting, contain any
untrue statement of a material fact or
omit to state a material fact required to
be included in order to make the
statements therein, in light of the
circumstances under which they were made,
not misleading.
SECTION 3.08
ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of the
most recent audited financial statements
included in the Filed Company SEC
Documents to the date of this Agreement,
the Company has conducted its business
only in the ordinary course, and during
such period there has not been:
(i) any event, change, effect, development, condition or
occurrence that, individually or in the aggregate, would reasonably
be
expected to have a Company Material Adverse Effect;
<PAGE>
15
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or
property)
with respect to any Company Common Stock or any repurchase for
value
by the Company of any Company Common Stock, other than quarterly
cash
dividends with respect to the Company Common Stock of (A) $0.18
per
share with respect to the first quarter of 2005 and (B) $0.09
per
share with respect to the second and third quarters of 2005, in
each
case with usual declaration, record and payment dates;
(iii) any split, combination or reclassification of any
Company Common Stock or any issuance or the authorization of
any
issuance of any other securities in respect of, in lieu of or
in
substitution for shares of Company Common Stock;
(iv) (A) any granting by the Company or any Company
Subsidiary to any current or former director, officer, employee
or
independent contractor of the Company or any Company Subsidiary
(each,
a "PARTICIPANT") of
any loan or any increase in any type of
compensation, benefits, perquisites or any bonus or award, except
for
grants of normal cash bonus opportunities and normal increases of
cash
compensation (including compensation in connection with new hires),
in
each case in the ordinary course of business consistent with
past
practice or as was required under employment agreements in effect
as
of the date of the most recent audited financial statements
included
in the Filed Company SEC Documents, (B) any payment of any bonus
to
any Participant, except for bonuses paid in the ordinary course
of
business consistent with past practice, (C) any granting by the
Company or any Company Subsidiary to any Participant of any
severance,
change in control, termination or similar compensation, pay or
benefits or increases therein, or of the right to receive any
severance, change in control, termination or similar compensation,
pay
or benefits or increases therein, except (x) as was required under
any
employment, severance or termination agreements in effect as of
the
date of the most recent audited financial statements included in
the
Filed Company SEC Documents, (y) in the ordinary course of
business
consistent with past practice in connection with new hires to
replace
departed employees and (z) in the ordinary course of business
consistent with past practice in connection with promotions made
in
the ordinary course of business consistent with past practice, or
(D)
any entry by the Company or any Company Subsidiary into, or any
amendment of, any Company Benefit Agreement;
(v) any damage, destruction or loss, whether or not covered
by insurance, that, individually or in the aggregate, would
reasonably
be expected to have a Company Material Adverse Effect;
(vi) any change in accounting methods, principles or
practices by the Company or any Company Subsidiary, except for
any
change which is not material or which is required by a change in
GAAP
or applicable Law;
(vii) any material elections with respect to Taxes by the
Company or any Company Subsidiary or settlement or compromise by
the
Company or any Company Subsidiary of any material Tax liability
or
refund; or
<PAGE>
16
(viii) any revaluation by the Company or any Company
Subsidiary of any of the assets of the Company or any Company
Subsidiary, except insofar as may have been required by applicable
Law
or that would not reasonably be expected to have a Company
Material
Adverse Effect.
SECTION 3.09
TAXES. (a) As used in this Agreement:
"TAXES" shall mean all (i) federal, state and local, domestic
and
foreign, taxes, assessments, duties or
similar charges of any kind whatsoever,
including all corporate franchise, income,
sales, use, ad valorem, receipts,
value added, profits, license, withholding,
employment, excise, property, net
worth, capital gains, transfer, stamp,
documentary, social security, payroll,
environmental, alternative minimum,
occupation, recapture and other taxes, and
including any interest, penalties and
additions imposed with respect to such
amounts; (ii) liability for the payment of
any amounts of the type described in
clause (i) as a result of being a member of
an affiliated, consolidated,
combined, unitary or aggregate group; and
(iii) liability for the payment of any
amounts as a result of an obligation to
indemnify any other person with respect
to the payment of any amounts of the type
described in clause (i) or (ii).
"TAXING AUTHORITY" shall mean any federal, state or local, domestic
or
foreign, governmental body (including any
subdivision, agency or commission
thereof), or any quasi-governmental body,
in each case, exercising regulatory
authority in respect of Taxes.
"TAX RETURN" shall mean all returns, declarations of estimated
tax
payments, reports, estimates, information
returns and statements, including any
related or supporting information with
respect to any of the foregoing, filed or
to be filed with any Taxing Authority in
connection with the determination,
assessment, collection or administration of
any Taxes.
(b) The Company and each Company Subsidiary has timely filed, or
has
caused to be timely filed on its behalf,
all material Tax Returns required to be
filed by or on behalf of the Company and
each Company Subsidiary in the manner
prescribed by applicable Law. All such Tax
Returns are complete and correct,
except as, individually or in the
aggregate, would not reasonably be expected to
have a Company Material Adverse Effect. The
Company and each Company Subsidiary
has timely paid (or the Company has paid on
each such Company Subsidiary's
behalf) all Taxes due and owing, and, in
accordance with GAAP, the most recent
financial statements contained in the Filed
Company SEC Documents reflect a
reserve (excluding any reserve for deferred
Taxes) for all Taxes payable by the
Company and each Company Subsidiary for all
taxable periods and portions thereof
through the date of such financial
statement, in each case except as,
individually or in the aggregate, would not
reasonably be expected to have a
Company Material Adverse Effect.
(c) No Tax Return of the Company or any Company Subsidiary is
under
audit or examination by any Taxing
Authority, and no written notice or, to the
knowledge of the Company, unwritten notice
of such an audit or examination has
been received by the Company or any Company
Subsidiary. Each material assessed
deficiency resulting from any audit or
examination relating to Taxes by any
Taxing Authority has been timely paid and
there is no assessed deficiency,
refund litigation, proposed adjustment or
matter in controversy with respect to
any Taxes due and owing by the Company or
any Company Subsidiary. The federal
income
<PAGE>
17
Tax Returns of the Company and each Company
Subsidiary have been examined by the
Internal Revenue Service or the relevant
statute of limitations has closed for
all years through 1997.
(d) There is no agreement or other document extending, or having
the
effect of extending, the period of
assessment or collection of any material
Taxes and no power of attorney with respect
to any such Taxes has been executed
or filed with any Taxing Authority by or on
behalf of the Company or any Company
Subsidiary.
(e) No material Liens for Taxes exist with respect to any assets
or
properties of the Company or any Company
Subsidiary, except for statutory liens
for Taxes not yet due.
(f) Neither the Company nor any Company Subsidiary is a party to
or
bound by any material Tax sharing
agreement, material Tax indemnity obligation
or similar material agreement or
arrangement with respect to Taxes (including
any advance pricing agreement, closing
agreement or other agreement relating to
Taxes with any Taxing Authority), other
than any such agreements (i) with
customers, vendors, lessors or similar
persons entered into in the ordinary
course of business and (ii) among the
Company and the Company Subsidiaries.
(g) Except as, individually or in the aggregate, would not
reasonably
be expected to have a Company Material
Adverse Effect, the Company and each
Company Subsidiary has complied with all
applicable Laws relating to the payment
and withholding of Taxes (including
withholding of Taxes pursuant to Sections
1441, 1442, 3121 and 3402 of the Code or
similar provisions under any federal,
state or local, domestic or foreign, Laws)
and has, within the time and the
manner prescribed by applicable Law,
withheld from and paid over to the proper
Governmental Entities all amounts required
to be so withheld and paid over under
applicable Law.
(h) Neither the Company nor any Company Subsidiary is or has been
a
United States real property holding
corporation within the meaning of Section
897(c)(2) of the Code.
(i) Neither the Company nor any Company Subsidiary shall be
required
to include in a taxable period ending after
the Closing Date taxable income
attributable to income that accrued in a
prior taxable period but was not
recognized in any prior taxable period as a
result of the installment method of
accounting, the long-term contract method
of accounting, the cash method of
accounting or Section 481 of the Code or
comparable provisions of state, local
or foreign Tax law.
(j) Neither the Company nor any Company Subsidiary has participated
in
any "LISTED TRANSACTION" as defined in
Treasury Regulation Section 1.6011-4.
SECTION 3.10
ABSENCE OF CHANGES IN BENEFIT PLANS. (a) From the date of the
most recent audited financial statements
included in the Filed Company SEC
Documents to the date of this Agreement,
neither the Company nor any Company
Subsidiary has terminated, adopted,
amended, modified or agreed to terminate,
adopt, amend or modify (or announced an
intention to terminate, adopt, amend or
modify), in any material respect, any
collective bargaining agreement or any
bonus, pension, profit sharing, deferred
compensation, incentive compensation,
stock ownership, stock purchase, stock
appreciation, restricted stock, stock
repurchase rights, stock option, phantom
stock, performance, retirement, thrift,
savings, stock
<PAGE>
18
bonus, cafeteria, paid time off,
perquisite, fringe benefit, vacation,
severance, disability, death benefit,
hospitalization, medical or other welfare
benefit or other plan, program, arrangement
or understanding, whether oral or
written, formal or informal, funded or
unfunded (whether or not legally
binding), maintained, contributed to or
required to be maintained or contributed
to by the Company or any Company Subsidiary
or any other person or entity that,
together with the Company or any Company
Subsidiary, is treated as a single
employer under Section 414(b), (c), (m) or
(o) of the Code or any other
applicable Law (each, a "COMMONLY
CONTROLLED ENTITY"), in each case providing
benefits to any Participant and whether or
not subject to United States law (all
such plans, programs, arrangements and
understandings, including any such plan,
program, arrangement or understanding
entered into or adopted on or after the
date of this Agreement, "COMPANY BENEFIT
PLANS") or has made any change, in any
material respect, in any actuarial or other
assumption used to calculate funding
obligations with respect to any Company
Benefit Plan that is a Company Pension
Plan, or any change, in any material
respect, in the manner in which
contributions to any such Company Pension
Plan are made or the basis on which
such contributions are determined.
(b) Section 3.10 of the Company Disclosure Letter contains a
complete
and correct list of (i) any material
employment, deferred compensation,
severance, change in control, termination,
employee benefit, loan (other than
Participant loans under any Company Pension
Plan that includes a qualified cash
or deferred arrangement within the meaning
of Section 401(k) of the Code),
indemnification, retention, stock
repurchase, stock option, consulting or
similar agreement, commitment or obligation
between the Company or any Company
Subsidiary, on the one hand, and any
Participant, on the other hand, and (ii)
any agreement between the Company or any
Company Subsidiary, on the one hand,
and any Participant, on the other hand, the
benefits of which are contingent, or
the terms of which are materially altered,
upon the occurrence of transactions
involving the Company or any Company
Subsidiary of the nature contemplated by
this Agreement (all such agreements,
collectively, the "COMPANY BENEFIT
AGREEMENTS").
SECTION 3.11
ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS.
(a) Section 3.11(a) of the Company Disclosure Letter contains a
complete and correct list of all Company
Benefit Plans that are "EMPLOYEE
PENSION BENEFIT PLANS" (as defined in
Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended
("ERISA")) (all such plans,
collectively, the "COMPANY PENSION PLANS")
or "EMPLOYEE WELFARE BENEFIT PLANS"
(as defined in Section 3(1) of ERISA) and
all other material Company Benefit
Plans; provided, however, that no Company
Benefit Agreement shall be deemed a
Company Benefit Plan or listed in Section
3.11(a) of the Company Disclosure
Letter. Each Company Benefit Plan has been
administered in compliance with its
terms and applicable Law, and the terms of
any applicable collective bargaining
agreements, except to the extent that the
failure to comply with any such terms
or Law, individually or in the aggregate,
would not reasonably be expected to
have a Company Material Adverse Effect. The
Company has delivered or made
available to Parent complete and correct
copies of (i) each Company Benefit Plan
and each Company Benefit Agreement (or, in
the case of any unwritten Company
Benefit Plan or Company Benefit Agreement,
a description thereof), (ii) the most
recent annual report on Form 5500
(including accompanying schedules and
attachments) with respect to each Company
Benefit Plan for which such a report
is required, (iii) the most recent summary
plan description for each Company
Benefit Plan for which such summary plan
description is required under
<PAGE>
19
ERISA, (iv) each material trust agreement
and material group annuity contract
relating to the funding or payment of
benefits under any Company Benefit Plan,
(v) the most recent determination or
qualification letter issued by the Internal
Revenue Service for each Company Benefit
Plan intended to qualify for favorable
tax treatment in the United States of
America, as well as a true, correct and
complete copy of each pending application
for such letter, if applicable, and
(vi) the most recent actuarial valuation,
if applicable, for each Company
Pension Plan.
(b) All Company Pension Plans intended to be tax qualified have
been
the subject of determination letters from
the Internal Revenue Service with
respect to all tax Law changes through the
Economic Growth and Tax Relief
Reconciliation Act of 2001 with respect to
which a determination letter from the
Internal Revenue Service can be obtained to
the effect that such Company Pension
Plans are qualified and exempt from federal
income taxes under Sections 401(a)
and 501(a), respectively, of the Code, and
no such determination letter has been
revoked nor, to the knowledge of the
Company, has revocation been threatened,
nor has any such Company Pension Plan been
amended since the date of its most
recent determination letter or application
therefor in any respect that would
adversely affect its qualification or
materially increase its costs or require
security under Section 307 of ERISA. All
Company Pension Plans that are required
to have been approved by any non-U.S.
Governmental Entity have been so approved.
(c) Except as set forth in Section 3.11(c) of the Company
Disclosure
Letter, neither the Company nor any
Commonly Controlled Entity has maintained,
contributed to or been obligated to
maintain or contribute to, or has any
liability under, any Company Benefit Plan
that is subject to Title IV of ERISA.
With respect to the Maytag Corporation
Employees Retirement Plan (the "US
PENSION PLAN"), to the knowledge of the
Company there has been no material
adverse change in the financial condition
of such plan from the date of the most
recent audited financial statements
included in the Filed Company SEC Documents
to the date of this Agreement, assuming for
such purpose that there has been no
change in the discount rate used for
purposes of valuing the liabilities of such
plan from the discount rate applied in such
financial statements. No liability
under Title IV of ERISA (other than for
premiums to the Pension Benefit Guaranty
Corporation) has been or is expected to be
incurred by the Company or any
Company Subsidiary with respect to any
ongoing, frozen or terminated
"SINGLE-EMPLOYER" plan (as defined in
Section 4001(a)(15) of ERISA), currently
or formerly maintained by any of them or by
any Commonly Controlled Entity,
except for any such liabilities that,
individually or in the aggregate, would
not reasonably be expected to have a
Company Material Adverse Effect. None of
the Company Pension Plans has an
"ACCUMULATED FUNDING DEFICIENCY" (as defined in
Section 302 of ERISA or Section 412 of the
Code), whether or not waived, nor has
any waiver of the minimum funding standards
of Section 302 of ERISA or Section
412 of the Code been requested. None of the
Company, any Company Subsidiary, any
employee of the Company or any Company
Subsidiary or any of the Company Benefit
Plans, including the Company Pension Plans,
or any trusts created thereunder or
any trustee, administrator or other
fiduciary of any Company Benefit Plan or
trust created thereunder, or any agents of
the foregoing, has engaged in a
"PROHIBITED TRANSACTION" (as defined in
Section 406 of ERISA or Section 4975 of
the Code) that would be reasonably expected
to subject the Company, any Company
Subsidiary or any officer of the Company or
any Company Subsidiary or any of the
Company Benefit Plans, or, to the knowledge
of the Company, any trusts created
thereunder or any trustee or administrator
of any
<PAGE>
20
Company Benefit Plan or trust created
thereunder to the tax or penalty on
prohibited transactions imposed by such
Section 4975 of the Code or to the
sanctions imposed under Title I of ERISA or
to any other liability for breach of
fiduciary duty under ERISA, except for any
such prohibited transactions that,
individually or in the aggregate, would not
reasonably be expected to have a
Company Material Adverse Effect. No Company
Pension Plan or related trust has
been terminated during the last five years,
nor has there been any "REPORTABLE
EVENT" (as defined in Section 4043 of
ERISA), other than an event for which the
30-day notice period has been waived, with
respect to any Company Pension Plan
since January 1, 2004, and no notice of a
reportable event will be required to
be filed in connection with the
Transactions. Neither the Company nor any
Company Subsidiary has incurred any
material liability that has not been
satisfied in full as a result of a
"COMPLETE WITHDRAWAL" or a "PARTIAL
WITHDRAWAL" (as each such term is defined
in Sections 4203 and 4205,
respectively, of ERISA) during the past six
years from any "MULTIEMPLOYER PLAN"
within the meaning of Section 4001(a)(3) of
ERISA.
(d) With respect to any Company Benefit Plan that is an
employee
welfare benefit plan, whether or not
subject to ERISA, such Company Benefit Plan
is either funded through an insurance
company contract and is not a "WELFARE
BENEFITS FUND" (as defined in Section
419(e) of the Code) or it is unfunded.
(e) Other than payments or benefits that may be made to the
persons
listed in Section 3.11(e) of the Company
Disclosure Letter (each, a "PRIMARY
COMPANY EXECUTIVE"), no amount or other
entitlement that could be received
(whether in cash or property or the vesting
of property) as a result of any of
the Transactions (alone or in combination
with any other event) by any
Participant who is a "DISQUALIFIED
INDIVIDUAL" (as defined in final Treasury
Regulation Section 1.280G-1) (each, a
"DISQUALIFIED INDIVIDUAL") under any
Company Benefit Plan, Company Benefit
Agreement or other compensation
arrangement currently in effect would be an
"EXCESS PARACHUTE PAYMENT" (as
defined in Section 280G(b)(1) of the Code)
and no such Disqualified Individual
is entitled to receive any additional
payment (e.g., any tax gross-up or any
other payment) from the Company, the
Surviving Corporation or any other person
in the event that the excise tax required
by Section 4999(a) of the Code is
imposed on such Disqualified Individual.
The Company has provided Parent with
calculations performed in 2004 by Hewitt
Associates of the estimated amounts of
compensation and benefits that could be
received (whether in cash or property or
the vesting of property) by certain Primary
Company Executives as a result of a
transaction of the nature contemplated by
this Agreement (alone or in
combination with any other event), and the
"BASE AMOUNT" (as defined in Section
280G(b)(3) of the Code) for certain Primary
Company Executives, in each case as
of the date specified in such calculations
and in accordance with the
assumptions made by Hewitt Associates as
set forth in such calculations. To the
knowledge of the Company, the Company
provided true and complete compensation
and benefit information and data to Hewitt
Associates necessary to perform such
calculations, which information and data
was correct in all material respects as
of the date provided by the Company to
Hewitt Associates.
(f) The execution and delivery by the Company of this Agreement
do
not, and the consummation of the
Transactions and compliance with the terms
hereof will not (either alone or in
combination with any other event) (i)
entitle any Participant to any additional
compensation, severance, termination,
change in control or other benefits or any
benefits the value of which will be
calculated on the basis of any of the
Transactions (alone or in
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21
combination with any other event), (ii)
accelerate the time of payment or
vesting or trigger any payment or funding
(through a grantor trust or otherwise)
of any comp
