PRE-ACQUISITION AGREEMENT
BETWEEN
UNITED TECHNOLOGIES CORPORATION
AND
TITAN ACQUISITIONS, LTD.
AND
INTERNATIONAL COMFORT PRODUCTS CORPORATION
DATED June 23, 1999
TABLE OF CONTENTS
Page
ARTICLE 1
INTERPRETATION
1.1 Definitions........................................... 2
1.2 Singular, Plural, etc................................. 7
1.3 Deemed Currency....................................... 7
1.4 Headings, etc......................................... 7
1.5 Date for any Action................................... 7
1.6 Governing Law......................................... 7
1.7 Attornment............................................ 7
ARTICLE 2
THE OFFER
2.1 The Offer............................................. 8
2.2 ICP Directors' Circular............................... 9
2.3 Offer Documents....................................... 10
2.4 Outstanding Stock Options............................. 11
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity............................................. 12
3.2 Solicitation.......................................... 12
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction.............................. 12
4.2 Information Circular, Etc............................. 12
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UTC AND UTCSUB
5.1 Organization and Qualification........................ 13
5.2 Authority Relative to this Agreement.................. 13
5.3 No Violations......................................... 13
5.4 Funds Available....................................... 14
5.5 Litigation............................................ 14
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ICP
6.1 Organization and Qualification........................ 15
6.2 Authority Relative to this Agreement.................. 15
6.3 No Violations......................................... 15
6.4 Capitalization........................................ 16
6.5 No Material Adverse Effect............................ 17
6.6 No Undisclosed Material Liabilities................... 17
TABLE OF CONTENTS
(continued)
Page
6.7 Brokerage Fees....................................... 17
6.8 Conduct of Business.................................. 17
6.9 Reports.............................................. 18
6.10 U.S. Registration.................................... 19
6.11 Subsidiaries......................................... 19
6.12 Litigation........................................... 19
6.13 Insurance............................................ 19
6.14 Environmental........................................ 20
6.15 Benefit Plans........................................ 20
6.16 Tax Matters.......................................... 21
6.17 Year 2000............................................ 22
6.18 Compliance........................................... 22
6.19 Debt Covenant........................................ 23
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by ICP............................ 23
ARTICLE 8
COVENANTS OF ICP
8.1 No Solicitation....................................... 25
8.2 ICP Board of Directors................................ 26
ARTICLE 9
COVENANTS OF UTC AND UTCSUB
9.1 Regulatory and Other Authorizations: Consents......... 27
9.2 Employment Agreements................................. 27
9.3 Officers' and Directors' Insurance.................... 27
9.4 Employment Termination................................ 28
9.5 Indemnities........................................... 28
9.6 Compensation; Benefit Plans........................... 28
ARTICLE 10
MUTUAL COVENANTS
10.1 Notification of Certain Matters....................... 29
10.2 Competition Filings and Investment Canada Act Filing.. 29
10.3 Other Filings......................................... 30
10.4 Additional Agreements................................. 30
10.5 Access to Information................................. 31
10.6 Debt Obligations...................................... 31
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination........................................... 31
ii
TABLE OF CONTENTS
(continued)
Page
11.2 Effect of Termination and Other Events................ 32
11.3 Amendment............................................. 33
11.4 Waiver................................................ 33
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices............................................... 34
12.2 Miscellaneous......................................... 35
12.3 Assignment............................................ 35
12.4 Expenses.............................................. 35
12.5 Severability.......................................... 35
12.6 Survival.............................................. 36
12.7 Counterpart Execution................................. 36
iii
PRE-ACQUISITION AGREEMENT
THIS AGREEMENT made the 23rd day of June, 1999,
BETWEEN:
UNITED TECHNOLOGIES CORPORATION, a corporation duly incorporated under and
governed by the laws of the State of Delaware and having its principal
office in the City of Hartford, in the State of Connecticut (hereafter
referred to as "UTC"),
- and -
TITAN ACQUISITIONS, LTD., a corporation duly incorporated under and
governed by the laws of the Province of New Brunswick and having its
registered office in the City of St. John, in the Province of New Brunswick
(hereafter referred to as "UTCSub"),
- and -
INTERNATIONAL COMFORT PRODUCTS CORPORATION, a corporation duly continued
under and governed by the federal laws of Canada and having its registered
office in the City of Toronto, in the Province of Ontario (hereafter
referred to as "ICP"),
WHEREAS the Board of Directors of each of UTC and ICP has determined that it is
in the best interests of their respective corporations and shareholders that UTC
and ICP combine their business interests with the result that there shall be one
economic enterprise and that such combination be effected through an offer by
UTCSub, a wholly-owned subsidiary of UTC, to purchase all of the outstanding
ordinary shares of ICP;
AND WHEREAS the Board of Directors of ICP has unanimously determined to
recommend acceptance of the UTCSub offer to the shareholders of ICP;
AND WHEREAS the Board of Directors of ICP has unanimously determined that it
would be in the best interests of ICP and its shareholders to enter into this
Agreement;
AND WHEREAS UTC, through UTCSub, is willing to make an offer subject to the
terms and conditions of this Agreement.
NOW THEREFORE IN CONSIDERATION OF the mutual covenants hereinafter contained and
other good and valuable consideration (the receipt and adequacy whereof is
hereby acknowledged), the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless there is something in the subject matter or context
inconsistent therewith:
"Agreement", "this Agreement", "herein", "hereto" and "hereof' and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time;
"Business Day" means any day excepting a Saturday, Sunday or any other day on
which banking institutions in New York City (in the State of New York) or
Toronto (in the Province of Ontario) are authorized or required by any
applicable law to close;
"Canada BCA" means the Canada Business Corporations Act as the same has been and
may hereafter from time to time be amended;
"Competition Act" means the Competition Act (Canada), as the same has been and
may hereafter from time to time be amended;
"Confidentiality Agreement" has the meaning set forth in Section 2.2(a);
"diluted basis" means, with respect to the number of outstanding ICP Shares at
any time, such number of outstanding ICP Shares calculated on the basis that all
outstanding options and other rights to purchase ICP Shares are exercised;
"Disclosure Schedule" means a letter from ICP to UTC dated the date hereof
containing disclosures made by ICP pursuant to this Agreement;
"Effective Time" means the time that UTCSub shall have acquired ownership of and
paid for ICP Shares pursuant to the terms of the Offer;
"Exchange Act" means the United States Securities Exchange Act of 1934, as the
same has been and may hereafter from time to time be amended;
"Expiry Time" means the Initial Expiry Time unless the Offer has been extended,
in which case it means the expiry time of the Offer as extended from time to
time;
"Governmental Authority" means any government, parliament, legislature,
regulatory authority, governmental department, agency, commission, board,
tribunal, crown corporation, court or other law, rule or regulation-making
entity having jurisdiction or exercising executive, legislative, judicial,
regulatory or administrative powers on behalf of any federation of nations,
nation, or any province, territory, state or other subdivision thereof or any
municipality, district or other subdivision thereof;
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"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination, award, directive, or citation entered by or with any
Governmental Authority and having force of law;
"HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as the same has been amended and may hereafter from time to time be
amended;
"ICP Governing Documents" means the Certificate and Articles of Continuance and
By-laws of ICP;
"ICP Options" means the outstanding options to acquire ICP Shares under the
Stock Option Plans;
"ICP Shares" means ordinary shares in the share capital of ICP;
"in writing" means information delivered in a written form, whether by mail,
telecopy or other transmitted means, and includes documents, files, records,
books and other materials made available, delivered or produced to UTC by or on
behalf of ICP in the course of UTC conducting its due diligence review in
respect of ICP and its subsidiaries between the date of the Confidentiality
Agreement and the date of this Agreement;
"Information Circular" has the meaning set forth in Section 4.2;
"Initial Expiry Time" means 11:59 p.m. (Toronto time) on the day which is the
twentieth (20th) Business Day from and including the day that the Offer
Documents are filed with the appropriate Securities Authorities and mailed to
shareholders of ICP;
"Investment Canada Act" means the Investment Canada Act, as the same has been
amended and may hereafter from time to time be amended;
"Lockup Agreements" mean the letter agreements dated the date hereof between
UTCSub and each of Ravine Partners, Ltd. and Ontario Teachers' Pension Plan
Board;
"Material Adverse Effect" means any effect on the business, operations, results
of operations or financial condition of ICP or any of its subsidiaries that,
individually or in the aggregate, is materially adverse to the business of ICP
and its subsidiaries considered as a whole, other than any such effect (i) which
arises out of a matter that has been publicly disclosed prior to the date of
this Agreement or otherwise disclosed in the Disclosure Schedule, (ii) resulting
from conditions affecting the residential and light commercial air conditioning
and heating product industries in Canada and the United States, (iii) resulting
from general economic, financial, currency exchange, securities or commodity
market conditions in Canada, the United States or elsewhere or (iv) resulting
solely from the public announcement of the transactions contemplated by this
Agreement;
"Offer" has the meaning set forth in Section 2.1 (a);
"Offer Conditions" mean the following conditions to the Offer:
3
(a) at the Expiry Time, the number of ICP Shares that shall have been validly
deposited under the Offer (and not properly withdrawn), together with any
ICP Shares held by or on behalf of UTC, or any of its subsidiaries, shall
constitute at least 71.0% of the outstanding ICP Shares (calculated on a
diluted basis);
(b) all material requisite governmental and regulatory approvals and consents
(including, without limitation, those of any stock exchanges or Securities
Authorities) required in UTC's reasonable judgment to make lawful the
purchase by, or the sale to, UTCSub of the ICP Shares (whether under the
Offer, a compulsory acquisition or Second Stage Transaction) shall have
been obtained and all applicable statutory or regulatory waiting periods
during the pendency of which the purchase by, or the sale to, UTCSub of the
ICP Shares would be illegal shall have expired or been terminated without
the imposition of any conditions that, individually or in the aggregate,
have or are reasonably likely to have the consequences referred to in
clauses (i) through (iii) of paragraph (c) below; without limiting the
foregoing: (i) the applicable waiting periods under the HSR Act and the
Competition Act with respect to the Offer shall have expired or been
terminated; (ii) the Offer shall have been approved or deemed to be
approved or exempted pursuant to the Investment Canada Act; and (iii) all
other consents and approvals without which in UTC's reasonable judgment the
purchase by, or the sale to, UTCSub of the ICP Shares (whether under the
Offer, a compulsory acquisition or Second Stage Transaction) would be
illegal have been obtained;
(c) no statute, rule, regulation, executive or other order shall have been
enacted, issued, promulgated or enforced by any Governmental Authority and
no preliminary or permanent injunction, temporary restraining order or
other legal restraint or prohibition shall have been threatened or issued
by (and no action, proceeding or counterclaim shall be pending or
threatened by or before) a court or other Governmental Authority (i)
preventing or rendering, or seeking to prevent or render, illegal the
making of the Offer, the acceptance for payment of, the payment for, or
ownership, directly or indirectly, of some or all of the ICP Shares by
UTCSub or the completion of a compulsory acquisition or Second Stage
Transaction, (ii) imposing or confirming, or seeking to impose or confirm,
limitations on the ability of UTC or UTCSub, directly or indirectly,
effectively to acquire or hold or to exercise full rights of ownership of
the ICP Shares or otherwise control ICP, in a manner that, in the
reasonable judgment of UTC, would reasonably be expected, in the aggregate,
to materially impair the overall benefits to be realized by UTC from
consummation of the Offer and the other transactions contemplated by this
Agreement, or (iii) requiring, or seeking to require, divestiture by
UTCSub, directly or indirectly, of any ICP Shares or requiring UTCSub, UTC,
ICP or any of their respective subsidiaries or affiliates to dispose of or
hold separate all or any portion of their respective businesses, assets or
properties or imposing any limitations on the ability of any of such
entities to conduct their respective businesses or own such assets,
properties or the ICP Shares or on the ability of UTC or UTCSub to conduct
the business of ICP and its subsidiaries and own the assets and properties
of ICP and its subsidiaries, in each case under this clause (iii) in a
manner that, in the reasonable judgment of
4
UTC, would reasonably be expected, in the aggregate, to materially impair
the overall benefits to be realized by UTC from consummation of the Offer
and the other transactions contemplated by this Agreement;
(d) (i) ICP shall not have breached, or failed to comply with, in any material
respect, any of its covenants or other obligations under this Agreement,
and (ii) each of the representations and warranties of ICP contained in
this Agreement that is qualified as to materiality shall be so true and
correct and any such representation or warranty that is not so qualified
shall be so true and correct, in all material respects, as of the date of
this Agreement and as of the Expiry Time as if made on and as of the Expiry
Time (except to the extent such representations and warranties speak as of
a specific date, which shall be so true and correct as of such date);
provided that in either case ICP has been given notice of and ten (10)
Business Days to cure any such misrepresentation, breach or non-performance
or such misrepresentation, breach or non-performance by its timing or
nature cannot be cured before such tenth Business Day;
(e) at any time after date of this Agreement, there shall not have occurred any
event, occurrence, development or state of circumstances that has had a
Material Adverse Effect;
(f) there shall not have occurred, developed or come into effect or existence
any event, action, state, condition or major financial occurrence of
national or international consequence or any law, regulation, action,
governmental regulation, inquiry or other occurrence of any nature
whatsoever which, in the reasonable judgment of UTC, materially adversely
affects or involves, the general economic, financial, currency exchange,
securities or commodity market operations in Canada or the United States;
(g) neither ICP nor any of its subsidiaries (or the Board of Directors or any
committee thereof of ICP) shall have approved, recommended, authorized,
proposed, filed a document with any Securities Authorities not opposing, or
publicly announced its intention to enter into, any Take-over Proposal
(other than with UTCSub or any of its affiliates) and shall not have
resolved to do any of the foregoing;
(h) this Agreement shall not have been terminated pursuant to its terms; and
(i) the Board of Directors or any committee thereof of ICP shall not have
modified or amended in any manner adverse to UTC or UTCSub, and shall not
have withdrawn, its authorization, approval or recommendation of the Offer
or this Agreement and shall not have resolved to do any of the foregoing.
The foregoing conditions are for the sole benefit of UTC and UTCSub and may be
asserted regardless of the circumstances (including any action or inaction by
UTC or UTCSub or any of their affiliates giving rise to any such condition) or
waived by UTC or UTCSub in whole or in part at any time from time to time in its
discretion subject to the terms and conditions of this Agreement. The failure
of UTC or UTCSub at any time to exercise any of the foregoing rights
5
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.
"Offer Documents" has the meaning set forth in Section 2.3(a);
"Officer Obligations" means any existing written obligations or liabilities of
ICP or any of its subsidiaries to pay any amount to its officers, directors or
employees, other than for salary, bonuses under their existing bonus
arrangements and directors' fees in the ordinary course and, without limiting
the generality of the foregoing, shall include the obligations of ICP or any of
its subsidiaries to officers or employees, in each case to the extent disclosed
in the Disclosure Schedule or the SEC Reports (i) for severance or termination
payments on the change of control of ICP pursuant to any executive involuntary
severance and termination agreements in the case of officers and pursuant to
ICP's severance policy in the case of employees, and (ii) for retention bonus
payments pursuant to any retention bonus program;
"SEC" means the United States Securities and Exchange Commission;
"SEC Reports" means annual and periodic reports, proxy materials and
registration statements required to be filed by ICP and its subsidiaries with
the SEC pursuant to applicable Securities Laws;
"Second Stage Transaction" has the meaning set forth in Section 4.1;
"Securities Authorities" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"Securities Laws" means, collectively, the Canada BCA, any applicable Canadian
provincial securities laws or United States federal securities laws, the "blue
sky" or securities laws of the states of the United States and any other
applicable securities laws;
"Stock Option Plans" means the Employee Stock Option Plan and the 1998 Employee
Stock Option Plan of ICP;
"subsidiary" has the meaning set forth in the Canada BCA;
"Superior Take-over Proposal" means any written unsolicited Take-over Proposal
(i) which, in the opinion of ICP's Board of Directors, after consulting with and
receipt of advice from Credit Suisse First Boston Corporation, ICP's independent
financial advisor (or any other nationally recognized investment banking firm),
is more favourable to ICP's shareholders from a financial point of view than the
Offer (including, and after considering, any adjustment to the terms and
conditions proposed by UTC and UTCSub in response to such Take-over Proposal),
and (if such Take-over Proposal includes cash as consideration) that sufficient
financing commitments have been obtained with respect to such Take-over Proposal
that it reasonably expects a transaction pursuant to such proposal could be
consummated and that such transaction is reasonably capable of being consummated
without material delay taking into account all legal, accounting, regulatory and
other aspects of such Take-over Proposal; and (ii) in respect of which UTC has
received a copy of such Take-over Proposal as executed by the party making the
proposal, at
6
least 48 hours prior to acceptance or recommendation of such proposal by the
Board of Directors of ICP;
"Take-over Proposal" means, in respect of ICP or its subsidiaries or their
assets, any proposals or offers regarding any take-over bid, merger,
consolidation, amalgamation, arrangement, sale of a material amount of assets,
sale of treasury shares (other than pursuant to options under the Stock Option
Plans) or other business combination or similar transaction; and
"Take-up Date" means the date that UTCSub first takes up and acquires ICP Shares
pursuant to the Offer.
1.2 Singular, Plural, etc.
Words importing the singular number include the plural and vice versa and words
importing gender include the masculine, feminine and neuter genders.
1.3 Deemed Currency
In the absence of a specific designation of any currency any undescribed dollar
amount herein shall be deemed to refer to United States dollars.
1.4 Headings, etc.
The division of this Agreement into Articles and Sections, the provision of a
table of contents hereto and the insertion of the recitals and headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement and, unless otherwise stated, all references in
this Agreement to Articles and Sections refer to Articles and Sections of this
Agreement in which such reference is made.
1.5 Date for any Action
In the event that any date on which any action is required to be taken hereunder
by any of the parties hereunder is not a Business Day, such action shall be
required to be taken on the next succeeding day which is a Business Day.
1.6 Governing Law
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
1.7 Attornment
The parties hereby irrevocably and unconditionally consent to and submit to the
courts of the Province of Ontario for any actions, suits or proceedings arising
out of or relating to this Agreement or the matters contemplated hereby (and
agree not to commence any action, suit or proceeding relating thereto except in
such courts) and further agree that service of any process, summons, notice or
document by single registered mail to the addresses of the parties set forth in
this Agreement shall be effective service of process for any action, suit or
proceeding brought
7
against either party in such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the matters contemplated hereby
in the courts of the Province of Ontario and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding so brought has been brought in an inconvenient
forum.
ARTICLE 2
THE OFFER
2.1 The Offer
(a) Provided that this Agreement shall not have been terminated in accordance
with Article 11, then UTCSub shall, as promptly as practicable, (but in no
event later than five Business Days after the date of the public
announcement of the execution of this Agreement), and UTC shall cause
UTCSub to, commence (within the meaning of Rule 14d-2 under the Exchange
Act) an offer to purchase all of the outstanding ICP Shares for a price of
$11.75 in cash for each ICP Share, which offer shall be made in accordance
with applicable Securities Laws and be subject only to the Offer Conditions
(the "Offer", which definition shall include any permitted amendments to,
or extensions of, the Offer). The Offer shall be made pursuant to the
Offer Documents and shall contain the terms and conditions set forth in
this Agreement. The obligation of UTCSub to, and of UTC to cause UTCSub
to, commence the Offer, conduct and consummate the Offer and accept for
payment, and pay for, any ICP Shares tendered (and not properly withdrawn)
pursuant to the Offer shall be subject only to the Offer Conditions (any of
which may be waived in whole or in part by UTCSub in its sole discretion).
UTCSub expressly reserves the right, subject to compliance with applicable
Securities Laws, to modify the terms of the Offer, except that, without the
express written consent of ICP, UTCSub shall not (i) reduce the number of
ICP Shares subject to the Offer, (ii) reduce the Offer price, (iii) add to
or modify the Offer Conditions, (iv) except as provided in the next
sentence, change the Expiry Time, (v) change the form of consideration
payable in the Offer or (vi) amend, alter, add or waive any term of the
Offer in any manner that is, in the opinion of ICP, acting reasonably,
materially adverse to the holders of the ICP Shares. Notwithstanding the
foregoing, (A) if on any scheduled expiration date of the Offer, which
shall initially be the Initial Expiry Time, all of the Offer Conditions
have not been satisfied or waived, UTCSub shall, and UTC shall cause UTCSub
to, unless in the reasonable judgment of UTC all of the Offer Conditions
cannot be satisfied or waived on or prior to December 15, 1999, from time
to time, extend the Expiry Time for such period of time as is necessary to
satisfy or fulfill such conditions, (B) UTCSub may extend the Offer for any
period required by any rule, regulation, interpretation or position of any
of the Securities Authorities applicable to the Offer, or to permit ICP to
cure any misrepresentation, breach or non-performance during the time
period referred to in the proviso to clause (d) of the Offer Conditions,
and (C) UTCSub may extend the Offer for up to ten (10) Business Days (but
not beyond December 15, 1999) if there have been validly tendered (and not
properly withdrawn) prior to the expiration of the Offer such number of
8
ICP Shares that would constitute at least 80%, but less than 90%, of the
issued and outstanding ICP Shares as of the date of determination. Subject
only to the Offer Conditions, UTCSub shall, and UTC shall cause UTCSub to,
pay, as soon as practicable after the expiration of the Offer, for all ICP
Shares validly tendered (and not properly withdrawn).
(b) UTCSub will instruct the depositary under the Offer to advise ICP, from
time to time (but not less frequently than every two (2) Business Days
until the day immediately prior to the Expiry Time and thereafter on an
hourly basis, if requested by ICP and in such manner as ICP may reasonably
request), as to the number of ICP Shares that have been tendered (and not
properly withdrawn) under the Offer.
(c) The parties hereto agree that UTC may make the Offer through UTCSub but
that UTC shall be liable to ICP for the full performance by UTCSub of its
obligations under this Agreement.
2.2 ICP Directors' Circular
(a) ICP hereby consents to the Offer as set forth in Section 2.1 and
represents, warrants and confirms that (i) its Board of Directors has
unanimously (A) determined that the Offer is fair to the holders of ICP
Shares and is in the best interests of ICP and such holders and (B)
approved the Offer and this Agreement and resolved to recommend acceptance
of the Offer by the holders of ICP Shares, provided that the Offer is not
amended except in accordance with the terms of this Agreement, and (C)
determined to elect, to the extent permitted by law, not to be subject to
any "moratorium", "control share acquisition", "business combination",
"fair price" or other form of anti-takeover laws and regulations of any
jurisdiction that may purport to be applicable to this Agreement or the
Lockup Agreements, (ii) the making of the Offer and the taking of any other
action by UTC or UTCSub in connection with this Agreement or the Lockup
Agreements and the transactions contemplated hereby and thereby have been
consented to by the Board of Directors of ICP in accordance with the terms
and provisions of the Confidentiality Agreement dated March 19, 1999
between UTC and ICP (the "Confidentiality Agreement") and (iii) Credit
Suisse First Boston Corporation, ICP's independent financial advisor, has
advised ICP's Board of Directors that, in its opinion, the consideration to
be paid in the Offer to ICP's shareholders is fair, from a financial point
of view, to such shareholders. On the date the Offer Documents are filed
with the appropriate Securities Authorities, ICP shall file with the
Securities Authorities a directors' circular with respect to the Offer
containing the recommendation described in Section 2.2(a) and shall mail
the directors' circular to the shareholders of ICP. The directors'
circular shall comply as to form and content in all material respects with
the requirements of applicable Securities Laws and, on the date filed with
Securities Authorities and on the date first published, sent or given to
ICP'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
9
circumstances under which they were made, not misleading, except that no
representation or warranty is made by ICP with respect to written
information supplied by UTC or UTCSub or any other third party specifically
for inclusion in the directors' circular. ICP, UTC and UTCSub each agree
promptly to correct any written information provided by it for use in the
directors' circular if and to the extent that such information shall have
become false or misleading in any material respect, and ICP further agrees
to take all steps necessary to amend or supplement the directors' circular
and to cause the directors' circular as so amended or supplemented to be
filed with the appropriate Securities Authorities and disseminated to ICP's
shareholders, in each case as and to the extent required by applicable
Securities Laws. UTC shall be given reasonable opportunity to review and
comment upon the directors' circular prior to its filing with the
Securities Authorities or dissemination to ICP's shareholders, and ICP
shall consider such comments in good faith. ICP agrees to provide UTC any
comments ICP or its counsel may receive from the Securities Authorities
with respect to the directors' circular promptly after the receipt of such
comments.
(b) The Board of Directors of ICP has been advised that all directors of ICP
intend to tender their ICP Shares under the Offer. The directors' circular
shall reflect the intention of such directors to tender their ICP Shares
pursuant to the Offer.
(c) Notwithstanding Section 2.2(a), in the event that, prior to the expiry of
the Offer, a Superior Take-over Proposal is offered or made to the holders
of ICP Shares or ICP, the Board of Directors of ICP may withdraw, modify or
change any recommendation regarding the Offer if the Board of Directors of
ICP, acting in good faith, after consulting outside counsel, determines
that the directors are required to do so in order to discharge properly
their fiduciary duties under applicable law.
2.3 Offer Documents
(a) On the date of commencement of the Offer, UTC and UTCSub shall file or
cause to be filed with the appropriate Securities Authorities an offer to
purchase and take-over circular and the related letter of transmittal,
notice of guaranteed delivery and summary advertisement pursuant to which
the Offer will be made (collectively, the "Offer Documents"). UTC and
UTCSub further agree to take all reasonable steps necessary to cause the
Offer Documents to be disseminated to holders of ICP Shares in accordance
with applicable Securities Laws. UTC and UTCSub agree that the Offer
Documents shall comply as to form and content in all material respects with
applicable Securities Laws, and the Offer Documents, on the date first
published, sent or given to ICP'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 or warranty is made by UTC or
UTCSub with respect to written information supplied by ICP or any third
party specifically for inclusion or incorporation by reference in the Offer
Documents. UTC, UTCSub and ICP each
10
agree promptly to correct any written information provided by it for use in
the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect and UTC and UTCSub
further agree to take all steps to cause the Offer Documents as so
corrected to be filed with the appropriate Securities Authorities and
disseminated to ICP's shareholders, in each case as and to the extent
required by applicable Securities Laws. ICP shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their
filing with Securities Authorities or dissemination to ICP's shareholders,
and UTC and UTCSub shall consider such comments in good faith. UTC and
UTCSub agree to provide ICP any comments UTC, UTCSub or their counsel may
receive from Securities Authorities with respect to the Offer Documents
promptly after the receipt of such comments.
(b) ICP agrees to provide such reasonable assistance as UTCSub or its agents
may reasonably request in connection with communicating the Offer and any
amendments and supplements thereto to the holders of the ICP Shares and to
such other persons as are entitled to receive the Offer under Securities
Laws, including providing lists of the shareholders of ICP and of the
holders of ICP Options and other securities convertible into or
exchangeable for ICP Shares and mailing labels with respect to all such
holders of securities as soon as possible after the date of this Agreement
but in any event no later than the close of business in Toronto on June 28,
1999 and updates or supplements thereto from time to time as may be
requested by UTCSub.
2.4 Outstanding Stock Options
ICP shall cause the vesting of option entitlements under the Stock Option Plans
to accelerate prior to or concurrent with the Expiry Time, such that all
outstanding ICP Options to acquire ICP Shares are exercisable prior to or
concurrent with the Expiry Time. At the Effective Time, each holder of a then
outstanding ICP Option shall, in settlement thereof, be entitled to receive from
ICP, and shall be paid in full satisfaction for each ICP Share subject to such
ICP Option an amount (subject to any applicable withholding tax) in cash equal
to the product of (i) the excess of the Offer price over the per share exercise
or purchase price of such ICP Option and (ii) the number of ICP Shares subject
to such ICP Option. Upon receipt of such consideration, each such ICP Option
shall be cancelled. The surrender of a ICP Option to ICP in exchange for such
consideration shall be deemed a release of any and all rights the holder had or
may have had in respect of such ICP Option. The Stock Option Plans shall
terminate as of the Effective Time and any and all rights under any and all
rights under any provisions in any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of ICP or any subsidiary thereof shall be cancelled by ICP as of the Effective
Time.
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ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity
UTC, UTCSub and ICP shall not issue any press release with respect to this
Agreement or the transactions contemplated hereby unless such action is agreed
to jointly or is required by applicable law or by obligations pursuant to any
listing agreement with a stock exchange, in which case the party making such
release will use reasonable efforts to consult the other party before issuance
of such release.
3.2 Solicitation
The financial advisors to UTC and UTCSub will act as dealer managers (the
"Dealer Managers") in connection with the solicitation of acceptances of the
Offer and will form a soliciting dealer group comprised of members of stock
exchanges in Canada and the United States therefor.
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction
If UTCSub takes up and pays for any ICP Shares pursuant to the terms of the
Offer, UTCSub shall use its reasonable best efforts to, subject to any necessary
regulatory and shareholder approval, acquire, and ICP agrees to assist UTCSub in
acquiring, the balance of any non-tendered ICP Shares as soon as practicable
(but in any event no later than ninety (90) days) following the Take-up Date by
way of a statutory arrangement, amalgamation, merger, reorganization,
consolidation, recapitalization or other type of acquisition transaction or
transactions ("Second Stage Transaction") carried out for a cash consideration
per ICP Share not less than the consideration paid pursuant to the Offer.
Nothing herein shall be construed to prevent UTCSub from acquiring, directly or
indirectly, additional ICP Shares in the open market or in privately negotiated
transactions, in accordance with Securities Laws (including by way of compulsory
acquisition) following completion of the Offer.
4.2 Information Circular, Etc.
Without limiting Section 4.1, ICP agrees that if UTCSub is required to use its
reasonable best efforts to effect a Second Stage Transaction which requires
approval of ICP's shareholders in a meeting of ICP's shareholders, ICP shall
take all action necessary in accordance with the Securities Laws, other
applicable Canadian laws, the ICP Governing Documents and the requirements of
The Toronto Stock Exchange and the American Stock Exchange or any other
regulatory authority having jurisdiction to duly call, give notice of, convene
and hold a meeting of its shareholders as promptly as practicable to consider
and vote upon the action proposed by UTCSub. In the event of such a meeting or
meetings, ICP shall mail to its shareholders an Information Circular with
respect to the meeting of ICP's shareholders. The term "Information Circular"
shall mean such proxy or other required informational statement or circular, as
the case may be, and all related materials at the time required to be mailed to
ICP's shareholders and all amendments or supplements thereto, if any. Each of
UTCSub and ICP shall obtain and furnish
12
the information required to be included in any Information Circular. The
information provided and to be provided by UTCSub and ICP for use in the
Information Circular, on both the date the Information Circular is first mailed
to ICP's shareholders and on the date any such meeting is held, shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading and will
comply in all material respects with all applicable requirements of law. UTCSub
and ICP each agree to correct promptly any such information provided by it for
use in any Information Circular which shall have become false or misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UTC AND UTCSUB
As of the date hereof, UTC and UTCSub hereby jointly and severally represent and
warrant to ICP as follows and acknowledge that ICP is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
5.1 Organization and Qualification
UTC is a corporation duly incorporated and organized and validly existing under
the laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as it is now being conducted. UTCSub is a
corporation duly incorporated and organized and validly existing under the laws
of the Province of New Brunswick and has the requisite corporate power and
authority to carry on its business as it is now being conducted.
5.2 Authority Relative to this Agreement
UTC and UTCSub have the requisite corporate authority to enter into this
Agreement and to carry out their obligations hereunder. The execution and
delivery of this Agreement and the consummation by UTC and UTCSub of the
transactions contemplated hereby have been duly authorized by their respective
Boards of Directors and no other corporate proceedings on their part are or will
be necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of UTC and
UTCSub and constitutes the legal, valid and binding obligation of each of UTC
and UTCSub enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and to general principles of equity.
5.3 No Violations
(a) Neither the execution and delivery of this Agreement by UTC and UTCSub, the
consummation by them of the transactions contemplated hereby nor compliance
by them with any of the provisions hereof will: (i) violate, conflict with,
or result in breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in a right of
termination or acceleration under, or result in a creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of UTC or UTCSub or any of their subsidiaries under,
13
any of the terms, conditions or provisions of (x) the charter or bylaws of
either UTC or UTCSub or (y) any material note, bond, mortgage, indenture,
loan agreement, deed of trust, agreement, lien, contract or other
instrument or obligation to which UTC or UTCSub or any of their
subsidiaries is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which either UTC or UTCSub or
any of their subsidiaries is bound; or (ii) subject to compliance with the
statutes and regulations referred to in Section 5.3(b), violate any
judgment, ruling, order, writ, injunction, determination, award, decree,
statute, ordinance, rule or regulation applicable to UTC or UTCSub or any
of their subsidiaries (except, in the case of each of clauses (i) and (ii)
above, for such violations, conflicts, breaches, defaults or terminations
which, or any consents, approvals or notices which if not given or
received, would not have any material adverse effect on the ability of UTC
to consummate the transactions contemplated hereby on a timely basis).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, the Competition Act, the HSR Act, the Investment Canada
Act, the rules of The Toronto Stock Exchange or the American Stock
Exchange, and any other pre-merger notification or similar statutes, (i)
there is no legal impediment to UTC and UTCSub's consummation of the
transactions contemplated by this Agreement and (ii) no filing or
registration with, or authorization, consent or approval of, any domestic
or foreign public body or authority is necessary by UTC or UTCSub in
connection with the making or the consummation of the Offer, except for
such filings or registrations which, if not made, or for such
authorizations, consents or approvals, which, if not received, would not
have a material adverse effect on the ability of UTCSub to consummate the
transactions contemplated hereby on a timely basis.
5.4 Funds Available
Adequate arrangements have been made for aggregate funds to be available at each
of the Expiry Time and the Effective Time, such that UTCSub will be in a
position (i) to pay for all ICP Shares tendered pursuant to the Offer in
accordance with the terms of the Offer and any ICP Shares acquired pursuant to a
compulsory acquisition or Second Stage Transaction and (ii) to satisfy all other
financial obligations of UTC, UTCSub and ICP arising as a result of the
consummation of the transactions contemplated hereby.
5.5 Litigation
There is no litigation, suit, claim, action, proceeding or investigation pending
or, to the knowledge of UTC and UTCSub, threatened against UTC or UTCSub or any
of their respective properties or assets by or before any Governmental
Authority, which would seek to delay or prevent the consummation of any
transaction contemplated by this Agreement. Neither UTC, UTCSub nor any
property or asset of UTC or UTCSub is subject to any continuing order of,
consent decree, settlement agreement or similar written agreement with, or, to
the knowledge of UTC and UTCSub, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority or any
14
arbitrator which would prevent UTC or UTCSub from performing their respective
material obligations under this Agreement or prevent or materially delay the
consummation of any transaction contemplated by this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ICP
As of the date hereof and except as otherwise disclosed in ICP's SEC Reports or
the Disclosure Schedule, ICP hereby represents and warrants to UTC and UTCSub as
follows and acknowledges that they are relying upon these representations and
warranties in connection with the entering into of this Agreement:
6.1 Organization and Qualification
ICP is a corporation duly continued and validly existing under the federal laws
of Canada and has the requisite corporate power and authority to carry on its
business as it is now being conducted. Each of ICP's subsidiaries is a
corporation duly incorporated and organized and validly subsisting under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as now being conducted. ICP and
each of its subsidiaries is duly registered to do business and is in good
standing in each jurisdiction in which the character of its properties, owned or
leased, or the nature of its activities make such registration necessary, except
where the failure to be so registered or in good standing neither, individually
or in the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the performance of
this Agreement by ICP.
6.2 Authority Relative to this Agreement
ICP has the requisite corporate authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by ICP's Board of Directors, and no other corporate proceedings
on the part of ICP are necessary to authorize this Agreement and the
transactions contemplated hereby (except for obtaining shareholder approval in
respect of any Second Stage Transaction). This Agreement has been duly executed
and delivered by ICP and constitutes the legal, valid and binding obligation of
ICP enforceable against ICP in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and to general principles
of equity.
6.3 No Violations
(a) Neither the execution and delivery of this Agreement by ICP, the
consummation of the transactions contemplated hereby nor compliance by ICP
with any of the provisions hereof will: (i) violate, conflict with, or
result in breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in a right of
termination or acceleration under, cause any available credit to cease to
be available under, or result in a creation of any lien,
15
security interest, charge or encumbrance upon any of the properties or
assets of ICP or any of its subsidiaries, or impair or limit the ability of
ICP or any subsidiary to carry on business under, any of the terms,
conditions or provisions of (x) the ICP Governing Documents or (y) any
note, bond, mortgage, indenture, loan agreement, deed of trust, agreement,
lien, contract or other instrument or obligation to which ICP or any of its
subsidiaries is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which ICP or any of its
subsidiaries is bound; or (ii) subject to compliance with the statutes and
regulations referred to in Section 6.3(b), violate any judgment, ruling,
order, writ, injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to ICP or any of its subsidiaries (except, in
the case of each of clauses (i) and (ii) above, for such violations,
conflicts, breaches, defaults, terminations which, or any consents,
approvals or notices which if not given or received, neither, individually
or in the aggregate, have had or would be reasonably expected to have a
Material Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP or the consummation of any of the
transactions contemplated by this Agreement).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, the Competition Act, the HSR Act, the Investment Canada
Act, the rules of The Toronto Stock Exchange or the American Stock
Exchange, and any other pre-merger notification or similar statutes, (i)
there is no legal impediment to ICP's consummation of the transactions
contemplated by this Agreement and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign public body
or authority is necessary by ICP in connection with the making or the
consummation of the Offer, except for such filings or registrations which,
if not made, or for such authorizations, consents or approvals, which, if
not received, would not prevent or materially delay or limit the
performance of this Agreement by ICP or the consummation of any of the
transactions contemplated by this Agreement.
6.4 Capitalization
As of the date hereof, the authorized share capital of ICP consists of an
unlimited number of ordinary shares and class A and B preference shares. As of
the date of ICP's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999, forty million seven hundred forty-seven thousand four hundred
and seventy-one (40,747,471) ICP Shares were issued and outstanding and no Class
A or Class B preference shares were issued and outstanding. As of the date
hereof, 2,043,000 ICP Shares are reserved for issuance pursuant to the exercise
of outstanding ICP Options granted under the Stock Option Plans. Except for
such ICP Options, there are no options, warrants or other rights, agreements or
commitments of any character whatsoever requiring the issuance, sale or transfer
by ICP of any shares of ICP (including the ICP Shares) or any subsidiary of ICP
or any securities convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any shares of ICP (including the ICP
Shares) or any subsidiary of ICP, nor are there any outstanding stock
appreciation rights, phantom equity or similar rights, agreements, arrangements
or commitments based upon the book value, income or other attribute of ICP or
any subsidiary of ICP. All outstanding ICP
16
Shares have been duly authorized and validly issued, are fully paid and non-
assessable and are not subject to, nor were they issued in violation of, any
preemptive rights, and all ICP Shares issuable upon exercise of outstanding
stock options in accordance with their respective terms will be duly authorized
and validly issued, fully paid and non-assessable and will not be subject to any
preemptive rights.
6.5 No Material Adverse Effect
Since March 31, 1999, there has not been any change, condition, event or
development that has had or is reasonably likely to have a Material Adverse
Effect.
6.6 No Undisclosed Material Liabilities
Except (a) as disclosed or reflected in the consolidated interim unaudited
financial statements of ICP as at March 31, 1999 included in ICP's Quarterly
Report on Form 10-Q for such period, (b) for liabilities and obligations (i)
incurred after March 31, 1999 in the ordinary course of business and consistent
with past practice, or (ii) pursuant to the terms of this Agreement, and (c) for
liabilities or obligations which neither, individually or in the aggregate, have
had or would reasonably be expected to have a Material Adverse Effect nor would
prevent or materially delay or limit the performance of this Agreement by ICP,
neither ICP nor any of its subsidiaries has incurred any liabilities of any
nature, whether accrued, contingent or otherwise (or which would be required by
generally accepted accounting principles in Canada to be reflected on a
consolidated balance sheet of ICP and its subsidiaries).
6.7 Brokerage Fees
ICP has not retained (nor will it retain) any financial advisor, broker, agent
or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement, any transaction contemplated hereby or any
transaction presently ongoing or contemplated, except that Credit Suisse First
Boston Corporation has been retained as ICP's financial advisor in connection
with certain matters including the transactions contemplated hereby. ICP has
delivered to UTCSub a true and complete copy of its agreement with Credit Suisse
First Boston Corporation.
6.8 Conduct of Business
Since March 31, 1999, neither ICP nor any of its subsidiaries has taken any
action that would be in violation of Section 7.1 if such provision had been in
effect since such date, other than violations which neither, individually or in
the aggregate, have had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the performance of
this Agreement by ICP.
6.9 Reports
(a) ICP has heretofore made available to UTCSub true and complete copies of (i)
ICP's Annual Report on Form 10-K or 20-F, as the case may be, for each of
the fiscal years ended December 31, 1996, 1997, 1998, Information Circular
relating to ICP's 1999 annual meeting of shareholders and related 1998
Annual
17
Report to shareholders and (ii) all prospectuses or other offering
documents used by ICP in the offering of its securities or filed with
Securities Authorities since January 1, 1998, and (iii) ICP's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1999. As of
their respective dates, such forms, statements, prospectuses and other
offering documents (including all exhibits and schedules thereto and
documents incorporated by reference therein) did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and complied
in all material respects with all applicable requirements of law and
related rules and regulations. The audited financial statements and
unaudited interim financial statements of ICP and its consolidated
subsidiaries publicly issued by ICP, or included or incorporated by
reference in such forms, statements, prospectuses and other offering
documents were prepared in accordance with generally accepted accounting
principles in Canada applied on a consistent basis (except (i) as otherwise
indicated in such financial statements and the notes thereto or, in the
case of audited statements, in the related report of ICP's independent
accountants or (ii) in the case of unaudited interim financial statements,
to the extent they may not include footnotes or may be condensed or summary
statements; provided, however, that were such unaudited interim financial
statements to include footnotes or not be condensed, the financial results
indicated therein would not be materially different), and fairly present
the consolidated financial position, results of operations and changes in
financial position of ICP and its consolidated subsidiaries as of the dates
thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit
adjustments except for such adjustments necessary for a fair statement of
the results for the interim periods presented).
(b) ICP will deliver to UTCSub as soon as they become available true and
complete copies of any report or statement filed by it with Securities
Authorities subsequent to the date hereof. As of their respective dates,
such reports and statements (excluding any information therein provided by
UTCSub specifically for inclusion therein, as to which ICP makes no
representation) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading and will comply in all material respects with all
applicable requirements of law and related rules and regulations. The
consolidated financial statements of ICP issued thereby or to be included
in such reports and statements (excluding any information therein provided
by UTCSub specifically for inclusion therein, as to which ICP makes no
representation) will be prepared in accordance with generally accepted
accounting principles in Canada applied on a consistent basis (except (i)
as otherwise indicated in such financial statements and the notes thereto
or, in the case of audited statements, in the related report of ICP's
independent accounts or (ii) in the case of unaudited interim financial
statements, to the extent they may not include footnotes or may be
condensed or summary statements; provided, however, that were such
unaudited interim financial statements to include
18
footnotes or not be condensed, the financial results indicated therein
would not be materially different) and will present fairly the consolidated
financial position, results of operations and changes in financial position
of ICP as of the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial statements, to
normal year-end audit adjustments except for such adjustments necessary for
a fair statement of the results for the interim periods presented).
6.10 U.S. Registration
The ICP Shares were not issued by a closed-end investment company registered
under the United States Investment Company Act of 1940.
6.11 Subsidiaries
All of the capital stock of each of ICP's subsidiaries is beneficially owned,
directly or indirectly, by ICP with valid and marketable title thereto, free and
clear of any and all liens, charges, security interests, adverse claims,
encumbrances and demands of any nature or kind whatsoever.
6.12 Litigation
There is no claim, action, suit, proceeding or governmental investigation
pending or, to the knowledge of ICP, threatened against or relating to ICP or
any of its subsidiaries that involves a claim against ICP or any of its
subsidiaries in excess of $500,000 or that, either individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect or in any manner challenges or seeks to prevent, enjoin, alter or
materially delay or limit the Offer or the performance of this Agreement by ICP
or any of the other transactions contemplated hereby. Neither ICP (or any of
its subsidiaries) nor any property or asset of ICP (or any of its subsidiaries)
is subject to any continuing order of, consent, decree, settlement, agreement or
similar written agreement with or, to the knowledge of ICP, continuing
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority or any
arbitrator which would prevent ICP from performing its material obligations
under this Agreement or prevent or materially delay or limit the consummation of
any transaction contemplated by this Agreement.
6.13 Insurance
ICP has insurance policies, including without limitation, policies of life,
fire, health and other casualty and liability insurance, that ICP believes is
sufficient for its business and operations.
6.14 Environmental
(a) ICP has been and is in compliance with all applicable environmental laws
and regulations except for non-compliance that neither, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP;
19
(b) ICP has never received any notice of or been prosecuted for non-compliance
with any environmental laws or regulations, nor has ICP settled any
allegation of non-compliance short of prosecution; and
(c) there are no actual or threatened orders or directions relating to
environmental matters requiring any material work, repair or construction
or capital expenditures to be made with respect to any of ICP's properties,
nor has ICP received notice of any of the same.
6.15 Benefit Plans
(a) there are no benefit plans (as defined in Section 9.6);
(b) the benefit plans have been maintained and operated in accordance with
their terms and applicable legal requirements and there are no outstanding
violations or defaults under any benefit plans except for violations or
defaults that neither, individually or in the aggregate, have had or would
be reasonably expected to have a Material Adverse Effect nor would prevent
or materially delay or limit the performance of this Agreement by ICP, nor
any actions, claims or other proceedings pending or, to the knowledge of
ICP, threatened with respect to any benefit plan except for claims for
benefits in the ordinary course of business;
(c) no benefit plan currently is under a governmental investigation or audit
and, to the knowledge of ICP, no such investigation or audit is
contemplated or under consideration;
(d) each benefit plan covers only current or former employees of ICP or its
subsidiaries and their dependents or beneficiaries;
(e) no promise or commitment to increase benefits under any benefit plan
(except pursuant to the express terms of the plan) or to adopt any
additional benefit plan has been made;
(f) no event has occurred which could subject any person to any tax, penalty or
fiduciary liability in connection with any plan that, individually or in
the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect or would prevent or materially delay or limit the
performance of this Agreement by ICP;
(g) there have been no withdrawals of surplus or contribution holidays in
respect of such benefit plans, except as permitted by law and the terms of
the benefit plans;
(h) ICP and its subsidiaries do not contribute to any multi-employer plan or
multiple employer plans with respect to which there would be a liability of
ICP or its subsidiaries on withdrawal from any such plan except for
liability that neither, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect or would prevent
or materially delay or limit the performance of this Agreement by ICP;
20
(i) ICP and its subsidiaries do not provide for any medical or health benefits
extending beyond termination of employment, except to the extent required
by applicable law;
(j) neither ICP nor any of its subsidiaries is a party to any collective
bargaining agreement or other agreement or understanding with a labour
union or labour organization; there are no labour unions or other
organizations representing, purporting to represent or attempting to
represent, any employee of ICP or any of its subsidiaries; and
(k) the consummation of the transactions contemplated by this Agreement (alone
or together with any other event) will not (i) entitle any person to any
benefit under any benefit plan, (ii) accelerate the time of payment,
vesting or funding of, or increase the amount, of any compensation or
benefits due to any executive officer under any benefit plan, or (iii)
accelerate the timing of payment, vesting or funding of, or increase the
amount, of any compensation or benefits due any person other than an
executive officer under any benefit plan except for amounts that neither,
individually or in the aggregate, have had or would be reasonably expected
to have a Material Adverse Effect nor would prevent or materially delay or
limit the performance of this Agreement by ICP.
6.16 Tax Matters
(a) ICP and its subsidiaries have timely filed all returns and reports relating
to taxes of any kind or nature (including but not limited to income, sales,
payroll, value added, property, withholding and estimated taxes) required
to be filed by applicable law with respect to each of ICP and its
subsidiaries or any of their income, properties or operations as of the
date hereof, except where the failure to file neither, individually or in
the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP. All such returns are true, accurate
and complete and accurately set forth all items required to be reflected or
included in such terms by applicable federal, state, local or foreign tax
laws, rules or regulations, except to the extent that any inaccuracies in
filed returns would neither, individually or in the aggregate, have had or
would be reasonably expected to have a Material Adverse Effect nor would
prevent or materially delay or limit the performance of this Agreement by
ICP. ICP and its subsidiaries have timely paid all such taxes attributable
to each of ICP and its subsidiaries that were due and payable without
regarding to whether such taxes have been assessed, except to the extent
that any failure to pay neither, individually or in the aggregate, has had
or would be reasonably expected to have a Material Adverse Effect nor would
prevent or materially delay or limit the performance of this Agreement by
ICP. ICP has made available to UTC complete and accurate copies of the
portions applicable to each of ICP and its subsidiaries of all income and
franchise tax returns, and any amendments thereto, filed by or on behalf of
ICP or any of its subsidiaries or any member of a group of corporations
including ICP or any of its subsidiaries for the taxable years ending 1994
and 1995 (in respect of
21
Canadian returns) and 1994 through 1997, inclusive (in respect of United
States returns).
(b) There are no pending or, to ICP's knowledge, threatened audits,
examinations, investigations, deficiencies, claims or other proceedings
relating to such taxes of ICP or any of its subsidiaries. ICP and its
subsidiaries have made adequate provisions in accordance with Canadian
generally accepted accounting principles appropriately and consistently
applied to each of ICP and its subsidiaries in the consolidated financial
statements included in the Reports referred to in Section 6.9(a) for the
payment of all taxes for which each of ICP and its subsidiaries may be
liable for the periods covered thereby that were not yet due and payable as
of the dates thereof, regardless of whether the liability for such taxes is
disputed, except where the failure to reserve neither, individually or in
the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP.
6.17 Year 2000
ICP has taken steps that are reasonable to ensure that the occurrence of the
year 2000 will not materially and adversely affect the information and business
systems of ICP or its subsidiaries, and it is ICP's reasonable expectation that
no material expenditures in excess of currently budgeted items will be required
in order to cause such systems to operate properly following the change of the
year 1999 to 2000.
6.18 Compliance
Neither ICP nor any of its subsidiaries is or has been in conflict with, in
default with respect to or in violation of, any statute, law, ordinance, rule,
regulation, order, judgment, decree, agreement, indenture, contract or other
instrument applicable to ICP or any of its subsidiaries or by which any property
or asset of ICP or any of its subsidiaries is bound or affected, except for any
such conflicts, defaults or violations that neither, individually or in the
aggregate, have had or would be reasonably expected to have a Material Adverse
Effect nor would prevent or materially delay or limit the performance of this
Agreement by ICP. ICP and its subsidiaries have all material permits, licenses,
authorizations, consents, approvals and franchises from Governmental Authorities
required to conduct their businesses as currently conducted, except for such
permits, licenses, authorizations, consents, approvals and franchises the
absence of which neither, individually or in the aggregate, have had or would be
reasonably expected to have a Material Adverse Effect nor would prevent or
materially delay or limit the performance of this Agreement by ICP.
6.19 Debt Covenant
At the date hereof ICP is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.03 of the
Indenture dated as of May 13, 1998 among International Comfort Products
Holdings, Inc., International Comfort Products Corporation and United States
Trust Company of New York (the "Indenture"; the terms
22
"Indebtedness" and "Permitted Indebtedness" as used in this sentence have the
meanings ascribed to such terms by the Indenture).
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by ICP
Unless UTCSub shall otherwise agree in writing or as alternatively expressly
permitted or specifically contemplated by this Agreement, ICP covenants and
agrees that, during the period from the date of this Agreement until this
Agreement is terminated:
(a) the business of ICP and its subsidiaries shall be conducted only in, and
ICP and its subsidiaries shall not take any action except in, the usual and
ordinary course of business and consistent with past practice, and ICP
shall use all commercially reasonable efforts to maintain and preserve its
and its subsidiaries' business organization, assets, employees and
advantageous business relationships;
(b) ICP shall not directly or indirectly do or permit to occur any of the
following: (i) amend the ICP Governing Documents; (ii) declare, set aside
or pay any dividend or other distribution or payment (whether in cash,
shares or property) in respect of its share capital; (iii) issue, grant,
sell or pledge or agree to issue, grant, sell or pledge any shares of ICP
or its subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, shares of ICP
or its subsidiaries, other than ICP Shares issuable pursuant to the terms
of ICP Options outstanding on the date hereof; (iv) redeem, purchase or
otherwise acquire any of its outstanding shares or other securities; (v)
split, combine or reclassify any of its shares; (vi) adopt a plan of
liquidation or resolutions providing for the liquidation, dissolution,
merger, consolidation or reorganization of ICP or any of its subsidiaries;
or (vii) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing, except as permitted
above;
(c) other than pursuant to commitments entered into prior to the date of this
Agreement as disclosed in the Disclosure Schedule or ICP's SEC Reports,
neither ICP nor any of its subsidiaries shall directly or indirectly: (i)
sell, pledge, dispose of or encumber any assets except in the ordinary
course of business; (ii) acquire (by merger, amalgamation, consolidation or
acquisition of shares or assets) any corporation, partnership or other
business organization or division thereof, or, except for investments in
securities made in the ordinary course of business, make any investment
either by purchase of shares or securities, contributions of capital (other
than to subsidiaries), property transfer, or, except in the ordinary course
of business, purchase of any property or assets of any other individual or
entity; (iii) incur any indebtedness for borrowed money or any other
material liability or obligation or issue any debt securities or assume,
guarantee, endorse or otherwise as an accommodation become responsible for,
the obligations of any other individual or entity, or make any loans or
advances, except in the ordinary course
23
of business; (iv) except for the Officer Obligations, pay, discharge or
satisfy any material claims, liabilities or obligations other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice of liabilities reflected or reserved against
in its financial statements or incurred in the ordinary course of business
consistent with past practice; (v) authorize, recommend or propose any
release or relinquishment of any material contract right other than in the
ordinary course of business consistent with past practice; (vi) waive,
release, grant or transfer any rights of material value or modify or change
in any material respect any existing material license, lease, contract,
production sharing agreement, government land concession or other document,
other than in the ordinary course of business consistent with past
practice; (vii) enter into any interest rate swaps, currency swaps or any
other rate fixing agreement for a financial transaction or enter into any
call arrangement of any sort or any forward sale agreement for commodities,
other than in the ordinary course of business consistent with past
practice; (viii) authorize or propose any of the foregoing, or enter into
or modify any contract, agreement, commitment or arrangement to do any of
the foregoing; or (ix) make any capital expenditures other than in
accordance with the 1999 capital expenditure budget previously disclosed in
writing to UTC;
(d) neither ICP nor any of its subsidiaries shall create any new Officer
Obligations and, except for payment of the existing Officer Obligations,
neither ICP nor any of its subsidiaries shall grant to any officer or
director an increase in compensation in any form, grant any general salary
increase other than in accordance with the requirements of any existing
collective bargaining or union contracts, grant to any other employee any
increase in compensation in any form other than routine increases in the
ordinary course of business consistent with past practices, make any loan
to any officer or director, or take any action with respect to the grant of
any severance or termination pay arising from the Offer or a change of
control of ICP or the entering into of any employment agreement with, any
senior officer or director, or with respect to any increase of benefits
payable under its current severance or termination pay policies;
(e) neither ICP nor any of its subsidiaries shall adopt or amend or make any
contribution to any bonus, profit sharing, option, pension, retirement,
deferred compensation, insurance, incentive compensation, other
compensation or other similar plan, agreement, trust, fund or arrangements
for the benefit of employees, except as is necessary to comply with the law
or as required by existing provisions of any such plans, programs,
arrangements or agreements; and
(f) ICP shall use its reasonable efforts to cause it current insurance (or re-
insurance) policies not be cancelled or terminated or any of the coverage
thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance and
re-insurance companies of nationally recognized standing providing coverage
equal to or greater than the coverage under the cancelled, terminated or
lapsed policies for substantially similar premiums are in full force and
effect.
24
ARTICLE 8
COVENANTS OF ICP
8.1 No Solicitation
(a) ICP shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any parties conducted before the
date of this Agreement with respect to any Take-over Proposal and, without
limitation, shall promptly following the execution of this Agreement
request the return of all confidential information provided by ICP to all
parties who have had such discussions or negotiations or who have entered
into confidentiality agreements with ICP pertaining to the sale of ICP or a
substantial portion of its assets.
(b) ICP shall immediately notify UTCSub of any Take-over Proposal received by
it or any of its subsidiaries or any of their respective directors,
officers, employees, agents, financial advisors, counsel or other
representatives or any request for confidential information relating to ICP
in connection with a Take-over Proposal or for access to the properties,
books or records of ICP or any of its subsidiaries by any person or entity
that it is considering making a Take-over Proposal. Any such notice to
UTCSub shall be made orally immediately following any such receipt or
request, shall be confirmed in writing, and shall indicate such details of
the Take-over Proposal or information request known to such persons as
UTCSub may reasonably request, including the identity of the person making
such Take-over Proposal or request for information.
(c) Neither ICP nor any of its subsidiaries, or any of their respective
directors, officers, employees, agents, financial advisors, counsel or
other representatives shall, directly or indirectly, (i) solicit, initiate
or encourage, or enter into any agreements or understandings with respect
to any Take-over Proposal (other than from UTC and its subsidiaries and
their respective directors, officers, employees, agents, financial
advisors, counsel or other representatives) or (ii) provide any
confidential information to any person or entity (other than UTC and its
affiliates) or participate in any discussions or negotiations relating to
any such Take-over Proposal.
(d) Notwithstanding Section 8.1(c), if the Board of Directors of ICP receives a
request for confidential information from a party who proposes to ICP a
Take-over Proposal and the Board of Directors of ICP determines that such
proposal is reasonably likely to lead to a Superior Take-over Proposal and,
after consulting with its outside counsel, that it is necessary to do so in
order for the directors to discharge properly their fiduciary duties under
applicable law, then, and only in such case, ICP may, subject to the prior
execution and delivery of a confidentiality agreement in substantially the
same form and containing the same restrictions and limitations as are set
forth in the Confidentiality Agreement, provide such party with access to
such information regarding ICP as was provided to or made available to UTC
and/or UTCSub, and ICP or its Board of Directors may consider and negotiate
such Superior Take-over Proposal (it being
25
understood that neither ICP nor its Board of Directors may approve, make a
recommendation to ICP shareholders or enter into an agreement with respect
to such Superior Take-over Proposal unless this Agreement has been
previously terminated). In such event, upon UTC's request, ICP shall from
time to time advise UTC as to the status of such discussions and shall
provide to UTC a copy of any such confidentiality agreement immediately
upon its execution.
(e) ICP shall not waive, in whole or in part, the "standstill" provisions
applicable to any party to a confidentiality agreement with ICP (other than
UTC) as at the date hereof.
8.2 ICP Board of Directors
(a) Promptly upon the purchase by UTCSub of the outstanding ICP Shares pursuant
to the Offer, and from time to time thereafter, UTC shall be entitled to
designate up to such number of directors, rounded up to the next whole
number, on the Board of Directors of ICP as shall give UTC representation
on the Board of Directors of ICP equal to the product of the total number
of directors on the Board of Directors (giving effect to the directors
appointed pursuant to this sentence) multiplied by the percentage that the
aggregate number of the ICP Shares beneficially owned by UTC or any
affiliate of UTC following such purchase bears to the total number of ICP
Shares then outstanding, and ICP shall, at such time, immediately take all
actions necessary to cause UTC's designees to be appointed as directors of
ICP, including increasing the size of the Board of Directors of ICP or
securing the resignations of incumbent directors or both.
(b) ICP shall promptly take all actions required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill
its obligations under this Section 8.2 and shall include in the Schedule
14D-9 such information with respect to ICP and its officers and directors
as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. UTC shall supply to ICP and be solely responsible for any
information with respect to UTC and its nominees, officers, directors and
affiliates required by such Section 14(f) and Rule 14f-1.
(c) Following the appointment of designees of UTC pursuant to this Section 8.2
and prior to consummation of the Second Stage Transaction, any amendment of
this Agreement or the ICP Governing Documents, any termination of this
Agreement by ICP, any extension by ICP of the time for the performance of
any of the obligations or other acts of UTC hereunder or waiver thereof,
any waiver of any condition to the obligations of ICP or waiver of any of
ICP's rights hereunder or other action by ICP shall require the concurrence
of a majority of the directors of ICP then in office who were not
designated by UTC, which action shall be deemed to constitute the action of
the full Board of Directors of ICP even if such majority does not
constitute a majority of all directors then in office.
26
ARTICLE 9
COVENANTS OF UTC and UTCSub
9.1 Regulatory and Other Authorizations: Consents
UTC and UTCSub agree to take any and all steps necessary to avoid or eliminate
each and every impediment under any antitrust, competition, or trade regulation
law that may be asserted by any Governmental Authority or any other party so as
to enable the parties to consummate the transactions contemplated hereby as soon
as practicable, but in any event no later than December 15, 1999, including
without limitation, committing to and/or effecting, by consent decree, hold
separate orders, or otherwise, the sale, divestiture or disposition of such
assets or businesses of UTC, UTCSub or ICP as are required to be divested in
order to avoid the entry of any injunction, temporary restraining order or other
Governmental Order, which would otherwise have the effect of preventing the
consummation of all or any part of the transactions contemplated hereby;
provided, however, that neither UTC nor UTCSub shall have any obligation under
this Section 9.1 to take any actions if such actions, in the reasonable judgment
of UTC, would reasonably be expected, in the aggregate, to materially impair the
overall benefits to be realized by UTC from consummation of the Offer and the
other transactions contemplated by this Agreement.
9.2 Employment Agreements
UTCSub agrees, and after the Effective Time will cause ICP and any successor to
ICP to agree, to honour and comply with the terms of those existing executive
termination and severance agreements, plans or policies of ICP and its
subsidiaries, in each case to the extent disclosed in the Disclosure Schedule or
ICP's SEC Reports or except as may otherwise be agreed with the relevant
employee.
9.3 Officers' and Directors' Insurance
UTCSub agrees to use reasonable efforts to secure directors and officers
liability insurance coverage for ICP's current and former directors and officers
on a six year "trailing" or "runoff' basis from and after the Effective Time.
If a "trailing" policy is not available, then UTCSub agrees that for the entire
period from the Effective Time until six years after the Effective Time, UTCSub
will use reasonable efforts to cause ICP or any successor to ICP to maintain
ICP's current directors' and officers' insurance policy or an equivalent policy,
subject in either case to terms and conditions no less advantageous to the
directors and officers of ICP than those contained in the policy in effect on
the date hereof, for all present and former directors and officers of ICP,
covering claims made prior to or within six years after the Effective Time.
This Section 9.3 shall not require UTCSub to pay an annual premium in excess of
200% of the aggregate annual amounts currently paid by ICP to maintain the
existing policies (the "Insurance Amount") and, if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of such
amount, UTCSub shall use its reasonable best efforts to obtain as much
comparable insurance as available for the Insurance Amount.
27
9.4 Employment Termination
If UTC, UTCSub or ICP choose to terminate, whether constructively or actually,
the employment of any employees (other than for cause) of ICP or any of its
subsidiaries within one year of the completion of the Offer, notice and
severance shall be provided to such employees in accordance with ICP's existing
severance practices, in each case to the extent disclosed in the Disclosure
Schedule or ICP's SEC Reports or except as may otherwise be agreed with the
relevant employee.
9.5 Indemnities
UTC agrees that if it acquires ICP Shares under the Offer it shall cause ICP to
fulfill its obligations pursuant to indemnities provided or available to past
and present officers and directors of ICP pursuant to the provisions of the ICP
Governing Documents, the Canada BCA, and the written indemnity agreements
entered into between ICP and its officers and directors, in each case to the
extent disclosed in the Disclosure Schedule or ICP's SEC Reports.
9.6 Compensation; Benefit Plans
Except as otherwise agreed with a relevant employee, UTC and UTCSub agree, and
after the Effective Time will cause ICP and any successor to ICP to agree, to
maintain until December 31, 1999 salaries and all benefit plans and compensation
programs currently available to employees of ICP or any of its subsidiaries,
including without limitation members of management of ICP or any of its
subsidiaries, or to make available until December 31, 1999 alternative benefit
plans and compensation programs which are comparable in the aggregate to those
currently available to such employees. For the purposes of this Section 9.6,
"benefit plans" means all arrangements, agreements, programs or policies,
whether funded or unfunded, relating to employees which ICP or any of its
subsidiaries is a party or by which it is bound and under which ICP or any of
its subsidiaries have any liability or contingent liability and relating to: (i)
retirement savings or pensions, including any defined benefit pension plan,
defined contribution plan, group registered retirement savings plan, thrift and
saving plan or supplemental pension or retirement plan; (ii) employee welfare
benefits, as defined for purposes of Section 3(1) of the Employee Retirement
Income Security Act of 1974 (United States), as amended, including
hospitalization, health, disability, life or severance pay benefits; and (iii)
profit sharing, bonus, stock incentive, stock purchase and other incentive plans
or programs.
ARTICLE 10
MUTUAL COVENANTS
10.1 Notification of Certain Matters
UTC shall give prompt notice to ICP, and ICP shall give prompt notice to UTC, of
(a) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would cause (i) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(b) any failure of UTC or ICP, 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,
28
however, that the delivery of any notice pursuant to this Section 10.1 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
10.2 Competition Filings and Investment Canada Act Filing
(a) Without limiting UTC's and UTCSub's obligations under Section 9.1, UTC,
UTCSub and ICP shall, and shall cause their respective officers, employees,
representatives, advisors and agents to, (i) take promptly all actions
necessary to make the filings required of UTC, UTCSub, ICP or any of their
affiliates under the HSR Act, the Competition Act and any other similar
statute in other jurisdictions, (ii) comply at the earliest practicable
date with any request for additional information or documentary material
received by UTC, UTCSub, ICP or any of their affiliates from the U.S.
Department of Justice pursuant to the HSR Act or from the Canadian
Competition Bureau pursuant to the Competition Act or any other
Governmental Authority, as the case may be, and (iii) consult and cooperate
in connection with any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by the U.S. Federal
Trade Commission or the Antitrust Division of the U.S. Department of
Justice or state attorneys general or by the Canadian Competition Bureau or
any other Governmental Authority, as the case may be.
(b) Each of the parties hereto shall promptly inform the other parties of any
material communication received by such party from the U.S. Federal Trade
Commission, the Antitrust Division of the U.S. Department of Justice, the
Canadian Competition Bureau or any other Governmental Authority regarding
any of the transactions contemplated hereby. UTC and UTCSub shall advise
ICP promptly of any understandings, undertakings or agreements which UTC
and UTCSub propose to make or enter into with the U.S. Federal Trade
Commission, the Antitrust Division of the U.S. Department of Justice, the
Canadian Competition Bureau or any other Governmental Authority in
connection with the transactions contemplated hereby.
(c) UTC, UTCSub and ICP shall, as promptly as practicable hereafter, make any
necessary filings under the Investment Canada Act and shall respond as
promptly as practicable to any inquiry from the Investment Review Division
of Industry Canada.
10.3 Other Filings
UTC, UTCSub and ICP shall, as promptly as practicable hereafter, prepare and
file any filings required under Securities Laws, the rules of The Toronto Stock
Exchange and the American Stock Exchange, or any other applicable law relating
to the transactions contemplated herein.
10.4 Additional Agreements
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use all commercially reasonable efforts to take, and to
cause its officers, employees, representatives, advisors and agents to
take, all action and to do, or
29
cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated
by this Agreement and to cooperate with each other in connection with the
foregoing, including using commercially reasonable efforts (i) to obtain
all necessary waivers, consents and approvals from other parties to
material agreements, leases and other contracts or agreements (including,
without limitation, the agreement of any persons as may be required
pursuant to any agreement, arrangement or understanding relating to ICP's
operations), (ii) to make all filings and obtain all necessary consents,
approvals and authorizations as are required to be obtained under any
federal, provincial or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to cause to be
lifted or rescinded any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations
and other filings and submissions of information requested by Governmental
Authorities and (vi) to fulfill all conditions and satisfy all provisions
of this Agreement and the Offer. For purposes of the foregoing, the
obligation to use "commercially reasonable efforts" to obtain waivers,
consents and approvals to loan agreements, leases and other contracts shall
not include any obligation to agree to a materially adverse modification of
the terms of such documents or to prepay or incur additional material
obligations to such other parties.
(b) Nothing in this Agreement (other than as expressly provided for in Section
2.1) shall obligate UTC or UTCSub (i) to keep the Offer open for acceptance
beyond the expiration date set forth in the Offer (as it may be extended
from time to time) or (ii) to take any action that, in the reasonable
judgment of UTC, would reasonably be expected to materially impair the
overall benefits to be realized by UTC from consummation of the Offer and
the other transactions contemplated by this Agreement.
10.5 Access to Information
Subject to the Confidentiality Agreement and upon reasonable notice, ICP shall
(and shall cause each of its subsidiaries to) afford UTC's officers, employees,
counsel, accountants and other authorized representatives and advisers
reasonable access, during normal business hours and until the expiration of this
Agreement, to all of its properties, books, contracts and records as well as to
its management personnel, and, during such period, ICP shall (and shall cause
each of its subsidiaries to) furnish promptly to UTC all information concerning
its business, properties and personnel as UTC may reasonably request.
10.6 Debt Obligations
ICP acknowledges that following completion of the Offer the modification or
elimination of the covenants contained in, and reduction of the outstanding
amount of, its existing debt obligations is integral to UTC's business plans.
ICP agrees to use reasonable efforts to cooperate and assist UTC in obtaining
consents to such modifications and in purchasing such obligations in
30
furtherance of those plans, including the conduct of (or provision of assistance
to UTC in conducting) a consent solicitation and tender offer for the
outstanding debt securities of ICP or its subsidiaries on terms satisfactory to
UTC; provided that (i) ICP shall not be required to purchase any debt
obligations or pay any fees in connection with such efforts prior to
consummation of the Second Stage Transaction, unless funds therefore are
provided by UTC on terms satisfactory to ICP and (ii) UTC shall pay or reimburse
ICP for all reasonable expenses in connection therewith.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination
This Agreement may be terminated by written notice given to the other parties
hereto, at any time prior to completion of the transactions contemplated hereby:
(a) by mutual written consent of ICP and UTC;
(b) by either UTC or ICP (provided that the terminating party is not then in
breach, in any material respect, of any covenant or other agreement
contained herein and no representation or warranty of such terminating
party contained herein that is qualified as to materiality shall be untrue
or incorrect, and no representation or warranty of such terminating party
contained herein that is not so qualified shall be untrue or incorrect in
any material respect, at any time before the Effective Time, in each case,
as if made at and as of such time (or, to the extent such representation or
warranty speaks as of a specific date, no such representation or warranty
was so untrue or incorrect as of such date)), if there shall have been a
breach, in any material respect, of any covenant or other agreement
contained herein on the part of the other party or if any representation or
warranty of such other party contained herein that is qualified as to
materiality shall not be true and correct, or any representation or
warranty of such other party contained herein that is not so qualified
shall not be true and correct in all material respects, at any time before
the Effective Time, in each case as if made at and as of such time (or, to
the extent such representation or warranty speaks as of a specific date,
such representation or warranty was not so true and correct as of such
date), which breach or misrepresentation is not cured within 10 days
following written notice to such other party, or such breach, by its nature
or timing cannot be cured prior to the Expiry Time;
(c) by ICP, following receipt of, and in order to accept or recommend, a
Superior Take-over Proposal if, after consulting with outside counsel, the
Board of Directors of ICP has determined that such action is required in
order to discharge properly the directors' fiduciary duties under
applicable law;
(d) by UTC, if (i) the Board of Directors or any committee thereof of ICP
modifies or amends in any manner adverse to UTC or UTCSub, or withdraws,
its authorization, approval or recommendation of the Offer or this
Agreement or shall
31
have resolved to do any of the foregoing or (ii) ICP or any of its
subsidiaries (or the Board of Directors or any committee thereof) shall
have approved, recommended, authorized, proposed or filed a document with
any Securities Authority not opposing, or publicly announced its intention
to enter into any Take-over Proposal (other than with UTC, UTCSub or any of
their affiliates), or shall have resolved to do any of the foregoing;
(e) by either UTC or ICP, if the Offer terminates or expires at the Expiry
Time, without UTCSub taking up and paying for any ICP Shares on account of
the failure of any of the Offer Conditions which has not been waived by
UTCSub, unless the absence of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform its requisite
obligations hereunder; or
(f) by either UTC or ICP, if the Take-up Date has not occurred on or prior to
December 15, 1999.
11.2 Effect of Termination and Other Events
(a) In the event of the termination of this Agreement as provided in Section
11. 1, this Agreement shall forthwith have no further force or effect and
there shall be no obligation on the part of UTC, UTCSub or ICP hereunder
except as set forth in Section 12.4 and this Section 11.2, which provisions
shall survive the termination of this Agreement. Nothing herein shall
relieve any party from liability for any breach of this Agreement.
(b) In the event of termination of this Agreement pursuant to Section 11.1(c)
or 11.1(d), ICP shall make payment to UTC by wire transfer of immediately
available funds of a fee in the amount of $15 million. Such fee shall be
payable concurrently with a termination pursuant to Section 11.1(c) (and
such termination shall not be effective until payment of such fee) and
within two Business Days after a termination pursuant to Section 11.1(d).
(c) In the event of termination of this Agreement pursuant to Section 11.1(e)
or 11.1(f) principally as a result of a failure to obtain the antitrust
approvals contemplated under clause (b) of the Offer Conditions, then,
within two Business Days after such termination, UTC shall make payment to
ICP by wire transfer of immediately available funds of a fee in the amount
of $10 million, provided, however, that no payment shall be due if ICP
shall have breached Sections 10.2, 10.3 or 10.4 contained herein.
(d) In the event a Take-over Proposal is announced publicly while the Offer is
open for acceptance and the minimum acceptance condition contemplated under
clause (a) of the Offer Conditions is not satisfied at the Expiry Time
(other than principally as a result of a failure to obtain the antitrust
approvals contemplated under clause (b) of the Offer Conditions), then,
within two Business Days after
32
such Expiry Time, ICP shall make payment to UTC by wire transfer of
immediately available funds of a fee in the amount of $15 million.
(e) In the event a Take-over Proposal is announced publicly and made after the
Expiry Time but prior to March 31, 2000, then, if UTCSub did not take up
and pay for any ICP Shares under the Offer and ICP was not entitled to any
payment under Section 11.2(c), ICP shall within two Business Days of the
date on which such Take-over Proposal is made make payment to UTC by wire
transfer of immediately available funds of a fee in the amount of $15
million.
11.3 Amendment
This Agreement may be amended by mutual agreement between the parties hereto.
This Agreement may not be amended except by an instrument in writing signed by
the appropriate officers on behalf of each of the parties hereto.
11.4 Waiver
Each of UTC and UTCSub, on the one hand, and ICP, on the other hand, may (i)
extend the time for the performance of any of the obligations or other acts of
the other, (ii) waive compliance with any of the other's agreements or the
fulfilment of any conditions to its own obligations contained herein, or (iii)
waive inaccuracies in any of the other's representations or warranties contained
herein or in any document delivered by the other party hereto; provided,
however, that any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices
All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered or sent if delivered personally or as of the date sent if sent by
cable, telegram, telecopier, telex or by prepaid overnight carrier to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
(a) if to UTC and UTCSub:
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: Ari Bousbib
Telecopy No.: 860-728-6355
33
and
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: General Counsel
Telecopy No.: 860-728-7862
with a copy to:
Stikeman, Elliott
Commerce Court West
Suite 5300, P.O. Box 85, Stn. Commerce Court
Toronto, ON M5L 1B9
Attention: William J. Braithwaite
Telecopy No.: 416-947-0866
(b) if to ICP:
501 Corporate Centre Drive, Suite 200
Franklin, TN 37067
Attention: David P. Cain
Telecopy No.: 615-771-4001
with a copy to:
Osler, Hoskin & Harcourt
1900, 333 7th Avenue S.W.
Calgary, AB T2P 2Z1
Attention: F.R. Allen
Telecopy No.: 403-260-7024
12.2 Miscellaneous
This Agreement (i) except for the Confidentiality Agreement, constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, between the parties, with respect to the subject matter
hereof, and (ii) shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and no other person. The
parties hereto shall be entitled to rely upon delivery of an executed facsimile
copy of the Agreement, and such facsimile copy shall be legally effective to
create a valid and binding agreement among the parties hereto. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to
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enforce specifically the terms and provisions hereof in any court of the
Province of Ontario having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
12.3 Assignment
Except as expressly permitted by the terms hereof, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties.
UTCSub may assign all of its rights or obligations under this Agreement to a
direct or indirect wholly-owned subsidiary of UTC, provided that any such
assignment will have no material adverse tax or other effects to ICP or the
holders of ICP Shares, and provided further that if such assignment takes place,
UTC and UTCSub shall continue to be liable to ICP for all obligations under this
Agreement and for any default in performance by the assignee.
12.4 Expenses
Except as provided in Sections 10.6 and 11.2, all fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense, whether or not
the Offer is consummated.
12.5 Severability
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law. Any provision of this
Agreement that is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
12.6 Survival
Except as otherwise provided in this Section 12.6, none of the representations,
warranties or covenants in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
ICP, shall survive the acceptance of, and payment for, any ICP Shares by UTCSub
pursuant to the Offer. This Section 12.6 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
12.7 Counterpart Execution
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute one agreement.
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IN WITNESS WHEREOF, UTC, UTCSub and ICP have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
UNITED TECHNOLOGIES CORPORATION
By: /s/ Ari Bousbib
-----------------------
Name: Ari Bousbib
Title: Vice President
TITAN ACQUISITIONS, LTD.
By: /s/ Ari Bousbib
-----------------------
Name: Ari Bousbib
Title: President
INTERNATIONAL COMFORT PRODUCTS CORPORATION
By: /s/ Richard W. Snyder
-----------------------
Name: Richard W. Snyder
Title: Chairman
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Pre-Acquisition Agreement - United Technologies Corp. and International Comfort Products Corp.
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