General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D Brown & Sharpe Manufacturing Company 12 42K
2: EX-1 Underwriting Agreement 1 7K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 75 242K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 30 114K
5: EX-4 Instrument Defining the Rights of Security Holders 3 11K
6: EX-5 Opinion re: Legality 11 39K
7: EX-6 Opinion re: Discount on Capital Shares 10 34K
EX-3 — Articles of Incorporation/Organization or By-Laws
Exhibit Table of Contents
Exhibit 3
EXECUTION VERSION
SHAREHOLDERS AGREEMENT
By and Between
BROWN & SHARPE MANUFACTURING COMPANY
and
FINMECCANICA S.p.A.
September 28, 1994
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
1.1. Additional Finmeccanica Securities . . . . . . . 1
1.2. Affiliate . . . . . . . . . . . . . . . . . . . . 1
1.3. Average Market Price . . . . . . . . . . . . . . 2
1.4. Business Day . . . . . . . . . . . . . . . . . . 2
1.5. Charter Documents . . . . . . . . . . . . . . . . 2
1.6. Class A Common Stock . . . . . . . . . . . . . . 2
1.7. Class B Common Stock . . . . . . . . . . . . . . 2
1.8. Commission . . . . . . . . . . . . . . . . . . . 2
1.9. Common Equivalent Securities . . . . . . . . . . 2
1.10. Derivative Securities . . . . . . . . . . . . . . 2
1.11. Disposition . . . . . . . . . . . . . . . . . . . 3
1.12. Equity Securities . . . . . . . . . . . . . . . . 3
1.13. Exchange Act . . . . . . . . . . . . . . . . . . 3
1.14. Holder . . . . . . . . . . . . . . . . . . . . . 3
1.15. NYSE . . . . . . . . . . . . . . . . . . . . . . 3
1.16. Person . . . . . . . . . . . . . . . . . . . . . 3
1.17. Preferred Stock . . . . . . . . . . . . . . . . . 3
1.18. Prospectus . . . . . . . . . . . . . . . . . . . 3
1.19. Public Offering . . . . . . . . . . . . . . . . . 3
1.20. Purchase Right . . . . . . . . . . . . . . . . . 3
1.21. Registration Statement . . . . . . . . . . . . . 3
1.22. Restricted Securities . . . . . . . . . . . . . . 3
1.23. Sale Notice . . . . . . . . . . . . . . . . . . . 4
1.24. Securities Act . . . . . . . . . . . . . . . . . 4
1.25. Sharpe . . . . . . . . . . . . . . . . . . . . . 4
1.26. Third Party . . . . . . . . . . . . . . . . . . . 4
1.27. Third Party Transaction . . . . . . . . . . . . . 4
1.28. Total Voting Power . . . . . . . . . . . . . . . 4
1.29. Underwritten Registration . . . . . . . . . . . . 4
ARTICLE II ORGANIZATIONAL DOCUMENTS . . . . . . . . . . . . 4
2.1. Charter Documents . . . . . . . . . . . . . . . . 4
ARTICLE III FUTURE EQUITY ISSUANCES . . . . . . . . . . . 5
3.1. Future Equity Issuances . . . . . . . . . . . . . 5
3.2. Exercise of Purchase Right . . . . . . . . . . . 6
3.3. Termination of Purchase Rights . . . . . . . . . 6
3.4. Closing . . . . . . . . . . . . . . . . . . . . . 7
3.5. Certain Covenants . . . . . . . . . . . . . . . . 7
ARTICLE IV LIMITATIONS ON TRANSFER . . . . . . . . . . . . . 7
4.1. Two-Year Restriction on Transfer . . . . . . . . 7
4.2. Company Right of First Offer . . . . . . . . . . 7
4.3. Legends . . . . . . . . . . . . . . . . . . . . . 9
4.4. Standstill . . . . . . . . . . . . . . . . . . . 10
ARTICLE V CORPORATE GOVERNANCE . . . . . . . . . . . . . . 11
5.1. Board of Directors . . . . . . . . . . . . . . . 11
5.3. Resignation of Sharpe . . . . . . . . . . . . . . 12
5.4. Voting of Finmeccanica Shares . . . . . . . . . . 12
Page
----
ARTICLE VI REGISTRATION RIGHTS . . . . . . . . . . . . . . . 13
6.1. Registration Rights . . . . . . . . . . . . . . . 13
6.2. Registration Procedures . . . . . . . . . . . . . 14
6.3. Registration Expenses . . . . . . . . . . . . . . 17
6.4. Indemnification . . . . . . . . . . . . . . . . . 18
6.5. Participation In Public Offering . . . . . . . . 20
6.6. Selection of Underwriters . . . . . . . . . . . . 20
6.7. Period of Distribution . . . . . . . . . . . . . 20
ARTICLE VII FINANCIAL MATTERS . . . . . . . . . . . . . . 20
7.1. Financial Statements . . . . . . . . . . . . . . 20
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . 21
8.1. Termination . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX GENERAL . . . . . . . . . . . . . . . . . . . . . 21
9.1. Injunctive Relief . . . . . . . . . . . . . . . . 21
9.2. Further Assurances . . . . . . . . . . . . . . . 21
9.3. Assignment . . . . . . . . . . . . . . . . . . . 21
9.4. Notices . . . . . . . . . . . . . . . . . . . . . 22
9.5. Governing Law . . . . . . . . . . . . . . . . . . 22
9.6. Binding Effect . . . . . . . . . . . . . . . . . 23
9.7. No Partnership Relationship . . . . . . . . . . . 23
9.8. Headings . . . . . . . . . . . . . . . . . . . . 23
9.9. Legal Costs . . . . . . . . . . . . . . . . . . . 23
9.10. Severability . . . . . . . . . . . . . . . . . . 23
9.11. Entire Agreement; No Waiver; Amendment . . . . . 23
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BROWN & SHARPE MANUFACTURING COMPANY
SHAREHOLDERS AGREEMENT
Agreement made as of this 28th day of September, 1994 by and
between BROWN & SHARPE MANUFACTURING COMPANY, a Delaware
corporation (the "Company"), and FINMECCANICA S.p.A., an Italian
corporation ("Finmeccanica").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to a certain Acquisition Agreement dated
as of June 10, 1994, as amended by an Amendment No. 1 to
Acquisition Agreement dated as of July 31, 1994, between the
parties hereto ("Acquisition Agreement"), Finmeccanica has on the
date hereof acquired 3,450,000 newly issued shares of Class A
Common Stock of the Company;
WHEREAS, Finmeccanica's right to purchase a pro-rata
percentage of the future issues of securities by Brown & Sharpe
from time to time, in order to maintain its percentage of the
capital stock of Brown & Sharpe issued as the Brown & Sharpe
Purchase Price Shares, is, as set forth in the Acquisition
Agreement, an integral part of the acquisition transaction
contemplated by the Acquisition Agreement;
WHEREAS, said Finmeccanica purchase right is, for the
convenience of the parties, set forth in this separate Agreement.
NOW, THEREFORE, for and in consideration of the premises,
the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
---------
DEFINITIONS
-----------
As used herein, the following terms shall have the meanings
set forth below:
1.1. Additional Finmeccanica Securities. "Additional
------------------------------------
Finmeccanica Securities" shall have the meaning set forth in
Section 3.1.
1.2. Affiliate. "Affiliate" shall mean any Person (as
---------
hereinafter defined) which directly or indirectly and/or one or
more intermediaries controls, or is controlled by, or is under
common control with any party. For the purpose of this
definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with") when used
in respect to any Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of any Person whether through the
ownership of voting securities (control is assumed in cases of
more than 50% ownership), by contract or otherwise.
1.3. Average Market Price. "Average Market Price" of the
---------------------
Class A Common Stock at any date shall mean the average of the
closing prices for a share of Class A Common Stock on the thirty
(30) consecutive trading days ending on the trading date last
preceding the date of determination of such price, on the NYSE.
1.4. Business Day. Any weekday which is not a day on
-------------
which banking institutions in New York City are authorized or
obligated by law or executive order to close.
1.5. Charter Documents. "Charter Documents" shall have
-----------------
the meaning set forth in Section 2.1 hereof.
1.6. Class A Common Stock. "Class A Common Stock" shall
---------------------
mean shares of the Class A Common Stock, $1.00 par value, of the
Company.
1.7. Class B Common Stock. "Class B Common Stock" shall
---------------------
mean shares of the Class B Common Stock, $1.00 par value, of the
Company.
1.8. Commission. The Securities and Exchange Commission.
----------
1.9. Common Equivalent Securities. "Common Equivalent
------------------------------
Securities" shall at any date mean the sum of (a) the number of
shares of Class A Common Stock then outstanding, (b) the number
of shares of Class B Common Stock then outstanding, and (c) the
number of shares of Class A Common Stock for or into which other
securities of the Company, can be exercised, exchanged or
converted, assuming the exercise, exchange or conversion, as
appropriate, of all such outstanding securities (including all
warrants, options and convertible securities, but excluding
therefrom (x) the number of shares of Class A Common Stock into
which the Class B Common Stock then outstanding may be converted,
(y) up to 400,000 shares of Class A Common Stock issuable upon
the exercise of stock options granted to employees of the Company
or its subsidiaries pursuant to Benefit Plans (as defined in
Section 3.1(c)), and (z) any shares of Class A Common Stock
issuable to holders of the Company's 9 1/4% Convertible
Subordinated Debentures Due December 2005 unless the Average
Market Price of shares of Class A Common Stock shall exceed
$24.25 per share on the Business Day immediately preceding such
date.
1.10. Derivative Securities. "Derivative Securities" shall
---------------------
have the meaning set forth in Section 3.1(a).
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1.11. Disposition. "Disposition" means any sale, transfer,
-----------
encumbrance, gift, donation, assignment, pledge, hypothecation,
or other disposition of any Restricted Securities or any interest
therein, whether voluntary or involuntary, including, but not
limited to, any disposition by operation of law, by court order,
by judicial process, or by foreclosure, levy or attachment,
except for pledges merely creating a security interest if the
pledgee agrees to become a party hereto with respect to the
Restricted Securities subject to such pledge.
1.12. Equity Securities. "Equity Securities" shall have
-----------------
the meaning set forth at Section 3.1(a).
1.13. Exchange Act. The Securities Exchange Act of 1934,
------------
as amended.
1.14. Holder. "Holder" shall mean Finmeccanica and its
------
permitted successors and assigns.
1.15. NYSE. "NYSE" shall mean the New York Stock Exchange,
----
Inc.
1.16. Person. "Person" shall mean an individual, a
------
corporation, a partnership, an association, a trust or any other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
1.17. Preferred Stock. "Preferred Stock" shall mean shares
---------------
of Preferred Stock, $1.00 par value, of the Company.
1.18. Prospectus. The prospectus included in a
----------
Registration Statement, as amended or supplemented by any
prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material
incorporated by reference into such Prospectus.
1.19. Public Offering. "Public Offering" shall mean an
----------------
underwritten public offering of the Company's Common Equivalent
Securities made pursuant to an effective registration statement
in compliance with applicable securities laws.
1.20. Purchase Right. "Purchase Right" shall have the
--------------
meaning set forth in Section 3.1(a).
1.21. Registration Statement. Any registration statement,
----------------------
including all amendments and supplements thereto, of the Company
relating to the registration for resale of Restricted Securities
pursuant to the Registration Statement, which is filed pursuant
to the provisions of this Agreement, including the Prospectus
included therein.
1.22. Restricted Securities. "Restricted Securities" means
---------------------
all shares of Class A Common Stock, and any other equity
securities of the Company of any class or character whatever
- 3 -
(including without limitation all securities convertible into or
exchangeable or exercisable for equity securities of the Company,
all options to acquire equity securities of the Company, and all
other rights to acquire equity securities of the Company),
whether now or hereafter authorized, owned now or in the future
specifically by Finmeccanica, including all securities receivable
upon the exercise or conversion of such securities, all shares of
Class A Common Stock received in the future by Finmeccanica as a
purchase price adjustment pursuant to Sections 1.4(g) of the
Acquisition Agreement, respectively, all securities received
from the issuer thereof on account of the foregoing securities,
and all securities received from the issuer as a result of any
stock split or combination, stock dividend, recapitalization,
reorganization or other similar corporate event, until (a) the
date on which any such Restricted Security has been effectively
registered under the Securities Act and sold pursuant to a
Registration Statement; or (b) the date on which any such
security is sold to the public pursuant to Rule 144 under the
Securities Act.
1.23. Sale Notice. "Sale Notice" shall have the meaning
------------
set forth in Section 4.1(f) hereof.
1.24. Securities Act. "Securities Act" shall mean the
---------------
Securities Act of 1933, as amended.
1.25. Sharpe. "Sharpe" shall mean Henry D. Sharpe, Jr.
------
1.26. Third Party. "Third Party" shall have the meaning
------------
set forth in Section 3.1(a).
1.27. Third Party Transaction. "Third Party Transaction"
-----------------------
shall have the meaning set forth in Section 3.1(a).
1.28. Total Voting Power. "Total Voting Power of the
--------------------
Company" shall mean the total number of votes which may be cast
in the election of directors of the Company at any meeting of
shareholders of the Company if all securities entitled to vote in
the election of directors of the Company were present and voted
at such meeting (other than votes that may be cast only upon the
happening of a contingency).
1.29. Underwritten Registration. A registration in which
-------------------------
Common Equivalent Securities of the Company are sold to an
underwriter for reoffering to the public.
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ARTICLE II
----------
ORGANIZATIONAL DOCUMENTS
------------------------
2.1. Charter Documents. Attached hereto as Exhibit B are
------------------
copies of the Certificate of Incorporation and By-Laws (the
"Charter Documents") of the Company as of the date hereof. The
parties agree that:
(a) if any inconsistency between the provisions of the
Certificate of Incorporation of By-Laws of the Company and the
provisions of this Agreement exists, they shall use their best
efforts to cause the Board of Directors of the Company to
recommend to the shareholders of the Company to vote in favor of
amending and shall vote or cause to be voted the securities as to
which they have beneficial ownership to amend, the provisions of
the Certificate of Incorporation or By-Laws to conform to the
terms of this Agreement; and
(b) the Charter Documents shall not be amended in any
manner which is inconsistent with the terms of this Agreement
while this Agreement remains in effect.
ARTICLE III
-----------
FUTURE EQUITY ISSUANCES
-----------------------
3.1. Future Equity Issuances. (a) Subject to the
-------------------------
provisions of Section 3.3 hereof, the Company agrees that it will
not, following the date hereof, issue any equity securities of
the Company, including, without limitation, shares of Class A
Common Stock, Class B Common Stock or Preferred Stock
(collectively, "Equity Securities"), or any rights, warrants or
options to purchase, or securities convertible into, any Equity
Securities (collectively, "Derivative Securities"), to any Person
or Persons (a "Third Party"), other than Finmeccanica or any of
its Affiliates (as the term is hereinafter defined), in any
transaction or series of transactions (a "Third Party
Transaction") without first offering to Finmeccanica the right to
purchase (the "Purchase Right") from the Company that percentage
of such Equity Securities or (subject to the provisions of
Section 3.1(d) hereof) such number or principal amount of
Derivative Securities (based, in the case of Derivative
Securities, on the number of Equity Securities which may be
acquired upon the exercise or conversion thereof as of the date
that such Derivative Securities may first be exercised or
converted) (collectively, "Additional Finmeccanica Securities")
as is equal to a fraction, the numerator of which is the total of
all Common Equivalent Securities then owned by Finmeccanica and
its Affiliates, and the denominator of which is the total number
of Common Equivalent Securities then issued and outstanding
(including, without limitation, all shares owned by Finmeccanica
and its Affiliates). For purposes of this Agreement, any
- 5 -
issuance or sale of Equity Securities held as treasury shares by
the Company shall be subject to the provisions of this Agreement.
(b) The purchase price payable by Finmeccanica for any
Additional Finmeccanica Securities which it elects to purchase
pursuant to Section 3.1(a) above shall be equal to the purchase
price to be paid for Equity Securities or Derivative Securities,
as applicable, by any Third Party in the underlying Third Party
Transaction, and the Additional Finmeccanica Securities shall
otherwise be issued on the same terms and conditions as such
Equity Securities or Derivative Securities. Notwithstanding the
foregoing, if Equity Securities or Derivative Securities are to
be acquired in a Third Party Transaction for consideration other
than cash, the purchase price payable by Finmeccanica hereunder
shall be equal to the Average Market Price per share of Class A
Common Stock determined as of the Business Day immediately
preceding the date of the closing of the Third Party Transaction.
(c) Notwithstanding anything to the contrary in the
foregoing, the provisions of this Article III shall not apply
with respect to any Equity Securities (including, without
limitation, any restricted stock units or awards covering Equity
Securities) or Derivative Securities granted or issued under any
employee stock ownership, employee stock option, employee benefit
or similar plan or arrangement maintained by the Company
(collectively, "Benefit Plans").
(d) Notwithstanding anything to the contrary in the
foregoing, the following special provisions shall apply with
respect to any Derivative Securities issued by the Company (other
than under Benefit Plans). Finmeccanica shall have the right to
exercise Purchase Rights in respect of such Derivative Securities
only at such time as such Derivative Securities have been
exercised, in the case of rights, options or warrants to acquire
Equity Securities, or converted, in the case of securities
convertible into Equity Securities, by the holders thereof, and
then only in respect of any Equity Securities actually issued to
such holders in connection with such exercise or conversion, by
purchasing shares of Class A Common Stock in an amount determined
in accordance with Section 3.1(a) above. The purchase price
payable by Finmeccanica for any shares of Class A Common Stock
acquired by Finmeccanica pursuant to this Section 3.1(c) shall be
payable in cash and shall be equal to the Average Market Price
per share of Class A Common Stock determined as of the Business
Day prior to the Closing (as defined below) of any such
acquisition by Finmeccanica as provided in Section 3.4 below,
without regard to the consideration payable by the relevant
holders of the Derivative Securities for the underlying Equity
Securities issued to such holders.
3.2. Exercise of Purchase Right. (a) The Company shall
---------------------------
provide prior written notice to Finmeccanica of any issuance of
Equity Securities or Derivative Securities which it proposes to
make, including description of the terms and conditions of such
- 6 -
proposed new issuances; provided, however, that with respect to
the Derivative Securities as described in the first sentence of
Section 3.1(d) the Company shall provide a written summary to
Finmeccanica on a monthly basis, which notice shall set forth the
number of Equity Securities issued during the preceding calendar
month as a result of the exercise of any such Derivative
Securities, and Finmeccanica's Purchase Right shall be based on
the total number of Equity Securities so issued during such
preceding calendar month. Each Purchase Right shall be
exercisable by Finmeccanica in writing for a period of 30 days
after Finmeccanica's receipt of the written notice required to be
provided to Finmeccanica pursuant to this Section 3.2(a). If any
such Purchase Right is exercised, Finmeccanica shall have an
additional 20 days (following the termination of such 30-day
period) within which to pay for and accept delivery of the
Additional Finmeccanica Securities in respect of which the
Purchase Rights are exercised.
(b) If Finmeccanica elects not to exercise any Purchase
Right or fails to elect to exercise any Purchase Right within the
time period specified in this Section 3.2, such failure or
refusal shall not be deemed to be a waiver of Finmeccanica's
Purchase Rights under this Agreement with respect to any Equity
Securities or Derivative Securities issued by the Company at a
later date, all of which Purchase Rights shall remain in full
force and effect.
3.3. Termination of Purchase Rights. Finmeccanica's
----------------------------------
rights pursuant to Sections 3.1 and 3.2 of this Agreement shall
terminate at such time as Finmeccanica shall cease to
beneficially own at least 862,500 shares of Class A Common Stock
(as adjusted for any shares issued pursuant to a to stock split,
stock dividend capitalization, reorganization or similar
corporate event); provided, however, that any such decrease in
Finmeccanica's beneficial ownership of Class A Common Stock or
other voting securities as aforesaid is not due directly or
indirectly to any breach by the Company of its obligations under
this Agreement.
3.4. Closing. The closing of the purchase of any
-------
Additional Finmeccanica Securities of the Company pursuant to the
exercise by Finmeccanica of any Purchase Rights under Section 3.1
hereof shall be held at such place and on such date within 20
days following any exercise of such Purchase Rights as may be
mutually agreed upon by the Company and Finmeccanica (the
"Closing"). At each Closing, the Company shall deliver to
Finmeccanica the certificate(s) or other document(s) representing
the Additional Finmeccanica Securities being purchased, duly
registered in the name of Finmeccanica, and Finmeccanica shall
simultaneously deliver the purchase price therefor. In the case
of any Closing of shares of Class A Common Stock acquired
pursuant to Section 3.1(d) above, Brown & Sharpe shall either
issue new shares of Class A Common Stock or sell shares of Class
A Common Stock held as treasury stock.
- 7 -
3.5. Certain Covenants. (a) The Company covenants and
-----------------
agrees that it will at all times keep a sufficient amount of
authorized but unissued shares of all relevant classes of Equity
Securities and Derivative Securities available for issuance upon
any exercise of the Purchase Rights granted to Finmeccanica under
the terms of this Agreement.
(b) At each Closing, Finmeccanica shall receive a
certificate signed by the President and Chief Executive Officer
of the Company pursuant to which the Company represents and
warrants that, since the date of this Agreement up to and
including the date of such Closing, no Equity Securities or
Derivative Securities have been issued, sold, offered for sale or
otherwise disposed of by the Company except in accordance with
this Agreement.
ARTICLE IV
----------
LIMITATIONS ON TRANSFER
-----------------------
4.1. Two-Year Restriction on Transfer. Subject to the
----------------------------------
provisions of Section 4.2(d) below, Finmeccanica agrees not to
sell any of its Restricted Securities to any entity other than
the Company from the date hereof through and including the second
anniversary of the date hereof. After such date, Finmeccanica
shall be free to dispose of Restricted Securities in such manner
as it may determine in its sole discretion, subject only to the
provisions herein.
4.2. Company Right of First Offer. (a) Subject to the
------------------------------
exceptions contained in Section 4.2(d) hereof, if at any time
after the second anniversary of the date hereof Finmeccanica
desires to make a bona fide sale or transfer of any or all of the
Restricted Securities to a third party in a private transaction
that is not required to be registered under the Securities Act,
Finmeccanica shall offer the first opportunity to purchase such
shares to the Company in the following manner:
(i) Finmeccanica shall first deliver to the Secretary
of the Company a written notice (the "Sale Offer"), which shall
be irrevocable for a period of thirty (30) days after delivery
thereof, offering to the Company all or any part of the
Restricted Securities owned by Finmeccanica at the purchase price
and on the terms specified therein, whereupon the Company shall
have the right and option to purchase, within thirty (30) days of
the date of delivery of such notice, all but not part of the
Restricted Securities so offered at the purchase price and on the
terms stated therein. The Company's acceptance of the offer made
in the Sale Offer shall be made by delivering a written notice to
Finmeccanica within the 30-day period specified above, as
applicable, which shall provide Finmeccanica with satisfactory
evidence (by written commitment letter subject only to customary
requirements, diligence and documentation) of the Company's
- 8 -
ability to finance such repurchase. In the event that
Finmeccanica is negotiating with any particular potential
transferee(s), Finmeccanica shall disclose the name(s) of such
transferee(s).
(ii) Notwithstanding the foregoing, the period of time
within which the Company shall be required to notify Finmeccanica
of its intention to purchase the Restricted Securities covered by
the Sale Offer shall be extended from thirty (30) to ninety (90)
days if a majority of the Board of Directors of the Company
determines, in the reasonable exercise of its discretion, that
the transfer to the proposed transferee of such Restricted
Securities by Finmeccanica is incompatible with the interests of
the Company. In such event the Company shall deliver to
Finmeccanica within ten days following receipt of the Sale Offer
a written notice confirming its intention to extend the 30-day
period to 90 days and setting forth the basis for such extension.
(b) Sales of Restricted Securities under the terms of this
Section 4.2 shall be made at the offices of the Company within
thirty (30) days after the date by which notice of the Company's
acceptance of the Sale Offer is due under Sections 4.2(a)(i) or
(ii) above. Delivery of certificates or other instruments
evidencing such Restricted Securities duly endorsed for transfer
to the Company shall be made on such date or dates against
payment of the purchase price therefor.
(c) If the Company does not exercise its right of first
offer with respect to all Restricted Securities included in the
Sale Offer within the time specified for such exercise,
Finmeccanica may sell, subject to any other restrictions or
conditions contained in this Agreement, all (but not less than
all) of the Restricted Securities so offered for sale at a price
not less than the price, and on terms not more favorable to the
purchaser thereof than the terms, stated in the Sale Offer, for a
period of ninety (90) days following expiration of the Company's
time to exercise. In the event all the Restricted Securities so
offered are not sold by Finmeccanica during such ninety day
period in accordance with the terms referred to in the preceding
sentence, the right of Finmeccanica to sell such Restricted
Securities shall expire and the obligations of this Section 4.2
shall be reinstated with respect to such Restricted Securities.
(d) Anything contained in Sections 4.1 and 4.2 to the
contrary notwithstanding, the following sales and transfers shall
not be subject to Sections 4.1 and 4.2 hereof:
(i) Dispositions of Restricted Securities to or among
Affiliates of Finmeccanica, provided that each
such Affiliate shall affirm in writing its
agreement to be bound by this Agreement;
(ii) Sales of Restricted Securities pursuant to Rule
144 promulgated under the Securities Act (but only
- 9 -
to the extent the sale or transfer of Class A
Common Stock at any time is in compliance with the
volume limitations under paragraph (e)
thereunder);
(iii) Sales pursuant to Article VI below (from and after
the second anniversary of the Closing Date under
the Acquisition Agreement);
(iv) Sales of Restricted Securities in response to a
tender offer made (as evidenced by the filing with
the Commission of a Schedule 14D-1 or any
successor schedule or form thereto) by any Person
or group of Persons (within the meaning of Section
13(d) of the Exchange Act) other than Finmeccanica
or a Person controlled by or under common control
with Finmeccanica to purchase or to exchange for
cash or other consideration any Class A Common
Stock or Class B Common Stock which, if
successful, would result in such Person or group
of Persons owning or having the right to acquire,
beneficially or of record, shares of Class A
Common Stock or Class B Common Stock constituting
thirty percent (30%) or (in the case of any Person
affiliated with any director, officer or employee
stock ownership plan of the Company) ten percent
(10%) or more of the Total Voting Power of the
Company, if the Board of Directors of the Company
shall have recommended to the shareholders to
accept such tender offer or a majority of the
securities of the Company which are the subject of
the tender offer held by any of the persons
referred to above shall have been tendered in
acceptance of the Tender Offer prior to the
expiration date of such Tender Offer (as notified
to Finmeccanica not less than five Business Days
prior to such expiration date).
(v) Bona fide pledges of Restricted Securities to an
institutional lender to secure a loan, guaranty or
other financial support, provided that such
lender agrees to hold such Restricted Securities
subject to all provisions of this Agreement and
any sale or disposition by such lender of such
pledged Restricted Securities shall be subject to
the limitations of this Section 4.2.
4.3. Legends. Each certificate for Restricted Securities
-------
shall be stamped or otherwise imprinted with legends in
substantially the following form, each Holder hereby agreeing to
deliver all outstanding certificates to the Company for such
legending:
- 10 -
TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS
SPECIFIED IN A SHAREHOLDERS' AGREEMENT AMONG
THE CORPORATION AND CERTAIN OF ITS
SHAREHOLDERS, AND NO TRANSFER OF THESE
SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES
OF SUCH AGREEMENT MAY BE OBTAINED FROM THE
CORPORATION.
4.4. Standstill. (a) Until December 31, 1998, neither
----------
Finmeccanica nor any of Finmeccanica's Affiliates shall acquire
beneficial ownership of any Equity Securities or Derivative
Securities of the Company (except, in any case, by way of stock
dividends or other distributions or offerings made available by
the Company to holders of any Class A Common Stock generally) or
authorize or make a tender, exchange or other offer therefor,
without the written consent of the Company, if the effect of such
acquisition would be to increase Finmeccanica's percentage of
ownership of the outstanding Common Equivalent Securities of the
Company beyond 40%; provided, however, that such percentage shall
be reduced proportionately to such lesser percentage of the
outstanding Common Equivalent Securities of the Company as
Finmeccanica shall hold as a result of any disposition of Class A
Common Stock by Finmeccanica permitted under this Agreement.
Notwithstanding the foregoing, (x) nothing in this Section 4.4
shall be deemed to preclude Finmeccanica from exercising its
rights under Article III above; and (y) in connection with any
tender offer made (as evidenced by the filing with the Commission
of a Schedule 14D-1 or any successor schedule or form thereto) by
any Person or group of Persons (within the meaning of Section
13(d) of the Exchange Act) other than Finmeccanica or a Person
controlled by or under common control with Finmeccanica to
purchase or to exchange for cash or other consideration any Class
A Common Stock or Class B Common Stock which, if successful,
would result in such Person or group of Persons owning or having
the right to acquire, beneficially or of record, shares of Class
A Common Stock or Class B Common Stock constituting thirty
percent (30%) or (in the case of any Person affiliated with any
director, officer or employee stock ownership plan of the
Company) ten percent (10%) or more of the Total Voting Power of
the Company, in the event (A) the Board of Directors of the
Company shall have recommended to the shareholders of the Company
to tender their shares in acceptance of such Tender Offer or (B)
a majority of the securities of the Company which are the subject
of the Tender Offer held by any of the persons referred to above
shall have been tendered in acceptance of the Tender Offer prior
to the expiration date of such Tender Offer (as notified to
Finmeccanica not less than five Business Days prior to such
expiration date), Finmeccanica shall have the right to commence a
tender offer or other offer to purchase or exchange for cash or
other consideration any Common Equivalent Securities.
- 11 -
(b) Nothing in this Section 4.5 shall obligate Finmeccanica
to dispose of any Restricted Securities if the aggregate
percentage ownership of outstanding Common Equivalent Securities
of the Company by Finmeccanica is increased as a result of a
recapitalization of the Company or a repurchase of securities by
the Company or any other action taken by the Company or its
Affiliates.
ARTICLE V
---------
CORPORATE GOVERNANCE
--------------------
5.1. Board of Directors. (a) The parties agree that the
-------------------
Board of Directors of the Company shall be increased from seven
(7) to ten (10) directors to permit the election to the Board of
Directors of three (3) nominees designated by Finmeccanica
("Finmeccanica Nominees"). In order to effectuate the foregoing,
the Company shall, as soon as reasonably practicable after the
Closing, take all action necessary in accordance with the
Exchange Act, the laws of Delaware and the Company's Certificate
of Incorporation and Bylaws to give notice of and convene a
special meeting (the "Meeting") of its shareholders to consider
and vote upon the approval of the increase of the number of
directors of the Company from seven to ten and the election to
the Board of Directors of the Company of the three Finmeccanica
Nominees that Finmeccanica shall have notified in writing to the
Company at the Closing. The Board of Directors of the Company
shall nominate one of the Finmeccanica Nominees for election to
the class of Directors with terms expiring in 1995, one of the
Finmeccanica Nominees for election to the class of Directors with
terms expiring in 1996 and the remaining Finmeccanica Nominee for
election to the class of Directors with terms expiring in 1997,
and shall recommend without qualification of any nature that the
Company's shareholders vote to approve such increase in the
number of directors and to elect each of the Finmeccanica
Nominees. The Company's Board of Directors shall use its
reasonable best efforts to solicit from the shareholders of the
Company such approval and such election, which efforts may
include without limitation causing the Company to solicit
shareholder proxies therefor and to advise Finmeccanica upon its
request from time to time as to the status of the shareholder
vote then tabulated. It is further agreed that the Company's
Board of Directors shall be decreased from ten to nine directors
at such time as Sharpe resigns or otherwise ceases to be a member
of the Board of Directors of the Company, and that a Finmeccanica
Nominee elected to the class of directors with the next earliest
expiring terms shall resign his directorship upon the election of
a director (as set forth in Section 5.3) to fill the vacancy
created by Sharpe ceasing to be a member of the Board of
Directors.
(b) For so long as Finmeccanica owns at least
1,250,000 shares of the Company's Class A Common Stock (as
- 12 -
adjusted for any shares issued pursuant to a stock split, stock
dividend, recapitalization, reorganization or similar corporate
event), the Company's Board of Directors shall nominate and
recommend for election at meetings of shareholders of the Company
at which Directors are to be elected up to two individuals
designated by Finmeccanica such that there shall at all times be
two Finmeccanica Nominees on the Board of Directors of the
Company. In the event that Finmeccanica's ownership of shares of
the Company's Class A Common Stock falls below 1,250,000 (as
adjusted for any shares issued pursuant to a stock split, stock
dividend, recapitalization, reorganization or similar corporate
event), Finmeccanica's representation on the Board of Directors
of the Company shall be reduced as follows: (i) if Finmeccanica
owns between 375,000 and 1,250,000 shares, it shall be entitled
only to one directorship; and (ii) if Finmeccanica owns 375,000
shares or less, it shall not be entitled to any directorship.
The reduction in Finmeccanica's permitted directorships on the
Company's Board of Directors shall be accomplished by resignation
of the Finmeccanica Nominee(s). Upon the resignation of a
Finmeccanica Nominee resulting solely by virtue of the provisions
of this Section 5.1, the nomination and election of a successor
director shall be made by the Company's Board of Directors. In
all other cases, the Board of Directors shall nominate and elect
a successor nominee designated by Finmeccanica.
5.2. Executive Committee. For so long as Finmeccanica owns
--------------------
at least 1,250,000 shares of the Company's Class A Common Stock
(as adjusted for any shares issued pursuant to a stock split,
stock dividend, recapitalization, reorganization or similar
corporate event), Finmeccanica shall be entitled to be
represented on the Executive Committee of the Board of Directors
of the Company by one Finmeccanica Nominee (if the Executive
Committee is composed of four directors) or two Finmeccanica
Nominees (if the Executive Committee is composed of five
directors).
5.3. Resignation of Sharpe. In connection with the
------------------------
resignation of Sharpe, Finmeccanica shall, not less than 60 days
prior to the date the Company notifies Finmeccanica it intends to
file its preliminary or definitive proxy statement with the
Commission in respect of such Annual Meeting, designate an
individual to fill the vacancy created by Sharpe ceasing to be a
director, who shall be an executive or professional advisor, not
an employee of Finmeccanica, of appropriate standing and
reputation with at least 10 years of experience in managing or
advising industrial companies. Such individual shall be
acceptable to the Company's Board of Directors, who shall not
unreasonably withhold their approval and shall recommend without
qualification of any nature that the Company's shareholders vote
to approve such nominee.
5.4. Voting of Finmeccanica Shares. In each election of
------------------------------
members of the Board of Directors of the Company, Finmeccanica
shall vote its shares (a) first, in such manner as Finmeccanica
- 13 -
deems appropriate, so as to assure the election of any
Finmeccanica Nominees included in the slate of nominees presented
to the shareholders by the Board of Directors or management of
the Company pursuant to Section 5.1 above, and (b) second, to the
extent Finmeccanica has any remaining votes to cast, in favor of
the election of the nominees recommended by the Company's Board
of Directors; provided, however, that in the absence of any
-------- -------
cumulative voting, Finmeccanica shall vote its shares for the
Finmeccanica Nominees and for any other nominees recommended by
the Company's Board of Directors. Nothing contained herein shall
prevent Finmeccanica from voting its shares in any manner it
deems appropriate with regard to any matter presented to the
shareholders of the Company other than the election of members of
the Board of Directors, provided, that Finmeccanica shall not
vote its shares in favor of any shareholder proposal that would
reduce below nine the members of directors comprising the Board
of Directors.
ARTICLE VI
REGISTRATION RIGHTS
-------------------
6.1. Registration Rights. (a) Subject to the provisions of
-------------------
Section 4.1. above, if at any time the Company receives a written
request from one or more Holders (i) stating that such Holder
wishes or Holders wish to register not less than 25% of the
Restricted Securities, the Company shall prepare and file a
Registration Statement for a public offering under the Securities
Act covering such Restricted Securities which are the subject of
such request and shall use its reasonable efforts to cause such
Registration Statement to become effective. In addition, upon
the receipt of such request, the Company shall promptly give
written notice to all other Holders of Restricted Securities that
such registration is to be effected. The Company shall include
in such Registration Statement such Restricted Securities for
which it has received written requests to register by such other
Holders within fifteen (15) days after the Company's written
notice to such other Holders. The Company shall be obligated to
prepare and file not more than three Registration Statements
pursuant to this Section 6.1 and not more than one Registration
Statement in any twelve-month period. If a Holder makes or
Holders make a request under this Section 6.1 and the Company
determines, in good faith, that it is not in the best interests
of the Company and its shareholders to file a Registration
Statement at such time, the Company shall have the right to
refuse to file a Registration Statement and such request shall
not constitute a demand to file a Registration Statement under
this Section 6.1. In the event the Company, in good faith,
prepares and files with the Commission a Registration Statement
pursuant to the exercise of the registration rights granted
hereunder, and the Registration Statement is not able to be
declared effective, (a) the Holders shall have the right to
require the company to file an additional Registration Statement
- 14 -
pursuant to this Section 6.1, and (b) the Holders shall not be
required to wait twelve months from the prior request.
Notwithstanding the 2-year restriction on sales of the Restricted
Securities provided under Section 4.1, a Holder shall be entitled
to request a registration of Registered Securities pursuant to
this Section 6.1(a) two months prior to the expiration of such 2-
year period to enable the registration statement covering such
Registered Securities to be declared effective by the Commission
as soon as practicable after the expiration of such period.
Notwithstanding the provisions of this Section 6.1, the
Company's obligation to file a registration statement, to cause
such registration statement to become and remain effective or to
make available the prospectus supplement described in Section
6.2(i) shall be suspended for a period not to exceed 90 days in
any 24-month period if, in the good faith judgment of the
Company's Board of Directors, there is a material fact relating
to the Company which has not been disclosed to the general
public.
(b) Incidental Registration. If the Company proposes
-----------------------
to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of
its Class A Common Stock under the Securities Act in connection
with an Underwritten Offering solely for cash (other than a
registration on Form S-8 relating solely to the sale of
securities to participants in a Benefit Plan, a registration on
Form S-4 or any successor form, or a registration on Form S-1 or
S-3 relating to a merger conversion), the Company shall promptly
give the Holders written notice of such registration. Upon the
written request of a Holder given within 30 days after mailing of
such notice by the Company, the Company shall, subject to Section
6.5, use its reasonable efforts to cause a registration statement
covering all of the Restricted Securities that such Holder has
requested to be registered to become effective under the
Securities Act. The Company shall be under no obligation to
complete an offering of its securities it proposes to make under
this Section 6.1(b) and shall incur no liability to the Holders
for its failure to do so.
Notwithstanding any other provision of this Section 6.1(b),
if the underwriter advises the Company in writing that marketing
factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of
Restricted Securities which would otherwise be underwritten
pursuant hereto and the number of shares that may be included in
the underwriting shall be allocated as follows: (x) first, all
shares to be sold by the Company shall be included, (y) second,
shares held by the Holder(s) of Restricted Securities shall be
included pro rata based on the number of shares requested by such
Holder(s) to be included in the underwriting, and (z) thereafter,
shares held by other Persons having registration rights shall be
included pro rata based on the number of such shares requested by
each such Person to be included in the underwriting.
- 15 -
(c) Restrictions on Public Sale by Holders. The
------------------------------------------
Holders agree, upon the request of the underwriter(s) in any
Underwritten Offering not to effect any sale or distribution of
securities of the Company of the same class as the securities (or
any security convertible into or exchangeable or exercisable for
such security) included in such Registration Statement, including
a sale pursuant to Rule 144 under the Securities Act (except as
part of such registration), during the 30-day period prior to,
and during the 180-day period beginning on, the closing date of
any such Public Offering made pursuant to such Registration
Statement, to the extent timely notified in writing by the
Company or such underwriter(s).
6.2. Registration Procedures. In connection with the
------------------------
Registration Statement, the Company will use its reasonable
efforts to effect such registration to permit the sale of the
Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof, and pursuant thereto
the Company will:
(a) prepare and file with the Commission a
Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be
available for the sale of the Restricted Securities being sold in
accordance with the intended method or methods of distribution
thereof, cooperate and assist in any filings required to be made
with the NYSE and use its reasonable efforts to cause such
Registration Statement to become effective;
(b) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement
effective for the period of the distribution contemplated thereby
(determined as hereinafter provided) and comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement;
(c) advise the underwriter(s), if any, and selling
Holders promptly:
(i) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any post-
effective amendment thereto, when the same has become
effective;
(ii) of any request by the Commission for
amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information
relating thereto;
- 16 -
(iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement under the Securities Act or of the suspension by
any state securities commission of the qualification of.the
Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of
the preceding purposes;
(iv) if at any time the representations and
warranties of the Company contemplated by paragraph (j)(i)
below cease to be true and correct; and
(v) of the existence of any fact and the
happening of any event that makes any statement of a
material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make
the statements therein not misleading;
(d) in connection with the filing of Registration
Statement, any amendment thereto, any document that in to be
incorporated by reference into the Registration Statement or the
Prospectus and any other communication with the Commission:
(i) furnish copies of any such document to the
selling Holders and to the managing underwriter(s), if any,
at least two (2) business days prior to any such filing and
provide them the opportunity to comment thereon; and
(ii) make the Company's representatives available
for discussion of such document;
(e) furnish to the selling Holders and each of the
underwriter(s), if any, at least one signed copy of the
Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated
by reference therein and all exhibits;
(f) deliver to the selling Holders and each of the
underwriter(s), if any, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus and any amendment
or supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering and
the sale of the Restricted Securities covered by the Prospectus
or any amendment or supplement thereto;
(g) prior to any public offering of Restricted
Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the
- 17 -
Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s) may
reasonably request and do any and all other acts or things
necessary or advisable to enable the disposition in such
jurisdictions of the Restricted Securities covered by the
Registration Statement; provided, however, that the Company shall
not be required to register or qualify as a foreign corporation
where it is not then so qualified or to take any action that
would subject it to the service of process in suits or to
taxation, other than an to matters and transactions relating to
the Registration Statement, in any jurisdiction where it is not
then so subject;
(h) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Restricted Securities to be
sold and not bearing any restrictive legends; and enable such
Restricted Securities to be in such denominations and registered
in such names as the Holder or the underwriter(s), if any, may
request at least two Business Days prior to any sale of
Restricted Securities made by such underwriter(s);
(i) if any fact or event contemplated by clause (c)(v)
above shall exist or have occurred, prepare a supplement or post-
effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or
file any other required document so that, when thereafter
delivered to the purchasers of Restricted Securities, the
Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading;
(j) enter into such agreements (including an
underwriting agreement) and take all such other actions in
connection therewith as may be required in order to facilitate
the disposition of the Restricted Securities pursuant to this
Agreement, and in connection with any such underwriting agreement
entered into by the Company:
(i) make such representations and warranties to
the underwriter(s), in form, substance and scope as are
customarily made by issuers to underwriters in secondary
underwritten offerings;
(ii) obtain opinions of counsel to the Company
and updates thereof addressed to the underwriter(s) covering
the matters customarily requested in opinions requested in
underwritten offerings and such other matters as may be
requested by such underwriters;
(iii) obtain "cold comfort" or "agreed upon
procedures" letters and updates thereof from the Company's
independent certified public accountants, addressed to the
underwriters, such letters to be in customary form and
- 18 -
covering matters of the type customarily required in such
letters by underwriters in connection with primary
underwritten offerings;
(iv) set forth in full or incorporate by reference
in the underwriting agreement the indemnification provisions
and procedures of Section 6.4 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(v) deliver such documents and certificates as
may be requested by the underwriter(s) of such Public
Offering to evidence compliance with clause (i) above and
with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company
pursuant to this clause (j).
The above shall be done at each closing under such
underwriting or similar agreement, if and to the extent
required thereunder;
(k) make available for inspection by a representative
of the selling Holders, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney or accountant retained by the underwriters, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by such Holders, underwriter, attorney or accountant in
connection with such Registration Statement subsequent to the
filing thereof and prior to its effectiveness; and
(l) use its reasonable efforts to cause all Restricted
Securities to be listed on each securities exchange, if any, on
which equity securities issued by,the Company are then listed.
Each Holder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the
information previously furnished to the Company by such Holder
not materially misleading.
Each Holder agrees by acquisition of such Restricted
Securities that, upon receipt of any notice from the Company of
the existence of any fact of the kind described in Section
6.2(c)(v) hereof, such Holder will forthwith discontinue
disposition of Restricted Securities until such Holder's receipt
of the copies of the supplemented or amended Prospectus
contemplated by Section 6.2(f) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the
Prospectus. If so directed by the company, each Holder will
deliver to the Company all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus
- 19 -
covering such Restricted Securities current at the time of
receipt of such notice.
6.3. Registration Expenses. (a) Except as otherwise
----------------------
provided below, all expenses incident to the Company's
performance of or compliance with this Agreement will be borne by
the Company, including without limitation:
(i) all registration and filing fees and expenses
(including filings made with the NYSE);
(ii) fees and expenses of compliance with federal
securities and state blue sky or securities laws;
(iii) expenses of printing;
(iv) fees and disbursements of counsel for the
Company;
(v) underwriter expenses;
(vi) fees of transfer agents and registrars; and
(vii) all fees and disbursements of
independent certified public accountants of the Company
(including the expenses of any special audit and "cold
comfort" or "agreed upon procedures" letters required by or
incident to such performance).
Notwithstanding the foregoing, the Holder(s) will pay all
underwriting discounts and selling commissions attributable to
Restricted Securities included in an underwritten Public Offering
pro rata in proportion to the number of shares sold by each.
6.4. Indemnification. (a) The Company agrees to indemnify
---------------
and hold harmless each Holder and each Person, if any, who
controls such Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages, liabilities and expenses
(including, without limiting the foregoing but subject to Section
6.4(c) hereof, the reasonable legal and other expenses incurred
in connection with any action, suit or proceeding or any claim
asserted) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendment or
supplements thereto) or any preliminary Prospectus, or arising
out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made in the case of the
Prospectus, not misleading, except insofar as such losses,
claims, damages, liabilities, or expenses arise out of or are
based upon any such untrue statement or omission or alleged
- 20 -
untrue statement or omission based upon information (i) relating
to such Holder, furnished in writing to the Company by or on
behalf of such Holder expressly for use therein or (ii) made in
any preliminary Prospectus if a copy of the Prospectus (or in the
Prospectus if a copy of a Prospectus amendment or supplement) was
not sent or given by or on behalf of such Holder to the Person
asserting any such loss, claim, damage or liability or obtaining
such judgment at or prior to the written confirmation of the sale
of the Restricted Securities as required by the Securities Act,
and the Prospectus (or the Prospectus amendment or supplement)
would have corrected such untrue statement or omission; provided,
--------
however, that the Company shall have furnished copies of such
-------
Prospectus (or such Prospectus amendment or supplement) to such
Holder in compliance with Section 6.3(f) hereof at least five
days prior to such sale confirmation.
(b) As a condition to the inclusion of its Restricted
Securities in any Registration Statement pursuant to this
Agreement, the Holder thereof will furnish to the Company in
writing, promptly after receipt of a request therefor, such
information as the Company may reasonably request for use in
connection with any Registration Statement, Prospectus or
preliminary prospectus and agrees to indemnify and hold harmless,
the Company and its directors, its officers who sign such
Registration Statement, and any Person controlling the Company
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses,
claims, liabilities and expenses arising out of (i) information
relating to such Holder furnished in writing by or on behalf of
such Holder expressly for use in such Registration Statement or
the Prospectus or any preliminary Prospectus included therein or
(ii) the failure of such Holder to cause the Prospectus or a
Prospectus supplement or amendment to be delivered to the Person
asserting any such loss, claim, damage or liability prior to the
written confirmation of the sale of the Restricted Securities as
required by the Securities Act, and the Prospectus (or Prospectus
amendment or supplement) would have corrected such untrue
statement or omission; provided, however, that the Company shall
-------- -------
have furnished copies of such Prospectus (or such Prospectus
amendment or supplement) to such Holder in compliance with
section 6.2(f) hereof at least five days prior to such sale
confirmation. In case any action shall be brought against the
Company, any of its directors, any such officer, or any such
controlling Person based on the Registration Statement, the
Prospectus or any preliminary Prospectus and in respect of which
indemnity may be sought against the Holder, such Holder shall,
mutatis mutandis, have the rights and duties given to the Company
------- --------
by Section 6.4(c) hereof (except that if the Company as provided
in Section 6.4(c) hereof shall have assumed the defense thereof
such Holder shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof
but the fees and expenses of such counsel shall be at such
Holder's expense) and the Company and its directors, any such
officers, and any such controlling Person shall have the rights
- 21 -
and duties given by Section 6.4(c) hereof. In no event shall the
liability of a selling Holder hereunder be greater than the gross
proceeds received by such Holder upon the sale of the Restricted
Securities giving rise to such indemnification obligation.
(c) In case any action or proceeding shall be brought
against the Holder or any Person controlling such Holder, based
upon the Registration Statement, the Prospectus or any
preliminary Prospectus, or any amendment or supplement thereto,
and with respect to which indemnity may be sought against the
Company, such Holder or such Person controlling such Holder shall
promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Holder and payment of all
reasonable fees and expenses relating thereto. The Holder and
such Persons controlling such Holder shall have the right to
employ separate counsel in any such action or proceeding and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at such Holder's expense unless (i) the
employment of such counsel has been specifically authorized in
writing by the Company, (ii) the Company has not assumed the
defense and employed counsel reasonably satisfactory to such
Holder within 15 days after notice of any such action or
proceeding, or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include both the
Holder or any Person controlling such Holder and the Company and
such Holder or any Person controlling such Holder shall have been
advised by such counsel that there may be one or more legal
defenses available to such Holder or Person controlling such
Holder that are different from or additional to those available
to the Company (in which case the Company shall not have the
right to assume the defense of such action or proceeding on
behalf of such Holder or controlling Person, it being understood
that the Company shall, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
one separate firm of attorneys for all Holders and controlling
Persons, which firm shall be designated in writing by the Holders
and shall be reasonably acceptable to the Company). The Company
shall not be liable for any settlement of any such action
effected without the written consent of the Company, but if
settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless such Holder and all Persons
controlling such Holder from and against any loss or liability by
reason of such settlement or judgment.
6.5. Participation In Public Offering. No Holder may
-----------------------------------
participate in any Public Offering, hereunder unless such Holder
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required
under the terms of such underwriting agreements.
- 22 -
6.6. Selection of Underwriters. In any underwritten Public
--------------------------
Offering pursuant to Section 6.1(a), the lead underwriter or
underwriters that will conduct the offering will be selected by
the selling Holders and shall be reasonably acceptable to the
Company.
6.7. Period of Distribution. For purposes of Section
------------------------
6.2(b), the period of distribution of Restricted Securities in a
firm commitment underwritten Public Offering shall be deemed to
extend until each underwriter has completed the distribution of
all securities purchased by it, and the period of distribution of
Restricted Securities in any other registration shall be deemed
to extend until the earlier of the sale of all Restricted
Securities covered thereby or 120 days after the effective date
thereof.
ARTICLE VII
-----------
FINANCIAL MATTERS
-----------------
7.1. Financial Statements. The Company will deliver to
---------------------
Finmeccanica:
(a) Not later than the date furnished to the Company's
Board of Directors, such financial and operating data concerning
the Company and its business units as are regularly made
available to the Company's Board of Directors (and its Executive
Committee). The Company's obligation under this Section 7.1(a)
shall be deemed satisfied upon delivery of such data to the
Finmeccanica nominees who are members of the Board of Directors
of the Company.
(b) Promptly (but in any event within five days) after any
filing by the Company with the Commission or with the NYSE of any
publicly available annual or periodic or special report or proxy
statement or final registration statement, a copy of such report
or statement and copies of all press releases and other
statements made available generally by the Company to the public
concerning material developments in the Company's business.
ARTICLE VIII
------------
TERMINATION
-----------
8.1. Termination. Except to the extent expressly provided
-----------
herein, this Agreement will continue in full force and effect
until the earlier of (i) seven and one half (7 1/2) years from
the date hereof, (ii) termination by mutual written agreement of
the parties, (iii) dissolution of the Company, or (iv) the date
upon which Finmeccanica ceases to own, by virtue of a Disposition
of Restricted Securities of the Company, at least ten percent
(10%) of those Common Equivalent Securities of the Company held
- 23 -
by Finmeccanica on the date hereof. To the extent that this
Agreement has not otherwise terminated prior to the seventh
anniversary of the date hereof, the parties shall negotiate in
good faith the renewal of this Agreement on substantially similar
terms and conditions for a successive seven-year period to the
extent permitted by Delaware law.
ARTICLE IX
----------
GENERAL
-------
9.1. Injunctive Relief. It is acknowledged that it will be
------------------
impossible to measure in money the damages that would be suffered
if the parties fail to comply with any of the obligations imposed
on them by this Agreement and that in the event of any such
failure, an aggrieved person will be irreparably damaged and will
not have an adequate remedy at law. Any such person shall,
therefore, be entitled to injunctive relief and/or specific
performance to enforce such obligations, and if any action should
be brought in equity to enforce any of the provisions of this
Agreement, none of the parties hereto shall raise the defense
that there is an adequate remedy at law.
9.2. Further Assurances. Each party hereto shall do and
------------------
perform or cause to be done and performed all such further acts
and things and shall execute and deliver all such other
agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
9.3. Assignment. None of the parties hereto shall assign
----------
any of its rights or duties under any provision of this Agreement
to any third party (other than to an Affiliate), without
obtaining the prior written consent of the other parties hereto,
except that a Holder may transfer or assign its rights and
obligations hereunder in whole or in part to a transferee
pursuant to a transfer of shares made in compliance with all of
the provisions of this Agreement.
9.4. Notices. All notices and other communications
-------
hereunder, except as otherwise expressly provided, shall be in
writing and shall be deemed to have been duly given if either (i)
delivered personally, (ii) transmitted by telecopier (if followed
by the original copy sent by postage prepaid mail as provided
below) or (iii) sent by postage prepaid certified mail (airmail
if international), return receipt requested, as follows (or to
such other address as may be specified in a notice to the other
party hereto) :
- 24 -
if to the Company:
Brown & Sharpe Manufacturing Company
Precision Park
North Kingstown, Rhode Island 02852
Attention: James W. Hayes, III
Fax: (401) 886-2214
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attention: Howard K. Fuguet, Esq.
Fax: (617) 951-7050
if to Finmeccanica:
Elsag Bailey Company
via Puccini, 2
16154 Genoa
Italy
Attention: Group General Counsel
Fax: 011-39-10-6582637
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
Attention: W. Preston Tollinger, Jr., Esq.
Fax: (212) 626-4120
9.5. Governing Law. This Agreement and all issues
---------------
concerning the respective rights and obligations of the Company
and the Shareholders shall be governed by the laws of the State
of Delaware, without regard to the conflicts of law principles
thereof.
9.6. Binding Effect. The terms and conditions of the
---------------
Agreement shall extend to, be binding upon, and inure to the
benefit of, the heirs, successors, administrators, legal
representatives, permitted assigns of the respective parties
hereto.
9.7. No Partnership Relationship. The parties agree that
----------------------------
nothing in this Agreement will create or be deemed to create any
partnership, agency or any other relationship between them except
as otherwise expressly stated herein.
9.8. Headings. The descriptive headings contained herein
--------
are for convenience only and shall not control or affect the
meaning of construction of any provision of this Agreement.
- 25 -
9.9. Legal Costs. The losing party in any lawsuit to
------------
enforce the rights of any party to this Agreement shall reimburse
the prevailing party for all costs (including attorney's fees)
incurred in connection with such action.
9.10. Severability. Should any provision of this
------------
Agreement be held invalid or unenforceable under the laws of any
applicable jurisdiction, the other provisions of this Agreement
shall remain valid and in full force and effect. To the extent
permissible under applicable law, the parties will use their best
efforts to modify the invalid or unenforceable provisions so as
to comply with such laws so long as the intent and effect of the
affected provision is preserved.
9.11. Entire Agreement; No Waiver; Amendment. This
-----------------------------------------
Agreement and all Exhibits hereto supersede all other oral or
written representations and understandings of the parties hereto
with respect to the subject matter hereof. No failure or delay
by any party in the exercise of any right hereunder will operate
as a waiver thereof, nor will any single or partial exercise of
any right preclude an additional or further exercise thereof or
the exercise of any other right. No amendment, variation,
modification or waiver of any provision of this Agreement shall
be valid unless made in writing and signed by the parties hereto.
- 26 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized representatives
as of the date first above written.
FINMECCANICA S.p.A.
through its Elsag Bailey Company division
By: /s/ Paolo Caron
------------------------------
Name: Paolo Caron
Title: Attorney-in-Fact
BROWN & SHARPE MANUFACTURING
COMPANY
By: /s/ C.A. Junkunc
------------------------------
Name: C.A. Junkunc
Title: Vice President and Chief
Financial Officer
- 27 -
Dates Referenced Herein and Documents Incorporated by Reference
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