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Exhibit 10.12
GRANITE CONSTRUCTION INCORPORATED
PURCHASE OF 102,850 SHARES OF CLASS A COMMON STOCK
OF TIC HOLDINGS, INC.
----------------------------------
DECEMBER 30, 1996
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Granite Construction Incorporated
Purchase of 102,850 Shares of Class A Common Stock of TIC Holdings, Inc.
Document Index
Stock Purchase Agreement between 1
Granite Construction Incorporated (the
"Company") and TIC Holdings, Inc.
("TIC") dated December 23, 1996
Cooperation and Rights Agreement 2
between the Company, TIC, and various
shareholders of TIC dated December 23,
1996
Officer's Certificate from TIC dated 3
December 30, 1996
Legal Opinion from Xxxx, Xxxx, Xxxx & 4
Freidenrich to TIC dated
December 30, 1996
Compliance Certificate from the 5
Company dated December 30, 1996
Legal Opinion from Xxxx, Xxxx, Xxxx & 6
Freidenrich to the Company dated
December 30, 1996
Press release from the Company dated 7
December 30, 1996
Closing Certificate from TIC dated 8
December 30, 1996
Stock Certificate from TIC to the 9
Company representing 102,850 shares of
TIC
Opinion from TIC in-house counsel to 10
the Company dated December 30, 1996
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Opinion from Xxxxx, Johnson, Robinson, 11
Xxxx & Xxxxxxxxx, P.C. to the Company
dated December 30, 1996
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STOCK PURCHASE AGREEMENT
between
GRANITE CONSTRUCTION INCORPORATED,
a Delaware corporation
("Buyer")
and
TIC HOLDINGS, INC.,
a Colorado corporation
(the "Company")
Dated December 23, 1996
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TABLE OF CONTENTS
Page
----
1. Definitions ............................................................. 1
"Associated Companies" .................................................. 1
"Applicable Contract" ................................................... 1
"Balance Sheet" ......................................................... 1
"Best Efforts" .......................................................... 1
"Breach" ................................................................ 1
"Buyer" ................................................................. 2
"Closings" .............................................................. 2
"Closing Dates" ......................................................... 2
"Code" .................................................................. 2
"Common Stock" .......................................................... 2
"Company" ............................................................... 2
"Consent" ............................................................... 2
"Contemplated Transactions" ............................................. 2
"Contract" .............................................................. 2
"Disclosure Letter" ..................................................... 2
"Encumbrance" ........................................................... 2
"Environment" ........................................................... 2
"Environmental, Health, and Safety Liabilities" ......................... 3
"Environmental Law" ..................................................... 3
"ERISA" ................................................................. 4
"Escrow Agent" .......................................................... 4
"Escrow Agreement" ...................................................... 4
"Exchange Act" .......................................................... 4
"Facilities" ............................................................ 4
"Financial Statements" .................................................. 4
"GAAP" .................................................................. 4
"Governmental Authorization" ............................................ 4
"Governmental Body" ..................................................... 5
"Hazardous Act" ......................................................... 5
"Hazardous Materials" ................................................... 5
"HSR Act" ............................................................... 5
"IRS" ................................................................... 5
"Knowledge" ............................................................. 5
"Knowledge of the Company" .............................................. 6
"Legal Requirement" ..................................................... 6
"Occupational Safety and Health Law" .................................... 6
"Order" ................................................................. 6
"Ordinary Course of Business" ........................................... 6
"Organizational Documents" .............................................. 6
"Person" ................................................................ 6
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"Plan" .................................................................. 6
"Proceeding" ............................................................ 6
"Release" ............................................................... 7
"Representative" ........................................................ 7
"Securities Act" ........................................................ 7
"Shares" ................................................................ 7
"Shareholders" .......................................................... 7
"Subsidiaries" .......................................................... 7
"Tax" ................................................................... 7
"Tendered Shares" ....................................................... 7
"Termination Date" ...................................................... 7
2. Sale and Issuance of Shares and Tendered Shares; Closing ................ 7
2.1 Shares ......................................................... 7
2.2 Tendered Shares ................................................ 8
2.3 Purchase Price ................................................. 8
2.4 Closings ....................................................... 8
2.5 Closing Obligations ............................................ 8
2.6 Post-First Closing Obligations ................................. 9
3. Representations and Warranties of the Company ........................... 10
3.1 Organization and Good Standing; Subsidiaries ................... 10
3.2 Authority; No Conflict ......................................... 10
3.3 Capitalization ................................................. 12
3.4 Shares, Options and Warrants of the Company .................... 12
3.5 Financial Statements and Other Information ..................... 12
3.6 Books and Records .............................................. 13
3.7 Title to Properties; Encumbrances .............................. 13
3.8 Condition and Sufficiency of Assets ............................ 14
3.9 Accounts Receivable ............................................ 15
3.10 No Undisclosed Liabilities ..................................... 15
3.11 Taxes .......................................................... 15
3.12 No Material Adverse Change ..................................... 16
3.13 Employee Benefits .............................................. 16
3.14 Compliance with Legal Requirements; Governmental
Authorizations ................................................. 21
3.15 Legal Proceedings; Orders ...................................... 22
3.16 Absence of Certain Changes and Events .......................... 23
3.17 Contracts; No Defaults ......................................... 23
3.18 Insurance ...................................................... 24
3.19 Environmental and Occupational Safety and Health Matters ....... 26
3.20 Employees ...................................................... 27
3.21 Labor Disputes; Compliance ..................................... 27
3.22 Certain Payments ............................................... 28
3.23 Disclosure ..................................................... 28
3.24 Brokers or Finders ............................................. 28
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4. Representations and Warranties of Buyer ................................. 28
4.1 Organization and Good Standing ................................. 28
4.2 Authority; No Conflict ......................................... 29
4.3 Investment Intent .............................................. 29
4.4 Certain Proceedings ............................................ 31
4.5 Brokers or Finders ............................................. 31
4.6 Consent ........................................................ 31
5. Covenants of the Company Prior and Subsequent to First Closing Date ..... 31
5.1 Access and Investigation ....................................... 31
5.2 Operation of the Business of the Company ....................... 31
5.3 Negative Covenant .............................................. 32
5.4 Required Approvals ............................................. 32
5.5 Notification ................................................... 32
5.6 No Negotiation ................................................. 32
5.7 Best Efforts ................................................... 33
5.8 Supplements to Disclosure Letter ............................... 33
5.9 Solicitation of Shareholders ................................... 33
6. Covenants of Buyer Prior to Second Closing Date ......................... 33
6.1 Access to Information .......................................... 33
6.2 Approvals of Governmental Bodies ............................... 33
6.3 Best Efforts ................................................... 33
6.4 Notification ................................................... 34
7. Conditions Precedent to Buyer's Obligation to Close ..................... 34
7.1 Accuracy of Representations .................................... 34
7.2 Completion of Investigations, Inspections and Studies .......... 34
7.3 The Company's Performance ...................................... 35
7.4 Consents ....................................................... 35
7.5 Additional Documents ........................................... 35
7.6 No Proceedings ................................................. 35
7.7 Disclosure Letter .............................................. 35
7.8 Election of Additional Directors ............................... 35
8. Conditions Precedent to the Company's Obligation to Close ............... 36
8.1 Accuracy of Representations .................................... 36
8.2 Buyer's Performance ............................................ 36
8.3 Consents ....................................................... 36
8.4 Additional Documents ........................................... 36
8.5 No Injunction .................................................. 37
9. Additional Conditions Precedent to Buyer's and the Company's
Obligation to Close at Second Closing ................................... 37
9.1 Consents ....................................................... 37
9.2 No Material Adverse Change ..................................... 37
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9.3 Completion of Tender Offer ..................................... 37
9.4 Opinion of Xxxxx, Johnson, Robinson, Xxxx & Xxxxxxxxx, P.C.
("Company Counsel") ............................................ 37
10. Termination ............................................................. 37
10.1 Termination Events ................................................. 37
10.2 Effect of Termination .............................................. 38
11. General Provisions ...................................................... 38
11.1 Expenses ....................................................... 38
11.2 Public Announcements ........................................... 39
11.3 Confidentiality ................................................ 39
11.4 Notices ........................................................ 39
11.5 Binding Arbitration; Service of Process ........................ 40
11.6 Further Assurances ............................................. 41
11.7 Waiver ......................................................... 41
11.8 Indemnification ................................................ 42
11.9 Entire Agreement and Modification, Survival of Representations
and Warranties ................................................. 42
11.10 No Personal Liability .......................................... 42
11.11 Assignments, Successors and No Third Party Rights .............. 42
11.12 Severability ................................................... 43
11.13 Section Headings, Construction ................................. 43
11.14 Time of Essence ................................................ 43
11.15 Governing Law .................................................. 43
11.16 Counterparts ................................................... 43
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of December
23, 1996 between Granite Construction Incorporated, a Delaware corporation
("Buyer") and TIC Holdings, Inc., a Colorado corporation (the "Company").
RECITALS
A. For the consideration and on the terms set forth in this Agreement,
Buyer desires to purchase from the Company and the Company desires to issue and
sell to the Purchaser 102,850 shares (the "Shares") of the Company's Class A
Common Stock, par value $.10 per share (the "Common Stock"), at a price per
share as described in Section 2 hereto.
B. In addition, Buyer desires to purchase directly from the
shareholders of the Company, an aggregate of 154,276 Shares of the Company's
Class A Common Stock, par value $.10 per share (the "Tendered Shares"), also at
the price per share as described in Section 2 hereto.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
have the meanings specified or referred to in this Section 1:
"Associated Companies" -- the Company and its Subsidiaries,
collectively.
"Applicable Contract" -- any Contract (a) under which any Associated
Company has any Material rights, (b) under which any Associated Company has any
Material obligation or liability or (c) by which any Associated Company or any
of the Material assets owned, leased or used by any Associated Company is bound.
"Balance Sheet" -- as defined in Section 3.5.
"Best Efforts" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to maximize to the extent
reasonably practicable the prospects that a result will occur.
"Breach" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any Material inaccuracy in or Material breach of, or any Material
failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision or (b) any Material claim (by any Person) or
other occurrence or circumstance that is or was
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inconsistent with such representation, warranty, covenant, obligation, or other
provision and causes Material damage to such person, and the term "Breach" means
any such Material inaccuracy, breach, failure, claim, occurrence, or
circumstance.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Closings" -- as defined in Section 2.4.
"Closing Dates" -- the date and time as of which the Closings actually
take place.
"Code" -- the Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code or any successor law.
"Common Stock" -- as defined in the Recitals to this Agreement.
"Company" -- as defined in the first paragraph of this Agreement.
"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" -- all of the transactions contemplated by
this Agreement, including:
(a) the issuance and sale of the Shares by the Company to
Buyer; and
(b) the performance by Buyer and the Company of their
respective covenants and obligations under this Agreement.
"Contract" -- any Material agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Disclosure Letter" --the disclosure letter delivered by the Company to
Buyer prior to the Closing, as the same may be supplemented from time to time,
containing the information required by Section 3.
"Encumbrance" -- any Material charge, claim, community property
interest, condition, equitable interest, lien, pledge, security interest, right
of first refusal, option or restriction of any kind, including any Material
restriction on use, voting (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwaters, drinking
water
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supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other natural resource.
"Environmental, Health, and Safety Liabilities" -- any Material cost,
damages, expense, liability, obligation, or other responsibility arising from or
under the Breach of any Environmental Law, Occupational Safety and Health Law,
or any Order, and relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" will include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
"Environmental Law" -- any Legal Requirement designed:
(a) to advise appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations or discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) to prevent or acceptably minimize the release of
pollutants or hazardous substances or materials into the Environment;
(c) to reduce the quantities, prevent the release, and
minimize the hazardous characteristics of wastes that are generated;
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(d) to assure that products are designed, formulated,
packaged, or used so that they do not present unreasonable risks to human health
or the Environment when used or disposed of;
(e) to protect resources or species;
(f) to acceptably minimize the risks inherent in
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) to clean up pollutants that have been released, prevent
the threat of release, or pay the costs of such clean up or prevention; or
(h) to make responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or to permit
self-appointed representatives of the public interest to recover for injuries
done to public assets or the Environment.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent" -- LaSalle National Trust.
"Escrow Agreement" -- that certain escrow agreement to be entered into
by and among Buyer, the Company and the Escrow Agent, in the form to be
acceptable to the parties thereto upon commencement of the tender offer for the
Tendered Shares.
"Exchange Act" -- the Securities Exchange Act of 1934, as amended, or
any successor law, and the regulations or rules issued pursuant to such Act or
any successor law.
"Facilities" -- any real property or leaseholds currently owned or
operated by the Company and any buildings, plants, structures, or equipment
currently owned, leased, or operated by the Company.
"Financial Statements" -- shall mean all of the consolidated financial
statements of the Company described in Section 3.5.
"GAAP" -- generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.5 were prepared.
"Governmental Authorization" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal
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Requirement which if not obtained by an Associated Company, such failure would
have a Material adverse effect on the Company.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district, or
other governmental jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Act" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Materials" any substance that is now listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos containing materials.
"HSR Act" -- the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
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(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could reasonably be expected to
discover or otherwise become aware of such fact in carrying out such
individual's ordinary duties for the Company.
"Knowledge of the Company" -- shall mean Knowledge of the following
officers about the affairs of the Company: Xxxxx X. Xxxxx, Xxxx X. XxXxxxxx,
Xxxxxx X. XxXxxxxx, Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxx and Xxxxxx X. Xxxxxxxxxx.
"Legal Requirement" -- any applicable federal, state, local, municipal,
foreign, international, multinational, or other constitution, law, ordinance,
principle of common law, regulation, statute or treaty pursuant to which the
failure to comply would have a Material adverse effect on the Company.
"Material" -- Involving potential claims, expenses, payments or other
liability in excess of $200,000.
"Occupational Safety and Health Law" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards.
"Order" -- any Material award, decision, injunction, judgment, order,
directive, ruling, subpoena, or verdict entered, issued, made, or rendered by
any court, administrative agency, or other Governmental Body or by any
arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course Of Business" only if such
action is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"Plan" -- as defined in Section 3.13.
"Proceeding" -- any Material action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal)
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commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body, arbitrator, mediator or other third party.
"Release" -- any Material spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment.
"Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" -- the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Shares" -- as defined in the Recitals to this Agreement.
"Shareholders" -- the holders of record on September 30, 1996 of the
Common Stock.
"Subsidiaries" -- with respect to any Person (the "Owner"), any
corporations or other Persons of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company. Subsidiaries excludes those entities expressly
excluded on Part 3.1(a) of the Disclosure Letter.
"Tax" -- any Material tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body.
"Tendered Shares" -- as defined in the Recitals to this Agreement.
"Termination Date" -- as defined in Section 2.4.
2. Sale and Issuance of Shares and Tendered Shares; Closings; Escrow.
2.1 Shares. Subject to the terms and conditions of this Agreement,
at the First Closing, the Company will issue and sell to Buyer, and Buyer will
purchase from the Company, the Shares.
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2.2 Tendered Shares. Subject to the terms and conditions of this
Agreement and the Escrow Agreement, Buyer will purchase the Tendered Shares from
the Shareholders.
(a) The Tendered Shares to be purchased from the Shareholders shall
be allocated as follows:
(i) The Shareholders shall be entitled, at their sole
election, to sell to Granite up to 20% of the shares held by such Shareholder on
September 30, 1996.
(ii) To the extent there are Shareholders who elect to sell
less than all of the Tendered Shares which they are entitled to sell, such
excess Tendered Shares shall be allocated in accordance with the Company's
Stock Repurchase Policy adopted by the board of directors of the Company on
July 29, 1994.
(b) If the Shareholders fail to tender shares equal to all of the
Tendered Shares, the Company will issue and sell to the Buyer, and the Buyer
will purchase that number of shares of Common Stock such that immediately
subsequent to such purchase and sale, Granite shall own 30% of the issued and
outstanding Common Stock.
2.3 Purchase Price. The purchase price per share (the "Purchase
Price") for the Shares and the Tendered Shares shall be established according
to Article VI A. of the Company's Third Restated Articles of Incorporation
utilizing audited financial statements for the year ended December 31, 1996 and
an appraisal of the Associated Companies' equipment prepared by an independent
appraiser (the "Appraisal") but in no case shall the Purchase Price be less
than $78.00 per share (the "Minimum Purchase Price"). The Purchase Price shall
be calculated excluding the purchase of the Shares.
2.4 Closings. The purchase and sale (the "Closings") provided for in
this Agreement will take place at the offices of Otten, Johnson, Robinson,
Neff, Ragonetti, P.C., 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 at
10:00 a.m. MST. At the First Closing on or around December 30, 1996, upon
satisfaction of all conditions of Closing in Sections 7 and 8, Granite shall
purchase the Shares. At the Second Closing, upon satisfaction of all conditions
of Closing in Section 9, on or around April 15, 1997 but no later than May 15,
1997 (the "Termination Date"), Granite shall purchase the Tendered Shares.
2.5 Closing Obligations. At the First Closing:
(a) The Company will deliver to Buyer:
(i) a certificate representing the Shares;
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(ii) a Co-operation and Rights Agreement executed by the
Company and certain shareholders of the Company whereby Buyer, the Company and
such shareholders agree to various forms of Strategic co-operation and certain
rights and limitations regarding ownership of the Shares and the Tendered Shares
by Buyer (the "Rights Agreement");
(iii) a certificate executed by the Company representing and
warranting to Buyer that each of the representations and warranties by the
Company in this Agreement was accurate in all Material respects as of the date
of this Agreement and is accurate in all Material respects as of the First
Closing Date as if made on the First Closing Date (giving full effect to any
supplements to the Disclosure Letter that were delivered by the Company to Buyer
prior to the First Closing Date in accordance with Section 5.8); and
(iv) such other documents as are required to be provided
pursuant to Section 7; and
(b) Buyer will deliver to the Company:
(i) the Minimum Purchase Price for the Shares, by wire transfer
to accounts specified by the Company;
(ii) a certificate executed by Buyer representing and
warranting to the Company to the effect that, except as otherwise stated in such
certificate, each of Buyer's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the First Closing Date as if made on the First Closing Date;
(iii) the Rights Agreement executed by Buyer;
(iv) such other documents as are required to be provided
pursuant to Section 8.
2.6 Post-First Closing Obligations.
(a) As soon as reasonably possible after receipt of the Company's
audited financial statements for the year ended December 31, 1996 and the
Appraisal, the Company and Granite shall mutually determine the Purchase Price.
If the Purchase Price exceeds $78.00 per share, Granite shall, within five (5)
business days of such determination, deliver by wire transfer to the Company, an
amount equal to the difference between the Purchase Price and the Minimum
Purchase Price for the Shares.
(b) Immediately upon final calculation of the Purchase Price, the
parties shall enter into the Escrow Agreement and commence the tender offer for
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the Tendered Shares and Granite shall deposit with the Escrow Agent by wire
transfer an amount equal to the Purchase Price for the Tendered Shares.
3. Representations and Warranties of the Company. The Company
represents and warrants to Buyer that to the knowledge of the Company:
3.1 Organization and Good Standing; Subsidiaries.
(a) Part 3.1(a) of the Disclosure Letter contains or will
contain a complete and accurate list for each Associated Company of its name,
its jurisdiction of organization, other jurisdictions in which it is authorized
to do business, and its capitalization (including the identity of each equity
owner and the ownership interests held by each). Each Associated Company is an
entity duly organized, validly existing, and in good standing under the laws of
its jurisdiction of organization, with full power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations under
Applicable Contracts. Each Associated Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned,
leased or used by it, or the nature of the activities conducted by it, requires
such qualification, except where the failure to so qualify would not have a
Material adverse effect on such Associated Company or its operations.
(b) The Company has delivered or made available to Buyer copies
of the Organizational Documents of each Associated Company, as currently in
effect on or prior to the Closing.
(c) Other than as listed on Part 3.1(c) of the Disclosure
Letter, the Associated Companies (i) have no Subsidiaries, (ii) do not own or
control (directly or indirectly) any capital stock, bonds or other securities
of, and do not have any proprietary interest in, any other corporation, general
or limited partnership, firm, association or business organization, entity or
enterprise and (iii) do not control (directly or indirectly) the management or
policies of any other corporation, partnership, firm, association or business
organization, entity or enterprise.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws
affecting creditor's rights generally. Upon the execution and delivery of this
Agreement (including the Disclosure Letter) and the Rights Agreement
(collectively the "Company's Closing Documents"), the Company's Closing
Documents will constitute the legal, valid, and binding obligations of the
Company, enforceable against the Company in accordance
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with their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other laws affecting creditor's rights generally.
(b) Except as set forth in Part 3.2(b) of the Disclosure Letter,
neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of
the Associated Companies; or
(B) any resolution adopted by the board of directors
or the shareholders of any Associated Company;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any Associated Company, or
any of the assets owned, leased or used by, any Associated Company, may be
subject which would have a Material adverse affect on any Associated Company;
(iii) contravene, conflict with, or result in a violation of
any of the Material terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any Material
Governmental Authorization that is held by any Associated Company or that
otherwise relates to the business of, or any of the assets owned, leased or used
by, any Associated Company;
(iv) cause Buyer or any Associated Company to become
subject to, or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by any Associated
Company to be reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any Material provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract with
outstanding obligations of the Company in excess of $5,000,000; or
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned, leased or used by
any Associated Company.
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Except as set forth in Part 3.2(b) of the Disclosure Letter, no Associated
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of the Closing
Documents or the consummation or performance of any of the Contemplated
Transactions.
3.3 Capitalization. As of September 30, 1996 the authorized equity
securities of the Company consisted of 2,000,000 shares of preferred stock, par
value $1.00 per share, none of which are issued and outstanding, 2,500,000
shares of Class A Common Stock, par value of $.10 per share, of which 771,379
shares were issued and outstanding as of September 30, 1996, and 500,000 Shares
of Class B Common Stock, par value $.10 per share, none of which are issued and
outstanding. With the exception of the securities referred to in Section 3.4
below, all of the outstanding equity securities of each Associated Company other
than the Company are owned of record and beneficially by one or more of the
Associated Companies, free and clear of all Encumbrances, except for the
Encumbrances set forth as Part 3.3(a) of the Disclosure Letter. Other than as
set forth on Part 3.3(b) of the Disclosure Letter, no legend or other reference
to any purported Encumbrance appears upon any certificate representing equity
securities of any Associated Company. All of the outstanding equity securities
of any Associated Company have been duly authorized and validly issued and are
fully paid and nonassessable. Except for the securities referred to in Section
3.4 below and as set forth on Part 3.3(c) of the Disclosure Letter, there are no
Applicable Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Associated Company. None of the
outstanding securities of any Associated Company was issued in violation of the
Securities Act or any other Legal Requirement. Other than as set forth on Part
3.3(d) of the Disclosure Letter, no Associated Company owns, or has any Contract
to acquire, any securities of any Person (other than Associated Companies) or
any direct or indirect equity or ownership interest in any other business (other
than those businesses disclosed in Part 3.1 of the Disclosure Letter), excluding
contractual joint ventures, consortiums or similar arrangements.
3.4 Shares, Options and Warrants of the Company. Part 3.4 of the
Disclosure Letter contains a list of all outstanding options and warrants and
other securities that may be exercised to purchase or are convertible into
securities of the Associated Companies (the "Securities").
3.5 Financial Statements and Other Information. The Company has
delivered to Buyer:
(a) Audited, consolidated balance sheets of the Company as of
December 31 in each of the years 1990 through 1995 (with the December 31, 1995
balance sheet being referred hereafter as the "Balance Sheet"), and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the fiscal years then ended, together with the report thereon of KPMG
Peat Marwick LLP, independent certified public accountants. Such audited
financial statements and notes thereto fairly present in all Material respects,
the financial
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condition and the consolidated results of operations, stockholders' equity, and
cash flows of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, except as
disclosed to the contrary therein; the financial statements referred to in this
Section 3.5 reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements. No financial statements of any Person other than the
Associated Companies are required by GAAP to be included in the financial
statements of the Company. Part 3.5(a) of the Disclosure Letter sets forth the
accounting treatment of certain items that may be an exception to this
representation and warranty.
(b) The unaudited consolidated balance sheet of the Company as
of September 30, 1996 (the "1996 Balance Sheet") and the related consolidated
statements of operations, stockholders' equity, and cash flows for the nine
months then ended (collectively, the "1996 Financial Statements"). The 1996
Financial Statements and notes thereto shall fairly present in all Material
respects the consolidated financial condition and results of operations, changes
in stockholders' equity and cash flow of the Company as at September 30, 1996
and for the periods referred to in such financial statements, all in accordance
with GAAP (except insofar as the unaudited 1996 Financial Statements are
concerned for the absence of notes thereto and subject to certain year-end
adjustments and inter-company adjustments among the Associated Companies),
subject to all of the matters described on Part 3.5(a) of the Disclosure Letter;
the financial statements referred to in this Section 3.5(b) shall reflect the
consistent application of such accounting principles throughout the period
involved as well as with prior periods except as set forth on Part 3.5(a) of the
Disclosure Letter, and subject to all of the matters described on Part 3.5(a) of
the Disclosure Letter. No financial statements of any Person other than the
Associated Companies are required by GAAP to be included in the 1996 Financial
Statements of the Company.
3.6 Books and Records. The minute books, stock record books, and
other Material records of the Associated Companies, all of which have been made
available to Buyer, are complete and correct in all Material respects and have
been maintained in accordance with reasonable business practices. The minute
books of the Associated Companies contain accurate and complete records of all
Material corporate action taken by, the stockholders, the Boards of Directors,
and committees of the Boards of Directors of the Associated Companies, and no
meeting of any such stockholders, Board of Directors, or committee of the Board
of Directors has been held for which any Material action has been taken for
which minutes have not been prepared and are not contained in such minute books.
3.7 Title to Properties; Encumbrances. Part 3.7 of the Disclosure
Letter contains a complete and accurate list of all real property, leaseholds,
or other interests therein owned by any Associated Company. Sellers have
delivered or made available to Buyer copies of the deeds and other instruments
(as recorded) by which the Associated Companies acquired such real property and
interests, and copies of all
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title insurance policies, opinions, abstracts, and surveys in the possession of
the Company or the Associated Companies and relating to such property or
interests. The Associated Companies own (with good and marketable title in the
case of real property, subject only to the matters permitted by the following
sentence) all the properties and assets (whether real, personal, or mixed and
whether tangible or intangible) which the Company purports to own on Part 3.7 of
the Disclosure Schedule and reflected as owned in the books and records of the
Associated Companies, including all of the properties and assets reflected in
the 1996 Balance Sheet (except for assets held under Material capitalized leases
disclosed or not required to be disclosed in Part 3.7 of the Disclosure Letter
and personal property sold since the date of the 1996 Balance Sheet, as the case
may be, in the Ordinary Course of Business), and all of the properties and
assets purchased or otherwise acquired by the Associated Companies since the
date of the 1996 Balance Sheet (except for personal property acquired and sold
since the date of the 1996 Balance Sheet in the Ordinary Course of Business),
which subsequently purchased or acquired properties and assets having an
individual value in excess of $100,000 (other than inventory and short-term
investments) are listed in Part 3.7 of the Disclosure Letter. Except as set
forth on Part 3.7 of the Disclosure Letter, all Material properties and assets
reflected in the 1996 Balance Sheet are free and clear of all Encumbrances and
are not, in the case of real property, subject to any rights of way, building
use restrictions, variances, reservations or limitations of any nature except,
with respect to all such properties and assets, (a) mortgages or security
interests shown on the Balance Sheet (and/or described in the notes thereto) as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred in connection with
the purchase of property or assets after the date of the Balance Sheet (such
mortgages and security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with notice or lapse
of time or both, would constitute a default) exists, (c) liens for current taxes
not yet due, and (d) with respect to real property, (i) minor imperfections of
title, if any, none of which is Material or impairs the use of the property
subject thereto, or impairs the operations of any Associated Company and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto. All buildings, plants and
structures owned by the Associated Companies lie wholly within the boundaries of
the real property owned by the Associated Companies and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person.
3.8 Condition and Sufficiency of Assets. In all Material respects,
the buildings, plants, structures, and equipment of the Associated Companies,
including all Material items of equipment not shown on the 1996 Balance Sheet of
the Company which is held by the Company pursuant to the terms of operating
leases, are structurally sound, are in reasonable operating condition and
repair, subject to ordinary wear and tear, and are adequate for the uses to
which they are being put. All buildings, plants, structures and equipment of the
Associated Companies that are capitalized financial statement purposes and are
owned by the Associated
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Companies as of the date set forth in Part 3.8 of the Disclosure Letter and all
equipment held under operating leases as of such dates are described in Part 3.8
of the Disclosure Letter. The building, plants, structures and equipment of the
Associated Companies are sufficient for the continued conduct of the Associated
Companies' businesses after the Closing in substantially the same manner and
volume as conducted prior to the Closing.
3.9 Accounts Receivable. All accounts receivable of the Associated
Companies that are reflected on the 1996 Balance Sheet or on the accounting
records of the Associated Companies as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the Ordinary Course
of Business. Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Closing Date current and collectible net of the respective
reserves shown on the 1996 Balance Sheet or on the accounting records of the
Acquired Companies as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the 1996 Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a Material adverse change in the composition of such Accounts
Receivable in terms of aging). Except as noted in Part 3.9 of the Disclosure
Letter, subject to such reserves, each of the Accounts Receivable either has
been or will be collected in full, without any set-off, within ninety days after
the day on which it first becomes due and payable. Except as set forth in Part
3.9 of the Disclosure Schedule, there is no Material contest or claim other than
returns in the Ordinary Course of Business, under any Applicable Contract with
any maker of an Accounts Receivable relating to the amount or validity of, such
Accounts Receivable. Part 3.9 of the Disclosure Letter contains a complete and
accurate list of all Accounts Receivable posted on the Company's books as of
November 30, 1996 which list sets forth the aging of such Accounts Receivable.
Pursuant to Section 5.8, the Company shall deliver to Buyer a supplement to the
Disclosure Letter which includes a list of all receipts as well as xxxxxxxx for
the period commencing on December 1, 1996 and ending on December 20, 1996.
3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of
the Disclosure Letter or as set forth in Section 3.15, the Company has no
Material liabilities or obligations of any nature (whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the 1996 Balance Sheet and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof.
3.11 Taxes.
(a) The Associated Companies filed or caused to be filed on a
timely basis all Material tax returns that are or were required to be filed by
or with respect to any of them, either separately or as a member of a group of
corporations,
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pursuant to applicable Legal Requirements. The Company has made available to
Buyer copies of, and Part 3.11 of the Disclosure Letter contains a complete and
accurate list of, all such tax returns relating to income or franchise taxes
filed since January 1, 1993. The Associated Companies have paid, or made
reasonable provision for the payment of, all Taxes that have or may have become
due pursuant to those tax returns or otherwise, or pursuant to any Material
assessment received by any Associated Company, except such Taxes, if any, as are
listed in Part 3.11(a) of the Disclosure Letter and are being contested in good
faith.
(b) Except as set forth in Part 3.11(a) of the Disclosure
Letter, since January 1, 1993, the United States federal and state income tax
returns of each Associated Company described in Section 3.11(a) have not been
audited by the IRS or relevant state tax authorities. Part 3.11 of the
Disclosure Letter contains a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter, are being contested in good faith by appropriate proceedings.
Except as described in Part 3.11 of the Disclosure Letter, no Associated Company
has given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of any Associated Company or for
which any Associated Company may be liable.
(c) All tax returns filed by (or that include on a consolidated
basis) any Associated Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment by any Associated Company after
the date of this Agreement. The Company is not, and within the five-year period
preceding the Closing Date has not been, an "S" corporation.
3.12 No Material Adverse Change. Since the date of the 1996 Balance
Sheet other than for general economic conditions or as disclosed in Part 3.12 of
the Disclosure Letter, there has not been any Material adverse change in the
business, operations, properties, assets, or condition of the Associated
Companies, taken as a whole, and no event has occurred or circumstance exists
that may result in such a Material adverse change. In addition, since the date
of the Balance Sheet, there has been no Material adverse change in the
composition of the assets.
3.13 Employee Benefits.
(a) As used in this Section 3.13, the following terms have the
meanings set forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation owed,
adopted, or followed by the Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans currently in effect or pursuant to which
the Company has ongoing Material obligations of which the Company or an ERISA
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Affiliate of the Company is or was a Plan Sponsor, or to which the Company or an
ERISA Affiliate of the Company otherwise contributes or has contributed, or in
which the Company or an ERISA Affiliate of the Company otherwise participates or
has participated. All references to Plans are to Company Plans unless the
context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the Company
or any ERISA Affiliate of the Company.
"ERISA Affiliate" means, with respect to the Company, any other person
that, together with the Company, would be treated as a single employer under
Code Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section 3(37)(A).
"Other Benefit Obligations" means all Material obligations, arrangements,
or customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of Code Section 132.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements or Code Section 401(a).
"Title IV Plans" means ail Pension Plans that are subject to Title IV of
ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under Code
5.01(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) Part 3.13(b) of the Disclosure Letter contains a complete
and accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are Qualified
Plans.
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(i) Part 3.13(b)(i) of the Disclosure Letter contains a
complete and accurate list of (A) all existing ERISA Affiliates of each
Associated Company, and (B) all Plans of which any such ERISA Affiliate is or
since January 1, 1993 was a Plan Sponsor, in which any such ERISA Affiliate
participates or since January 1, 1993 has participated, or to which any such
ERISA Affiliate contributes or has contributed since January 1, 1993.
(ii) The Associated Companies do not have any Material
liability for post-retirement benefits, other than those payable through a
Pension Plan or Other Benefit Obligation, as calculated in accordance with
Financial Accounting Statement 106 of the Financial Accounting Standards Board,
regardless of whether any Associated Company is required by this Statement to
disclose such information.
(iii) Section 3.13(b)(iii) of the Disclosure letter sets
forth the financial cost of all obligations currently owed under the Company
Plan or Company Other Benefit Obligation that is not subject to the disclosure
and reporting requirements of ERISA.
(c) The Company has made available to Buyer:
(i) all documents that set forth the terms of each
Company Plan, Company Other Benefit Obligation, or Company VEBA and of any
related trust, including (A) all plan descriptions and summary plan descriptions
of Company Plans for which the Associated Companies are required to prepare,
file, and distribute plan descriptions and summary plan descriptions, and (B)
all summaries and descriptions furnished to participants and beneficiaries
regarding Company Plans, Company Other Benefit Obligations, and Company VEBAs
for which a plan description or summary plan description is not required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(iv) all insurance policies purchased by or to provide
benefits under any Company Plan;
(v) all Material contracts with third party
administrators, actuaries, investment managers, consultants, and other persons
providing services that relate to any Company Plan, Company Other Benefit
Obligation, or Company VEBA;
(vi) all Material reports submitted within the four years
preceding the date of this Agreement by third party administrators, actuaries,
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investment managers, consultants, or other persons provided services with
respect to the Company Plan, Company Other Benefit Obligation, or Company VEBA;
(vii) all notifications to employees of their rights under
ERISA Section 601 et seq. and Code Section 4980B to the extent still available
in Company files;
(viii) the Form 5500 filed for the plan years ended
December 31, 1995, 1994 and 1993 with respect to each Company Plan, including
all schedules thereto and the opinions of independent accountants;
(ix) all notices that have been retained by the Company
that were given by any Associated Company or any ERISA Affiliate of an
Associated Company or any Company Plan to the IRS, or any participant or
beneficiary, pursuant to statute, within the four years preceding the date of
this Agreement, including notices that are expressly mentioned elsewhere in this
Section 3.13;
(x) all notices related to a Company Plan that were
given by the IRS or the Department of Labor that were addressed specifically to
any Associated Company, any ERISA Affiliate of an Associated Company, or any
Company Plan within the four years preceding the date of this Agreement; and
(xi) with respect to Qualified Plans and VEBAs, the most
recent determination letter for each Plan of the Associated Companies that is a
Qualified Plan.
(d) Except as set forth in Part 3.13(d) of the Disclosure
Letter:
(i) The Associated Companies have performed in all
Material respects all of their respective obligations to be performed as of the
date hereof under all Company Plans, Company Other Benefit Obligations, and
Company VEBAs. The Associated Companies have made appropriate entries in its
financial records and statements for all obligations and liabilities under such
Plans, VEBAs, and Obligations that have accrued but are not due.
(ii) No written statement has been made by the Company to
any Person with regard to any Plan or Other Benefit Obligation that was not in
accordance with the Plan or Other Benefit Obligation and that could have a
Material adverse economic consequence to any Associated Company or to Buyer.
(iii) The Company is unaware of any reason why the
Associated Companies, with respect to all Company Plans, Company Other Benefits
Obligations, and Company VEBAs, and each Company Plan, Company Other Benefit
Obligation, and Company VEBA are not in full compliance with ERISA, the Code,
and other applicable Laws in all Material respects including the provisions of
such Laws expressly mentioned in this Section 3.13.
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(iv) No transaction prohibited by ERISA Section 406 and
no "prohibited transaction" under Code Section 4975(c) have occurred with
respect to any Company Plan.
(v) No Associated Company has any Material liability to
the IRS with respect to any Plan, including any liability imposed by Chapter 43
of the Code.
(vi) All filings required by ERISA and the Code as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the Code have been timely provided to
the extent that a failure to so timely file or provide could have a Material
adverse effect on the Company.
(vii) Each Company Plan can be terminated within thirty
days, without payment of any additional contribution or amount over the normal
amount due under the terms of the Plan and without the vesting or acceleration
of any benefits promised by such Plan.
(viii) Other than as set forth in Part 3.13(d) of the
Disclosure Letter, since December 31, 1995, there has been no establishment or
amendment of the Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(ix) Since the 1996 Balance Sheet Date, no event has
occurred or circumstance exists that could result in a Material increase in
premium costs of Company Plans and Company Other Benefit Obligations that are
insured, or a Material increase in benefit costs of such Plans and Obligations
that are self-insured.
(x) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding involving,
the Company Plan, Company Other Benefit Obligation, or Company VEBA is pending
or threatened.
(xi) No Company Plan is a Stock bonus, pension, or
profit-sharing plan within the meaning of Code Section 401(a).
(xii) Each Qualified Plan of each Associated Company is
intended to be qualified in form and there is no reason why the Plans would not
be qualified in operation under Code Section 401(a); each trust for each such
Plan is exempt from federal income tax under Code Section 501(a). Each Company
VEBA is exempt from federal income tax. No event has occurred or circumstance
exists that will or is reasonably likely to give rise to disqualification or
loss of tax-exempt status of any such Plan or trust.
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(xiii) No Company Plan is subject to Title IV of ERISA.
(xiv) The accountants report for each Pension Plan of
each Associated Company and each ERISA Affiliate of each Associated Company
fairly presents the financial condition and the results of operations of each
such Plan in accordance with GAAP.
(xv) No Associated Company or any ERISA Affiliate of an
Associated Company has ever established, maintained, or contributed to or
otherwise participated in, or had an obligation to maintain, contribute to, or
otherwise participate in, any Multi-Employer Plan.
(xvi) Except to the extent required under ERISA Section
601 et seq. and Code Section 4980B, no Associated Company provides health or
welfare benefits for any retired or former employee or is obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(xvii) The Associated Companies have complied in all
Material respects with the provisions of ERISA Section 601 et seq. and Code
Section 4980B.
(xviii) No payment that is owed or may become due to any
director, officer, employee, or agent of any Associated Company will be
nondeductible to the Associated Companies or subject to tax under Code Section
280G or Section 4999; nor will any Associated Company be required to "gross up"
or otherwise compensate any such person because of the imposition of any excise
tax on a payment to such person.
(xix) The consummation of the Contemplated Transactions
will not result in the payment, vesting, or acceleration of any benefit.
3.14 Compliance with Legal Requirements; Governmental
Authorizations. Except as set forth in Part 3.14 of the Disclosure Letter:
(a) each Associated Company is in Material compliance with each
Legal Requirement that is or was applicable to it or to the conduct or operation
of its business or the ownership or use of any of its assets;
(b) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) is reasonably likely to constitute or
result in a Material violation by any Associated Company of, or a Material
failure on the part of any Associated Company to comply with, any Legal
Requirement, or (B) to give rise to any Material obligation on the part of any
Associated Company to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
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(c) no Associated Company has received any written notice from
any Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential Material violation of, or Material failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Associated Company to undertake, or to bear all or
any portion of the cost of, any Material remedial action of any nature.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Part 3.15(a) of the Disclosure
Letter, there is no pending Material Proceeding that has been commenced by or
against any Associated Company. In addition, no such Material Proceeding has
been threatened and (2) no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Material Proceeding. The Company has made available to Buyer copies of
all pleadings, correspondence, and other documents relating to each Material
Proceeding listed in Part 3.15(a) of the Disclosure Letter;
(b) Except as set forth in Part 3.15(b) of the Disclosure
Letter:
(i) there is no Material Order to which any of the
Associated Companies, or any of the assets owned, leased or used by any of the
Associated Companies is subject; and
(ii) no officer, director, agent, or employee of any
Associated Company is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of any Associated Company.
(c) Except as set forth in Part 3.15(c) of the Disclosure
Letter:
(i) each Associated Company is, and at all times has
been, in Material compliance with all of the terms and requirements of each
Material Order to which it, or any of the assets owned, leased or used by it, is
or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Material Order to which
the Company, or any of the assets owned, leased or used by any Associated
Company, is subject; and
(iii) no Associated Company has received at any time any
written notice from any Governmental. Body or any other Person regarding any
actual, alleged , possible or potential Material violation of, or failure to
comply with, any Material term or requirement of any Material Order to which any
Associated
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Company, or any of the assets owned, leased or used by any Associated Company,
is or has been subject.
3.16 Absence of Certain Changes and Events. Except as set forth in
Part 3.16 of the Disclosure Letter, since September 30, 1996, the Associated
Companies have conducted their businesses only in the Ordinary Course of
Business, and there has not been any:
(a) change in any Associated Company's authorized capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Associated
Company;
(c) Material increase by any Associated Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
employee (except in the Ordinary Course of Business) or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) except in the Ordinary Course of Business, adoption of, or
Material increase in the payments to or benefits under, any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of any Associated Company;
(e) damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, Materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Associated Companies, taken as a whole;
(f) entry into (i) any Material license, credit, or similar
agreement, or (ii) any Material Applicable Contract other than in the Ordinary
Course of Business;
(g) Material change in the accounting methods used by any
Associated Company; or
(h) agreement, whether oral or written, by any Associated
Company to do any of the foregoing.
3.17 Contracts; No Defaults.
(a) Part 3.17(a) of the Disclosure Letter contains a complete
and accurate list, and the Company has made available to Buyer true and complete
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copies of all Applicable Contracts providing for payment by or to the Associated
Companies in excess of $5 million, which have not been fully performed and for
which obligations are still outstanding excluding ongoing warranty obligations.
Part 3.17(a) of the Disclosure Letter sets forth information regarding such
Applicable Contracts, including the parties to the Applicable Contracts, the
date of such Applicable Contracts, the estimated backlog of such Applicable
Contracts as of the last date for which a backlog was estimated, and the
Associated Company's office where details relating to the Applicable Contracts
are located.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter no officer, director or employee, of any Associated Company is bound by
any Contract that purports to limit the ability of such officer, director, or
employee, to (A) engage in or continue any conduct, activity, or practice
relating to the business of the Company, or (B) assign to any Associated Company
or to any other Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Applicable Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and is valid and
enforceable in all Material respects in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other laws affecting creditor's rights
generally.
(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) each Associated Company is and has been in Material
compliance with all applicable terms and requirements of each Applicable
Contract;
(ii) each other Person that has any Material obligation or
liability under any Applicable Contract under which an Associated Company has or
had any rights is and at all times since December 31, 1995 has been, in Material
compliance with Material terms and requirements of such Applicable Contract.
3.18 Insurance.
(a) The Company has made available to Buyer:
(i) true and complete copies of all policies of insurance
purchased by the Company, to which any Associated Company is a party or under
which any Associated Company, or any director of any Associated Company, is or
has been covered at any time within the 10 years preceding the date of this
Agreement.
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(ii) any statement by the auditor of any Associated
Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any Material self-insurance written arrangement by or
affecting any Associated Company, including any reserves established thereunder;
(ii) all Material obligations of the Associated Companies
out of the Ordinary Course of Business to provide coverage to third parties (for
example, under leases or service agreements) and identifies the policy under
which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the 10 preceding policy years in which
there are open claims:
(i) a summary of the loss experience under each policy;
(ii) a statement describing the loss experience for all
Material claims that were self-insured as described in Section (b)(i), including
the number and aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter;
(i) All current policies purchased by the Company to
which any Associated Company is a party or that provide coverage to any
Associated Company or director or officer thereof:
(A) are valid, outstanding and enforceable in all
Material respects;
(B) will not be terminated as a result of the
consummation of the Contemplated Transactions.
(ii) No Associated Company has received (A) any refusal of
coverage, or (B) any notice of cancellation or any other indication that any
current insurance policy provided or obtained by the Company or any Associated
Company is no longer in full force or effect or that the issuer of any such
policy is not willing or able to perform its obligations thereunder.
(iii) The Associated Companies have paid all premiums due,
and have otherwise performed all of their respective Material obligations, under
each current policy provided or obtained by the Company or any Associated
Company.
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(iv) The Associated Companies have given notice to the
insurer of all Material claims that may be insured thereby.
3.19 Environmental and Occupational Safety and Health Matters.
Except as set forth in Part 3.19 of the Disclosure Letter:
(a) Each Associated Company is, and at all times since January
1, 1990 has been, in Material compliance with, and has not been and is not in
Material violation of any Environmental Law or any Occupational Safety and
Health Law. No Associated Company has any basis to expect, nor has any of them
received, any actual or threatened order, notice, or other written communication
from (i) any Governmental Body or private citizen acting in the public interest,
or (ii) the current or prior owner or operator of any Facilities, of any actual
or potential violation or failure to comply with any Environmental Law or any
Occupational Safety and Health Law, or of any actual or threatened Material
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities in which any Associated
Company has had an interest, or with respect to any property or Facility at or
to which Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by any Associated Company, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) Other than materials used by the Associated Companies in
the Ordinary Course of Business, there are no Hazardous Materials present on or
in the Environment at the Facilities or at any geologically or hydrological
adjoining property, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills (authorized or unauthorized), land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, pumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon that could reasonably be expected to
result in Material liability to the Company. No Associated Company, has
permitted or conducted, and, is not aware of, any activity conducted with
Hazardous Materials with respect to the Facilities in which the Associated
Companies have or had an interest except in Material compliance with all
applicable Environmental Laws and Occupational Safety and Health Laws. There are
no landfills, dumps or deposits to land containing Hazardous Materials on any of
the Facilities or any other real properties or assets in which any Associated
Company has or had an interest.
(c) There has been no Release or reasonable threat of Release,
of any Hazardous Materials at or from the Facilities or at any other locations
where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
or from or by any other properties and assets (whether real, personal, or mixed)
in which any Associated Company has or had an interest, any geologically or
hydrological
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adjoining property, by any Associated Company, or any other Person, except in
Material compliance with Environmental Laws.
(d) The Company has made available to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by any Associated Company, with Environmental Laws.
3.20 Employees.
(a) No current key employee or current director of any
Associated Company is a party to, or is otherwise bound by, any agreement or
arrangement that in any way adversely affected, affects, or will affect (i) the
performance of his duties as an employee or director of the Associated Companies
or (ii) the ability of any Associated Company to conduct its business. No
director, officer, or other key employee of an Associated Company intends to
terminate his employment with such Associated Company in the immediate future.
3.21 Labor Disputes; Compliance. Other than as set forth in Part
3.21 of the Disclosure Letter,
(a) no Associated Company has been or is a party to any
collective bargaining Contract;
(b) there is no presently pending or existing, and there is not
threatened any strike, slowdown, picketing, work stoppage,, labor arbitration or
proceeding in respect of the grievance of any employee, charge or complaint
filed by an employee or union with the National Labor Relations Board or any
comparable Governmental Body, organizational activity, or other labor dispute
against or affecting any of the Associated Companies or their Facilities, and no
application for certification of a collective bargaining agent is pending or is
threatened;
(c) no event has occurred or circumstance exists that is
reasonably likely to provide the basis for any Material work stoppage or other
Material labor dispute;
(d) there is no lockout of any employees by any Associated
Company, and no such action is contemplated by any Associated Company;
(e) the Associated Companies have complied in all Material
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, the payment
of social security and similar taxes, occupational safety and health; and
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(f) no Associated Company is liable for the payment of any
Material taxes, fines, penalties, or other amounts, however designated, for
failure to comply with any of the foregoing Legal Requirements.
3.22 Certain Payments. Since January 1, 1994, neither an Associated
Company nor any director, officer, agent, or employee of an Associated Company,
or any other Person acting for or on behalf of an Associated Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services in Material
violation of any Legal Requirement (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any Affiliate of the Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of an Associated Company.
3.23 Disclosure.
(a) The representations and warranties of the Company in this
Agreement together with the Disclosure Letter taken as a whole do not contain
any untrue statement of a Material fact and do not omit to state a Material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a Material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
(c) There is no fact that has specific application to an
Associated Company (other than general economic or industry conditions) and that
Materially adversely affects the assets, business, prospects, financial
condition, or results of operations of the Associated Companies that has not
been set forth in this Agreement, the Disclosure Letter, or the Financial
Statements.
3.24 Brokers or Finders. Except as set forth in Part 3.24 of the
Disclosure Letter, the Associated Companies and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
4. Representations and Warranties of Buyer. Buyer represents and
warrants to the Company as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
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4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of this Agreement and the Rights
Agreement (collectively, the "Buyer's Closing Documents"), the Buyer's Closing
Documents will constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditor's rights generally. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the Rights
Agreement and to perform its obligations under this Agreement and the Rights
Agreement.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or
the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which
Buyer may be bound.
Other than as required by the HSR Act with regard to the Tendered Shares
to be acquired at the Second Closing, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 Investment Intent; Investigation.
(a) Buyer is familiar with the business and financial
condition, properties, operations and prospects of the Company. Buyer has been
given full access to all Material information concerning the condition,
properties, operations and prospects of the Company and its subsidiaries. Buyer
has had an opportunity to ask questions of, and to receive information from, the
Company and persons acting on its behalf concerning the terms and conditions of
Buyer's investment in the Shares, and to obtain any additional information
necessary to verify and accuracy of the
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information and data received by Buyer. The Buyer has had an opportunity to
discuss with Company the financial statements delivered to the Buyer.
(b) Buyer has made such independent investigation of the
Company and its subsidiaries, its management, and related matters as the
undersigned deems to be necessary or advisable in connection with this
investment; and the undersigned has received all information and data which the
undersigned has requested from the Company and which Buyer believes to be
necessary in order to reach an informed decision as to the advisability of
investing in the Shares.
(c) Buyer understands that the purchase of the Shares involves
various risks, including those outlined in this Agreement. Among other risks,
Buyer understands that it is unlikely that any market will exist for any resale
of the Shares and that the Shares will be subject to restrictions on transfer as
set forth in the Company's Third Restated Articles of Incorporation.
(d) THE BUYER IS ACQUIRING THE SHARES SOLELY FOR ITS OWN
BENEFICIAL ACCOUNT, FOR INVESTMENT PURPOSES, AND NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION OF THE SHARES. The Buyer
understands that the Shares have not been registered under the Securities Act,
or the securities laws of any state (collectively referred to as "State
Securities Laws") by reason of specific exemptions under the provisions thereof
which depend in part upon the investment intent of the undersigned and of the
other representations made by the undersigned in this Agreement. Buyer
understands that the Company is relying upon the representations and agreements
contained in this Agreement (and any supplemental information) for the purpose
of determining whether this transaction meets requirements for such exemptions.
(e) Buyer understands that the Shares are "restricted
securities" under the Securities Act and that the Securities Act and the rules
of the Securities and Exchange Commission (the "Commission") provide in
substance that the undersigned may dispose of the Shares only pursuant to an
effective registration statement under the Securities Act or an exemption
therefrom, and understands that the Company has no obligation or intention to
register any of the Shares thereunder, or to take action so as to permit sales
pursuant to the Securities Act. Accordingly, Buyer understands that under the
Commission's rules the undersigned may dispose of the Shares principally only in
"private placements" which are exempt from registration under the Securities
Act, in which event the transferee will acquire "restricted securities" subject
to the same limitations as in the hands of the undersigned. As a consequence,
Buyer understands that it must bear the economic risks of the investment in the
Shares for an indefinite period of time.
(f) Buyer is a corporation with total assets in excess of
$5,000,000.
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4.4 Certain Proceedings. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the Buyer's Knowledge, no such Proceeding has been
threatened.
4.5 Brokers or Finders. Buyer has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commission or other similar payment or connection with this Agreement.
4.6 Consent. Buyer hereby consents to the Company granting stock
options, stock bonuses and similar rights to purchase shares of the common stock
of the Company in excess of the number of shares of common stock of the Company
which is equal to 30% of the outstanding shares of common stock of the Company.
5. Covenants of the Company Prior and Subsequent to First Closing
Date.
5.1 Access and Investigation. Between the date of this Agreement
and the First Closing Date, the Company will, and will cause the Associated
Companies and their Representatives to (a) afford Buyer and its Representatives
free and full access to the Company's management to discuss the Company's
business operations, assets, liabilities, actual or potential litigation and
claims, properties and prospects with the Company's employees, agents,
accountants, attorneys, customers, suppliers, and other persons having business
dealings with the Company or knowledge of the issues, (b) afford Buyer and its
Representatives full and free access to the Company's properties (including
subsurface testing), contracts, books and records, and other documents and data,
(c) furnish Buyer and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request and (d) furnish Buyer with such additional financial, operating, and
other data and information as Buyer may reasonably request in the Company's
possession or control, or as to which the Company has Knowledge.
5.2 Operation of the Business of the Company. Between the date of
this Agreement and the First Closing Date, the Company will, and will cause the
Associated Companies, unless the Company obtains the written consent of Buyer
(which shall not be unreasonably withheld or delayed) to:
(a) conduct the business of the Associated Companies only in
the Ordinary Course of Business;
(b) not declare any extraordinary dividends;
(c) not pay any incentives or bonuses not normally given within
the Ordinary Course of Business nor pay or grant any out of the ordinary
compensation increases;
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(d) use their Best Efforts to preserve intact the current
business organization of the Associated Companies, keep available the services
of the current officers and employees of the Associated Companies, and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Associated
Companies;
(e) otherwise report to Buyer as reasonably requested
concerning the status of the business, operations and finances of the Associated
Companies.
5.3 Negative Covenant. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and First Closing Date, the
Company will not, and will cause the Associated Companies not to, without the
prior consent of Buyer, which shall not be unreasonably withheld or delayed,
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
Section 3.16 is likely to occur.
5.4 Required Approvals. As promptly as practicable after the First
Closing Date the Company will make all filings required by Legal Requirements to
be made by it in order to consummate the Contemplated Transactions (including
all filings under the HSR Act). Between the date of this Agreement and each
Closing Date, the Company will (a) cooperate with Buyer with respect to all
filings that Buyer elects to make or is required by Legal Requirements to make
in connection with the Contemplated Transactions and (b) cooperate with Buyer in
obtaining early termination of any applicable waiting period under the HSR Act).
5.5 Notification. Between the date of this Agreement and the Second
Closing Date, the Company will promptly notify Buyer in writing if the Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any representations and warranties of the Company, or if the Company becomes
aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Disclosure Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, the Company will promptly
deliver to Buyer a supplement to the Disclosure Letter specifying such change.
During the same period, the Company will promptly notify Buyer of the occurrence
of any Breach of any covenant in this Section 5 or of the occurrence of any
event that may make the satisfaction of the conditions in Section 7 or 9
impossible or unlikely.
5.6 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, the Company will not, and will cause the
Associated Companies and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate
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with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business, or assets (other than in
the Ordinary Course of Business) of the Company or any of the capital stock of
the Company (other than pursuant to currently outstanding stock options held by
employees of the Company), or any merger, consolidation, business combination or
similar transaction involving the Company.
5.7 Best Efforts. Between the date of this Agreement and the Second
Closing Date, the Company will use its Best Efforts to cause the conditions in
Sections 7 and 9 as applicable, respectively to be satisfied.
5.8 Supplements to Disclosure Letter. The Company shall have the
right, from time to time, on or prior to the First Closing Date, to supplement
the Material set forth in the Disclosure Letter initially delivered by the
Company to Buyer. Any references in this Agreement or in any other document
entered into in connection with this Agreement to the Disclosure Letter shall be
mean the Disclosure Letter as fully amended and supplemented on or prior to the
First Closing Date.
5.9 Solicitation of Shareholders. Subject to Legal Requirements, as
promptly as practicable after the determination of the Purchase Price, the
Company shall prepare necessary documentation and take all actions necessary to
solicit the Shareholders for the tender of the Tendered Shares and to cause the
release of funds and the Tendered Shares pursuant to the terms of the Escrow
Agreement.
6. Covenants of Buyer Prior to Second Closing Date.
6.1 Access to Information. Between the date of this Agreement and
the First Closing Date, Buyer will afford the Company full and free access, upon
the request, to copies of Buyer's public filings under the Securities Act, the
Exchange Act, and other information the Company shall reasonably request.
6.2 Approvals of Governmental Bodies. As promptly as practicable
after the First Closing Date, Buyer will make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Second Closing Date, Buyer will (a) cooperate with the Company with
respect to all filings that the Company elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions and (b)
cooperate with the Company in obtaining all consents identified in Part 3.2(b)
of the Disclosure Letter (including taking all actions requested by the Company
to cause early termination of any applicable waiting period under the HSR Act.)
6.3 Best Efforts. Between the date of this Agreement and the Second
Closing Date, Buyer will use its Best Efforts to cause the conditions in
Sections 7, 8 and 9 as applicable, respectively to be satisfied.
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6.4 Notification. Between the date of this Agreement and the Second
Closing Date, the Buyer will promptly notify the Company in writing if the Buyer
becomes aware of any fact or condition that causes or constitutes a Breach of
any representations and warranties of the Company or the Buyer, or if the Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, the Buyer will promptly
notify the Company of the occurrence of any Breach of any covenant of the Buyer
in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 or 9 impossible or unlikely.
6.5 Solicitation of Shareholders. Following the determination of
the Purchase Price, Buyer shall fully cooperate with the Company to facilitate
the solicitation of the Shareholders for the tender of the Tendered Shares and
to cause the release of funds pursuant to the terms of the Escrow Agreement.
7. Conditions Precedent to Buyer's Obligation to Close. Buyer's
obligation to purchase the Shares and to take the other actions required to be
taken by Buyer at the First Closing is subject to the satisfaction, at or prior
to the First Closing, of each of the following conditions (any of which may be
waived by Buyer, in whole or in part):
7.1 Accuracy of Representations. Each of the representations and
warranties in Section 3 of this Agreement must have been accurate in all
Material respects as of the date of this Agreement, and must be accurate in all
Material respects as of the First Closing Date as if made on the First Closing
Date.
7.2 Completion of Investigations, Inspections and Studies. Buyer
has performed or caused the performance of any and all investigations,
inspections and studies including financial, environmental, title and asset and
liability condition, the methods and results of all of which it deems
satisfactory in its sole discretion. In addition, Buyer has performed any and
all investigations and inspections as to: financial matters, insurance, employee
benefit plans, including job cost and estimates; legal matters, including review
of pending or potential claims or suits (of whatever type for and against the
Company), and review of contracts and other documents; environmental matters,
including site assessments; equipment and plant appraisals, verification of
reserves; and real property, including appraisals, the results of which must be
satisfactory to Buyer in its sole discretion and will include, but not be
limited to, interviews with the Company's key employees and review of backlog
and projects.
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7.3 The Company's Performance.
(a) All of the covenants and obligations that the Company is
required to perform or to comply with pursuant to this Agreement at or prior to
the First Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all Material respects.
(b) The Company must have delivered each of the documents
required to be delivered pursuant to Section 2.5, and each of the other
covenants and obligations in Section 5 required to be performed by the Company
must have been performed and complied with in all Material respects.
7.4 Consents. Each of the Consents required to be obtained to
consummate the transactions contemplated by this Agreement must have been
obtained and must be in full force and effect.
7.5 Additional Documents. The Company must have caused the
following documents to be delivered to Buyer:
(a) an opinion of counsel to the Company, dated the Closing
Date, in the form reasonably acceptable to Buyer; and
(b) such other documents as Buyer may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of the Company's
representations and warranties, (iii) evidencing the performance by the Company
of, or the compliance by the Company with, any covenant or obligation required
to be performed or complied with by the Company, (iv) evidencing the
satisfaction of any condition referred to in this Section 7 or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
7.6 No Proceedings. Since the date of this Agreement, there must
not have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated Transactions
or (b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
7.7 Disclosure Letter. The Company shall have provided Buyer full
and complete and final copies of the Disclosure Letter which shall be acceptable
to Buyer in its sole discretion.
7.8 Election of Additional Directors. Xxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxxx shall have been duly elected to
the Board of Directors of the Company, effective as of the First Closing. At the
First
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Closing, the members of the Board of directors of the Company shall be X.X.
XxXxxxxx, Xxxxxxx X. Xxxxx, Xxxx X. Xxxx, Xxxxx X. Xxxxxxxxxx, Xxxx X. Xxxxxx,
Xxxx X. XxXxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxx X. Xxxx, Xxxxx
Xxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxxxxx.
8. Conditions Precedent to the Company's Obligation to Close. The
Company's obligation to sell the Shares and to take the other actions required
to be taken by the Company at the First Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by the Company, in whole or in part):
8.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all Material respects as of the date of this Agreement and must be
accurate in all Material respects as of the First Closing Date as if made on the
First Closing Date.
8.2 Buyer's Performance.
(a) All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the First
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
Material respects.
(b) Buyer must have delivered each of the documents required to
be delivered by Buyer pursuant to Section 2.5 and must have paid the Minimum
Purchase Price for the Shares required to be paid by Buyer pursuant to Section
2.
8.3 Consents. Each of the Consents required to be obtained to
consummate the transactions contemplated by this Agreement must have been
obtained and must be in full force and effect.
8.4 Additional Documents. Buyer must have caused the following
documents to be delivered to the Company:
(a) opinions of Xxxx Xxxx Xxxx & Freidenrich, dated the Closing
Date, in the form reasonably acceptable to the Company; and
(b) such other documents as the Company may reasonably request
for the purpose of (i) enabling their counsel to provide the opinion referred to
in Section 7.5(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by
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Buyer, (iv) evidencing the satisfaction of any condition referred to in this
Section 8 or (v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 No injunction. There must not be in effect any Legal
Requirement or any injunction or other Order that prohibits the issuance and
sale of the Shares to Buyer.
9. Additional Conditions Precedent to Buyer's and the Company's
Obligation to Close at Second Closing.
9.1 Consents. All required consents, including any required
consent under the HSR Act, shall have been obtained.
9.2 No Material Adverse Change. There shall have been no Material
Adverse Change in the Associated Companies and the Company shall have delivered
certificate to Buyer so certifying.
9.3 Completion of Tender Offer. The Tender Offer shall have been
completed in accordance with applicable law and all obligations of Buyer, the
Company and the holders of the Tendered Shares set forth in the Escrow Agreement
and documents relating to the Tender Offer shall have been satisfied.
9.4 Opinion of Xxxxx, Johnson, Robinson, Xxxx & Xxxxxxxxx, P.C.
("Company Counsel"). Buyer shall have received an opinion from Company Counsel
reasonably satisfactory to Buyer as to matters not provided in the opinion(s)
delivered to Buyer at the First Closing.
10. Termination.
10.1 Termination Events. This Agreement may, by written notice, be
terminated:
(a) at or prior to the First Closing by either Buyer or the
Company if a Material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been waived;
(b) at or prior to the First Closing:
(i) By Buyer if any of the conditions in Section 7 has
not been satisfied as of the First Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not waived such
condition on or before the First Closing Date; or
(ii) By the Company, if any of the conditions in Section 8
has not been satisfied as of the First Closing Date or if satisfaction of such a
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condition is or becomes impossible (other than through the failure of the
Company to comply with its obligations under this Agreement) and the Company has
not waived such condition on or before the First Closing Date;
(c) at or prior to the Second Closing;
(i) By Buyer if any of the conditions in Section 9 has
not been satisfied as of the Second Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of the
Company to comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Second Closing Date;
(ii) By the Company if any of the conditions in Section 9
has not been satisfied as of the Second Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of the
Company to comply with its obligations under this Agreement) and the Company has
not waived such condition on or before the Second Closing Date;
(d) by mutual consent of Buyer and the Company; or
(e) at any time after the Termination Date by either Buyer or
the Company if either Closing has not occurred (other than through the failure
of any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before the Termination Date, or such
later date as the parties may agree upon.
10.2 Effect of Termination. Each party's right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
further obligations of the parties under this Agreement will terminate;
provided, however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
11. General Provisions.
11.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel and accountants. Buyer will be responsible for
payment of its own expenses and the Company will be responsible for payment of
the
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Company's expenses, except, provided however, that the Company shall pay
reasonable fees of Xxxx Xxxx Xxxx & Freidenrich, counsel to Buyer, not to exceed
$15,000 that are incurred in connection with the Tender Offer. All accounting
expenses of the Company, shall be deemed to be ordinary business expenses of the
Company and shall be paid by the Company.
11.2 Public Announcements. Neither party shall issue any press
release or make any public announcement related to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
party; provided, however, that any party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning the publicly-traded securities of such party (in which case
the disclosing party will use its reasonable best efforts to advise the other
party prior to making the disclosure). The Company and Buyer will consult with
each other concerning the means by which the Company's employees, customers and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions.
11.3 Confidentiality. Between the date of this Agreement and five
(5) years after the Closing Date, Buyer and the Company will maintain in
confidence, and will cause the directors, officers, employees, agents, and
advisors of Buyer and the Company to maintain in confidence, and not use to the
detriment of another party or the Company any written, oral, or other
information obtained in confidence from another party or the Company in
connection with this Agreement or the Contemplated Transactions, expressly
including the reports of all consultants retained pursuant to the terms of this
Agreement, unless (a) such information becomes publicly available through no
fault of such party, (b) the use of such information is necessary or appropriate
in making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is legally required.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
11.4 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed within three business days by registered mail, return
receipt requested, (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested) or (d) three business
days after being sent by registered or certified mail, return receipt requested,
in each case to the appropriate addresses and facsimile numbers set forth below
(or to such other addresses and facsimile numbers as a party may designate by
notice to the other parties):
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The Company: TIC Holdings, Inc.
00000 Xxxxxx Xxxx 000
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
FAX No.: (000) 000-0000
with a copy to: Xxxxx, Johnson, Robinson,
Xxxx & Ragonetti, P.C.
1800 Colorado National Building
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
FAX No.: (000) 000-0000
Buyer: Granite Construction Company
P. O. Xxx 00000
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Legal Department
FAX No.: (000) 000-0000
with a copy to: Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
FAX No.: (000) 000-0000
11.5 Binding Arbitration; Service of Process. In the event of a
dispute between the parties related to or arising out of this Agreement or the
Rights Agreement, representatives of the parties will meet promptly in an effort
to resolve the dispute amicably. If the parties cannot agree upon a resolution
within thirty days of either party requesting a meeting for resolution of a
dispute, then the matter will promptly be submitted to binding arbitration in
accordance with this Section 11.5.
(a) Arbitration will be held in Denver, Colorado, in
accordance with the rules and regulations of the American Arbitration
Association. The number of arbitrators will be one (1) for disputes less than
$200,000 and three (3) for all other disputes and will be selected in accordance
with the rules and regulations of the American Arbitration Association. The
determination of the arbitrator will be conclusive and binding upon the parties,
and any determination by the arbitrator of an award may be filed with the clerk
of a court of competent jurisdiction as a final adjudication of the claim
involved, or application may be made to such court for judicial acceptance of
the award and an order of enforcement, as the case may be. Except to the extent
otherwise directed by the arbitrator, each party will bear its own expenses,
including legal and accounting fees, if any, with respect to the
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arbitration, and one-half of the costs of the arbitrator and of the fees imposed
by the American Arbitration Association.
(b) In any arbitration hereunder, the demand for arbitration
shall specifically delineate the claims asserted and the Material issues with
respect thereto. Within thirty days after filing a demand for arbitration,
claimant shall provide to respondent a list of all fact witnesses known to
claimants the names and curriculum vitae of each expert witness anticipated to
be called by claimant, and a copy of relevant documents. Within thirty days
after receipt of the foregoing information, respondent shall provide to claimant
a list of all fact witnesses known to respondent, the names and curriculum vitae
of each, expert witness anticipated to be called by respondent, and a copy of
relevant documents known to respondent. Within ten days after discovery has been
closed by the arbitrator (but in no event later than sixty days prior to the
arbitration hearing), claimant shall present to respondent a list of all fact
and expert witnesses anticipated to be called by claimant, a summary of the
substance of each such witness' testimony, and a list of all documents
anticipated to be introduced by claimant (and a copy of such documents if not
previously provided to respondent). Within thirty days after receipt of the
foregoing information, respondent shall present to claimant a list of all fact
and expert witnesses anticipated to be called by respondent, a summary of the
substance of each such witness' testimony and a list of all documents
anticipated to be introduced by respondent (and a copy of such documents if not
previously provided to claimant). Any award by the arbitrator shall be subject
to all dollar and other limitations set forth in this Agreement.
(c) A demand for arbitration may be served on Buyer or the
Company by certified U.S. Mail, postage prepaid, or reliable overnight delivery
service, to the address set forth in Section 11.4 hereof.
11.6 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents and (c) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.7 Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except
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in the specific instance for which it is given and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
11.8 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify, defend with counsel reasonably satisfactory to Buyer
and hold harmless Buyer, its officers, directors, employees and agents (each an
"Indemnified Party"), from and against (i) any and all claims, demands, causes
of action arising in connection with the solicitation and purchase of the
Tendered Shares, except in the case of willful misconduct or gross negligence on
the part of an Indemnified Party, or (ii) any loss, liability, damages, expenses
incurred by any Indemnified Party as a result of any action by the Company or by
a Shareholder or breach by the Company or a Shareholder of a representation or
warranty contained in any document of transfer related to the Tendered Shares.
11.9 Entire Agreement and Modification, Survival of Representations
and Warranties. This Agreement supersedes all prior agreements between the
parties with respect to its subject matter (including the Draft Summary of Terms
of Proposed Investment by Granite Construction, Inc. ("Granite") in TIC
Holdings, Inc. ("TIC"), and constitutes (along with the exhibits and other
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment. The representations and
warranties contained in Section 3 of this Agreement shall survive until the
third anniversary of the First Closing. The agreements and covenants contained
in this Agreement, including all obligations to provide indemnification, shall
survive the Closings until full performance thereof.
11.10 No Personal Liability. Buyer agrees that no officer,
director, employee or agent of the Company, shall be subject to personal
liability in connection with this Agreement, other than in the event of fraud.
11.11 Assignments, Successors and No Third Party Rights. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other party, which will not be unreasonably withheld, if such
rights are of a purely financial nature without strategic implications, except
that Buyer may assign any of its rights under this Agreement to Granite
Construction Company, but Buyer will not be relieved of its obligations
hereunder as a result of such assignment. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole
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and exclusive benefit of the parties to this Agreement and their successors and
assigns.
11.12 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
11.13 Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Sections" refer to the
corresponding Sections of this Agreement. All words used in this Agreement will
be construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
11.14 Time of Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
11.15 Governing Law. This Agreement will be governed by and
construed under the laws of the State of Colorado without regard to conflicts of
laws principles.
11.16 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"Buyer":
GRANITE CONSTRUCTION INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx By : /s/ Xxxxxxx Xxxxx
------------------------------- --------------------------
Printed Name: Xxxxxxx X. Xxxxxx Xxxxxxx Xxxxx
Title: Vice President and Vice President and General
Chief Financial Officer Counsel and Secretary
"The Company":
TIC HOLDINGS, INC.
By: /s/ X. X. XxXxxxxx
--------------------------
Printed Name: X. X. XxXxxxxx
Title: President
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COOPERATION AND RIGHTS AGREEMENT
This Cooperation and Rights Agreement (this "Agreement") is entered into
as of December 23, 1996 (the "Effective Date"), by and among Granite
Construction Incorporated, a Delaware corporation ("Granite"), TIC Holdings,
Inc., a Colorado corporation (the "Company") and the shareholders of the Company
listed on Exhibit A hereto (the "Holders"). Unless otherwise indicated,
capitalized terms have the meanings ascribed to them in that certain Stock
Purchase Agreement of even date herewith between Granite and the Company (the
"Purchase Agreement"). Granite, the Company and the Holders are collectively
referred to herein as the "Parties".
RECITALS
A. As of September 30, 1996 the Company had authorized 5,000,000 shares of
stock, of which 2,000,000 shares have been classified as Preferred Stock, none
of which are outstanding, 2,500,000 shares have been classified as Class A
Common Stock, of which 771,379 shares were outstanding as of September 30, 1996,
and 500,000 shares have been classified as Class B Common Stock, none of which
are outstanding. Immediately prior to the First Closing under the Purchase
Agreement, the Holders hold 291,133 shares of the Company's outstanding Class A
Common Stock. Class A common stock, Class B common stock, Preferred Stock and
all other classes of stock authorized and issued by the Company (consistent with
Section 5 of this Agreement) (all section references are to the sections of this
Cooperation and Rights Agreement, unless otherwise indicated) are collectively
referred to herein as "Stock".
B. Granite is purchasing from the Company and from shareholders of the
Company 257,126 shares of the Company's Class A Common Stock ("Granite Shares")
pursuant to the Purchase Agreement.
C. The Company, the Holders and Granite desire to set forth certain rights
and obligations of the Parties as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Right of Maintenance; Right to Acquire 51%; Standstill.
1.1 The Right to Purchase Adjustment Stock and Majority Stock. The
Company hereby grants to Granite the right to purchase from the Company all or
any part of the Adjustment Stock (as defined in Section 1.2), if any, within
thirty (30) days after October 31 of each year during the five years after the
Effective Date and in addition, the right to purchase from the Company the
Majority Stock (as defined in Section 1.2) within the one month period
commencing on the sixth anniversary of the Effective Date, provided that neither
the Company nor Granite has exercised their rights pursuant to Sections 6.1 or
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6.2 of this Agreement (or given notice of their intent to exercise such rights)
as of the date of any purchase of Adjustment Stock or Majority Stock. The
purchase price per share for each share of Adjustment Stock and Majority Stock
shall equal the Designated Purchase Price (as defined in Article VI.A. of the
Company's Third Restated Articles of Incorporation (the "Restated Articles"))
used to transfer shares under Article VI of the Restated Articles as of the date
of each respective purchase of Adjustment Stock or Majority Stock by Granite
hereunder and shall be paid to the Company by wire transfer on or before the
applicable date that Granite's right to purchase such shares under this Section
1.1 expires, if and to the extent Granite elects to purchase such shares.
1.2 Adjustment Stock and Majority Stock. "Adjustment Stock" shall
mean that number of shares of the Company's Class A Common Stock (rounded to the
nearest whole share) which, when issued and sold to Granite, will result in
Granite owning 30% of the total number of outstanding shares of the Company's
Stock entitled to vote ("Voting Stock") immediately after Granite purchases such
Voting Stock based upon the Voting Stock outstanding as of October 31 of such
year. "Majority Stock" shall mean that number of shares of the Company's Class A
Common Stock (rounded to the nearest whole share) which, when issued and sold to
Granite, will result in Granite owning 51% of the Voting Stock immediately after
Granite purchases such Voting Stock based upon the Voting Stock outstanding as
of October 31, 2002.
1.3 Notice. Between October 31 and November 10 of each year,
beginning in the year after the Effective Date, the Company shall provide
Granite with written notice as to the number of shares of Adjustment Stock or
Majority Stock, as the case may be, that may be purchased by Granite in such
year, together with the basis for such calculation and the then effective
Designated Purchase Price.
1.4 Standstill. Notwithstanding any other provision herein to the
contrary, other than upon the exercise of its rights pursuant to Section 2
below, pursuant to Section VI.C.2 of the Restated Articles or upon receipt of
the prior written consent of the Company, Granite agrees not to acquire more
than 49.9% of the Voting Stock of the Company that is issued and outstanding
during the five year period commencing on the Effective Date.
1.5 Contingent Waiver of Rights. The Parties do not intend to
qualify as a "Controlled Group of Corporations" under Section 1563 of the
Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of this
stated intent:
(a) Company Waiver. The Company hereby waives its rights under
Article VI of the Restated Articles to purchase the Stock held by the
shareholders of the Company listed on Exhibit B attached hereto (the "Waiver
Shareholders"), if and to the extent such waiver is necessary to avoid Granite
and the Company Qualifying as a "Controlled Group of Corporations" under Section
1563 of the Code. This waiver shall be irrevocable as to each Waiver Shareholder
without the prior written consent of such Waiver Shareholder and Granite.
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(b) Granite Waiver. Granite hereby waives its rights, if any,
under Article VI of the Restated Articles to purchase the Stock from the Waiver
Shareholders, if and to the extent such waiver is necessary to avoid Granite and
the Company qualifying as a "Controlled Group of Corporations" under Section
1563 of the Code. This waiver shall be irrevocable as to each Waiver Shareholder
without the prior written consent of such Waiver Shareholder and the Company.
(c) To the extent the waivers described in Sections 1.5(a) and
1.5(b), above, are collectively insufficient to avoid Granite and the Company
qualifying as a Controlled Group of Corporations, the Company hereby waives its
rights under Article VI of the Restated Articles and Granite hereby waives its
rights, if any, under Article VI of the Restated Articles to purchase Stock from
any of the Shareholders of the Company who are also employees of the Company,
other than the Waiver Shareholders (the "Employee Shareholders"), as specified
hereafter. The maximum number of shares of Stock to which this waiver applies
shall be the minimum number of shares of Stock held by Employee Shareholders as
may be necessary to avoid Granite and the Company qualifying as a Controlled
Group of Corporations under Section 1563 of the Code. The number of shares of
Stock held by any Employee Shareholder which is subject to the waiver shall be
the total number of shares of Stock held by such Employee Shareholder multiplied
by a fraction, the numerator of which is the total number of shares of Stock
subject to this waiver and the denominator of which is the total number of
shares of Stock owned by the Employee Shareholders. This waiver provided in this
Section 1.5(c) shall apply only in the event that the waivers described in
Sections 1.5(a) and 1.5(b), above, are collectively insufficient to avoid
Granite and the Company qualifying as a Controlled Group of Corporations and, in
such event, this waiver shall be in addition to the waivers set forth in Section
1.5(a) and 1.5(b), above. The waiver contained in this Section 1.5(c) shall be
irrevocable.
(d) The provisions of this Section 1.5 shall be interpreted in
such a manner as to be consistent with the objective of Granite and the Company
not qualifying as a Controlled Group within the meaning of Section 1563 of the
Code.
1.6 Company Undertaking. At all times that Granite holds less than
51% of the issued and outstanding shares of the voting stock of the Company, the
Company agrees that it shall not, without Granite's prior written consent,
redeem or repurchase shares of its voting stock, if upon the completion of such
redemption or repurchase Granite would own or be considered to own for purposes
of Code Section 1563, eighty percent (80%) or more of the Company's voting
stock.
2. Right of First Offer in the Event of a Proposed Sale to Third
Parties.
(a) For as long as (i) Granite holds at least fifteen percent (15%)
of the Voting Stock of the Company, but less than 75% of the Voting Stock of the
Company and (ii) neither the Company nor Granite has exercised their rights
pursuant to Sections 6.1 or 6.2 of this Agreement (or given notice of their
intent to exercise such rights), the Company hereby grants to Granite, subject
to Section 2(b)(i)(B) below, the right to purchase: (A) any
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Stock or any securities evidencing an ownership interest in the Company, or any
securities convertible into, exchangeable for or exercisable for Stock or any
securities issuable pursuant to any agreement or commitment to issue Stock (the
"Securities") or (B) the assets ("Assets") offered for sale in connection with
the sale of all or substantially all of the assets of the Company, which
Securities or Assets the Company may, from time to time, propose to issue or
sell to persons or entities other than Granite ("Third Parties"), whether in an
effort to raise capital through the issuance of new Securities or pursuant to a
sale of the Company by reason of merger, reorganization to avoid bankruptcy,
acquisition or asset sale. If Granite exercises the right to purchase described
herein, the purchase price and all other transaction terms shall be equivalent
to those proposed to be offered to the Third Parties.
(b) Procedure.
(i) Each time the Company proposes to offer Securities or
Assets to a Third Party, the Company shall first make an offering of such
Securities or Assets to Granite in accordance with the following provisions:
(A) The Company shall deliver a notice ("Notice") to
Granite stating (i) its bona fide intention to offer such Securities or Assets
to a Third Party, (ii) the description of Securities or Assets to be offered and
(iii) the price and terms, if any, upon which it proposes to offer such
Securities or Assets.
(B) Within 20 calendar days after receipt of the Notice,
Granite may elect to purchase or obtain, at the price and on the terms specified
in the Notice, all of the Securities or Assets offered by delivery of written
notice of such election to the Company, provided however, that if the proposed
sale is of Securities for purposes of raising capital for the Company, Granite
may elect to purchase either (i) all of such Securities, or (ii) up to 30% of
such Securities if the Third Parties continue to be willing to purchase the
remainder of the offering.
(ii) If Granite does not timely elect to purchase all of the
Securities or Assets which Granite is entitled to obtain pursuant to Section
2(b)(i) above, the Company may, during the 180-day period following the
expiration of the period provided in subsection (i) hereof, offer the remaining
unsubscribed portion of such Securities or Assets to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than, those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Securities or Assets within such 180 day period, or if such
agreement is not consummated within 90 days of the execution thereof, the right
provided hereunder shall be deemed to be revived and such Securities or Assets
shall not be offered unless first re-offered to Granite in accordance with the
terms of this Section 2.
(c) Granite Transferees. In addition to any limitations or
restrictions contained in the Restated Articles, any person or entity acquiring
Stock from or through Granite will be subject to all the obligations,
restrictions, limitations and other duties of Granite contained in this
Agreement. No transfer of any Stock held by Granite shall serve
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to terminate, cancel, alter, amend, diminish or otherwise affect the rights of
the Company, the Holders or the shareholders of the Company other than Granite
(the "Non-Granite Shareholders") referenced in this Agreement.
(d) Stock Rights of Holders. No part of this Agreement (including,
but not limited to this Section 2) shall preclude the Company from issuing stock
options or stock bonuses and/or from selling Stock to its employees (and the
employees of the Associated Companies) subject to approval by the Board of
Directors and consistent with the past practices of the Company and any such
issuance shall not be subject to Granite's Right of First Offer set forth in
this Section 2.
3. Voting Rights.
3.1 Election of Members of the Board of Directors. Provided neither
the Company nor Granite has exercised their rights (or given notice of their
intent to exercise their rights) pursuant to Section 6.1 or 6.2 of this
Agreement, with respect to any proposal concerning the election of directors of
the Company, the Parties agree as follows:
(a) Representatives of Granite. At all times following Granite's
purchase of the Granite Shares in accordance with the Purchase Agreement, the
Company and the Holders agree to cause to be nominated, and each of the Holders
agrees to vote all shares of the Company's Voting Stock then owned by such
Holder to elect the nominees of Granite to the Board of Directors of the
Company; provided, however, that the Company and the Holders shall not be
required to nominate and no Holder shall be required to vote such Holder's
shares for more than that number of Granite designees equal to the total number
of directors then authorized and serving multiplied by the percentage of shares
of Voting Stock of the Company then held by Granite or its affiliates, rounded
to the nearest whole number. Granite designates Xxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxxx as its initial designees and
the Holders and the Company shall cause such persons to be elected by the
current Board of Directors effective upon the First Closing of Granite's
purchase of the Granite Shares in accordance with the terms of the Purchase
Agreement.
(b) Non-Granite Representatives. At all times following
Granite's purchase of the Granite Shares in accordance with the Purchase
Agreement, Granite agrees to vote all shares of the Company's Voting Stock then
owned by Granite to elect the nominees designated by a majority of the members
of the Board not previously designated or nominated by Granite ("Non-Granite
Board Members") and if such Non-Granite Board Members fail to so designate, the
nominees designated by a majority of the Non-Granite Shareholders; provided,
however, that Granite shall not be required to vote its shares for more than
that number of Non-Granite designees equal to the total number of directors then
authorized and serving multiplied by the percentage of shares of Voting Stock of
the Company then held by Non-Granite Shareholders, rounded to the nearest whole
number.
(c) Authorized Number of Directors. The authorized number of
directors shall be determined in accordance with the Bylaws of the Company.
Granite
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agrees to vote all of its votes on the Board with the majority decision of the
Non-Granite Board Members in all proposed actions to fix or modify the
authorized number of members of the Board.
4. Approval of Certain Changes.
(a) The Company covenants and agrees that it shall not, without the
approval of a majority of the Board, including at least one director designated
by Granite and elected as set forth in Section 3 above, take any of the
following actions:
(i) Change the salary structure, incentive compensation
plans, or other compensation programs that would have the effect of
significantly increasing the Company's salaried employee compensation levels as
a percentage of the Company's total revenue or as a percentage of the Company's
total profits.
(ii) Except to the extent of those dividends necessary to
maintain the Cross Purchase Insurance Trust (the "Trust") (i.e. the PS-58
dividend) and an equivalent dividend to those shareholders, including Granite,
that do not participate in the Trust, declare any dividend to the Company's
shareholders that would negatively impact the share of profits or equity
increase that would otherwise accrue to Granite or declare any dividend in
excess of fifteen percent (15%) of after-tax profits not in accordance with past
practice of the Company.
(iii) Change the Company's capital structure in a manner that
would disproportionately impact Granite's participation in profits or equity.
(iv) Conclude an initial public offering of the Company.
(v) File for voluntary bankruptcy or a dissolution of the
Company.
(vi) Enter any extraordinary borrowing arrangements
inconsistent with past practice of the Company.
(vii) Approve an acquisition by the Company of any entity:
(A) Competitive with Granite;
(B) At a purchase price in excess of ten percent (10%) of
stockholders' equity as shown on the Company's most recent financial statements;
or
(C) Outside the Company's traditional line of business.
(viii) Excluding contractual joint ventures, consortiums or
other similar arrangements in which the Company (or any of its subsidiaries) is
or may become a party, acquire equity interests in projects or minority
interests in other companies in
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excess of twenty percent (20%) of the Company's total stockholders' equity when
such acquisition or investment is cumulated with other similar investments.
(ix) Excluding the issuance of stock options or stock bonuses
consistent with the past practices of the Company, authorize and issue any new
classes of stock of the Company.
(x) Enter into a transaction that would cause it to fail to
maintain the following ratios: (A) Consolidated liabilities less permitted
subordinated debt to consolidated tangible equity plus permitted subordinated
debt in a ratio of no more than two to one; and (B) cash flow coverage ratio
defined as net income plus depreciation and amortization divided by current
maturities of long term debt in a ratio of no less than 1.75 to one.
(b) The foregoing provisions notwithstanding, any and/or all of the
foregoing actions may be taken by the Company without the approval of any Board
member designated by Granite where such actions are taken pursuant to the
exercise of the Company's rights provided in Section 6.1 or to fulfill the
Company's obligations pursuant to the exercise of Granite's rights provided in
Section 6.2.
5. Understandings Regarding Granite's Role in TIC.
5.1 The Parties acknowledge that Granite's acquiring the Granite
Shares is a possible first step toward establishing a long term relationship
with the Company for the strategic and financial benefit of shareholders of both
Granite and the Company. This Agreement has been structured to enable Granite
and the Company to avoid making irrevocable long term commitments until
officers, employees and directors of each company have had a three year
opportunity to decide whether such a closer long term relationship is in their
mutual interest.
5.2 At all times that Granite is a shareholder of the Company,
Granite and the Directors of the Company who Granite designates shall be mindful
of the best interests of the Non-Granite Shareholders, of the Company's
corporate culture and Core Values and of the Company's history and reputation in
its marketplace.
5.3 In the event Granite does acquire fifty-one percent (51%) or
more of the Voting Stock, Granite will exercise its fiduciary duty to protect
the rights of the Non-Granite Shareholders in accordance with applicable law and
consistent with this Agreement. Specifically, and without limitation of the
foregoing, Granite will maintain equity incentive plans generally consistent
with the past practices of the Company and a Stock repurchase policy for
employees and shareholders of the Company and the Associated Companies. Such
Stock repurchase policy will include a mechanism for the sale of such Stock into
the public market, to Granite and/or to the Company. Such programs shall be
maintained by the Board and/or the Board of Granite and shall provide for the
repurchase of Stock by the Company and/or Granite consistent with the past
practice of the Company as to eligibility. Such repurchases of Stock shall be
made, to the
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extent of shareholders desiring to sell, in an amount at least equal to one
hundred and twenty percent (120%) of the average level of funds available for
repurchases using the formula established by the Company's bank covenants for
fiscal year 1997 as specified in the Second Amendment to First Amended and
Restated Loan Agreement by and among TIC Holdings, Inc. and its subsidiaries,
Norwest Bank Colorado, National Association, Bank One, Arizona, N.A. and Xxxxxx
Trust and Savings Bank dated July 1, 1996 for the six (6) year period prior to
the time Granite becomes entitled to acquire the Majority Stock, provided either
Granite or the Company have the financial ability to make such repurchases on
the repurchase date.
6. Repurchase of Granite's Shares by the Company.
6.1 The Company's Call Right.
(a) The Right. The Company shall have the right, upon providing
thirty (30) days prior written notice to Granite, to repurchase all or any part
of the Granite Shares and any or all other shares of the Company then held by
Granite, upon any of the following events or dates:
(i) any proposed transfer of all or any part of the
Granite Shares and other shares of the Company then held by Granite to a third
party, excluding for such purposes transfers by Granite to Granite Construction
Company ("Granite Company");
(ii) the closing of any merger or consolidation or exchange
of stock of Granite and/or Granite Company, if the Granite Shares or any other
shares of the Company have been transferred to Granite Company, with any other
corporation or entity after which any party or group of related parties acquires
more than 50% of the voting stock of the resulting entity.
(iii) the acquisition of the majority of the issued and
outstanding voting stock of Granite and/or Granite Company, if the Granite
Shares or any other shares of the Company have been transferred to Granite
Company, by a person or entity not a Granite shareholder as of the Effective
Date;
(iv) Granite's total stockholder's equity, as indicated in
any public annual or quarterly financial statement of Granite, is less than
$50,000,000; or
(v) during the one month period commencing three years
after the Effective Date.
(b) Amount and Delivery of Repurchase Price. The price per share
and payment terms for any purchase pursuant to this Section 6.1 shall be
determined as follows:
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(i) For repurchases described in Section 6.1(a)(i), the
purchase price per share and terms shall be the price per share and proposed
terms of the proposed transfer. Each time that Granite proposes to offer Stock
to a party that is not a shareholder of the Company ("Granite Offeree"), Granite
shall first deliver a notice ("Notice") to the Company stating (i) its bona fide
intention to offer such Stock to a Granite Offeree and the name of the Granite
Offeree, (ii) the description of Stock to be offered and (iii) the price and
terms, if any, upon which it proposes to offer such Stock. Within 20 calendar
days after receipt of the Notice, the Company may exercise its rights under
Section 6.1(a), at the price and on the terms specified in the Notice. If the
Company does not timely elect to obtain all of the Stock which Granite proposes
to sell within the 20 day period specified herein, Granite may, during the
180-day period following the expiration of the 20 day period, offer the Stock to
the person or persons specified in Granite's Notice at a price not less than,
and upon terms no more favorable to the Granite Offeree than, those specified in
the Notice. If Granite does not enter into an agreement for the sale of the
Stock consistent with its Notice within such 180 day period or if such agreement
is not consummated within 90 days of the execution thereof, the Company's right
hereunder shall be deemed to be revived and such Stock shall not be offered to a
third party unless first re-offered to the Company in accordance with the terms
of this Section 6.
(ii) For repurchases described in Section 6.1(a)(ii), (iii)
or (iv) and in Section 6.2, the purchase price per share shall be equal to the
Designated Purchase Price (as defined in Article VI.A. of the Restated Articles)
as of the date of notice of the repurchase. Granite shall give the Company
written notice of the occurrence of any of the events described in Section
6.1(a)(ii), (iii) or (iv) within 20 business days of the happening of such
event. Payment of the purchase price to Granite shall be made by five year
promissory note secured by the assets of the Company (subject to all then
existing security interests and bonding obligations of the Company and execution
of any normal and customary subordination agreements required by the Company's
primary lender) bearing interest at the 60 day reference rate charged by Bank of
America NT&SA providing for five annual installments of principal with accrued
interest, with the first installment due one year following the date of notice
of repurchase.
(iii) For repurchases described in Section 6.1(a)(v), the
purchase price per share shall be equal to the greater of: (A) the purchase
price determined according to Section 6.1(b)(ii); or (B) the original
acquisition price per share paid by Granite for the Granite Shares plus
interest, compounded annually, from the date the shares were paid for by Granite
calculated at one percent (1%) above the 60-day reference rate charged by Bank
of America NT&SA. The purchase price shall be payable at any time as the Company
shall elect prior to the second anniversary of the date of notice delivered
pursuant to Section 6.1(a)(v).
6.2 Granite's Put Right. Granite shall have the option to cause the
Company to repurchase all or any part of the Granite Shares and other shares of
the Company then held by Granite by giving written notice to the Company during
the one week period commencing three years after the Effective Date. The
purchase price shall be calculated and paid as set forth in Section 6.1(b)(ii).
9
63
7. Strategic Cooperation.
7.1 Best Efforts. In order to maximize the effectiveness of
interactions between Granite and the Company and to take advantage of their
respective areas of expertise and market positions, Granite and the Company
agree to use their respective best efforts to seek out opportunities to maximize
business opportunities for their joint benefit, including but not limited to the
following:
(a) The Company and Granite each agree to create opportunities
for reciprocal introductions among the employees of each company.
(b) The Company agrees to discuss the possible inclusion of
Granite as a joint venture partner in any Western Summit Constructors, Inc.
project in excess of $40,000,000 or any project of the Company in excess of
$70,000,000 and/or on any other project where Granite's resources may be
helpful.
(c) Granite agrees to seek opportunities similar to those set
forth in Section 7.1(b) above to involve the Company as a joint venture partner
on Granite projects.
(d) Both parties agree to seek specific opportunities for joint
activities in the following target areas:
(i) International projects;
(ii) Privatization projects;
(iii) Projects requiring equity participation;
(iv) Water and waste water treatment projects;
(v) Marine/bridge projects in the southeastern United
States;
(vi) Overall marketing opportunities in the southeastern
United States; and
(vii) Larger projects that have types of work commonly
undertaken by the Company and Granite.
(e) Granite agrees to discuss with the Company the potential
acquisition of any industrial construction firm and to seek a cooperative method
of making any such acquisition.
7.2 Certain Limitations. At all times consistent with Section 5 of
this Agreement, Granite's involvement with the Company shall be limited to
participation on the Company's Board of Directors as set forth herein, joint
ventures, joint marketing efforts and "cross-pollination" of people so long as
the Company is able to maintain historical
10
64
patterns of profitability and viability. In addition, the Company shall maintain
its identity and the integrity of its systems and financial structure so long as
it is able to maintain historical patterns of profitability and viability.
Notwithstanding the foregoing, it is specifically agreed and understood that
neither the foregoing language nor any other provision of this Agreement shall
be interpreted as abrogating, contravening or preventing the Company's Board of
Directors from exercising its best business judgment, normal corporate rights
and/or the statutory duties of corporate governance.
8. Stock Legends. (a) All certificates representing shares of capital
stock of the Company held by Granite shall bear the following legend;
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN VOTING RESTRICTIONS, RIGHTS OF REPURCHASE AND RIGHTS OF FIRST REFUSAL
SET FORTH IN THE CORPORATION'S THIRD RESTATED ARTICLES OF INCORPORATION AND A
COOPERATION AND RIGHTS AGREEMENT AMONG THE CORPORATION, THE HOLDER HEREOF AND
CERTAIN OTHER SHAREHOLDERS OF THE COMPANY. COPIES OF THE ARTICLES AND SUCH
AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICES OF THE CORPORATION."
(ii) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION OR COMPLIANCE IS
NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
(b) All certificates representing shares of capital stock of the
Company held by the Holders shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN VOTING RESTRICTIONS SET FORTH IN A COOPERATION AND RIGHTS
AGREEMENT AMONG THE CORPORATION, THE HOLDER HEREOF AND CERTAIN
OTHER SHAREHOLDERS OF THE COMPANY, A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF THE CORPORATION."
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9. Miscellaneous.
9.1 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed within three business days by registered mail, return
receipt requested, (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested) or (d) three business
days after being sent by registered or certified mail, return receipt requested,
in each case to the appropriate addresses and facsimile numbers set forth under
the signature of the party (or to such other addresses and facsimile numbers as
a party may designate by notice to the other parties).
9.2 Binding Arbitration. In the event of a dispute between the
Parties related to or arising out of this Agreement, representatives of the
Parties will meet promptly in an effort to resolve the dispute amicably. If the
Parties cannot agree upon a resolution within thirty days of either Party
requesting a meeting for resolution of a dispute, then the matter will promptly
be submitted to binding arbitration in accordance with the arbitration
provisions contained in the Purchase Agreement.
9.3 Further Assurances. The Parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents and (c) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
9.4 Waiver. The rights and remedies of the Parties hereunder are
cumulative and not alternative. Neither the failure nor any delay by any Party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other Party; (b) no waiver that may be
given by a Party will be applicable except in the specific instance for which it
is given and (c) no notice to or demand on one Party will be deemed to be a
waiver of any obligation of such Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
9.5 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter
(including the Draft Summary of Terms of Proposed Investment by Granite
Construction, Inc. ("Granite") in TIC Holdings, Inc. ("TIC")) and constitutes a
complete and exclusive statement of the terms
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66
of the agreement between the Parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by Granite
and the Company, unless such change affects the Holders, in which case it must
also be executed by Holders holding a majority of the shares of Voting Stock of
the Company then held by the Holders as a group.
9.6 Assignments, Successors and No Third Party Rights. Neither
Party may assign any of its rights under this Agreement without the prior
consent of the other Party, which will not be unreasonably withheld if such
rights are of a purely financial nature without strategic implications except
that Granite may assign any of its rights under this Agreement to Granite
Construction Company, but Granite will not be relieved of its obligations
hereunder as a result of such assignment. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the Parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the Parties (and with regard to Sections 5 and 7, shareholders of the
Company) any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the Parties
to this Agreement (and with regard to Sections 5 and 7, shareholders of the
Company) and their successors and assigns.
9.7 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
9.8 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
9.9 Governing Law. This Agreement will be governed by and construed
under the laws of the State of Colorado without regard to conflicts of laws
principles.
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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67
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
"Granite":
GRANITE CONSTRUCTION INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxx
--------------------------- ----------------------------------
Printed Name: Xxxxxxx X. Xxxxxx Xxxxxxx Xxxxx
Title: Vice President and Title: Vice President, General Counsel
Chief Financial Officer and Secretary
Address: X.X. Xxx 00000
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.,
Legal Department
FAX No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
FAX No.: (000) 000-0000
"The Company":
TIC HOLDINGS, INC.
By: /s/ X.X. XxXxxxxx
------------------------
Printed Name: X. X. XxXxxxxx
Title: President
Address: 00000 Xxxxxx Xxxx 000
X.X. Xxx 000000
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
FAX No.: (000) 000-0000
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68
with a copy to:
Otten, Johnson, Xxxxxxxx Xxxx & Xxxxxxxxx, P.C.
1600 Colorado National Building
000 Xxxxxxxxxxx Xx.
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
FAX No.: (000) 000-0000
15
69
COUNTERPART SIGNATURE PAGE
TO COOPERATION AND RIGHTS AGREEMENT
Dated as of December 23, 1996
"Holder"
If you are an individual, print your
name and sign below.
X. X. XxXxxxxx
Name (Please Print)
/s/ X.X. XxXxxxxx
-----------------
Signature
Address:
------------------------
------------------------
FAX No.:
------------------------
16
70
COUNTERPART SIGNATURE PAGE
TO COOPERATION AND RIGHTS AGREEMENT
Dated as of December 23, 1996
"Holder"
If you are an individual, print your
name and sign below.
Xxxxx X. Xxxxxxxxxx
Name (Please Print)
/s/ Xxxxx X. Xxxxxxxxxx
-----------------------
Signature
Address: 000 Xxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
FAX No.: (000) 000-0000
17
71
COUNTERPART SIGNATURE PAGE
TO COOPERATION AND RIGHTS AGREEMENT
Dated as of December 23, 1996
"Holder"
If you are an individual, print your
name and sign below.
Xxxx X. Xxxxxx
Name (Please Print)
/s/ Xxxx X. Xxxxxx
------------------
Signature
Address: Xxx 000000
Xxxxxxxxx Xxxxxxx, XX 00000
FAX No.:
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72
Exhibit A
"Holders"
Number of Shares of Class A
Name Common Stock Owned
X. X. XxXxxxxx 77,319
Xxxxx X. Xxxxxxxxxx 50,688
Xxxx X. Xxxxxx 163,126
-------
Total 291,133
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73
Exhibit B
Waiver Shareholders
The following shareholders of the Company, by executing in the space
opposite their name, hereby acknowledge and consent to the waiver of the
Company's and Granite's rights under Article VI of the Restated Articles to
purchase the Stock held by such shareholders as set forth in that certain
Cooperation and Rights Agreement dated December 23, 1996, to which this Exhibit
B is attached.
X. X. XxXxxxxx /s/ X.X. XxXxxxxx
------------------------
Xxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxx
------------------------
X. X. Xxxxxxx /s/ X.X. Xxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxxx /s/ Xxxxxx X. Xxxxxxxxxx
------------------------
Xxxx X. Xxxx /s/ Xxxx X. Xxxx
------------------------
Xxxx X. Xxxx /s/ Xxxx X. Xxxx
------------------------
Xxxxx X. Xxxxxxxxxx /s/ Xxxxx X. Xxxxxxxxxx
------------------------
Xxxx X. XxXxxxxx /s/ Xxxx X. XxXxxxxx
------------------------
Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
------------------------
Xxxx X. Xxxxxx /s/ Xxxx X. Xxxxxx
------------------------
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TIC HOLDINGS, INC.
Officer's Certificate
The undersigned officer of TIC Holdings, Inc., a Colorado corporation
("TIC")(1), in connection with the rendering by Xxxx Xxxx Xxxx & Freidenrich
("GCWF") of the opinion with respect to the Stock Purchase Agreement and the
Cooperation and Rights Agreement (the "Rights Agreement") by and between Granite
Construction Incorporated, a Delaware corporation ("Granite"), and TIC, and
recognizing that GCWF will rely on this Certificate in rendering such opinion,
hereby certifies as follows:
1. On September 30, 1996, a total of 771,379 shares of Class A Common
Stock of TIC Holdings, Inc. ("Common Stock") was outstanding. This number of
outstanding shares of Common Stock does not include any shares of Common Stock
held as Treasury Stock by TIC, nor does this number include any authorized but
unissued shares of Preferred Stock and/or Class B Common Stock.
2. No voting rights are associated with shares of Class B Common Stock,
and the voting rights of Preferred Stock are to be determined by the Board of
Directors of TIC (the "Board") upon the issuance of any shares of Preferred
Stock. As of the Effective Date of the Rights Agreement and immediately prior
thereto, there are no outstanding shares of Class B Common Stock or Preferred
Stock.
3. On September 30, 1996, the 771,379 shares of outstanding Common Stock
were held by the following categories of shareholders in the amounts indicated
below:
NUMBER OF SHARES SHAREHOLDER CATEGORY
414,626 Employee Shareholders who
are Board Members
322,982 Employee Shareholders who
are not Board Members
33,771 Non-Employee Shareholders
4. As of the Effective Date of the Rights Agreement and immediately prior
to Granite's purchase of the Shares pursuant to the terms of the Stock Purchase
Agreement, the total number of outstanding shares of Common Stock and the total
number of shares of Common Stock held by Employee Shareholders who are Board
Members, Employee Shareholders who are not Board Members and Non-Employee
Shareholders is substantially the same as set forth in paragraph 3.
------------
(1) Defined terms used and not defined herein have the same meanings ascribed to
them as in the Stock Purchase Agreement and/or the Rights Agreement.
75
5. The undersigned is authorized to make the representations set forth
herein on behalf of TIC.
IN WITNESS WHEREOF, the undersigned has signed this Certificate this 30th
day of December, 1996.
TIC Holdings, Inc.,
a Colorado corporation
By: /s/ [SIG]
-----------------------
Dated: December 30, 1996
--------------------
-2-
76
[XXXX XXXX XXXX FREIDENRICH LETTERHEAD]
December 30, 1996
To TIC Holdings, Inc.,
a Colorado corporation:
We are legal counsel to Granite Construction Incorporated, a Delaware
corporation (the "Buyer") and we are rendering this opinion pursuant to Section
8.4 of the Stock Purchase Agreement dated December 23, 1996 between the TIC
Holdings. Inc., a Colorado corporation (the "Company") and Buyer (the "Stock
Purchase Agreement") and the Cooperation and Rights Agreement dated December 23,
1996 between the Company, Buyer and certain shareholders of the Company (the
"Rights Agreement") in connection with the purchase by Buyer of up to 257,126
shares of the Company's Class A Common Stock (the "Shares"). Capitalized terms
used in this opinion, unless specifically defined herein, have the meanings
assigned them in the Stock Purchase Agreement. The Stock Purchase Agreement and
the Rights Agreement may collectively be referenced to herein as the
"Agreements."
In connection with this opinion, we have reviewed only the documents of
Buyer listed on Exhibit A hereto. As to factual matters, we have relied solely
upon, and assumed the accuracy, completeness, and genuineness of, a certificate
of an officer of the Buyer (the "Certificate"), certificates of public officials
and oral and written representations made to us by officers of Buyer. We have
made no independent investigation of any of the facts stated in any such
certificate or representation; however, nothing has come to our attention which
would lead us to believe that such facts are inaccurate. With respect to our
opinion in Paragraph 3 hereof regarding material agreements of Buyer, we have
relied solely upon our review of agreements filed as exhibits to Buyer's filings
with the Securities and Exchange Commission ("SEC"). With respect to our opinion
in Paragraph 3 regarding judgments, decrees and orders, we have relied solely
upon a representation made to us in the Certificate to the effect that except as
may otherwise be set forth in the Agreements and the Exhibits thereto, there are
no judgments, decrees or orders binding upon Buyer. We are not aware of any
judgment, decree or order binding upon Buyer.
In those instances in which our opinion is "to our knowledge," it is based
solely upon an inquiry of attorneys within our firm who perform legal services
for the Company, review of the Certificate and such additional review as is
specified above.
In addition, we have assumed that the representations and warranties as to
factual matters made by the Company and Buyer in Sections 3 and 4, respectively,
of the Stock
77
Page 2
Purchase Agreement are true and correct. We have also assumed the genuineness
and authenticity of all documents submitted to us as originals, the conformity
to originals of all documents submitted to us as copies, the due execution and
delivery of the Agreements and all other documents referenced therein by any
party other than the Buyer when due execution and delivery are a prerequisite to
the effectiveness thereof, that you have received all of the documents that you
were required to receive under the Agreements, and that the Agreements and all
other documents referenced therein are binding obligations of the Company.
We are admitted to practice law only in the State of California, and we
express no opinion concerning any law other than the law of the State of
California, the corporation laws of the State of Delaware ("Delaware Law") and
the federal law of the United States. As to matters of Delaware Law, we have
based our opinion solely upon our examination of such laws and the rules and
regulations of the authorities administering such laws, all as reported in
standard, unofficial compilations. Opinions of counsel licensed to practice law
in states or jurisdictions other than the State of California have not been
obtained. We call your attention to the fact that the Agreements state that they
are governed by the laws of the State of Colorado and that we are not rendering
any opinion with respect to Colorado laws. We have not examined the question of
what law would govern the interpretation or enforcement of the Agreements and
our opinion is based on the assumption that the internal laws of the State of
California and federal law would govern the provisions of the Agreements and the
transactions contemplated thereby. We note that if the Agreements are not, in
fact, legal, valid, binding and enforceable under the laws of the State of
Colorado, the Agreements may not be enforced by a California court under
applicable conflicts of law principles. We express no opinion with respect to
any questions of choice of law, choice of venue or conflict of laws.
We express no opinion with respect to (i) the availability of equitable
remedies, including specific performance, (ii) the enforceability of the
Agreement under Section 1670.5 of the California Civil Code.
Subject to the foregoing, it is our opinion that as of the date hereof.
1. The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Buyer has all requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted.
2. The Company has all requisite corporate power to enter into the
Agreements, to purchase the Shares and the Tendered Shares, and to carry out and
perform its obligations under the terms thereof. The Agreements have been duly
authorized by all necessary corporate action on the part of Buyer and have been
duly executed and delivered by Buyer. The Agreements are valid and binding
obligations of Buyer, enforceable in accordance with their terms, except as
limited by applicable
78
Page 3
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting the enforcement of creditors' rights.
3. The execution, delivery or performance of the Agreements will not
violate any term of Buyer's Certificate of Incorporation or By-Laws; and, to our
knowledge, such transactions will not, in any material respect, violate or
conflict with or constitute a default under the provisions of any material
agreement, judgment, decree or order binding upon the Buyer.
4. To our knowledge, except as described or disclosed in the Agreements or
in exhibits thereto, no action, suit, proceeding or investigation is pending or
threatened against Buyer or its properties, which would prevent Buyer from
carrying out its obligations under the Agreements.
5. As of the date of the First Closing, all consents, approvals and
authorizations of and filings with any federal or California governmental
authority required on the part of Buyer, if any, in connection with the valid
execution and delivery of the Agreements or the consummation of the transactions
contemplated thereby have been obtained or made, except filings to be made under
the HSR Act which filing is required prior to the Second Closing.
The foregoing opinion is intended solely for your benefit and is not to be
made available to or be relied upon by any other person, firm, or entity without
our express prior written consent.
Very truly yours,
/s/ Xxxx Xxxx Xxxx & Freidenrich
XXXX XXXX XXXX & FREIDENRICH,
A Professional Corporation
79
EXHIBIT A
1. Copies of the Certificate of Incorporation of Buyer as amended to the date
hereof.
2. Copies of the By-Laws of Buyer, as amended to the date hereof and as
certified to be complete and true by the Secretary of Buyer.
3. The minutes of the meetings of the Board of Directors of Buyer in which
the transactions with the Company were authorized.
4. The Agreements and all other agreements referenced therein, including all
exhibits thereto.
5. Certificate of Status issued on December 30, 1996, by the Delaware
Secretary of State.
6. Material agreements attached as exhibits to SEC filings of the Buyer.
80
GRANITE CONSTRUCTION INCORPORATED
COMPLIANCE CERTIFICATE
The undersigned, Xxxxxxx X. Xxxxxx, Vice President and Chief Financial
Officer of Granite Construction Incorporated, a Delaware corporation (the
"Company"), does hereby certify on behalf of the Company in such capacity as
follows:
1. He is familiar with the terms of the Stock Purchase Agreement between
the Company and TIC Holdings, Inc., a Colorado corporation ("TIC") dated
December 23, 1996 (the "Agreement") and is familiar with the terms and
conditions of the various documents mentioned and described in the Agreement.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
2. As to matters herein set forth, the undersigned has personal knowledge
or has obtained information from officers or other employees of the Company and
makes this Certificate pursuant to the provisions of subsection 2.5(b)(ii) of
the Agreement.
3. The representations and warranties made by the Company in Section 4 of
the Agreement are true and correct hereto as of the First Closing Date with the
same force and effect as if the Agreement had been made on the First Closing
Date.
IN WITNESS WHEREOF, the undersigned has signed this certificate on this
30th day of December, 1996.
GRANITE CONSTRUCTION
INCORPORATED
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
Vice President and Chief Financial Officer
81
6
82
[XXXX XXXX XXXX FREIDENRICH LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
This opinion is provided in connection with the Stock Purchase Agreement
between Granite Construction Incorporated, a Delaware corporation ("Granite")
and TIC Holdings, Inc., a Colorado corporation ("TIC") and in connection with
the Cooperation and Rights Agreement (the "Rights Agreement") between Granite
and TIC.
Pursuant to the Stock Purchase Agreement, TIC is issuing and selling to
Granite 102,850 shares of TIC's Class A Common Stock and Granite is buying an
additional 154,276 shares of TIC's Class A Common Stock directly from TIC
shareholders. Pursuant to the Rights Agreement, TIC is granting Granite the
right to purchase up to 30% of the total number of outstanding shares of TIC
voting stock during each of the five years after the Effective Date of the
Rights Agreement as well as the right, for a one-month period commencing on the
sixth anniversary of the Effective Date of the Rights Agreement, to acquire
additional shares as will enable it to own 51% of TIC voting stock.
Additionally, Granite will have a right of first purchase in the event TIC
proposes to issue and sell TIC voting stock to third parties. The Rights
Agreement further provides that Granite shall not acquire more than 49.9% of the
outstanding shares of TIC voting stock during the five-year period following the
Effective Date of the Rights Agreement (the "Standstill") except pursuant to its
exercise of its right of first purchase pursuant to the Rights Agreement or its
purchase of TIC stock pursuant to the terms of the Restated Articles of
Incorporation of TIC (the "Restated Articles"). Pursuant to the terms of the
Rights Agreement, TIC reserves the right (the "Call Right") to repurchase all or
any part of the TIC stock owned by Granite upon the occurrence of certain events
(such as a proposed sale of TIC stock by Granite), upon 30 days prior written
notice, and during the one-month period commencing three years after the
Effective Date of the Rights Agreement. If TIC should exercise its Call Right,
Granite's right to purchase 51% of the TIC voting stock will terminate. The
Rights Agreement further provides for the irrevocable waiver by TIC and Granite
of certain repurchase rights they hold pursuant to the terms of the Restated
Articles (the "Waiver").
83
December 30, 1996
Page Two
Except as otherwise provided, capitalized terms referred to herein have
the meanings set forth in the Stock Purchase Agreement and Rights Agreement, as
appropriate. All section references, unless otherwise indicated, are to the
Internal Revenue Code of 1986, as amended (the "Code").
In our capacity as legal counsel to Granite in connection with the Stock
Purchase Agreement and Rights Agreement and for the purpose of rendering this
opinion, we have examined and are relying upon (without any independent
investigation or review thereof) the truth and accuracy, at all relevant times,
of the statements, covenants, representations and warranties contained in the
following documents (including all schedules and exhibits thereto): (1) the
Stock Purchase Agreement; (2) the Rights Agreement; (3) Article VI of the
Restated Articles; (4) a certificate from TIC (the "TIC Certificate") that
contains representations with respect to the number of shares of TIC stock
outstanding, the number of shares held by employees that are subject to a right
of first purchase and the number of shares subject to the Waiver; (5) an opinion
of counsel from Xxxxx, Johnson, Robinson, Xxxx & Rogonetti, P.C. to (the "Xxxxx
Opinion") to the effect that the Rights Agreement, and in particular the Waiver,
is fully enforceable in accordance with its terms, and (6) such other
instruments and documents related to the transactions contemplated by the
parties as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) that:
1. Original documents (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been (or will be by the Effective Date of the Stock Purchase Agreement and
the Rights Agreement) due execution and delivery of all documents where due
execution and delivery are prerequisites to effectiveness thereof.
2. Granite's purchase of TIC voting stock will be consummated
pursuant to the terms of the Stock Purchase Agreement and Rights Agreement and
will be effective under the applicable state law.
3. Any representation or statement made "to the best of knowledge"
or similarly qualified is correct without such qualification. As to all matters
in which a person or entity making a representation referred to above has
represented that such person or entity either is not a party to, does not have,
or is not aware of, any plan or intention, understanding or agreement, there is
in fact no such plan, intention, understanding or agreement.
4. Granite shall at no time own, acquire or obtain options to
acquire eighty percent (80%) or more of the shares of TIC voting stock.
5. The Waiver is enforceable according to its terms.
84
December 30, 1996
Page Three
6. The Xxxxx Opinion has been delivered and not withdrawn.
In addition to the assumptions set forth above, this opinion is
subject to the exceptions, limitations and qualifications set forth below.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that the execution of the Stock Purchase Agreement and the Rights
Agreement by Granite and the consummation of the actions contemplated thereunder
will not render TIC and Granite members of the same "controlled group of
corporations," as that term is defined in Sections 414(b) and 1563 of the Code,
provided that Granite does not subsequently acquire or own or obtain an option
to acquire eighty percent (80%) or more of the shares of TIC voting stock,
regardless of whether such eighty percent (80%) acquisition or ownership by
Granite results from the purchase of additional shares of TIC voting stock by
Granite or the repurchase or redemption by TIC of shares of its voting stock
owned by shareholders other than Granite.
This opinion represents and is based upon our best judgment regarding the
application of federal income tax laws arising under the Code, existing judicial
decisions, administrative regulations and published rulings and procedures. Our
opinion is not binding upon the Internal Revenue Service ("IRS"), the Department
of Labor ("DOL") or the courts, and the IRS is not precluded from successfully
asserting a contrary position. Furthermore, no assurance can be given that
future legislative, judicial or administrative changes, on either a prospective
or retroactive basis, would not adversely affect the accuracy of the conclusions
stated herein. Nevertheless, we undertake no responsibility to advise you of any
new developments in the application or interpretation of federal tax laws or in
the application or interpretation of the Employee Retirement Income Security Act
of 1974, as amended.
Our opinion in this letter is based solely upon existing federal law and
federal regulatory and judicial interpretations thereunder that pertain to
controlled group status. We express no opinion as to the enforceability or
validity of the Waiver under federal or Colorado state law. We are not admitted
to practice law in any state or jurisdictions other than the State of
California. Therefore, we are relying solely on the Xxxxx opinion for its
interpretation of federal law and the laws, regulations, and rules of the State
of Colorado with respect to the enforceability of the Waiver.
This opinion addresses only the classification of TIC and Granite as
members of the same controlled group of corporations under Sections 414(b) and
1563 of the Code. No opinion is expressed as to any other matter or any other
transaction (including any transaction undertaken in connection with these
agreements) under any foreign, federal, state, or local law.
No opinion is expressed as to any other matter or to any matter whatsoever
if all the terms of the Stock Purchase Agreement and the Rights Agreement are
not carried out in accordance
85
December 30, 1996
Page Four
with the terms of such Agreements and without waiver or breach of any material
provision thereof or if all of the representations, warranties, statements and
assumptions upon which we relied are not true and accurate at all relevant
times. In the event any one of the statements, representations, warranties or
assumptions upon which we have relied to issue this opinion is incorrect, our
opinion might be adversely affected and may not be relied upon.
This opinion is intended solely for your benefit and may not be relied
upon by any other person or entity, and may not be made available to any other
person or entity without our prior written consent.
Very truly yours,
/s/ XXXX XXXX XXXX & FREIDENRICH
XXXX XXXX XXXX & FREIDENRICH
A Professional Corporation
86
[GRANITE LETTERHEAD]
FOR IMMEDIATE RELEASE
GRANITE TO ACQUIRE MINORITY INTEREST IN TIC
HOLDINGS
WATSONVILLE, CALIFORNIA (December 30, 1996) Granite Construction Incorporated
(NASDAQ/NMS:GCCO) announced today that it has reached an agreement to acquire
30% of the outstanding stock of TIC Holdings Inc., a Steamboat Springs,
Colo.-based industrial construction company, for approximately $21 million.
According to the terms of the agreement, Granite will acquire 10% of the company
this year and make a tender offer to TIC shareholders for an additional 20% of
the shares next spring upon completion of TIC's 1996 audited financial
statements. The Watsonville, Calif.-based heavy civil contractor plans to
finance the transaction through its existing credit lines.
TIC, founded in 1974, operates both nationally and internationally. The company
has annual revenues of approximately $500 million. By market sector, 59% of its
1995 revenue came from industrial/petrochemical projects, 23% from power-related
projects, 16% from water/sewer/wastewater projects and the remaining 2% derived
from transportation-related work. The company employs over 4,000 worldwide.
87
Granite President and Chief Executive Officer Xxxxx X. Xxxxx said "our
investment in TIC gives us a strong foothold in the growing industrial process
marketplace, provides a broader diversification of our core business and is
expected to provide joint venture opportunities for our existing operations via
a strategic alliance with TIC."
TIC Chairman, President and Chief Executive Officer X.X. XxXxxxxx added that
"Granite's investment in TIC Holdings provides us with more flexibility to
expand our industrial construction capabilities in targeted areas such as
engineer-procure-construct, design-build and international."
Granite is the third largest heavy civil contractor in the U.S. The company is
also a large producer of sand, gravel, asphalt and other construction materials.
The company has offices in California, Arizona, Nevada, Utah, Texas and Georgia.
TIC is one of the leading merit shop, general heavy industrial contractors in
the U.S. The company is ranked in the Top 20 in both the industrial and power
marketplaces by Engineering News-Record magazine. TIC self-performs all major
disciplines including civil, structural steel erection, heavy mechanical,
process piping and electrical/instrumentation. TIC has offices in Colorado,
Georgia, California, Texas, Louisiana, Kansas, Nevada, Oregon and Wyoming.
88
TIC Holdings, Inc.,
a Colorado Corporation
CLOSING CERTIFICATE
TIC HOLDINGS, INC., a Colorado corporation (the "Company"), pursuant to
Section 2.5(a)(iii) of that certain Stock Purchase Agreement between the Company
and Granite Construction Incorporated dated December 23, 1996 (the "Stock
Purchase Agreement"), does hereby certify that as of the date hereof, and
subject to the terms of the Stock Purchase Agreement, all of the representations
and warranties of the Company contained in the Stock Purchase Agreement are
accurate in all Material respects. In addition, the Company has performed and/or
complied with all covenants and or obligations required to be performed or
complied with by the Company prior to the First Closing as of the date hereof.
Furthermore, all conditions required to be satisfied by the Company prior to the
First Closing pursuant to the terms of Section 7 of the Stock Purchase Agreement
have been satisfied as of the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Closing Certificate
as of this 30th day of December, 1996.
TIC HOLDINGS, INC.,
a Colorado Corporation
By: /s/ XXXXXXX X. XXXX
--------------------------------
Xxxxxxx X. Xxxx
Vice President & General Counsel
89
Number Shares
1736 102,050
INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO
TIC HOLDINGS, INC.
2,500,000 Class A common shares $.10 par value authorized
500,000 Class B common shares $.10 par value authorized
2,000,000 Preferred $1.00 par value authorized
Transfer of shares represented Class A common shares
by this certificate is restricted
as stated on the reverse
side hereof.
THIS CERTIFIES THAT Granite Construction Incorporated is the owner of One
Hundred Two Thousand Eight Hundred Fifth and no/100 fully paid and
non-assessable Shares of the above Corporation transferable only on the books of
the Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated December 30, 1996
90
The corporation will furnish to any shareholder upon request and without charge
a full statement of the designations, preferences, limitations and rights of the
shares of each class authorized to be issued and the variations in the relative
rights and preferences between the shares of each such series, so far as the
same have been fixed and determined, and the authority of the board of directors
to fix and determine the relative rights and preferences of subsequent series.
The securities represented by this certificate are subject to certain voting
restrictions, rights of repurchase and rights of first refusal set forth in the
Corporation's Third Restated Articles of Incorporation and a Cooperation and
Rights Agreement among the Corporation, the holder hereof and certain other
shareholders of the Company. Copies of the articles and such agreement are on
file at the principal offices of the Corporation.
The securities represented by this certificate have not been registered under
the securities act of 1933, as amended (the "Act") or registered or qualified
under any applicable state securities laws and are "Restricted Securities" as
defined in Rule 144 promulgated under the Act. The securities may not be sold or
offered for sale or otherwise distributed except (i) in conjunction with an
effective registration statement for the shares under the Act or (ii) in
compliance with rule 144, or (iii) pursuant to an opinion of counsel
satisfactory to the Corporation that such registration or compliance is not
required as to said sale, offer or distribution.
To the extent that California Securities Laws are applicable: "It is unlawful to
consummate a sale or transfer of this security, or any interest therein, or to
receive any consideration therefor, without the prior written consent of the
commissioner of corporations of the State of California, except as permitted in
the commissioners rules."
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written in full according to
applicable laws or regulations. Additional abbreviations may also he used though
not in the list.
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian - (Minor) under Uniform Gifts to Minors
Act - (State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
For value received, the undersigned hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNED
--------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints
-----------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
-----------------------
In presence of --------------------------
-----------------------------
[NOTICE PARAGRAPH NOT SHOWN]
91
[TIC COMPANY LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
I am in-house legal counsel to TIC Holdings, Inc., a Colorado corporation
("TIC"). This opinion is delivered to you at the request of TIC pursuant to
paragraph 7.5(a) of that certain Stock Purchase Agreement dated December 23,
1996 (the "Agreement") by and between TIC and Granite Construction Incorporated,
a Delaware corporation ("Buyer"). Unless otherwise defined herein, terms defined
in the Agreement are used herein as therein defined.
In connection with this opinion, I have examined the Agreement and all schedules
and exhibits thereto, and that certain Cooperation and Rights Agreement by and
among TIC, Buyer, and certain shareholders of TIC (the "Rights Agreement"), and
such other records of TIC, certificates and other documents, as I have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.
This opinion is rendered only with respect to Colorado law and applicable
federal law.
Based upon the foregoing and upon such investigation as I have deemed necessary,
I am of the opinion that:
(1) The Agreement and the Rights Agreement have been duly executed and
delivered by TIC; and
(2) As of December 30, 1996, the authorized capital stock of the Company
consists of 2,000,000 shares of preferred stock, par value $1.00 per share, none
of which are issued and outstanding, 2,500,000 shares of Class A Common Stock,
par value of $.10 per share, of which 770,771 shares are issued and outstanding
(not counting the Granite Shares), and 500,000 Shares of Class B Common Stock,
par value of $.10 per share, none of which are issued and outstanding. All such
issued and outstanding shares have been duly authorized and are validly issued,
fully paid and nonassessable. To the best of my knowledge, except as described
in the Disclosure Letter, there are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from the Company
of any shares of its capital stock.
92
Granite Construction Incorporated
Page Two
December 30, 1996
The opinion set forth herein is as of the date hereof and I disclaim any
undertaking or obligation to advise Buyer of changes which may hereafter be
brought to my attention.
This opinion has been prepared solely for the use of Buyer and may not be quoted
in whole or in part or otherwise referred to in any financial statement, or
filed with or furnished to any governmental agency or other party, without my
prior written consent. Notwithstanding the foregoing, the law firm of Xxxxx,
Johnson, Robinson, Xxxx & Ragonetti, P.C. is hereby expressly authorized to rely
upon this opinion in giving their opinions in connection with the Agreement and
the Rights Agreement.
Very truly yours,
/s/ XXXXXXX X. XXXX
Xxxxxxx X. Xxxx
General Counsel
MAR:an
[TIC LOGO]
93
[XXXXX, JOHNSON, ROBINSON, XXXX & XXXXXXXXX, P.C LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
X.X. Xxx 00000
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
We have acted as special counsel to TIC Holdings, Inc., a Colorado
corporation (the "Company") in connection with that certain Stock Purchase
Agreement dated December 23, 1996 (the "Agreement"), by and between the Company
and Granite Construction Incorporated, a Delaware corporation ("Buyer"). This
opinion letter is provided to you at the request of the Company pursuant to
Section 7.5(a) of the Agreement. Except as otherwise indicated herein,
capitalized terms used herein are defined as set forth in the Agreement.
As special counsel for the Company in connection with this opinion
letter, we have examined the following documents:
1. The Agreement.
2. That certain Cooperation and Rights Agreement by and among the
Company, Buyer and certain shareholders of the Company dated
December 23, 1996 (the "Rights Agreement").
3. The Articles of Incorporation of the Company, and all
amendments thereto which have been duly filed with the
Colorado Secretary of State and the bylaws of the Company, as
amended to date (the "Organization Documents").
We have also examined such corporate records and other documents and have made
such examination of law as we have deemed necessary in connection with this
opinion letter.
In rendering this opinion letter, as to questions of fact material to
this opinion letter we have relied, to the extent we have deemed such reliance
appropriate, without investigation, on certificates and other communications
from public officials and others and from directors, officers and employees of
the Company and on representations of the Company set forth in the Agreement.
94
Granite Construction Incorporated
December 30, 1996
Page 2
Wherever we indicate that our opinion with respect to the existance or
absence of facts is based on our knowledge, our opinion is based solely on the
current actual knowledge of the attorneys in this firm who are representing the
Company in connection with the transactions contemplated by the Agreement
(collectively, the "Contemplated Transactions"), and we have conducted no
special investigation of factual matters in connection with this opinion letter.
With respect to opinions which are qualified by reference to materiality, we
have relied upon the opinions of officers and representatives of the Company.
In connection with this opinion letter, we have assumed the accuracy
and completeness of all documents and records that we have reviewed, the
genuineness of all signatures, the authenticity of the documents submitted to us
as originals and the conformity to authentic original documents of all documents
submitted to us as certified, conformed or reproduced copies. We have further
assumed that:
(i) Granite has legal existence;
(ii) The Contemplated Transactions have been duly
authorized by all necessary corporate or other action
on the part of Granite;
(iii) All of Granite's representations contained in Section
4.3 of the Agreement are true and correct;
(iv) Persons acting on behalf of Granite were duly
authorized so to act;
(v) Granite has complied with all legal requirements
applicable to it that affect the Contemplated
Transactions;
(vi) The Agreement and the Rights Agreement have been duly
executed and delivered by Granite;
(vii) There has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence;
and
(viii) The Contemplated Transactions comply with any test of
good faith or fairness required by law.
Based upon and subject to the foregoing and subject to the
qualifications and exceptions hereinafter set forth, it is our opinion that:
95
Granite Construction Incorporated
December 30, 1996
Page 3
(1) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado.
(2) The Company has corporate power and authority to enter into
the Agreement and the Rights Agreement and to perform its
obligations thereunder. The execution and delivery of the
Agreement and the Rights Agreement and the consummation of the
Contemplated Transactions have been duly authorised by all
necessary corporate action on the part of the Company.
(3) Based upon the legal opinion of Xxxxxxx X. Xxxx of even date
herewith, a copy of which is attached hereto as Exhibit A (the
"Xxxx Opinion"), opining that the Agreement and the Rights
Agreement have been duly executed by the Company, such
agreements constitute the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance
with their terms. The provisions set forth in Sections 1.5 and
1.6 in the Rights Agreement are valid and binding against the
Company and Granite and are fully enforceable in accordance
with their terms.
(4) The execution and delivery by the Company of the Agreement and
the Rights Agreement and the performance of the Company's
obligations under such documents, do not violate applicable
provisions of statutory law or regulation, subject to
compliance with those filing and consent requirements set
forth in paragraph (7) below.
(5) The execution and delivery of the Agreement and the Rights
Agreement and the performance of any of the Contemplated
Transactions by the Company will not violate any provision of
its Organization Documents, or to our knowledge, based solely
on inquiry of officers of the Company, any covenant, indenture
or agreement binding upon or affecting the Company or its
property or assets, except that under the Company's primary
loan facility, the Company will be required to obtain the
consent of the lenders prior to granting any security interest
in its assets, if and when required by Section 6.1 of the
Rights Agreement.
96
Granite Construction Incorporated
December 30, 1996
Page 3
(6) The Shares, when issued in compliance with the provisions of
the Agreement, including, but not limited to, payment of the
Purchase Price by Granite, will be duly authorized, validly
issued, fully paid and nonassessable. Except as described in
the Agreement (and the Disclosure Letter delivered pursuant
thereto) and in the Organisation Documents, the issuance of
the Shares is not subject to any preemptive rights or, to our
knowledge, rights of first refusal created by the Company.
(7) To our knowledge, the Company has obtained all Consents
required to be obtained from any person in connection with the
execution and delivery of the Agreement or the Rights
Agreement or the consummation performance of nay of the
Contemplated Transactions, except for (i) the Notification and
Report Form which is required to be filed with the Federal
Trade Commission and the United States Department of Justice
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 and the rules and regulations promulgated thereunder,
and (ii) the Consent of the Company's primary lenders
described in paragraph (5) above; and (iii) such other
consents, authorizations, filings, approvals and registrations
which if not obtained or made would not have a material
adverse effect on the Company.
(8) Except as disclosed in the Disclosure Letter, to our
knowledge, there is no action, arbitration, hearing,
litigation or suit involving any Governmental Authority
pending or threatened against the Company, nor is there any
Order outstanding against the Company, that, individually or
in the aggregate, would reasonably be expected to be Material
to the Company.
(9) Based solely upon the Xxxx Opinion (i) the authorized capital
stock of the Company consists of 2,000,00 shares of preferred
stock, par value $1.00 per share, none of which are issued and
outstanding, 2,500,000 shares of Class A Common Stock, par
value of $.10 per share, of which 770,771 shares are issued
and outstanding, and 500,000 shares of Class B Common Stock,
par value $.10 per share, none of which are issued and
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Granite Construction Incorporated
December 30, 1996
Page 5
outstanding; (ii) all such issued and outstanding shares have
been duly authorized and are validly issued, fully paid and
nonassessable; and (iii) except as described in the Disclosure
Letter, there are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or
acquisition from the Company of any shares of its capital
stock.
We express no opinion to the enforceability of any provisions of the
Agreement or Rights Agreement: (i) that provide that any waivers or amendments
may only be in writing; (ii) which purport to assign or in any way delegate the
fiduciary obligations of members of the board of directors of the Company; (iii)
contained in Section 5 of the Rights Agreement; (iv) which requires the Company
to redeem or repurchase capital stock of the Company at a time in which the
Company has inadequate liquidity and/or assets as prescribed by C.R.S. Section
0-000-000; or (v) as such agreements may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights. In addition, Section 4 of the
Rights Agreement, which requires that certain actions be approved by at lease
one of the directors designated by Granite, may not be enforceable based upon
C.R.S. Section 0-000-000 which requires that increased voting requirements be
set forth in the bylaws of the Company. However, the Company has amended its
bylaws to require that at least 73% of the directors in office approve those
actions set forth in Section 4 of the Rights Agreement, therefore, so long as,
Granite designates at lease 30% of the total directors in office, at least one
of the directors designated by Granite will have to vote in favor of such action
in order for the board of directors of the Company to approve such action,
therefore the intended affect of Section 4 should be achieved.
Our opinions expressed above are limited to the laws of the State of
Colorado and the laws of the United States of America, and we do not express any
opinion herein concerning any other state laws or any ordinances, administrative
decisions, rules or regulations of any county, town, municipality or special
political subdivision (whether created or enabled through legislative action at
the federal, state or regional level). This opinion letter is given as of the
date hereof and we assume no obligation to advise you of changes that may
hereafter be brought to our attention. This opinion letter is solely for the
information of the addressee hereof and is not to be quoted in whole or in part
or otherwise referred to, nor is it to be filed with any governmental agency or
any other person, without our prior written consent. No one other than the
addressee hereof is entitled to rely on this opinion
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Granite Construction Incorporated
December 30, 1996
Page 6
letter. This opinion letter is rendered solely for purposed of the Contemplated
Transactions and should not be relied upon for any other purpose.
Very truly yours,
/s/ OTTER, JOHNSON, ROBINSON, XXXX & RAGONETTE, P.C.
----------------------------------------------------
Otter, Johnson, Robinson, Xxxx & Ragonette, P.C.
99
EXHIBIT A
[TIC LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
Ladies and Gentleman:
I am in-house legal counsel to TIC Holdings Inc., Colorado corporation ("TIC").
This opinion is delivered to you at the request of TIC pursuant to paragraph
7.5(a) of that certain Stock Purchase Agreement dated December 23, 1996 (the
"Agreement") by and between TIC and Granite Construction Incorporated, a
Delaware corporation ("Buyer"). Unless otherwise defined herein, terms defined
in the Agreement are used herein as therein defined.
In connection with this opinion. I have examined the Agreement and all schedules
and exhibits thereto, and that certain Cooperation and Rights Agreement by and
among TIC, Buyer, and certain shareholders of TIC (the "Rights Agreement"), and
such other records of TIC, certificates and other documents, as I have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.
This opinion is rendered only with respect to Colorado law and applicable
federal law.
Based upon the foregoing and upon such investigation as I have deemed necessary,
I am of the opinion that:
(1) The Agreement and the Rights Agreement have been duly executed and
delivered by TIC; and
(2) As of December 30, 1996, the authorized capital stock of the
Company consists of 2,000,000 shares of preferred stock, par value $1.00 per
share, none of which are issued and outstanding 2,500,000 shares of Class A
Common Stock, per value of $.10 per share, of which 770,771 shares are issued
and outstanding (not counting the Granite Shares), and 500,000 Shares of Class B
Common Stock, per value of $.10 per share, none of which are issued and
outstanding. All such issued and outstanding shares have been duly authorised
and are validly issued, fully paid and nonassessable. To the best of my
knowledge, except as described in the Disclosure Letter, there are no
outstanding rights, options, warrants, conversion rights or agreements for the
purchase or acquisition from the Company of any shares of its capital stock.
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Granite Construction Incorporated
Page Two
December 30, 1996
The opinion act forth herein is as of the date hereof and I disclaim any
undertaking or obligation to advice Buyer of changes which may hereafter be
brought to my attention.
This opinion has been prepared solely for the use of Buyer and may not be quoted
in whole or in part or otherwise referred to in any financial statement, or
filed with or furnished to any governmental agency or other party, without my
prior written consent. Notwithstanding the foregoing, the law firm of Xxxxx,
Johnson, Robinson, Xxxx & Regonetti, P.C. is hereby expressly authorised to rely
upon this opinion in giving their opinions in connection with the Agreement and
the Rights Agreement.
Very truly yours,
/s/ XXXXXXX X. XXXX
Xxxxxxx X. Xxxx
General Counsel
MAR:an
[TIC LOGO]
