Conformed Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CEMEX, S.A. de C.V.
TRICEM ACQUISITION, CORP.
AND
PUERTO RICAN CEMENT COMPANY, INC.
DATED AS OF
June 11, 2002
Table of Contents
Page
Article I
Definitions
Section 1.1 Definitions....................................................................................1
Article II
The Offer
Section 2.1 The Offer......................................................................................8
Section 2.2 Company Action................................................................................11
Section 2.3 Directors.....................................................................................12
Section 2.4 Merger Without Meeting of Shareholders........................................................14
Article III
The Merger And Related Matters
Section 3.1 The Merger....................................................................................14
Section 3.2 Certificate of Incorporation of the Surviving Corporation.....................................14
Section 3.3 By-Laws of the Surviving Corporation..........................................................14
Section 3.4 Directors and Officers of the Surviving Corporation...........................................15
Section 3.5 Closing.......................................................................................15
Section 3.6 Subsequent Actions............................................................................15
Article IV
Conversion Of Securities
Section 4.1 Conversion of Capital Stock...................................................................15
Section 4.2 Exchange of Certificates......................................................................16
Section 4.3 Appraisal Rights..............................................................................17
Section 4.4 Lost, Stolen or Destroyed Certificates........................................................18
Article V
Disclosure Schedules; Standards
For Representations And Warranties
Section 5.1 Disclosure Schedules..........................................................................18
Section 5.2 Standards.....................................................................................18
Article VI
Representations And Warranties Of The Company
Section 6.1 Due Organization, Good Standing and Power.....................................................19
Section 6.2 Authorization and Validity of Agreement.......................................................19
Section 6.3 Capitalization................................................................................20
Section 6.4 Consents and Approvals; No Violations.........................................................21
Section 6.5 Company Reports and Financial Statements......................................................22
Section 6.6 Information to Be Supplied....................................................................23
Section 6.7 Absence of Certain Events.....................................................................23
Section 6.8 Litigation....................................................................................23
Section 6.9 Title to Properties; Encumbrances; Leases.....................................................24
Section 6.10 Compliance with Laws..........................................................................24
Section 6.11 Employee Benefit Plans........................................................................25
Section 6.12 Books and Records.............................................................................27
Section 6.13 Taxes.........................................................................................27
Section 6.14 Intellectual Property.........................................................................29
Section 6.15 Brokers; Schedule of Fees and Expenses........................................................29
Section 6.16 Environmental Matters.........................................................................29
Section 6.17 Takeover Statutes.............................................................................31
Section 6.18 Voting Requirements; Board Approval...........................................................31
Section 6.19 Opinion of Financial Advisor..................................................................32
Section 6.20 Contracts.....................................................................................32
Section 6.21 Plants and Equipment..........................................................................33
Section 6.22 Labor and Employment Matters..................................................................33
Section 6.23 Certain Contracts.............................................................................33
Section 6.24 Insurance.....................................................................................34
Section 6.25 Certain Actions...............................................................................34
Section 6.26 Xxxxx Loans and Loan Commitments..............................................................34
Article VII
Representations And Warranties Of Parent And Purchaser
Section 7.1 Due Organization; Good Standing...............................................................36
Section 7.2 Authorization and Validity of Agreement.......................................................36
Section 7.3 Consents and Approvals; No Violations.........................................................37
Section 7.4 Information to Be Supplied....................................................................37
Section 7.5 Broker's or Finder's Fee......................................................................38
Section 7.6 Ownership of Capital Stock....................................................................38
Section 7.7 No Prior Activities...........................................................................38
Section 7.8 Sufficient Funds..............................................................................38
Article VIII
Covenants
Section 8.1 Access to Information Concerning Properties and Records.......................................38
Section 8.2 Conduct of the Business of the Company Pending the Closing Date...............................39
Section 8.3 Company Shareholder Meeting; Preparation of Proxy Statement...................................43
Section 8.4 Reasonable Best Efforts; Notification.........................................................44
Section 8.5 No Solicitation...............................................................................45
Section 8.6 Antitrust Laws................................................................................48
Section 8.7 Indemnification; Directors' and Officers' Insurance...........................................48
Section 8.8 Public Announcements..........................................................................49
Section 8.9 Employee Benefits Plans.......................................................................50
Section 8.10 Availability of Sufficient Funds..............................................................51
Article IX
Conditions To The Merger
Section 9.1 Conditions to Obligations of Each Party.......................................................51
Article X
Termination And Abandonment
Section 10.1 Termination...................................................................................52
Section 10.2 Effect of Termination.........................................................................54
Section 10.3 Payment of Certain Fees.......................................................................54
Article XI
Miscellaneous
Section 11.1 Representations and Warranties................................................................55
Section 11.2 Extension; Waiver.............................................................................55
Section 11.3 Notices.......................................................................................56
Section 11.4 Entire Agreement..............................................................................57
Section 11.5 Binding Effect; Benefit; Assignment...........................................................57
Section 11.6 Amendment and Modification....................................................................57
Section 11.7 Further Actions...............................................................................58
Section 11.8 Interpretation................................................................................58
Section 11.9 Enforcement...................................................................................58
Section 11.10 Fees and Expenses.............................................................................59
Section 11.11 Counterparts..................................................................................59
Section 11.12 Applicable Law................................................................................59
Section 11.13 Severability..................................................................................59
Section 11.14 Waiver of Jury Trial..........................................................................59
Section 11.15 Time..........................................................................................59
Section 11.16 Effect on Confidentiality Agreement...........................................................59
Annex I - Certain Conditions of the Offer
Exhibit A - Form of Transaction Support Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 11, 2002 (this
"AGREEMENT"), by and among Cemex, S.A. de C.V., a Mexico corporation
("PARENT"), Tricem Acquisition, Corp., a Puerto Rico corporation and an
indirect subsidiary of Parent ("PURCHASER"), and Puerto Rican Cement Company,
Inc., a Puerto Rico corporation (the "COMPANY").
WHEREAS, the Boards of Directors of each of Purchaser and the
Company have determined that it is advisable and in the best interests of
each corporation and its respective shareholders to consummate the
acquisition of the Company by Purchaser, upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser
make a cash tender offer to acquire all shares of the issued and outstanding
common stock, U.S. $1.00 par value, of the Company (the "COMPANY COMMON
STOCK") for U.S. $35.00 per share, net to the seller in cash;
WHEREAS, Parent, Purchaser and certain holders of Company Common
Stock are contemporaneously with the execution of this Agreement entering
into separate Transaction Support Agreements, the form of which is attached
hereto as Exhibit A (collectively, the "TRANSACTION SUPPORT AGREEMENTS"); and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of each of Purchaser and the Company have approved this Agreement
and the transactions contemplated hereby, including the merger of Purchaser
with and into the Company, with the Company as the surviving corporation,
following the Offer (as hereinafter defined) and the Board of Directors of
the Company has also taken such action as is necessary to render inapplicable
to this Agreement and the Transaction Support Agreements and the transactions
contemplated hereby and thereby the provisions of Article TENTH of the
Company's Certificate of Incorporation.
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the
following terms shall have the respective meanings specified therefor below
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined).
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section
8.5(b).
"AFFILIATE" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided that for the purposes of this definition, "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, by contract or,
otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble hereto.
"ANTITRUST AUTHORITIES" shall have the meaning set forth in
Section 8.6(d).
"ANTITRUST LAW" shall have the meaning set forth in Section 8.6(d).
"BALANCE SHEET" means the audited balance sheet of the Company and
its consolidated Subsidiaries as of December 31, 2001.
"BANCO POPULAR LOAN AGREEMENTS" means that certain U.S. $5.9 million
Credit Agreement between the Company and Banco Popular de Puerto Rico, dated
December 28, 2001 and that certain U.S. $15.6 million Credit Agreement
between the Company and Banco Popular de Puerto Rico, dated August 10, 2001.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a
federal holiday, and shall consist of the time period from 12:01 a.m. through
12:00 midnight Eastern time.
"CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 3.1(b).
"CERTIFICATES" shall have the meaning set forth in Section 4.2(b).
"CLEANUP" shall have the meaning set forth in Section 6.16.
"CLOSING" shall have the meaning set forth in Section 3.5.
"CLOSING DATE" shall have the meaning set forth in Section 3.5.
"CODE" shall mean the Internal Revenue Code of 1986, as may be
amended from time to time.
"COMPANY" shall have the meaning set forth in the preamble hereto.
"COMPANY BENEFIT PLANS" shall have the meaning set forth in Section
6.11(a).
"COMPANY'S BOARD OF DIRECTORS" shall have the meaning set forth in
Section 2.1(a).
"COMPANY BUDGET" shall have the meaning set forth in Section 8.2(b).
"COMPANY COMMON STOCK" shall have the meaning set forth in the
recitals hereof.
"COMPANY DISCLOSURE SCHEDULE" shall have the meaning set forth in
Section 5.1.
"COMPANY EMPLOYEES" shall have the meaning set forth in Section 8.9(c).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse
effect on the ability of the Company to perform in all respects its
obligations under this Agreement or to consummate the transactions
contemplated hereby, (ii) a material adverse effect on the business, assets,
liabilities, financial condition or results of operations of the Company and
its Subsidiaries, taken as a whole, (iii) as to matters which can reasonably
be quantified in economic terms, any effect which has resulted in or would be
reasonably expected to result in, with respect to the Company and its
Subsidiaries, taken as a whole, a diminution or decrease in the value of
properties or assets, an increase in liabilities or obligations (whether
accrued, contingent or otherwise), an adverse change in the cash flows,
business or financial condition, or any combination thereof involving,
individually or in the aggregate, with respect to all applicable
representations or warranties, more than U.S. $15 million; provided, that, in
calculating such amount, any amounts which are included in the "baskets" set
forth in (1) clause (iii) of the last sentence of Section 6.5(c), (2) the
first sentence of Section 6.8, (3) Section 6.23(a) and (4) Section
8.2(b)(11)(E) will be included in the determination of whether such U.S. $15
million amount is exceeded, or (iv) a material adverse effect on the
long-term ability of the Company and its Subsidiaries, taken as a whole, to
continue their operations or to obtain their required supply of raw materials
or other production inputs; provided, however, that any effect relating to
(a) any changes or developments in the economy in general, the cement, ready
mix or construction industries in Puerto Rico generally or effects of weather
or meteorological events or acts of terrorism or war, provided, that the
Company and its Subsidiaries are not affected by such changes or effects in a
materially disproportionate manner as compared to other companies in such
industries in Puerto Rico, or (b) the negotiation, announcement, execution,
delivery, consummation or anticipation of the transactions contemplated by,
or compliance with, this Agreement and the transactions contemplated hereby,
shall be excluded for purposes of determining whether a Company Material
Adverse Effect has occurred.
"COMPANY PREFERRED STOCK" shall mean that preferred stock of the
Company having a par value of five dollars ($5.00) per share as authorized by
the Company's Certificate of Incorporation.
"COMPANY SEC REPORTS" shall mean all forms, reports, registration
statements and other filings, together with any exhibits, any amendments
thereto and information incorporated by reference therein, filed by the
Company or any of its Subsidiaries with the SEC since December 31, 1999.
"COMPANY SHAREHOLDER APPROVAL" shall mean the approval of this
Agreement and the Merger at the Company Shareholder Meeting by the holders of
a majority of all outstanding shares of Company Common Stock, voting as one
class, with each share having one vote.
"COMPANY SHAREHOLDER MEETING" shall have the meaning set forth in
Section 8.3(a).
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality agreement
between the Company and Cemex, Inc., dated May 24, 2002.
"CONSUMMATION OF THE OFFER" shall mean the acceptance for payment of
shares of Company Common Stock by Purchaser pursuant to the Offer, in
accordance with the terms of this Agreement.
"CONTRACTS" shall have the meaning set forth in Section 6.4.
"CURE PERIOD" shall have the meaning set forth in Section 2.1(a).
"DISSENTING SHAREHOLDERS" shall have the meaning set forth in
Section 4.1(c).
"EFFECTIVE TIME" shall have the meaning set forth in Section 3.1(b).
"ENVIRONMENTAL CLAIMS" shall have the meaning set forth in
Section 6.16.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 6.16.
"ERISA" shall have the meaning set forth in Section 6.11.
"ERISA AFFILIATE" shall have the meaning set forth in Section 6.11.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FINANCIAL STATEMENTS" means the audited and unaudited financial
statements of the Company and its consolidated Subsidiaries included in the
Company SEC Reports.
"FOREIGN PLAN" shall have the meaning set forth in Section 6.11.
"GAAP" shall mean generally accepted accounting principles of the
United States of America, as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in
Section 6.4.
"HAZARDOUS MATERIALS" shall have the meaning set forth in
Section 6.16.
"HSR ACT" shall have the meaning set forth in Section 6.4.
"INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.7(a).
"INDEPENDENT DIRECTORS" shall have the meaning set forth in
Section 2.3(a).
"INITIAL EXPIRATION DATE" shall have the meaning set forth in
Section 2.1(a).
"INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set forth in
Section 6.14.
"ISSUANCE OBLIGATION" shall have the meaning set forth in
Section 6.3(a).
"JOINT PRESS RELEASE" shall have meaning set forth in Section 2.1(b).
"KNOWLEDGE" shall mean, when used in any representation, warranty or
covenant of the Company contained herein, the actual or deemed knowledge (as
defined below) of the individuals listed on Schedule 1.1 hereto. For purposes
hereof, each such individual shall be deemed to have knowledge of any item,
matter, fact, occurrence, circumstance or condition which such individual
should have known through the exercise of reasonable care or after reasonable
inquiry.
"LANDLORD LEASES" shall have the meaning set forth in Section 6.9(b).
"LAWS" shall have the meaning set forth in Section 6.4.
"LIENS" shall mean all security interests, liens, claims, pledges,
options, rights of first refusal, charges or other encumbrances of any nature
or any other similar limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided under
applicable U.S. federal, state or Puerto Rico securities Laws).
"MATERIAL CONTRACT" shall have the meaning set forth in
Section 6.20(a).
"MEASUREMENT DATE" shall mean the first to occur of (a) the date
upon which Parent first designates one or more directors of the Company
pursuant to Section 2.3(a) and (b) the date upon which the Effective Time
occurs.
"MERGER" shall have the meaning set forth in Section 3.1(a).
"MERGER CONSIDERATION" shall have the meaning set forth in
Section 4.1(c).
"MINIMUM CONDITION" shall have the meaning set forth in Section 2.1(a).
"NLRB" shall have the meaning set forth in Section 6.11.
"OFFER" shall have the meaning set forth in Section 2.1(a).
"OFFER DOCUMENTS" shall have the meaning set forth in Section 2.1(c).
"OFFER PRICE" shall have the meaning set forth in Section 2.1(a).
"OFFER TO PURCHASE" shall have the meaning set forth in Section 2.1(a).
"ORDERS" shall have the meaning set forth in Section 6.4.
"PARENT" shall have the meaning set forth in the preamble hereto.
"PARENT DESIGNEES" shall have the meaning set forth in Section 2.3.
"PARENT DISCLOSURE SCHEDULE" shall have the meaning set forth in
Section 5.1.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any event, change,
occurrence, effect, fact or circumstance that is materially adverse to the
ability of Parent or Purchaser to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
"PAYING AGENT" shall have the meaning set forth in Section 4.2(a).
"PBGC" shall have the meaning set forth in Section 6.11.
"PERMITS" shall have the meaning set forth in Section 6.10(b).
"PERSON" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a
limited liability company, any other entity, a group and a government or
other department or agency thereof.
"XXXXX" shall have the meaning set forth in Section 6.26.
"XXXXX DEBTORS" shall have the meaning set forth in Section 6.26.
"XXXXX LOAN COMMITMENTS" shall have the meaning set forth in
Section 6.26.
"XXXXX LOAN DOCUMENTS" shall have the meaning set forth in
Section 6.26.
"PONCE LOANS" shall have the meaning set forth in Section 6.26.
"PRGCL" shall mean the General Corporation Law of the Commonwealth
of Puerto Rico, as currently in effect and as amended from time to time.
"PROXY STATEMENT" shall have the meaning set forth in Section 8.3(b).
"PUERTO RICO" shall mean the Commonwealth of Puerto Rico.
"PURCHASER" shall have the meaning set forth in the preamble hereto.
"QUALIFIED PERSON" shall have the meaning set forth in Section 2.3(a).
"REJECTION PERIOD" shall have the meaning set forth in Section 2.1(a).
"RELEASE" shall have the meaning set forth in Section 6.16.
"RETURNS" shall have the meaning set forth in Section 6.13(a).
"SCHEDULE 14D-9" shall have the meaning set forth in Section 2.2(c).
"SCHEDULE TO" shall have the meaning set forth in Section 2.1(c).
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSEQUENT AMENDMENT" shall have the meaning set forth in Section 2.1.
"SUBSIDIARY" with respect to a Person shall mean (x) any partnership
of which such Person or any of its Subsidiaries is a general partner
(excluding any such partnership where such Person or any Subsidiary of such
Person does not have a majority of the voting interest in such partnership)
or (y) any other entity in which such Person together with any of its
Subsidiaries owns or has the power to vote more than 50% of the equity
interests in such entity having general voting power to participate in the
election of the governing body of such entity.
"SUFFICIENT FUNDS" shall have the meaning set forth in Section 7.8.
"SUPERIOR PROPOSAL" shall have the meaning set forth in Section 8.5(a).
"SURVIVING CORPORATION" shall have the meaning set forth in
Section 3.1(a).
"TAKEOVER PROPOSAL" shall have the meaning set forth in Section 8.5(a).
"TAXES" shall have the meaning set forth in Section 6.13(a).
"TENANT LEASES" shall have the meaning set forth in Section 6.9(b).
"TERMINATION DATE" shall mean ninety days following commencement of
the Offer; provided, however, that if the condition provided for in clause
(a) (ii) of Annex I shall not have been satisfied on or prior to such date,
then the Termination Date shall be extended until ten Business Days after
such condition has been satisfied, but in no event shall the Termination Date
be extended beyond one hundred and eighty days following commencement of the
Offer.
"TERMINATION FEE" shall have the meaning set forth in Section 10.3.
"THIRD PARTY ACQUISITION EVENT" shall have the meaning set forth in
Section 10.3.
"U.S. $" shall mean United States dollars.
"VOTING DEBT" shall have the meaning set forth in Section 6.3(a).
"WARN Act" shall have the meaning set forth in Section 6.22(c).
ARTICLE II
THE OFFER
Section 2.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated
pursuant to Section 10.1 hereof, as promptly as reasonably practicable, but
in no event later than fifteen Business Days following the public
announcement of the terms of this Agreement (which public announcement shall
occur no later than the first Business Day following the execution of this
Agreement), Purchaser shall, and Parent shall cause Purchaser to, commence
(within the meaning of Rule 14d-2 under the Exchange Act) a tender offer (as
it may be amended from time to time as permitted by this Agreement, the
"OFFER") to purchase all of the shares of Company Common Stock issued and
outstanding at a price of U.S. $35.00 per share, net to the seller in cash
(such price, or such higher price per share of Company Common Stock as may be
paid in the Offer, being referred to herein as the "OFFER PRICE"). The
obligation of Purchaser to accept for payment and pay for shares of Company
Common Stock tendered pursuant to the Offer shall be subject only to the
condition that there shall be validly tendered (other than by guaranteed
delivery where actual delivery has not occurred) in accordance with the terms
of the Offer, prior to the expiration date of the Offer and not withdrawn, a
number of shares of Company Common Stock that, together with the shares of
Company Common Stock then owned by Parent and/or Purchaser, represents at
least a majority of the shares of Company Common Stock outstanding on a fully
diluted basis (after giving effect to the conversion or exercise of all
outstanding options, warrants and other rights to acquire, and securities
exercisable or convertible into, Company Common Stock, whether or not
exercised or converted at the time of determination) (the "MINIMUM
CONDITION") and to the satisfaction or waiver by Purchaser as permitted
hereunder of the other conditions set forth in Annex I hereto. The Offer
shall be made by means of an offer to purchase (the "OFFER TO PURCHASE") and
the related letter of transmittal, each in form reasonably satisfactory to
the Company, containing the terms set forth in this Agreement and the
conditions set forth in Annex I. Parent and Purchaser agree that the Offer to
Purchase will state at least in the summary term sheet and in appropriate
places in the Offer to Purchase that "Purchaser's obligation to purchase
shares of Company Common Stock under the Offer is not conditioned on any
financing arrangements or subject to any financing condition." Without
limiting the foregoing, effective upon Consummation of the Offer, the holder
of such Company Common Stock will sell and assign to Purchaser all right,
title and interest in and to all of the shares of Company Common Stock
tendered (including, but not limited to, such holder's right to any and all
dividends and distributions, if any, with a record date before, and a payment
date after, the scheduled or extended expiration date).
Purchaser expressly reserves the right, subject to compliance with
the Exchange Act, to waive any of the conditions to the Offer and to make any
change in the terms of or conditions to the Offer; provided that, without the
prior written consent of the Company, which consent must be expressly
authorized by the board of directors of the Company (the "COMPANY'S BOARD OF
DIRECTORS"), (i) the Minimum Condition may not be waived or changed and (ii)
no change may be made that changes the form of consideration to be paid,
decreases the Offer Price, decreases the number of shares of Company Common
Stock sought in the Offer, adds to or modifies any of the conditions to the
Offer set forth in Annex I, makes any other change in the terms of the Offer
that is materially adverse to the holders of the Company Common Stock or
(except as provided in the next sentence) changes the expiration date of the
Offer. Notwithstanding the foregoing, Purchaser may, without the consent of
the Company, extend the expiration date of the Offer beyond the Initial
Expiration Date, (i) if, immediately before the scheduled or extended
expiration date of the Offer, any of the conditions to the Offer shall not
have been satisfied or, to the extent permitted, waived, until such
conditions are satisfied or waived, (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable Law or (iii) for
up to 10 additional business days in increments of not more than two business
days each (but in no event beyond the Termination Date), if, immediately
prior to the scheduled or extended expiration date of the Offer, the Company
Common Stock tendered and not withdrawn pursuant to the Offer constitutes
more than 80% and less than 90% of the outstanding Company Common Stock,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer; provided, that in the case of any extension
under clause (iii), Parent or Purchaser may not thereafter assert the failure
of any of the conditions provided for in clause (b)(ii) of Annex I or, for
purposes of clause (b)(iii) or (c) of Annex I, a Company Material Adverse
Effect or a material breach of a representation or warranty, in each such
case, by reason of an event other than a knowing, intentional breach of a
covenant by the Company occurring after the initial extension under clause
(iii). In addition, Purchaser shall at the request of the Company extend the
Offer for a period of time sufficient to provide the applicable Cure Period
to the Company in the event of a breach by the Company of a representation,
warranty, covenant or other agreement of the Company under this Agreement
which breach, in the reasonable judgment of Parent, is capable of being cured
during the applicable Cure Period, provided that, at the time of the then
scheduled expiration of the Offer, all other conditions to the Offer have
been satisfied or waived; and provided, further, that Purchaser shall not be
required to extend the Offer for any Cure Period if the Company shall fail to
give to Parent notice of its Knowledge of any such breach of a
representation, warranty, covenant or agreement within four Business Days of
its receipt of such Knowledge. For purposes of this Agreement, "CURE PERIOD"
shall mean thirty days from the date on which the Company has Knowledge of a
breach by the Company of a representation, warranty, covenant or other
agreement under this Agreement, provided that in the event that the Company
first has Knowledge of a breach by the Company of a representation, warranty,
covenant or other agreement under this Agreement after the Initial Expiration
Date, the Cure Period with respect to such breach shall not extend beyond the
then-scheduled expiration date of the Offer; and "INITIAL EXPIRATION DATE"
shall mean 12:00 midnight Eastern time on the date that is the twentieth
Business Day from the commencement date of the Offer in accordance with Rule
14d-2 under the Exchange Act.
If any of the conditions to the Offer (other than those set forth in
clause (c) of Annex I) is not satisfied or waived on any scheduled or
extended expiration date of the Offer, Purchaser shall, and Parent shall
cause Purchaser to, extend the Offer, if such condition or conditions could
reasonably be expected to be satisfied, from time to time until such
conditions are satisfied or waived; provided, that Purchaser shall not be
required to extend the Offer beyond the earlier to occur of (x) the
Termination Date or (y) in the event that it has become publicly known that
any Takeover Proposal or amended Takeover Proposal has been made, the
expiration of the applicable Rejection Period therefor without such Takeover
Proposal or amended Takeover Proposal being publicly rejected by the Company
at or prior to the time of such expiration. For the purposes of this
Agreement, "REJECTION PERIOD" shall mean (i) with respect to any Takeover
Proposal, ten Business Days after the earlier of the time of receipt by the
Company of such Takeover Proposal or such time as the Takeover Proposal has
become publicly known; (ii) with respect to an amendment to such Takeover
Proposal, two Business Days after the earlier of the time of receipt of such
amended Takeover Proposal or such time as the amended Takeover Proposal has
become publicly known; and (iii) with respect to any subsequent amendment to
such Takeover Proposal (a "SUBSEQUENT AMENDMENT"), twenty-four hours after
the earlier of the time of receipt of such subsequently amended Takeover
Proposal or such time as the subsequently amended Takeover Proposal has
become publicly known; provided that any Takeover Proposal made by any
Person, any Affiliate of such Person, or group of Persons or their respective
Affiliates shall not be deemed to be a new Takeover Proposal if such Person,
Affiliate of such Person or member of a group with such Person or their
respective Affiliates previously has made a Takeover Proposal. Subject to the
foregoing and upon the terms and subject to the conditions of the Offer,
Purchaser shall, and Parent shall cause it to, accept for payment and pay
for, as promptly as practicable after the expiration of the Offer (or as
required by Rule 14d-11 under the Exchange Act), all shares of Company Common
Stock validly tendered and not withdrawn pursuant to the Offer. In addition,
if, at the scheduled or extended expiration date of the Offer, the Minimum
Condition has been satisfied but Company Common Stock tendered and not
withdrawn pursuant to the Offer constitutes less than 90% of the outstanding
Company Common Stock, without the consent of the Company, Purchaser shall
have the right, after it has accepted and paid for all of the Company Common
Stock tendered in the initial offer period, to provide for a "subsequent
offering period" (as contemplated by Rule 14d-11 under the Exchange Act) for
up to 20 Business Days after Purchaser's acceptance for payment of the shares
of Company Common Stock then tendered and not withdrawn pursuant to the
Offer. During any such subsequent offering period, Purchaser shall
immediately accept for payment and promptly pay for all shares of Company
Common Stock as they are tendered pursuant to the Offer in accordance with
Rule 14d-11 under the Exchange Act.
(b) No later than the first Business Day following execution of this
Agreement, and subject to the conditions of this Agreement, Parent shall
issue a joint press release with the Company (the "JOINT PRESS RELEASE")
regarding this Agreement and its intent to make the Offer and shall file with
the SEC the Joint Press Release, under cover of Schedule TO, indicating on
the front of such Schedule TO that such filing contains pre-commencement
communications.
(c) As soon as practicable on the date of commencement of the Offer,
Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto and
including the exhibits thereto, the "SCHEDULE TO") with respect to the Offer.
The Schedule TO will include or incorporate by reference as exhibits the
Offer to Purchase and forms of the letter of transmittal and summary
advertisement and all other ancillary documents (collectively, together with
any supplements or amendments thereto, the "OFFER DOCUMENTS"). Parent and
Purchaser will take all steps necessary to cause the Offer Documents to be
disseminated to holders of shares of Company Common Stock to the extent
required by applicable federal securities Laws. Parent, Purchaser and the
Company each agree promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect. Parent and Purchaser
agree to take all steps necessary to cause the Schedule TO as so corrected to
be filed with the SEC and the Offer Documents as so corrected to be
disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities Laws including
applicable SEC rules and regulations thereunder. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
TO and the Offer Documents prior to their being filed with the SEC or
disseminated to the holders of shares of Company Common Stock. In conducting
the Offer, Parent and Purchaser shall comply in all material respects with
the provisions of the Exchange Act and any other applicable Law. Purchaser
and Parent also agree to provide the Company and its counsel in writing with
any comments Purchaser, Parent or their counsel may receive from the SEC or
its staff with respect to the Schedule TO or the Offer Documents promptly
after the receipt of such comments and shall consult with and provide the
Company and its counsel a reasonable opportunity to review and comment on the
response of Purchaser to such comments prior to responding.
Section 2.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents that the Company's Board of Directors, at a meeting duly called
and held, has, by the unanimous vote of all directors present, (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to the Company's shareholders and are
advisable and in the best interests of the Company and its shareholders, (ii)
approved and adopted this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, in accordance with the requirements of
the PRGCL and has also taken such action as is necessary to render
inapplicable to this Agreement and the Transaction Support Agreements and the
transactions contemplated hereby and thereby the provisions of Article TENTH
of the Company's Certificate of Incorporation and (iii) resolved to recommend
acceptance of the Offer and, to the extent required by applicable Law,
approval and adoption of this Agreement and the Merger by its shareholders.
The Company further represents that UBS Warburg, L.L.C. ("UBS WARBURG") has
delivered to the Company's Board of Directors its oral opinion (to be
promptly confirmed in writing) that the consideration to be paid in the Offer
and the Merger is fair to the holders of shares of Company Common Stock
(other than Parent or any of its Affiliates) from a financial point of view.
The Company has not been advised by any of its directors or executive
officers who own shares of Company Common Stock that such director or
executive officer does not intend to tender his or her shares of Company
Common Stock pursuant to the Offer. In connection with the Offer, the Company
will, or will cause its transfer agent to, promptly furnish Parent with a
list of its shareholders, mailing labels and any available listing or
computer file containing the names and addresses of all record holders of
shares of Company Common Stock and lists in the Company's possession or
control of securities positions of shares of Company Common Stock held in
stock depositories, in each case as of a recent date, and will provide to
Parent such additional information (including updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance
as Parent may reasonably request in connection with the Offer. Subject to the
requirements of applicable Laws, and, except for such steps as are necessary
to disseminate the Schedule TO and the Offer Documents and any other
documents necessary to consummate the Offer and the transactions contemplated
by this Agreement, Parent and Purchaser shall hold in confidence the
information contained in any such labels, listings and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, shall, upon request, destroy all copies of
such information then in their possession (and certify such destruction to
the Company), except to the extent that such information can be shown to have
been previously known on a nonconfidential basis by Parent or Purchaser, in
the public domain through no fault of Parent or Purchaser or later Lawfully
acquired by Parent or Purchaser on a nonconfidential basis.
(b) Not later than the first Business Day following execution of
this Agreement and subject to the conditions of this Agreement, the Company
shall issue the Joint Press Release with Parent and shall file with the SEC
the Joint Press Release, under cover of Schedule 14D-9, indicating on the
front of such Schedule 14D-9 that such filing contains pre-commencement
communications.
(c) As soon as practicable on the day that the Offer is commenced,
the Company shall file with the SEC and disseminate to holders of shares of
Company Common Stock, in each case as and to the extent required by
applicable federal securities Laws, a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with any amendments or supplements thereto, the
"SCHEDULE 14D-9") that shall reflect the recommendations of the Company's
Board of Directors referred to in Section 2.2(a) above. The Company, Parent
and Purchaser each agree promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of shares of Company Common Stock,
in each case as and to the extent required by applicable federal securities
Laws. Parent and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 prior to its being filed with the
SEC. The Company also agrees to provide Parent and its counsel in writing
with any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments and shall consult with and provide Parent and its counsel a
reasonable opportunity to review and comment on the response of the Company
to such comments prior to responding.
Section 2.3 DIRECTORS.
(a) Promptly upon Consummation of the Offer, Parent shall be
entitled to designate for appointment or election to the Company's Board of
Directors, upon written notice to the Company, such number of directors,
rounded up to the next whole number, on the Company's Board of Directors such
that the percentage of its designees on the Board shall equal the percentage
of the outstanding shares of Company Common Stock owned of record or
beneficially by Parent and its direct or indirect Subsidiaries (the "PARENT
DESIGNEES"). In connection with the foregoing, the Company has taken all
action reasonably necessary to permit the Parent Designees to (i) be elected
to the Company's Board of Directors promptly following Consummation of the
Offer, including without limitation, increasing the size of the Company's
Board of Directors and obtaining the resignation of such number of its
current directors as is necessary to give effect to the foregoing provision
and (ii) constitute at least the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of (A) each committee
of the Company's Board of Directors, (B) each board of directors (or similar
body) of each Subsidiary of the Company and (C) each committee (or similar
body) of each such board. Notwithstanding the foregoing, until the Effective
Time, the Company's Board of Directors shall have at least three directors
who are directors of the Company on the date of this Agreement and who are
not officers of the Company or any of its Subsidiaries (the "INDEPENDENT
DIRECTORS"); provided, however, that (x) notwithstanding the foregoing, in no
event shall the requirement to have at least three Independent Directors
result in Parent's designees constituting less than a majority of the
Company's Board of Directors unless Parent shall have failed to designate a
sufficient number of Persons to constitute at least a majority and (y) if the
number of Independent Directors shall be reduced below three for any reason
whatsoever (or if immediately following Consummation of the Offer there are
not at least three then-existing directors of the Company who (1) are
Qualified Persons (as defined below) and (2) are willing to serve as
Independent Directors), then the number of Independent Directors required
hereunder shall be reduced to equal the number of then-serving Independent
Directors, unless the remaining Independent Director or Independent Directors
are able to identify a person or persons, as the case may be, who are not
officers or Affiliates of the Company, Parent or any of their respective
Subsidiaries (any such person being referred to herein as a "QUALIFIED
PERSON") willing to serve as an Independent Director, in which case such
remaining Independent Director or Independent Directors shall be entitled
(but not required) to designate any such Qualified Person or Persons to fill
such vacancies, and such designated Qualified Person shall be deemed to be an
Independent Director for purposes of this Agreement, or if no Independent
Directors then remain, the other Directors shall be entitled (but not
required) to designate three Qualified Persons to fill such vacancies, and
such persons shall be deemed to be Independent Directors for purposes of this
Agreement.
The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under this Section 2.3(a), including mailing
to shareholders the information required by such Section 14(f) and Rule 14f-1
(which the Company shall mail together with the Schedule 14D-9 if it receives
from Parent and Purchaser the information below on a basis timely to permit
such mailing) as is necessary to enable the Parent Designees to be elected to
the Company's Board of Directors. The Company's obligations to appoint the
Parent Designees to the Company's Board of Directors shall be subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Parent or Purchaser shall supply the Company in writing any
information with respect to either of them and their nominees, officers,
directors and Affiliates required by such Section 14(f) and Rule 14f-1 as is
necessary in connection with the appointment of any of Parent's designees
under this Section 2.3(a). The provisions of this Section 2.3(a) are in
addition to and shall not limit any rights that Purchaser, Parent or any of
their Affiliates may have as a holder or beneficial owner of shares of
Company Common Stock as a matter of Law with respect to the election of
directors or otherwise.
(b) Following the election or appointment of Parent's designees
pursuant to Section 2.3(a), the approval by affirmative vote or written
consent by a majority of the Independent Directors then in office (or, if
there shall be only one Independent Director then in office, the Independent
Director) shall be required to authorize (and such authorization shall
constitute the authorization of the Company's Board of Directors and no other
action on the part of the Company, including any action by any committee
thereof or any other director of the Company, shall be required or permitted
to authorize) (i) any amendment or termination of this Agreement by the
Company, (ii) any extension of time for performance of any obligation or
action hereunder by Parent or Purchaser or (iii) any waiver or exercise of
any of the Company's rights under this Agreement. Any action that requires
approval by the Independent Directors shall be deemed to be approved by a
majority of the Independent Directors if there is no Independent Director and
such action is approved by the Company's Board of Directors.
Section 2.4 MERGER WITHOUT MEETING OF SHAREHOLDERS. If following
Consummation of the Offer (or any subsequent offering period), Purchaser owns
at least 90% of the outstanding shares of Company Common Stock, each of the
parties hereto shall take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without the Company Shareholder Meeting, in accordance with Section 3053 of
the PRGCL.
ARTICLE III
THE MERGER AND RELATED MATTERS
Section 3.1 THE MERGER.
(a) Upon the terms and subject to the conditions of this Agreement,
in accordance with the PRGCL, at the Effective Time the Company and Purchaser
shall consummate a merger (the "MERGER") pursuant to which (i) Purchaser
shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease and (ii) the Company shall be
the surviving corporation in the Merger (sometimes hereinafter referred to as
the "SURVIVING CORPORATION") and shall continue its corporate existence under
the Laws of the Commonwealth of Puerto Rico.
(b) Upon the terms and subject to the conditions of this Agreement,
on the date of the Closing (or on such other date as Parent and the Company
may agree), Parent, Purchaser and the Company shall file with the Department
of State of Puerto Rico a certificate of merger or other appropriate
documents (in any such case, the "CERTIFICATE OF MERGER") executed and
acknowledged in accordance with the relevant provisions of the PRGCL, and
shall make all other filings or recordings required under the PRGCL. The
Merger shall become effective on the later of the date on which the
Certificate of Merger has been duly filed with the Department of State of
Puerto Rico or such time as is agreed upon by the parties and specified in
the Certificate of Merger, and such time is hereinafter referred to as the
"EFFECTIVE TIME."
(c) From and after the Effective Time, the Merger shall have the
effects set forth in this Agreement and in Section 3059 of the PRGCL.
Section 3.2 CERTIFICATE OF INCORPORATION OF THE SURVIVING
CORPORATION. The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until such time that the
Certificate of Incorporation is amended thereafter in accordance with the
PRGCL and subject to Section 8.7(a) hereof.
Section 3.3 BY-LAWS OF THE SURVIVING CORPORATION. The By-Laws of
the Company, as in effect immediately prior to the Effective Time, shall be
the By-Laws of the Surviving Corporation until such time that the By-Laws are
amended thereafter in accordance with the PRGCL and subject to Section 8.7(a)
hereof.
Section 3.4 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
At the Effective Time, the directors of Purchaser immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, each of
such directors to hold office, subject to the applicable provisions of the
PRGCL and the Certificate of Incorporation and By-Laws of the Surviving
Corporation, until the earlier of their resignation or the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time
shall, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, be the officers of
the Surviving Corporation until the earlier of their resignation or their
respective successors shall be duly elected or appointed and qualified.
Section 3.5 CLOSING. The closing of the Merger (the "CLOSING")
shall take place at 10:00 a.m., local time, on a date to be specified by the
parties, or, if no such date is specified, on the second Business Day after
satisfaction or, to the extent permitted by applicable Law, waiver by the
applicable parties, of all of the conditions set forth in Article IX hereof
(the "CLOSING DATE"), at a location to be mutually agreed to by the Company
and Parent.
Section 3.6 SUBSEQUENT ACTIONS. If at any time after the
Effective Time the Surviving Corporation determines that any deeds, bills of
sale, instruments of conveyance, assignments, assurances or any other actions
or things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of the Company or
Purchaser vested or to be vested in the Surviving Corporation as a result of,
or in connection with, the Merger or otherwise to carry out this Agreement,
the officers and directors of the Surviving Corporation shall be authorized
to execute and deliver, in the name and on behalf of either the Company or
Purchaser, all such deeds, bills of sale, instruments of conveyance,
assignments and assurances and to take and do, in the name and on behalf of
each of such entity or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
ARTICLE IV
CONVERSION OF SECURITIES
Section 4.1 CONVERSION OF CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holders of any shares of Company Common Stock or any shares of capital stock
of Purchaser:
(a) Purchaser Capital Stock. Each share of capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser-Owned Stock. All
shares of Company Common Stock that are owned by the Company, any Subsidiary
of the Company, Parent or any Subsidiary of Parent immediately prior to the
Effective Time shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Exchange of Shares of Company Common Stock. Each share of
Company Common Stock (other than shares to be cancelled in accordance with
Section 4.1(b) and any shares that are held by shareholders exercising
appraisal rights pursuant to Section 3062 of the PRGCL ("DISSENTING
SHAREHOLDERS")) issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive the Offer Price in cash,
payable to the holder thereof, without interest (the "MERGER CONSIDERATION"),
upon surrender of the certificate formerly representing such share in the
manner provided in Section 4.2. All such shares, when so converted, shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 4.2, without interest.
Section 4.2 EXCHANGE OF CERTIFICATES.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company organized under the Laws of the United
States or any state thereof and located therein reasonably acceptable to the
Company to act as agent for the holders of shares of Company Common Stock in
connection with the Merger (the "PAYING AGENT") to receive in trust the funds
to which holders of such shares shall become entitled pursuant to Section
4.1(c). At the Effective Time, Parent shall deposit with the Paying Agent
cash in U.S. dollars in an amount sufficient to pay the Merger Consideration
as provided herein. The Paying Agent shall invest such funds as directed by
the Parent on a daily basis; provided that no such investment or loss thereon
shall affect the amounts payable to the Company's shareholders pursuant to
this Article IV. Parent and the Surviving Corporation shall replace any
monies lost through an investment made pursuant to this Section 4.2. Any
interest and other income resulting from such investments shall be the
exclusive property of and shall be paid promptly to the Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES"),
whose shares were converted pursuant to Section 4.1 into the right to receive
the Merger Consideration (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent and
the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each share formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a Person other than the Person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the Person requesting
such payment shall have paid any transfer and other Taxes required by reason
of the payment of the Merger Consideration to a Person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. Until surrendered as contemplated by this Section
4.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 4.2. The right of any shareholder to receive the
Merger Consideration shall be subject to and reduced by any applicable
withholding Tax obligation.
(c) Transfer Books; No Further Ownership Rights in the Shares of
Company Common Stock. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of the shares of Company Common Stock on the records of the
Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of the shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock, except as otherwise provided
for herein or by applicable Law, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time that may have been declared or
made by the Company on such shares of Company Common Stock in accordance with
the terms of this Agreement or prior to the date of this Agreement and that
remain unpaid at the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article IV except as
otherwise provided by Law.
(d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) that had been made available to the
Paying Agent and that have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar Laws)
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest
thereon. Notwithstanding the foregoing, none of Parent, Purchaser, the
Surviving Corporation or the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar Law.
Section 4.3 APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, if any Dissenting Shareholder shall demand to be
paid the fair cash value of such holder's shares of Company Common Stock, as
provided in Section 3062 of the PRGCL, such shares shall not be converted
into or be exchangeable for the right to receive the Merger Consideration
except as provided in this Section 4.3, and the Company shall give Parent
notice of any written objections to this Agreement or the Merger under
Section 3062 of the PRGCL received by the Company and of any demands received
by the Company for the fair cash value of any shares of Company Common Stock
and Parent shall have the right to participate in all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for payment. If any Dissenting Shareholder shall fail to
perfect or shall have effectively withdrawn or lost the right to dissent, the
shares of Company Common Stock held by such Dissenting Shareholder shall
thereupon be treated as though such shares had been converted into the Merger
Consideration at the Effective Time pursuant to Section 4.1.
Section 4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. If any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of
a bond in such reasonable amount as Parent may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent shall deliver the Merger Consideration for each of the shares of
Company Common Stock represented by such Certificate.
ARTICLE V
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
Section 5.1 DISCLOSURE SCHEDULES. Prior to the execution and
delivery of this Agreement, the Company has delivered to Parent, and Parent
has delivered to the Company, a schedule (in the case of the Company, the
"COMPANY DISCLOSURE SCHEDULE," and in the case of Parent, the "PARENT
DISCLOSURE SCHEDULE") setting forth, among other things, items the disclosure
of which the Company or Parent, as the case may be, desires or is required to
make either in response to an express disclosure requirement contained in a
provision of this Agreement or as an exception to one or more of such party's
representations, warranties, covenants or agreements contained in Article VI,
in the case of the Company, or Article VII, in the case of Parent and
Purchaser, or to one or more of such party's covenants contained in Article
VIII. Notwithstanding anything in this Agreement to the contrary (i) no such
item is required to be set forth in the Disclosure Schedule as an exception
to a representation or warranty (other than the representations and
warranties contained in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5, 6.6,
6.7, 6.15, 6.17, 6.18, 6.19, 6.25, 7.1, 7.2, 7.4 and 7.5) if its absence
would not result in the related representation or warranty being deemed
untrue or incorrect under the standard established by Section 5.2, and (ii)
the mere inclusion of an item in a Disclosure Schedule in response to an
express disclosure requirement or as an exception to a representation,
warranty or covenant shall not be deemed an admission by a party that such
item is material or represents a material exception or material fact, event
or circumstance or that such item has had or would reasonably be expected to
have a Company Material Adverse Effect or Parent Material Adverse Effect, as
the case may be.
Section 5.2 STANDARDS. No representation or warranty of the
Company contained in Article VI (other than the representations and
warranties contained in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5, 6.6,
6.7, 6.15, 6.17, 6.18, 6.19 and 6.25) or of Parent and Purchaser in Article
VII (other than the representations and warranties contained in Sections 7.1,
7.2, 7.4 and 7.5) shall be deemed untrue or incorrect for any purpose under
this Agreement or the Offer and no party hereto shall be deemed to have
breached any such representation or warranty for any purpose under this
Agreement, in any case as a consequence of the existence or absence of any
fact, circumstance or event unless such fact, circumstance or event,
individually or when taken together with all other facts, circumstances or
events inconsistent with any such representations or warranties contained in
Article VI, in the case of the Company, or Article VII, in the case of Parent
and Purchaser, has had or would reasonably be expected to have a Company
Material Adverse Effect or Parent Material Adverse Effect, as the case may be.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the
Company represents and warrants to, and covenants and agrees with, Parent and
Purchaser as set forth below in this Article VI. Each exception set forth in
the Company Disclosure Schedule and each other response to this Agreement set
forth in the Company Disclosure Schedule is identified by reference to, or
has been grouped under a heading referring to, a specific individual Section
of this Agreement.
Section 6.1 DUE ORGANIZATION, GOOD STANDING AND POWER.
(a) The Company and each of its Subsidiaries is duly organized,
validly existing and in good standing under the Laws of the jurisdiction of
its organization, and each such Person has all requisite corporate (or
partnership, or limited liability company as applicable) power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business as a foreign corporation or other entity and is in
good standing in each jurisdiction in which such qualification is required.
(c) The Company has made available to Parent true, complete and
correct copies of the Certificate of Incorporation and By-Laws of the
Company, in each case as amended (if so amended) to the date of this
Agreement, and has made available the certificates or articles of
incorporation and by-laws or other organizational documents of its
Subsidiaries, in each case as amended (if so amended) to the date of this
Agreement.
(d) The respective certificates or articles of incorporation and
by-laws or other organizational documents of the Subsidiaries of the Company
do not contain any provision limiting or otherwise restricting the ability of
the Company to control such Subsidiaries. Section 6.1(d) of the Company
Disclosure Schedule sets forth a list of all Subsidiaries of the Company and
their respective jurisdictions of incorporation or organization and
identifies the Company's (direct or indirect) percentage of equity ownership
therein.
Section 6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and, subject to obtaining the Company Shareholder Approval, if
necessary, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and approved by the Company's
Board of Directors and no other corporate action on the part of the Company
is necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby, other than obtaining the Company Shareholder Approval,
if necessary, and the filing of the Certificate of Merger. This Agreement has
been duly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery of this Agreement by each of
Parent and Purchaser, this Agreement is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
Section 6.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 2,000,000 shares of Company
Preferred Stock. As of March 31, 2002, (i) 5,148,474 shares of Company Common
Stock were issued and outstanding, (ii) zero shares of Company Preferred
Stock were issued and outstanding and (iii) 851,526 shares of Company Common
Stock were held by the Company in its treasury. All issued and outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and free from preemptive rights.
There are no outstanding or authorized options, warrants, rights,
subscriptions, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to shares
of capital stock or other equity interests of the Company or any of its
Subsidiaries, pursuant to which the Company or any of its Subsidiaries is or
may become obligated to issue shares of its capital stock or other equity
interests or any securities convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of the capital stock or other equity
interests of the Company or any of its Subsidiaries (each an "ISSUANCE
OBLIGATION"). There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any outstanding securities of the
Company. The Company has no authorized or outstanding bonds, debentures,
notes or other indebtedness the holders of which have the right to vote (or
convertible or exchangeable into or exercisable for securities the holders of
which have the right to vote) with the shareholders of the Company on any
matter ("VOTING DEBT"). There are no restrictions (other than restrictions
under state corporation statutes or similar Laws) of any kind which prevent
or restrict the payment of dividends by the Company or any of its
Subsidiaries and there are no limitations or restrictions (other than
restrictions on sales or other dispositions under federal, state or Puerto
Rico securities Laws) on the right to sell or otherwise dispose of such
capital stock or other ownership interests.
(b) All of the issued and outstanding shares of capital stock of
each Subsidiary are beneficially owned by the Company, directly or
indirectly, and all such shares are validly issued, fully paid and
nonassessable and free from preemptive rights. No Subsidiary of the Company
has outstanding Voting Debt and there are no obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding securities of any of its Subsidiaries or any capital stock of, or
other ownership interests in, any of its Subsidiaries.
(c) Except for the Company's interest in its Subsidiaries, the
Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture,
limited liability company or other business association or entity which is
material to the Company and its Subsidiaries, taken as a whole.
(d) No indebtedness of the Company or any of its Subsidiaries
contains any restriction upon (i) the prepayment of any indebtedness of the
Company or its Subsidiaries, (ii) the incurrence of indebtedness by the
Company or its Subsidiaries or (iii) the ability of the Company or any of its
Subsidiaries to grant any Lien on the properties or assets of the Company or
its Subsidiaries.
Section 6.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i)
the filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), and any similar filings as may be
required pursuant to Puerto Rico or other Law, are made and the waiting
periods thereunder (if applicable) have been terminated or expired, (ii) the
prior notification, reporting, approval or consent requirements of other
antitrust or competition Laws as may be applicable are satisfied and any
antitrust filings/notifications that must or may be effected in countries
having jurisdiction are made and any applicable waiting periods thereunder
have been terminated or expired, (iii) the applicable requirements of the
Exchange Act are met, (iv) the requirements under any applicable foreign,
state or Puerto Rico securities or blue sky Laws are met, (v) the filing of
the Certificate of Merger and other appropriate merger documents, if any, as
required by the PRGCL, are made, and (vi) in the case of this Agreement and
the Merger, the Company Shareholder Approval is received if necessary, the
execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby (including the changes
in the composition of the Company's Board of Directors) and the performance
by the Company of its obligations hereunder and the performance of the
Transaction Support Agreements do not and will not: (A) violate or conflict
with any provision of the Company's Certificate of Incorporation (including
Article TENTH thereof) or the Company's By-Laws or the comparable governing
documents of any of its Subsidiaries; (B) cause the Company to violate or
conflict with (x) any United States federal, state, foreign or Puerto Rico
statute, law, ordinance, rule or regulation (together, "LAWS") or (y) any
order, judgment, decree or writ (together, "ORDERS") of any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality
of the United States, Puerto Rico, any foreign country or any domestic or
foreign state, county, city or other political subdivision (a "GOVERNMENTAL
AUTHORITY") or (z) any Permit, in each case, applicable to the Company or any
of its Subsidiaries or by which any of their respective properties or assets
may be bound; (C) require any filing with, or permit, consent or approval of,
or the giving of any notice to, any Governmental Authority by the Company; or
(D) result in a violation or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default under, or result in
the creation of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries under, or give rise to any obligation, right of
termination, cancellation, acceleration or increase of any obligation or a
loss of a benefit under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement,
contract, understanding, arrangement, lease or other instrument, whether
written or oral, ("CONTRACTS") to which the Company or any of its
Subsidiaries is a party, or by which any such Person or any of its properties
or assets are bound. There are no third-party consents or approvals required
to be obtained by the Company under the Contracts prior to the consummation
of the transactions contemplated by this Agreement.
Section 6.5 COMPANY REPORTS AND FINANCIAL STATEMENTS.
(a) Since December 31, 1999, the Company and, to the extent
applicable, its Subsidiaries, have filed all forms, reports and documents
(including exhibits and all other information incorporated therein) with the
SEC required to be filed by it pursuant to the federal securities Laws and
the SEC rules and regulations thereunder, and all forms, reports, schedules,
registration statements and other documents filed with the SEC by the Company
and, to the extent applicable, its Subsidiaries have complied in all material
respects with all applicable requirements of the federal securities Laws,
including the SEC rules and regulations promulgated thereunder. The Company
has, prior to the date of this Agreement, made available to Parent true,
complete and correct copies of all Company SEC Reports filed by the Company
and its Subsidiaries with the SEC between December 31, 1999 and the date of
this Agreement. As of their respective dates, the Company SEC Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Section 6.5(a) of the Company Disclosure Schedule
contains a true, complete and correct copy of all correspondence since
December 31, 1999 to date between the Company and the SEC, other than routine
transmittal letters.
(b) The Financial Statements (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC, (ii) were prepared in accordance with GAAP applied on
a consistent basis (except as may be indicated therein or in the notes or
schedules thereto) and (iii) present fairly in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in shareholders' equity and cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to normal
year-end adjustments).
(c) Except as set forth on the Balance Sheet, neither the Company
nor any of its Subsidiaries has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), in each case that is
required by GAAP to be set forth on a consolidated balance sheet of the
Company and its consolidated Subsidiaries, except for (i) liabilities and
obligations incurred in connection with this Agreement and fees and expenses
related thereto, and (ii) liabilities and obligations incurred in the
ordinary course of business consistent with past practice which would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
in default in respect of the terms and conditions of any indebtedness or
other agreement which would reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. The Company has no
obligations under any "off-balance sheet" financings or similar transactions,
other than such obligations (i) that are specifically disclosed in its
reports to the SEC, (ii) that constitute lease transactions entered into in
the ordinary course of business, or (iii) that are not specified in clauses
(i) or (ii) and do not represent obligations in excess of U.S. $100,000 in
the aggregate.
Section 6.6 INFORMATION TO BE SUPPLIED.
(a) Each of the Schedule 14D-9 and the Proxy Statement and the other
documents required to be filed by the Company with the SEC in connection with
the Offer, the Merger and the other transactions contemplated hereby will
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC thereunder and will
not, on the date of its filing or, in the case of the Proxy Statement, on the
date it is mailed to shareholders of the Company and at the time of the
Company Shareholder Meeting, and none of the written information supplied or
to be supplied by the Company expressly for inclusion or incorporation by
reference in the Schedule TO or the Offer Documents will at the time the
Schedule TO or the Offer Documents are filed with the SEC and first
published, sent or given to the Company's shareholders, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 6.6, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Proxy Statement or the Schedule
14D-9 based on information supplied by Parent or Purchaser expressly for
inclusion or incorporation by reference therein or based on information which
is not included in or incorporated by reference in such documents but which
should have been disclosed pursuant to Section 7.4.
Section 6.7 ABSENCE OF CERTAIN EVENTS. Except as explicitly
disclosed in the Company SEC Reports filed prior to the date of this
Agreement or as required or expressly permitted by this Agreement, since
December 31, 2001 the Company and its Subsidiaries have in all material
respects operated their respective businesses only in the ordinary course and
there has not occurred (i) any event, change, occurrence, effect, fact,
circumstance or condition which would reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect; and (ii) as of
the date hereof, neither the Company nor any of its Subsidiaries has taken
any of the actions described in Sections 8.2(b)(1), (2), (3), (5), (6), (7),
(8), (9), (10), (13), (14), (15), (17) or (18).
Section 6.8 LITIGATION. Other than with respect to claims that
are subject to complete insurance coverage (other than with respect to
deductibles pursuant to the Company's insurance policies) pursuant to the
Company's general liability, automobile or workers compensation insurance
policies and which do not exceed U.S. $25,000 individually or U.S. $250,000
in the aggregate, and except as explicitly disclosed in the Company SEC
Reports filed prior to the date of this Agreement, there are no
investigations, actions, suits or proceedings pending against the Company or
its Subsidiaries or, to the Knowledge of the Company, threatened against the
Company or its Subsidiaries (or any of their respective properties, rights or
franchises), at Law or in equity, or before or by any Puerto Rico, federal,
state, local or foreign commission, board, bureau, agency, regulatory or
administrative instrumentality or other Governmental Authority or any
arbitrator or arbitration tribunal. The Company does not have Knowledge of
any valid basis for any action, proceeding or investigation against the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is subject to any judgment that has not been satisfied in all
respects or any order or decree that remains in effect, which in any such
case was entered in any lawsuit or proceeding in which the Company or any of
its Subsidiaries was a party.
Section 6.9 TITLE TO PROPERTIES; ENCUMBRANCES; LEASES.
(a) The Company and each of its Subsidiaries has good, valid and
indefeasible title to all of its tangible properties and assets, with full
right to convey the same; in each case subject to no Liens, except for (A)
Liens reflected in the Balance Sheet, (B) Liens consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto
that do not detract from the value of, or impair the use of, such property by
the Company or any of its Subsidiaries in the operation of their respective
businesses and (C) Liens for current Taxes, assessments or governmental
charges or levies on property not yet due or which are being contested in
good faith. Neither the Company nor any of its Subsidiaries has granted any
options or rights of first refusal or rights of first offer to third parties
to purchase or otherwise acquire an interest in any of its tangible
properties and assets. All properties and assets reflected in the Balance
Sheet have an aggregate fair market and realizable value at least equal to
the aggregate value thereof as reflected therein.
(b) The Company and each of its Subsidiaries has valid leasehold
interests in each of its leased premises (collectively, the "TENANT LEASES").
Each Tenant Lease is in full force and effect, no notice of any default has
been delivered by any landlord under any of the Tenant Leases and to the
Knowledge of the Company there are no facts which would now or with the
giving of notice or the passage of time or both be a default under the terms
of any of the Tenant Leases. There are no pending claims by any tenant as to
premises leased to tenants by the Company or any of its Subsidiaries
(collectively, the "LANDLORD LEASES") and there are no pending claims by such
tenants for offsets against rent or other monetary claims made by tenants
against the Company or any of its Subsidiaries in its capacity as landlord.
Section 6.10 COMPLIANCE WITH LAWS. Except with respect to Taxes,
which are the subject of Section 6.13, environmental matters, which are the
subject of Section 6.16, employee benefits matters, which are the subject of
Section 6.11, and labor matters, which are the subject of Section 6.22, and
except as explicitly disclosed in the Company SEC Reports filed prior to the
date of this Agreement:
(a) The Company and each of its Subsidiaries have complied and are
presently complying with all applicable Laws, and neither the Company nor any
of its Subsidiaries has received written notification of any asserted present
or past failure to so comply.
(b) The Company and its Subsidiaries hold, to the extent legally
required, all Puerto Rico, federal, state, local and foreign permits,
approvals, licenses, authorizations, certificates, rights, exemptions and
orders from Governmental Authorities (the "PERMITS") that are required for
the operation of the respective businesses of the Company and its
Subsidiaries as now conducted.
(c) Each of the Company's and its Subsidiaries' tangible properties
and assets is in material compliance with all applicable Laws, including,
without limitation, all Laws with respect to zoning, building, fire and
health codes.
Section 6.11 EMPLOYEE BENEFIT PLANS
(a) Section 6.11(a) of the Company Disclosure Schedule contains a
true and complete list of each deferred compensation and each incentive
compensation, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination
or severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company or by any
trade or business, whether or not incorporated (an "ERISA AFFILIATE"), that
together with the Company would be deemed a "single employer" within the
meaning of section 4001(b) of ERISA, or to which the Company or an ERISA
Affiliate is party, whether written or oral, for the benefit of any employee
or former employee of the Company or any Subsidiary of the Company (the
"COMPANY BENEFIT PLANS").
(b) With respect to each Company Benefit Plan, the Company has
furnished to Buyer a complete and correct copy of each Company Benefit Plan
and any amendments thereto (or if the Company Benefit Plan is not a written
plan, a description thereof), any related trust or other funding vehicle, any
reports or summaries required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with respect
to each Company Benefit Plan intended to qualify under section 401 of the
Code.
(c) No liability under Title IV of ERISA has been incurred by the
Company, any Subsidiary of the Company or any ERISA Affiliate since December
31, 1997 that has not been satisfied in full, and, to the Knowledge of the
Company, no condition exists that presents a material risk to the Company,
any Subsidiary of the Company or any ERISA Affiliate of incurring any
liability under such Title, other than liability for premiums due to the
Pension Benefit Guaranty Corporation ("PBGC"), which payments have been or
will be made when due. Insofar as the representation made in this Section
6.11(c) applies to Section 4064, 4069 or 4204 of ERISA, it is made with
respect to any employee benefit plan, program, agreement or arrangement
subject to Title IV of ERISA to which the Company, any Subsidiary of the
Company or any ERISA Affiliate made, or was required to make, contributions
during the six-year period ending on the last day of the most recent plan
year ended before the date of this Agreement. The PBGC has not instituted
proceedings to terminate any Company Benefit Plan and, to the Knowledge of
the Company, no condition exists that presents a material risk that such
proceedings will be instituted. All contributions and premiums required to be
paid under (i) the terms of each of the Company Benefit Plans subject to
ERISA and (ii) Section 302 of ERISA and Section 412 of the Code, have, to the
extent due, been paid in full or properly recorded on the financial
statements or records of the Company or an ERISA Affiliate. No Company
Benefit Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA or
Section 412 of the Code), whether or not waived.
(d) No Company Benefit Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Company Benefit Plan a plan
described in section 4063(a) of ERISA.
(e) Each of the Company Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code. The administrator of each of
the Company Benefit Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a currently effective
determination letter from the IRS stating that it is so qualified, and, to
the Knowledge of the Company no event has occurred which would adversely
affect the Company's ability to rely on such determination. None of the
Company, any Subsidiary of the Company, any ERISA Affiliate, any of the
Company Benefit Plans, any trust created thereunder, nor to the Company's
Knowledge, any trustee or administrator thereof has engaged in a transaction
or has taken or failed to take any action in connection with which the
Company, any Subsidiary of the Company or any ERISA Affiliate could be
subject to any material liability for either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975, 4976 or 4980B of the Code. There are no pending or, to the
Knowledge of the Company, threatened claims by or on behalf of any Company
Benefit Plan, by any employee or beneficiary under any such Company Benefit
Plan or otherwise involving any such Company Benefit Plan (other than routine
claims for benefits). Neither the Company nor any ERISA Affiliate is a party
to any agreement or understanding, whether written or unwritten, with the
PBGC, the IRS, the Department of Labor or the Centers for Medicare and
Medicaid Services with respect to a Company Benefit Plan.
(f) Section 6.11(f) of the Company Disclosure Schedule sets forth
(i) each Company Benefit Plan which provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Subsidiary of the Company
for periods extending beyond their retirement or other termination of
service, other than (x) coverage mandated by applicable law, (y) death
benefits under any "pension plan," or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary) and (ii) any
unfunded liability of the Company or and Subsidiary of the Company with
respect to each such Company Benefit Plan.
(g) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time
of payment or vesting, or increase the amount of compensation due any such
employee or officer.
(h) No "leased employee," as that term is defined in Section 414(n)
of the Code, performs services for the Company. The Company has not (i) used
the services or workers provided by third party contract labor suppliers,
temporary employees, "leased employees," or individuals who have provided
services as independent contractors in such a manner as would reasonably be
expected to cause such workers to have become eligible to participate in the
Company Benefit Plans or (ii) used the services of individuals to an extent
that would reasonably be expected to result in the disqualification of any of
the Company Benefit Plans or the imposition of penalties or excise taxes with
respect to the Company Benefit Plans by the Internal Revenue Service, the
Department of Labor, the PBGC, or any other Governmental Body.
(i) With respect to each Company Benefit Plan established or
maintained outside of the United States of America primarily for benefit of
employees of the Company residing outside the United States of America (a
"FOREIGN PLAN"): (i) all employer and employee contributions to each Foreign
Plan required by law or by the terms of such Foreign Plan have been made, or,
if applicable, accrued, in accordance with normal accounting practices; (ii)
the fair market value of the assets of each funded Foreign Plan, the
liability of each insurer for any Foreign Plan funded through insurance or
the book reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the Measurement Date, with respect to all current and
former participants in such plan according to the actuarial assumptions and
valuations most recently used to determine employer contributions to such
Foreign Plan and no transaction contemplated by this Agreement shall cause
such assets or insurance obligations to be less than such benefit
obligations; and (iii) each Foreign Plan required to be registered has been
registered and has been maintained in good standing with applicable
regulatory authorities.
Section 6.12 BOOKS AND RECORDS. The books of account, minute
books, stock record books and other records of the Company and the
Subsidiaries of the Company have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the Exchange
Act. The Company has made available to Parent the complete minute books of
the Company and its Subsidiaries for all periods after December 31, 1997, and
such minute books contain true and correct records of all corporate action
taken by the Company's and each of its Subsidiaries' shareholders, Boards of
Directors and committees of the Boards of Directors since December 31, 1997,
and no meeting of any of such shareholders, the Boards of Directors or such
committees has been held for which minutes have not been prepared and are not
contained in such minute books.
Section 6.13 TAXES. Except as explicitly disclosed in the Company
SEC Reports filed prior to the date of this Agreement:
(a) The Company and each of its Subsidiaries has timely filed or
caused to be timely filed with the appropriate taxing authorities all
returns, statements, forms and reports for federal income and other Taxes (as
hereinafter defined) ("RETURNS") that are required to be filed by, or with
respect to, the Company and such Subsidiaries on or prior to the Closing
Date. The Returns as filed were true, correct and complete and accurately
reflect all liability for Taxes for the periods covered thereby. "TAXES"
shall mean all taxes, assessments, charges, duties, fees, levies or other
governmental charges including, without limitation, all Puerto Rico, federal,
state, local, foreign and other income, franchise, profits, capital gains,
capital stock, transfer, sales, use, value-added, occupation, property,
excise, severance, windfall profits, stamp, license, payroll, withholding and
other taxes, assessments, charges, duties, fees, levies or other governmental
charges of any kind whatsoever (whether payable directly or by withholding
and whether or not requiring the filing of a Return), all estimated taxes,
and all deficiency assessments, additions to tax, penalties and interest with
respect thereto and shall include any liability for such amounts as a result
either of being a member of a combined, consolidated, unitary or affiliated
group or of a contractual obligation to indemnify, any Person.
(b) All Taxes and liabilities for Taxes of the Company and its
Subsidiaries that have become due and payable have been timely paid or fully
provided for as a liability on the Financial Statements of the Company and
its Subsidiaries (or in the notes thereto) in accordance with GAAP. Since the
date of the Balance Sheet, neither the Company nor any of its Subsidiaries
has incurred liability for Taxes other than in the ordinary course of
business.
(c) No deficiencies for any Taxes have been asserted or assessed
against the Company or any of its Subsidiaries, which are not fully reserved
for or which are not being contested in good faith by appropriate
proceedings. No Governmental Authority is currently conducting a tax audit or
investigation with respect to the Company or any of its Subsidiaries, or has
asked in writing for an extension or waiver of an applicable statute of
limitations. With respect to Taxes or any Return, no power of attorney has
been executed by the Company or any of its Subsidiaries. To the Company's
Knowledge, there is no dispute or claim concerning any liability for Taxes of
the Company or any Company Subsidiary either claimed or raised by any taxing
authority in writing.
(d) Neither the Company nor any of its Subsidiaries has been a
member of any affiliated group within the meaning of Section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
Puerto Rico, state, local or foreign Law (other than a group the common
parent of which is the Company), or has any liability for Taxes of any Person
(other than the Company and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 or any similar provision of Puerto Rico, state, local or
foreign Law as a transferee or successor, by contract or otherwise.
(e) All Taxes which the Company or any of its Subsidiaries is (or
was) required by Law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(f) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which the Company (or any of its Subsidiaries) could be liable
for any Taxes of any party other than the Company or any Subsidiary of the
Company.
(g) Neither the Company nor any of its Subsidiaries is a party to
any agreement, plan, contract or arrangement that could result, separately or
in the aggregate, in a payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(h) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
(i) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code.
(j) There are no Liens for Taxes upon any property or assets of the
Company or any of its Subsidiaries, except for Liens for Taxes not yet due or
for which adequate reserves have been established in accordance with GAAP.
(k) No unresolved claim that the Company or any of its Subsidiaries
is or may be subject to Taxes has been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not pay Taxes
or file Returns.
Section 6.14 INTELLECTUAL PROPERTY. The Company and its
Subsidiaries own, or are validly licensed or otherwise have the right to use
in the manner currently used, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights and other proprietary intellectual property rights and
computer programs (collectively, "INTELLECTUAL PROPERTY RIGHTS") which are
used in the conduct of the business of the Company and its Subsidiaries and
the consummation of the transactions contemplated hereby will not alter or
impair any Intellectual Property Rights in any respect. No claims are pending
or, to the Knowledge of the Company, threatened against the Company or any of
its Subsidiaries that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. To the Knowledge of the Company, no person is
infringing the rights of the Company or any of its Subsidiaries with respect
to any Intellectual Property Right.
Section 6.15 BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than UBS Warburg,
the fees and expenses of which will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Company. The estimated professional
fees and expenses incurred and to be incurred by the Company in connection
with the Offer, the Merger and the other transactions contemplated hereby
(including the fees of UBS Warburg and the fees of the Company's legal
counsel) are set forth in Section 6.15 of the Company Disclosure Schedule.
The Company has furnished to Parent a true, complete and correct description
of the financial details of all agreements between the Company and UBS
Warburg relating to the Offer, the Merger and the other transactions
contemplated hereby, copies of which have been provided to Parent.
Section 6.16 ENVIRONMENTAL MATTERS.
(a) Definitions.
(i) "Cleanup" means all actions required under Environmental
Laws to: (1) cleanup, remove, treat or remediate the Release of
Hazardous Materials in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Materials so that they do not migrate, endanger
or threaten the indoor or outdoor environment; (3) perform
government-required pre-remedial studies and investigations and
post-remedial monitoring and care; or (4) respond to any lawful
government requests for information or documents in any way relating to
cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of the Release of Hazardous Materials
in the indoor or outdoor environment.
(ii) "Environmental Claim" means any written claim, action,
cause of action, or investigation or notice by any person or entity
alleging potential liability (including, without limitation, potential
liability for investigatory costs, Cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (a) the Release
of any Hazardous Materials at any location, whether or not owned or
operated by the Company, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(iii) "Environmental Laws" means all applicable written
federal, state, local and foreign laws and regulations relating to
pollution or protection of human health or the environment, including
without limitation, laws relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal,
transport or handling of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
(iv) "Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National
Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss.
300.5, or defined as such by, or regulated as such under, any
Environmental Law.
(v) "Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or
migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater and surface or
subsurface strata) or into or out of any property, including the
movement of Hazardous Materials through or in the air, soil, surface
water, groundwater or property.
(b) Representations and Warranties on Environmental Matters.
(i) The Company is in material compliance with all
Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company of all material permits and other material
governmental authorizations required under Environmental Laws, and
material compliance with the terms and conditions thereof). The Company
has not received any written communication, whether from a governmental
authority, citizens group or employee, alleging that the Company is not
in such material compliance, and. to the Knowledge of the Company, there
are no past or present actions, activities, circumstances, conditions,
events or incidents that may prevent or interfere with such compliance
in the future.
(ii) No transfers of permits or other governmental
authorizations under Environmental Laws, and no additional permits or
other governmental authorizations under Environmental Laws, will be
required to permit the Buyer to conduct the business of the Company in
material compliance with all Environmental Laws immediately following
the Effective Time, as conducted by the Company immediately prior to the
Effective Time. To the extent that such transfers or additional permits
and other governmental authorizations are required, the Company agrees
to use its reasonable best efforts to cooperate with the Parent to
effect such transfers and obtain such permits and other governmental
authorizations prior to the Effective Time.
(iii) There is no Environmental Claim pending or, to the
Knowledge of the Company, threatened against the Company or against any
person or entity whose liability for any Environmental Claim the Company
has expressly retained or assumed either contractually or by operation
of law.
(iv) The Company has not and, to the Knowledge of the Company,
no other person has placed, stored, deposited, discharged, buried,
dumped or disposed of Hazardous Materials or any other wastes produced
by, or resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent to any
property currently or formerly owned, operated or leased by the Company,
except for inventories of such substances to be used, and wastes
generated therefrom, in the ordinary course of business of the Company
(which inventories and wastes, if any, were and are stored or disposed
of in accordance with applicable Environmental Laws and in a manner such
that there has been no Release of any such substances).
(v) The Company has delivered or otherwise made available for
inspection to Parent true, complete and correct copies and results of
any material reports, studies, analyses, tests or monitoring possessed
or initiated by the Company pertaining to Hazardous Materials in, on,
beneath or adjacent to any property currently or formerly owned,
operated or leased by the Company, or regarding the Company's material
compliance with Environmental Laws.
Section 6.17 TAKEOVER STATUTES. The Company's Board of Directors
has approved the Offer, the Merger and this Agreement and, assuming the
accuracy of Parent's and Purchaser's representations in Section 7.6, such
approval is sufficient and no further action by the Company Board of
Directors is required to render inapplicable to the Offer, the Merger, this
Agreement and the other transactions contemplated hereby the provisions of
Article Tenth of the Company's Certificate of Incorporation. The Company's
Board of Directors has also taken such action as is necessary to render
inapplicable to the Transaction Support Agreements and the transactions
contemplated thereby the provisions of Article TENTH of the Company's
Certificate of Incorporation. No other "fair price," "moratorium," "control
share," "business combination," "affiliate transaction," or other
anti-takeover statute or similar statute or regulation of any jurisdiction is
applicable to the Offer, the Merger, this Agreement and the other
transactions contemplated hereby.
Section 6.18 VOTING REQUIREMENTS; BOARD APPROVAL.
(a) The affirmative vote of the holders of a majority of the
outstanding shares of the Company Common Stock, voting as one class with each
share having one vote, is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve this Agreement, the
Merger and the transactions contemplated hereby.
(b) The Company's Board of Directors has, as of the date of this
Agreement, (i) unanimously determined that the Offer and the Merger are fair
to the Company's shareholders, and are in the best interests of the Company
and its shareholders, (ii) approved this Agreement and the transactions
contemplated hereby and (iii) resolved to recommend that the shareholders of
the Company approve and adopt this Agreement, the Offer and the Merger.
Section 6.19 OPINION OF FINANCIAL ADVISOR. The Company has
received the oral opinion of UBS Warburg (to be promptly confirmed in
writing) to the effect that, as of the date of this Agreement, the
consideration to be paid in the Offer and the Merger is fair to the holders
of shares of the Company Common Stock (other than Parent or any of its
Affiliates) from a financial point of view, and a true, complete and correct
copy of such opinion has been, or promptly upon receipt thereof will be,
delivered to Parent. The Company has been authorized by UBS Warburg to permit
the inclusion of such opinion in its entirety in the Schedule 14D-9 and Proxy
Statement, and references thereto in Schedule TO and the Offer Documents so
long as such references are in form and substance reasonably satisfactory to
UBS Warburg and its counsel.
Section 6.20 CONTRACTS.
(a) Neither the Company nor any of its Subsidiaries is a party to or
bound by any contract, arrangement, commitment or understanding (whether
written or oral) that: (i) is an employment agreement that upon Consummation
of the Offer or the effectiveness of the Merger, will (either alone or upon
the occurrence of any additional acts or events) result in any payment or
benefits (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any rights to any payment or benefits, from
Parent, Purchaser, the Company or the Surviving Corporation or any of their
respective Subsidiaries to any officer, director, consultant or employee
thereof, (ii) is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed (in whole or in part) after the
date of this Agreement that has not been filed or incorporated by reference
in the Company SEC Reports, (iii) which contains any material prohibition on
the conduct of any business or line of business, or any material limitation
on the scope of business that may be conducted, by the Company of any of its
Subsidiaries, including geographic limitations on the Company's or any of its
Subsidiaries' activities or (iv) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement. Each contract, arrangement, commitment or understanding of
the type described in this Section 6.20(a), whether or not set forth in
Section 6.20(a) of the Company Disclosure Schedule, is referred to herein as
a "MATERIAL CONTRACT." The Company has previously made available to Parent
true, complete and correct copies of each Material Contract.
(b) Each Material Contract is valid and binding and in full force
and effect, (ii) no default exists on the part of the Company or any of its
Subsidiaries under any such Material Contract and no event or condition
exists which constitutes or, after notice or lapse of time or both, would
constitute, a default on the part of the Company or any of its Subsidiaries
under any such Material Contract and (iii) to the Knowledge of the Company no
other party to such Material Contract is in default in any respect
thereunder.
Section 6.21 PLANTS AND EQUIPMENT. The plants, structures and
equipment necessary for the continued operation of the Company or any of its
Subsidiaries are structurally sound with no defects and, taking into account
ordinary wear and tear, are in good operating condition and repair and are
sufficient to produce the products of the Company and its Subsidiaries, taken
as a whole, in quantities not less than the quantities produced in any
calendar year since 1996. Other than as set forth in the Company Budget, none
of such plants, structures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs, which in nature and
cost are consistent with past practice or normal expectations. Each of the
facilities of the Company and its Subsidiaries has all required mining
Permits and concessions to produce raw materials and production inputs in
sufficient quantities for the production of products of the Company and its
Subsidiaries in the amounts currently produced.
Section 6.22 LABOR AND EMPLOYMENT MATTERS. Except as set forth on
Schedule 6.22 of the Company's Disclosure Schedule, (a) the Company is not
party to or bound by any collective bargaining agreement or any other
agreements with a labor union; (b) to the Knowledge of the Company there has
been no labor union prior to the date hereof organizing any employees of the
Company into one or more collective bargaining units and the Company has not
received notice that any representation petition respecting the employees of
the Company has been filed with the National Labor Relations Board ("NLRB");
(c) there is not now, and there has not been since December 31, 1999 any
actual or, to the Knowledge of the Company, threatened labor dispute, strike,
slowdown or work stoppage which affects or may affect the business of the
Company or which may interfere with its continued operations; (d) to the
Knowledge of the Company, neither the Company nor any employee, agent or
representative thereof, have since December 31, 1999 committed any unfair
labor practice as defined in the National Labor Relations Act, as amended,
and there is no pending or, to the Knowledge of the Company, threatened
charge or complaint against the Company by or with the NLRB or any
representative thereof; (e) to the Knowledge of the Company, the Company is
in compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, health and safety, and wages
and hours; (f) the Company has not received written notice of any
investigation, charge or complaint against the Company pending before the
Equal Employment Opportunity Commission or any other federal, state, or
Puerto Rico government agency or court or other tribunal regarding an
unlawful employment practice; (g) there are no complaints, lawsuits,
arbitrations or other proceedings pending or, to the Knowledge of the
Company, threatened by or on behalf of any present or former employee of the
Company alleging breach of any express or implied contract of employment; (h)
the Company is and has been in compliance with all notice and other
requirements under the Worker Adjustment and Retaining Notification Act
("WARN") or similar Puerto Rico statute.
Section 6.23 CERTAIN CONTRACTS
(a) There are no Contracts (other than loan agreements) between (i)
the Company or any of its Subsidiaries, on the one hand, and (ii) any
director, officer or employee of the Company or its Subsidiaries, any
Affiliate of any director, officer or employee of the Company or its
Subsidiaries or any Person the equity interests of which are more that 5%
owned by any director, officer or employee of the Company or its
Subsidiaries, on the other hand, other than any such Contracts that will
terminate or expire prior to or as of Consummation of the Offer, in each case
providing for payments in the aggregate of more than U.S. $25,000 in any
12-month period or U.S. $50,000 over the remaining duration of any such
Contracts, and not to exceed U.S. $250,000 in the aggregate.
(b) There are no Contracts between the Company or any of its
Subsidiaries with any Person (i) requiring that the Company or such
Subsidiary purchase or sell any product or service exclusively from or to any
Person, (ii) prohibiting the Company or any of its Subsidiaries from selling
products or services to any Person, (iii) requiring the Company or any of its
Subsidiaries to purchase all of their requirements of any product or service
from any Person or (iv) requiring the Company to pay for any product or
service regardless of whether or not the Company avails itself of such
product or service.
(c) There are no Contracts between the Company or any of its
Subsidiaries with any Person with a term of more than two years providing for
payments of more than U.S. $50,000 in any 12-month period or U.S. $100,000
over the remaining duration of any such Contracts and not to exceed U.S.
$250,000 in the aggregate in any 12-month period that are not cancelable by
the Company without penalty, payment or other obligation.
Section 6.24 INSURANCE. The Company and its Subsidiaries have
insurance coverage in amounts and with deductibles which are customary for a
company similar in size, location and industry to the Company and its
Subsidiaries.
Section 6.25 CERTAIN ACTIONS. None of the Company or any of its
Subsidiaries, or any of their respective officers, directors or, to the
Knowledge of the Company, any of their employees or representatives has taken
any action or made any payment since December 31, 1997 that would constitute
a breach of the United States Foreign Corrupt Practices Act.
Section 6.26 XXXXX LOANS AND LOAN COMMITMENTS
(a) Definitions.
(i) "XXXXX DEBTORS" means the Person or Persons, directly or
indirectly, obligated on or in respect of a Xxxxx Loan or Xxxxx Loan
Commitment (other than the Company or any Subsidiary of the Company),
including any guarantor or other provider of security.
(ii) "XXXXX LOANS" means all of the following owed to or held
by Xxxxx or by the Company relating to Xxxxx (including any of the
following fully or partially charged off the books of the Company):
(A) loans, advances or other extensions of credit,
including customer liabilities (on letters of credit or
otherwise), and including in all cases loans made to pay
interest accruing on loans whether or not due or payable
(sometimes referred to as capitalized interest);
(B) all Liens (including security interests), rights
(including rights of set-off), remedies, powers, privileges,
demands, priorities, equities and benefits owned or held by,
or accruing or to accrue to or for the benefit of, the holder
of the obligations or instruments referred to in clause (A)
above, including but not limited to those arising under or
based upon Xxxxx Loan Documents, standby letters of credit,
payment bonds and performance bonds at any time and from time
to time existing with respect to any of the obligations or
instruments referred to in clause (A) above; and
(C) all amendments, modifications, renewals,
extensions, refinancings and refundings of or for any of the
foregoing.
(iii) "XXXXX LOAN COMMITMENTS" means the collective reference
to each commitment or obligation on the part of Xxxxx or the Company
relating to Xxxxx to extend credit to any Person.
(iv) "XXXXX LOAN DOCUMENTS" means the agreements, instruments,
certificates, or other documents at any time evidencing or otherwise
relating to, governing, or executed in connection with, or as security
for a Xxxxx Loan or a Xxxxx Loan Commitment, including without
limitation, security agreements, notes, bonds, acceptances and letters
of credit issued in connection therewith, loan agreements, letter of
credit applications, letters of credit, drafts, guarantees, assignments,
security agreements, pledges, subordination or priority agreements,
undertakings, security instruments, financing statements, certificates,
documents, participation and assignment agreements and inter-creditor
agreements, and all amendments, modifications, renewals, extensions,
rearrangements and substitutions with respect to any of the foregoing.
(v) "XXXXX" means Xxxxx Capital Corp., a wholly owned
Subsidiary of the Company.
(b) Representations on Xxxxx Loans and Xxxxx Loan Commitments.
(i) Each Xxxxx Loan or Xxxxx Loan Commitment was made by Xxxxx
or the Company in the ordinary course of business consistent with past
practice, is at a rate of interest usual and customary for such Xxxxx
Loan or Xxxxx Loan Commitment and is collectible in accordance with its
terms, subject to any reserves for uncollectible Xxxxx Loans set forth
on the Balance Sheet and applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors' rights
generally. Each Xxxxx Loan is secured by a Lien on collateral with a
value in excess of the amount owed under such Xxxxx Loan. Section 6.26
of the Company Disclosure Schedule sets forth as of the date of this
Agreement: (i) the unpaid principal balance of each Xxxxx Loan as well
as the aggregate amount of any Xxxxx Loan Commitment, (ii) the payment
status and maturity date of each Xxxxx Loan and (iii) the interest rate
associated with each Xxxxx Loan and Xxxxx Loan Commitment.
(ii) Each Xxxxx Loan Document constitutes a valid, legal and
binding obligation of the Debtors thereunder, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors' rights
generally; each Xxxxx Loan Document contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization of the benefits intended to be
provided thereby, including by the security interest or Lien created and
granted (or purported to be created or granted) by such Xxxxx Loan
Document; all Liens granted to Xxxxx or the Company in any collateral
described in any Xxxxx Loan Document as security for each Xxxxx Loan and
Xxxxx Loan Commitment constitute valid and perfected Liens in such
collateral (assuming the relevant Debtor has rights in the collateral as
to permit attachment);
(iii) All Xxxxx Loans, Xxxxx Loan Commitments and related
Xxxxx Loan Documents were issued, made and maintained in material
compliance with applicable Law; there is no valid claim pending against
the Company with respect to, or, to the Knowledge of the Company, any
valid defense to the enforcement by the Company of, such Xxxxx Loan or
Xxxxx Loan Commitment and neither the Company nor any of its Affiliates
has taken or failed to take any action that would reasonably be expected
to entitle any Debtor or other party to assert successfully any claim or
defense against the Company, Parent or Purchaser (including without
limitation any right not to repay any such obligation or any part
thereof or any right to subordinate the claims related to such Xxxxx
Loan to any other claim); and
(iv) None of the rights or remedies under the Xxxxx Loan
Documents in favor of Xxxxx or the Company have been materially amended,
modified, waived, supplemented, subordinated or otherwise altered by
Xxxxx, the Company or any of its Affiliates.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the Parent Disclosure Schedule, each of
Parent and Purchaser represents and warrants to, and covenants and agrees
with, the Company as set forth in this Article VII. Each exception set forth
in the Parent Disclosure Schedule and each other response to this Agreement
set forth in the Parent Disclosure Schedule is identified by reference to, or
has been grouped under a heading referring to, a specific individual Section
of this Agreement.
Section 7.1 DUE ORGANIZATION; GOOD STANDING. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation.
Section 7.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of
Parent and Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Parent and Purchaser, and the
consummation by each such party of the transactions contemplated hereby, have
been duly authorized and approved by the respective boards of directors of
Parent and Purchaser and by the sole shareholder of Purchaser and no other
corporate action on the part of either of Parent or Purchaser is necessary to
authorize the execution, delivery and performance of this Agreement by each
of Parent and Purchaser and the consummation of the transactions contemplated
hereby other than filing the Certificate of Merger. This Agreement has been
duly executed and delivered by each of Parent and Purchaser and, assuming the
due and valid authorization, execution and delivery of this Agreement by the
Company, this Agreement is a valid and binding obligation of each of Parent
and Purchaser, enforceable against each of Parent and Purchaser in accordance
with its terms.
Section 7.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i)
the filings required under the HSR Act are made and the waiting periods
thereunder (if applicable) have been terminated or expired, (ii) the prior
notification and reporting requirements of other antitrust or competition
Laws as may be applicable are satisfied and any antitrust
filings/notifications which must or may be effected in countries having
jurisdiction are made and any waiting periods thereunder have been terminated
or expired, (iii) the applicable requirements of the Exchange Act are met,
(iv) the requirements under any applicable Puerto Rico, foreign or state
securities or blue sky Laws are met and (v) the filing of the Certificate of
Merger and other appropriate merger documents, if any, as required by the
PRGCL are made, the execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the transactions
contemplated hereby and the performance of each of Parent and Purchaser of
its obligations hereunder do not and will not: (A) violate or conflict with
any provision of the governing documents of Parent, Purchaser or any of their
respective Subsidiaries; (B) violate or conflict with any Laws or Orders of
any Governmental Authority or any Permit applicable to Parent, Purchaser or
any of their respective Subsidiaries or by which any of their respective
properties or assets may be bound; (C) require any filing with, or permit,
consent or approval of, or the giving of any notice to, any Governmental
Authority; or (D) result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Lien upon any of the properties or
assets of Parent, Purchaser or any of their respective Subsidiaries under, or
give rise to any obligation, right of termination, cancellation, acceleration
or increase of any obligation or a loss of a benefit under, any of the terms,
conditions or provisions of any Contracts to which Parent, Purchaser or any
of their respective Subsidiaries is a party, or by which any such Person or
any of its properties or assets are bound.
Section 7.4 INFORMATION TO BE SUPPLIED.
(a) Each of the Schedule TO and the Offer Documents and the other
documents required to be filed by Parent with the SEC in connection with the
Offer, the Merger and the other transactions contemplated hereby will comply
as to form, in all material respects, with the requirements of the Exchange
Act and will not, on the date of its filing, and none of the information
supplied or to be supplied by Parent or Purchaser expressly for inclusion or
incorporation by reference in the Schedule 14D-9 or the Proxy Statement will,
in the case of the Schedule 14D-9, at the time the Schedule 14D-9 is filed
with the SEC and first published, sent or given to the Company's shareholders
or, in the case of the Proxy Statement on the dates the Proxy Statement is
mailed to shareholders of the Company and at the time of the Company
Shareholder Meeting will not, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 7.4, no
representation or warranty is made by Parent with respect to statements made
or incorporated by reference in the Schedule TO, the Offer Documents, the
Schedule 14D-9 or Proxy Statement based on information supplied by the
Company expressly for inclusion or incorporation by reference therein or
based on information which is not made in or incorporated by reference in
such documents but which should have been disclosed pursuant to Section 6.6.
Section 7.5 BROKER'S OR FINDER'S FEE. Except for Xxxxxxx, Sachs &
Co. (whose fees and expenses will be paid by Parent or Purchaser), no agent,
broker, Person or firm acting on behalf of Parent or Purchaser is, or will
be, entitled to any fee, commission or broker's or finder's fees from any of
the parties hereto, or from any Person controlling, controlled by, or under
common control with any of the parties hereto, in connection with this
Agreement or any of the transactions contemplated hereby.
Section 7.6 OWNERSHIP OF CAPITAL STOCK. Neither Parent, Purchaser
nor any of their respective Subsidiaries beneficially owns, directly or
indirectly, any capital stock of the Company or is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any capital stock of the Company, other than as contemplated by
this Agreement and the Transaction Support Agreements. As of the date of this
Agreement, none of Purchaser, Parent or any Affiliate of Parent is an
"Interested Stockholder" of the Company, as such term is defined in Article
Tenth of the Company's Certificate of Incorporation.
Section 7.7 NO PRIOR ACTIVITIES. Purchaser was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement,
has no Subsidiaries and has undertaken no business or activities other than
in connection with entering into this Agreement and engaging in the
transactions contemplated hereby. All of the issued and outstanding shares of
capital stock of Purchaser are issued and outstanding, are duly authorized,
validly issued, fully paid and nonassessable.
Section 7.8 SUFFICIENT FUNDS. Parent and Purchaser have
sufficient funds to purchase all of the shares of Company Common Stock
outstanding on a fully diluted basis at the Offer Price, to retire all
outstanding indebtedness of the Company and its Subsidiaries and to pay all
costs, fees and expenses related to the transactions contemplated by this
Agreement (collectively, "SUFFICIENT FUNDS") and such funds will be available
at the times required under this Agreement.
ARTICLE VIII
COVENANTS
Section 8.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND
RECORDS. During the period commencing on the date hereof and ending on the
earliest of (i) the Closing Date, (ii) the date on which this Agreement is
terminated pursuant to Section 10.1 hereof and (iii) July 18, 2002, the
Company shall, and shall cause its Subsidiaries to, upon reasonable notice,
afford Parent, and Parent's counsel, accountants, consultants, financing
sources and other authorized representatives, access during normal business
hours to its and the Company's Subsidiaries' executive officers, properties,
books and records in order that they may have the opportunity to make such
investigations as they shall reasonably deem necessary of the Company's and
its Subsidiaries' affairs, including, without limitation, operational,
market, financial, legal, environmental, building and mechanical inspections
(including, without limitation, subsurface or other physically invasive
investigations) and title and survey due diligence; such investigation shall
not, however, affect the representations and warranties made by the Company
in this Agreement, provided, however, that if as of July 18, 2002 or any date
thereafter it has come to the attention of Parent that there has been a
breach by the Company of a representation, warranty or covenant hereunder,
the date set forth in clause (iii) shall be extended for so long as, and only
to the extent necessary for, Parent to continue to investigate the matters
causing or otherwise relating to any such breach or, if later, any Cure
Period relating to such breach and provided, further, that all such access
shall be reinstated promptly upon Consummation of the Offer. The Company
shall furnish promptly to Parent and Purchaser (x) a copy of each form,
report, schedule, statement, registration statement and other document filed
by it during such period pursuant to the requirements of Puerto Rico,
federal, state or foreign securities Laws and (y) all other information
concerning the Company's or its Subsidiaries' business, properties and
personnel as Parent or Purchaser may reasonably request. The Company agrees
to cause its officers and employees to furnish such additional financial and
operating data and other information and respond to such inquiries as Parent
or Purchaser shall from time to time reasonably request. Parent and Purchaser
shall make all reasonable efforts to minimize any disruption to the
businesses of the Company and its Subsidiaries which may result from the
requests made hereunder. The foregoing provisions of this Section 8.1 shall
not require the Company or any of its Subsidiaries to disclose any
information the disclosure of which in the reasonable good faith judgment of
the Company after consultation with outside counsel would (i) violate any
applicable antitrust or competition Law or (ii) violate any contractual
obligation of the Company or its Subsidiaries to any third party to maintain
the confidentiality of such information; provided, however, that with respect
to any information covered by this clause (ii), the Company shall use
commercially reasonable efforts to obtain the consent of any such third party
to such disclosure; provided, further, however that this clause (ii) shall
not limit or restrict any obligation of the Company to disclose information
to Parent pursuant to Section 8.5 or Section 10.1(c)(i). All information
exchanged pursuant to this Section 8.1 shall be subject to the
Confidentiality Agreement.
Section 8.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE
CLOSING DATE. Except as permitted, required or specifically contemplated by,
or otherwise described in, this Agreement or otherwise consented to or
approved in writing by Parent, which consent or approval shall not be
unreasonably withheld, conditioned or delayed in the case of clauses
8.2(b)(4) or (12), and except as set forth in Section 8.2 of the Company
Disclosure Schedule, during the period commencing on the date hereof until
the Effective Time:
(a) The Company and each of its Subsidiaries shall conduct their
respective operations only according to their ordinary and usual course of
business consistent with past practice and shall use their reasonable best
efforts to preserve intact their respective business organizations, keep
available the services of their officers and employees and maintain
satisfactory relationships with those Persons having significant business
relationships with them;
(b) Neither the Company nor any of its Subsidiaries shall:
(1) make any change in or amendment to its certificate or
articles of incorporation or its by-laws or similar organizational
documents;
(2) issue or sell, or authorize to issue or sell, any shares
of its capital stock, Voting Debt or any other securities, or issue or
sell, or authorize to issue or sell, any securities convertible into, or
options, warrants or rights to purchase or subscribe for, or enter into
any arrangement or contract with respect to the issuance or sale of, any
shares of its capital stock, Voting Debt or any other securities, or
make any other changes in its capital structure;
(3) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine, redeem or
reclassify, or purchase or otherwise acquire, any shares of its capital
stock or its other securities, other than (A) normal quarterly cash
dividends not in excess of U.S. $0.19 per share declared and paid in
accordance with the Company's past dividend policy, provided that the
timing of the declaration, record and payment dates, shall be the same
dates as were used by the Company in the last calendar year, or, if any
such date shall not be a Business Day, the next succeeding Business Day,
and provided further, that no such cash dividends shall be declared
after Consummation of the Offer or (B) dividends payable by a wholly
owned Subsidiary of the Company to the Company or another wholly owned
Subsidiary of the Company;
(4) incur any capital expenditures or any obligations or
liabilities in respect thereof, except (A) with respect to expansion
projects, for expenditures for such projects which are consistent with
the budget for the Company set forth in Section 8.2(b) of the Company
Disclosure Schedule (the "COMPANY BUDGET"), (B) those required for
maintenance and replacement in the ordinary course of business not to
exceed the amounts provided for maintenance and replacement in the
Company Budget and (C) capital expenditures outside the scope of the
Company Budget that do not exceed U.S. $250,000 in the aggregate.
(5) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof (excluding any of the Company's Subsidiaries) or (B)
any assets, including real estate, except purchases of inventory,
equipment, or other non-material assets in the ordinary course of
business consistent with the Company Budget;
(6) (A) except to the extent required under existing Company
Benefit Plans as in effect on the date of this Agreement, increase the
compensation or fringe benefits of any of its directors, officers or
employees or grant any severance or termination pay not currently
required to be paid under existing severance plans; (B) enter into any
employment or consulting agreement or arrangement with any present or
former director or officer of the Company or any of its Subsidiaries, or
any employment or consulting agreement with any other employee of the
Company or any of its Subsidiaries; or (C) except in the ordinary course
of business consistent with past practice and to the extent necessary to
fill vacancies, hire or agree to hire, or enter into any written
employment agreement with, any new or additional employee or officer
having an annual base salary of U.S. $40,000 or more or, in the
aggregate, annual base salaries of U.S. $500,000 or more;
(7) except as required to comply with applicable Law or
expressly provided in this Agreement, (A) adopt, enter into, terminate
or amend any Company Benefit Plan, collective bargaining agreement or
other arrangement for the current or future benefit or welfare of any
director, officer or current or former employee, (B) pay any benefit not
required under any Company Benefit Plan, accelerate the payment, right
of payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other
compensation or benefits, (C) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or
Company Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance
units or restricted stock, or the removal of existing restrictions in
any Company Benefit Plans or agreements or awards made thereunder) or
(D) except as required by the current terms thereof take any action to
fund or in any other way secure the payment of compensation or benefits
under any employee plan, agreement, contract or arrangement or Company
Benefit Plan;
(8) transfer, lease (as lessor), license, sell, mortgage,
pledge, dispose of, encumber or subject to any Lien, any assets, other
than in the ordinary course of business and consistent with past
practice, except as provided for in Section 8.2(b)(11) or in an amount
in the aggregate not to exceed U.S. $250,000;
(9) except as required by applicable Law or GAAP, make any
change in its methods of accounting;
(10) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger), except as provided for in Section
8.5;
(11) (A) Incur any long-term indebtedness (other than under
existing revolving credit facilities, as may be amended as contemplated
hereby) or, except in the ordinary course of business consistent with
past practice, any short-term indebtedness; (B) modify any material
indebtedness or other liability; (C) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations or indebtedness of any other Person;
(D) make any loans, advances or capital contributions to, or investments
in, any other Person (other than in or to wholly owned Subsidiaries of
the Company, or by wholly owned Subsidiaries to the Company, or
customary loans or advances to employees); (E) other than with respect
to the settlement of any claim that is completely covered (other than
with respect to deductibles to the Company's insurance policies) by the
Company's insurance carrier, settle any claims against the Company or
any of its Subsidiaries where the amounts payable by the Company and its
Subsidiaries would exceed U.S. $25,000 individually or U.S. $250,000 in
the aggregate, in each such case without admission of liability; or (F)
except in the ordinary course of business consistent with past practice,
enter into any material commitment or transaction;
(12) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any
such claims, liabilities or obligations, in the ordinary course of
business and consistent with past practice, or of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
Financial Statements;
(13) enter into any agreement, understanding or commitment
(including with any Antitrust Authority) that contains any material
prohibition on the conduct of any business or line of business, or any
material limitation on the scope of business that may be conducted, by
the Company or any of its Subsidiaries, including geographic limitations
on the Company's or any of its Subsidiaries' activities;
(14) (A) announce, implement or effect any material reduction
in labor force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of
employees of the Company or its Subsidiaries; provided, however, that
routine employee terminations for cause shall not be considered subject
to this clause (14) or (B) terminate the employment of any officer of
the Company other than for cause or agree that any voluntary termination
of employment by an officer of the Company occurring prior to the
Effective Time shall be treated as having been with "good reason";
(15) take any action including, without limitation, the
adoption of any shareholder rights plan or amendments to its Certificate
or Articles of Incorporation or By-Laws (or comparable governing
documents) or any resolution of the Company's Board of Directors, which
would, directly or indirectly, restrict or impair the ability of Parent
to vote, or otherwise to exercise the rights and receive the benefits of
a shareholder with respect to, securities of the Company acquired by
Purchaser in the Offer or the Merger, or permit any shareholder to
acquire securities of the Company on a basis not available to Parent or
Purchaser in the event that Parent or Purchaser were to acquire any
additional shares of the Company Common Stock or approve any "Business
Combination" (as defined in Article TENTH of the Company's Certificate
of Incorporation) with any person other than Parent and Purchaser for
the purposes of Article TENTH of the Company's Certificate of
Incorporation (subject to the Company's right to take action
specifically permitted by Section 8.5 prior to Consummation of the
Offer);
(16) enter into any Material Contract, or terminate or
materially modify or amend any such Material Contract to which it is a
party or waive or assign any of its material rights or claims except in
the ordinary course of business consistent with past practice;
(17) other than consistent with past practice or as required
by a change in Law or required by Law because of a change in facts, make
any Tax election or enter into any settlement or compromise of any
liability for Taxes that in either case is material;
(18) permit any insurance policy, other than a policy
providing coverage for losses not in excess of U.S. $25,000, naming it
as a beneficiary or a loss payable payee to be cancelled or terminated,
other than pursuant to an expiration in accordance with its terms,
unless a new policy with substantially similar coverage is in effect as
of the date of such cancellation or termination; or
(19) agree or commit, in writing or otherwise, to take any of
the foregoing actions.
For purposes of this Section 8.2(b) (other than Section 8.2(b)(13)),
references to "material" (but not "materially") mean material to the Company
and its Subsidiaries, taken as a whole.
(c) The Company (i) shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or would reasonably be expected
to, result in (A) any of the conditions to the Offer set forth in Article IX
or Annex I not being satisfied (subject to the Company's right to take action
specifically permitted by Section 8.5) or (B) a Company Material Adverse
Effect and (ii) shall not intentionally take, or permit any of its
Subsidiaries to take, any action that would, or would reasonably be expected
to, result in any of its representations and warranties set forth in this
Agreement becoming untrue in any respect.
Section 8.3 COMPANY SHAREHOLDER MEETING; PREPARATION OF PROXY
STATEMENT. Subject to Section 2.4, as promptly as practicable following
Consummation of the Offer, if required by applicable Law in order to
consummate the Merger, the Company, acting through the Company's Board of
Directors, shall, in accordance with applicable Law:
(a) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "COMPANY SHAREHOLDER MEETING") for the purpose of
considering and taking action upon the approval of the Merger and the
adoption of this Agreement;
(b) prepare and file with the SEC a preliminary proxy or information
statement in accordance with the Exchange Act relating to the Merger and this
Agreement and use its reasonable best efforts to obtain and furnish the
information required to be included by the Exchange Act and the SEC in the
Proxy Statement (as hereinafter defined) and, after consultation with Parent,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement, including any amendment or supplement thereto (the
"PROXY STATEMENT"), to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel;
(c) include in the Proxy Statement the recommendation of the
Company's Board of Directors that shareholders of the Company vote in favor
of approval of the Merger and adoption of this Agreement; and
(d) if proxies are solicited from Company shareholders, use
reasonable best efforts to solicit from its shareholders proxies, and to take
all other action necessary and advisable, to secure the vote of shareholders
required by applicable Law and the Company's Certificate of Incorporation or
By-Laws to obtain the approval for this Agreement and the Merger.
Section 8.4 REASONABLE BEST EFFORTS; NOTIFICATION
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer and the Merger, and the other
transactions contemplated by this Agreement, including (i) the obtaining of
all necessary actions or nonactions, waivers, consents and approvals from any
Governmental Authority and the making of all necessary registrations and
filings (including filings with any Governmental Authority, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Authority, (ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any Lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or the consummation of any of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Authority vacated or reversed, and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement; provided, however, that no loan agreement or
contract for borrowed money entered into by the Company or any of its
Subsidiaries shall be repaid except as currently required by its terms, in
whole or in part, and no contract shall be amended to increase the amount
payable thereunder or otherwise to be more burdensome to the Company or any
of its Subsidiaries in order to obtain any such consent, approval or
authorization without first obtaining the written approval of Parent (which
approval shall not be unreasonably withheld). Nothing contained in this
Section 8.4 shall prohibit the Company and its Subsidiaries from taking any
action permitted by Section 8.5 or from terminating this Agreement pursuant
to Section 10.1.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by the Company contained in this Agreement
becoming untrue or incorrect, subject to the standard established in Section
5.2 where applicable in any respect that would cause the condition to the
Offer set forth in paragraph (c)(2) of Annex I hereto to fail to be
satisfied; or (ii) the failure by the Company to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, that no such notification
shall affect the representations, warranties, covenants or agreements of the
Company or the conditions to the obligations of the parties under this
Agreement.
(c) Parent shall give prompt notice to the Company of (i) any
representation or warranty made by Parent or Purchaser contained in this
Agreement becoming untrue or incorrect, subject to the standard established
in Section 5.2 where applicable, in any respect or (ii) the failure by Parent
or Purchaser to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided that no such notification shall affect the
representations, warranties, covenants or agreements of Parent or Purchaser
or the conditions to the obligations of the parties under this Agreement.
Section 8.5 NO SOLICITATION.
(a) The Company shall, and shall cause its Affiliates, officers,
directors, employees, financial advisors, attorneys and other advisors,
representatives and agents to, immediately cease any existing activities,
discussions or negotiations conducted with any parties other than Parent or
Purchaser with respect to any Takeover Proposal (as defined below). The
Company shall not, nor shall it authorize or permit any of its Affiliates to,
nor shall it authorize or permit any officer, director or employee of or any
financial advisor, attorney or other advisor, representative or agent of it
or any of its Affiliates, to (i) directly or indirectly solicit, facilitate,
initiate or encourage the making or submission of, any Takeover Proposal
(including, without limitation, taking any action which would make Article
TENTH of the Company's Certificate of Incorporation not applicable to a
Takeover Proposal), (ii) enter into any agreement, arrangement or
understanding with respect to any Takeover Proposal or enter into any
agreement, arrangement or understanding requiring it to abandon or terminate
this Agreement or to fail to consummate the Merger or any other transaction
contemplated by this Agreement, (iii) initiate or participate in any
discussions or negotiations regarding, or furnish or disclose to any Person
(other than a party to this Agreement) any information with respect to, or
take any other action intentionally to facilitate or in furtherance of any
inquiries or the making of any proposal that constitutes, or could reasonably
be expected to lead to, any Takeover Proposal, or (iv) grant any waiver or
release under any standstill or similar agreement with respect to any class
of the Company's equity securities (other than to permit the Company to
receive a Takeover Proposal that did not result from a breach of any other
provision of this Section 8.5(a)); provided that prior to Consummation of the
Offer, in response to a Takeover Proposal that did not result from the breach
of this Section 8.5 and following delivery to Parent of notice of the
Takeover Proposal in compliance with its obligations under Section 8.5(d)
hereof, the Company may (1) in response to any Takeover Proposal, request
clarifications from (but not, except as contemplated by clause (2) below,
participate in discussions or negotiations with) any third party which makes
such Takeover Proposal, if such action is taken solely for the purpose of
obtaining information reasonably necessary for the Company to ascertain
whether such Takeover Proposal is a Superior Proposal, and (2) participate in
discussions or negotiations with or furnish information (pursuant to a
confidentiality/standstill agreement with customary terms as reasonably
determined in good faith by the Company after consultation with outside
counsel; provided that each such agreement is at least as limiting as any
such agreement between Parent and the Company) to any third party which has
made a bona fide Takeover Proposal if (A) the Company's Board of Directors
reasonably determines in good faith (after consultation with its financial
advisor) that taking such action would be reasonably likely to lead to the
delivery to the Company of a Superior Proposal and (B) the Company's Board of
Directors determines in good faith (after consultation with outside legal
counsel) that it is necessary to take such actions in order to comply with
its fiduciary duties under applicable Law. Without limiting the foregoing,
the Company agrees that any violation of the restrictions set forth in this
Section 8.5(a) directly or indirectly by any of its Subsidiaries, officers,
Affiliates or directors or any advisor, representative, consultant or agent
retained by the Company or any of its Subsidiaries or Affiliates in
connection with the transactions contemplated hereby, whether or not such
Person is purporting to act on behalf of the Company or any of its
Subsidiaries, shall constitute a breach of this Section 8.5(a) by the
Company. The Company will take all actions necessary or advisable to inform
the appropriate individuals or entities referred to in the prior sentence of
the obligations undertaken in this Section 8.5. For purposes of this Section
8.5, a Person shall be deemed to have facilitated or encouraged an action or
result only if any act or omission by such Person (i) would reasonably be
expected to facilitate or encourage such action or result or (ii) was
intended by such Person to facilitate or encourage such action or result.
For purposes of this Agreement, "TAKEOVER PROPOSAL" means any
indication of interest in, or proposal or offer for, (i) any direct or
indirect acquisition or purchase of 15% or more of the assets of the Company
or any of its Subsidiaries or 15% or more of any class of equity securities
of the Company or any of its Subsidiaries, (ii) any tender offer or exchange
offer that, if consummated, would result in any Person beneficially owning
15% or more of any class of equity securities of the Company or any of its
Subsidiaries or (iii) any merger, consolidation, business combination, sale
of all or any substantial portion of the assets, recapitalization,
liquidation or a dissolution of, or similar transaction of the Company or any
of its Subsidiaries other than the Offer or the Merger, which in any such
case has been communicated (including as a result of any press release or
other public disclosure) to (1) any of the individuals signing a Transaction
Support Agreement on behalf of a stockholder party thereto, (2) any of the
Persons identified as having Knowledge in Schedule 1.1 or (3) the Company's
Board of Directors generally; and "SUPERIOR PROPOSAL" means a bona fide
written Takeover Proposal made by a third party to purchase all of the
outstanding equity securities of the Company pursuant to a tender offer,
exchange offer, merger or other business combination (x) on terms which the
Company's Board of Directors determines in good faith to be superior to the
Company and its shareholders (other than Parent, Purchaser and their
respective Affiliates), in their capacity as shareholders, from a financial
point of view (taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and identity of the offeror and
the financial capacity of the offeror to consummate the transaction) as
compared to the transactions contemplated hereby and any alternative proposed
by Parent or Purchaser in accordance with Section 10.1(c) hereof, such
determination having been made only after consultation with the Company's
financial advisor, (y) for which financing is committed or cash is available
and (z) which is reasonably capable of being consummated.
(b) The Company agrees that, except as set forth in Section 8.5(c),
neither the Company's Board of Directors nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent or Purchaser, the approval or recommendation of the
Company's Board of Directors of the Offer, the Merger or this Agreement,
unless the Company's Board of Directors shall have determined in good faith,
after consultation with its outside counsel that such withdrawal or
modification is necessary in order to satisfy its fiduciary duties to the
Company's shareholders under applicable Law, (ii) approve or recommend, or,
in the case of a committee, propose to the Company's Board of Directors to
approve or recommend, any Takeover Proposal or (iii) approve, recommend or
cause it to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "ACQUISITION
AGREEMENT") related to any Takeover Proposal. For purposes of this clause
(b), if the Company Board of Directors or any such committee proposal is
publicly disclosed, regardless of the source of, or the circumstances
surrounding, the disclosure, such Company Board of Directors or committee
proposal shall be deemed to have been made publicly.
(c) Notwithstanding anything to the contrary herein, prior to
Consummation of the Offer, the Company and/or the Company's Board of
Directors may take the actions otherwise prohibited by Sections 8.5(a) and
8.5(b) if (i) a third party makes a Takeover Proposal which the Company has
determined to be a Superior Proposal in accordance with Section 8.5(a), (ii)
the Company complies with its obligations under Section 8.5(d), (iii) all of
the conditions to the Company's right to terminate this Agreement in
accordance with Section 10.1(c) hereof shall have been satisfied (including
expiration of the five Business Day period described therein (or such shorter
period as may be provided therein) and payment of all amounts due and payable
pursuant to Section 10.3 and (iv) simultaneously therewith, this Agreement is
terminated in accordance with Section 10.1(c)(i) hereof.
(d) The Company agrees that in addition to the obligations of the
Company set forth in paragraphs (a), (b) and (c) of this Section 8.5,
promptly after (but in no event more than two calendar days after) receipt
thereof, the Company shall advise Parent in writing of (i) any Takeover
Proposal or amended Takeover Proposal or (ii) any Superior Proposal, as well
as in either such case the material terms and conditions of such Takeover
Proposal or Superior Proposal together with copies of any written materials
received by the Company in connection with any of the foregoing and the
identity of the Person making any such Takeover Proposal or Superior
Proposal. In connection with the foregoing, the Company agrees that it shall
simultaneously provide to Parent any non-public information concerning the
Company provided to any other Person in connection with any such Takeover
Proposal or Superior Proposal which was not previously provided to Parent.
(e) Parent and Purchaser agree that nothing contained in this
Section 8.5 shall prohibit the Company from taking and disclosing to its
shareholders a position contemplated by Rule 14D-9 and Rule 14e-2 promulgated
under the Exchange Act with respect to any tender offer or from making any
required disclosure to the Company's shareholders if, in the reasonable good
faith judgment of the Company's Board of Directors, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
disclosure obligations under applicable Law.
Section 8.6 ANTITRUST LAWS.
(a) Each party hereto shall (i) take promptly (but in no event later
than fifteen Business Days following the date of this Agreement as to initial
filings) all actions necessary to make the filings required of it or any of
its Affiliates under any applicable Antitrust Laws in connection with this
Agreement and the transactions contemplated hereby, (ii) comply at the
earliest practicable date with any formal or informal request for additional
information or documentary material received by it or any of its Affiliates
from any Antitrust Authority and (iii) cooperate with one another in
connection with any filing under applicable Antitrust Laws and in connection
with resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement initiated by any Antitrust Authority.
(b) Each party hereto shall use its reasonable best efforts to
resolve such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law;
provided, however, that the Company shall not, without the prior written
consent of Parent, commit to any divestiture transaction and Parent shall not
be required to divest or hold separate or otherwise take or commence to take
any action that, in the reasonable discretion of Parent, materially limits
its ability to conduct the business or its ability to retain the Company or
any material portion of the assets of the Company.
(c) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other Governmental Authority regarding any of the
transactions contemplated hereby.
(d) For purposes of this Agreement, (i) "ANTITRUST AUTHORITIES"
means the Federal Trade Commission, the Antitrust Division of the Department
of Justice, the attorneys general of the several states of the United States
and any other Governmental Authority having jurisdiction with respect to the
transactions contemplated hereby pursuant to applicable Antitrust Laws and
(ii) "ANTITRUST LAW" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other Puerto Rico, federal, state and foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other Laws that
are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
Section 8.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) Parent, Purchaser and the Surviving Corporation agree that all
rights to indemnification existing in favor of the present or former
directors, officers, employees, fiduciaries and agents of the Company or any
of its Subsidiaries (collectively, the "INDEMNIFIED PARTIES") for acts or
omissions of such Persons occurring at or prior to the Effective Time, as
provided in the Company's Certificate of Incorporation or By-Laws or the
certificate or articles of incorporation, by-laws or similar organizational
documents of any of its Subsidiaries or the terms of any individual indemnity
agreement or other arrangement with any director or executive officer, which
agreement or arrangement is listed in Section 8.7 of the Company Disclosure
Schedule, in each case as in effect as of the date of this Agreement, shall
survive the Merger and shall continue in full force and effect for six years
after the Effective Time (without modification or amendment, except as
required by applicable Law) in accordance with their terms, to the fullest
extent permitted by Law, and shall be enforceable by the Indemnified Parties
against the Surviving Corporation, and the Surviving Corporation shall also
advance fees and expenses (including reasonable attorney's fees) as incurred
to the fullest extent permitted under applicable Law upon receipt of any
undertaking required by applicable Law. Notwithstanding the foregoing, Parent
and the Surviving Corporation shall not be required to indemnify any
Indemnified Party to the extent that the indemnifiable amount is paid by an
insurer pursuant to Section 8.7(b). If within six years from the Effective
Time, the Surviving Corporation is merged with and into Parent or another
Person, the certificate of incorporation and bylaws (or equivalent
organizational documents) of Parent or such other Person shall, for at least
the six-year period following the Effective Time, provide rights to
indemnification for the Indemnified Persons at least equivalent to those in
the certificate of incorporation and bylaws of the Surviving Corporation.
Subject to the foregoing, nothing is this Section 8.7 shall prevent a merger,
consolidation, or business combination of the Surviving Corporation with
another entity.
(b) Purchaser shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company (provided that
Purchaser may substitute therefor policies of at least equivalent coverage
containing terms and conditions which are no less advantageous) with respect
to matters occurring prior to the Effective Time. Notwithstanding the
foregoing sentence or Section 8.2 to the contrary, the Company shall have the
right to procure, prior to the Effective Time, a policy for directors' and
officers' liability insurance with respect to matters occurring prior to the
Effective Time, having a term lasting no less than six years following the
Effective Time and providing U.S. $15,000,000 (or such lesser amount as may
be obtained pursuant to the proviso at the end of this sentence) in coverage,
and containing terms and conditions which are no less advantageous than the
Company's current policies with respect to such insurance, provided that the
aggregate premium payable therefor shall not exceed U.S. $350,000. The
provisions of this Section 8.7 shall survive the consummation of the Merger
and expressly are intended to benefit each of the Indemnified Parties.
Notwithstanding any other provision of this Agreement to the contrary, the
provisions of this Section 8.7(b) may not be amended, waived or altered in
any respect without the prior written unanimous approval of the Company's
Board of Directors.
(c) Nothing in this Agreement is intended to, shall be construed to,
or shall release, waive or impair any rights to directors' and officers'
insurance claims under any policy that is or has been in existence with
respect to the Company or any of its Subsidiaries or any of their respective
officers, directors or employees, it being understood and agreed that the
indemnification provided for in this Section 8.7 is not prior to or in
substitution for any such claims under such policies.
Section 8.8 PUBLIC ANNOUNCEMENTS. The Joint Press Release
referenced in Section 2.1(b) with respect to the execution of this Agreement
shall be reasonably acceptable to Parent and the Company. Thereafter, Parent
and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement and shall not issue any such
press release or make any such public statement prior to such consultation
and review by the other party of such release or statement, except as may be
required by Law, court process or by obligations pursuant to any listing
agreement with a national securities exchange, or as may be permitted
pursuant to Section 8.5.
Section 8.9 EMPLOYEE BENEFITS PLANS.
(a) From and after the Measurement Date, the Company and the
Surviving Corporation, as the case may be, shall honor in accordance with
their respective terms (as in effect on the date of this Agreement), all the
Company's employment, severance and termination agreements, plans and
policies existing prior to the execution of this Agreement which are between
the Company or any of its Subsidiaries and any director, officer, employee or
consultant thereof and which have been disclosed in Section 8.9 of the
Company Disclosure Schedule. Parent acknowledges and agrees that Consummation
of the Offer would constitute a "Change in Control" (or the similar relevant
defined term) for all purposes pursuant to those agreements and arrangements
indicated on Section 8.9 of the Company Disclosure Schedule.
(b) From and after the Measurement Date, the Company and the
Surviving Corporation, as the case may be, shall provide severance pay to any
employee of the Company or any Subsidiary of the Company in such amount as
may be required by Act no. 80, approved May 30, 1976, 29 L.P.R.A.ss.185a et.
seq.
(c) For a period of six months from and after the Measurement Date,
Parent shall, unless the employees of the Company and its Subsidiaries at the
Measurement Date (the "COMPANY EMPLOYEES") shall otherwise agree or different
terms are negotiated with the relevant union representing such employees,
cause the Surviving Corporation to provide to the Company Employees employee
benefits that are, in the aggregate, no less favorable than those provided
immediately prior to the Measurement Date to Company Employees; provided,
however, that nothing contained in this Section 8.9 shall require Parent or
Purchaser to continue or replace, or cause to be continued or replaced, any
Company Benefit Plan or Parent Benefit Plan after the Measurement Date.
(d) Subject to compliance with Section 8.9(a), nothing contained in
this Section 8.9 or elsewhere in this Agreement shall be construed to prevent
the termination of employment of any Company Employee or any change in the
compensation or employee benefits available to any Company Employee or the
amendment or termination of any particular Company Benefit Plan to the extent
permitted by its terms as in effect immediately prior to the Measurement
Date.
(e) For all purposes under any employee benefit plans of Parent and
its Subsidiaries providing benefits to any Company Employee after the
Effective Time, (all such employee benefit plans are hereinafter referred to
as the "New Plans"), each such Company Employee shall be credited with his or
her years of service with the Company and its Subsidiaries before the
Effective Time, to the same extent as such employee was entitled, before the
Effective Time, to credit for such service under any similar Company Benefit
Plans for purposes of (i) eligibility to participate and (ii) vesting, but in
no event shall such service be taken into account in determining the accrual
of benefits under any New Plan, including, but not limited to, a defined
benefit plan. In addition, and without limiting the generality of the
foregoing, (x) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a Company Benefit Plan
in which such employee participated immediately before the Effective Time and
(y) for purposes of each New Plan providing medical, dental, pharmaceutical
or vision benefits to any Company Employee, Parent shall cause all
pre-existing condition exclusions of such New Plan to be waived for such
employee and his or her covered dependents (other than limitations or waiting
periods that are already in effect with respect to such employees and
dependents and that have not been satisfied as of the Effective Time), and
Parent shall cause any eligible expenses incurred by such employee and his or
her covered dependents during the portion of the plan year of the Company
Benefit Plan ending on the date such employee's participation in the
corresponding New Plan begins, to be taken into account under such New Plan
for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such employee and his or her covered
dependents for the applicable plan year as if such amounts had been paid in
accordance with such New Plan.
Section 8.10 AVAILABILITY OF SUFFICIENT FUNDS. Until the Closing
Date, Parent and Purchaser shall make available Sufficient Funds at the times
required under this Agreement.
ARTICLE IX
CONDITIONS TO THE MERGER
Section 9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) This Agreement shall have been approved and adopted by the
requisite vote of the shareholders of the Company, if required by applicable
Law, in order to consummate the Merger;
(b) No provision of any applicable Law or regulation and no
judgment, injunction, order or decree of any Governmental Authority of
competent jurisdiction shall prohibit the consummation of the Merger; and
(c) Purchaser, Parent or any Affiliate of Parent shall have
purchased shares of Company Common Stock pursuant to the Offer; provided,
however, that neither Parent nor Purchaser shall be entitled to rely on the
condition in this Section 9.1(c) if either of them shall have failed to
purchase shares of Company Common Stock pursuant to the Offer in breach of
their obligations under this Agreement.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the Company Shareholder Approval:
(a) by mutual written consent of Parent and the Company; provided,
that any such consent by the Company on or after the Measurement Date shall
have been duly authorized by unanimous vote of the Company's Board of
Directors, including all Independent Directors; or
(b) by Parent:
(i) if at any time prior to Consummation of the Offer, the
Company has breached any representation or warranty, or prior to the
Effective Time has breached any covenant or other agreement contained in
this Agreement, which (A) would give rise to the failure of a condition
set forth in clause (c) of Annex I, (B) cannot be or has not been cured
within the applicable Cure Period therefor or by the Termination Date,
whichever is earlier, and (C) has not been waived by Parent pursuant to
the provisions hereof (provided that Parent may not terminate this
Agreement pursuant to this clause (i) if either Parent or Purchaser is
then in material breach of any representation, warranty, covenant or
other agreement contained in this Agreement);
(ii) if at any time prior to Consummation of the Offer, (A)
the Company, or the Company's Board of Directors, as the case may be,
shall have (w) after the date hereof, entered into any agreement, other
than a confidentiality/standstill agreement permitted under Section 8.5,
with respect to any Takeover Proposal other than the Offer or the
Merger, (x) amended, conditioned, qualified, withdrawn, modified or
contradicted or resolved to do any of the foregoing, in a manner adverse
to Parent or Purchaser, its approval and recommendation of the Offer,
the Merger and this Agreement (regardless of whether such action was
permitted under this Agreement), (y) approved or recommended any
Takeover Proposal other than the Offer or the Merger or (z) failed to
reject any Takeover Proposal or amended Takeover Proposal within the
applicable Rejection Period therefor (except that Parent may not
terminate this Agreement pursuant to this clause (z) prior to the
Initial Expiration Date), or (B) the Company or the Company's Board of
Directors shall have resolved to do any of the foregoing; or
(iii) if the Company breaches in any material respect its
obligations under Section 8.5 hereof; or
(c) by the Company:
(i) if at any time prior to Consummation of the Offer (A) a
Superior Proposal is received by the Company and (B) the Company's Board
of Directors reasonably determines in good faith (after consultation
with outside counsel) that it is necessary to terminate this Agreement
and enter into an agreement to effect the Superior Proposal in order to
comply with its fiduciary duties to the Company's shareholders under
applicable Law; provided that the Company may not terminate this
Agreement pursuant to this Section 10.1(c)(i) unless and until (x) five
Business Days have elapsed following delivery to Parent of a written
notice of such determination by the Company's Board of Directors and
during such five Business Day period the Company has fully cooperated
with Parent, including, without limitation, informing Parent of the
terms and conditions of such Superior Proposal, with the intent of
enabling both parties to agree to a modification of the terms and
conditions of this Agreement so that the transactions contemplated
hereby may be effected; (y) at the end of such five Business Day period
the Takeover Proposal continues to constitute a Superior Proposal and
the Company's Board of Directors confirms its determination (after
consultation with outside counsel) that it is necessary to terminate
this Agreement and enter into an agreement to effect the Superior
Proposal to comply with its fiduciary duties under applicable Law; and
(z) (1) at or prior to such termination, Parent has received the
Termination Fee set forth in Section 10.3 hereof by wire transfer in
immediately available funds and (2) immediately following such
termination the Company enters into a definitive acquisition, merger or
similar agreement to effect the Superior Proposal; provided, however,
that, if the written notice contemplated in clause (x) above is given to
Parent less than five Business Days, but more than two Business Days,
prior to the then-scheduled expiration of the Offer, then the Company
will be permitted to terminate this Agreement under this Section
10.1(c)(i) no earlier than 24 hours before such scheduled expiration if
the Company has complied with all of the requirements of this Section
10.1(c)(i) (with the five Business Day period set forth in clauses (x)
and (y) above being deemed to end when such 24-hour period begins for
purposes of determining such compliance) unless, prior to the beginning
of such 24-hour period, Purchaser shall have extended the Offer to a
date that is at least five Business Days after the delivery of such
notice to Parent, in which case the Company's right to terminate this
Agreement pursuant to this Section 10.1(c)(i) shall be determined
without regard to this proviso; provided, further, that it is understood
and agreed that if the written notice contemplated in clause (x) above
is given to Parent less than two Business Days prior to the
then-scheduled expiration of the Offer, the Company's right to terminate
this Agreement pursuant to this Section 10.1(c)(i) shall be subject to
compliance with all of the requirements of this Section 10.1(c)(i),
including the five Business Day period set forth in clauses (x) and (y)
hereof without regard to the immediately preceding proviso; or
(ii) if Parent or Purchaser shall have (x) failed to commence
the Offer as provided in Section 2.1, provided the Company is not in
material breach of its obligations under this Agreement ,(y) failed to
pay for shares of Company Common Stock pursuant to the Offer in
accordance with Section 2.1 hereof or (z) breached in any material
respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach cannot be
or has not been cured within 30 days after receipt of written notice
thereof by Parent or by the Termination Date, whichever is earlier; or
(iii) if Parent or Purchaser breach their obligations to make
available Sufficient Funds at the times required under this Agreement; or
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or before the
Termination Date; provided that the right to terminate this Agreement
pursuant to this clause shall not be available to any party whose
failure to fulfill any material obligation of this Agreement or other
material breach of this Agreement has been the cause of, or resulted in,
the failure of the Offer to have been consummated on or prior to the
aforesaid date; or
(ii) if, as a result of the failure of any of the conditions
set forth in Annex I to this Agreement, the Offer shall have terminated
or expired in accordance with its terms without Purchaser having
purchased any shares of Company Common Stock pursuant to the Offer;
provided that the right to terminate this Agreement pursuant to this
clause shall not be available to any party whose failure to fulfill any
material obligation under this Agreement or other material breach of
this Agreement has resulted in the failure of such condition; or
(iii) if any court of competent jurisdiction or any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action permanently restricting, enjoining, restraining
or otherwise prohibiting Consummation of the Offer or consummation of
the Merger and such order, decree, ruling or other action shall have
become final and nonappealable.
Section 10.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement by Parent or the Company, as provided in Section 10.1, this
Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent or Purchaser or their respective
officers or directors (except as set forth in the Confidentiality Agreement,
this Section 10.2 and Sections 10.3, 11.3, 11.4, 11.5, 11.8, 11.9, 11.10,
11.12, 11.13, 11.14 and 11.16 which shall survive the termination); provided,
however, that nothing contained in this Section 10.2 shall relieve any party
hereto from any liability for any breach of this Agreement. In addition, in
the event of termination of this Agreement in accordance with its terms
(including payment of any applicable Termination Fee due and payable pursuant
to Section 10.3), Purchaser shall, and Parent shall cause Purchaser to,
promptly terminate the Offer without accepting any shares of Company Common
Stock for payment.
Section 10.3 PAYMENT OF CERTAIN FEES
(a) If this Agreement is terminated by Parent in accordance with
Section 10.1(b)(ii) or 10.1(b)(iii) by the Company pursuant to Section
10.1(c)(i), then the Company shall pay to Parent a termination fee in an
amount equal to U.S. $5,400,000 (the "TERMINATION FEE").
(b) If (i) this Agreement is terminated by (A) Parent pursuant to
Section 10.1(b)(i), (B) Parent or the Company pursuant to Section 10.1(d)(i),
or (C) Parent or the Company pursuant to Section 10.1(d)(ii), and (ii) the
Minimum Condition or any of the conditions listed in Section (c) of Annex I
to this Agreement shall fail to have been satisfied as of the date of such
termination, and (iii) it has become publicly known that a Takeover Proposal
or amended Takeover Proposal has been made after the date of this Agreement
and prior to the effective date of such termination and (iv) concurrently
with or within 12 months of the date of such termination to a Third Party
Acquisition Event occurs, then the Company shall within one Business Day of
the occurrence of such Third Party Acquisition Event, if any, pay to Parent
the Termination Fee.
"THIRD PARTY ACQUISITION EVENT" shall mean (i) the consummation of a
Takeover Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and
its Subsidiaries, taken as a whole, or any such transaction that, if it had
been proposed prior to the termination of this Agreement would have
constituted a Takeover Proposal or (ii) the entering into by the Company or
any of its Subsidiaries of a definitive agreement with respect to any such
transaction.
(c) Any payment of the Termination Fee pursuant to this Section 10.3
shall be made by wire transfer of immediately available funds. If the Company
fails to pay to Parent the Termination Fee when due hereunder, the Company
shall pay the reasonable costs and expenses (including legal fees and
expenses) incurred by Parent in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment,
together with interest on the amount of any unpaid fee and/or expense at the
publicly announced prime rate for leading money center banks as published in
The Wall Street Journal from the date such fee and/or expense was required to
be paid to the date it is paid.
ARTICLE XI
MISCELLANEOUS
Section 11.1 REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Company, on the one hand, and Parent
and Purchaser, on the other han-d, contained herein or in any certificates or
other documents delivered prior to or at the Closing shall not be deemed
waived or otherwise affected by any investigation made by any party. Each and
every such representation and warranty shall expire with, and be terminated
and extinguished by, the Closing and thereafter none of the Company, Parent
or Purchaser shall be under any liability whatsoever with respect to any such
representation or warranty. This Section 11.1 shall have no effect upon any
other obligation of the parties hereto, whether to be performed before or
after the Effective Time.
Section 11.2 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Directors of the Company (or, if required by Section
2.3, the Independent Directors), Parent or Purchaser, may (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable
party or (iii) subject to the proviso of Section 11.6, waive compliance with
any of the agreements or conditions contained herein by the other parties
hereto. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
Section 11.3 NOTICES. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
in person or mailed, certified or registered mail with postage prepaid, or
sent by telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Puerto Rican Cement Company, Inc.
X.X. Xxx 000000
Xxx Xxxx, Xxxxxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attention: President
with a copy (which shall not constitute notice) to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxxx III
(b) if to either Parent or Purchaser, to it at:
c/o CEMEX, Inc.
000 Xxxxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxx
and
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte.
Xxxxxxxxx, XX, Xxxxxx 00000
Telecopy: 011-52818-328-3082
Attention: Xxxxxx Xxxxxxxxxx
in each case, with a copy (which shall not constitute
notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
and
Xxxxxx, Xxxxx & Xxxxxx
00 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date
of delivery unless if mailed, in which case on the third Business Day after
the mailing thereof except for a notice of a change of address, which shall
be effective only upon receipt thereof.
Section 11.4 ENTIRE AGREEMENT. The Confidentiality Agreement
(subject to Section 11.16) and this Agreement and the schedules and other
documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
Section 11.5 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and,
with respect to the provisions of Section 8.7 hereof, shall inure to the
benefit of the Persons or entities benefiting from the provisions thereof who
are intended to be third-party beneficiaries thereof and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that Purchaser may assign and transfer its rights and obligations hereunder
to any of its Affiliates, provided that such assignment shall not release
Parent from its obligations hereunder. Except as provided in the immediately
preceding sentence, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 11.6 AMENDMENT AND MODIFICATION. Subject to applicable
Law, this Agreement may be amended, modified and supplemented in writing by
the parties hereto in all respects before the Effective Time (whether before
or after the Company Shareholder Approval), by action taken by the respective
Boards of Directors of Parent, Purchaser and the Company (or, if required by
Section 2.3, the Independent Directors) or by the respective officers
authorized by such Boards of Directors or the Independent Directors, as the
case may be; provided, however, that after the Company Shareholder Approval,
no amendment shall be made which by Law requires further approval by the
shareholders of the Company without such further approval.
Section 11.7 FURTHER ACTIONS. Each of the parties hereto agrees
that, except as otherwise provided in this Agreement and subject to its legal
obligations and fiduciary duties, it will use its reasonable best efforts to
fulfill all conditions precedent specified herein, to the extent that such
conditions are within its control, and to do all things reasonably necessary
to consummate the transactions contemplated hereby.
Section 11.8 INTERPRETATION. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation". The phrases "the date of this Agreement",
"the date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to June 11, 2002.
Section 11.9 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms. It is accordingly
agreed that the parties shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to which they are
entitled at Law or in equity. Each of the parties hereto (a) irrevocably and
unconditionally consents to submit to the jurisdiction of any court located
in County of New York, State of New York (a "STATE COURT") or in the United
States District Court for the Southern District of New York (the "FEDERAL
COURT") for the purpose of any action arising out of or based upon this
Agreement or any of the transactions contemplated by this Agreement brought
by any party hereto and for the recognition and enforcement of any judgment
rendered in respect thereof, (b) waives, and agrees not to assert by way of
motion, as a defense, or otherwise, in any such action, any claim that it is
not subject to the personal jurisdiction of the above-named courts, that its
assets or property is exempt or immune from attachment or execution, that the
action is brought in an inconvenient forum, that the venue of the action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts and (c)
agrees that it will not bring any action relating to this Agreement in any
court other than a State Court or the Federal Court. Each of Parent,
Purchaser and the Company irrevocably appoints LeBoeuf, Lamb, Xxxxxx &
XxxXxx, L.L.P., as its agent for the sole purpose of receiving service of
process or other legal summons in connection with any proceedings in the
State of New York. If the appointment of the person mentioned in this Section
11.9 ceases to be effective, Parent, Purchaser and the Company each agrees
that it will promptly appoint a further person in the State of New York to
accept service of process on its behalf in the State of New York and so
notify the other parties to this Agreement. Nothing contained in this Section
11.9 shall affect the right to serve process in any other manner permitted by
Law.
Section 11.10 FEES AND EXPENSES. Except as otherwise set forth in
Section 10.3, all fees and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall
be paid by the party incurring such expenses (including any HSR Act filing
fees, which shall be for the account of Parent and Purchaser), whether or not
Consummation of the Offer occurs.
Section 11.11 COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, and
all of which together shall be deemed to be one and the same instrument.
Section 11.12 APPLICABLE LAW. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the Laws of the State of New York (without regard to the
conflict of Laws rules thereof), except to the extent that the PRGCL is
mandatorily applicable to the Merger.
Section 11.13 SEVERABILITY. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 11.14 WAIVER OF JURY TRIAL. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this
Agreement or the transactions contemplated hereby.
Section 11.15 TIME. Time is of the essence with respect to this
Agreement, the Offer, the Merger and the other transactions contemplated
hereby.
Section 11.16 EFFECT ON CONFIDENTIALITY AGREEMENT. The Company
agrees that the execution and delivery of this Agreement constitutes the
consent of the Company's Board of Directors to the taking by Parent and
Purchaser of the actions otherwise prohibited by the standstill provisions
set forth in the sixth paragraph, and the non-solicitation provisions set
forth in the seventh paragraph, of the Confidentiality Agreement, whether
through the transactions contemplated by this Agreement, the Transaction
Support Agreements or otherwise. The Company and Parent agree that
notwithstanding anything in Section 10.2 or in the Confidentiality Agreement
to the contrary, the standstill provisions set forth in the sixth paragraph
of the Confidentiality Agreement shall not survive and shall forthwith become
void in the event that the Options (as defined in the Transaction Support
Agreements) become exercisable pursuant to the terms of the Transaction
Support Agreements.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of Parent, Purchaser and the Company has
caused this Agreement to be executed by its officers thereunto duly
authorized, all as of the date first above written.
CEMEX, S.A. de C.V.
By: /s/ XXXXXX XXXXXX
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice President
TRICEM ACQUISITION, CORP.
By: /s/ XXXXXXXX XXXXXXX
-----------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
PUERTO RICAN CEMENT COMPANY, INC.
By: /s/ XXXXXX X. XXXXXXX
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman & CEO
ANNEX I
CERTAIN CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I which are not defined
herein shall have the meanings set forth in the Agreement to which this Annex
I is attached, except that the term the "Merger Agreement" shall be deemed to
refer to the Agreement to which this Annex I is attached.
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) promulgated under the
Exchange Act (relating to Purchaser's obligations to pay for or return
tendered shares of Company Common Stock promptly after termination or
withdrawal of the Offer), pay for any shares of Company Common Stock tendered
pursuant to the Offer, and may terminate or amend the Offer in accordance
with the Merger Agreement, if:
(a) immediately prior to any scheduled or extended expiration
date of the Offer:
(i) the Minimum Condition shall not have been satisfied;
(ii) the applicable waiting period under the HSR Act shall not
have expired or been terminated;
(iii) any necessary consent from lenders under the Banco
Popular Loan Agreements to waive any "change of control" defaults that
may occur thereunder by reason of consummation of the Offer or the
Merger shall not have been obtained; or
(iv) if the consent of the Nuclear Regulatory Commission
identified in Section 6.4 of the Company Disclosure Schedules shall not
have been obtained;
(b) immediately prior to any scheduled or extended expiration
date of the Offer, any of the following conditions exists:
(i) there shall have been any action threatened or taken, or
any statute, rule, regulation, judgment, order or injunction
promulgated, entered, enforced, enacted, issued or deemed applicable to
the Offer or the Merger by any domestic or foreign federal or state
governmental regulatory or administrative agency or authority or court
or legislative body or commission which directly or indirectly (1)
prohibits, or imposes any material limitations, other than limitations
generally affecting the industries in which the Company and Parent and
their respective Subsidiaries conduct their business, on, Parent's or
Purchaser's ownership or operation (or that of any of their respective
Subsidiaries) of all or a material portion of the Company's and its
Subsidiaries' businesses or assets as a whole, or compels Parent or
Purchaser or their respective Subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company
or Parent in each case taken as a whole, (2) prohibits, or makes
illegal, Consummation of the Offer or consummation of the Merger or the
other transactions contemplated by the Merger Agreement, (3) results in
the material delay in the ability of Purchaser, or renders Purchaser
unable, to accept for payment, pay for or purchase a material amount of
the shares of Company Common Stock, or (4) imposes material limitations
on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the shares of the Company Common Stock including,
without limitation, the right to vote the shares of the Company Common
Stock purchased by it on all matters properly presented to the Company's
shareholders;
(ii) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities in the New York
Stock Exchange (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index and excluding any
suspension or limitation resulting from physical damage or interference
with any exchange not related to market conditions), (2) a declaration
of a banking moratorium or any suspension of payments in respect of
banks in the United States (whether or not mandatory);
(iii) other than as explicitly disclosed in the Company
Disclosure Schedule or the Company SEC Reports filed prior to the date
of the Merger Agreement, any change shall have occurred (or any
development shall have occurred) after December 31, 2001, in the
business, assets, liabilities, financial condition or results of
operations of the Company or any of its Subsidiaries that has had or
would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect; or
(iv) the Company's Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser
(including by amendment of the Schedule 14D-9), its recommendation of
the Offer, the Merger Agreement, or the Merger, or recommended another
proposal or offer regarding a Takeover Proposal, or shall have resolved
to do any of the foregoing; or
(v) the Merger Agreement shall have been terminated in
accordance with its terms; or
(c) immediately prior to any scheduled or extended expiration
date of the Offer, (1) the Company shall have breached or failed to perform
in any material respect any of its obligations under the Merger Agreement
required to have been performed at or prior to such time, or (2) (i) subject
to Section 5.2 of the Merger Agreement, the representations and warranties of
the Company set forth in the Merger Agreement (other than the representations
and warranties set forth in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5,
6.6, 6.7, 6.15, 6.17, 6.18, 6.19 and 6.25) shall fail to be true and correct
as of the date of the Merger Agreement and as of any scheduled or extended
expiration date of the Offer as though made on such date (or, in each case,
if made as of a specified date, as of such date) and (ii) the representations
and warranties of the Company set forth in Sections 6.1(a), 6.1(c), 6.1(d),
6.2, 6.3, 6.5, 6.6, 6.7, 6.15, 6.17, 6.18, 6.19 and 6.25 of the Merger
Agreement shall fail to be true and correct in all material respects as of
the date of the Merger Agreement and as of any scheduled or extended
expiration date of the Offer as though made on such date (or, in each case,
if made as of a specified date, as of such date), or the Company shall have
failed to deliver to Parent and Purchaser a certificate executed by an
appropriate officer of the Company reasonably acceptable to Parent as to the
satisfaction of the condition set forth in this paragraph (c) immediately
prior to the scheduled or any extended time of expiration of the Offer; or
(d) the Company shall have failed to deliver to Parent and
Purchaser resignations of a sufficient number of the incumbent directors on
the Company's Board of Directors effective as of the Consummation of the
Offer, and/or duly adopted resolutions of the Company's Board of Directors,
such that the Company has satisfied its obligations pursuant to Section 2.3
of the Merger Agreement that are required to be satisfied prior to
Consummation of the Offer;
which in the reasonable good faith judgment of the Parent or
Purchaser but subject to the provisions of the Merger Agreement, in any such
case, and regardless of the circumstances (including any action or inaction
by Parent or Purchaser) giving rise to such conditions make it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment
for shares of Company Common Stock.
Subject to the provisions of the Merger Agreement, the foregoing
conditions are for the sole benefit of Parent and Purchaser and may be
asserted by Purchaser or, subject to the terms of the Merger Agreement may be
waived by Parent or Purchaser, in whole or in part at any time and from time
to time in the reasonable discretion of Parent or Purchaser at any time prior
to the scheduled or extended expiration date of the Offer. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed
an ongoing right which may be asserted at any time and from time to time
prior to the scheduled or extended expiration date of the Offer.
