AGREEMENT AND PLAN OF MERGER
among
RES Holding Corporation
RES Acquisition Corporation
and
Republic Engineered Steels, Inc.
Dated as of July 23, 1998
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
1.1 The Offer.................................................... 1
1.2 Company Actions.............................................. 4
1.3 Stockholder Lists............................................ 5
1.4 Directors.................................................... 6
1.5 Redemption of Special Preferred Stock........................ 7
ARTICLE II
THE MERGER
2.1 The Merger................................................... 7
2.2 Closing; Effective Time of Merger. .......................... 7
2.3 Effects of the Merger........................................ 8
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock...................................... 9
3.2 Payment for Shares........................................... 10
3.3 Stock Transfer Books......................................... 12
3.4 Stock Option Plans........................................... 12
3.5 Dissenting Shares............................................ 13
3.6 Withholding Rights........................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the
Company...................................................... 14
4.2 Representations and Warranties of Parent and
Sub.......................................................... 23
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company..................................... 26
5.2 Covenants of Parent.......................................... 33
i
Page
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of a Proxy Statement; Company
Stockholders Meeting; Merger Without a
Company Stockholders Meeting................................ 34
6.2 Access to Information....................................... 35
6.3 Brokers or Finders.......................................... 35
6.4 Indemnification; Directors' and Officers'
Insurance................................................... 36
6.5 Consents, Approvals and Filings............................. 38
6.6 Conduct of Business of Sub.................................. 40
6.7 Publicity................................................... 40
6.8 Continuation of Employee Benefits........................... 40
6.9 Amendment of ESOP........................................... 41
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to
Effect the Merger............................................ 41
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination.................................................. 42
8.2 Fees and Expenses............................................ 44
8.3 Effect of Termination........................................ 45
8.4 Amendment.................................................... 46
8.5 Extension; Waiver............................................ 46
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties
and Agreements............................................... 46
9.2 Notices...................................................... 47
9.3 Interpretation............................................... 48
9.4 Counterparts................................................. 48
9.5 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership........................... 48
9.6 Governing Law................................................ 48
9.7 Assignment................................................... 48
ii
Glossary of Defined Terms
Term: Page:
Acquisition Proposal....................................................29
Agreement................................................................1
Certificate of Merger....................................................8
Certificates............................................................10
Closing Date.............................................................8
Code....................................................................21
Company..................................................................1
Company Common Stock.....................................................1
Company Disclosure Schedule.............................................14
Company SEC Documents...................................................19
Company Voting Debt.....................................................15
Confidentiality Agreement...............................................35
Constituent Corporations.................................................7
Continuing Director......................................................6
Control Date.............................................................6
DGCL.....................................................................4
Dissenting Shares.......................................................13
Effective Time...........................................................8
Environmental Claim.....................................................23
Environmental Laws......................................................23
ERISA...................................................................22
Exchange Act.............................................................2
Financing Commitments...................................................26
GAAP....................................................................19
Gains Taxes.............................................................16
Governmental Entity.....................................................31
HSR Act.................................................................16
Indemnified Liabilities.................................................36
Indemnified Parties.....................................................36
IRS.....................................................................21
Material Adverse Effect.................................................14
Merger...................................................................1
Merger Consideration.....................................................9
Notice of Superior Proposal.............................................30
Offer....................................................................2
Offer Consideration......................................................2
Offer Documents..........................................................3
Option Consideration....................................................13
Options.................................................................12
Order...................................................................39
Paying Agent............................................................10
Payment Fund............................................................10
Proxy Statement.........................................................34
Representatives.........................................................28
Schedule 14D-1...........................................................3
Schedule 14D-9...........................................................5
iii
Term: Page:
SEC......................................................................3
Securities Act..........................................................18
Shares...................................................................1
Stock Option Plan.......................................................12
Sub......................................................................1
Subsidiary...............................................................9
Superior Proposal.......................................................30
Surviving Corporation....................................................7
Transactions............................................................38
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 23, 1998
(the "Agreement"), is made and entered into by and among RES Holding
Corporation, a Delaware corporation ("Parent"), RES Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"), and
Republic Engineered Steels, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub
and the Company have approved the acquisition of the Company by Parent, by
means of the merger (the "Merger") of Sub with and into the Company, upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Sub will commence a
cash tender offer to purchase all of the outstanding shares of common stock,
par value $.01 per share, of the Company ("Shares" or "Company Common Stock"),
upon the terms and subject to the conditions set forth in this Agreement and
the Offer Documents (as defined in Section 1.1(b)), and the Board of Directors
of the Company has approved the terms of the Offer (as defined in Section
1.1(a)) to be set forth in the Offer Documents and agreed to recommend to the
stockholders of the Company that they accept the Offer and tender their
Company Common Stock pursuant thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the
consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided this Agreement shall not have been terminated
in accordance with Section 8.1, as promptly as practicable (but in no event
later than five business days following the public announcement of the
execution of this Agreement), Sub will commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), an offer to purchase (the "Offer") all the outstanding Shares at a
price of $7.25 per Share, net to the seller in cash (the "Offer
Consideration"). The obligation to consummate the Offer and to accept for
payment and to pay for the Shares tendered pursuant to the Offer will be
subject only to those conditions set forth in Exhibit A attached hereto. The
Company agrees that no Shares held by the Company or any of its Subsidiaries
(as defined in Section 3.1) will be tendered to Sub pursuant to the Offer. Sub
expressly reserves the right, in its sole discretion, to waive any condition
set forth in Exhibit A, other than the Minimum Condition and the ESOP
Condition (each as defined in Exhibit A), and to make any other changes in the
terms and conditions of the Offer, provided that Sub will not, without the
prior written consent of the Company, (i) decrease or change the form of the
consideration payable in the Offer, (ii) decrease the number of Shares sought
pursuant to the Offer, (iii) impose additional conditions to the Offer, (iv)
modify the conditions to the Offer as set forth in Exhibit A in a manner
adverse to the holders of the Shares, (v) waive the Minimum Condition or the
ESOP Condition or (vi) make any other change in the terms of the Offer adverse
to the holders of the Shares. The Offer will initially provide that the Offer
will expire 20 business days after (and inclusive of) the date it is
commenced. Sub agrees that, subject to the terms and conditions of the Offer
and this Agreement, it will accept for payment and pay for all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as it is permitted to
do so under applicable law, provided that Sub shall have the right in its sole
discretion to extend the Offer from time to time for up to an aggregate of 15
business days, notwithstanding the prior satisfaction of the conditions set
forth in Exhibit A, in the event that at least 75% of the Company's
outstanding Shares have been validly tendered and not withdrawn pursuant to
the Offer. If, subject to the succeeding sentence, the Minimum Condition or
the ESOP Condition is not satisfied or if the conditions set forth in
paragraphs B, C or E of Exhibit A are not satisfied or, to the extent
permitted by this Agreement, waived by Sub as of the scheduled expiration date,
Sub shall have the right in its sole discretion to extend the Offer from time to
time until the earlier of the consummation of the Offer or the termination of
this Agreement. If the Minimum Condition, the ESOP Condition or the HSR
Condition (as defined in Exhibit A) or the conditions set forth in paragraphs A,
F or G of Exhibit A are not satisfied or, to the extent permitted by this
Agreement, waived by Sub as of the scheduled expiration date, Sub will, unless
it is manifestly apparent that such condition will not be satisfied prior to the
termination of this Agreement, or Sub and the Company shall otherwise agree in
writing, extend the Offer from time to time until the earlier of the
consummation of the Offer or the termination of this Agreement.
(b) On the date of commencement of the Offer, Parent and Sub
will file or cause to be filed with the Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all
amendments, the "Schedule 14D-1") with respect to the Offer, which will
contain the Offer to purchase and related letter of transmittal and other
ancillary documents and agreements pursuant to which the Offer will be made
(collectively, with any supplements or amendments, the "Offer Documents").
Parent and Sub will disseminate the Offer Documents to the holders of the
Shares. Each of Parent, Sub and the Company agrees to correct promptly any
information provided by it for use in the Offer Documents that becomes false
or misleading in any material respect, and Parent and Sub will take all steps
necessary to cause the Offer Documents as so corrected to be filed with the
SEC and to be disseminated to the holders of the Shares, in each case as and
to the extent required by law. The Company and its counsel will have a
reasonable opportunity to review and comment on the Offer Documents prior to
the filing of the Offer Documents with the SEC. Parent and Sub will provide
the Company and its counsel with any comments that may be received from the
SEC or its staff with respect to the Offer Documents promptly after receipt.
Parent and Sub agree that the Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations under the Exchange Act. Parent and Sub further agree that none of
the information in the Offer Documents or any related schedule required to be
filed with the SEC or in any related amendment will, on the date of filing
with the SEC or on the date first published, sent or given to holders of the
Shares, as the case may be, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein, in light of the
circumstances under which they are made, not misleading (but excluding
statements made in any of the foregoing documents based on information
supplied by the Company specifically for inclusion therein). Parent and Sub
agree that none of the information supplied by Parent or Sub or any of their
affiliates specifically for inclusion in the Schedule 14D-9 (as defined in
Section 1.2(a)) or any related amendment will, at the date of filing with the
SEC, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
1.2 Company Actions. The Company hereby approves of and
consents to the Offer and represents and warrants that, subject to the terms
and conditions set forth in this Agreement, (a) its Board of Directors (at a
meeting duly called and held) has (i) determined that the Offer and Merger (as
defined in Section 2.1) are fair to and in the best interests of the
stockholders of the Company, (ii) resolved to recommend acceptance of the
Offer and approval and adoption of this Agreement by stockholders of the
Company, (iii) taken all necessary steps to render Section 203 of the Delaware
General Corporation Law, as amended (the "DGCL"), inapplicable to the Merger
and (iv) resolved to elect not to be subject, to the extent permitted by law,
to any state takeover law other than Section 203 of the DGCL that may purport
to be applicable to the Offer, the Merger or the transaction contemplated by
this Agreement, (b) Lazard Freres & Co. LLC, the Company's investment banker,
has delivered to the Board of Directors of the Company its written opinion to
the effect that, based upon and subject to the matters set forth therein and
as of the date thereof, the consideration to be paid to the Company's
stockholders in the Offer and Merger is fair, from a financial point of view,
to those stockholders, and such opinion has not been withdrawn or modified and
(c) each of the Administrative Committee (the "Administrative Committee") of
the employee common stock ownership plan of the Company (the "ESOP") and the
Trustee (the "Trustee") of the ESOP Trust (the "ESOP Trust") has advised the
Company that, as of the date hereof, it has conducted such review of the terms
of the Offer and the Merger as it deems appropriate and has determined that,
if the Offer were consummated on the date hereof at the price and on the terms
set forth in this Agreement on the date hereof, and subject to their
satisfaction with the information to be set forth in the Offer Documents, the
Administrative Committee would follow the proper directions of the ESOP
participants, and the Trustee would follow the proper directions of the
Administrative Committee, as the case may be, to tender Shares owned by the
ESOP Trust. The Company has been authorized by Lazard Freres & Co. LLC to
permit the inclusion of such firm's fairness opinion (and, subject to such
firm's approval, a reference thereto) in the Offer Documents and in the
Schedule 14D-9 referred to below and the Proxy Statement, as defined in
Section 6.1(a). Contemporaneously with the commencement of the Offer, the
Company will, subject to the terms and conditions set forth in this Agreement,
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") containing the recommendations of its Board of
Directors in favor of the Offer and Merger and will permit the inclusion in
the Offer Documents of such recommendations, in each case subject to the
provisions of Section 5.1(e). The Company, Parent and Sub will promptly
correct any information provided by them for use in the
Schedule 14D-9 that becomes false or misleading in any material respect, and
the Company will 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 the
Shares, in each case as and to the extent required by law. Parent and its
counsel will have a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
Parent and its counsel with any comments that may be received from the SEC or
its staff with respect to the Schedule 14D-9 promptly after receipt. The
Company agrees that the Schedule 14D-9 will comply as to form in all material
respects with the applicable requirements of the Exchange Act and the rules
and regulations under the Exchange Act. The Company further agrees that
neither the Schedule 14D-9, nor any related amendments nor any information
supplied by the Company specifically for inclusion in the Offer Documents (but
excluding statements made in any of the foregoing documents based on
information supplied by Parent or Sub or any of their affiliates specifically
for inclusion therein) will, at the respective times the Schedule 14D-9 or
Offer Documents are filed with the SEC or are first published, sent or given
to stockholders, as the case may be, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
1.3 Stockholder Lists. In connection with the Offer, the
Company will promptly furnish Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and will
furnish Sub with such information and assistance as Sub or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Subject to the requirements of applicable law and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer and Merger, Parent and
Sub and their affiliates and associates will hold in confidence such listings
and other information, will use such listings and other information only in
connection with the Offer and Merger and, if this Agreement is terminated in
accordance with its terms, will, upon request, deliver to the Company all
copies of all such listings and other information (and extracts or summaries
of such information) then in their or their agents' or advisors' possession.
1.4 Directors.
(a) Upon the purchase by Sub pursuant to the Offer of a
number of Shares that represents a majority of the outstanding Shares on a
fully-diluted basis, and from
time to time thereafter until the Effective Time (as defined in Section 2.2),
the parties will, subject to the provisions of Section 14(f) of the Exchange
Act and Rule 14f-1 under the Exchange Act, promptly use all reasonable efforts
to cause the persons identified on Exhibit B attached hereto to comprise a
majority of the Board of Directors of the Company.
The date on which such persons first comprise a majority of
the Company's Board of Directors is referred to as the "Control Date."
(b) From and after the Control Date and prior to the
Effective Time, for so long as there is at least one director who is
designated as a "Continuing Director" in the list of directors set forth in
subsection (a) above (each a "Continuing Director" and, collectively, the
"Continuing Directors"), all other directors will abstain from acting upon,
and the approval of a majority of the Continuing Directors will be required to
authorize, any termination of this Agreement by the Company, any amendment of
this Agreement requiring action by the Board of Directors of the Company, any
extension of time for the performance of any obligation or other act of Parent
or Sub under this Agreement and any waiver of compliance with any provision of
this Agreement for the benefit of the Company.
1.5 Redemption of Special Preferred Stock. Immediately
following the consummation of the Offer and satisfaction of the ESOP
Condition, the Company will give due notice that the outstanding share of
Special Preferred Stock will be redeemed at an aggregate redemption price of
$1,500 within 30 days (but not less than 20 days) after the giving of such
notice. Concurrently with the giving of such notice, the Company will (i)
deposit the redemption price for the share of Special Preferred Stock to be
redeemed with a bank or trust company, designated in the notice of such
redemption, having an office in Cleveland, Ohio, in Canton, Ohio, or in
Wilmington, Delaware, having combined capital, surplus and undivided profits
aggregating at least $50,000,000, in trust for payment to the holder of the
share of Special Preferred Stock to be redeemed, and (ii) deliver irrevocable
written instructions authorizing the depositary to apply such deposit solely
to the redemption of the share of Special Preferred Stock to be redeemed.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, in accordance
with the DGCL, the Merger will be effected and pursuant thereto Sub will be
merged with and into the Company at the Effective Time. At the Effective Time,
the separate corporate existence of Sub will cease and the Company will
continue as the surviving corporation and as a direct wholly-owned subsidiary
of Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, after giving effect to the Merger and as the
context requires, the Company is sometimes hereinafter referred to as the
"Surviving Corporation"). At the election of Parent, any direct or indirect
wholly owned Delaware subsidiary of Parent may be substituted for Sub as a
Constituent Corporation in the Merger. In such event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect such
substitution.
2.2 Closing; Effective Time of Merger. Unless this Agreement
shall have been terminated and the transaction herein contemplated shall have
been abandoned pursuant to Section 8.1, and subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties hereto will
cause the Merger to be consummated by filing a certificate of merger, or, if
the provisions of Section 253 of the DGCL are applicable, a certificate of
ownership and merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, as provided in the DGCL as early as possible on the
Closing Date. The "Closing Date" will mean the second business day after
satisfaction and/or waiver of all of the conditions set forth in Article VII,
at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date, time or place is agreed to in writing by the
parties hereto. The Merger will become effective upon the filing of the
Certificate of Merger or at such later time as is provided in the Certificate
of Merger as the Company and Sub will agree (the "Effective Time").
2.3 Effects of the Merger.
(a) The Merger will have the effects as set forth in the
applicable provisions of the DGCL.
(b) The directors of Sub and the officers of the Company
immediately prior to the Effective Time will, from and after the Effective
Time, be the directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws.
(c) At the Effective Time, the certificate of incorporation
and by-laws of the Company, as in effect immediately prior to the Effective
Time, will be the
certificate of incorporation and by-laws, respectively, of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law; provided, however, that the certificate of incorporation
(other than Article First thereof) and the by-laws of the Surviving
Corporation will be amended at the Effective Time to read in its entirety as
the certificate of incorporation (other than Article First thereof) and
by-laws, respectively, of Sub, as in effect immediately prior to the Effective
Time.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of
shares of Company Common Stock, shares of Special Preferred Stock, par value
$.01 per share, of the Company (the "Special Preferred Stock") or any holder
of shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time will be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent- Owned Stock.
Each share of Company Common Stock that immediately prior to the Effective
Time is owned by the Company, Parent, Sub or any Subsidiary of Parent will be
canceled and retired and will cease to exist and no consideration will be
delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (excluding Shares to be cancelled in accordance with Section 3.1(b) and
Dissenting Shares (as defined in Section 3.5)) will be converted into the
right to receive the per share amount actually paid in the Offer, payable to
the holder thereof in cash, without any interest thereon (such amount is
herein referred to as the "Merger Consideration"), upon surrender and exchange
of the Certificate (as defined in Section 3.2(b)) representing such share of
Company Common Stock.
(d) Holders of Certificates. All such shares of Company
Common Stock, when converted as provided in Section 3.1(c), will no longer be
outstanding and will automatically be cancelled and retired and will cease to
exist, and each
certificate previously evidencing such shares of Company Common Stock will
thereafter represent only the right to receive the Merger Consideration,
without any interest thereon. The holders of certificates previously
evidencing shares of Company Common Stock outstanding immediately prior to the
Effective Time will cease to have any rights with respect to the Company
Common Stock, except as otherwise provided herein or by law.
(e) Subsidiary Defined. As used in this Agreement, the word
"Subsidiary," with respect to any party, means any corporation, limited
liability company, partnership, joint venture or other organization, whether
incorporated or unincorporated, of which: (i) such party or any other
Subsidiary of such party is a general partner; (ii) voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation, partnership, joint venture or other organization
is held by such party or by any one or more of its Subsidiaries, or by such
party and any one or more of its Subsidiaries; or (iii) at least 25% of the
equity, other securities or other interests is, directly or indirectly, owned
or controlled by such party or by any one or more of its Subsidiaries, or by
such party and any one or more of its Subsidiaries.
3.2 Payment for Shares.
(a) Paying Agent. Prior to the Effective Time, Parent will
appoint a United States bank or trust company reasonably acceptable to the
Company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Parent will cause Sub to deposit with the Paying
Agent in a separate fund established for the benefit of the holders of shares
of Company Common Stock, for payment in accordance with this Article III,
through the Paying Agent (the "Payment Fund"), immediately available funds in
an amount necessary to make the payment pursuant to Section 3.1(c) to such
holders. The Paying Agent, pursuant to irrevocable instructions, will pay the
Merger Consideration out of the Payment Fund.
If for any reason (including losses) the Payment Fund is
inadequate to pay the amount to which holders of shares of Company Common
Stock will be entitled under Section 3.1(c), Parent will take all steps
necessary to enable or cause Sub to deposit in trust additional cash with the
Paying Agent sufficient to make all payments required under this Agreement,
and Parent and the Surviving Corporation will in any event be liable for
payment thereof. The Payment Fund will not be used for any purpose except as
expressly provided in this Agreement.
(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation will instruct the Paying
Agent to mail to each holder of record (other than Parent or any Subsidiary of
Parent) of a Certificate or Certificates which, immediately prior to the
Effective Time, evidenced outstanding shares of Company Common Stock (the
"Certificates"), (A) a form of letter of transmittal (which will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Paying Agent, and
will be in such form and have such other provisions as the Surviving
Corporation reasonably may specify) and (B) 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 together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the
holder of such Certificate will be entitled to receive in respect thereof cash
in an amount equal to the product of (1) the number of shares of Company
Common Stock represented by such Certificate and (2) the Merger Consideration,
and the Certificate so surrendered will forthwith be cancelled. No interest
will be paid or accrued on the Merger Consideration payable upon the surrender
of any Certificate. If payment is to be made to a person other than the person
in whose name the surrendered Certificate is registered, it will be a
condition of payment that the Certificate so surrendered will be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment will pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
surrendered Certificate or established to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.2(b)(i), each
Certificate (other than Certificates representing Shares owned by Parent or
any Subsidiary of Parent) will be deemed at any time after the Effective Time
to represent for all purposes only the right to receive the Merger
Consideration.
(ii) Upon surrender of the certificate representing
the share of Special Preferred Stock outstanding as of the date of this
Agreement for cancellation to the Surviving Corporation together with such
customary documents as may be required by the Surviving Corporation, the
holder of such will be entitled to receive in respect thereof cash in an
amount equal to $1,500.00, and the certificate so surrendered will forthwith
be cancelled. No interest will be paid or accrued on the consideration payable
upon the surrender of such certificate. Until surrendered in accordance with
the provisions of this Section 3.2(b)(ii), the certificate
representing the outstanding share of Special Preferred Stock will be deemed
at any time after the Effective Time to represent for all purposes only the
right to receive a cash payment in an amount equal to $1,500.00.
(c) Termination of Payment Fund; Interest. Any portion of
the Payment Fund which remains undistributed to the holders of Company Common
Stock for 270 days after the Effective Time will be delivered to the Surviving
Corporation, and any holders of Company Common Stock who have not theretofore
complied with this Article III and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time will thereafter
look only to the Surviving Corporation for payment of the Merger Consideration
to which they are entitled. All interest accrued in respect of the Payment
Fund will inure to the benefit of and be paid to the Surviving Corporation.
(d) No Liability. None of Parent, the Company or the
Surviving Corporation will be liable to any holder of shares of Company Common
Stock for any cash from the Payment Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Company Common Stock shall not have been surrendered prior to seven years
after the Effective Time (or immediately prior to such earlier date on which
any Merger Consideration payable to the holder thereof pursuant to this
Article 3 would otherwise escheat to or become the property of any
governmental entity), any such Merger Consideration shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any person previously entitled
thereto.
3.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company will be closed and there will be no further
registration of transfers of shares of Company Common Stock thereafter. On or
after the Effective Time, any certificates presented to the Paying Agent or
Parent for any reason, except notation thereon that a stockholder has elected
to exercise his rights to appraisal pursuant to the DGCL, will be converted
into the consideration as provided in this Article III.
3.4 Stock Option Plans. Prior to the Effective Time, Parent
will cause Sub to pay or, to the extent funds for such purpose are provided by
Parent to the Company, the Company will pay each holder of a then outstanding
option to purchase Shares (including under the Company's 1995 Stock Option
Plan (the "Stock Option Plan")), whether or not then exercisable or vested
(collectively, the "Options"), in cancellation and settlement thereof, for
each Share subject to such Option, an amount in cash equal to the excess, if
any, of the Merger Consideration over the per Share exercise
price therefor (such amount being hereinafter referred to as, the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16 of the Exchange Act, any such amount will be paid by Sub or the
Surviving Corporation as soon as practicable after the first date payment can
be made without liability to such persons under Section 16(b) of the Exchange
Act. Upon payment of the Option Consideration, the Option will be cancelled.
The payment to the holder entitled thereto of the Option Consideration will be
deemed a release of any and all rights the holder had or may have had in
respect of such Option.
3.5 Dissenting Shares. Notwithstanding any other provisions
of this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by
stockholders who have not voted in favor of the Merger or consented thereto in
writing and who properly demand appraisal for such shares in accordance with
Section 262 of the DGCL (collectively, the "Dissenting Shares") will not be
converted into or represent the right to receive the consideration provided
for in Section 3.1. Such stockholders instead will be entitled to receive
payment of the appraised value of such shares of Company Common Stock held by
them in accordance with the provisions of Section 262 of the DGCL, except that
all Dissenting Shares held by stockholders who will have failed to perfect or
who effectively will have withdrawn or otherwise lost their rights to
appraisal of such shares of Company Common Stock under Section 262 of the DGCL
will thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the consideration provided for in Section 3.1 upon surrender
in the manner provided in Section 3.2, of the certificate or certificates
that, immediately prior to the Effective Time, evidenced such shares of
Company Common Stock.
3.6 Withholding Rights. Parent and Sub will be entitled to
deduct and withhold, or cause to be deducted or withheld, from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock or Options such amounts as are required to be
deducted and withheld with respect to the making of such payment under the
Code (as defined in Section 4.1(i)), or any provision of applicable state,
local or foreign tax law. To the extent that amounts are so withheld, such
withheld amounts will be treated for all purposes of this Agreement as having
been paid to such holders in respect of which such deduction and withholding
was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company
and its Subsidiaries is a corporation duly incorporated, validly existing and
in good standing under the laws of its respective jurisdiction of
incorporation, has the corporate power to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified to do business as a foreign corporation and in good standing to
conduct business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in jurisdictions where the failure so to
qualify would not in the aggregate have a Material Adverse Effect (as defined
below) with respect to the Company. The Company has heretofore made available
to Parent complete and correct copies of its and its Subsidiaries' respective
Certificates of Incorporation and By-laws. All Subsidiaries of the Company and
their respective jurisdictions of incorporation or organization are identified
on Schedule 4.1(a) of the disclosure letter dated the date of this Agreement
and delivered by the Company to Parent and Sub prior to the execution of this
Agreement (the "Company Disclosure Schedule"). As used in this Agreement: a
"Material Adverse Effect" means, with respect to any party, any events,
changes or effects which, individually or in the aggregate, would have a
material adverse effect on the business, operations, assets, liabilities,
properties, results of operations or financial condition of such party and its
Subsidiaries, taken as a whole.
(b) Capital Structure. The authorized capital stock of the
Company consists of (i) 27,000,000 shares of Common Stock, $.01 par value, of
which, as of the date hereof, 19,706,578 Shares were issued and outstanding,
all of which were validly issued, fully paid and non-assessable and free of
preemptive rights, and 1,764,000 Shares are reserved for issuance pursuant to
outstanding Options, (ii) 6,000,000 shares of Preferred Stock, $.01 par value,
of which, as of the date hereof, no shares were issued and outstanding and
(iii) 1 share of Special Preferred Stock, of which, as of the date hereof, 1
share was issued and outstanding. Except as set forth on Schedule 4.1(b) of
the Company Disclosure Schedule, as of the date hereof, all outstanding shares
of capital stock of the Company's Subsidiaries are owned by the Company or a
direct or indirect wholly-owned Subsidiary of the Company, free and clear of
all liens, charges, encumbrances, claims and options of any nature. Except as
set forth above and on Schedule 4.1(b) of the Company Disclosure Schedule
(which
sets forth a true and correct list of the following, including holders thereof
and exercise prices therefor), there are not as of the date hereof any
outstanding or authorized capital stock equivalents or equity equivalents of
the Company or any options, warrants, calls, rights (including preemptive
rights), commitments or any other agreements of any character which the
Company or any of its Subsidiaries is a party to, or may be bound by,
requiring it to issue, transfer, sell, purchase, redeem or acquire any shares
of capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of capital stock or
equity equivalents of the Company or any of its Subsidiaries. There is no
Company Voting Debt outstanding. For purposes of this Agreement, "Company
Voting Debt" means bonds, debentures, notes or other instruments or evidence
of indebtedness having the right to vote (or convertible into, or exercisable
or exchangeable for, securities having the right to vote) on any matters on
which the Company stockholders may vote. The Company does not hold any capital
stock or other equity interest, directly or indirectly, in any person other
than the Subsidiaries.
(c) Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and, subject to the next
sentence, to consummate the transaction contemplated hereby. This Agreement,
the Offer, the Merger and the consummation by the Company of the transaction
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company or its stockholders are necessary to authorize this Agreement or to
consummate the transaction contemplated hereby, other than the approval of
this Agreement and the Merger by (i) the holders of a majority of the Company
Common Stock if required by the DGCL, and (ii) the holder of the Special
Preferred Stock as long as a "Trigger Event" (as defined in the Company's
Restated Certificate of Incorporation) has not occurred. This Agreement has
been duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding agreement of Parent and Sub,
constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that the enforcement
hereof may be limited by (A) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
(d) Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement nor the consummation by the Company
of the transaction contemplated hereby will: (i) conflict with or result in
any breach of
any provision of the respective Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (A) in connection with the
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (B) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities
of other states in which the Company or any of its Subsidiaries is authorized
to do business, (C) in connection with any state or local tax which is
attributable to a change in the beneficial ownership of real property owned by
the Company or its Subsidiaries (collectively, the "Gains Taxes"), (D) as may
be required by any applicable state securities or "blue sky" laws or state
takeover laws, (E) such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer or the
Merger or the transaction contemplated by this Agreement, or (F) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not have a Material Adverse Effect on the
Company; (iii) except as set forth in Schedule 4.1(d) of the Company
Disclosure Schedule, result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, consent or acceleration or lien or other
charge or encumbrance) under, or cause any payment to be required to be made
or any securities or rights of the Company to be issued pursuant to, any of
the terms, conditions or provisions of any note, license, agreement, plan or
other instrument or obligation to which the Company or any of its Subsidiaries
or any of their assets may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite, waivers or consents have
been obtained or which, in the aggregate, would not have a Material Adverse
Effect on the Company; or (iv) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 4.1(d) are duly and timely obtained or made and, with respect to the
Merger, the approval of this Agreement by the Company's stockholders has been
obtained to the extent required by the DGCL, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or
any of its Subsidiaries or to any of their respective assets.
(e) Compliance. Neither the Company nor any of its
Subsidiaries is in default or violation of (i) any law, statute, rule,
regulation, order, judgment, decree, governmental approval, permit or
franchise applicable to the Company or any of its Subsidiaries or by which its
or any of
their respective properties are bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, or other instrument
or obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of its or their respective
properties are bound or affected ("Contracts"), except in the case of both (i)
and (ii) for such defaults and violations which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company or materially
delay consummation of the transaction contemplated hereby. To the Company's
knowledge, the other parties to such Contracts are not in default thereunder
and such Contracts are valid and binding obligations of the other parties
thereto in accordance with their terms, except for such defaults and failures
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(f) Properties. The Company or one of its Subsidiaries has
good, valid, and in the case of Owned Properties (as defined below),
marketable fee title to: (i) all of the real property and interests in real
property owned by the Company or its Subsidiaries indicated in the most recent
financial statements included in the Company SEC Documents as defined in
clause (i) of Section 4.1(h), except for properties sold or otherwise disposed
of in the ordinary course of business (the "Owned Properties"), and (ii)
leasehold estates in all leased real properties indicated in the most recent
financial statements included in the Company SEC documents, except leasehold
interests terminated in the ordinary course of business (the "Leased
Properties"); the Owned Properties and Leased Properties being sometimes
referred to herein as the "Real Properties"), in each case free and clear of
all mortgages, liens, security interests, easements, covenants, rights-of-way
and other similar restrictions and encumbrances ("Encumbrances"), except for
(x) Encumbrances which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, (y) those Encumbrances set forth in
Schedule 4.1(f) of the Company Disclosure Schedule or the Company SEC
Documents and (z) Encumbrances for Taxes (as hereinafter defined) which are
being contested in good faith by appropriate proceedings.
(g) Intellectual Property. Except to the extent the failure
of any of the following would not, in the aggregate, have a Material Adverse
Effect on the Company: (i) the Company and each of its Subsidiaries owns
and/or is licensed to use (in each case, free and clear of any liens, claims
or similar encumbrances) all patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct of its
business as currently conducted; (ii) the use of such patents, trademarks,
trade names, service marks, copyrights,
technology, know-how and processes by the Company and its Subsidiaries and
their agents does not infringe on the rights of any person; (iii) to the
knowledge of the Company, no person is infringing on any right of the Company
or any of its Subsidiaries with respect to any such patents, trademarks,
service marks, trade names, copyrights, technology, know-how or processes; and
(iv) there are no agreements, written or oral, which in any material respect
limit or otherwise relate to any rights of the Company or its Subsidiaries to
use any of their intellectual property.
(h) SEC Reports; Financial Statements. (i) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since July 1, 1996 pursuant to the federal securities laws and the SEC rules
and regulations thereunder, all of which, except as set forth on Schedule
4.1(h) of the Company Disclosure Schedule, as of their respective dates,
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange
Act and the rules and regulations promulgated thereunder (collectively, the
"Company SEC Documents") and, including any financial statements or schedules
included therein, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(ii) The consolidated balance sheets and the related
consolidated statements of income (loss), shareholders' equity (deficiency)
and cash flows (including the related notes thereto) of the Company included
in the Company SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior
periods (except as otherwise noted therein), and present fairly the
consolidated financial position of the Company and its consolidated
Subsidiaries as of their respective dates, and the consolidated results of
their operations and their cash flows for the periods presented therein
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments).
(iii) As of March 31, 1998, neither the Company nor any of
its Subsidiaries had any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due that are required to be
recorded or reflected on a consolidated balance sheet of the Company under
generally accepted accounting principles, except (i) as specifically reflected
or reserved against or disclosed in the financial statements of the Company
included in the Company SEC Documents filed prior to the date of this
Agreement or (ii) described in Schedule 4.1(h) of the Company Disclosure
Schedule.
(i) Litigation. There are no actions, claims, suits,
proceedings or governmental investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries that would
have a Material Adverse Effect on the Company, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its Subsidiaries having any such
effect.
(j) Offer Documents. None of the information supplied by the
Company in writing for inclusion in the Offer Documents or provided by the
Company in the Schedule 14D-9 will, at the respective times that the Offer
Documents and the Schedule 14D-9 or any amendments or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(k) Taxes. The Company and its Subsidiaries have timely
filed all Federal, state, local and foreign Tax Returns that any of them is
required to file ("Tax Returns") other than those Tax Returns the failure of
which to have timely filed or to file would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company and its
Subsidiaries have paid all Taxes (shown due on such filed returns). The
Company has delivered or made available to Parent true and complete copies of
the Company's and its Subsidiaries' Federal, state, local and foreign income
tax returns for each of the three years ended June 30, 1995 through 1997.
Except as set forth in Schedule 4.1(k) of the Company Disclosure Schedule, no
audits or other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Return of the Company or its
Subsidiaries as to which any taxing authority has asserted in writing claims
which would have a Material Adverse Effect on the Company or, as of the date
of this Agreement, which, if adversely determined, would have a Material
Adverse Effect on the Company. Except as set forth in Schedule 4.1(k) of the
Company Disclosure Schedule, as of the date of this Agreement, the Company and
its Subsidiaries have not received any notice or deficiency or assessment from
any taxing authority with respect to liabilities for income and other material
Taxes which have not been fully paid or finally settled. "Tax Returns" means
any return, declaration, report or similar statement required to be filed with
respect to any Taxes (including any attached schedules), including any
information return, claim or
refund, amended return and declaration of estimated Tax. "Tax" or "Taxes"
means all Untied States federal, state, local or foreign income, profits,
estimated, gross receipts, windfall profits, sales, use, license, excise,
emergency excise, franchise, capital gains, capital stock, employment,
withholding, transfer, stamp, payroll, goods and services, value added,
alternative or add-on minimum tax, or any other tax, custom, duty or
governmental fee, or other like assessment or charge of any kind whatsoever,
together with any interest, penalties, fines, related liabilities or additions
to tax that may become payable in respect thereof imposed by any taxing
authority.
(l) Employee Benefit Plans; Labor Matters. (i) Schedule
4.1(l) of the Company Disclosure Schedule contains a true and complete list of
each "employee benefit plan" (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including multiemployer plans within the meaning ----- of ERISA section
3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive or
deferred compensation plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA, under which any employee or
former employee of the Company or any of its Subsidiaries has any present or
future right to benefits with respect to which the Company or any of its
Subsidiaries has any present or future liability. All such plans, agreements,
programs, policies and arrangements are collectively referred to herein as the
"Company Plans".
(ii) With respect to each Company Plan, the Company has
delivered or made available to Parent a current, accurate and complete copy
(or, to the extent no such copy exists, an accurate description) thereof and,
to the extent applicable: (A) any related trust agreement or other funding
instrument; (B) the most recent determination letter, if applicable (C) any
summary plan description and other written communication by the Company or any
of its Subsidiaries to their employees concerning the extent of the benefits
provided under a Company Plan; and (D) the most recent (1) Form 5500 and
attached schedules, (2) audited financial statements, (3) actuarial valuation
reports and (4) attorney's response to an auditor's request for information.
(iii) Except as set forth in Schedule 4.1(l) of the Company
Disclosure Schedule (A) each Company Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter from the Internal Revenue
Service (the "IRS") that it is so qualified and nothing has occurred since the
date of such letter that could reasonably be expected to affect the qualified
status
of such Company Plan; (B) each Company Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable law;
(C) neither the Company nor any of its ERISA Affiliates has incurred any
direct or indirect liability under, arising out of or by operation of Title IV
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
in connection with the termination of, or withdrawal from, any Company Plan or
other retirement plan or arrangement, and no fact or event exists that could
reasonably be expected to give rise to any liability. Except as set forth in
Schedule 4.1(l) of the Company Disclosure Schedule or the Company SEC
Documents, the aggregate projected benefit obligations of each Company Plan
subject to Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Company Plan) do not exceed the fair market value
of the assets of such Company Plan (as of the date of such valuation).
(iv) For purposes of this Agreement, "ERISA Affiliate" shall
be any organization which is a member of a controlled group of organizations
within the meaning of Code sections 414(b), (c), (m) or (o).
(v) Other than the Company's Employee Stock Ownership Plan
(the "ESOP"), there is no employee benefit plan or arrangement established by
or jointly with the Company that owns of record any of the issued and
outstanding Shares.
(m) Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, as set forth on Schedule 4.1(m) of the Company Disclosure Schedule
or as expressly contemplated by this Agreement, since March 31, 1998, (i) the
business of the Company and its Subsidiaries has been carried on only in the
ordinary and usual course (ii) there has not been any condition, event or
occurrence that individually or in the aggregate, has resulted or would
reasonably be expected to result in a Material Adverse Effect on the Company
and (iii) neither the Company nor any of its Subsidiaries has taken any action
which, had it been taken following the date hereof and prior to the Control
Date, would have required the consent of Parent pursuant to Section 5.1 of
this Agreement.
(n) Opinion of Investment Banker. The Company has received
the written opinion of Lazard Freres & Co. LLC dated the date hereof, to the
effect that, based upon and subject to the matters set forth therein and as of
such date, the consideration to be received by the holders of Company Common
Stock in the Offer and the Merger is fair from a financial point of view to
such holders.
(o) Environmental Matters. As of the date of this Agreement,
except as disclosed on Schedule 4.1(o) of the Company Disclosure Schedule, (i)
the Company and each of its Subsidiaries is in compliance with all applicable
federal, state and local laws and regulations relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), except for non compliance that, in the aggregate, would
not have a Material Adverse Effect on the Company and, to the knowledge of the
Company, there is no condition that would reasonably be expected to prevent or
interfere with such compliance with Environmental Laws in the future and (ii)
neither the Company nor any of its Subsidiaries has received written notice
of, or, to the knowledge of the Company, is the subject of, any action,
proceeding, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim"), except for liabilities and
non-compliances that in the aggregate would not have a Material Adverse Effect
on the Company; (iii) except as would not in the aggregate have a Material
Adverse Effect on the Company, materials that are regulated pursuant to
Environmental Laws or that could reasonably be expected to result in liability
under Environmental Laws have not been generated, transported, treated,
stored, disposed of, arranged to be disposed of, released or threatened to be
released at, on, from or under any of the properties or facilities currently
or, to the knowledge of the Company, formerly owned, leased or otherwise used
by the Company or any of its Subsidiaries, in violation of, or in a manner or
to a location that would reasonably be expected to give rise to liability to
the Company or its Subsidiaries under any Environmental Laws; and (iv) neither
the Company nor any of its Subsidiaries has contractually assumed any material
liabilities or obligations under any Environmental Laws that could reasonably
be expected to have a Material Adverse Effect on the Company.
4.2 Representations and Warranties of Parent and Sub. Parent
and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub
is a corporation, duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of organization, has the power to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified to do business as a foreign entity and in
good standing to conduct business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in jurisdictions where the
failure so to qualify would not
in the aggregate have a Material Adverse Effect with respect to Parent. Parent
and Sub have heretofore made available to the Company complete and correct
copies of their respective charter documents. Parent does not own any capital
stock of any person other than the capital stock of Sub.
(b) Authority. Each of Parent and Sub has the requisite
power and authority to execute and deliver this Agreement and to consummate
the transaction contemplated hereby. This Agreement and the consummation by
each of Parent and Sub of the transaction contemplated hereby have been duly
and validly authorized by the respective managers and Board of Directors of
each of Parent and Sub and no other proceedings on the part of either Parent
or Sub are necessary to authorize this Agreement or to consummate the
transaction contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and, assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes the
valid and binding agreement of each of Parent and Sub, enforceable against
Parent and Sub in accordance with its terms, except that the enforcement
hereof may be limited by (A) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
(c) Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement nor the consummation by Parent and
Sub of the transaction contemplated hereby will: (i) conflict with or result
in any breach of any provision of the respective charter documents of either
Parent or Sub, (ii) require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
except (A) in connection with the applicable requirements of the HSR Act, (B)
the filing of the Certificate of Merger pursuant to the DGCL and appropriate
documents with the relevant authorities of other states in which Parent and
Sub are authorized to do business, (C) in connection with any Gains Taxes, (D)
as may be required by any applicable state securities or "blue sky" laws or
state takeover laws, (E) such filings and consents as may be required under
any Environmental Law pertaining to any notification, disclosure or required
approval triggered by the Offer or the Merger or the transaction contemplated
by this Agreement, (F) such filings, consents, approvals, orders,
registrations and declarations as may be required under the laws of any
foreign country in which Parent or Sub conducts any business or owns assets,
or (G) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the aggregate
have a Material Adverse Effect on Parent; (iii) result in a
violation or breach of, or 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 or lien or other charge or encumbrance) under any
of the terms, conditions or provisions of any note, license, agreement or
other instrument or obligation to which Parent or Sub or any of their assets
may be bound, except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration or lien or other charge or
encumbrance) as to which requisite, waivers or consents have been obtained or
which, in the aggregate, would not have a Material Adverse Effect on Parent;
or (iv) assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in this Section 4.2(c) are duly and
timely obtained or made, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent or Sub or to any of their respective
assets. Neither Parent nor Sub nor any of their respective affiliates or
associates is, at the date hereof, an "interested stockholder" (as such term
is defined in Section 203 of the DGCL) of the Company.
(d) Offer Documents. None of the information supplied or to
be supplied by Parent in writing for inclusion in the Offer Documents or
provided by Parent in the Schedule 14D-9 will, at the respective times that
the Offer Documents and the Schedule 14D-9 or any amendments or supplements
thereto are filed with the SEC and are first published or sent or given to
holders of Shares, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(e) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transaction contemplated hereby and has not engaged
in any business activities or conducted any operations other than in
connection with the transaction contemplated thereby.
(f) Financing. (i) Parent owns all of the outstanding
capital stock of Sub. At all times prior to the Effective Time, no person
other than Parent has owned, or will own, any of the outstanding capital stock
of Sub. Sub has not incurred, and prior to the Effective Time will not incur,
directly or through any Subsidiary, any liabilities or obligations for
borrowed money or otherwise, except incidental liabilities or obligations not
for borrowed money incurred in connection with its organization and except in
connection with the Merger.
(ii) Parent has received written executed
commitments (collectively, the "Financing Commitments") (true and complete
copies of which have been delivered to
the Company prior to the execution of this Agreement) from financial
institutions and investors to provide, subject to the terms and conditions of
such commitments, debt and equity financing sufficient, together with other
funds available to Parent, to effect the Offer and the Merger and the
transaction contemplated hereby and to pay all related fees and expenses.
Subject to the terms and conditions of this Agreement and the receipt of funds
pursuant to the Financing Commitments, Parent agrees to contribute to the
equity of Sub to the extent necessary to enable Sub to satisfy its obligations
to purchase the Shares pursuant to the Offer and to effect the Merger.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the
date of this Agreement and continuing until the Control Date, the Company
agrees as to the Company and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement, or to the extent that Parent
otherwise consents in advance in writing):
(a) Ordinary Course. Each of the Company and its
Subsidiaries will carry on its businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted except that
the Company may continue its efforts to sell the assets of the Stainless and
Specialty Business of the Company, and the Company and each of its
Subsidiaries shall endeavor to preserve substantially intact the business
organization of the Company and its Subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company and
its Subsidiaries and to preserve the present relationships of the Company and
its Subsidiaries with customers, suppliers and other persons with which the
Company or any of its Subsidiaries has significant business relations.
(b) Dividends; Changes in Stock. The Company will not, nor
will it permit any of its Subsidiaries to: (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock, other than
dividends paid to the Company; (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; or (iii) repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any shares of its capital stock
or such other securities, except as required by the terms of its securities
outstanding or any employee benefit plan in effect on the date hereof.
(c) Issuance of Securities. The Company will not, nor will
it permit any of its Subsidiaries to, (i) issue or grant any options, warrants
or rights to purchase shares of Company Common Stock or other equity
securities of the Company or its Subsidiaries, (ii) amend the terms of or
reprice any Option or amend the terms of the Stock Option Plan, or (iii)
issue, deliver or sell, or authorize or propose to issue, deliver or sell, any
shares of its capital stock of any class or series or other equity securities,
any debt securities or any securities convertible into, or any rights,
warrants or options to acquire, any such securities, other than the issuance
of Shares upon the exercise of Options that are outstanding on the date
hereof.
(d) Governing Documents. The Company will not, and will not
permit any of its Subsidiaries to, amend or propose to amend its Restated
Certificate of Incorporation or By-laws or equivalent organizational
documents.
(e) No Solicitation. (i) The Company will not directly or
indirectly initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below), or enter
into or maintain or continue discussions or negotiate with any person or
entity in furtherance of such inquiries or for the purpose of obtaining an
Acquisition Proposal, and the Company will not permit any of its Subsidiaries
to take, and will use reasonable efforts to prevent the officers, directors,
employees, advisors, representatives, agents and affiliates of the Company or
any of its Subsidiaries (including any investment bankers, attorney or
accountant retained by the Company or any of its Subsidiaries) (such officers,
directors, employees, representatives, advisors, agents, affiliates,
investment bankers, attorneys and accountants being referred to herein,
collectively as "Representatives") from taking, any such action; provided,
however, that nothing contained in this Section 5.1(e) will prohibit the Board
of Directors of the Company from:
(A) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes a written,
bona fide Acquisition Proposal that was not solicited after the date of this
Agreement if, and only to the extent that, (i) the Board of Directors of the
Company, after consultation with and based upon the advice of independent
legal counsel (who may be the Company's regularly engaged independent legal
counsel), and after consultation with a nationally recognized investment
banking firm, determines in good faith by majority vote that (A) such
Acquisition Proposal would, if consummated, constitute
a Superior Proposal, and (B) such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under applicable law and (ii) prior to taking such action, the Company (x)
provides prior notice to Parent to the effect that it is taking such action
and (y) receives from such person or entity an executed confidentiality
agreement in reasonably customary form. The Company will promptly notify
Parent and Sub if it is prepared to provide access to the properties, books or
records of the Company or any of its Subsidiaries to any person who has made
an Acquisition Proposal. The Company shall promptly (and in any event within
one business day, and prior to taking any of the foregoing actions) advise
Parent following the receipt by it of any Acquisition Proposal or any inquiry
or request relating thereto and the substance thereof (including the identity
of the person making such Acquisition Proposal, a description of all material
terms thereof and a copy of any written proposal), and, if the Board of
Directors in good faith believes it is consistent with its fiduciary duties,
advise Parent of any developments with respect to such Acquisition Proposal,
inquiry or request promptly upon the occurrence thereof, including the
Company's entering into discussions or negotiations with respect thereto. The
Board of Directors of the Company shall not, in connection with any of the
actions described in this Section 5.1(e), take any action to cause any state
takeover statute or other similar state law to become applicable to the Offer
or the Merger or inapplicable to any Acquisition Proposal (until such time as
this Agreement has been terminated in accordance with the requirements of
Section 8.1). The Company agrees immediately to cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Parent and its affiliates
with respect to any of the foregoing;
(B) failing to make or reaffirm, withdrawing, adversely
modifying or taking a public position materially inconsistent with its
recommendation referred to in Article I hereof (which may include making any
statement required by Rule 14e-2 under the Exchange Act) if there exists an
Acquisition Proposal and the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent counsel), and after
consultation with a nationally recognized investment banking firm, determines
in good faith by majority vote that (A) such Acquisition Proposal would, if
consummated, constitute a Superior Proposal, and (B) that such action is
necessary for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law; or
(C) making a "stop-look-and-listen" communication with
respect to an Acquisition Proposal, of the nature contemplated in, and
otherwise in compliance with, Rule 14d-9 under the Exchange Act as a result of
receiving an Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal"
means any of the following (other than the transaction among the Company,
Parent and Sub contemplated hereunder) involving the Company or any of its
Subsidiaries: (i) any proposed merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii) any
proposed sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets that comprise more than 20% (computed based on the fair
market value of such assets as determined by the Board of Directors of the
Company in good faith) of the assets of the Company and its Subsidiaries, on a
consolidated basis, in a single transaction or series of transactions; (iii)
any proposed tender offer, exchange offer or other equity investment for more
than 20% of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(ii) Except as set forth in this Section 5.1(e)(ii), the
Board of Directors of the Company will not approve or recommend or permit the
Company to enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines
in good faith that it is necessary to do so in order to comply with its
fiduciary duties to stockholders under applicable law, the Board of Directors
of the Company may approve or recommend a Superior Proposal (as defined below)
or cause the Company to enter into an agreement with respect to a Superior
Proposal, but in each case only if (i) the Company provides written notice to
Parent (a "Notice of Superior Proposal") three business days prior to the time
it intends to cause the Company to enter into such an agreement advising
Parent that the Board of Directors of the Company has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal, (ii) at the
end of such three business day period, the Company's Board of Directors
continues to believe that such Acquisition Proposal constitutes a Superior
Proposal, including taking into account any adjustment to the terms and
conditions of the transaction contemplated hereby proposed by Parent in
response to such Acquisition Proposal,
and (iii) the Company terminates this Agreement in accordance with the
requirements of Section 8.1(g) prior to taking any of the foregoing actions.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
Acquisition Proposal not directly or indirectly initiated, solicited,
encouraged or knowingly facilitated by the Company after the date of the
Agreement which the Board of Directors of the Company determines in good faith
judgment (based on the advice of an investment banker of nationally recognized
reputation), taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, (i) would, if
consummated, result in a transaction that is more favorable to the Company's
stockholders (in their capacity as stockholders), from a financial point of
view, than the transaction contemplated by this Agreement and (ii) is
reasonably capable of being completed; provided, that for purposes of this
definition, the term Acquisition Proposal shall have the meaning assigned to
such term in Section 5.1(e)(i) except that each reference to 20% in the
definition of "Acquisition Proposal" shall be deemed to be a reference to 70%
and "Acquisition Proposal" shall only be deemed to refer to a transaction
involving the Company or, with respect to assets (including the shares of any
Subsidiary of the Company), the assets of the Company and its Subsidiaries
taken as a whole (and not any of its Subsidiaries alone).
(f) Acquisitions/Dispositions. Except as set forth on
Schedule 5.1(f) of the Company Disclosure Schedule and other than the
transaction contemplated hereby, the Company will not, nor will it permit any
of its Subsidiaries to, make any acquisition, by means of merger,
consolidation or otherwise, or any disposition (including sale/leaseback
transactions or similar arrangements) of assets or securities, other than
acquisitions of supplies and raw materials and sales of inventory and worn-out
or obsolete equipment and other transactions in the ordinary course of
business.
(g) Governmental Filings. The Company will promptly provide
Parent (or its counsel) with copies of all filings made by the Company with
(i) the SEC and (ii) other state or federal court, administrative agency or
commission or other governmental authority or instrumentality (a "Governmental
Entity") in connection with this Agreement and the transaction contemplated
hereby in the case of this clause (ii).
(h) No Dissolution, Etc. Other than pursuant to this
Agreement, the Company will not authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or reorganization of
the Company or any of its Subsidiaries.
(i) Other Actions. Except as expressly permitted by the
terms of this Agreement, the Company will not take or agree or commit to take,
nor will it knowingly permit any of its Subsidiaries to take or agree or
commit to take, any action that would reasonably be expected to result in any
of the Company's representations or warranties hereunder being untrue in any
material respect or in any of the Company's covenants hereunder or any of the
conditions to the Offer and the Merger not being satisfied.
(j) Certain Employee Matters. The Company and its
Subsidiaries will not (without the prior written consent of Parent): (i) grant
any material increases in the compensation of any of its directors or officers
or in the payment of any severance due to such directors or officers; (ii) pay
or agree to pay any pension, retirement allowance or other benefit not
required or contemplated to be paid prior to the Effective Time by any of the
Company Plans as in effect on the date hereof to any such director or officer,
whether past or present; (iii) enter into any new, or materially amend any
existing, employment or severance or termination agreement with any such
director or officer; or (iv) except as may be required to comply with
applicable law, become obligated under any new plan which if in effect on the
date hereof would be a Company Plan, or amend or modify any Company Plan.
(k) Indebtedness. Except as set forth on Schedule 5.1(k) of
the Company Disclosure Schedule and other than ordinary course borrowing
pursuant to lines of credit or facilities existing on the date of this
Agreement, the Company will not, nor will the Company permit any of its
Subsidiaries to assume or incur any indebtedness for borrowed money or
guarantee any such indebtedness or guarantee any debt securities of others or,
except for ordinary course leases of computer equipment, enter into any lease
(whether such lease is an operating or capital lease), or create any
mortgages, liens, security interests or other encumbrances on the property of
the Company or any of its Subsidiaries in connection with any indebtedness
thereof.
(l) Accounting. The Company and its Subsidiaries will not
take any action, other than as required by the SEC, GAAP or applicable law,
with respect to accounting policies, procedures and practices.
(m) Certain Changes. The Company will not, and will not
permit any of its Subsidiaries to: (i) except for the ESOP Amendment (as
defined in Section 6.9), enter into or amend any contract, agreement,
commitment or arrangement other than in the ordinary course of business
consistent with past practice; (ii) except as set forth in Schedule 5.1(m) of
the Company Disclosure Schedule, authorize or make any single capital
expenditure (or series of related capital
expenditures) which is in excess of $5,000,000 or, in the case of the
Company's electric arc furnace project, $10,000,000; (iii) except as set forth
in Schedule 5.1(m) of the Company Disclosure Schedule, make or change any tax
election, file any amended Tax Return, or settle or compromise any material
federal, state, local or foreign Tax liability; (iv) settle or compromise any
pending suit, action or claim for an amount in excess of $300,000 or which
relates to the transaction contemplated hereby; or (v) 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 liabilities in the ordinary course of business and consistent
with past practice.
(n) Cooperation. The Company will cooperate with Parent (i)
in identifying, making and obtaining the filings, consents, approvals,
authorizations and permits referred to in Section 4.1(d) and (ii) as
reasonably requested in any syndication of the financing contemplated by the
Financing Commitments.
5.2 Covenants of Parent.
(a) In connection with the financing necessary to pay for
shares in the Offer and the Merger, Parent will not permit either Sub or the
Surviving Corporation to assume or incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of such party or guarantee
any debt securities of others or create any mortgages, liens, security
interests or other encumbrances on the property of Sub or Surviving
Corporation in connection with any indebtedness thereof, or enter into any
"keep well" or other agreement or arrangement to maintain the financial
condition of another person; provided, however, that this restriction shall
not apply to any financing that is both (i) completed at the earliest of (A)
three months after the Effective Time, (B) six months after the Control Date
provided that the Effective Time shall theretofore have occurred or (C) the
combination of Parent or the Surviving Corporation and Bar Technologies, Inc.
or one of its Subsidiaries under a common parent company or by merger and (ii)
in respect of which the Board of Directors of the Surviving Corporation, the
Administrative Committee and the Trustee receive a solvency opinion from a
reputable appraiser or investment bank; and provided, further, that this
restriction shall not thereafter apply to any subsequent refinancing.
(b) Parent will, to the extent required by the relevant
documentation, cause the Surviving Corporation to expressly assume the due and
punctual payment under, and the performance of every agreement and covenant of
the Company
under, (i) the Loan Agreement, dated as of June 1, 1996, between the Ohio
Water Development Authority (the "Authority") and the Company, (ii) the Loan
Agreement, dated as of October 1, 1994, between the Authority and the Company,
(iii) the Indenture, dated as of December 15, 1993, between the Company, as
Issuer, and Bankers Trust Company, as Trustee, pursuant to which the Company's
9-7/8% First Mortgage Notes Due 2001 were issued (as amended or supplemented
from time to time, the "Indenture"), and (iv) the Second Amended and Restated
Revolving Credit Agreement, dated as of April 25, 1997, by and among the
Company, BankBoston, N.A. and the lending institutions listed on Schedule I
thereto and BankBoston, N.A., as Agent with BancBoston Securities, Inc., as
Arranger (the "Revolving Credit Facility").
(c) Parent will cooperate and provide reasonable assistance
to the Company in its endeavors pursuant to Section 5.1(a).
(d) Parent will, or cause Sub to, supply the Administrative
Committee with a sufficient number of copies of the Offer Documents to deliver
to the ESOP participants so that the Administrative Committee may request and
receive instructions from ESOP participants concerning the manner in which the
Administrative Committee should direct the Trustee to respond to the Offer
with respect to Shares owned by the ESOP Trust.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of a Proxy Statement; Company Stockholders
Meeting; Merger Without a Company Stockholders Meeting.
(a) Subject to Section 6.1(c) below, the Company will,
promptly following the acceptance for payment of and payment for shares of the
Company Common Stock by Sub in the Offer, prepare and file its proxy or
information statement relating to the Merger (the "Proxy Statement") with the
SEC. The Company will use all reasonable best efforts to respond to all SEC
comments with respect to the Proxy Statement and to cause the Proxy Statement
to be mailed to the Company's stockholders at the earliest practicable date.
(b) Subject to Section 6.1(c) below, the Company will,
promptly following the acceptance for payment of and payment for shares of the
Company Common Stock by Sub in the Offer, duly call, give notice of, convene
and hold a meeting of the Company's stockholders for the purpose of approving
this Agreement (or instead take such action by written consent if permitted by
applicable law). At such
stockholders meeting (or pursuant to such written consent), Parent will cause
all of the shares of Company Common Stock then owned by Parent and Sub to be
voted in favor of the Merger.
(c) Notwithstanding the foregoing subparagraphs (a) and (b),
in the event that Parent and Sub immediately following the purchase of Shares
in the Offer own 90% or more of the outstanding shares of Company Common
Stock, the parties hereto agree that they will take all necessary and
appropriate action to cause the Merger to become effective promptly after the
expiration of the Offer without a meeting of stockholders of the Company in
accordance with Section 253 of the DGCL.
6.2 Access to Information. Upon reasonable notice, each of
the Company or Parent, as the case may be, will (and will cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party (including, in the case of Parent and
Sub, the persons that have executed Financing Commitments and, in the case of
the Company, the Administrative Committee and the Trustee and their respective
employees, accountants, counsel and other representatives), access, during
normal business hours during the period prior to the Effective Time, to all
its properties, books, contracts, commitments and records and, during such
period, such party will (and will cause each of its Subsidiaries to) furnish
promptly to the other party, (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to SEC requirements and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
The Confidentiality Agreement, dated as of April 29, 1998, between Bar
Technologies, Inc., Blackstone Capital Partners II Merchant Banking Fund L.P.,
Birmingham Steel Corporation and the Company (the "Confidentiality Agreement")
will apply with respect to information furnished thereunder or hereunder and
any other activities contemplated thereby.
6.3 Brokers or Finders. The Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to
any broker's or finders fee or any other commission or similar fee in
connection with the transaction contemplated by this Agreement, except for (i)
Lazard Freres & Co. LLC, whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm (a copy of which has
been made available to Parent prior to the date of this Agreement), (ii)
Xxxxxxx Xxxxx Xxxxxx, whose fees and expenses incurred in connection with the
proposed sale of
the Company's specialty business will be paid by the Company in accordance
with the Company's agreement with such firm (a copy of which has been made
available to Parent prior to the date of this Agreement) and (iii) Xxxxxxx
Xxxxx Barney in connection with its advice to the Trustee of and the
Administrative Committee for the ESOP in connection with the Offer and the
Merger (a copy of which has been made available to Parent prior to the date of
this Agreement).
6.4 Indemnification; Directors' and Officers' Insurance.
(a) The Company will, and from and after the Effective Time,
the Surviving Corporation will, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer, director, employee or agent
of the Company or any of its Subsidiaries (the "Indemnified Parties") against
all losses, claims, damages, costs, expenses (including reasonable attorneys'
fees and expenses), liabilities or judgments or amounts of or in connection
with any threatened or actual claim, action, suit, proceeding or investigation
based on or arising out of the fact that such person is or was (i) serving in
such person's capacity as a director, officer, employee or agent of the
Company or any of its Subsidiaries, or a person serving at the request of the
Company or any of its Subsidiaries as a trustee of a trust or (ii) serving in
such person's capacity as a trustee or member of an administrative committee,
or in any other Company fiduciary capacity with respect to any employee
benefit or stock plan maintained or sponsored by the Company or any of its
Subsidiaries, whether pertaining to any matter existing or occurring at or
prior to the Effective Time or any acts or omissions occurring or existing at
or prior to the Effective Time and whether asserted or claimed prior to, or at
or after, the Effective Time ("Indemnified Liabilities"), including all
Indemnified Liabilities based on, or arising out of, or pertaining to this
Agreement or the transaction contemplated hereby, in each case to the fullest
extent a corporation is permitted under the DGCL to indemnify such persons
(and the Company and the Surviving Corporation, as the case may be, will pay
expenses in advance of the final disposition of any such action or proceeding
to each Indemnified Party to the fullest extent permitted by law, subject to
delivery of the undertaking described below). Without limiting the foregoing,
in the event any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party (whether arising before or after the
Effective Time), (i) such Indemnified Party may retain the Company's regularly
engaged independent legal counsel or, in the event that a conflict of interest
precludes using such counsel in the reasonable judgment of the Indemnified
Party, counsel satisfactory to it and reasonably satisfactory to
the Company (and reasonably satisfactory to the Surviving Corporation after
the Effective Time) and the Company (or after the Effective Time, the
Surviving Corporation) will pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; and (ii) the Company (or after the Effective Time, the Surviving
Corporation) will use all reasonable best efforts to assist in the vigorous
defense of any such matter, provided that neither the Company nor the
Surviving Corporation will be liable for any settlement effected without its
prior written consent which consent will not unreasonably be withheld. Any
Indemnified Party, upon learning of any such claim, action, suit, proceeding
or investigation, will notify the Company (or after the Effective Time, the
Surviving Corporation) promptly (but the failure so to notify will not relieve
a party from any liability which it may have under this Section 6.4 except to
the extent such failure materially prejudices such party's position with
respect to such claims), and will deliver to the Company (or after the
Effective Time, the Surviving Corporation) the undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Parties as a group may retain only
one law firm (and one local counsel) to represent them with respect to each
such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties in which case such additional counsel reasonably
acceptable to the Company as may be required (as will be reasonably determined
by the Indemnified Parties and the Company or the Surviving Corporation, as
the case may be) may be retained by the Indemnified Parties at the cost and
expense of the Company (or Surviving Corporation). Furthermore, the provisions
with respect to indemnification set forth in the certificate of incorporation
of the Surviving Corporation will not be amended following the Effective Time
if such amendment would materially and adversely affect the rights thereunder
of individuals who at any time prior to the Effective Time were directors,
officers, employees or agents of the Company in respect of actions or
omissions occurring at or prior to the Effective Time.
(b) The Surviving Corporation will cause to be maintained in
effect the current policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries providing coverage for a period
of six years after the Effective Time with respect to matters arising before
and acts or omissions occurring or existing at or prior to the Effective Time,
including the transaction contemplated by this Agreement; provided that in no
event shall the Surviving Corporation be required to expend an amount prorated
over the number of years covered in excess of 150% of the annual premiums
currently paid by the Company for such insurance; and provided further, that
if the
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
(c) The provisions of this Section 6.4 are intended to be
for the benefit of, and will be enforceable by, each Indemnified Party, his
heirs and his personal representatives and will be binding on all successors
and assigns of Parent, Sub, the Company and the Surviving Corporation.
6.5 Consents, Approvals and Filings.
(a) Upon the terms and subject to the conditions hereof,
each of the parties hereto will (i) make promptly its respective filings, and
thereafter make any other required submissions, under the HSR Act, the
Securities Act and the Exchange Act, with respect to the Offer and the Merger
and the transaction contemplated herein (together, the "Transactions") and
(ii) use all reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable to satisfy the conditions to the Offer and the Merger and to
consummate and make effective the Transactions. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement will use all reasonable efforts to take all such action.
(b) Parent hereby agrees that it will, and it will cause
each of its affiliates to, use all reasonable efforts to obtain any government
clearances required for completion of the Offer and the Merger (including
through compliance with the HSR Act), to respond to any government requests
for information, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) (an "Order") that restricts,
prevents or prohibits the consummation of the Merger, including by vigorously
pursuing all available avenues of administrative and judicial appeal. Parent
also hereby agrees to take, and to use all reasonable efforts to cause each of
its affiliates to take, any and all of the following actions to the extent
necessary to obtain the approval of any governmental entity with jurisdiction
over the enforcement of any applicable laws regarding the Offer and the
Merger: entering into negotiations; providing information; substantially
complying with any second request for information pursuant to the HSR Act;
entering into and performing agreements or submitting to judicial or
administrative orders and selling or otherwise disposing of,
or holding separate (through the establishment of a trust or otherwise)
particular assets or categories of assets, or businesses of Parent, Company or
any of their affiliates; provided, however, that notwithstanding the foregoing
and anything else contained in this Agreement, neither Parent nor any of its
affiliates is required to take any such action with respect to any assets or
product lines that would have a Material Adverse Effect on the Surviving
Corporation and Bar Technologies, Inc., taken as a whole. The parties hereto
will consult and cooperate with one another, and consider in good faith the
views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or in behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other federal, state or foreign
antitrust or fair trade law.
(c) Parent will take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
obtain, prior to the expiration date of the Offer, one or more commitment
letters, reasonably satisfactory to the Company, to provide all of the
financing required by the Surviving Corporation to repurchase any of the
Company's 9-7/8% First Mortgage Notes Due 2001, issued, authenticated and
delivered under the Indenture that may be tendered to the Surviving
Corporation as a result of the offer required to be made by the Surviving
Corporation to repurchase such securities as a consequence of the consummation
of the Offer and to refinance any indebtedness existing under the Company's
Revolving Credit Facility or to waive any event of default under such
Revolving Credit Facility resulting from the transaction contemplated hereby.
Prior to the Control Date, the Company shall consult with Parent with respect
to any action taken by the Company in connection with such offer to repurchase
such Mortgage Notes Due 2001, and the Company will not file or otherwise
publicly release any documentation, nor make any public announcement, with
respect thereto without the consent of Parent as to the form and substance
thereof, such consent not to be unreasonably withheld.
6.6 Conduct of Business of Sub. During the period of time
from the date of this Agreement to the Effective Time, Sub will not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.
6.7 Publicity. The parties will consult with each other and
will mutually agree upon any press release or public announcement pertaining
to the Offer and the Merger and will not issue any such press release or make
any such public announcement prior to such consultation and agreement
(such agreement not to be unreasonably withheld), except as may be required by
applicable law, in which case the party proposing to issue such press release
or make such public announcement will use reasonable best efforts to consult
in good faith with the other party before issuing any such press release or
making any such public announcement.
6.8 Continuation of Employee Benefits.
(a) Until at least the second anniversary of the Effective
Time, (i) Parent will maintain or cause to be maintained employee benefits and
programs for retirees (other than former members of the USWA (as defined in
Exhibit A), officers and salaried employees of the Company and each of its
Subsidiaries that are no less favorable in the aggregate than those existing
on the date hereof and (ii) Parent will cause the Surviving Corporation to
assume the obligations of the Company under the provisions of (x) the Change
of Control Agreements, as set forth on Schedule 6.8 of the Company Disclosure
Schedule (the "Change of Control Agreements"), with Parent, Sub and the
Company agreeing that for purposes of such Change of Control Agreements, at
not later than the consummation of the Offer, (i) a Change of Control shall
have occurred, (ii) Good Reason, as such term is defined therein, shall have
occurred for a period of six months following the consummation of the Offer
and (iii) such Change of Control Agreements will be fully funded in accordance
with the terms thereof, (y) the Severance Agreements, as set forth on Schedule
6.8 of the Company Disclosure Schedule (the "Severance Agreements"), and (z)
the retention policies of the Company, as described on Schedule 6.8 of the
Company Disclosure Schedule (the "Company Retention Policies"). For purposes
of eligibility to participate in and vesting in all benefits provided to
retirees, directors, officers and salaried employees, the retirees, directors,
officers and salaried employees of the Company and its Subsidiaries will be
credited with their years of service with prior employers to the extent
service with prior employers is taken into account under plans of the Company.
(b) This Section 6.8 is intended to be for the benefit of,
and will be enforceable by, each officer and salaried employee, in each of
their capacities as a third party beneficiary hereunder, and will be binding
on all successors and assigns of Parent, Sub, the Company and the Surviving
Corporation.
6.9 Amendment of ESOP. Following the consummation of the
Offer, the Company will promptly adopt, subject to the approval of the USWA,
in accordance with the ESOP's amendment provisions, an amendment to the ESOP
to provide that the ESOP (i) will be converted to a profit-sharing plan that
is not required to invest in or distribute
employer securities and (ii) will, subject to the requirements of the Code,
permit in-service distributions, in connection with the transactions
contemplated herein, in cash or direct rollovers to eligible retirement plans
(as defined in the Code) (the "ESOP Amendment").
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger will be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. Unless the Merger is consummated
pursuant to Section 253 of the DGCL, this Agreement will have been approved
and adopted by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act will have been terminated or will
have expired.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger will be in effect; provided, however, that
prior to invoking this condition, each party will use all reasonable efforts
to have any such order, injunction or other restraint or prohibition vacated.
(d) Statutes. No statute, rule, executive order, injunction,
decree or regulation will have been enacted, entered, enforced, or promulgated
by any Governmental Entity which prohibits or restricts the consummation of
the Merger, or makes such consummation illegal.
(e) Payment for Shares. Sub will have accepted for payment
and paid for the shares of Company Common Stock duly tendered in the Offer;
provided, however, that this condition will be deemed to have been satisfied
if Sub fails to accept for payment and pay for Shares pursuant to the Offer in
violation of this Agreement or the terms and conditions of the Offer.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Boards of Directors of
Parent and the Company, respectively, subject, in the case of the Company, to
Section 1.4(b);
(b) by Parent or the Company, if, without any material
breach by such terminating party of its obligations under this Agreement
causing or resulting in such delay, the purchase of Shares pursuant to the
Offer will not have occurred on or before October 30, 1998; provided, however,
that Parent may extend the October 30, 1998 date for 45 calendar days if
Parent is then actively negotiating with the Department of Justice or the
Federal Trade Commission regarding satisfaction of the HSR Condition and/or
the condition set forth in paragraph A of Exhibit A and certifies to the
Company that, to its knowledge, all other conditions to the Offer are
satisfied or capable of prompt satisfaction as of the date of such
verification; but provided further such certification shall be without
prejudice to the requirement that such condition remain satisfied;
(c) by Parent or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being
purchased in accordance with Section 1.1(a); provided, however, that Parent
may not terminate this Agreement pursuant to this Section 8.1(c), if Parent's
termination of, or Sub's failure to accept for payment or pay for any Shares
tendered pursuant to, the Offer is in violation of the terms of the Offer or
this Agreement;
(d) by Parent or the Company, if any Governmental Entity of
competent jurisdiction will have (i) issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the purchase of Shares pursuant to the Offer or the Merger and
such order, decree, ruling or action will have been final and nonappealable or
(ii) failed to issue an order, decree or ruling or to take any other action
which is necessary to fulfill the conditions set forth in Exhibit A and
Section 7.1, as applicable, and such denial of a request to issue such order,
decree or ruling or to take such other action shall have become final and
nonappealable; provided, however, that the party seeking to terminate this
Agreement will have complied with its obligations under this Agreement to
attempt to remove or lift, or to obtain, as applicable, such order, decree or
ruling;
(e) by the Company, if the Offer has not been timely
commenced in accordance with Section 1.1, unless the failure to commence the
Offer shall be due to the failure of the Company to perform in any material
respect any of its obligations under this Agreement then required to be
performed;
(f) by Parent, if the Board of Directors of the Company
shall have (i) withdrawn, modified or changed its recommendation or approval
in respect of this Agreement or the Offer in a manner adverse to Parent, (ii)
approved or recommended any proposal other than by Parent or Sub in respect of
an Acquisition Proposal, (iii) failed to include in the Proxy Statement the
recommendation referred to in clause (i), or (iv) resolved to do any of the
foregoing;
(g) by the Company prior to consummation of the Offer, if
(i) the Board of Directors of the Company shall have determined that an
Acquisition Proposal constitutes a Superior Proposal in accordance with the
requirements of Section 5.1 (e), (ii) the Company shall have delivered to
Parent a written notice of the determination by the Company's Board of
Directors to terminate this Agreement pursuant to this Section 8.1(g) and
(iii) simultaneously with such termination the Company shall enter into a
definitive acquisition, merger or similar agreement to effect such Acquisition
Proposal and shall make payment of the full amount required by Section 8.2(a);
or
(h) prior to the consummation of the Offer, by the Company
or Parent (provided that the terminating party is not then in material breach
of any representation, warranty, covenant or other agreement contained
herein), if there shall have been a material breach of any of the covenants or
agreements or any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within ten
business days following written notice given by the terminating party to the
party committing such breach, or which breach, by its nature, cannot be cured
prior to the date on which the Offer expires.
8.2 Fees and Expenses.
(a) (i) If Parent terminates this Agreement pursuant to
Section 8.1(f), (ii) if the Company terminates this Agreement pursuant to
Section 8.1(g), or (iii) if (A) Parent or the Company terminates this
Agreement pursuant to Section 8.1(b) or Section 8.1(c) as a result of failure
to meet the Minimum Condition or the ESOP Condition or Parent terminates this
Agreement pursuant to Section 8.1(h), and (B) at any time prior to such
termination an Acquisition Proposal (except that the reference to 20% in the
definition of Acquisition Proposal shall for the purpose of this
Section 8.2(a) be 50%) shall have been publicly disclosed, in the case of a
termination pursuant to Section 8.1(b) or Section 8.1(c), or communicated to
the Company in the case of a termination pursuant to Section 8.1(h), and (C)
within 12 months after such termination the Company enters into an agreement
with respect to, or consummates, a transaction contemplated by such
Acquisition Proposal, then in each case the Company will pay to Blackstone
Management Partners L.P., simultaneously with such termination in the case of
clause (ii) above, within two business days following such termination in the
case of clause (i) above, and simultaneously with the earlier of entry into
any agreement for or the consummation of such transaction in the case of
clause (iii) above, a fee, in cash of $4,250,000; provided, however, that the
Company in no event shall be obligated to pay more than one such fee with
respect to all such terminations and transactions.
(b) Upon payment of any fee pursuant to subparagraph (a)
above, the party paying such fee will be fully released and discharged from
any liability or obligation resulting from or under this Agreement, except
that the obligations under Confidentiality Agreement shall survive such
payment.
(c) The Surviving Corporation will be responsible for any
transfer, sales, or similar taxes resulting from the Merger, except as
expressly provided herein.
(d) Whether or not the Offer or Merger is consummated and
except as otherwise provided in this Section 8.2, all costs and expenses
incurred in connection with this Agreement will be paid by the party incurring
the expense.
8.3 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1,
this Agreement will forthwith become void and there will be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or stockholders except (i) with respect to
Section 8.2 and this Section 8.3 and (ii) that no such termination will
relieve any party from liability for a willful breach hereof. In addition, in
the event that this Agreement is validly terminated, Parent and Sub agree
that, immediately following such termination Parent and Sub will terminate the
Offer and not purchase any Shares pursuant to the Offer or otherwise, and
Parent further agrees that following such termination, it will continue to be
bound by all of the terms and conditions contained in the Confidentiality
Agreement.
8.4 Amendment. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Parent, Sub
and the Company at any time
prior to the Effective Time with respect to any of the terms contained herein;
provided, however, that, after the consummation of the Offer, no term or
condition contained in this Agreement will be amended or modified if such
change will have an adverse effect on the holders of the Company Common Stock
(including by reducing the amount of or changing the form of the Merger
Consideration).
8.5 Extension; Waiver. Subject to the provisions of Article
I hereof, at any time prior to the Effective Time, the parties hereto, by
action taken or authorized by their respective Boards of Directors, may, to
the extent legally allowed: (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 or in any
document delivered pursuant hereto; and (iii) waive compliance with any of the
agreements or conditions contained herein; provided, however, that, after the
consummation of the Offer, no term or condition contained in this Agreement
will be amended, modified or waived if such change will have an adverse effect
on the holders of the Company Common Stock. Any agreement on the part of a
party hereto to any such extension or waiver will be valid only if set forth
in a written instrument signed on behalf of such party. The failure of any
party hereto to assert any of its rights hereunder will not constitute a
waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement will survive the
acceptance for payment of, and the payment for, the Shares by Sub in the Offer
or the expiration of the Offer. None of the covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement will
survive the Effective Time, except for the covenants and agreements contained
in Article III, Section 6.4 and Section 6.8 hereof and any other covenant or
agreement herein that expressly contemplates performance after the Effective
Date. The Confidentiality Agreement will survive the execution and delivery of
this Agreement, and the provisions of the Confidentiality Agreement will apply
to all information and material delivered by any party hereunder.
9.2 Notices. Any notice or communication required or
permitted hereunder will be in writing and either delivered personally or
telecopied or sent by certified or registered mail, postage prepaid, and will
be
deemed to be given, dated and received when so delivered personally or
telecopied or, if mailed, five business days after the date of mailing to the
following address or telecopy number, or to such other address or addresses as
such person may subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
c/o The Blackstone Group
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to the Company, to:
Republic Engineered Steels, Inc.
000 Xxxxxxx Xxxx XX
X.X. Xxx 000
Xxxxxxxxx, XX 00000-0000
Attn: Chief Legal Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
9.3 Interpretation. When a reference is made in this
Agreement to Articles, Sections or Exhibits, such reference will be to an
Article or Section of this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they will be deemed to be followed by
the words "without limitation". The phrase "made
available" in this Agreement will mean that the information referred to has
been made available if requested by the party to whom such information is to
be made available. The meaning of defined terms apply to the plural as well as
the singular form and vice versa.
9.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which will be considered one and the same agreement
and will become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership. This Agreement, the Confidentiality Agreement and any other
documents and instruments referred to herein constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and, except as
provided in Sections 5.2(d), 6.4, 6.8 and 8.2, is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
9.6 Governing Law. This Agreement will be governed and
construed in accordance with the law of the State of Delaware.
9.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except as provided in Section 2.1.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
RES HOLDING CORPORATION
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
RES ACQUISITION CORPORATION
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
REPUBLIC ENGINEERED STEELS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
EXHIBIT A
The capitalized terms used in this Exhibit A will have the
respective meanings given to such terms in the Agreement and Plan of Merger,
dated as of July 23, 1998 (the "Merger Agreement"), by and among RES Holdings
Corporation, a Delaware corporation ("Parent"), RES Acquisition Corporation, a
Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and
Republic Engineered Steels, Inc., a Delaware corporation (the "Company"), to
which this Exhibit A is attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub will
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any Shares tendered, and, subject to the
provisions of the Merger Agreement, may amend or terminate the Offer (whether
or not any Shares have theretofore been purchased or paid for), if (i) there
have not been validly tendered and not withdrawn prior to the time the Offer
will otherwise expire a number of Shares which constitutes a majority of the
voting power (determined on a fully-diluted basis), on the date of purchase of
all the securities of the Company entitled to vote generally in the election
of directors or in a merger (without giving effect to any voting rights of the
Special Preferred Stock) (the "Minimum Condition"); (ii) the employee common
stock ownership plan of the Company (the "ESOP") has not validly tendered and
not withdrawn prior to the time the Offer will otherwise expire a number of
Shares such that immediately following the purchase of Shares pursuant to the
Offer the ESOP would hold less than 25% of the Shares then outstanding (or
such fewer number of Shares as is necessary to eliminate the voting rights of
the Special Preferred Stock and cause such Special Preferred Stock to be
immediately redeemable at the Company's option) (the "ESOP Condition"); (iii)
any waiting periods under the HSR Act applicable to the purchase of Shares in
the Offer and the Merger will not have expired or been terminated prior to the
expiration of the Offer (the "HSR Condition"); or (iv) at any time on or after
the date of the Merger Agreement and before acceptance for payment
A-1
of, or payment for, such Shares any of the following events will have
occurred:
(A) any Governmental Entity will have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, interpretation, judgement, injunction or other order which (i)
is in effect and which materially restricts, prevents or prohibits
consummation of the Offer, the Merger or any transaction contemplated by the
Agreement; provided, however, that such effect has not resulted from Parent or
Sub breaching its obligations in the Merger Agreement to cause any such
decree, judgment, injunction or other order to be vacated or lifted or to
oppose any such action or proceeding; or which (ii) notwithstanding that
Parent has complied fully its obligations in the Merger Agreement, makes
materially more costly the making of the Offer, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some or all of the
Shares or of the Company (including by reason of imposing a material liability
on the Company, Parent or Sub or materially encumbering any of their
respective assets), the consummation of the transaction contemplated by the
Merger Agreement or materially delays the Merger, or which (iii)
notwithstanding that Parent has complied fully with Section 6.5 of the Merger
Agreement, materially limits the ownership or operation by the Company, any of
its Subsidiaries, Parent or any of its affiliates of all or any material
portion of the business or assets of the Company or any of its Subsidiaries,
or compels Parent or any of its affiliates to sell, dispose of or hold
separate (through the establishment of a trust or otherwise) all or any
material portion of the business or assets of the Company, its Subsidiaries or
any other such person, as a result of the transaction contemplated by the
Merger Agreement; or which (iv) notwithstanding that Parent has complied fully
with Section 6.5 of the Merger Agreement, imposes or confirms limitations on
the ability of Sub, Parent or any of its affiliates effectively to acquire or
hold or to exercise full rights of ownership of the Shares, including without
limitation the right to vote any Shares acquired or owned by Sub, Parent or
any of its affiliates on all matters properly presented to the shareholders of
the Company, including without limitation, the adoption and approval of the
Merger Agreement and the Merger or the right to vote any shares of capital
stock of any subsidiary directly or indirectly owned by the Company; or (v)
any Governmental Entity shall have instituted or threatened in writing to
institute any action or proceeding which could reasonably be expected to have
or result in any of the foregoing effects.
A-2
(B) the representations and warranties of the Company
contained in the Merger Agreement (without giving effect to any "Material
Adverse Effect", "materiality" or similar qualifications contained therein)
will not be true and correct in all respects as of the date of consummation of
the Offer as though made on and as of such date except (1) for changes
specifically permitted by the Merger Agreement, (2) that those representations
and warranties which address matters only as of a particular date will remain
true and correct as of such date, and (3) for breaches or inaccuracies which,
individually or in the aggregate, would not (a) have a Material Adverse Effect
on the Company or (b) materially adversely affect the ability of the parties
to the Merger Agreement to consummate the transaction contemplated thereby;
(C) the obligations of the Company contained in the Merger
Agreement to be performed at or prior to the consummation of the Offer will
not have been performed or complied with in all material respects by the
Company prior to the consummation of the Offer;
(D) the Merger Agreement will have been terminated in
accordance with its terms or the Offer shall have been terminated with the
consent of the Company;
(E) (i) it shall have been publicly disclosed or Parent
shall have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of more than 20% of the outstanding Shares has been acquired by
any corporation (including the Company or any of its Subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or any of its
affiliates or the ESOP, or (ii) (A) the Board of Directors of the Company
shall have withdrawn or modified in a manner adverse to Sub the approval or
recommendation of the Offer, the Merger or the Merger Agreement, or approved
or recommended any Acquisition Proposal or any other acquisition of Shares
other than the Offer and the Merger or (B) any such corporation, partnership,
person or other entity or group shall have entered into a definitive agreement
or an agreement in principle with the Company with respect to an Acquisition
Proposal;
(F) Parent fails to receive funds pursuant to the Financing
Commitments; or
A-3
(G) members of the United Steelworkers of America ("USWA")
have not ratified the Settlement Agreement and new Collective Bargaining
Agreement submitted for their ratification by the USWA in connection with the
transaction contemplated by the Merger Agreement in the manner determined to
be appropriate by the USWA for such ratification.
A-4
EXHIBIT B
Xxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxxx XxXxxx
Xxxxx Xxxxxxxx
B-1
