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AGREEMENT AND PLAN OF MERGER
AMONG
DYCKERHOFF AKTIENGESELLSCHAFT
LEVEL ACQUISITION CORP.
AND
LONE STAR INDUSTRIES, INC.
Dated as of September 2, 1999
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AGREEMENT AND PLAN OF MERGER
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THIS IS AN AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of September 2, 1999 (the "Agreement Date") among Dyckerhoff Aktiengesellschaft,
a corporation organized under the laws of the Federal Republic of Germany
("Parent"), Level Acquisition Corp., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Purchaser"), and Lone Star Industries, Inc.,
a Delaware corporation (the "Company").
Background
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WHEREAS, the Board of Directors of the Company has determined that it
is fair to, advisable and in the best interests of the Company and the
shareholders of the Company to enter into and consummate this Agreement with
Purchaser, providing for the merger of Purchaser with and into the Company, with
the Company as the Surviving Corporation (provided that, at the election of
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Parent, the Company shall merge with and into Purchaser, with the Purchaser as
the Surviving Corporation) (in either case, the "Merger"), in accordance with
the Delaware General Corporation Law (the "DGCL") and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of Purchaser has approved the Merger
of Purchaser with and into the Company and such other transactions in accordance
with the DGCL upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (as amended or supplemented in accordance with this Agreement, the
"Offer") to purchase for cash (i) all of the issued and outstanding shares of
common stock, par value $1.00 per share (referred to herein as either the
"Shares" or "Company Common Stock"), of the Company together with the attached
Rights (as defined herein), at a price per share of $50.00, net to the seller in
cash (the "Share Price") and (ii) all of the outstanding Common Stock Purchase
Warrants (the "Warrants") issued pursuant to the Warrant Agreement dated as of
April 13, 1994 between the Company and Chemical Bank, as Warrant Agent (the
"Warrant Agreement"), for $81.25 per Warrant, net to the seller in cash (the
"Warrant Price") (the Common Stock (and attached Rights (as defined herein)) and
the Warrants being collectively referred to as the "Securities").
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Security in the Offer and the Merger is fair
to the holders of such Security and has resolved to recommend that the holders
of such Securities tender their Securities pursuant to the Offer and approve and
adopt this Agreement and the Merger upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, and certain stockholders of the Company ("Certain Stockholders"),
have executed and delivered to Parent and Purchaser an agreement (the "Tender
Agreement") pursuant to which the Certain Stockholders have agreed to take
specified actions in furtherance of the transactions contemplated by this
Agreement, including tendering their Securities into the Offer;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
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(a) Subject to the provisions of this Agreement, and provided that
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this Agreement shall not have been terminated in accordance with Section 8.1 and
so long as none of the events or circumstances set forth in Annex A hereto shall
have occurred or be existing, not later than the fifth business day from the
date of public announcement of the execution of this Agreement, Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer at (i) a price of $50.00 per
Share net to the seller in cash and (ii) a price of $81.25 per Warrant net to
the seller in cash. The obligation of Purchaser to consummate the Offer, to
accept for payment and to pay for any Securities tendered pursuant to the Offer
shall be subject to those conditions set forth in Annex A and the other
conditions to the Offer set forth in this Agreement. Purchaser expressly
reserves the right, in its sole discretion, to waive any such condition provided
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that, without the consent of the Company, Parent or Purchaser shall not waive
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the Minimum Condition (as defined in Annex A). The initial expiration date of
the Offer shall be the 20th business day following the commencement of the
Offer (determined using Rule 14d-1(c)(6) under the Exchange Act).
(b) Purchaser expressly reserves the right, in its sole discretion, to
modify and make changes to the terms and conditions of the Offer, provided that
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without the prior consent of the Company, no modification or change may be made
which (i) decreases the consideration payable in the Offer, (ii) changes the
form of consideration payable in the Offer (other than by adding consideration),
(iii) changes the Minimum Condition, (iv) decreases the maximum number of
Securities sought pursuant to the Offer, (v) adversely changes the conditions to
the Offer, (vi) imposes additional conditions to the Offer (other than in
respect of any consideration which is payable in addition to the Share Price and
Warrant Price), or (vii) except as provided in
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the next sentence, extend the Offer. Notwithstanding the foregoing, Purchaser
may (but shall not be required under this Agreement or otherwise to), without
the consent of the Company, (i) extend the Offer on one or more occasions for
such period as may be determined by Purchaser in its sole discretion (each such
extension period not to exceed 10 business days at a time), if at the then
scheduled expiration date of the Offer any of the conditions to Purchaser's
obligations to accept for payment and pay for Securities shall not be satisfied
or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (iii) extend the Offer
on one or more occasions for an aggregate period of not more than five business
days if the Minimum Condition has been satisfied but less than 90% of the Fully
Diluted Shares have been validly tendered and not properly withdrawn, and (iv)
extend the Offer for any reason on one or more occasions for an aggregate period
of not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (i), (ii) or (iii) of this sentence,
notwithstanding the prior satisfaction of the conditions to the Offer set forth
on Annex A. Without limiting the right of Purchaser to extend the Offer pursuant
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to the immediately preceding sentence, in the event that the condition set forth
in paragraph (d) of Annex A with respect to the HSR Act (as defined herein) or
with respect to an action or proceeding by a Governmental Entity that shall not
have been satisfied or waived at the scheduled or any extended expiration date
of the Offer (and such condition is the sole remaining condition to be satisfied
or waived if the Offer were to be consummated on that date), at the request of
the Company, Purchaser shall, and Parent shall cause Purchaser to, extend the
expiration date of the Offer, in 5 business day increments, up to November 30,
1999, unless Parent determines in good faith that such condition can not be
satisfied prior to November 30, 1999, subject to the terms of Section 6.4. It is
agreed that the conditions to the Offer set forth on Annex A are for the benefit
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of Purchaser and may be asserted by Purchaser or, except with respect to the
Minimum Condition as set forth in Section 1.1(a), may be waived by Purchaser, in
whole or in part at any time and from time to time, in its sole discretion. On
the terms and subject to the conditions of the Offer and this Agreement,
promptly after expiration of the Offer, Purchaser shall accept for payment and
pay for, and Parent shall cause Purchaser to accept for payment and pay for, all
Securities validly tendered and not withdrawn pursuant to the Offer that
Purchaser becomes obligated to purchase pursuant to the Offer. Parent shall
provide, or cause to be provided, on a timely basis the funds necessary to
purchase any and all of the Securities that Purchaser becomes obligated to
purchase pursuant to the Offer in accordance with the terms of this Agreement.
(c) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC with respect to the Offer a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1") with respect to the Offer
which will comply in all material respects with the provisions of applicable
federal securities laws, and will contain the offer to purchase relating to the
Offer (the "Offer to Purchase") and forms of related letters of transmittal and
summary advertisement (which documents, together with any supplements or
amendments thereto and including the exhibits thereto, are referred to herein
collectively as the "Offer Documents"). Parent shall deliver copies of the
proposed forms of the Schedule 14D-1 and the Offer Documents to the Company
within a reasonable time prior to the commencement of the Offer for review and
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comment by the Company and its counsel. Parent agrees to provide the Company and
its counsel in writing any comments that Purchaser, Parent or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt thereof. The Company, Parent and Purchaser shall promptly
correct any information provided by it for use in the Schedule 14D-1 or the
Offer Documents that shall have become false or misleading in any material
respect and Parent and Purchaser further agree to take all steps necessary to
cause such Schedule 14D-1 or Offer Documents as so corrected to be filed with
the SEC and disseminated to the shareholders of the Company, as and to the
extent required by applicable federal securities laws.
Section 1.2 Company Actions.
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(a) The Company hereby consents to the Offer and represents and
warrants that (i) its Board of Directors, at a meeting duly called and held on
September 2, 1999, has duly and by unanimous vote adopted resolutions approving
the Offer, the Merger and this Agreement and the other transactions contemplated
hereby and thereby (collectively, the "Transactions"), determining that the
terms of the Offer and the Merger are fair to, and in the best interests of, the
Company's shareholders and warrantholders and recommending acceptance of the
Offer and adoption of the Merger and this Agreement by the shareholders and
warrantholders of the Company, (ii) (A) the Offer and Merger are "Permitted
Offers" under the Rights Agreement, dated as of November 10, 1994, between the
Company and Chemical Bank, as Rights Agent (the "Rights Agreement"), (B) each
right to purchase Shares pursuant to the Rights Agreement ("Rights") is
represented by the certificate representing the associated Share and is not
exercisable or transferable apart from the associated Share, (C) there has not
been a "Distribution Date" or "Shares Acquisition Date" under the Rights
Agreement, (D) the Company has taken all necessary actions so that the execution
of and delivery of this Agreement and the Tender Agreement and the consummation
of the Offer, the Merger and the other Transactions will not result in the
triggering of the provisions of Sections 11 or 13 of the Rights Agreement or the
occurrence of a "Distribution Date" or "Shares Acquisition Date" under the
Rights Agreement and will not result in Parent, Purchaser or any of their
affiliates or associates becoming an "Acquiring Person" under the Rights
Agreement, and (E) upon consummation of the Merger the former holders of the
Rights will not have any claims or rights thereunder (without any necessity to
redeem the Rights to effectuate the foregoing), and (iii) Xxxxxxx Xxxxx & Co.
(the "Company Financial Advisor") has delivered to the Company's Board of
Directors its opinion (the "Fairness Opinion") that the consideration to be
received by the Company's shareholders and warrantholders is fair, from a
financial point of view, to such shareholders and warrantholders as of the date
of the opinion and a complete and correct signed copy of such opinion has been
delivered by the Company to Parent. The Company has been authorized by the
Company Financial Advisor to permit the inclusion of the Fairness Opinion (and,
subject to prior review and consent by such Company Financial Advisor, a
reference thereto) in the Offer Documents and in the Schedule 14D-9 referred to
below and the Proxy Statement. The Company hereby consents to the inclusion in
the Offer Documents of the recommendations of the Company's Board of Directors
described in this Section 1.2. The Company has been advised that all of its
directors and executive officers who are knowledgeable of the Transactions
intend
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either to tender their Securities pursuant to the Offer or (solely in the case
of directors and executive officers who would as a result of the tender incur
liability under Section 16(b) of the Exchange Act) to vote in favor of the
Merger.
(b) The Company shall file with the SEC on the date of the
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall comply in all material
respects with the provisions of applicable federal securities laws, and will,
subject to Section 6.1 hereof, contain such recommendations of the Board in
favor of the Offer and the Merger, and shall disseminate the Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Exchange Act and shall mail such
Schedule 14D-9 together with the Offer Documents. The Company shall deliver the
proposed forms of the Schedule 14D-9 and the exhibits thereto to Parent within a
reasonable time prior to the commencement of the Offer for review and comment by
Parent and its counsel. Parent and its counsel shall be given a reasonable
opportunity to review any amendments and supplements to the Schedule 14D-9 prior
to their filing with the SEC or dissemination to shareholders of the Company.
The Company agrees to provide Parent and its counsel in writing any comments
that the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt thereof. Each of the
Company, Parent and Purchaser shall promptly correct any information provided by
it for use in the Schedule 14D-9 that shall have become false or misleading in
any material respect and the Company further agrees to take all steps necessary
to cause such Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the shareholders of the Company, as and to the extent required
by applicable federal securities laws.
Section 1.3 Securitiesholder Lists. In connection with the Offer, the
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Company shall promptly furnish to, or cause to be furnished to, Parent and
Purchaser mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listing or computer file containing the
names and addresses of the record holders of the Securities as of a recent date
and of those Persons becoming record holders subsequent to such date (to the
extent available), together with all other information in the Company's
possession or control regarding the beneficial owners of Securities and shall
furnish Parent and Purchaser with such information and assistance as Parent,
Purchaser or their respective agents may reasonably request in communicating the
Offer to the record and beneficial holders of Securities. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Merger,
Parent and Purchaser shall, and shall cause each of their affiliates to, hold
the information contained in any of such labels and lists in confidence, use
such information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, deliver to the Company all copies of such information
or extracts therefrom then in their possession or under their control.
Section 1.4 Directors; Section 14(f).
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(a) Immediately upon the acceptance for payment of and payment for any
Securities by Purchaser pursuant to the Offer, Purchaser shall be entitled to
designate such
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number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to the product of (i) the total number of directors on the
Board of Directors of the Company (giving effect to the increase in the size of
such Board pursuant to this Section 1.4) and (ii) the percentage that the number
of votes represented by Shares beneficially owned by Purchaser and its
affiliates (including Shares so accepted for payment and purchased and any
Warrants so accepted for payment and purchase and converted by Purchaser into
Shares) bears to the number of votes represented by Shares then outstanding. In
furtherance thereof, concurrently with such acceptance for payment and payment
for such Securities the Company shall, upon request of Parent and in compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
use its best efforts promptly either to increase the size of its Board of
Directors or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be so
elected or appointed to the Company's Board of Directors, and the Company shall
take all actions available to the Company to cause such designees of Parent to
be so elected or appointed. At such time, the Company shall, if requested by
Parent, also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number) as
is on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) each board of directors (or similar body) of each
subsidiary of the Company and (iii) each committee (or similar body) of each
such board.
(b) Notwithstanding the foregoing, the Company shall use its best
efforts to ensure that, in the event that Purchaser's designees are elected to
the Board of Directors of the Company, such Board of Directors shall have, at
all times prior to the Effective Time, at least two directors who are directors
on the date of this Agreement and who are not officers or affiliates of the
Company (it being understood that for purposes of this sentence, a director of
the Company shall not be deemed an affiliate of the Company solely as a result
of his status as a director of the Company), Parent or any of their respective
subsidiaries (the "Independent Directors"); and provided further, that, in such
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event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever the remaining Independent Director may designate a person to
fill such vacancy who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors may designate two persons to fill such vacancies who shall not be
officers or affiliates of the Parent or any of its subsidiaries (other than the
Company), and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Subject to applicable law, the Company shall
promptly take all action requested by Parent necessary to effect any such
election, including mailing to its shareholders and warrantholders the
information required by Section 14(f) of the Exchange Act and Rule 14(f)-1
promulgated thereunder (or, at Parent's request, furnishing such information to
Parent for inclusion in the Offer Documents initially filed with the SEC and
distributed to the stockholders and warrantholders of the Company) as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors. Each of Parent and Purchaser shall furnish to the Company, and be
solely responsible for, any information with respect to itself and its nominees,
directors and affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.
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(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors and prior to the
Effective Time, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder, any waiver of any material
condition to the Company's obligations hereunder or any of the Company's rights
hereunder or other material action by the Company hereunder may be effected only
by the action of a majority of the Independent Directors of the Company, which
action shall be deemed to constitute the action of any committee specifically
designated by the Board of Directors of the Company to approve the actions
contemplated hereby and the full Board of Directors of the Company; provided
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that, if there shall be no Independent Directors, such actions may be effected
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by majority vote of the entire Board of Directors of the Company, except that no
such action shall amend the terms of this Agreement or modify the terms of the
Offer or the Merger in a manner materially adverse to the holders of Securities.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the relevant provisions of the DGCL, Purchaser
shall be merged with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII. Following
the Merger, the Company shall continue as the surviving corporation (the
"Surviving Corporation") under the name "Lone Star Industries, Inc." and shall
continue its existence under the laws of the State of Delaware, and the separate
corporate existence of Purchaser shall cease. At the election of Parent, any
direct or indirect wholly owned subsidiary of Parent may be substituted for
Purchaser as a constituent corporation in the Merger. Notwithstanding the
foregoing, Parent may elect at any time prior to the meeting of shareholders of
the Company to consider approval of the Merger and this Agreement (the
"Shareholder Meeting") is first given to the Company's shareholders that instead
of merging Purchaser into the Company as hereinabove provided, to merge the
Company into Purchaser or another direct or indirect wholly owned subsidiary of
Parent. In such event the parties shall execute an appropriate ministerial
amendment to this Agreement in order to reflect the foregoing and to provide
that Purchaser or such other subsidiary of Parent shall be the Surviving
Corporation and shall continue under the name "Lone Star Industries, Inc." In
addition, in such event, assuming Purchaser, Parent or any other subsidiary of
Parent meets the requirements of Section 1504(a)(2) of the Internal Revenue Code
of 1986, as amended (the "Code"), at Parent's election, the Company shall in
connection with the Merger adopt a plan of liquidation under Section 332 of the
Code in form and substance reasonably satisfactory to Parent (a "Plan of
Liquidation"). None of the Company's, Parent's or Purchaser's representations,
warranties or covenants shall be affected by whether the Company or Purchaser is
the Surviving Corporation in the Merger.
Section 2.2 Effective Time. As soon as practicable after the
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satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of
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State of the State of Delaware (the "Delaware Secretary"), in such form as
required by and executed in accordance with the relevant provisions of the DGCL
(the date and time of the filing of the Certificate of Merger with the Delaware
Secretary (or such later time as is specified in the Certificate of Merger)
being the "Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
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forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4 Certificate of Incorporation; Bylaws. (a) At the Effective
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Time and without any further action on the part of the Company and Purchaser,
the Certificate of Incorporation of Purchaser (the "Certificate of
Incorporation"), as in effect immediately prior to the Effective Time until
thereafter further amended as provided therein and under the DGCL, shall be the
certificate of incorporation of the Surviving Corporation following the Merger.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the Bylaws of Purchaser shall be the Bylaws of the
Surviving Corporation and thereafter may be amended or repealed in accordance
with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
Section 2.5 Directors and Officers. The directors of Purchaser
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immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 2.6 Conversion of Securities. At the Effective Time, by virtue
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of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(i) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
(ii) Each Share held in the treasury of the Company and each
Share owned by Purchaser or any direct or indirect subsidiary of the
Company, in each case immediately prior to the Effective Time, shall be
cancelled and retired without any conversion thereof and no payment or
distribution shall be made with respect thereto.
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(iii) Each issued and outstanding Share (other than Shares
cancelled pursuant to Section 2.6(ii) and any Dissenting Shares (as defined
in Section 2.7(a))) shall be converted into the right to receive $50.00 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such share in the
manner provided in Section 2.8, less any required withholding taxes.
(iv) Each Warrant issued and outstanding immediately prior to
the Effective Time (other than Warrants held in the treasury of the
Company, which shall be cancelled) shall remain outstanding following, and
be unaffected by, the Merger, except that, to the extent provided in
Section 10.5 of the Warrant Agreement, from and after the Effective Time
each holder of Warrants shall have the right to obtain upon the exercise of
each Warrant, in lieu of each share of Company Common Stock theretofore
issuable upon exercise of such Warrant, the Merger Consideration without
interest thereon, net to the holder in cash.
Section 2.7 Dissenting Shares. (a) Notwithstanding anything in this
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Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have not
voted such Shares in favor of the Merger (or consented thereto in writing), who
shall have delivered a written objection to the Merger and a demand for
appraisal of such Shares in accordance with Section 262 of the DGCL (insofar as
such Section is applicable to the Merger and provides for appraisal rights with
respect thereto) and who shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL (the "Dissenting Shares"), shall not be converted into the right to receive
the Merger Consideration, but shall instead entitle the holder thereof to
receive that consideration determined pursuant to Section 262 of the DGCL;
provided, however, that if such holder shall have failed to perfect or shall
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have effectively withdrawn such holder's right to appraisal and payment under
the DGCL, such holder's Shares shall thereupon be deemed to have been converted,
at the Effective Time, into the right to receive the Merger Consideration,
without any interest thereon. The Company represents and warrants that the
Warrants shall not entitle holders thereof to appraisal rights pursuant to the
DGCL in connection with the Merger.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to the applicable provisions of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands for appraisal or offer
to settle or settle any such demands.
Section 2.8 Surrender of Shares. (a) Prior to the mailing of the Proxy
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Statement, Parent shall appoint a bank or trust company which is reasonably
satisfactory to the Company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration. Prior to
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the Effective Time, Parent shall deposit, or shall cause to be deposited, with
the Paying Agent for the benefit of former holders of Shares sufficient funds to
make all payments pursuant to this Section 2.8. Such funds shall be invested by
the Paying Agent as directed by the Surviving Corporation. Any net profit
resulting from, or interest or income produced by, such investments will be
payable to the Surviving Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
aggregate amount of Merger Consideration into which the number of Shares
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. If any Merger Consideration is
to be remitted to a person whose name is other than that in which the
Certificate for Shares surrendered for exchange is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form for transfer,
and that the person requesting such exchange shall have paid any transfer and/or
other taxes required by reason of the remittance of Merger Consideration to a
person whose name is other than that of the registered holder of the Certificate
surrendered, or the person requesting such exchange shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. No interest shall be paid or accrued, upon the surrender
of the Certificates, for the benefit of holders of the Certificates on any
Merger Consideration.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) and only as general creditors thereof for payment of their
claim for Merger Consideration to which such holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificates
representing Shares shall not have been surrendered prior to six months after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any governmental entity), any such cash shall, to the
extent permitted by
- 10 -
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of Shares such amounts as Parent (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under the Code
(as defined herein), or any provision of any applicable state, local or foreign
law, rule or regulation. To the extent that amounts are so withheld by Parent
and paid by Parent to the applicable taxing authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of Shares in respect of which such deduction and withholding was
made by Parent.
Section 2.9 No Further Transfer or Ownership Rights. After the Effective
---------------------------------------
Time, there shall be no further transfer on the records of the Company (or the
Surviving Corporation) or its transfer agent of certificates representing Shares
which have been converted pursuant to this Agreement into the right to receive
Merger Consideration, and if such certificates are presented to the Company for
transfer, they shall be cancelled against delivery of Merger Consideration. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law. All Merger Consideration paid upon the surrender
for exchange of Certificates representing Shares in accordance with the terms of
this Article II shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the Shares exchanged for Merger
Consideration theretofore represented by such Certificates.
Section 2.10 Treatment of Options. Prior to the date of this Agreement,
--------------------
the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary to provide that (A) effective on the date of this Agreement, no
further grants shall be made under the Company's Directors Stock Option Plan,
dated July 1, 1996 (the "Directors Plan"), the Company's Management Stock Option
Plan, dated April 14, 1994 (the "Management Plan") or the Company's 1996 Long
Term Incentive Plan (the "1996 Plan") (collectively, the "Company Stock Option
Plans"), (B) effective at the Effective Time, each outstanding stock option,
stock appreciation right (an "SAR"), or any other award providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary (each an "Option") heretofore granted under any of the
Company's Stock Option Plans, whether or not then vested or exercisable, shall,
at the Effective Time, be cancelled, and each holder thereof (all of whom are
listed in Section 2.10 of the Company Disclosure Schedule) shall be entitled to
-----------------------------------------------
receive a payment in cash from the Company (which amount shall be subject to any
applicable withholding taxes and shall be paid without interest, the "Cash
Payment"), upon cancellation, equal to the product of (x) the total number of
Shares subject or related to such Option, whether or not then vested or
exercisable, and (y) the excess, if any, of the Merger Consideration over the
exercise price or purchase price, as the case may be, per Share subject or
related to such Option, each such Cash Payment to be paid to each holder of an
outstanding Option upon cancellation. Except as specifically set forth in
Section 6.8(e), the
- 11 -
Company Stock Option Plans (and any Benefit Plan or other plan, program or
arrangement) providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary shall terminate as
of the Effective Time. Within 5 business days following the date of this
Agreement, the Company will have obtained the consent of each of the holders of
the Options as shall be necessary to effectuate the transactions contemplated by
this Section 2.10. Notwithstanding anything to the contrary contained in this
Agreement, payment shall, at Parent's request, be withheld in respect of any
Option until all necessary consents are obtained, and in any event all such
consents, if any, must be obtained prior to Purchaser's acceptance for payment
of any Securities pursuant to the Offer.
Section 2.11 Closing. Upon the terms and subject to the conditions
-------
hereof, as soon as practicable after consummation of the Offer (and in any event
within two business days after the satisfaction or waiver of the conditions set
forth in Section 7.1), and to the extent required by the DGCL after the vote of
the shareholders of the Company in favor of the approval of the Merger and this
Agreement has been obtained, the Company and Purchaser (or Parent if
appropriate) shall execute and file with the Delaware Secretary the Certificate
of Merger, and the parties shall take all such other and further actions as may
be required by law to make the Merger effective. Prior to the filing referred to
in this Section 2.11, a closing (the "Closing") will be held at the offices of
Dechert Price & Xxxxxx, 4000 Xxxx Atlantic Tower, 0000 Xxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000-0000 (or such other place as the parties may agree) for
the purpose of confirming all of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization and Qualification.
------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority and possesses all governmental franchises and
Permits (as defined herein) necessary to enable it to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted,
except where the failure to possess such franchises and Permits has not had and
could not be reasonably expected to have a Material Adverse Effect on the
Company. The Company is duly qualified as a foreign corporation or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed or in good standing, individually or in the aggregate, has
not had and could not reasonably be expected to have a Material Adverse Effect
on the Company.
(b) The only subsidiaries of the Company are those set forth on
Section 3.1(b) of the Company Disclosure Schedule. None of such subsidiaries is
-------------------------------------------------
a "Significant Subsidiary"
- 12 -
within the meaning of Rule 1-02 of Regulation S-X of the SEC. Each subsidiary of
the Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority and possesses all governmental
franchises and Permits necessary to enable it to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted,
except where the failure to possess such franchises and Permits has not had and
could not be reasonably expected to have a Material Adverse Effect on the
Company. Each subsidiary of the Company is duly qualified as a foreign
corporation or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed or in good standing, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company.
(c) All of the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and non-assessable and,
except as set forth in Section 3.1(b) of the Company Disclosure Schedule, are
-------------------------------------------------
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another such wholly owned subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, rights of first refusal,
"tag" or "drag" along rights, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for the capital stock of its
subsidiaries and ownership of 25% of the KC Joint Venture (as hereafter
defined), the Company does not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, limited liability
company, joint venture or other entity. The Company has delivered to Parent
complete and correct copies of its Amended and Restated Certificate of
Incorporation, as amended, and Amended and Restated Bylaws.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 75,000,000
Shares. All of the issued and outstanding Shares have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to
preemptive rights. As of September 1, 1999, 19,296,793 Shares were issued and
outstanding, 5,666,582 Shares were reserved for issuance pursuant to outstanding
Warrants issued (each Warrant representing the right to purchase two Shares at
an exercise price of $18.75 per Warrant), 72,000 Shares were reserved for
issuance pursuant to outstanding Options issued under the Directors Plan, and
238,500 Shares were reserved for issuance pursuant to outstanding Options issued
under the Management Plan. Such Shares reserved for issuance under the Company
Stock Option Plans have not been issued and will not be issued prior to the
Effective Time, and no commitment has been or will be made for their issuance,
other than under the Options described in the preceding sentence and issued and
outstanding under the Company Stock Option Plans as of the date of this
Agreement. Except as otherwise provided in Section 2.10 of this Agreement, at
the Effective Time, each Option shall be cancelled and the holder thereof shall
not be entitled to receive any consideration therefor other than the cash
payments provided by Section 2.10 of this Agreement. Section 3.2(a) of the
---------------------
Company Disclosure Schedule sets forth the exercise prices and number of Shares
---------------------------
in respect of
- 13 -
all outstanding Options, under the Company Stock Option Plans and no option or
SAR has been granted under the Company's 1996 Long Term Incentive Plan (the
"1996 Plan"). There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of the
Company may vote ("Voting Company Debt"). Except as set forth above or in
-----
Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding
--------------------------------------------------
securities, options, warrants, calls, rights, convertible or exchangeable
securities, "phantom" stock rights, SARs, stock-based performance units,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or any of its subsidiaries or obligating
the Company or any of its subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, unit, commitment, agreement,
arrangement or undertaking. There are not any outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire, or providing preemptive or, except as set forth in
Section 3.2(a) of the Company Disclosure Schedule, registration rights with
-------------------------------------------------
respect to, any shares of, or any outstanding options, warrants or rights of any
kind to acquire any shares of, or any outstanding securities that are
convertible into or exchangeable for any shares of, capital stock of the Company
or any of its subsidiaries. The Company and its subsidiaries do not have
outstanding any loans to any person in respect of the purchase of securities
issued by the Company and its subsidiaries.
(b) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or any of
its subsidiaries or, except as set forth in Section 3.2(b) of the Company
-----------------------------
Disclosure Schedule, with respect to the registration of the offering, sale or
-------------------
delivery of any shares of capital stock of the Company or any of its
subsidiaries under the Securities Act of 1933, as amended (the "Securities
Act").
Section 3.3 Authority Relative to this Agreement. (a) The Company has
------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by
the Company prior to or at the Effective Time, to perform its obligations
hereunder and thereunder, and to consummate the Transactions (subject to the
Company Shareholder Approval (as defined herein) with respect to the Merger).
The execution and delivery of this Agreement and each instrument required hereby
to be executed and delivered by the Company prior to or at the Effective Time
and the performance of its obligations hereunder and thereunder and the
consummation by the Company of the Transactions 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 are necessary to authorize this Agreement
or to consummate the Transactions (other than the Company Shareholder Approval
and the filing and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly and validly executed and delivered by
the Company, and, assuming
- 14 -
this Agreement constitutes a valid and binding obligation of Parent and
Purchaser, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The only vote of holders of any class or series of capital
stock of the Company or any of its subsidiaries necessary to adopt or approve
this Agreement and the Merger is the adoption of this Agreement by the holders
of a majority of the outstanding Shares (the "Company Shareholder Approval"),
subject to Section 6.9(c). The affirmative vote of the holders of any capital
stock or other securities of the Company or any of its subsidiaries, or any of
them, is not necessary to consummate the Offer or any Transaction other than as
set forth in the preceding sentence.
Section 3.4 Absence of Certain Changes. Except as specifically disclosed
--------------------------
in the Company's filings and reports under the Exchange Act filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in Section 3.4 of the Company Disclosure Schedule,
----------------------------------------------
since December 31, 1998, the Company and its subsidiaries have conducted their
business only in the ordinary course, and during such period there has not been
any event, change, effect or development that, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect on the
Company and the Company and its subsidiaries are not aware of any event, change,
effect or development which may reasonably be expected to occur or exist that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company. Except as disclosed in the Filed Company SEC Documents or as set forth
in Section 3.4 of the Company Disclosure Schedule, since December 31, 1998 there
----------------------------------------------
has not been (a) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company or any
redemption or other acquisition by the Company of any capital stock of the
Company; (b) any damage, destruction or loss, whether or not covered by
insurance, that, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect on the Company; or (c) any change
in accounting methods, principles or practices by the Company materially
affecting the consolidated assets, liabilities, results of operations or
business of the Company, except insofar as may have been required by a change in
generally accepted accounting principles.
Section 3.5 Reports. (a) Since January 1, 1998, the Company has timely
-------
filed all required forms, reports and documents with the SEC required to be
filed by it pursuant to the federal securities laws and the SEC rules and
regulations thereunder (collectively, the "Company SEC Documents"), all of which
have complied as of their respective filing dates in all material respects with
all applicable requirements of the Securities Act and the Exchange Act, and the
rules promulgated thereunder. None of such forms, reports or documents at the
time filed contained any untrue statement of a material fact or omitted 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. The financial statements of the Company included in the Company
SEC Documents (including the notes thereto) at the time filed complied as to
form in all material respects with applicable accounting requirements and the
published rules and
- 15 -
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (and include, in the case of any unaudited interim financial statements,
reasonable accruals for normal year-end adjustments). No subsidiaries of the
Company are required to file periodic reports with the SEC under the Exchange
Act.
(b) To the knowledge of the Company, the financial statements for
the KC Joint Venture for the year ended December 31, 1998 and six months ended
June 30, 1999 previously provided to Parent, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the financial position of the KC Joint Venture as of the date
thereof and the results of its operations and cash flows for the periods then
ended except where any such failure to comply with the foregoing, individually
or in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company. To the knowledge of the Company, since
the date of the June 30, 1999 financial statements, there has been no material
adverse change in the liabilities of the KC Joint Venture other than in the
ordinary course of its businesses. For purposes of this Section 3.5(b), the
knowledge of the Company shall be solely the knowledge of members of the KC
Joint Venture Management Committee appointed by the Company under Article VIII
of the KC Joint Venture Partnership Agreement (as hereafter defined).
(c) Since January 1, 1998, the Company and its subsidiaries have
filed all reports required to be filed with any Governmental Entity (as
hereafter defined) other than the SEC, including state securities
administrators, except where the failure to file any such reports of the Company
and its subsidiaries, individually or in the aggregate, has not had and could
not reasonably be expected to have a Material Adverse Effect on the Company.
Such reports of the Company and its subsidiaries, including all those filed
after the date of this Agreement and prior to the Effective Time, were prepared
in accordance with the requirements of applicable law except where the failure
to prepare any such reports in accordance with the requirements of applicable
law, individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.6 Proxy Statement. If a Proxy Statement is required for the
---------------
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, except that no representation is
made by the Company with respect to information supplied by or on behalf of
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company specifically for
inclusion in the Proxy Statement shall, at the time the Proxy Statement is
mailed or at the time of the Shareholder Meeting or at the Effective Time,
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
- 16 -
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no representation or
-------- -------
warranty as to any of the information relating to and supplied by or on behalf
of Parent and Purchaser specifically for inclusion in the Proxy Statement. The
letter to shareholders and warrantholders, notice of meeting, proxy statement
and form of proxy, or the information statement, as the case may be, to be
distributed to shareholders and warrantholders in connection with the Merger, or
any schedule required to be filed with the SEC in connection therewith, together
with any amendments or supplements thereto, are collectively referred to herein
as the "Proxy Statement." If, at any time prior to the Effective Time, any event
relating to the Company or any of its affiliates, officers or directors is
discovered by the Company that shall be set forth in a supplement to the Proxy
Statement, the Company will promptly inform Parent and Purchaser and prepare,
file and disseminate such supplement as may be required by applicable law.
Section 3.7 Consents and Approvals; No Violation. Subject to obtaining
------------------------------------
the Company Shareholder Approval (if required under the DGCL) and the taking of
the actions described in the immediately succeeding sentence, the execution,
delivery and performance of this Agreement do not, and the consummation of the
Transactions (including the changes in ownership of Securities or the
composition of the Board of Directors of the Company) and compliance with the
provisions of this Agreement will not, conflict with, or result in any material
violation of, or default (with or without notice or lapse to time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or loss of a material benefit under, or result in the
creation of any Lien upon any of the material properties or material assets of
the Company or any of its subsidiaries under, or result in the termination of,
or require that any consent be obtained or any notice be given with respect to,
(i) the Certificate of Incorporation or Bylaws of the Company or the comparable
charter or organizational documents of any of its subsidiaries, (ii) except as
set forth in Section 3.7 of the Company Disclosure Schedule, any loan or credit
----------------------------------------------
agreement note, bond, mortgage, indenture, lease, license or other agreement,
instrument, Contract or Permit applicable to the Company or any of its
subsidiaries or their respective properties or assets, (iii) any judgment,
order, writ, injunction, decree, law, statute, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their respective
properties or assets or (iv) any licenses to which the Company or any of its
subsidiaries is a party, other than, in the case of clauses (ii), (iii) or (iv),
any such conflicts, violations, defaults, rights, Liens, losses of a material
benefit, consents or notices that, individually or in the aggregate, have not
and could not reasonably be expected to have a Material Adverse Effect on the
Company. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity") is required
by the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the Transactions, except for (i) the filing of a premerger notification and
report form by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) the filing with the SEC of (x) the
Schedule 14D-9, (y) if required, the Proxy Statement relating to the approval by
the Company's shareholders of this Agreement and (z) such reports under Section
13(a) of the Exchange Act as
-17-
may be required in connection with this Agreement and the Transactions
contemplated by this Agreement, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.8 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to the Company Financial Advisor pursuant to the letter
agreement, dated August 6, 1999, no person is entitled to receive any investment
banking, brokerage or finder's fee or commission in connection with this
Agreement or the Transactions based upon arrangements made by or on behalf of
the Company or any of its subsidiaries or by any affiliate of the Company or any
of its subsidiaries. A copy of the above agreement has previously been delivered
to Parent. The estimated fees and expenses incurred and to be incurred by the
Company for counsel, accountants, investment bankers, financial printers,
experts and consultants in connection with this Agreement and the Transactions
are set forth in Section 3.8 of the Company Disclosure Schedule.
----------------------------------------------
Section 3.9 Schedule 14D-9; Offer Documents. Neither the Schedule 14D-9,
-------------------------------
any other document required to be filed by the Company with the SEC in
connection with the Transactions, nor any information supplied by the Company in
writing for inclusion in the Offer Documents or the Schedule 14D-1 shall, at the
respective times the Schedule 14D-9, any other filings by the Company, the
Schedule 14D-1, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, 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 are made, not misleading. The Schedule 14D-9 and any other document
required to be filed by the Company with the SEC in connection with the
Transactions will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by or on behalf of Parent or Purchaser
specifically for inclusion or incorporation by reference therein.
Section 3.10 Litigation. Except as specifically disclosed in the Filed
----------
Company SEC Documents, there is no claim, suit, action or proceeding (including
arbitration proceedings) pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that, individually or in the
aggregate, has or could reasonably be expected to 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 which, individually or in the aggregate, has or could
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.11 Absence of Changes in Benefit Plans. Except as disclosed in
-----------------------------------
the Filed Company SEC Documents or Section 3.11 of the Company Disclosure
--------------------------------------
Schedule, there are no
--------
-18-
material employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings between either of the Company or any
of its subsidiaries and any current or former employee, officer or director of
either of the Company or any of its subsidiaries or for which either of the
Company or any of its subsidiaries is liable.
Section 3.12 ERISA Compliance. (a) Section 3.12(a) of the Company
----------------
Disclosure Schedule sets forth a complete list of all material "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") including without limitation, all material
"multiemployer pension plans" as defined in Section 3(37) of ERISA), employment
contracts, bonus, pension, profit sharing, deferred compensation, incentive
compensation, excess benefit, stock, stock option, severance, termination pay,
change in control or other material employee benefit plans, programs or
arrangements, including, but not limited to, those providing medical, dental,
vision, disability, life insurance and vacation benefits (other than those
required to be maintained by law), whether written or unwritten, qualified or
nonqualified, funded or unfunded, foreign or domestic currently maintained, or
contributed to, or required to be maintained or contributed to, by the Company
or any other person or entity that, together with the Company, is treated as a
single employer under Section 414 of the Code or Section 4001 of ERISA (each a
"Commonly Controlled Entity") for the benefit of any current or former
employees, officers or directors of the Company or any of its subsidiaries or
with respect to which the Company or any of its subsidiaries has any liability
(collectively, the "Benefit Plans"). As applicable with respect to each Benefit
Plan, the Company has delivered to Purchaser, true and complete copies of each
Benefit Plan, including all amendments thereto, and in the case of an unwritten
Benefit Plan, a written description thereof.
(b) Except as set forth in Section 3.12(b) of the Company Disclosure
Schedule, no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any Commonly Controlled Entity could be subject to any liability under ERISA,
or, with respect to any Benefit Plan, under the Code or any other applicable
law, rule or regulation, domestic or foreign, other than any condition or set of
circumstances that, individually or in the aggregate has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any Commonly Controlled Entity has incurred or would reasonably
be expected to incur any liability in respect of any employee benefit plan
maintained by any person other than the Company or any Commonly Controlled
Entity other than any liability that, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse Effect on
the Company.
(c) The Benefit Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are intended to meet the
tax qualification requirements of Section 401(a) of the Code (each a "Pension
Plan") have been determined by the IRS to satisfy such requirements, and their
related trusts have been determined to be exempt from taxation under Section
501(a) of the Code. All Pension Plans have received current determination
letters from the IRS and no determination letter with respect to any Pension
Plan has been revoked nor, to the best knowledge of the Company is there any
reason for such
-19-
revocation except where the same has not had and could not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) The funding information set forth in footnote 12 of the financial
statements of the Company for the period ending December 31, 1998 that are
contained in the Filed Company SEC Documents fairly report in all material
respects the information contained therein concerning: (i) the excess of the
liabilities, determined using the accumulated benefit obligation methodology of
Statement of Financial Accounting Standards No. 87, of each Benefit Plan subject
to Title IV of ERISA over the fair market value of such Benefit Plan's assets
and (ii) the actuarially determined present value of any obligation to provide
retiree medical or life insurance benefits determined in accordance with
Statement of Financial Accounting Standard No. 106 and, with respect to any
Benefit Plan providing such benefits, the current fair market value of any
assets held by the Company to satisfy such liabilities (including without
limitation any amounts held in one or more trusts intended to be qualified under
Section 501(c)(9) of the Code). The present value of any unfunded benefits
payable under those Benefit Plans identified on Section 3.12(d) of the Company
------------------------------
Disclosure Schedule determined using reasonable actuarial methods and
-------------------
assumptions does not exceed the amount set forth on Section 3.12(d) of the
----------------------
Company Disclosure Schedule.
---------------------------
(e) Multiemployer Plans.
(i) Section 3.12(e)(i) of the Company Disclosure Schedule lists
each Benefit Plan that is a multiemployer pension plan.
(ii) All required contributions, withdrawal liability payments
or other payments of any type that the Company or any ERISA Affiliate have
been obligated to make to any multiemployer pension plan have been duly and
timely made. Any withdrawal liability incurred with respect to any
multiemployer pension plan has been fully paid as of the date hereof.
(iii) Neither the Company nor any Commonly Controlled Entity has
undertaken any course of action that could reasonably be expected to lead
to a complete or partial withdrawal from any multiemployer pension plan.
(f) Except as set forth on Section 3.12(f) of the Company Disclosure
-----------------------------------------
Schedule, the execution and delivery of this Agreement do not, and the
--------
consummation of the Transactions will not (i) require the Company, any Commonly
Controlled Entity or any of the Company's subsidiaries to pay greater
compensation or make a larger contribution to, or pay greater benefits or
accelerate payment or vesting of a benefit under, any Benefit Plan or any other
program, agreement, policy or arrangement or (ii) create or give rise to any
additional vested rights or service credits under any Benefit Plan or any other
program, agreement, policy or arrangement.
(g) Except as set forth in Section 3.12(g) of the Company Disclosure
-----------------------------------------
Schedule, no Benefit Plan provides benefits, including without limitation, death
--------
or medical
-20-
benefits, beyond termination of employment or retirement other than (A) coverage
mandated by law or (B) death or retirement benefits under a Benefit Plan
qualified under Section 401(a) of the Code. Neither the Company nor any Commonly
Controlled Entity or any of the Company's subsidiaries is obligated (whether or
not in writing) to provide any person with life, medical, dental or disability
benefits for any period of time beyond retirement or termination of employment,
other than as set forth in Section 3.12(g) of the Company Disclosure Schedule or
as required by the provisions of Sections 601 through 608 of ERISA and Section
4980B of the Code.
(h) With respect to any Benefit Plan that is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA), (i) except as set forth in
Section 3.12(h) of the Company Disclosure Schedule, no such Benefit Plan is
funded through a "welfare benefit fund", as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a "group health plan",
as such term is defined in Section 5000(b)(l) of the Code, complies in all
material respects with the applicable requirements of Sections 601 through 608
of ERISA and Section 4980B(f) of the Code, and (iii) except as set forth in
Section 3.12(h) of the Company Disclosure Schedule, each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the Company or any Commonly
Controlled Entity or any of the Company's subsidiaries on or at any time after
the consummation of the Offer.
Section 3.13 Taxes. (a) (i) All federal income Tax Returns and all
-----
other material Tax Returns (as defined herein) that are required to be filed by
or with respect to the Company or any of its subsidiaries have been timely
filed, and all such Tax Returns are true, complete and accurate in all material
respects and correctly reflect the income, or other measure of Tax (as defined
herein), required to be shown thereon in all material respects, (ii) all Taxes
shown as due on such returns have been paid in full, and (iii) the most recent
financial statements contained in the Filed Company SEC Documents reflect an
adequate reserve for all Taxes of the Company and its subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure
-----------------------------------------
Schedule, no material Tax Return of the Company or any of its subsidiaries is
--------
under audit or examination by any taxing authority, and no written notice of
such an audit or examination has been received by the Company or a subsidiary.
(c) Except as set forth in Section 3.13(c) of the Company Disclosure
-----------------------------------------
Schedule, there is not in force any extension of time with respect to the due
--------
date for the filing of any Tax Return or any waiver or agreement for any
extension of time for the assessment or payment of any Tax due with respect to
the period covered by any Tax Return.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure
-----------------------------------------
Schedule, there is no material issue raised or claim against the Company or any
--------
of its subsidiaries for any Taxes, and no assessments, deficiency or adjustment
has been asserted or proposed with
-21-
respect to any Tax Return and no material issues relating to Taxes were raised
in writing by a taxing authority in a completed audit or examination that can
reasonably be expected to arise in a later taxable period.
(e) Except as set forth in Section 3.13(e) of the Company Disclosure
-----------------------------------------
Schedule, since January 1, 1993, none of the Company and its subsidiaries has
--------
been a member of an affiliated group filing a consolidated federal income Tax
Return other than the affiliated group of which the Company is the common parent
corporation.
(f) There are no material Liens for Taxes on the assets of the
Company or any of its subsidiaries other than Liens for Taxes not yet due and
payable.
(g) Except as set forth in Section 3.13(g) of the Company Disclosure
-----------------------------------------
Schedule, neither the Company nor any of its subsidiaries is bound by any
--------
material tax sharing, tax indemnity or similar agreement with respect to Taxes.
(h) No record owner of the Company's Common Stock is a non-resident
alien individual or foreign corporation (within the meaning of Section 897(a)(1)
of the Code) that has held more than 5% of the Company's Common Stock at any
time during the five-year period ending on the date of this Agreement.
As used herein, "Tax Returns" shall mean all material returns and
reports of or with respect to any Tax which are required to be filed by or with
respect to the Company or any of its subsidiaries other than returns or reports
of or with respect to Benefit Plans, and "Taxes" shall mean (i) all taxes,
charges, imposts, tariffs, fees, levies or other similar assessments or
liabilities, including income taxes, ad valorem taxes, excise taxes, withholding
taxes, stamp taxes or other taxes of or with respect to gross receipts,
premiums, real property, personal property, windfall profits, sales, use,
transfers, licensing, employment, payroll and franchises imposed by or under any
statute, law, rule or regulation, and such terms shall include any interest,
fines, penalties, assessments or additions to tax resulting from, attributable
to or incurred in connection with any such tax or any contest or dispute
thereof; (ii) liability of the Company or any fiduciary for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, combined consolidated or unitary group for any taxable period; and
(iii) liability of the Company or any subsidiary for the payment of any amounts
of the type described in clauses (i) or (ii) as a result of any express or
implied obligation to indemnify any other person.
Section 3.14 No Excess Parachute Payments; Termination Payments; Section
-----------------------------------------------------------
162(m) of the Code. Except pursuant to the agreements listed in Section 3.14 of
------------------ ---------------
the Company Disclosure Schedule, any amount that could be received (whether in
-------------------------------
cash or property or the vesting of property) as a result of any of the
Transactions by any employee, officer or director of either of the Company or
any of their affiliates who is a "disqualified individual" (as is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan would
not be characterized as an "excess parachute payment" (as is defined in Section
280G(b)(1) of the Code). Except pursuant to the agreements listed in Section
-------
3.14 of the Company Disclosure
------------------------------
-22-
Schedule, there are no payments that the Company or any of its subsidiaries, or
--------
the Surviving Corporation is or would be required to make to any of the
Company's current or former employees or to any third party which payment is
contingent upon a change of control of the Company or any of its subsidiaries or
payable as a result of the Transactions, including, without limitation, the
termination of any of the Company's or any of its subsidiaries' employees after
the Effective Time. The disallowance of a deduction under Section 162(m) of the
Code for employee remuneration will not apply to any amount paid or payable by
the Company or any of its subsidiaries with respect to any Options referred to
in Section 2.10 of this Agreement.
Section 3.15 Compliance with Applicable Laws. Except for any of the
-------------------------------
following which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and except as
disclosed on Section 3.15(a) of the Company Disclosure Schedule:
--------------------------------------------------
(a) the Company and its subsidiaries has in effect all Federal,
state, local and foreign governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits (including Environmental Permits
(as defined herein)) and rights ("Permits") and all patents, trademarks,
tradenames, service marks, copyright, know-how, processes and all agreements and
other rights with respect to intellectual property ("Intellectual Property")
necessary for it to own, lease or operate its properties and assets and to carry
on its business as now conducted, there has occurred no default under any such
Permit and, any such patents, trademarks and copyrights owned by the Company are
valid and enforceable and do not infringe on the rights of any person.
"Environmental Permit" means any permit, license, approval or other
authorization issued under any applicable law, regulation and other requirement
of any country, state, municipality or other subdivision thereof relating to
pollution or protection of health or the environment, including laws,
regulations or other requirements governing discharges, releases of Hazardous
Materials into ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials;
(b) each of the Company and its subsidiaries is in compliance with
all applicable Environmental Laws (as hereafter defined);
(c) each of the Company and its subsidiaries and their respective
properties, assets, businesses and operations is, and has been, and each of the
Company's former subsidiaries, while subsidiaries of the Company and their
respective properties, assets, businesses and operations, was, in compliance
with all applicable Environmental Laws (as defined herein) and Environmental
Permits. The term "Environmental Laws" means any federal, state, local or
foreign statute, code, ordinance, rule, regulation, written policy or guideline,
judgment, order, writ, decree, or injunction, including the requirement to
register underground storage tanks, relating to: (i) emissions, discharges,
releases or threatened releases of Hazardous Material (as defined herein) into
the environment, including, without limitation, into ambient air, soil,
sediments, land surface or subsurface, buildings or facilities, surface water,
groundwater, publicly-owned treatment works, septic systems or land; or (ii) the
generation, treatment, storage,
-23-
recycling, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material; including without limitation, the following statutes, their
implementing regulations and any state corollaries: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
------
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
------
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
------
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Clean
------
Water Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
------
Section 7401 et seq.;
------
(d) during the period of ownership or operation by the Company and
its subsidiaries of any of their respective current or previously-owned or
operated properties, to the Company's knowledge there has been no Release (as
defined herein) of Hazardous Material in, on, under, from or affecting such
properties, any surrounding site or any off-site location. Prior to the period
of ownership or operation by the Company and its subsidiaries of any of their
respective current or previously-owned or operated properties, to the Company's
knowledge there were no releases of Hazardous Material in, on, under or
affecting any such property, any surrounding site or any off-site location,
"Hazardous Materials" means (l) hazardous materials, pollutants or contaminants,
medical, hazardous or infectious wastes, hazardous waste constituents, hazardous
chemicals, hazardous or toxic pollutants, and hazardous or toxic substances as
those terms are defined in or regulated by any Environmental Law, (2) petroleum,
including crude oil and any fractions thereof, (3) natural gas, synthetic gas
and any mixtures thereof, (4) radioactive materials including, without
limitation, source byproduct or special nuclear materials and (5) pesticides.
"Releases" means spills, leaks, discharges, disposal, pumping, pouring,
emissions, injection, emptying, leaching, dumping or allowing to escape; and
(e) (i) to the Company's knowledge, the Company and its subsidiaries
and their respective properties, assets, businesses and operations are not
subject to any Environmental Claims (direct or contingent) or Environmental
Liabilities (as such terms are defined herein) arising from or based upon any
act, omission, event, condition or circumstance occurring or existing on or
prior to the date hereof or for which the Company and its subsidiaries are
responsible, including without limitation, any such Environmental Claims or
Environmental Liabilities arising from or based upon the ownership or operation
of assets, businesses or properties of the Company or any subsidiary or their
respective predecessors, and (ii) neither the Company nor any of its
subsidiaries has received any notice of any violation of any Environmental Law
or Environmental Permit or any Environmental Claim in connection with their
respective assets, properties, businesses or operations, or, in each case, those
of their respective predecessors. The term "Environmental Claim" means any third
party (including governmental agencies, regulatory agencies, employees or other
private parties) action, lawsuit, claim, investigation proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability for (i)
noise; (ii) pollution or contamination of the air, surface water, ground water,
land or structure; (iii) solid (including hazardous, waste), gaseous or liquid
waste (including hazardous waste) generation, handling, treatment, storage,
disposal or transportation; (iv) exposure to hazardous or toxic substances; (v)
the safety or health of employees; or (vi) the manufacture,
-24-
processing, distribution in commerce, use, or storage of chemical or other
Hazardous Materials. An "Environmental Claim" includes, but is not limited, to,
a common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit of the Company or any of its subsidiaries, or to adopt or
amend a regulation to the extent that such a proceeding attempts to redress
violations of such an Environmental Permit as alleged by a federal, state or
local executive, legislative, judicial, regulatory or administrative agency,
board or authority. The term "Environmental Liabilities" includes all costs
arising from any Environmental Claim or violation or alleged violation or
circumstance or condition which would give rise to a violation or liability
under any Environmental Permit or Environmental Law under any theory of
recovery, at law or in equity, and whether based on negligence, strict liability
or otherwise, including but not limited to: remedial, removal, response,
abatement, investigative, monitoring, personal injury and damage to property,
and any other related costs, expenses, losses, damages, penalties, fines,
liabilities and obligations, including reasonable attorney's fees and court
costs.
Section 3.16 State Takeover Statutes. The Company has taken all action
-----------------------
necessary to render Section 203 of the DGCL inapplicable to Parent, Purchaser
and their respective affiliates, and to the Offer, the Merger, this Agreement,
and the Tender Agreement, and the other Transactions. No other "fair price,"
"moratorium," "control share acquisition," "business combination," or other
state takeover statute or similar statute or regulation applies or purports to
apply to the Company, Parent, Purchaser, affiliates of Parent or Purchaser, the
Offer, the Merger, this Agreement, and the Tender Agreement or any of the other
Transactions. As a result of the foregoing actions, the only action required to
authorize the Merger is the Company Shareholder Approval and no further action
is required to authorize the other Transactions.
Section 3.17 Contracts. Section 3.17 to the Company Disclosure Schedule
---------- -----------------------------------------------
lists, under the relevant heading, all oral or written contracts, agreements,
guarantees, leases and executory commitments (each a "Contract"), other than
Benefit Plans, agreements disclosed on Section 3.11 to the Company Disclosure
--------------------------------------
Schedule and any Contracts heretofore filed as an exhibit to or described within
--------
any Filed Company SEC Document, that exist as of the date hereof to which the
Company or any of its subsidiaries is a party or by which it is bound and which
fall within any of the following categories: (a) Contracts (other than for
capital expenditures). not entered into in the ordinary course of the Company's
and its subsidiaries' businesses other than those that individually or in the
aggregate are not material to the business of the Company and its subsidiaries,
taken as a whole, (b) joint venture and partnership agreements (including in
respect of the KC Joint Venture), (c) Contracts containing covenants purporting
to limit the freedom of the Company or any of its subsidiaries to compete in any
line of business in any geographic area or to hire any individual or group of
individuals, (d) Contracts which after the consummation of any of the
Transactions would have the effect of limiting the freedom of Parent or any of
its subsidiaries to compete in any line of business in any geographic area or to
hire any individual or group of individuals, (e) Contracts which contain terms
that restrict or limit the purchasing or distribution relationships of the
Company or its affiliates (including after consummation of any of the
Transactions), Parent or any of its affiliates, or any customer, licensee or
lessee thereof, (f) Contracts relating to any outstanding commitment for capital
expenditures in excess of $1,000,000 (which are not otherwise reflected in the
budget referred to in Section 5.2(n)), (g)
-25-
indentures, mortgages, promissory notes, loan agreements or guarantees of
borrowed money in excess of $1,000,000 in the aggregate, mortgages on vessels,
letters of credit or other agreements or instruments of the Company or its
subsidiaries or commitments for the borrowing or the lending by the Company of
amounts in excess of $1,000,000 in the aggregate or providing for the creation
of any charge, security interest, encumbrance or lien upon any of the assets of
the Company with an aggregate value in excess of $1,000,000, (h) Contracts
providing for "earn-outs" or other contingent payments by the Company involving
more than $1,000,000 per Contract over the terms of such Contracts, (i)
Contracts associated with off balance sheet financing in excess of $1,000,000 in
the aggregate, including but not limited to arrangements for the sale of
receivables, (j) licenses or similar agreements granting the right to use any
material Intellectual Property which are material to the Company, (k) stock
purchase agreements, asset purchase agreements or other acquisition or
divestiture agreements where the consideration in any individual transaction
exceeds $10,000,000 since January 1, 1996, or (l) any agreement which is
material to the business of the Company and its subsidiaries taken as a whole,
irrespective of amount. All Contracts to which the Company or any subsidiary is
a party or by which it is bound are valid and binding obligations of the Company
or such subsidiary and, to the knowledge of the Company, the valid and binding
obligation of each other party thereto except such Contracts which if not so
valid and binding could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor, to the knowledge of the Company, any other party thereto is in violation of
or in default in respect of, nor has there occurred an event or condition which
with the passage of time or giving of notice (or both) would constitute a
default under or permit the termination of, any such Contract except such
violations or defaults under or terminations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.18 Labor Matters. Except to the extent set forth in Section
------------- -------
3.18 of the Company Disclosure Schedule, (a) no employee of the Company or any
---------------------------------------
of its subsidiaries is represented by any union or other labor organization; (b)
there is no material unfair labor practice complaint against the Company or any
of its subsidiaries pending or, to the knowledge of the Company, threatened by
or before the National Labor Relations Board or any other Governmental Entity;
(c) there is no labor strike, or material dispute, slowdown, representation
campaign or work stoppage pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries; (d) no
material grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending and no claim therefor has been asserted against
the Company or its subsidiaries; and (e) neither the Company or any of its
subsidiaries has experienced any material work stoppage since January 1, 1998.
Section 3.19 Title to Properties. (a) The Company has good, valid and
-------------------
marketable title to, or leasehold interests in, its material properties
sufficient to operate such properties and to conduct its business in the
ordinary course and except for any defects in such titles, or any easements,
restrictive covenants or similar encumbrances which, in the aggregate, do not
materially interfere with its ability to conduct its business as currently
conducted.
-26-
(b) The Company is not a bareboat or demise charterer of vessels
operating in the coastwise trade of the United States. Schedule 3.19 of the
--------------------
Company Disclosure Schedule contains a complete and correct list of the vessels
---------------------------
owned by the Company.
Section 3.20 Undisclosed Liabilities. Except as and to the extent
-----------------------
specifically disclosed in the Filed Company SEC Documents or accrued on the June
30, 1999 balance sheet included in the Filed Company SEC Documents, or as set
forth in Section 3.20 of the Company Disclosure Schedule, and except for
-----------------------------------------------
liabilities incurred in the ordinary course of business and otherwise not in
contravention of this Agreement which individually and in the aggregate are not
material, the Company and each of its subsidiaries does not have any liabilities
or obligations of any nature (whether absolute, contingent or otherwise) that
would be required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles other than liabilities or obligations
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
Section 3.21 Opinion of Company Financial Advisor. The Company has
------------------------------------
received the Fairness Opinion, to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by the
Company's stockholders and warrantholders is fair to the Company's stockholders
and warrantholders from a financial point of view, a signed copy of which
opinion has been delivered to Parent, and such opinion has not been amended,
modified or revoked in a manner adverse to Parent or Purchaser. The Company has
been authorized by the Company Financial Advisor to permit the inclusion of the
Fairness Opinion (and, subject to prior review and consent by such Company
Financial Advisor, a reference thereto) in the Offer Documents and in Schedule
14D-9 and the Proxy Statement.
Section 3.22 Insurance. The Company and its subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance (other
than insurance under any Benefit Plans set forth in Section 3.12(a) of the
----------------------
Company Disclosure Schedule) in such amounts, with such deductibles and against
---------------------------
such risks and losses as are, in the Company's judgment, reasonable for the
assets and properties of the Company and its subsidiaries and customary in the
Company's industry. As of the date of this Agreement, except as set forth in
Section 3.22 of the Company's Disclosure Schedule, all such policies are in full
-------------------------------------------------
force and effect, all premiums due and payable thereon have been paid, and no
notice of cancellation or termination has been received with respect to any such
policy.
Section 3.23 Indemnification Claims. Other than as set forth on Section
---------------------- -------
3.23 of the Company Disclosure Schedule, the Company is not aware of any
---------------------------------------
indemnification, breach of contract or similar claims by or against the Company
or any of its subsidiaries which are pending or threatened (or which could be
reasonably expected to be made in the future), in each case in excess of
$100,000 in amount, with respect to any acquisition or disposition by the
Company of any assets or businesses.
Section 3.24 Year 2000. The expenses incurred by the Company to become
---------
Year 2000 Compliant have not been material, and issues with respect to Year 2000
Compliance have
-27-
had no material effect on the Company. Future costs with respect to Year 2000
Compliance are not expected to be material. For purposes of this Agreement,
"Year 2000 Compliant" means the ability to process (including calculate,
compare, sequence, display or store), transmit or receive data or data/time data
from, into and between the twentieth and twenty-first centuries, and the years
1999 and 2000, and leap year calculations without error or malfunction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1 Organization and Qualification. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of Parent and Purchaser is duly qualified as a foreign corporation or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing could not reasonably be expected
to preclude the consummation of the Offer or the Merger.
Section 4.2 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and each instrument required hereby to be executed and delivered
by Parent or Purchaser prior to or at the Effective Time, to perform its
obligations hereunder and thereunder, and to consummate the Transactions. The
execution and delivery by Parent and Purchaser of this Agreement and each
instrument required hereby to be exercised and delivered by Parent or Purchaser
prior to or at the Effective Time and the performance of their respective
obligations hereunder and thereunder, and the consummation by Parent and
Purchaser of the Transactions have been duly and validly authorized by the
respective Boards of Directors (or similar organizational bodies) of Parent and
Purchaser, the Supervisory Board of Parent and the shareholder of Purchaser, and
no other corporate proceedings on the part of Parent or Purchaser are necessary
to authorize this Agreement, or commence the Offer or to consummate the
Transactions (including the Offer) other than filing and recordation of
appropriate merger documents as required by the DGCL or by the German Federal
Cartel Authority and publication after consummation of the Offer of an ad-hoc
disclosure pursuant to Section 15 of the German Securities Trading Act. This
Agreement has been duly and validly executed and delivered by each of Parent and
Purchaser and, assuming this Agreement constitutes a valid and binding
obligation of the Company, this Agreement constitutes a valid and binding
agreement of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms.
Section 4.3 Proxy Statement. None of the information supplied in writing
---------------
by Parent, Purchaser and their respective affiliates specifically for inclusion
in the Proxy Statement, if
-28-
required, shall, at the time the Proxy Statement is mailed, at the time of the
Shareholder Meeting or at the Effective Time, 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; provided, however,
-------- -------
that Parent and Purchaser make no representation or warranty as to any of the
information relating to and supplied by or on behalf of the Company specifically
for inclusion in the Proxy Statement. If, at any time prior to the Effective
Time, any event relating to Parent or any of its affiliates, officers or
directors is discovered by Parent that should be set forth in a supplement to
the Proxy Statement, Parent will promptly inform the Company.
Section 4.4 Consents and Approvals; No Violation. Subject to the taking
------------------------------------
of the actions described in the immediately succeeding sentence, the execution
and delivery of this Agreement do not, and the consummation of the Transactions
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
material properties or assets of Parent under (i) the certificate of
incorporation or bylaws (or similar organizational documents) of Parent or
Purchaser, (ii) any loan or credit agreement, note, bond, indenture, lease or
other agreement, instrument or Permit applicable to Parent or Purchaser or their
respective properties or assets, (iii) any judgment, order, writ, injunction,
decree, law, statute, ordinance, rule or regulation applicable to Parent or
Purchaser or their respective properties or assets, other than, in the case of
clause (ii) and (iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not (x) impair in any material
respect the ability of Parent and Purchaser to perform their respective
obligation under this Agreement or (y) prevent or impede the consummation of any
of the Transactions. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
person is required by Parent or Purchaser in connection with the execution and
delivery of this Agreement or the consummation by Parent or Purchaser, as the
case may be, of any of the Transactions, except (A) in connection with the HSR
Act, (B) pursuant to the Securities Act, and the Exchange Act, (C) the filing of
the Certificate of Merger pursuant to the DGCL, (D) such filings and approvals
as may be required under the takeover or securities laws of various states, (E)
the filing of reports with the U.S. Department of Commerce regarding foreign
direct investment in the United States, (F) the filing of documentation with the
United States Coast Guard in connection with the eligibility of vessels owned by
the Company to operate in the coastwise trade of the United States, (G)
publication after consummation of the Offer of an ad-hoc disclosure pursuant to
Section 15 of the German Securities Trading Act, or (H) where the failure to
obtain any such consent, approval, authorization or permit, or to make any such
filing or notification, would not preclude consummation of the Offer or the
Merger or would not otherwise prevent Parent from performing its obligations
under this Agreement or where the requirement to obtain such consent, approval,
authorization or permit, or to make such filing or notification arises from the
regulatory status of the Company or its subsidiaries.
Section 4.5 Financing. Parent will have at each of (i) the time of
---------
acceptance for purchase by Purchaser of Shares pursuant to the Offer and (ii)
the Effective Time, and will make
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available to Purchaser, the funds necessary to consummate the Offer and the
Merger on the terms contemplated by this Agreement. Purchaser has provided to
the Company true and correct copies of commitments entered into by Parent as of
the date hereof in connection with all required financing for purposes of the
Offer and the Merger.
Section 4.6 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to Xxxxxx Xxxxxxx & Co. Incorporated, and excluding financing
fees, no person is entitled to receive any investment banking brokerage or
finder's fee or commission in connection with this Agreement or the Transactions
based upon arrangements may by or on behalf of Parent or Purchaser.
Section 4.7 Schedule 14D-1; Offer Documents. Neither the Schedule 14D-1,
-------------------------------
the Offer Documents nor any information supplied by Parent or Purchaser in
writing for inclusion in the Schedule 14D-9 shall, at the respective times the
Schedule 14D-9, the Schedule 14D-1, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders and warrantholders of the Company, as the case may be, 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 are made, not
misleading. The Schedule 14D-1 and the Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent or Purchaser with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business of the Company Pending the Merger. The
-----------------------------------------------------
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use its reasonable efforts to preserve intact its business
organization, maintain its rights and franchises, retain the services of its
respective key employees and maintain its relationships with its respective
customers and suppliers and others having business dealings with it to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time;
-30-
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain supplies
and inventories in quantities consistent with its customary business practice;
and
(d) use its reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that currently
maintained.
Section 5.2 Prohibited Actions by the Company. Without limiting the
---------------------------------
generality of Section 5.1, except as set forth in Section 5.2 of the Company
--------------------------
Disclosure Schedule, the Company covenants and agrees that, except as expressly
-------------------
contemplated by this Agreement or otherwise consented to in writing by Parent
(which consent shall not be unreasonably withheld or delayed), from the date of
this Agreement until the Effective Time, it will not do, and will not permit any
of its subsidiaries to do, any of the following:
(a) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) grant any severance or termination pay (other than pursuant to
the severance policy or practice of the Company or its subsidiaries as disclosed
in Section 3.12 of the Company Disclosure Schedule and in effect on the date of
-----------------------------------------------
this Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish, adopt,
enter into or amend in any material respect any collective bargaining agreement
or any Benefit Plan of the Company or any Commonly Controlled Entity; or (iv)
take any action to accelerate any rights or benefits, or make any determinations
not in the ordinary course of business consistent with past practice, under any
collective bargaining agreement or Benefit Plan of the Company or any Commonly
Controlled Entity; provided that the Company may amend the Company Stock Option
-------- ----
Plans to accelerate the vesting of any unvested Options and to permit employees
and directors to tender any shares acquired upon exercise of any Option into the
Offer in accordance with the terms of this Agreement;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for (i) dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the Company
and (ii) regular quarterly cash dividends by the Company consistent with past
practices (including as to declaration, record and payment dates) in no event to
exceed $0.05 per Share per fiscal quarter;
(c) redeem, purchase or otherwise acquire, or offer or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned subsidiaries directly from any wholly owned subsidiary of the
Company in exchange for capital contributions
-31-
or loans to such subsidiary, or (ii) any purchase, forfeiture or retirement of
shares of Company Common Stock or the Options occurring pursuant to the terms
(as in effect on the date of this Agreement) of any existing Benefit Plan of the
Company or any of its subsidiaries, in a manner otherwise consistent with the
terms of this Agreement);
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in, the
Company or any of its subsidiaries or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for, shares
of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize or propose the
offering, sale, issuance or grant of, any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any Voting Company Debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, SARs or stock-based performance units, other than issuances of shares of
Company Common Stock upon the exercise of the Options and Warrants outstanding
at the date of this Agreement in accordance with the terms thereof (as in effect
on the date of this Agreement);
(f) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets of any
other person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past practice);
(g) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for dispositions of excess
or obsolete assets and sales of inventories in the ordinary course of business
and consistent with past practice;
(h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of December 31, 1998 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may be
required by a change in generally accepted accounting principles;
(j) (i) incur any indebtedness for borrowed money, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any such indebtedness or debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person
-32-
or enter into any arrangement having the economic effect of any of the
foregoing, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or any direct
or indirect wholly owned subsidiary of the Company;
(k) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Filed Company SEC Documents or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(l) settle the terms of any material litigation affecting the Company
or any of its subsidiaries;
(m) make any Tax election except in a manner consistent with past
practice, change any method of accounting for Tax purposes, or settle or
compromise any material Tax liability;
(n) make or agree to make any new capital expenditures which
individually are in excess of $1,000,000 or which in the aggregate are in excess
of $3,000,000 except in accordance with the Company's budget, dated August 31,
1999, previously furnished to Parent; or
(o) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement untrue or incorrect or cause any condition set forth in Annex A to
occur or any condition in Article VII to be unsatisfied.
ARTICLE VI
COVENANTS
Section 6.1 No Solicitation.
---------------
(a) From and after the date hereof until the Effective Time or the
termination of this Agreement in accordance with Section 8.1, the Company and
its subsidiaries shall not, and the Company shall use its reasonable best
efforts to cause their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or the making or
submission of any Acquisition Proposal (as defined herein) or enter into or
maintain or continue discussions or negotiate with any person or group in
furtherance of such inquiries or to obtain or induce any person or group to make
or submit an Acquisition Proposal or agree to or endorse any
-33-
Acquisition Proposal or assist or participate in, facilitate or knowingly
encourage, any effort or attempt by any other person or group to do or seek any
of the foregoing or authorize any of its officers, directors or employees or any
of its subsidiaries or affiliates or any investment banker, financial advisor,
attorney, accountant or other representative or agent retained by it or any of
its subsidiaries to take any such action; provided, however, that nothing
-------- -------
contained in this Agreement shall prohibit the Company or the Board of Directors
of the Company from, prior to the earlier to occur of payment for the Securities
pursuant to the Offer or adoption of this Agreement by the requisite vote of the
stockholders of the Company, (i) furnishing information to or (ii) entering into
discussions or negotiations with any person or entity that makes an unsolicited
written Acquisition Proposal, if, and only to the extent that (x) in each case
referred to in (i) and (ii) above, the Board of Directors of the Company, with
the advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), determines in good faith that the failure to
do so would result in a breach of the fiduciary duty of the Board of Directors
of the Company to stockholders of the Company under applicable law and (y) in
the case referred to in (ii), the Board of Directors of the Company determines
in good faith that such Acquisition Proposal is reasonably likely to lead to a
Superior Proposal and (z) prior to taking such action the Company (A) delivers
to Parent and Purchaser the notice required pursuant to Section 6.1(c) stating
that it is taking such action and (B) receives from such person or group an
executed confidentiality agreement that is not, in any material respect, less
restrictive (including in respect of confidentiality and standstill
restrictions) as to such person or entity than the Confidentiality Agreement.
(b) Except as expressly permitted by this Section 6.1, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw,
modify or fail to make, or propose to withdraw, modify or fail to make its
approval or recommendation of the Offer or the Merger or of this Agreement, the
Tender Agreement, and the other Transactions, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, (iii) take any action
to render the provisions of any anti-takeover statute, rule or regulation
(including Section 203 of the DGCL) inapplicable to any person (other than
Parent, Purchaser or their affiliates) or group or to any Acquisition Proposal
or redeem the Rights or otherwise modify the Rights Agreement to facilitate any
Acquisition Proposal or purchase of Shares by any Person other than Parent and
Purchaser, or (iv) cause the Company to accept such Acquisition Proposal and/or
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal; provided, however, that prior to the earlier to occur of
-------- -------
acceptance for payment of Shares pursuant to the Offer or adoption of this
Agreement by the requisite vote of the stockholders of the Company, the Board of
Directors of the Company may terminate this Agreement if, and only to the extent
that (A) such Acquisition Proposal is a Superior Proposal, (B) the Board of
Directors of the Company, with the advice of independent legal counsel (who may
be the Company's regularly engaged independent counsel), determines in good
faith that the failure to do so would result in a breach of the fiduciary duty
of the Board of Directors of the Company to the stockholders of the Company
under applicable law, (C) the Company shall, prior to or simultaneously with the
taking of such action, have paid or pay to Parent or Purchaser or their designee
the Termination Fee referred to in Section 8.3, (D) the Company is not in
material breach of this Section 6.1
-34-
which material breach has resulted in a Superior Proposal, and (E) the Company
shall have complied with its obligations under Section 8.1(d)(ii).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, the Company shall promptly advise Parent of any
request for information or the submission or receipt of any Acquisition
Proposal, or any inquiry with respect to or which could lead to any Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the person making any such request,
Acquisition Proposal or inquiry and its response or responses thereto. The
Company will keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request, Acquisition Proposal or
inquiry. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(d) "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the Transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 15% or more of the assets of the Company and its
subsidiaries, taken as a whole, or of any Material Business (as defined herein)
or of any subsidiary or subsidiaries responsible for a Material Business in a
single transaction or series of related transactions; (iii) any tender offer
(including a self tender offer) or exchange offer that, if consummated, would
result in any person or group beneficially owning more than 15% of the
outstanding shares of any class of equity securities of the Company or its
subsidiaries or the filing of a registration statement under the Securities Act
in connection therewith; (iv) any acquisition of 15% or more 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 any other acquisition or
disposition the consummation of which would prevent or materially diminish the
benefits to Parent of the Merger; or (v) any public announcement by the Company
or any third party of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing. "Superior Proposal" means
any proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction, for at least a majority of the Fully Diluted Shares,
or at least 51% of the consolidated assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be superior to the
Company's stockholders (taking into account any changes to the terms of this
Agreement and the Offer that have been proposed by Parent in response to such
proposal) and to be more favorable to the Company and the Company's stockholders
(taking into account relevant considerations, including relevant legal,
financial, regulatory and other aspects of such proposal and the third party
making such proposal and the conditions and prospects for completion of such
proposal) than the Offer, the Merger and the other Transactions taken as a
whole. "Material Business" means any business (or the assets needed to carry out
such business) that contributed or represented 15% or more of the net sales, the
net income or the assets (including equity
-35-
securities) of the Company and its subsidiaries taken as a whole, or the
Company's interest in the KC Joint Venture .
(e) Nothing contained in this Section 6.1 shall prohibit the Company
or the Board of Directors of the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if the
Board of Directors of the Company, with the advice of independent legal counsel
(who may be the Company's regularly engaged independent counsel), determines in
good faith that the failure to take such action would result in a breach of the
fiduciary duty of the Board of Directors to the stockholders of the Company
under applicable law; provided that neither the Board of Directors of the
-------- ----
Company nor any committee thereof withdraws or modifies, or proposes to withdraw
or modify, the approval or recommendation of the Board of Directors of the
Company of the Offer or the Merger or approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company and
the Board of Directors of the Company have complied in all material respects
with all the provisions of this Section 6.1.
Section 6.2 Access to Information. Between the date of this Agreement
---------------------
and the Effective Time, the Company shall, and shall cause its subsidiaries to
(a) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full access during
normal business hours and at all other reasonable times to the officers,
employees, agents, properties, (provided that any access for environmental due
diligence shall be limited to conducting an environmental assessment consistent
with ASTM standards and a compliance audit ("Phase I"); and provided further,
that if the results of the Phase I or Purchaser's other due diligence recommends
Phase II investigations including testing and/or sampling of soil, water, air,
building materials or other environmental media, Purchaser may conduct such
reasonable investigations) offices and other facilities of the Company and its
subsidiaries and to their books and records (including all Tax Returns and all
books and records related to Taxes and such returns and including any
information related to any vessels owned or chartered by the Company or
reasonably related to any filings with the United States Coast Guard prepared by
Parent or Purchaser relating to the continued operation of vessels in the
coastwise trade of the United States), (b) permit Parent to make such
inspections as it may require (and the Company shall cooperate with Parent in
any inspections, including, without limitation, environmental due diligence),
and (c) furnish promptly to Parent and its representatives a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws and
such other information concerning the business, properties, contracts, records
and personnel of the Company and its subsidiaries (including financial,
operating and other data and information) in the possession of the Company or
the Company's counsel, accountants or other consultants or agents as may be
reasonably requested, from time to time, by or on behalf of Parent.
Section 6.3 Confidentiality Agreement. The parties agree that the
-------------------------
provisions of the Confidentiality Agreement dated July 8, 1999 between Parent,
Dyckerhoff, Inc., a Delaware corporation, and the Company (the "Confidentiality
Agreement") shall remain binding and in full
-36-
force and effect; provided, however, that any consents from the Company
-------- -------
necessary under the Confidentiality Agreement for Parent and Purchaser to
consummate the Transactions and the Tender Agreement shall be deemed to have
been made and provided that the provisions of the sixth paragraph of the
-------- ----
Confidentiality Agreement shall terminate and be of no further force and effect
after the date of the consummation of the Offer. The parties shall comply with,
and shall cause their respective Representatives (as defined in the
Confidentiality Agreement) to comply with, all of their respective obligations
under the Confidentiality Agreement until Parent or Purchaser purchases at least
a majority of the outstanding Shares pursuant to the Offer, at which time the
Confidentiality Agreement shall terminate and be of no further force and effect.
Section 6.4 Reasonable Best Efforts. (a) Subject to the terms and
-----------------------
conditions herein (including Section 6.1), each of the parties hereto agrees to
use its reasonable best 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 under applicable laws and regulations to consummate and make effective
as soon as reasonably practicable the Transactions contemplated by this
Agreement and the Tender Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement and the Tender Agreement, the proper officers and directors of each
party to this Agreement and the Tender Agreement shall take all such necessary
action. Such reasonable best efforts shall include, without limitation, (i)
using such efforts to obtain all necessary consents, approvals or waivers from
third parties and Governmental Entities necessary to the consummation of the
Transactions contemplated by this Agreement and the Tender Agreement and (ii)
opposing vigorously any litigation or administrative proceeding relating to this
Agreement or the Tender Agreement, including, without limitation, promptly
appealing any adverse court or agency order. Notwithstanding the foregoing or
any other provisions contained in this Agreement and the Tender Agreement to the
contrary, (i) neither Parent nor the Company nor any of their respective
affiliates shall be under any obligation of any kind to enter into any
negotiations or to otherwise agree with or litigate against any Governmental
Entity, including but not limited to any governmental or regulatory authority
with jurisdiction over the enforcement of any applicable federal, state, local
and foreign antitrust, competition or other similar laws and (ii) neither Parent
or any of its affiliates shall be under any obligation to otherwise agree with
any Governmental Entity or any other party to sell or otherwise dispose of,
agree to any limitations on the ownership or control of, or hold separate
(through the establishment of a trust or otherwise) particular assets or
categories of assets or businesses of any of the Company, its subsidiaries,
Parent or any of Parent's affiliates. The Company shall give and make all
required notices and reports to the appropriate persons with respect to the
Permits and Environmental Permits that may be necessary for the sale and
purchase of the business and the ownership, operation and use of the assets of
Surviving Corporation by Parent and Purchaser after the Effective Time. Subject
to the other terms of this Agreement, each of the Company, Parent and Purchaser
shall cooperate and use their respective reasonable best efforts to make all
filings, to obtain all actions or nonactions, waivers, Permits and orders of
Governmental Entities necessary to consummate the Transactions contemplated by
this Agreement and the Tender Agreement and to take all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity. Each of the parties hereto will furnish
to the other parties such necessary information and
-37-
reasonable assistance as such other parties may reasonably request in connection
with the foregoing. Parent has advised the Company that if the Company is the
Surviving Corporation in the Merger, Parent may (in its discretion) elect to
merge the Surviving Corporation into another direct or indirect subsidiary of
Parent after the Effective Time, and cause the Company to adopt a Plan of
Liquidation in connection therewith. The Company agrees to use its reasonable
best efforts to accommodate such merger and Plan of Liquidation and not to take
any action prior to the Effective Time which could impair or delay such
transactions. Parent and the Company agree that such merger and Plan of
Liquidation shall not affect the terms of this Agreement, including with respect
to the Offer and the Merger.
(b) The Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Tender Agreement or any of the other Transactions contemplated by the
foregoing and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, this Agreement, the
Tender Agreement or any other Transactions, take all action necessary to ensure
that the Offer, the Merger and the other Transactions, including the
Transactions contemplated by this Agreement and the Tender Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Tender Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger and the other Transactions.
Section 6.5 Indemnification of Directors and Officers.
-----------------------------------------
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Effective Time existing as of the date hereof
in favor of the current or former directors or officers, employees and agents of
the Company and its subsidiaries as provided in their respective certificates of
incorporation, bylaws or agreements listed on Section 3.17 of the Company's
-----------------------------
Disclosure Schedule as in effect on the date hereof shall survive the Merger and
-------------------
shall continue in full force and effect in accordance with their terms for a
period of six years from the Effective Time. Parent shall cause to be
maintained, if available, for a period of six years from the Effective Time the
Company's current directors' and officers' insurance and indemnification policy
and fiduciary liability policy (the "D&O Insurance") (provided that Parent may
-------- ----
substitute therefor, at its election, policies or financial guarantees with the
same carriers or other reputable and financially sound carriers of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous than the existing D&O Insurance) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who are directors and officers of the Company on the date of this
Agreement (or were prior to the date of this Agreement), so long as the annual
premium to be paid by the Company after the date of this Agreement for such D&O
Insurance during such six-year period would not exceed 200% of the annual
premium as of the date of this Agreement. If, during such six-year period, such
insurance coverage cannot be obtained at all or can only be obtained for an
amount in excess of 200% of the annual premium therefor as of the date of this
Agreement, Parent shall use reasonable best efforts to cause insurance coverage
to be obtained for an amount equal to 200% of the current annual premium
therefor, on terms and
-38-
conditions substantially similar to the existing D&O Insurance. Set forth in
Section 6.5(a) to the Company Disclosure Schedule is the amount of the annual
-------------------------------------------------
premium currently paid by the Company for its directors' and officers' liability
insurance.
(b) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made in writing against any present or former
director or officer of the Company based on or arising out of the services of
such person prior to the Effective Time in the capacity of such person as a
director or officer of the Company (and such director or officer shall have
given Parent written notice of such claim or claims within such six year
period), the provisions of subsection (a) of this Section respecting the rights
to indemnify the current or former directors or officers under the certificate
of incorporation and bylaws of the Company and its subsidiaries shall continue
in effect until the final disposition of all such claims.
(c) Notwithstanding anything to the contrary in this Section 6.5,
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
(d) The provisions of this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder and the heirs and representatives of such person.
Section 6.6 Event Notices and Other Actions. (a) From and after the date
-------------------------------
of this Agreement until the Effective Time, the Company shall promptly notify
Parent and Purchaser of (i) the occurrence or nonoccurrence of any event, the
occurrence or nonoccurrence of which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied, (ii) the
Company's failure to comply with any covenant or agreement to be complied with
by it pursuant to this Agreement which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied and (iii)
any representation or warranty made by the Company contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified as to
materiality becoming untrue or inaccurate in any material respect. The Company's
delivery of any notice pursuant to this Section 6.6(a) shall not cure any breach
of any representation or warranty of the Company contained in this Agreement or
otherwise limit or affect the remedies available hereunder to Parent or
Purchaser.
(b) The Company shall not, and shall not permit any of its
subsidiaries to, knowingly take any action or nonaction within its reasonable
control that will, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in this Agreement
that is qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) except as otherwise permitted by Section 6.1 and
subject to Section 6.4(a), any condition to
-39-
the Offer set forth in Annex A, or any condition to the Merger set forth in
Article VII, not being satisfied.
Section 6.7 Third Party Standstill Agreements. During the period from the
---------------------------------
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill or similar agreement to which the Company or any of its subsidiaries
is a party (other than any involving Parent). Subject to the foregoing, during
such period, the Company agrees to enforce and agrees to permit Parent and
Purchaser to enforce on its behalf and as third party beneficiaries thereof, to
the fullest extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court or other tribunal having jurisdiction. Notwithstanding the foregoing,
nothing in this Section 6.7 is intended to prevent the Company from exercising
its rights under Section 6.1 in accordance with the provisions of such Section.
In addition, the Company hereby waives any rights the Company may have under any
standstill or similar agreements to object to the transfer to Purchaser of all
Securities held by securityholders covered by such standstill or similar
agreements and hereby covenants not to consent to the transfer of any Securities
held by such securityholders to any other person unless (i) the Company has
obtained the specific, prior written consent of Parent with respect to any such
transfer or (ii) this Agreement has been terminated pursuant to Article VIII.
Section 6.8 Employee Stock Options; Employee Plans and Benefits and
-------------------------------------------------------
Employment Contracts.
--------------------
(a) Executive Agreements and Accrued Benefits. From and after the
-----------------------------------------
Effective Time, the Surviving Corporation agrees to honor in accordance with
their terms (i) all existing employment, change of control agreements and other
arrangements between the Company or any of its subsidiaries and any current or
former officer of the Company or any of its subsidiaries which are specifically
disclosed on Section 6.8(a) of the Company Disclosure Schedule, (ii) with
--------------------------------------------------
respect to all employees, officers and directors of the Company, all benefits or
other amounts earned or accrued through the Effective Time under the Benefit
Plans disclosed in Schedule 3.12(a) of the Company Disclosure Schedule (or not
---------------------------------------------------
required to be disclosed in such schedule) and (iii) the obligations relating to
retiree medical benefits under the agreements identified in Section 6.8(a)(iii)
-------------------
of the Company Disclosure Schedule.
----------------------------------
(b) Post-Closing Benefits. For a period of not less than one year
---------------------
following the Effective Time, the Company and the Surviving Corporation, as the
case may be, shall establish or maintain a compensation structure and benefit
plans for employees of the Company (other than its officers and/or directors)
who remain employees of the Surviving Corporation ("Transferred Employees") with
terms that, in the aggregate, are substantially comparable to the compensation
structure and Benefit Plans currently in place for such employees; provided,
that nothing herein shall require Parent, Purchaser, the Company and/or the
Surviving Corporation to have any obligation to (i) include any individual in
any stock option or other equity-based compensation or benefit plan or
arrangement, (ii) include any such Transferred Employee in any
-40-
benefit plan of Parent or any related entity (other than the Surviving
Corporation) or (iii) provide any individual with benefits resulting from any
change of control of Parent, the Company or the Surviving Corporation that
occurs after the Effective Time but the Company or the Surviving Corporation, as
the case may be, shall honor the Special Severance Plan identified on Section
3.12(a) of the Company Disclosure Schedule. From and after the Effective Time,
for eligibility and vesting purposes (but not for benefit accrual purposes)
under any severance, welfare, pension or other benefit plan or arrangement
sponsored by the Company and/or the Surviving Corporation, as the case may be,
that are made available to Transferred Employees, service with the Company
and/or the Surviving Corporation, as the case may be (whether before or after
the Effective Time) shall be credited as if such services had been rendered to
Parent or any related entity.
(c) Executive Incentive Plan. As soon as administratively feasible
------------------------
following the consummation of the Offer, any bonuses or other incentive
compensation due under the Company's Executive Incentive Plan shall be paid by
the Company to any officer, director or employee of the Company entitled thereto
in accordance with the terms of such Plan. In addition, the Company or
Surviving Corporation, as the case may be, shall make certain bonus payments to
salaried employees to the extent disclosed on Schedule 6.8(c) in respect of the
fiscal year 1999.
(d) Supplemental Executive Retirement Plan. Unless otherwise agreed
--------------------------------------
in writing between the Company and any affected participant prior to the date on
which Securities are first purchased pursuant to the Offer, the Company will
distribute to each such participant the benefit to which he is entitled under
the Supplemental Executive Retirement Plan pursuant to the terms of that Plan.
(e) Directors' Compensation Plans. On the Effective Time, the Company
-----------------------------
shall terminate all plans, programs and/or arrangements providing compensation
and/or benefits to the directors of the Company (the "Directors' Compensation
Plans'"). All benefits accrued under the Directors' Compensation Plans on or
prior to the Effective Time shall be paid to current or former directors in
accordance with the terms of such Plans.
(f) Stock Purchase Plan. Effective on the date of this Agreement, the
-------------------
Company shall amend the Company's Employee Stock Purchase Plan (the "Stock
Purchase Plan") to provide (A) that no individual eligible to participate in the
Stock Purchase Plan will be permitted to increase the rate or level of his or
her participation in the Stock Purchase Plan (including without limitation
changing the amount of his or her contributions to the Stock Purchase Plan or
enrolling to participate in the Stock Purchase Plan following the date of this
Agreement), (B) no further purchases of Securities shall occur pursuant to the
Stock Purchase Plan after the date immediately preceding the date that
Securities are first purchased pursuant to the Offer and (C) effective on the
date that Securities are first purchased pursuant to the Offer, the Stock
Purchase Plan shall terminate.
-41-
(g) No Right to Employment. Nothing contained in this agreement shall
----------------------
confer upon any employee of the Company, any Commonly Controlled Entity or any
of the Company's subsidiaries any right with respect to employment by the
Parent, the Purchaser or any of the Parent's subsidiaries or affiliates, nor
shall anything herein interfere with the right of Parent, the Purchaser or any
of the Parent's subsidiaries or affiliates to terminate the employment of any
such employee at anytime, with or without cause, or, except as provided in
Sections 6.8(a), (b) and (c), restrict Parent, the Purchaser or any of the
Parent's subsidiaries or affiliates in the exercise of their independent
business judgment in modifying any other terms and conditions of the employment
of any such employee.
Section 6.9 Meeting of the Company's Shareholders.
-------------------------------------
(a) To the extent required by applicable law, the Company shall
promptly after consummation of the Offer take all action necessary in accordance
with the DGCL and its Certificate of Incorporation and Bylaws to convene a
Shareholder Meeting to consider and vote on the Merger and this Agreement. At
the Shareholder Meeting, all of the Shares then owned by Parent, Purchaser or
any other subsidiary of Parent shall be voted to approve the Merger and this
Agreement. The Board of Directors of the Company shall recommend that the
Company's shareholders vote to approve the Merger and this Agreement if such
vote is sought, shall use its best efforts to solicit from shareholders of the
Company proxies in favor of the Merger and shall take all other action in its
judgment necessary and appropriate to secure the vote of shareholders required
by the DGCL to effect the Merger.
(b) Parent and Purchaser shall not, and they shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the Shares acquired pursuant to the Offer or otherwise prior to the Shareholder
Meeting; provided, however, that this Section 6.9(b) shall not apply to the
-------- -------
sale, transfer, assignment, encumbrance or other disposition of any or all such
Shares in transactions involving solely Parent, Purchaser and/or one or more of
their subsidiaries.
(c) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties hereto agree,
at the request of Purchaser, to take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 253 (in lieu of
Section 251) of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the shareholders of the Company.
Section 6.10 Proxy Statement. If required under applicable law, the
---------------
Company and Parent shall prepare the Proxy Statement, file it with the SEC under
the Exchange Act as promptly as practicable after Purchaser purchases Shares
pursuant to the Offer, and use all reasonable efforts to have it cleared by the
SEC. As promptly as practicable after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the shareholders of the
Company as of the record date for the Shareholder Meeting.
Section 6.11 Public Announcements. Parent and the Company shall to the
--------------------
fullest extent practicable consult with each other before issuing any press
release or otherwise making
-42-
any public statement with respect to the Offer, the Merger and the other
Transactions and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law.
Section 6.12 Shareholder Litigation. The Company shall give Parent the
----------------------
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any of the
Transactions; provided, however, that no such settlement shall be agreed to
-------- -------
without Parent's consent, which consent shall not be unreasonably withheld.
Section 6.13 Post Merger Treatment of Warrants. Following the Effective
---------------------------------
Time and subject to the terms and conditions of the Warrant Agreement, the
Parent will cause the Surviving Corporation to make available, as necessary,
sufficient funds to pay, and will pay, to holders of Warrants, upon the exercise
thereof, the amount of cash, without interest, to which such holders would have
been entitled pursuant to the Merger if such holders had exercised their
Warrants and acquired shares of Common Stock immediately prior to the Effective
Time.
Section 6.14 Rights Agreement. At the election of the Parent or
----------------
Purchaser, the Company will redeem the Rights immediately prior to the
Purchaser's acceptance for payment of Securities pursuant to the Offer and will
not otherwise redeem the Rights, or amend or terminate the Rights Agreement
unless required to do so by a court of competent jurisdiction or in connection
with the termination of this Agreement pursuant to Section 8.1(d)(ii) hereof.
Section 6.15 FIRPTA. The Company shall deliver to Purchaser prior to the
------
expiration of the Offer a certified statement, prepared in accordance with
Sections 897 and 1445 of the Code, that the Securities are not "United States
real property interests" within the meaning of Section 897 of the Code.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) if required by the DGCL, this Agreement shall have been approved
by the affirmative vote of the shareholders of the Company by the requisite vote
in accordance with applicable law; provided, that this Section 7.1(a) shall not
-------- ----
affect the obligations contained in Section 6.9(a); and
(b) 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 shall
be in effect; provided, however, that each of the parties shall have used its
-------- -------
reasonable best efforts to prevent the entry of any such injunction
-43-
or other order and to appeal, subject to the other terms of this Agreement
(including Section 6.4), as promptly as possible any injunction or other order
that may be entered.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time (notwithstanding approval
thereof by the shareholders of the Company) prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to the occurrence and continued
existence of any of the conditions set forth in Annex A hereto, Purchaser shall
have (i) failed to commence the Offer within the time required by Regulation 14D
under the Exchange Act, (ii) terminated the Offer without purchasing any
Securities pursuant to the Offer or (iii) failed to accept for payment
Securities pursuant to the Offer prior to November 30, 1999;
(d) by the Company (i) if there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company, and Purchaser shall have (A) failed to commence the Offer within the
time required by Regulation 14D under the Exchange Act, (B) terminated the Offer
without purchasing any Securities pursuant to the Offer, or (C) failed to accept
for payment Securities pursuant to the Offer prior to November 30, 1999;
provided further that the applicable date pursuant to this clause (C) shall also
-------- -------
be extended to the extent that the four business day notice period in Section
8.1(d)(ii)(y) is applicable and has not yet expired and also to the extent the
Expiration Date of the Offer is required to be extended by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to a
modification to the Offer by Purchaser in response to the Superior Proposal
which give rise to the notice period in Section 8.1(d)(ii)(y), or (ii) prior to
the purchase of Securities pursuant to the Offer, concurrently with the
execution of an Acquisition Agreement under the circumstances permitted by
Section 6.1 in connection with a Superior Proposal, provided that such
-------- ----
termination under this clause (ii) shall not be effective unless (x) the Company
and its Board of Directors shall have complied in all material respects with
their obligations under Section 6.1 in connection with such Superior Proposal
and the Company shall have paid the Termination Fee pursuant to Section 8.3 and
(y) the Company provides Parent and Purchaser with at least four business days'
written notice prior to terminating this Agreement, which notice shall be
accompanied by (1) a copy of the proposed Acquisition Agreement with respect to
the Superior Proposal that the
-44-
Company proposes to accept and (2) the Company's written certification that it
has made the determinations with respect to such Superior Proposal set forth in
clauses (A) and (B) of the proviso in Section 6.1(b) and the representation that
the Company will, in the absence of any other superior Acquisition Proposal,
execute such Acquisition Agreement unless Parent or Purchaser modifies the Offer
or this Agreement such that the Company's Board of Directors reasonably believes
in good faith after consultation with its independent legal counsel and
financial advisors that the Offer and the Merger (as so modified) are at least
as favorable as such Superior Proposal;
(e) by Parent or Purchaser prior to the purchase of Securities
pursuant to the Offer, if (i) any representations or warranties of the Company
(without reference to any materiality qualifications therein) contained in this
Agreement shall not be true and correct at any time prior to the acceptance for
payment of Securities pursuant to the Offer, except where the failure to be true
and correct would not have a Material Adverse Effect on the Company (other than
to the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall not be true and
correct as of such date except where the failure to be true and correct would
not have a Material Adverse Effect on the Company), or (ii) the Company shall
not have performed and complied with, in all material respects (without
reference to any materiality qualifications therein), each material covenant or
agreement contained in the Agreement and required to be performed or complied
with by it, and which breach, in the case of clause (i) and (ii) above, shall
not have been cured prior to the earlier of (A) 15 days following notice of such
breach and (B) two business days prior to the date on which the Offer expires,
provided, however, (x) that in the event of a material breach of Section 6.1 the
-------- -------
Company shall have 3 days following notice of such breach in order to cure and
(y) in the event of a willful or intentional breach Parent and Purchaser may
immediately terminate this Agreement, provided further there shall be no right
-------- -------
to cure breaches which are non-curable, or (iii) the Board of Directors of the
Company or any committee thereof shall have withdrawn, or modified, amended or
changed (including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, the Merger, any
of the Transactions or this Agreement, or shall have approved or recommended to
the Company's stockholders an Acquisition Proposal or any other acquisition of
Securities other than the Offer and the Merger, or shall have adopted any
resolutions to effect any of the foregoing or the Company shall have taken
action to redeem the Rights or otherwise modify the Rights Agreement to
facilitate an Acquisition Proposal or purchase of Securities by any person other
than Parent or Purchaser, or (iv) the Company Financial Advisor shall have
withdrawn, or modified or qualified in any manner adverse to Parent or
Purchaser, its Fairness Opinion;
(f) by the Company prior to the purchase of any Securities pursuant to
the Offer if (i) there shall have been a material breach of any representation
or warranty in this Agreement on the part of Parent or Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) Parent or Purchaser shall not have performed or complied with, in
all material respects (without reference to any materiality qualifications
therein), each covenant or agreement contained in this Agreement and required to
be performed or complied with by them, and such breach materially adversely
affects (or materially delays) the
-45-
consummation of the Offer, and which breach, in the case of clause (i) and
clause (ii) above, shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the date on
which the Offer expires; provided, however, that Parent and Purchaser shall have
-------- -------
no right to cure such breach and the Company may immediately terminate this
Agreement in the event that such breach by Parent or Purchaser was willful or
intentional, provided further there shall be no right to cure breaches which are
non-curable; or
(g) by Parent or Purchaser prior to the purchase of Securities
pursuant to the Offer if any person or group (which includes a "person" or
"group" as such terms are defined in Section 13(d)(3) of the Exchange Act) other
than Parent, Purchaser, or any of their affiliates, shall have acquired
beneficial ownership of more than 51% of the Shares outstanding or shall have
consummated or entered into a definitive agreement with the Company with respect
to an Acquisition Proposal, or consummates an Acquisition Proposal pursuant to a
definitive agreement with the Company.
Section 8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of Sections 6.3, 8.2, 8.3, 9.3, 9.4 and 9.7, shall forthwith
become void and have no effect, without any liability on the part of any party
or its affiliates, directors, officers or shareholders. Subject to Section 8.3
below, no termination of this Agreement shall relieve any party to this
Agreement of liability for breach of this Agreement. Notwithstanding anything
herein to the contrary, to the extent the Company owes Parent a Termination Fee,
termination by the Company pursuant to Section 8.1 shall not be effective unless
prior to or simultaneously therewith such Termination Fee are paid to Parent.
Section 8.3 Termination Fee.
---------------
(a) Except as provided in Section 8.3(b) and (c), all fees and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(c) or the Company terminates pursuant to Section 8.1(d)(i), in
either case due to a failure to achieve the Minimum Condition and Parent
and Purchaser are not in material breach of this Agreement, Parent or
Purchaser terminates pursuant to Section 8.1(c) because of the occurrence
and continued existence of the conditions set forth in paragraph (a) or (b)
of Annex A or Parent or Purchaser terminates pursuant to Sections 8.1(e)(i)
or (ii), in each case set forth in this clause (i), in circumstances when,
prior to such termination any third party shall have acquired beneficial
ownership of 51% or more of the outstanding Shares or made or consummated
or announced an intention to make or consummate an Acquisition Proposal for
51% or more of the consolidated assets of the Company or a majority of the
outstanding Shares of the Company (or with respect to any such proposal
that may be existing on the date hereof, not withdrawn such Acquisition
-46-
Proposal), and, in the case of such an Acquisition Proposal which has not
been consummated prior to such termination, within 12 months thereafter
such Acquisition Proposal (or, in the case Parent or Purchaser terminates
this Agreement pursuant to Section 8.1(c) due to a failure to achieve the
Minimum Condition, any other Acquisition Proposal for 51% or more of the
consolidated assets of the Company or a majority of the outstanding Shares
of the Company) has been consummated for consideration per Share higher
than the per Share consideration in the Offer or for an aggregate
consideration, including the retention of any equity by shareholders, of
more than the aggregate consideration of the Offer and the Merger;
(ii) Parent or Purchaser terminates this Agreement pursuant to
Sections 8.1(e)(iii) or (iv), pursuant to Section 8.1(c) because of the
occurrence and continued existence of the conditions set forth in paragraph
(g) or (i) of Annex A, pursuant to Section 8.1(g), because of a material
breach of Section 6.1, or a willful or intentional breach of the Company's
covenants and agreements which materially interferes with the consummation
of the Transactions;
(iii) the Company terminates this Agreement pursuant to Section
8.1(d)(ii); or
(iv) the Company terminates this Agreement pursuant to Section
8.1(f) in circumstances when Parent or Purchaser shall also have the right
to terminate this Agreement in the circumstances where Parent or Purchaser
would have been entitled to a Termination Fee pursuant to Section 8.3(b)(i)
or (ii) above;
then, in any such case, the Company shall pay to Parent, within one
business day following the date on which Parent becomes entitled to a
Termination Fee (but subject to earlier payment pursuant to Section 8.2, if
applicable), a fee (a "Termination Fee"), in cash, equal to $42,250,000;
provided that the Company in no event shall be obligated to pay more than one
-------- ----
such Termination Fee with respect to all such agreements and occurrences and
such termination. Any payment required to be made pursuant to this subsection
(b) shall be made to Parent by wire transfer of immediately available funds to
an account designated by Parent. The provisions of this Section 8.3, subject to
Section 8.3(c), shall not derogate from any rights or remedies which Parent,
Purchaser or the Company may possess under this Agreement (including as provided
in Section 9.3) or the Tender Agreement or under applicable law, as the case may
be, including with respect to any breach of the representations, warranties,
agreements or covenants contained in this Agreement, provided that,
notwithstanding the foregoing, the Termination Fee shall be the sole and
exclusive remedy of Parent unless the Parent elects to forego the Termination
Fee in such circumstances and pursue other rights and remedies in such
circumstances.
(c) If this Agreement is terminated by Parent or Purchaser pursuant to
Section 8.1(c) because of the occurrence and continued existence of the
conditions set forth in paragraph (a) of Annex A or pursuant to Sections
8.1(e)(i) and the condition does not result from a willful breach, promptly upon
demand the Company shall reimburse Parent and Purchaser for
-47-
all their reasonable documented out-of-pocket fees and expenses incurred by
Parent, Purchaser and their respective affiliates in connection with this
Agreement, the Offer, the Merger, the Tender Agreement and the other
Transactions, including all such fees and expenses of counsel, accountants,
investment bankers, experts and consultants to each of Parent and Purchaser and
their respective affiliates, commitment and other reasonable documented fees and
expenses payable to financing sources and the expenses of the preparation,
printing, filing and mailing of the Offer Documents and any other related costs
and expenses (the "Expenses"). Other than as provided in Section 9.3, payment of
Expenses shall be the sole and exclusive remedy of Parent and Purchaser for such
a breach, provided that Purchaser shall also be entitled to a Termination Fee to
the extent Section 8.3(b)(i) is applicable to the termination (in which event
the payment of Expenses shall be returned).
(d) For purposes of this Section 8.3, "willful" shall mean that the
Agreement is terminated as a result of one or more representations and
warranties not being true when made and one or more of the persons listed on
Schedule 8.3(d)(i) of the Company Disclosure Schedules had knowledge at that
time of events, facts, circumstances or conditions not disclosed hereunder which
caused such representations and warranties to be false or misleading.
Section 8.4 Amendment. To the extent permitted by applicable law and
---------
subject to Section 1.4(c), this Agreement may be amended by action taken by or
on behalf of the Boards of Directors of the Company, Parent and Purchaser at any
time before or after approval of this Agreement by the shareholders of the
Company but, after any such shareholder approval, no amendment shall be made
that by law requires the further approval of such shareholders without the
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time,
-----------------
subject to Section 1.1(b), a party may (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties of the other parties
contained herein or in any documents, certificate or writing delivered pursuant
hereto, or (c) waive compliance with any of the agreements or conditions of the
other parties hereto contained herein; provided that after the approval of the
-------- ----
Merger by the shareholders of the Company, no extensions or waivers shall be
made that by law require further approval by such shareholders without the
approval of such shareholders. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Non-Survival of Representations and Warranties. None of the
----------------------------------------------
representations and warranties made in this Agreement shall survive after the
Effective Time. This Section 9.1
-48-
shall not limit any covenant or agreement of the parties hereto which by its
terms contemplates performance after the Effective Time.
Section 9.2 Entire Agreement; Assignment. This Agreement (including the
----------------------------
Company Disclosure Schedule), the Tender Agreement and, to the extent
contemplated in Section 6.3(b), the Confidentiality Agreement, (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise, provided that
-------- ----
Parent or Purchaser may assign any of their rights and obligations to any direct
or indirect wholly owned subsidiary of Parent, but no such assignment shall
relieve Parent or Purchaser of its obligations hereunder. Any of Parent,
Purchaser or any direct or indirect wholly owned subsidiary of Parent may
purchase Securities under the Offer. Any attempted assignment in violation of
this Section 9.2 shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.3 Enforcement of the Agreement. The Company agrees that
----------------------------
irreparable damage would occur to Parent and Purchaser in the event that any of
the provisions of this Agreement were not performed by the Company in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that Parent and Purchaser shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are
entitled at law or in equity including those set forth in Section 8.3 of this
Agreement. The Company further agrees to waive any requirement for the securing
or posting of any bond in connection with obtaining any such injunction or other
equitable relief.
Section 9.4 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that Transactions are fulfilled to the extent possible. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
Section 9.5 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing (including telecopy or
similar writing) and shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 9.5 and
the appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 9.5 (or at such
other address for a party as shall be specified by like notice):
-49-
if to Parent or Purchaser:
Dyckerhoff Aktiengesellschaft
Xxxxxxxxxx Xxxxxxx 00
00000 Xxxxxxxxx
Xxxxxxx
Attn: Xx. Xxxxx Xxxxx
Xxxxx Xxxxxxx
Telecopy: 00-000-000-0000
with a copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Telecopy: 000-000-0000
if to the Company:
Lone Star Industries, Inc.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: 000-000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxx
Telecopy: 000-000-0000
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative. No
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failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
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Section 9.7 Governing Law; Consent to Jurisdiction. This Agreement shall
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be governed by and construed in accordance with the substantive laws of the
State of New York regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto. In addition, the Company,
Parent and Purchaser hereby (i) consent to submit to the personal jurisdiction
of any Federal court located in the State of New York or any New York state
court in the event any dispute arises out of this Agreement or any of the
Transactions, (ii) agree not to attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agree not to bring any action relating to this Agreement or any of the
Transactions in any court other than a Federal court located in the State of New
York or a New York state court and (iv) waive any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the Transactions. The Company, Parent and Purchaser hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the Transactions
in the courts of the State of New York or of the United States of America
located in the State of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.8 Descriptive Headings. The descriptive headings herein are
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inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9 Parties in Interest. This Agreement shall be binding upon
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and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Sections 6.5 and 6.8(a)(i), the first sentence of Section 6.8(c) and
Section 6.8(d) (which are intended to be for the benefit of the persons entitled
to therein, and may be enforced by such persons).
Section 9.10 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.11 Certain Definitions. For purposes of this Agreement
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(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "affiliate" of a person shall mean (i) a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first-mentioned person and (ii) an
"associate", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act.
(b) "beneficial owner" (including the term "beneficially own" or
correlative terms) shall have the meaning ascribed to such term under Rule 13d-
3(a) under the Exchange Act.
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(c) "business day" shall have the meaning ascribed to such term under
Rule 14d-1 of the Exchange Act.
(d) "Company Disclosure Schedule" shall mean a letter dated the date
of the Agreement delivered by the Company to Parent and Purchaser concurrently
with the execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in Article
III and covenants contained in Article V by specific section and subsection
references.
(e) "control" (including the terms "controlling," "controlled by" and
"under common control with" or correlative terms) shall mean the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities or as trustee or executor, by contract or credit
arrangement, or otherwise.
(f) "Fully Diluted Shares" means all outstanding securities entitled
generally to vote in the election of directors of the Company on a fully diluted
basis, after giving effect to the exercise or conversion of all options
excluding the Options which shall be cashed out pursuant to Section 2.10 hereof,
warrants (including the Warrants) and securities exercisable or convertible into
such voting securities, other than the Rights to the extent not then
exercisable.
(g) "group" shall have the meaning ascribed to such term under Rule
13d-3(a) under the Exchange Act.
(h) "KC Joint Venture" shall mean the general partnership organized
under Kentucky law known as the Kosmos Cement Company established pursuant to
the KC Joint Venture Partnership Agreement.
(i) "KC Joint Venture Partnership Agreement" shall mean the Kosmos
Cement Company Partnership Agreement between Kosmos Cement Company, Inc. and the
Company (as successor to Lone Star Cement, Inc.), dated March 7, 1998, as
supplemented and amended.
(j) "Material Adverse Effect" shall mean any change or effect that is
(after giving effect to any appropriate reserves for such matter on the
financial statements included in the Filed Company SEC Documents) materially
adverse to the business, results of operations, assets, liabilities or financial
condition of the Company and its subsidiaries, taken as a whole, or any event,
matter, condition or effect which precludes the Company from performing its
obligations under this Agreement or the consummation of the Transactions;
provided, however, that in determining whether there has been a Material Adverse
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Effect, any adverse effect directly attributable to the following shall be
disregarded: (i) general economic or business conditions; (ii) general industry
conditions; (iii) the taking of any action permitted or required by this
Agreement or the Tender Agreement; (iv) the announcement or pendency of the
Offer, the Merger or any of the other Transactions; (v) the breach by Parent or
Purchaser of this Agreement; and (vi) a decline in the Company's stock price
(provided, however, that any adverse
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effect attributable to the factors identified in clause (i) or (ii) of this
Section 9.11(j) shall not be disregarded to the extent that the impact on the
Company is greater than that on similarly situated companies).
(k) "person" shall mean a natural person, company, corporation,
partnership, association, trust or any unincorporated organization.
(l) "subsidiary" shall mean, when used with reference to a person
means any corporation or other business entity of which such person directly or
indirectly owns (i) the majority of the outstanding voting securities or (ii)
voting securities or equity interests which give such person the power to elect
a majority of the board of directors or similar governing body of such entity.
Section 9.12 Interpretation. (a) The words "hereof," "herein" and
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"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns. References to the "Company" or any of
its "subsidiaries" shall include, without limitation, the Company or any of its
subsidiaries in its capacity, status or operation as a partner in the KC Joint
Venture or any other joint venture or partnership.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, on the day
and year first above written.
DYCKERHOFF AKTIENGESELLSCHAFT
/s/Xxxxx Xxxxx
By:_____________________________
Name: Xxxxx Xxxxx
Title:Chief Executive Officer
/s/Xxxxx Xxxxxxx
By:_____________________________
Name: Xxxxx Xxxxxxx
Title:Chief Financial Officer
LEVEL ACQUISITION CORP.
/s/Xxxxx Xxxxx
By:_____________________________
Name: Xxxxx Xxxxx
Title:President
LONE STAR INDUSTRIES, INC.
/s/Xxxxx X. Xxxxxxx
By:_____________________________
Name: Xxxxx X. Xxxxxxx
Title:Chairman of the Board
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ANNEX A
to
Agreement and Plan of Merger
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Conditions to the Offer. Notwithstanding any other provision of the
Offer or this Agreement, in addition to (and not in limitation of) Purchaser's
rights pursuant to the Agreement to extend and amend the Offer at any time, in
its sole discretion, to the extent permitted by Section 1.1 of the Merger
Agreement, Purchaser shall not be required to accept for payment or, subject to
Rule 14e-1(c) of the Exchange Act, pay for and may delay the acceptance for
payment of or, subject to Rule 14e-1(c) of the Exchange Act, the payment for,
any Securities not theretofore accepted for payment or paid for, and Purchaser
may terminate or amend the Offer if (i) a number of Securities representing at
least a majority of the Fully Diluted Shares shall not have been validly
tendered and not withdrawn immediately prior to the expiration of the Offer
("Minimum Condition") or (ii) at any time on or after the date of the Merger
Agreement and prior to the time of acceptance of such Securities for payment or
the payment therefor, any of the following conditions has occurred and continues
to occur:
(a) any representation and warranty of the Company in the Agreement
(without reference to any materiality qualifier therein other than the
representations and warranties in Section 3.2, which must be true and correct in
all material respects) shall not be true and correct as of such time, except
where the failure to be so true and correct (other than the representations and
warranties in Section 3.2) would not have a Material Adverse Effect on the
Company, (other than to the extent any such representation and warranty
expressly relates to an earlier date, in which case such representation and
warranty shall not be true and correct as of such date, except where the failure
to be so true and correct would not have a Material Adverse Effect on the
Company) and which breach shall not have been cured prior to the earlier of (i)
15 days following notice of such breach and (ii) two business days prior to the
date on which the Offer expires; provided, however, that the Company shall have
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no right to cure such breach in the event that such breach by the Company was
willful or intentional, provided further, there shall be no right to cure
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breaches which are non-curable);
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications therein),
each covenant or agreement contained in the Agreement and required to be
performed or complied with by it and which breach shall not have been cured
prior to the earlier of (i) 15 days following notice of such breach and (ii) two
business days prior to the date on which the Offer expires; provided, however,
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(x) that in the event of a material breach of Section 6.1 the Company shall have
3 days following notice of such breach in order to cure and (y) in the event of
a willful or intentional
breach Parent and Purchaser may immediately terminate this Agreement, provided
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further, there shall be no right to cure breaches which are non-curable;
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(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered as a
result of a specified decrease in a market index) related to market conditions,
(ii) any extraordinary adverse change in the financial markets in the United
States or the Federal Republic of Germany, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or the Federal Republic of Germany by any Governmental Entity, (iv) any
material mandatory limitation by any Governmental Entity on the extension of
credit by banks or other lending institutions, or (v) a commencement of a war,
armed hostilities or other national or international calamity directly or
indirectly involving the United States or the Federal Republic of Germany;
(d) any applicable waiting period under the HSR Act shall not have
expired or been terminated or there shall be threatened or pending any suit,
action, investigation or proceeding by any Governmental Entity, or pending any
suit by any other person which has a reasonable possibility of success, (i)
challenging the acquisition by Parent or Purchaser of any Securities, seeking to
make illegal, materially delay, make materially more costly or otherwise
directly or indirectly restrain or prohibit the making or consummation of the
Offer and the Merger or the performance of any of the other Transactions or
seeking to obtain from the Company, Parent or Purchaser any damages that are
material in relation to the Company and its subsidiaries taken as whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent
or any of their respective subsidiaries or affiliates of any of the businesses
or assets of the Company, Parent or any of their respective subsidiaries or
affiliates, or to compel the Company, Parent or any of their respective
subsidiaries or affiliates to dispose of or hold separate any of the businesses
or assets of the Company, Parent or any of their respective subsidiaries or
affiliates, as a result of the Offer, the Merger or any of the other
Transactions, (iii) seeking to impose limitations on the ability of Parent or
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Securities accepted for payment pursuant to the Offer including, without
limitation, the right to vote the Shares accepted for payment by it on all
matters properly presented to the shareholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect the business or operations of the Company or
its subsidiaries, (v) requiring divestiture by Purchaser or any of its
affiliates of any Securities or (vi) which otherwise is reasonably likely to
have a Material Adverse Effect on the Company or Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters)
threatened, proposed or sought (which in each case Parent believes in good faith
is reasonably likely to become effective), enacted, entered, enforced,
promulgated or issued with respect to or deemed applicable to, or any consent or
approval withheld with respect to (i) Parent, the Company or any of their
respective subsidiaries or affiliates or (ii) the Offer or the Merger or any of
the other Transactions by any
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Governmental Entity or court, that has resulted or is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) though (v) of paragraph (d) above;
(f) since the date of the Agreement there shall have occurred any
events, changes, effects or developments that, individually or in the aggregate,
have had or are reasonably likely to have, a Material Adverse Effect on the
Company;
(g) (1) the Board of Directors of the Company or any other committee
thereof shall have (i) withdrawn, or modified, amended or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Parent or Purchaser, its
approval or recommendation of the Offer, the Merger, any of the other
Transactions or this Agreement, (ii) approved or recommended to the Company's
stockholders an Acquisition Proposal or any other acquisition of Securities
other than the Offer and the Merger or (iii) adopted any resolution to effect
any of the foregoing, or the Company shall have taken action to redeem the
Rights or otherwise modify the Rights Agreement to facilitate an Acquisition
Proposal or purchase of Securities by any person other than Parent or Purchaser,
or (2) the Company Financial Advisor shall have withdrawn, or modified or
qualified in any manner adverse to Parent or Purchaser, its Fairness Opinion;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser, any of their
affiliates, or any group of which any of them is a member, shall have acquired
beneficial ownership of more than 51% of the Shares or shall have consummated or
entered into a definitive agreement with the Company with respect to an
Acquisition Proposal.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition and, subject to Section 1.1, may
be waived by Purchaser or Parent, in whole or in part, at any time and from time
to time, in the sole discretion of Purchaser or Parent. The failure by
Purchaser or Parent or any of their respective affiliates at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right,
the waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
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