EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
ISPAT INTERNATIONAL N.V.,
PARK ACQUISITION CORP.
and
INTERNATIONAL STEEL GROUP INC.
Dated as of October 24, 2004
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01 The Merger.............................................................................2
SECTION 1.02 Effective Time; Closing................................................................3
SECTION 1.03 Effect of the Merger...................................................................3
SECTION 1.04 Certificate of Incorporation; By-laws..................................................3
SECTION 1.05 Directors and Officers.................................................................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities...............................................................4
SECTION 2.02 Exchange of Certificates and Cash Consideration........................................7
SECTION 2.03 Stock Transfer Books..................................................................10
SECTION 2.04 Company Stock Options; Company SARs...................................................10
SECTION 2.05 Appraisal Rights/Dissenting Shares....................................................11
SECTION 2.06 Affiliates............................................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries..........................................12
SECTION 3.02 Certificate of Incorporation and By-laws..............................................13
SECTION 3.03 Capitalization........................................................................13
SECTION 3.04 Authority Relative to This Agreement..................................................14
SECTION 3.05 No Conflict; Required Filings and Consents............................................14
SECTION 3.06 Permits; Compliance...................................................................15
SECTION 3.07 SEC Filings; Financial Statements.....................................................15
SECTION 3.08 Absence of Certain Changes or Events..................................................17
SECTION 3.09 Absence of Litigation.................................................................17
SECTION 3.10 Employee Benefit Plans................................................................17
SECTION 3.11 Labor and Employment Matters..........................................................19
SECTION 3.12 Real Property; Title to Assets........................................................20
SECTION 3.13 Intellectual Property.................................................................21
SECTION 3.14 Taxes.................................................................................22
SECTION 3.15 Environmental Matters.................................................................22
SECTION 3.16 Inventories...........................................................................23
SECTION 3.17 Material Contracts....................................................................23
SECTION 3.18 Insurance.............................................................................24
SECTION 3.19 Board Approval; Vote Required.........................................................24
SECTION 3.20 Certain Business Practices............................................................25
SECTION 3.21 Interested Party Transactions.........................................................25
SECTION 3.22 Opinion of Financial Advisor..........................................................25
SECTION 3.23 Brokers...............................................................................25
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01 Corporate Organization................................................................26
SECTION 4.02 Certificate of Incorporation and By-Laws..............................................27
SECTION 4.03 Capitalization........................................................................27
SECTION 4.04 Authority Relative to This Agreement..................................................28
SECTION 4.05 No Conflict; Required Filings and Consents............................................28
SECTION 4.06 Permits; Compliance...................................................................29
SECTION 4.07 SEC Filings; Financial Statements.....................................................29
SECTION 4.08 Absence of Certain Changes or Events..................................................31
SECTION 4.09 Absence of Litigation.................................................................31
SECTION 4.10 Richmond Agreement....................................................................31
SECTION 4.11 Labor and Employment Matters..........................................................31
SECTION 4.12 Operations of Merger Sub..............................................................32
SECTION 4.13 Tax Matters...........................................................................32
SECTION 4.14 Board Approval; Vote Required.........................................................32
SECTION 4.15 Certain Business Practices............................................................32
SECTION 4.16 Related Party Transactions............................................................33
SECTION 4.17 Brokers...............................................................................33
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger.................................33
SECTION 5.02 Conduct of Business by Parent Pending the Merger......................................35
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Registration Statement; Proxy Statement...............................................37
SECTION 6.02 Company Stockholders' Meeting and Parent Shareholders' Meeting........................38
SECTION 6.03 Access to Information; Confidentiality...............................................39
SECTION 6.04 No Solicitation of Transactions.......................................................39
SECTION 6.05 Certain Post-Closing Matters..........................................................42
SECTION 6.06 Certain Employee Benefits and Other Matters...........................................42
SECTION 6.07 Directors' and Officers' Indemnification and Insurance................................42
SECTION 6.08 Notification of Certain Matters.......................................................43
SECTION 6.09 Company Affiliates....................................................................44
SECTION 6.10 Further Action; Reasonable Best Efforts...............................................44
SECTION 6.11 Reorganization........................................................................44
SECTION 6.12 Obligations of Merger Sub.............................................................45
SECTION 6.13 Consents of Accountants...............................................................45
SECTION 6.14 NYSE Listing..........................................................................45
SECTION 6.15 Subsequent Financial Statements.......................................................45
SECTION 6.16 Public Announcements..................................................................45
SECTION 6.17 Shareholder Circular/Prospectus.......................................................45
SECTION 6.18 Sale and Charter; Capital Expenditures................................................47
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party...........................................47
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub................................48
SECTION 7.03 Conditions to the Obligations of the Company..........................................49
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination...........................................................................50
SECTION 8.02 Effect of Termination.................................................................52
SECTION 8.03 Fees and Expenses.....................................................................52
SECTION 8.04 Amendment.............................................................................54
SECTION 8.05 Waiver................................................................................54
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements............................55
SECTION 9.02 Notices...............................................................................55
SECTION 9.03 Certain Definitions...................................................................56
SECTION 9.04 Severability..........................................................................62
SECTION 9.05 Entire Agreement; Assignment..........................................................63
SECTION 9.06 Disclosure Schedules; Disclosure Information..........................................63
SECTION 9.07 Parties in Interest...................................................................63
SECTION 9.08 Specific Performance..................................................................63
SECTION 9.09 Governing Law.........................................................................63
SECTION 9.10 Waiver of Jury Trial..................................................................64
SECTION 9.11 Headings..............................................................................64
SECTION 9.12 Counterparts..........................................................................64
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EXHIBITS
1.02(a) Form of Surviving Corporation Certificate of Incorporation
1.02(b) Form of Surviving Corporation By-laws
6.09 Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of
October 24, 2004 (this "Agreement"), among Ispat International N.V., a company
organized under the laws of The Netherlands ("Parent"), Park Acquisition Corp.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"),
and International Steel Group Inc., a Delaware corporation (the "Company").
WHEREAS, Parent is entering into an acquisition agreement (the
"Richmond Agreement") with Richmond Investment Holdings Limited ("Richmond"), a
company organized under the laws of the British Virgin Islands, for the purchase
by Parent of all of the issued and outstanding capital stock of LNM Holdings
N.V., a company organized under the laws of The Netherlands Antilles (the "LNM
Transaction");
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Parent and the Company desire to effect a business
combination transaction pursuant to which, following the completion of LNM
Transaction (the "LNM Closing") and in conjunction therewith, the Company will
merge with and into Merger Sub (the "Merger") and become a wholly-owned
subsidiary of Parent;
WHEREAS, the Board of Directors of the Company (the "Company
Board") has (i) determined that the Merger is consistent with and in furtherance
of the long-term business strategy of the Company and fair to, and in the best
interests of, the Company and its stockholders and has approved this Agreement
and (ii) recommended the adoption of this Agreement by the stockholders of the
Company;
WHEREAS, the Board of Directors of Parent (the "Parent Board")
has (i) determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Parent and fair to, and in the best interests of,
Parent and its stockholders and has approved this Agreement and (ii) recommended
the approval of the issuance of shares in the Merger and the LNM Transaction by
the shareholders of Parent;
WHEREAS, Parent, and certain stockholders of the Company (the
"Stockholders") have entered into a Company Shareholder Support Agreement, dated
as of the date hereof (the "Company Shareholder Support Agreement"), providing
that, among other things, the Stockholders will vote their Company Shares in
favor of the adoption of this Agreement;
WHEREAS, the Company, and a certain shareholder of Parent (the
"Parent Shareholder"), have entered into a voting agreement, dated as of the
date hereof (the "Parent Shareholder Support Agreement"), providing that, among
other things, the Parent Shareholder will vote its Parent Class A Shares and
Parent Class B Shares in favor of adoption of the Richmond Agreement and the
transactions contemplated thereunder and this Agreement and the transactions
contemplated hereunder;
WHEREAS, the Company and Richmond have entered into a support
agreement, dated as of the date hereof (the "LNM Shareholder Support
Agreement"), providing representations and warranties to the Company from
Richmond; and
WHEREAS, for United States federal income tax purposes, the
Merger is intended to qualify as a reorganization under the provisions of
Section 368(a) of the United States Internal Revenue Code of 1986, as amended
(the "Code"), or alternatively, together with the LNM Transaction, as transfers
of property described in Section 351(a) (subject to Section 351(b)) of the Code;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. (a) Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with the DGCL, at the
Effective Time, the Company shall be merged with and into Merger Sub, the
separate corporate existence of the Company shall cease and Merger Sub shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"); provided, however, that if either of the conditions set forth in
Section 1.01(b) (after taking into account the application, if any, of the final
sentence of Section 1.01(b)) is satisfied, Parent shall, reverse the business
combination structure referred to herein as the "Merger" so that Merger Sub will
instead merge with and into the Company. In such event, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
Surviving Corporation of the Merger (a "Reverse-Subsidiary Merger"). A
Reverse-Subsidiary Merger would be intended to be integrated with the LNM
Transaction and treated as a transaction described in Section 351(a) of the
Code, and, unless waived by the Company, the condition of Section 7.03(d) hereof
would relate to the qualification of the acquisition under Section 351(a) of the
Code and the condition in 7.02(f) shall be waived. In the event Parent effects
the acquisition of the Company pursuant to a Reverse Subsidiary Merger, all
references to the "Merger" in this Agreement and all other ancillary or related
agreements, documents and instruments, shall be deemed to be references to the
"Reverse-Subsidiary Merger", all references to the "Surviving Corporation" shall
be deemed to be to the "Company" as the Surviving Corporation of the Merger, and
this Agreement and such other ancillary agreements, documents and instruments
shall be construed and interpreted accordingly.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Parent may effect the acquisition of the Company pursuant to the
Reverse-Subsidiary Merger if either of the following two conditions is
satisfied: (i) Parent reasonably determines that the value of the Stock
Consideration on the date of the Effective Time (such value, the "Stock Value")
is likely to be less than 42.5% (the "Minimum Percentage") of the sum of (A) the
Stock Value, (B) the Cash Consideration, (C) any other amounts paid by Parent or
the Company (or any affiliate thereof) to, or on behalf of, any Stockholder in
connection with the sale, redemption or other disposition of any Company Shares
in connection with the Merger for purposes of Treasury Regulation Section
1.368-1(e) (including payments with respect to Dissenting Shares) and (D) any
extraordinary dividends distributed by the Company prior to, and in connection
with, the Merger for purposes of Treasury Regulation Section 1.368-1(e) or (ii)
Parent or the Company receives written notice from its counsel specified in
Article VII to the effect that such counsel is unlikely to be able to deliver a
tax opinion required pursuant to Section 7.02(f) or
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Section 7.03(d), as the case may be, on the date of the Effective Time. For
purposes hereof, Parent shall have the right, at its sole and absolute
discretion, to increase the Stock Consideration to the extent necessary (as
reasonably determined by Parent based on the advice of its counsel) to cause the
Stock Value to at least equal the Minimum Percentage (which determination shall
be made based on the average of the high and low trading prices for Parent Class
A Shares on the date of the Effective Time or, if the Closing occurs before the
opening of the markets, the last business day immediately preceding the date of
the Effective Time).
SECTION 1.02 Effective Time; Closing. As promptly as
practicable after the satisfaction or, if permissible, 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 State of the State of Delaware, in such form as is required by,
and executed in accordance with, the relevant provisions of the DGCL (the date
and time of such filing of the Certificate of Merger (or such later time as may
be agreed by each of the parties hereto and specified in the Certificate of
Merger) being the "Effective Time"). Immediately prior to the filing of the
Certificate of Merger, a closing (the "Closing") shall be held at the offices of
Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such
other place as the parties shall agree, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VII.
SECTION 1.03 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided 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, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; By-laws. (a) At the
Effective Time, the Certificate of Incorporation of Merger Sub, in the form
attached hereto as Exhibit 1.04(a), shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter amended as provided by Law and such
Certificate of Incorporation. In the event of a Reverse-Subsidiary Merger, the
reference to "Merger Sub" in this subparagraph (a) shall be replaced by a
reference to "the Company".
(b) Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time, the By-laws of Merger Sub, in the form
attached hereto as Exhibit 1.04(b), shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
SECTION 1.05 Directors and Officers. (a) The directors of
Merger Sub 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 By-laws of the Surviving Corporation.
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(b) 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 and
qualified or until their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, Merger
Sub, the Company or the holders of any of the following securities:
(a) Cancellation of Certain Company Common Stock. Each share
of the common stock, par value $0.01 per share, of the Company (the
"Company Common Stock") issued and outstanding and owned by Merger Sub,
Parent or any direct or indirect wholly owned subsidiary of Parent or
of the Company (all issued and outstanding shares of Company Common
Stock being hereinafter collectively referred to as the "Company
Shares") and each share of Company Common Stock held in the treasury of
the Company, immediately prior to the Effective Time shall be canceled
without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(b) Shares of Merger Sub Stock. Each share of common stock,
par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation.
(c) Conversion of Company Common Stock. Each Company Share
(other than any Company Shares to be canceled pursuant to Section
2.01(a)) shall be canceled and shall be converted automatically,
subject to adjustment in accordance with Section 1.01(a), this Section
2.01 and Section 2.02, into the right to receive (i) $42.00 in cash
(the "Cash Consideration") or (ii) an amount of Class A Shares (the
"Exchange Ratio"), par value (E)0.01 per share ("Parent Class A
Shares") of Parent (the "Stock Consideration") equal to the quotient
determined by dividing $42.00 by the Average Parent Stock Price and
rounding the result to the nearest one thousandth of a share, payable
upon surrender, in the manner provided in Section 2.02, of the
certificate that formerly evidenced such Company Share; provided,
however, that if such quotient is less than 0.95865, the Exchange Ratio
will be 0.95865 and if such quotient is greater than 1.21740, the
Exchange Ratio will be 1.21740, or (iii) a combination of cash and
Parent Class A Shares determined in accordance with this Section 2.01
(the "Mixed Consideration", together with the Cash Consideration and
Stock Consideration elected by a holder of a Company Share as set forth
above shall be referred to as, the "Merger Consideration"), payable
upon surrender, in the manner provided in Section 2.02, of the
certificate that formerly evidenced such Company Share. The "Average
Parent Stock Price" means the average of the per share closing prices
of Parent Class A Shares on the NYSE during the 20 consecutive trading
days ending on (and including) the trading day that is two days prior
to the date of the Effective Time.
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(d) Cash Election. Each record holder of Company Shares
immediately prior to the Effective Time shall be entitled to elect to
receive cash for all or any part of such holder's Company Shares (a
"Cash Election"). Notwithstanding the foregoing and subject to Section
1.01(a) and Section 2.01(l), the aggregate number of Company Shares
that may be converted into the right to receive cash in the Merger (the
"Cash Election Number") shall be 50% of the total number of shares of
Company Shares issued and outstanding as of the Effective Time.
(e) Cash Election Shares. If the aggregate number of Company
Shares covered by Cash Elections (the "Cash Election Shares") exceeds
the Cash Election Number, each Cash Election Share shall be converted
into (i) the right to receive an amount in cash, without interest,
equal to the product of (A) the Cash Consideration and (B) a fraction
(the "Cash Fraction"), the numerator of which shall be the Cash
Election Number and the denominator of which shall be the total number
of Cash Election Shares and (ii) a number of Parent Class A Shares
equal to the product of (A) the Exchange Ratio and (B) a fraction equal
to one minus the Cash Fraction.
(f) Stock Election. Each record holder of Company Shares
immediately prior to the Effective Time shall be entitled to elect to
receive Parent Class A Shares for all or any part of such holder's
Company Shares (a "Stock Election"). Notwithstanding the foregoing and
subject to Section 1.01(a) and Section 2.01(l), the aggregate number of
Company Shares that may be converted into the right to receive Parent
Class A Shares in the Merger (the "Stock Election Number") shall be 50%
of the total number of Company Shares issued and outstanding as of the
Effective Time.
(g) Stock Election Shares. If the aggregate number of Company
Shares covered by Stock Elections (the "Stock Election Shares") exceeds
the Stock Election Number, each Stock Election Share shall be converted
into (i) the right to receive a number of Parent Class A Shares equal
to the product of (A) the Exchange Ratio and (B) a fraction (the "Stock
Fraction"), the numerator of which shall be the Stock Election Number
and the denominator of which shall be the total number of Stock
Election Shares and (ii) an amount in cash, without interest, equal to
the product of (A) the Cash Consideration and (B) a fraction equal to
one minus the Stock Fraction.
(h) Mixed Election. Each record holder of Company Shares
immediately prior to the Effective Time shall be entitled to elect to
receive Parent Class A Shares for part of such holder's Company Shares
and cash for the remaining part of such holder's Company Shares (a
"Mixed Election" and, collectively with a Stock Election and Cash
Election, the "Election"). Notwithstanding the foregoing and subject to
Section 1.01(a) and Section 2.01(l), the aggregate number of Company
Shares that may be converted into the right to receive the Cash
Consideration shall be 50%, and the aggregate number of Company Shares
that may be converted into the right to receive Parent Class A Shares
in the Merger shall be 50%, in each case, of the total number of
Company Shares issued and outstanding as of the Effective Time. With
respect to each holder of Company Shares who makes a Mixed Election,
each Company Share (or fraction thereof) such holder elects to be
converted into the right to receive Cash Consideration shall be treated
as a Cash Election Share for purposes of the provisions contained in
Sections 2.01(c), (d) and
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(e), and each Company Share (or fraction thereof) such holder elects
to be converted into the right to receive Parent Class A Shares shall
be treated as a Stock Election Share for purposes of the provisions
contained in Sections 2.01(c), (f) and (g).
(i) Form of Elections. Cash Elections, Stock Elections and
Mixed Elections shall be made on a form designed for that purpose (a
"Form of Election"). A record holder of Company Shares who holds such
shares as nominee or trustee or in another representative capacity (a
"Stockholder's Representative") may submit multiple Forms of Election;
provided that such Stockholder's Representative certifies that each
such Form of Election covers all the Company Shares held by such
Stockholder's Representative for a particular beneficial owner.
(j) Deemed Non-Election. For the purposes hereof, a holder of
Company Shares who does not submit a Form of Election that is received
by the Paying Agent prior to the Election Deadline (the "No Election
Shares") shall be deemed not to have made a Cash Election, Stock
Election or Mixed Election. If Parent or the Paying Agent shall
determine that any purported Election was not properly made, the shares
subject to such improperly made Election shall be treated as No
Election Shares. No Election Shares, at the discretion of Parent, may
be treated as Cash Election Shares or Stock Election Shares; provided,
however, that if the effect of such treatment would be to cause Section
1.01(b) to apply, then Parent shall not apply such treatment without
the consent of the Company.
(k) Election Deadline. Each of Parent and the Company shall
use its reasonable best efforts to cause copies of the Form of Election
to be mailed to the record holders of Company Shares not less than
thirty (30) days prior to the Effective Time and to make the Form of
Election available to all persons who become record holders of Company
Shares subsequent to the date of such mailing and no later than the
close of business on the seventh business day prior to the Effective
Time. Parent and the Company shall be deemed to have made the Form of
Election available for purposes of this Agreement if they post such
form on their respective websites in a downloadable format. A Form of
Election must be received by the Paying Agent by 5:00 p.m., New York
City time, on the third day after the Effective Time (the "Election
Deadline") in order to be effective. All elections may be revoked until
the Election Deadline in writing by the record holders submitting Forms
of Election.
(l) Anti-Dilution Provisions. In the event Parent (i) changes
(or establishes a record date for changing) the number of Parent Class
A Shares issued and outstanding prior to the Effective Time as a result
of a stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Parent Class A
Shares or Company Shares), extraordinary dividends, stock combination,
recapitalization, reclassification, reorganization combination,
exchange of shares or similar transaction or like change with respect
to the Parent Class A Shares or Company Shares or (ii) pays or makes an
extraordinary dividend or distribution in respect of Parent Class A
Shares (other than a distribution referred to in clause (i) of this
sentence) and, in either case, the record date therefor shall be prior
to the Effective Time, the Merger Consideration shall be
proportionately adjusted. Regular quarterly cash dividends and
increases thereon not prohibited by Section 5.02(b)(ii) of this
Agreement shall not be considered extraordinary
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for purposes of the preceding sentence. If, between the date hereof and
the Effective Time, Parent shall merge or consolidate with or into any
other corporation (a "Parent Business Combination") and the terms
thereof shall provide that Parent Class A Shares shall be converted
into the shares of any other corporation or entity, then provision
shall be made so that stockholders of the Company who would be entitled
to receive Parent Class A Shares pursuant to this Agreement shall be
entitled to receive, in lieu of each Parent Class A Share issuable to
such shareholders as provided herein, the same kind and amount of
securities or assets as shall be distributable upon such Parent
Business Combination with respect to Parent Class A Shares and the
parties hereto shall agree on an appropriate restructuring of the
transactions contemplated herein.
SECTION 2.02 Exchange of Certificates and Cash Consideration.
(a) Exchange Agent. Parent shall deposit, or shall cause to be deposited, with a
bank or trust company designated by Parent and reasonably satisfactory to the
Company (the "Exchange Agent"), for the benefit of the holders of Company
Shares, for exchange in accordance with this Article II through the Exchange
Agent, certificates representing the Parent Class A Shares issuable pursuant to
Section 2.01 as of the Effective Time, and cash, from time to time as required
to make payments in respect of the Cash Consideration and payments in lieu of
any fractional shares pursuant to Section 2.02(e) (such cash and certificates
for Parent Class A Shares, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Parent
Class A Shares and cash payments contemplated to be issued pursuant to Section
2.01 out of the Exchange Fund. Except as contemplated by Section 2.02(f) hereof,
the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each person who
was, at the Effective Time, a holder of record of Company Shares entitled to
receive the Merger Consideration pursuant to Section 2.01(c): (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the certificates evidencing
such Company Shares (the "Certificates") shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Exchange Agent of a Certificate for
cancellation, 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 a certificate
representing that number of whole Parent Class A Shares which such holder has
the right to receive in respect of the Company Shares formerly represented by
such Certificate (after taking into account all Company Shares then held by such
holder), if any, cash in respect of the Cash Consideration to be received by
such holder, if any, cash in lieu of any fractional Parent Class A Shares to
which such holder is entitled pursuant to Section 2.02(e), any dividends or
other
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distributions to which such holder is entitled pursuant to Section 2.02(c), and
the Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Company Shares that is not registered in the transfer
records of the Company, a certificate representing the proper number of Parent
Class A Shares, cash in respect of the Cash Consideration to be received by such
holder, if any, cash in lieu of any fractional Parent Class A Shares to which
such holder is entitled pursuant to Section 2.02(e), and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c), may
be issued to a transferee if the Certificate representing such Company Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing Parent Class A Shares, cash in respect of the Cash Consideration to
be received by such holder, if any, cash in lieu of any fractional Parent Class
A Shares to which such holder is entitled pursuant to Section 2.02(e), and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.02(c).
(c) Distributions with Respect to Unexchanged Parent Class A
Shares. No dividends or other distributions declared or made after the Effective
Time with respect to Parent Class A Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the Parent Class A Shares represented thereby, and no cash payment in
lieu of any fractional shares shall be paid to any such holder pursuant to
Section 2.02(e), until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, tax or other applicable Laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole Parent Class A Shares issued in exchange
therefor, without interest, (i) promptly, the amount of any cash payable with
respect to a fractional Parent Class A Shares to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or other distributions
with a record date after the Effective Time and theretofore paid with respect to
such whole Parent Class A Shares and (ii) at the appropriate payment date, the
amount of dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole Parent Class A Shares.
(d) No Further Rights in Company Common Stock. All Merger
Consideration issued upon conversion of the Company Shares in accordance with
the terms hereof (together with cash paid pursuant to Section 2.02(c) or Section
2.02(e)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Company Shares.
(e) No Fractional Shares. No certificate or scrip representing
fractional Parent Class A Shares shall be issued upon the surrender for exchange
of Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a shareholder of Parent. Each holder
of a fractional share interest shall be paid an amount in cash (without interest
and subject to the amount of any withholding taxes as contemplated in Section
2.02(h)) equal to the product obtained by multiplying (i) such fractional share
interest to which such holder (after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by (ii) the
Average Parent Stock Price. As promptly as practicable after the determination
of the amount of cash, if any, to be paid to holders of fractional share
interests, the Exchange Agent shall so notify Parent, and Parent shall deposit
such amount with the Exchange Agent and shall cause the Exchange Agent to
forward payments to such holders of fractional share interests subject to and in
accordance with the terms of Sections 2.02(b) and (c). If this procedure has any
adverse impact on whether the Merger will qualify under Treasury Regulation
Section 1.368-1(e) then the parties will amend the provision set forth in this
Section
8
2.02(e) to provide for a distribution of fractional shares to the holders of
Company Shares and the subsequent sale of such fractional Parent Class A Shares.
(f) Termination of Exchange Fund and Additional Exchange Fund.
Any portion of the Exchange Fund that remains undistributed to the holders of
Company Shares for one year after the Effective Time shall be delivered to
Parent, upon demand, and any holders of Company Shares who have not theretofore
complied with this Article II shall thereafter look only to Parent for the
Parent Class A Shares, any Cash Consideration, any cash in lieu of fractional
Parent Class A Shares to which they are entitled pursuant to Section 2.02(e) and
any dividends or other distributions with respect to Parent Class A Shares to
which they are entitled pursuant to Section 2.02(c). Any portion of the Exchange
Fund remaining unclaimed by holders of Company Shares as of a date which is
immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity shall, to the extent permitted by
applicable Law, become the property of Parent free and clear of any claims or
interest of any person previously entitled thereto.
(g) No Liability. None of the Exchange Agent, Parent or the
Surviving Corporation shall be liable to any holder of Company Shares for any
such Company Shares (or dividends or distributions with respect thereto), or
cash delivered to a public official pursuant to any abandoned property, escheat
or similar Law.
(h) Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Shares or Company
Stock Options such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign tax Law. To the extent that amounts are so withheld by the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Company Shares or Company Stock Options in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent, as the case may
be.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Parent Class A Shares to which the holder is entitled pursuant
to Section 2.01, any cash to which the holder is entitled pursuant to Section
2.01, any cash in lieu of fractional Parent Class A Shares to which the holders
thereof are entitled pursuant to Section 2.02(e), and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.02(c).
9
SECTION 2.03 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of Company Shares thereafter on the records of
the Company. From and after the Effective Time, the holders of Certificates
shall cease to have any rights with respect to such Company Shares, except as
provided in this Agreement or by Law. On or after the Effective Time, subject,
with respect to the relevant holders of Company Shares, their delivery of the
Certificates required by Section 6.08 of this Agreement, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
Parent Class A Shares, any cash in respect of Cash Consideration elected, if
any, any cash in lieu of fractional Parent Class A Shares to which the holders
thereof are entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.02(c).
SECTION 2.04 Company Stock Options; Company SARs. (a) Each
holder of an option (collectively, the "Company Stock Options") outstanding,
whether or not exercisable and whether or not vested, at the Effective Time
under the Company's 2002 Stock Option Plan, dated as of June 28, 2002, as such
plan may have been amended, supplemented or modified prior to the date hereof
(the "Company Stock Option Plan"), will, in settlement of such Company Stock
Option in effect immediately prior to the Effective Time and in exchange for the
surrender to the Company of the certificate or other document evidencing such
Company Stock Options, receive from the Company for each Company Share subject
to such Company Stock Option, an amount (subject to any applicable withholding
tax) in cash equal to the difference between $42.00 and the exercise price per
share of Company Common Stock, to the extent such difference is a positive
number. At the Effective Time, each outstanding and unexercised Company Stock
Option will be canceled whether or not the holder thereof is entitled to Company
Option Consideration under this Section 2.04(a) and the holders of Company Stock
Options will have no further rights in respect of any Company Stock Options. For
the avoidance of doubt, in no event will payments under this Section 2.04(a) be
taken into account in determining the aggregate amount of Cash Consideration
included in the Merger Consideration.
(b) On or after the date of this Agreement and prior to the
Effective Time, each of Parent and the Company shall take all necessary action
such that, with respect to each member of the Company Board and each employee of
the Company that is subject to Section 16 of the Exchange Act, the acquisition
by such person of Parent Class A Shares in the Merger and the disposition by any
such person of Parent Class A Shares or Company Stock Options pursuant to the
transactions contemplated by this Agreement shall be exempt from Section 16(b)
of the Exchange Act pursuant to and to the extent permitted by Rule 16b-3
promulgated thereunder.
(c) At the Effective Time, each stock appreciation right
providing benefits measured by the value of a number of shares of Company Common
Stock granted under the Managers Incentive Plan of the Company identified in
Section 2.04 of the Company Disclosure Schedule (each, a "Company SAR"), whether
vested or unvested, which is outstanding or unsatisfied immediately prior to the
Effective Time, will cease to represent a right or award measured by the value
of a number of shares of Company Common Stock and will be converted, at the
Effective Time, into a right or award measured by the value of a number of
shares of Parent Class A Shares (an "Assumed Company SAR"), on the same terms
and conditions (including expiration date, vesting and payment provisions) as
were applicable under the Company SAR (but taking into account any changes
thereto, including the adjustments thereof,
10
provided for in the Managers Incentive Plan of the Company or in any award
agreement thereunder by reason of this Agreement or the transactions
contemplated hereby). The number of Parent Class A Shares by which each such
Assumed Company SAR is measured will be equal to the number of shares of Company
Common Stock by which the Company SAR is measured, multiplied by the Exchange
Ratio (rounded to the nearest whole Parent Class A Share), and the exercise
price by which each such Assumed Company SAR is measured will be equal to the
exercise price by which the Company SAR is measured, divided by the Exchange
Ratio; provided, that the maximum value of each such Assumed Company SAR shall
not exceed the maximum value of the Company SAR. The parties will take all
actions required to implement this Section 2.02(c), including any amendments to
the Managers Incentive Plan of the Company to ensure that the Company SARs are
converted as provided in this Section 2.02(c).
SECTION 2.05 Appraisal Rights/Dissenting Shares. (a)
Notwithstanding any provision of this Agreement to the contrary and to the
extent available under the DGCL, Company Shares that are outstanding immediately
prior to the Effective Time and that are held by stockholders who shall have
neither voted in favor of the Merger nor consented thereto in writing and who
shall have demanded properly in writing appraisal for such Company Shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into, or represent the right to receive, the Merger
Consideration. Such stockholders shall be entitled to receive payment of the
appraised value of Dissenting Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Dissenting Shares under such
Section 262 shall thereupon be deemed to have been converted into, and to have
become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration, without any interest thereon, upon surrender, in the
manner provided in Section 2.02, of the certificate or certificates that
formerly evidenced such Company Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal 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 direct 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 demands
for appraisal or offer to settle or settle any such demands.
SECTION 2.06 Affiliates. Notwithstanding anything to the
contrary herein, no Parent Class A Shares shall be delivered to a person who is
an "affiliate" of the Company by the Company in accordance with Section 6.09
hereof for purposes of Rule 145 under the Securities Act until such person has
executed and delivered to Parent an executed copy of the affiliate letter
contemplated in Section 6.09 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company's disclosure schedule (the "Company Disclosure
Schedule") delivered by the Company to Parent and Merger Sub prior to the
execution of this Agreement (which schedule sets forth, with respect to each
item disclosed therein, the specific section of this
11
Agreement to which such item relates), contains items the disclosure of which is
necessary or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in this Article III, or to one or more
of the Company's covenants contained in Article V. Except as disclosed in the
Company Disclosure Schedule, or a Company SEC Report filed prior to the date
hereof, as an inducement to Parent and Merger Sub to enter into this Agreement,
the Company hereby represents and warrants to Parent and Merger Sub that:
SECTION 3.01 Organization and Qualification; Subsidiaries. (a)
Each of the Company and each Material Company Subsidiary is a corporation or
legal entity duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or organization and has the
requisite corporate, partnership or similar power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power, authority
and governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect. Each of the Company and each Material Company
Subsidiary is duly qualified or licensed to do business in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(b) A true and complete list of all the Material Company
Subsidiaries, together with the jurisdiction of incorporation or organization of
each Material Company Subsidiary and which identifies the percentage (direct or
indirect) of equity ownership of each Material Company Subsidiary owned by the
Company and each other subsidiary, is set forth in Section 3.01(b) of the
Company Disclosure Schedule. The Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
(c) Each subsidiary of the Company (each, a "Company
Subsidiary") that constitutes a significant subsidiary of the Company within the
meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange Commission
(the "SEC") to the Company's business as a whole is so identified in Section
3.01(c) of the Company Disclosure Schedule and is referred to herein as a
"Material Company Subsidiary".
12
SECTION 3.02 Certificate of Incorporation and By-laws. The
Company has heretofore made available to Parent a complete and correct copy of
the Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Material Company
Subsidiary. The Certificates of Incorporation, By-laws or equivalent
organizational documents of the Company and each Material Company Subsidiary are
in full force and effect. Neither the Company nor any Material Company
Subsidiary is in material violation of any of the provisions of its Certificate
of Incorporation, By-laws or equivalent organizational documents.
SECTION 3.03 Capitalization. (a) The authorized capital stock
of the Company consists of (i) 350,000,000 shares of Company Common Stock, (ii)
7,000,000 shares of Class B common stock, par value $0.01 per share (the
"Company Class B Common Stock") and (iii) 10,000,000 shares of preferred stock,
par value $0.01 per share ("Company Preferred Stock"). As of October 18, 2004,
(i) 100,027,950 shares of Company Common Stock were issued and outstanding, all
of which were validly issued, fully paid and nonassessable, (ii) no shares of
Company Class B Common Stock were issued and outstanding, (iii) no shares of
Company Common Stock were held in the treasury of the Company, (iv) no shares of
Company Common Stock were held by the Company Subsidiaries, (v) 4,275,510 shares
of Company Common Stock were reserved for future issuance pursuant to
outstanding Company Stock Options, (vi) 660,200 shares of Company Common Stock
were reserved for future issuance pursuant to the Company Stock Option Plan and
the Company Officer Stock and Cash Bonus Plan, and (vii) no shares of Company
Preferred Stock were issued and outstanding. From October 18, 2004, to the date
of this Agreement, the Company has not issued any shares of Company Common Stock
other than pursuant to the exercise of Company Stock Options. Except as set
forth in this Section 3.03, or the Company Shareholder Support Agreement, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any Material Company Subsidiary or obligating the Company or any
Company Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any Material Company Subsidiary. Section
3.03(a) of the Company Disclosure Schedule sets forth the following information
with respect to each Company Stock Option outstanding as of the date of this
Agreement: (i) the name of the Company Stock Option recipient; (ii) the number
of shares of Company Common Stock subject to such Company Stock Option; (iii)
the exercise or purchase price of such Company Stock Option; (iv) the date on
which such Company Stock Option was granted; (v) the applicable vesting
schedule; (vi) the date on which such Company Stock Option expires; and (vii)
whether the exercisability of such Company Stock Option will be accelerated in
any way by the transactions contemplated by this Agreement, and indicates the
extent of acceleration. All shares of Company Common Stock subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Common Stock or any capital
stock of any Company Subsidiary or to provide a material amount of funds to, or
make any material investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person. There are no
commitments or agreements of any character to which the Company is bound
obligating the Company to accelerate the vesting of any Company Stock Award as a
result of the Merger. All outstanding shares of Company Common Stock, all
13
outstanding Company Stock Awards, and all outstanding shares of capital stock of
each Material Company Subsidiary have been issued and granted in compliance with
(i) all applicable securities laws and other applicable Laws and (ii) all
requirements set forth in applicable contracts.
(b) Each outstanding share of capital stock of each Material
Company Subsidiary is duly authorized, validly issued, fully paid and
nonassessable, and each such share is owned by the Company or another Company
Subsidiary free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
any Company Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever other than Permitted Liens.
SECTION 3.04 Authority Relative to This Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby (the "Transactions"). The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the holders of a majority of the then-outstanding shares of Company
Common Stock, if and to the extent required by applicable Law, 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 the due authorization, execution and delivery by Parent and Merger Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. The Company Board has approved this
Agreement and the Transactions and such approvals are sufficient so that the
restrictions on business combinations set forth in Section 203 of the DGCL shall
not apply to the Merger or any of the Transactions. To the knowledge of the
Company, no other state takeover statute is applicable to the Merger or the
other transactions contemplated by this Agreement.
SECTION 3.05 No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws or any equivalent
organizational documents of the Company or any Material Company Subsidiary, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 3.05(b) have been obtained and all filings and obligations
described in Section 3.05(b) have been made, conflict with or violate any United
States or non-United States statute, law, ordinance, regulation, rule, code,
executive order, injunction, judgment, decree or other order ("Law") applicable
to the Company or any Company Subsidiary or by which any property or asset of
the Company or any Company Subsidiary is bound or affected or (iii) result in
any breach of or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Material Company Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts,
14
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or local or non-United
States government, governmental, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial or arbitral
body (a "Governmental Authority"), except (i) for applicable requirements, if
any, of the Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws")
and state takeover laws, the pre-merger notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Foreign Merger Filings and the filing and recordation of appropriate
merger documents as required by the DGCL and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.06 Permits; Compliance. Each of the Company and each
Material Company Subsidiary is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary for
each of the Company or the Material Company Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Company Permits"), except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would not, individually or in the
aggregate, have a Company Material Adverse Effect. As of the date of this
Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the knowledge of the Company, threatened, except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would not, individually or in the aggregate, have a Company Material
Adverse Effect. Neither the Company nor any Company Subsidiary is in conflict
with, or in default, breach or violation of, (a) any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected or (b) any Company
Permit, except for any such conflicts, defaults, breaches or violations that
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
SECTION 3.07 SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since December 10, 2003. Each of (i) the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2003, (ii) the Company's
Quarterly Reports on Form 10-Q for the periods ended March 31, 2004 and June 30,
2004, (iii) all definitive proxy statements relating to the Company's meetings
of stockholders (whether annual or special) held since December 10, 2003, (iv)
its prospectus dated September 3, 2004 filed pursuant to Rule 424(b)(3) of the
Securities Act and (v) all other forms, reports and other registration
statements filed by the Company with the SEC since December 10, 2003 filed prior
to the date hereof, (the forms, reports and other documents referred to in
clauses (i), (ii), (iii), (iv) and (v) above being, collectively, the "Company
SEC Reports"), (A) were prepared in accordance with either the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Xxxxxxxx-Xxxxx
Act of 2002, as the case may be, and the rules and regulations promulgated
thereunder and (B) did not, at the time they were filed, or, if amended or
15
supplemented, as of the date of such amendment or supplement, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, except to
the extent that information contained in any Company SEC Report has been revised
or superseded by a Company SEC Report filed as of a later date (but before the
date of this Agreement) and is publicly available. No Company Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements of the
Company together with the Company Subsidiaries (including, in each case, any
notes thereto) contained in the Company SEC Reports was prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments in amounts that are
immaterial in nature and amount and are consistent with past experience).
(c) Except as and to the extent set forth on any of (i) the
audited consolidated balance sheet of the Company as of December 31, 2003 or
(ii) the unaudited consolidated balance sheet of the Company for the period
ended June 30, 2004, each including the notes thereto (the "Company 2003-4
Balance Sheets"), neither the Company nor any Company Subsidiary has any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) that is required by GAAP to be recorded as a liability on a balance
sheet of the Company or disclosed in footnotes thereto, except for liabilities
and obligations, incurred in the ordinary course of business consistent with
past practice since June 30, 2004, which would not have a Company Material
Adverse Effect.
(d) The Company has timely filed all certifications and
statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002) with
respect to any Company SEC Report. The Company maintains disclosure controls and
procedures as required by Rule 13a-15 or Rule 15d-15 under the Exchange Act, and
such controls and procedures are effective to ensure that all material
information concerning the Company and the Company Subsidiaries is made known on
a timely basis to the individuals responsible for the preparation of the
Company's SEC filings. The Company has established and maintained a reporting
system permitting employees to anonymously report alleged accounting
irregularities and other matters as required by Law. As of the date hereof, the
Company is not conducting or required to conduct any investigation as a result
of any such report that, to the Company's knowledge, is reasonably likely to
have a material effect on the Company's past or future reported results of
operation or financial position. No attorney representing the Company or any
Company Subsidiary has reported evidence of a material violation of securities
laws, breach of fiduciary duty or similar violation by the Company or any of its
executive officers or directors to the Company Board or any committee thereof or
to any director or executive officer of the Company.
16
SECTION 3.08 Absence of Certain Changes or Events. Since
December 10, 2003, except as expressly contemplated by this Agreement, (a) the
Company and the Material Company Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice in all
material respects, (b) there has not been any Company Material Adverse Effect
and (c) none of the Company or any Material Company Subsidiary has taken any
action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 5.01(b)(ii), (b)(iii),
(b)(iv), (b)(v)(A), (b)(viii) or (b)(xii).
SECTION 3.09 Absence of Litigation. There is no litigation,
suit, claim, action, proceeding or investigation (an "Action") pending or, to
the knowledge of the Company, threatened against the Company or any Company
Subsidiary, or any material property or asset of the Company or any Company
Subsidiary, before any Governmental Authority that (a) individually or in the
aggregate, has had or would have a Company Material Adverse Effect or (b) seeks
to materially delay or prevent the consummation of any of the Transactions.
Neither the Company nor any Company Subsidiary nor any material property or
asset of the Company or any Material Company Subsidiary is subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority that
would, individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10(a) of
the Company Disclosure Schedule lists (i) all material employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance benefit plans, programs or
arrangements, and all employment, termination, severance or other similar
contracts or agreements, or other material benefits plans, whether legally
enforceable or not, to which the Company or any Company Subsidiary is a party,
with respect to which the Company or any Company Subsidiary has any obligation
or which are maintained, contributed to or sponsored by the Company or any
Company Subsidiary for the benefit of any current or former employee, officer or
director of the Company or any Company Subsidiary, (ii) each employee benefit
plan for which the Company or any Company Subsidiary would incur liability under
Section 4069 of ERISA in the event such plan has been or were to be terminated
and (iii) any contracts, arrangements or understandings between the Company or
any Company Subsidiary and any employee of the Company or any Company Subsidiary
including, without limitation, any contracts, arrangements or understandings
relating in any way to a sale of the Company or any Subsidiary (each as in
effect on the date of this Agreement, collectively, the "Plans"). Each Plan is
in writing and the Company has furnished or made available to Parent a true and
complete copy of each Plan and has delivered or made available to Parent a true
and complete copy of each material document, if any, prepared in connection with
each such Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. Neither the Company nor any Company
Subsidiary has any
17
express or implied commitment, whether legally enforceable or not, (i) to
create, incur liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into any contract or
agreement to provide compensation or benefits to any individual or (iii) to
modify, change or terminate any Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) Section 3.10(b) of the Company Disclosure Schedule lists
(i) each multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3)
of ERISA) with respect to which the Company or any Company Subsidiary has, or
has had within the past five years, any obligation to contribute, or for which
the Company or any Company Subsidiary could incur liability under Section
4212(c) of ERISA (a "Multiemployer Plan") and (ii) each single employer pension
plan (within the meaning of Section 4001(a)(15) of ERISA) for which the Company
or any Company Subsidiary could incur liability under Section 4063 or 4064 of
ERISA (a "Multiple Employer Plan"). The Company has furnished or made available
to Parent a true and complete copy of each Multiemployer Plan, and each summary
plan description and summary of material modifications and the most recently
prepared actuarial report and statement of withdrawal liability in connection
with each Multiemployer Plan provided to the Company.
(c) None of the Plans (i) (A) provides for the payment of
separation, severance, termination or similar-type benefits to any person, (B)
obligates the Company or any Company Subsidiary to pay separation, severance,
termination or similar-type benefits solely or partially as a result of any
transactions contemplated by this Agreement or (C) obligates the Company or any
Company Subsidiary to make any payment or provide any benefit as a result of a
"change in ownership or control", within the meaning of such term under Section
280G of the Code or (ii) provides for or promises retiree medical, disability or
life insurance benefits to any current or former employee, officer or director
of the Company or any Subsidiary.
(d) Each Plan and, to the knowledge of the Company, each
Multiemployer Plan is now and always has been operated in all material respects
in accordance with its terms and the requirements of all applicable Laws
including, without limitation, ERISA and the Code. The Company and the Company
Subsidiaries have performed all obligations required to be performed by them
under, are not in any respect in default under or in violation of, and there is
no knowledge of the Company of any default or violation by any party to, any
Plan or Multiemployer Plan. No Action is pending with respect to any Plan or, to
the knowledge of the Company, threatened with respect to any Plan or, to the
knowledge of the Company, pending or threatened with respect to any
Multiemployer Plan (other than claims for benefits in the ordinary course) and
no fact or event exists that could give rise to any Action with respect to any
Plan or, to the knowledge of the Company, any Multiemployer Plan.
(e) Each Plan that is intended to be qualified under Section
401(a) of the Code has timely received a favorable determination letter from the
IRS, covering all of the provisions applicable to the Plan for which
determination letters are currently available, that the Plan is so qualified and
each trust established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter or letters
from the IRS to adversely affect the qualified status of any such Plan or the
exempt status of any such trust; provided, however, that there is no knowledge
of the
18
Company whether or not any Multiemployer Plan has timely received a favorable
determination letter from the IRS under Section 401(a) of the Code (with respect
to such Multiemployer Plan) or Section 501(a) of the Code (with respect to any
trust established in connection with such Multiemployer Plan), or whether or not
any fact or event has occurred to adversely affect the qualified or exempt
status of any such Multiemployer Plan or related trust.
(f) There has not been any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan and, to the knowledge of the Company, any Multiemployer Plan. Neither the
Company nor any Company Subsidiary has incurred any liability under, arising out
of or by operation of Title IV of ERISA (other than liability for premiums to
the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could give rise to any such liability.
(g) All contributions, premiums or payments required to be
made with respect to any Plan have been made on or before their due dates. All
such contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority and no
fact or event exists which could give rise to any such challenge or
disallowance.
(h) Neither the Company nor any Company Subsidiary has made,
or has any obligation or contingent obligation to make, any "excess parachute
payment", within the meaning of such term under Section 280G of the Code.
SECTION 3.11 Labor and Employment Matters. (a) (i) There are
no controversies relating to or arising out of a collective bargaining
relationship between the Company or any Company Subsidiary and any union pending
or, to the knowledge of the Company, threatened between the Company or any
Company Subsidiary and any of their respective employees, which controversies
would, individually or in the aggregate, have a Company Material Adverse Effect,
(ii) neither the Company nor any Company Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Company Subsidiary, (iii) to the knowledge of the
Company, as of the date hereof there are not any organizational campaigns,
petitions or other activities or proceedings of any labor union to organize any
such employees that would, individually or in the aggregate, have a Company
Material Adverse Effect, (iv) neither the Company nor any Company Subsidiary has
breached or otherwise failed to comply with any provision of any collective
bargaining or other labor union contract applicable to persons employed by the
Company or any Company Subsidiary, and there are no material grievances
outstanding against the Company or any Company Subsidiary under any such
agreement or contract that would, individually or in the aggregate, have a
Company Material Adverse Effect, (v) there are no unfair labor practice
complaints pending against the Company or any Company Subsidiary before the
National Labor Relations Board or any other Governmental Authority or any
current union representation questions involving employees of the Company or any
Company Subsidiary that would, individually or in the aggregate, have a Company
Material Adverse Effect and (vi) as of the date hereof, there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of
19
the Company, threat thereof by any union or significant group of union workers,
by or with respect to any employees of the Company or any Company Subsidiary.
The consent of each labor union which is a party to the collective bargaining
agreements listed in Section 3.11(a) of the Company Disclosure Schedule has been
obtained or is not required to consummate the Transactions.
(b) The Company and each Company Subsidiary is in compliance
with all applicable laws relating to the employment of labor, including those
related to wages, hours, collective bargaining and the payment and withholding
of taxes and other sums as required by the appropriate Governmental Authority
and have withheld and paid to the appropriate Governmental Authority or are
holding for payment not yet due to such Governmental Authority all amounts
required to be withheld from employees of the Company or any Material Company
Subsidiary and are not liable for any arrears of wages, taxes, penalties or
other sums for failure to comply with any of the foregoing except for such
failures that would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company and each Material Company Subsidiary has
paid in full to all employees or adequately accrued for in accordance with GAAP
consistently applied all wages, salaries, commissions, bonuses, benefits and
other compensation due to or on behalf of such employees and there is no claim
with respect to payment of wages, salary or overtime pay that has been asserted
or is now pending or threatened before any Governmental Authority with respect
to any persons currently or formerly employed by the Company or any Material
Company Subsidiary, that would, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary is a
party to, or otherwise bound by, any consent decree with any Governmental
Authority relating to employees or employment practices. There is no charge or
proceeding with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or threatened with respect to
the Company or any Company Subsidiary, that would, individually or in the
aggregate, have a Company Material Adverse Effect. There is no charge of
discrimination in employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or threatened before the
United States Equal Employment Opportunity Commission, or any other Governmental
Authority in any jurisdiction in which the Company or any Company Subsidiary has
employed or employ any person that would, individually or in the aggregate, have
a Company Material Adverse Effect.
SECTION 3.12 Real Property; Title to Assets. (a) Section
3.12(a) of the Company Disclosure Schedule lists each parcel of real property
that is the location of a steel plant of, or that is otherwise material to, the
Company and the Material Company Subsidiaries taken as a whole and is owned by
the Company or any Material Company Subsidiary. Each such parcel of real
property (i) is owned free and clear of all mortgages, pledges, liens, security
interests, conditional and installment sale agreements, encumbrances, charges or
other claims of third parties of any kind, including, without limitation, any
easement, right of way or other encumbrance to title, or any option, right of
first refusal, or right of first offer (collectively, "Liens"), other than (A)
Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Material Company Subsidiary consistent with
past practice and (D) all matters of record, Liens and other imperfections of
title and encumbrances that would not, individually or in the
20
aggregate, have a Company Material Adverse Effect (collectively, "Permitted
Liens") and (ii) is neither subject to any governmental decree or order to be
sold nor is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor, to the
knowledge of the Company, has any such condemnation, expropriation or taking
been proposed.
(b) Section 3.12(b) of the Company Disclosure Schedule lists
each parcel of real property that is the location of a steel plant of, or that
is otherwise material to, the Company and the Material Company Subsidiaries and
is leased or subleased by the Company or any Material Company Subsidiary, with
the name of the lessor and the date of the lease, sublease, assignment of the
lease or leasing commissions payable by the Company or any Company Subsidiary in
connection therewith and each amendment to any of the foregoing (collectively,
the "Lease Documents"). True, correct and complete copies of all Lease Documents
have been made available to Parent by the Company. All such current leases and
subleases are in full force and effect, are valid and effective in accordance
with their respective terms, and there is not, under any of such leases, any
existing material default or event of default (or event which, with notice or
lapse of time, or both, would constitute a default) by the Company or any
Material Company Subsidiary or, to the Company's knowledge, by the other party
to such lease or sublease, or person in the chain of title to such leased
premises.
SECTION 3.13 Intellectual Property. Except as would not,
individually or in the aggregate, have a Company Material Adverse Effect, (a) to
the knowledge of the Company, the conduct of the business of the Company and the
Company Subsidiaries as currently conducted does not infringe upon or
misappropriate the Intellectual Property rights of any third party, and no claim
has been asserted in writing to the Company that the conduct of the business of
the Company and the Company Subsidiaries as currently conducted infringes upon
or may infringe upon or misappropriates the Intellectual Property Rights of any
third party, (b) with respect to each item of Intellectual Property owned by the
Company or a Company Subsidiary and material to the business, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole ("Company Owned Intellectual Property"), the Company or a
Company Subsidiary is the owner of the entire right, title and interest in and
to such Company Owned Intellectual Property and is entitled to use such Company
Owned Intellectual Property in the continued operation of its respective
business, (c) with respect to each item of Intellectual Property licensed to the
Company or a Company Subsidiary that is material to the business of the Company
and the Company Subsidiaries as currently conducted ("Company Licensed
Intellectual Property"), the Company or a Company Subsidiary has the right to
use such Company Licensed Intellectual Property in the continued operation of
its respective business in accordance with the terms of the license agreement
governing such Company Licensed Intellectual Property, (d) to the knowledge of
the Company, the Company Owned Intellectual Property is valid and enforceable,
and has not been adjudged invalid or unenforceable in whole or in part by any
Governmental Authority, (e) to the knowledge of the Company, no person is
engaging in any activity that infringes upon the Company Owned Intellectual
Property, (f) to the knowledge of the Company, each license of the Company
Licensed Intellectual Property is valid and enforceable, is binding on all
parties to such license, and is in full force and effect, and (g) to the
knowledge of the Company, no party to any license of the Company Licensed
Intellectual Property is in breach thereof or default thereunder.
21
SECTION 3.14 Taxes. (a) The Company and its Subsidiaries (i)
have timely filed or caused to be timely filed (taking into account any
applicable extensions) all material Tax Returns required to be filed as of the
date hereof, and all such filed Tax Returns are true, correct and complete in
all material respects, and (ii) have paid all material amounts of Taxes required
to be paid by the Company and the Company Subsidiaries (whether or not shown on
such Tax Returns). The Company and the Company Subsidiaries have not waived any
statute of limitations with respect to any material Tax or agreed to an
extension of time with respect to a material Tax assessment or deficiency. All
material Taxes required to have been withheld by or with respect to the Company
and the Company Subsidiaries have been timely withheld and remitted to the
applicable taxing authority. Neither the Company nor any of the Company
Subsidiaries is subject to any agreement for the sharing of Taxes or is
obligated to indemnify any other person for any material amount of Taxes
pursuant to any agreement, which agreement will remain in effect after the
Effective Time.
(b) Neither the Company nor any of the Company Subsidiaries
has been either a "distributing corporation" or a "controlled corporation" in
connection with a distribution of stock intended to qualify under Section 355 of
the Code. Neither the Company nor any of the Company Subsidiaries was, at any
time during the applicable period set forth in Section 897(c)(1) of the Code, a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code. No amount will be includible in the income of the Company
or any Company Subsidiary, for any taxable period that includes the Effective
Time, under "Subpart F" of the Code, and neither the Company nor any Company
Subsidiary holds any interests in a "passive foreign investment company" or
"foreign personal holding company". There are no Tax liens on any assets of the
Company or any of the Company Subsidiaries (other than any liens for Taxes not
yet due and payable for which adequate reserves have been made in accordance
with GAAP).
(c) To the knowledge of the Company, neither the Company nor
any of its affiliates has taken or agreed to take any action or knows of any
fact that is reasonably likely to prevent (i) the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii)
compliance by the parties with the "active trade or business test" set forth in
Treasury Regulation Section 1.367(a)-3(c)(3).
SECTION 3.15 Environmental Matters. (a) (i) Except as would
not have a Company Material Adverse Effect, none of the Company nor any of the
Company Subsidiaries has violated or is in violation of, or has any liability
under, any Environmental Law, and, to the knowledge of the Company, there is no
requirement proposed for adoption or implementation under any Environmental Law
that is reasonably expected to have a Company Material Adverse Effect, (ii)
there are no material Environmental Claims pending or threatened against the
Company or any Company Subsidiary, or with respect to any property currently or
formerly owned, leased, occupied or operated by the Company or any Company
Subsidiary or any of their predecessors for which the Company or any Company
Subsidiary has any or may be deemed to have any material liability, (iii)
neither the Company nor any Company Subsidiary is conducting or funding, or has
undertaken or completed, any material Remedial Action either voluntarily or
pursuant to the requirements of Environmental Law or any Governmental Authority,
(iv) except as would not have a Company Material Adverse Effect, neither the
Company nor any Company Subsidiary nor any of their predecessors for which the
Company or any Company Subsidiary has
22
any or may be deemed to have any liability, has Released any Hazardous
Substances into the Environment in violation of any Environmental Law, (v) none
of the property currently or formerly owned, leased, occupied or operated by the
Company or any Company Subsidiary or any of their predecessors for which the
Company or any Company Subsidiary has any or may be deemed to have any material
liability, is listed or proposed for listing on the National Priorities List
under the federal Comprehensive Environmental Response, Compensation and
Liability Act or any analogous foreign, state or local list, (vi) except as
would not have a Company Material Adverse Effect, there has been no Release of
Hazardous Substances at the properties currently or formerly owned, leased,
occupied or operated by the Company or any Company Subsidiary or any of their
predecessors for which the Company or any Company Subsidiary has any or may be
deemed to have any liability (including, without limitation, soils and surface
and ground waters), and (vii) except as would not have a Company Material
Adverse Effect, each of the Company and each Company Subsidiary has all
Environmental Permits and is in material compliance therewith; and
(b) neither the execution of this Agreement nor the
consummation of the transactions contemplated herein will require any
investigation, remediation or other action with respect to Hazardous Substances,
or any notice to or consent of Governmental Authorities or third parties,
pursuant to any applicable Environmental Law or Environmental Permit.
SECTION 3.16 Inventories. To the knowledge of the Company,
subject to amounts reserved therefor on the 2003-4 Balance Sheets, the values at
which all Inventories are carried on the 2003-4 Balance Sheets reflect in all
material respects the historical inventory valuation policy of the Company and
the Company Subsidiaries of stating such Inventories at the lower of cost
(determined by the last-in, first-out method for approximately 20% of the
inventories at December 31, 2003 and the balance determined by the average cost
or first-in, first-out methods) or market value.
SECTION 3.17 Material Contracts. (a) Subsections (i) through
(vii) of Section 3.17(a) of the Company Disclosure Schedule list the following
types of contracts and agreements to which the Company or any Company Subsidiary
is a party (such contracts and agreements as are required to be set forth in
Section 3.17(a) of the Company Disclosure Schedule being the "Material
Contracts") as of the date hereof:
(i) each "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) with respect to the
Company and the Company Subsidiaries;
(ii) each contract and agreement (excluding supply agreements
entered into in the ordinary course of business with a
remaining term of less than one year) which involved during
the past 12 months, or is likely to involve over the next 12
months, consideration of more than $25 million, in the
aggregate;
(iii) all broker, distributor, dealer, manufacturer's
representative, contracts and agreements which are not
terminable by the Company without penalty upon notice of 90
days or less to which the Company or any Company Subsidiary is
a party;
23
(iv) all material management contracts (excluding contracts for
employment) and material contracts with other consultants,
including any contracts involving the payment of royalties or
other amounts calculated based upon the revenues or income of
the Company or any Company Subsidiary or income or revenues
related to any product of the Company or any Company
Subsidiary to which the Company or any Subsidiary is a party;
(v) except to the extent copies of which are filed as exhibits to
the Company SEC Reports, all contracts and agreements
evidencing indebtedness for borrowed money of more than $5
million;
(vi) all contracts and agreements involving amounts in excess of
$25 million over the remaining term with any Governmental
Authority to which the Company or any Company Subsidiary is a
party; or
(vii) all contracts and agreements that limit, or purport to limit,
the ability of the Company or any Company Subsidiary to
compete in any line of business or with any person or entity
or in any geographic area or during any period of time.
(b) Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, (i) each Material Contract is a legal,
valid and binding agreement, and neither the Company nor any Company Subsidiary
is in default thereunder by its terms nor, to the Company's knowledge, has any
such Material Contract been cancelled by the other party thereto, and (ii) to
the Company's knowledge, no other party is in breach or violation of, or default
under, any Material Contract. The Company has furnished or made available to
Parent true and complete copies of all Material Contracts, including any
amendments thereto.
SECTION 3.18 Insurance. Section 3.18 of the Company Disclosure
Schedule sets forth a complete and accurate list of all material insurance
policies providing coverage in favor of the Company and the Material Company
Subsidiaries, specifying the insurer, amount of coverage and type of insurance
under each policy. Each such policy is in full force and effect and all premiums
are currently paid or accruals provided for and no notice of cancellation or
termination has been received with respect to any such policy.
SECTION 3.19 Board Approval; Vote Required. (a) The Company
Board, by resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way as of the date hereof, has duly (i) determined that this Agreement and the
Merger are consistent with and in furtherance of the long term business and
strategy of the Company and are fair to and in the best interests of the Company
and its stockholders, (ii) approved this Agreement and the Merger and declared
their advisability, and (iii) recommended that the stockholders of the Company
adopt this Agreement and directed that this Agreement be submitted for
consideration by the Company's stockholders at the Company Stockholders'
Meeting.
(b) The only vote of the holders of any class or series of
capital stock of the Company necessary to approve this Agreement, the Merger and
the transactions contemplated
24
hereby is the affirmative vote of the holders of a majority of the outstanding
Shares in favor of the adoption of this Agreement.
SECTION 3.20 Certain Business Practices. None of the Company,
any Company Subsidiary or, to the Company's knowledge, any directors, officers,
agents or employees of the Company or any Company Subsidiary, in each case
acting on behalf of the Company or any Company Subsidiary, has (a) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity, (b) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended (the "FCPA"), or (c) made any payment
in the nature of criminal bribery.
SECTION 3.21 Interested Party Transactions. To the knowledge
of the Company, since December 10, 2003, no current director, executive officer
or other affiliate of the Company or any Company Subsidiary has (or had at the
time of such transaction), directly or indirectly, (a) a material economic
interest in any person that has furnished or sold, or furnishes or sells,
services or products that the Company or any Company Subsidiary furnishes or
sells, or proposes to furnish or sell, (b) a material economic interest in any
person that purchases from or sells or furnishes to, the Company or any Company
Subsidiary, any goods or services having a value, in the aggregate, of more than
the greater of $1 million or 2% of such Person's revenue for the most recently
completed fiscal year in any 12 month period, (c) a material beneficial interest
in any Material Company Contract or (d) any material contractual or other
arrangement with the Company or any Company Subsidiary other than any agreement
governing the terms and conditions of their employment or service as a director
or executive officer; provided, however, that ownership of no more than one
percent (1%) of the outstanding voting stock of a publicly traded corporation
shall not be deemed an "economic interest in any person" for purposes of this
Section 3.21. The Company and the Company Subsidiaries have not, since December
10, 2003, (i) extended or maintained credit, arranged for the extension of
credit or renewed an extension of credit in the form of a personal loan to or
for any director or executive officer (or equivalent thereof) of the Company or
(ii) materially modified any term of any such extension or maintenance of
credit. There are no extensions of credit maintained by the Company or any of
the Company Subsidiaries to which the second sentence of Section 13(k)(1) of the
Exchange Act applies.
SECTION 3.22 Opinion of Financial Advisor. The Company has
received the written opinion of UBS Securities LLC and Xxxxxxx, Xxxxx & Co.,
dated the date of this Agreement, to the effect that, as of the date of this
Agreement, the Merger Consideration is fair, from a financial point of view, to
the Company's stockholders, a copy of which opinion will be delivered to Parent
promptly after the date of this Agreement.
SECTION 3.23 Brokers. No broker, finder or investment banker
(other than UBS Securities LLC and Xxxxxxx, Sachs & Co.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and UBS Securities LLC and Goldman,
25
Sachs & Co., pursuant to which each such firm would be entitled to any payment
relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent's disclosure schedule (the "Parent Disclosure
Schedule") delivered by Parent to the Company prior to the execution of this
Agreement (which schedule sets forth, with respect to each item disclosed
therein, the specific section of this Agreement to which such item relates),
contains items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in this
Article IV, or to one or more of the Company's covenants contained in Article V.
Except as disclosed in the Parent Disclosure Schedule, a Parent SEC Report filed
prior to the date hereof, the Richmond Agreement, the LNM Disclosed Information
or the Parent Prospectus, to the extent it is readily apparent that the items
disclosed therein relate to particular sections of this Agreement, as an
inducement to the Company to enter into this Agreement, Parent and Merger Sub
hereby, jointly and severally, represent and warrant to the Company that:
SECTION 4.01 Corporate Organization. (a) Each of Parent,
Merger Sub and each Material Parent Subsidiary is a corporation or legal entity
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation or organization and has the requisite corporate,
partnership or similar power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, have a Parent Material
Adverse Effect. Each of Parent, Merger Sub and each Material Parent Subsidiary
is duly qualified or licensed to do business in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed that would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(b) A true and complete list of all the Material Parent
Subsidiaries, together with the jurisdiction of incorporation or organization of
each Material Parent Subsidiary and which identifies the percentage (direct or
indirect) of equity ownership of each Material Parent Subsidiary owned by
Parent, is set forth in Section 4.01(b) of the Parent Disclosure Schedule.
Parent does not directly or indirectly own any equity or similar interest in, or
any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or other entity, which entity, if it were a Parent
Subsidiary, would also be a Material Parent Subsidiary.
(c) Each subsidiary of Parent (each, a "Parent Subsidiary")
that constitutes a significant subsidiary of Parent within the meaning of Rule
1-02 of Regulation S-X of the SEC to Parent's business as a whole is so
identified in Section 4.01(c) of the Parent Disclosure Schedule and, including
LNM, from and after the date of the closing of the LNM Transaction, is referred
to herein as a "Material Parent Subsidiary".
26
SECTION 4.02 Certificate of Incorporation and By-Laws. Parent
has heretofore made available to the Company a complete and correct copy of the
Deed of Incorporation (Akte van oprichting) and the Articles of Association
(Statuten) of Parent and the Certificate of Incorporation and By-Laws or
equivalent organization documents of Merger Sub, each as amended to date. Such
Deed of Incorporation and Articles of Association of Parent, and the
Certificates of Incorporation and By-Laws or equivalent organization documents
of Merger Sub and each Material Parent Subsidiary, are in full force and effect.
Neither Parent, Merger Sub nor any Material Parent Subsidiary is in material
violation of any of the provisions of, in the case of Parent, its Deed of
Incorporation or Articles of Association, or, in the case of Merger Sub or any
Material Parent Subsidiary, its Certificate of Incorporation or By-Laws or
equivalent organization documents.
SECTION 4.03 Capitalization. (a) The authorized share capital
of Parent consists of EUR 12,215,000 divided into (i) 500,000,000 Parent Class A
Shares and (ii) 72,150,000 Class B Shares ("Parent Class B Shares"). As of the
date of this Agreement, (i) 54,850,000 Parent Class A Shares are issued and
outstanding, all of which are validly issued, fully paid and non-assessable,
(ii) 72,150,000 Parent Class B Shares are issued and outstanding all of which
are validly issued, fully paid and non-assessable, (iii) 9,389,566 Parent Class
A Shares were held in the treasury of Parent, (iv) there are no Parent Class A
Shares held by the Parent Subsidiaries, (v) there are no Parent Class A Shares
reserved for future issuance pursuant to stock options under the Purchaser Stock
Option Plan. Except as set forth in this Section 4.03 and except for stock
options granted pursuant to the stock option plans of Parent, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued share capital of Parent or any
Material Parent Subsidiary or obligating Parent or any Material Parent
Subsidiary to issue or sell any shares of, or other equity interests in, Parent
or any Material Parent Subsidiary. All Parent Class A Shares subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except with respect to equity
interests of certain Parent Subsidiaries, there are no outstanding contractual
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent or any Parent
Subsidiary. Except with respect to equity interests of certain Parent
Subsidiaries, there are no outstanding contractual obligations of Parent or any
Parent Subsidiary to provide a material amount of funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. All outstanding shares of Parent capital stock, all outstanding
Parent stock awards, and all outstanding shares of capital stock of each
Material Parent Subsidiary have been issued and granted in compliance with (i)
all applicable securities laws and other applicable Laws and (ii) all
requirements set forth in applicable contracts.
(b) The authorized capital stock of Merger Sub consists of 100
shares of common stock, par value $0.01 per share, all of which are duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereof and all of which are owned by Parent free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's or Merger Sub's voting
rights, charges and other encumbrances of any nature whatsoever, except where
failure to own such shares free and clear would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
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(c) The Parent Class A Shares to be issued pursuant to the
Merger in accordance with Section 2.01 will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights or rights of
first refusal created by statute, Parent's Articles of Association or any
agreement to which Parent is a party or is bound and (ii) will, when issued, be
registered under the Securities Act and Exchange Act and registered or exempt
from registration under applicable Blue Sky Laws.
SECTION 4.04 Authority Relative to This Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Transactions, the approval of a majority of the
then outstanding voting power of the Parent Class A Shares and Parent Class B
Shares with respect to the Merger, the filing and recordation of appropriate
merger documents as required by the DGCL). This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms.
SECTION 4.05 No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Merger Sub do not,
and the performance of this Agreement by Parent and Merger Sub will not, (i)
conflict with or violate the Articles of Association of Parent or the
Certificate of Incorporation or By-laws or any equivalent organizational
documents of Merger Sub or any Material Parent Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in Section
4.05(b) have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent, Merger Sub or any Parent
Subsidiary or by which any property or asset of Parent, Merger Sub and any
Parent Subsidiary is bound or affected or (iii) result in any breach of, or
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent, any Material Parent
Subsidiary or Merger Sub pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or Merger Sub is a party or by which Parent or Merger
Sub or any property or asset of either of them is bound or affected, except,
with respect to clause (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky Laws and state
takeover laws, the Exon-Xxxxxx Provision, the HSR Act, the Foreign Merger
Filings and
28
filing and recordation of appropriate merger documents as required by the DGCL,
(ii) the consummation of the LNM Transaction and (iii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, have a
Parent Material Adverse Effect.
SECTION 4.06 Permits; Compliance. Each of Parent, Merger Sub
and the Material Parent Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Parent, Merger Sub or the Material Parent Subsidiaries to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Parent Permits"), except where the failure to have, or the suspension or
cancellation of, any of the Parent Permits would not, individually or in the
aggregate, have a Parent Material Adverse Effect. As of the date of this
Agreement, no suspension or cancellation of any of the Parent Permits is pending
or, to the knowledge of Parent, threatened, except where the failure to have, or
the suspension or cancellation of, any of the Parent Permits would not,
individually or in the aggregate, have a Parent Material Adverse Effect. Neither
Parent, Merger Sub nor any Parent Subsidiary is in conflict with, or in default,
breach or violation of, (a) any Law applicable to Parent, Merger Sub or any
Parent Subsidiary or by which any property or asset of Parent, Merger Sub or any
Parent Subsidiary is bound or affected or (b) any Parent Permit, except for any
such conflicts, defaults, breaches or violations that would not, individually or
in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.07 SEC Filings; Financial Statements. (a) Parent
and, to the extent required, each Parent Material Subsidiary, has filed all
forms, reports and documents required to be filed by it with the SEC since
December 31, 2001 and furthermore Parent, and to the extent required each Parent
Material Subsidiary, has fulfilled its obligations to timely publish its annual
financial statements for the financial years 2002 and 2003. Each of (i) Parent's
Annual Report on Form 20-F for the fiscal year ended December 31, 2003, (ii)
Parent's Quarterly Reports on Form 6-K for the periods ended March 31, 2004 and
June 30, 2004, (iii) any effective registration statement filed with the SEC
since January 1, 2002, (iv) all reports on Form 6-K filed with the SEC (as
opposed to furnished) since the filing date of Parent's Form 6-K for the period
ended June 30, 2004 and (v) all other forms, reports and other registration
statements filed by Parent with the SEC since January 1, 2003 (collectively, the
"Parent SEC Reports"), (A) were prepared in all material respects in accordance
with either the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations promulgated thereunder and (B) did
not, at the time they were filed, or, if amended or supplemented, as of the date
of such amendment or supplement, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, except to the extent that
information contained in any Parent SEC Reports has been revised or superseded
by a Parent SEC Report filed as of a later date (but before the date of this
Agreement) and is publicly available.
(b) Each of the consolidated financial statements of Parent
together with the Parent Subsidiaries (including, in each case, any notes
thereto) contained in the Parent SEC Reports was prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto or, in the case of unaudited
29
statements, as permitted by Form 6-K of the SEC) and each fairly presents, in
all material respects, the consolidated financial position, results of
operations and cash flows of Parent and its consolidated subsidiaries as at the
respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments in amounts that are immaterial in nature and amount and are
consistent with past experience).
(c) Included in Section 4.07(c) of the Parent Disclosure
Schedule are (i) the unaudited consolidated balance sheet and related unaudited
consolidated statements of income and stockholders equity and cash flow of LNM
and its subsidiaries at and for the six months ended June 30, 2004 (the "LNM
Interim Financials"), and (ii) the audited consolidated balance sheets and
related audited consolidated statements of income and stockholders' equity and
cash flow of LNM and its subsidiaries at and for the twelve months ended
December 31, 2001, December 31, 2002 and December 31, 2003 (the "LNM Audited
Financials").
(d) Each of the consolidated financial statements of LNM and
its subsidiaries (including, in each case, any notes thereto) contained in the
LNM Interim Financials and the LNM Audited Financials was prepared in accordance
with GAAP applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto) and each fairly presents, in all
material respects, the consolidated financial position, results of operations
and cash flows of LNM and its consolidated subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments in
amounts that are immaterial in nature and amount and are consistent with past
experience).
(e) Except as and to the extent set forth on any of (i) the
audited consolidated balance sheet of Parent as of December 31, 2003 and (ii)
the unaudited consolidated balance sheet of Parent for the period ended June 30,
2004, each including the notes thereto (the "Parent 2003-4 Balance Sheets"),
neither Parent nor any Parent Subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) that is required by
GAAP to be recorded as a liability on a balance sheet of Parent or disclosed in
the footnotes thereto, except for liabilities and obligations, incurred in the
ordinary course of business consistent with past practice since June 30, 2004,
which would not have a Parent Material Adverse Effect.
(f) Parent has timely filed all certifications and statements
required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18
U.S.C. Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002) with respect
to any Parent SEC Report. Parent maintains disclosure controls and procedures as
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act, and such controls
and procedures are effective to ensure that all material information concerning
Parent and Parent Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of Parent's SEC filings. Parent has
established and maintained a reporting system permitting employees to
anonymously report alleged accounting irregularities and other matters as
required by Law. As of the date hereof, Parent is not conducting or required to
conduct any investigation as a result of any such report that, to Parent's
knowledge, is reasonably likely to have a material effect on Parent's past or
future reported results of operation or financial position. No attorney
representing Parent or any Parent Subsidiary has reported in writing evidence of
a material violation of securities laws, breach of
30
fiduciary duty or similar violation by Parent or any of its officers, directors,
employees or agents to the Parent Board or any committee thereof or to any
director or executive officer of Parent.
SECTION 4.08 Absence of Certain Changes or Events. Since
December 31, 2003, except as expressly contemplated by this Agreement, or
specifically disclosed in any Parent SEC Report filed since December 31, 2003
and (a) prior to the date of this Agreement, Parent and the Parent Material
Subsidiaries have conducted their business only in the ordinary course and in a
manner consistent with past practice in all material respects, (b) prior to the
date of the Agreement, there has not been any Parent Material Adverse Effect and
(c) prior to the date of this Agreement, none of Parent or any Material Parent
Subsidiary has taken any action that, if taken after the date of this Agreement,
would constitute a breach of any of the covenants set forth in Section 5.02(b).
SECTION 4.09 Absence of Litigation. Except as specifically
disclosed in any Parent SEC Report filed prior to the date of this Agreement,
there is no Action pending or, to the knowledge of Parent, threatened against
Parent, Merger Sub or any Parent Subsidiary, or any material property or asset
of Parent, Merger Sub or any Parent Subsidiary, before any Governmental
Authority that (a) individually or in the aggregate, has had or would have a
Parent Material Adverse Effect or (b) seeks to materially delay or prevent the
consummation of the Merger. Neither Parent, Merger Sub nor any Parent Subsidiary
nor any material property or asset of Parent, Merger Sub or any Material Parent
Subsidiary is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of
Parent, continuing investigation by, any Governmental Authority, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority that would, individually or in the aggregate, have a Parent Material
Adverse Effect.
SECTION 4.10 Richmond Agreement. Parent has entered into the
Richmond Agreement. The Richmond Agreement is a legal, valid and binding
agreement, and is not in default by its terms nor has it been canceled by either
party, (b) to Parent's knowledge, all of the representations and warranties of
Richmond contained in the Richmond Agreement are true and correct in all
respects except where failure of such representations to be so true and correct
would not in the aggregate have a Parent Material Adverse Effect, (c) Richmond
is not in breach or violation of, or default under, the Richmond Agreement, (d)
Parent is not in breach or violation of, or default under, the Richmond
Agreement, (e) Parent has not received any claim of default under such agreement
and (f) neither the execution of this Agreement nor the consummation of any
Transaction shall constitute a default under, give rise to cancellation rights
under, or otherwise adversely affect the rights of Parent for indemnification
under the Richmond Agreement. Parent has furnished or made available to the
Company a true and complete copy of the Richmond Agreement, including any
amendments thereto.
SECTION 4.11 Labor and Employment Matters. (a) There are no
controversies pending or, to the knowledge of Parent, threatened between Parent
or any Parent Subsidiary and any of their respective employees, which
controversies would, individually or in the aggregate, have a Parent Material
Adverse Effect and (b) as of the date hereof, there is no strike, slowdown, work
stoppage or lockout, or, to the knowledge of Parent, threat thereof, by any
union or significant group of union workers, by or with respect to any employees
of Parent or any Parent Subsidiary. There are no consents of a labor union which
is a party to the
31
collective bargaining agreements with Parent or any Material Parent Subsidiary
required to consummate the Transactions.
SECTION 4.12 Operations of Merger Sub. Merger Sub is a direct,
wholly owned subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement, has engaged in no other
business activities and has conducted its operations only as contemplated by
this Agreement.
SECTION 4.13 Tax Matters. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any action or know
of any fact that is reasonably likely to prevent (i) the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code or (ii)
compliance by the parties with the "active trade or business test" set forth in
Treasury Regulation Section 1.367(a)-3(c)(3).
SECTION 4.14 Board Approval; Vote Required. (a) The Parent
Board, by resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way as of the date hereof, has duly (i) determined that the Transactions are
consistent with and in furtherance of the long term business and strategy of
Parent and are fair to and in the best interests of Parent and its Shareholders,
(ii) approved the Transactions and declared their advisability and (iii)
recommended that the shareholders of Parent approve the Transactions and
directed that the Transactions be submitted for consideration by the Parent's
stockholders at the Parent Shareholders' Meeting.
(b) The only vote of the holders of any class or series of
capital stock of the Company necessary to approve the Transactions, is the
affirmative vote of a majority of the then outstanding voting power of Parent
Class A Shares and Parent Class B Shares in favor of the approval of the
Transactions.
SECTION 4.15 Certain Business Practices. None of Parent, any
Parent Subsidiary or, to the Parent's knowledge, any directors, officers, agents
or employees of Parent or any Parent Subsidiary, in each case acting on behalf
of Parent or any Parent Subsidiary has (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the FCPA or (c) made any payment in the
nature of criminal bribery.
32
SECTION 4.16 Related Party Transactions. To the knowledge of
Parent, since December 31, 2003, no current director, executive officer or other
affiliate of Parent or any Parent Subsidiary has (or had at the time of such
transaction), directly or indirectly engaged in any interested party
transactions of a nature required to be described in the footnotes to audited
financial statements by US GAAP as Related Party transactions, except as and to
the extent set forth in the footnotes to any of (i) the audited financial
statements of Parent, and (ii) with respect to the remaking of this
representation and warranty as of the Effective Time, the audited financial
statements of LNM, or in each case, in the ordinary course and consistent with
past practices and as would not have a Parent Material Adverse Effect.
SECTION 4.17 Brokers. No broker, finder or investment banker
(other than Credit Suisse First Boston) is entitled to any brokerage, finder's
or other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or Merger Sub.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the
Merger. (a) The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.01 of the Company Disclosure
Schedule, or as expressly contemplated by any other provision of this Agreement,
unless Parent shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed:
(i) the businesses of the Company and the Company Subsidiaries
shall be conducted only in, and the Company and the Company
Subsidiaries shall not take any action except in, the ordinary course
of business and in a manner consistent with past practice; and
(ii) the Company shall use its reasonable best efforts to
preserve substantially intact the business organization of the Company
and the Company Subsidiaries, to keep available the services of the key
current officers, employees and consultants of the Company and the
Company Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with material customers, suppliers and
other persons with which the Company or any Company Subsidiary has
significant material business relations.
(b) By way of amplification and not limitation, except as
expressly contemplated by any other provision of this Agreement or as set forth
in Section 5.01 of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary shall, between the date of this Agreement and the Effective
Time, directly or indirectly, do, or propose to do, any of the following without
the prior written consent of Parent, which consent will not be unreasonably
withheld or delayed:
(i) amend or otherwise change the Certificate of Incorporation
or By-laws of the Company;
33
(ii) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (A) any shares of any class of capital stock of the Company or any
Material Company Subsidiary, or any options (except upon exercise of
existing stock options), warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Material Company Subsidiary or (B) any
assets of the Company or any Material Company Subsidiary, except for
(w) granting of Permitted Liens in the ordinary course of business and
in a manner consistent with past practice, (x) for sales, pledges,
disposals or encumbrances of assets not involving $25 million in the
aggregate, (y) sales of inventory in the ordinary course of business
and (z) sales of the assets listed on Section 5.01(b)(ii) of the
Company Disclosure Schedule after written notice to, and reasonable
consultation with, Parent;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of the Company's capital stock;
(iv) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of the
Company's capital stock;
(v) (A) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or, except as permitted by clause (C) of this
Section 5.01(b)(v), any amount of assets in excess of $25 million in
the aggregate, (B) incur any indebtedness for borrowed money or issue
any debt securities in excess of $25 million in the aggregate or
assume, guarantee or endorse, or otherwise become responsible for, the
obligations of any person other than any Company Subsidiary, or make
any loans or advances, or grant any security interest in any of its
assets except in the ordinary course of business and consistent with
past practice, or (C) authorize, or make any commitment with respect to
any individual capital expenditure in excess of $5 million, other than
authorizations and commitments with respect to capital expenditures
that are made or entered into after written notice to, and reasonable
consultation with, Parent;
(vi) hire any additional employees except in the ordinary
course of business and consistent with past practices or increase the
compensation payable or to become payable or the benefits provided to
its directors or officers, except as required by law or existing
agreement, or increase the compensation payable or to become payable or
the benefits to be provided to its employees, except for an increase as
set forth in Section 5.01(b)(vi) of the Company Disclosure Schedule in
salaries or wages of employees of the Company or any Company Subsidiary
who are not directors or officers of the Company or any Material
Company Subsidiary, or, except as required by Law or any existing
agreement or Plan, grant any severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer
or, except in the ordinary course of business, to any employee of the
Company or of any Company Subsidiary, or establish, adopt, enter into
or amend any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
34
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or group of employees;
(vii) (A) exercise its discretion with respect to or otherwise
voluntarily accelerate the vesting of any Company Stock Option as a
result of the Merger, any other change of control of the Company (as
defined in the Company Stock Option Plans) or otherwise or (B) exercise
its discretion with respect to or otherwise amend, modify or supplement
the Company's stock purchase plan;
(viii) take any action, other than reasonable and usual
actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures, except as
required by GAAP or applicable Law;
(ix) except in the ordinary course of business consistent with
past practice, make, change or revoke any material Tax election, settle
or compromise any material Tax liability, consent to any claim or
assessment relating to a material amount of Taxes or any waiver of the
statute of limitations, change any method of Tax accounting or, file
any amended Tax Return or claim for refund of material Taxes;
(x) commence, settle, pay, discharge or satisfy any Actions,
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) in excess of $20 million in the
aggregate, other than the payment, discharge or satisfaction of
obligations other than Actions, in the ordinary course of business and
consistent with past practice;
(xi) enter into, amend, modify or consent to the termination
of any Material Contract, or amend, waive, modify or consent to the
termination of the Company's or any Subsidiary's material rights
thereunder, other than in the ordinary course of business and
consistent with past practice;
(xii) fail to make in a timely manner any filings with the SEC
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder; or
(xiii) enter into any binding agreement or otherwise make a
commitment, to do any of the foregoing.
SECTION 5.02 Conduct of Business by Parent Pending the Merger.
(a) Parent agrees that, between the date of this Agreement and the Effective
Time, except as set forth in Section 5.02(a) of the Parent Disclosure Schedule,
or as expressly contemplated by any other provision of this Agreement, unless
the Company shall otherwise consent in writing, which consent will not be
unreasonably withheld or delayed:
(i) the businesses of Parent and the Parent Subsidiaries shall
be conducted only in, and Parent and the Parent Subsidiaries shall not
take any action except in, the ordinary course of business and in a
manner consistent with past practice; and
35
(ii) Parent shall use its reasonable best efforts to preserve
substantially intact the business organization of Parent and the Parent
Subsidiaries, to keep available the services of the key current
officers, employees and consultants of Parent and the Parent
Subsidiaries and to preserve the current relationships of Parent and
the Parent Subsidiaries with material customers, suppliers and other
persons with which Parent or any Parent Subsidiary has material
business relations.
(b) By way of amplification and not limitation, except as
expressly contemplated by any other provision of this Agreement or as set forth
in Section 5.02(b) of the Parent Disclosure Schedule, Parent agrees that from
the date of this Agreement until the earlier of the termination of this
Agreement and the Effective Time, neither Parent nor any Parent Subsidiary
shall, directly or indirectly, unless the Company shall otherwise consent in
writing, which consent will not be unreasonably withheld or delayed:
(i) issue, sell, dispose of or grant, or authorize the
issuance, sale, disposition or grant of, any shares of any class of
capital stock of Parent, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest of Parent except
pursuant to the terms of the Richmond Agreement or in exchange for fair
market value;
(ii) declare, set aside, make or pay any dividend or other
distribution payable in cash, stock, property or otherwise, with
respect to any of Parent's capital stock other than as set forth on
Section 5.02(b)(ii) of the Parent Disclosure Schedule; reclassify,
combine, split, subdivide or redeem, or purchase or otherwise acquire,
directly or indirectly, any of Parent's capital stock;
(iii) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporations, partnerships, other business
organizations or any divisions thereof or any material amount of assets
in one or more transactions involving consideration in excess of $1.5
billion in the aggregate;
(iv) directly or indirectly, take, or propose to take, without
the prior written consent of the Company, any action with the intent to
cause Parent's representations and warranties set forth in Article IV
to be untrue in any material respect;
(v) amend, modify or waive any closing condition or financial
term of the Richmond Agreement in a manner that would adversely affect
Parent's rights thereunder;
(vi) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise become
responsible for, the obligations of any person, or make any loans or
advances, or grant any security interest in any of its assets in excess
of $1.5 billion in the aggregate;
(vii) amend or otherwise change the Deed of Incorporation
(Akte van oprichting) or the Articles of Association (Statuten) of
Parent except as required by, the LNM Transaction or the actions
authorized pursuant to the shareholder vote in connection therewith; or
36
(viii) enter into any formal binding agreement or otherwise
make a commitment, to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Registration Statement; Proxy Statement. (a) As
promptly as practicable after the execution of this Agreement, (i) Parent and
the Company shall prepare and file with the SEC the proxy statement to be sent
to the stockholders of the Company relating to the meeting of the Company's
stockholders (the "Company Stockholders' Meeting") to be held to consider
approval and adoption of this Agreement or any information statement to be sent
to such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, being referred to herein as the "Proxy
Statement") and (ii) Parent shall prepare and file with the SEC a registration
statement on Form F-4 (together with all amendments thereto, the "Registration
Statement") in which the Proxy Statement shall be included as a prospectus, in
connection with the registration under the Securities Act of the Parent Class A
Shares to be issued to the stockholders of the Company pursuant to the Merger.
Parent and the Company each shall use their reasonable best efforts to cause the
Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement, Parent shall take all
or any action required under any applicable federal or state securities laws in
connection with the issuance of Parent Class A Shares pursuant to the Merger.
The Company shall furnish all information concerning the Company as Parent may
reasonably request in connection with such actions and the preparation of the
Registration Statement and Proxy Statement. As promptly as practicable after the
Registration Statement shall have become effective, the Company shall mail the
Proxy Statement to its stockholders.
(b) Except as permitted by Section 6.04(c), the Company
covenants that none of the Company Board or any committee thereof shall
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Merger Sub, the approval or recommendation by the Company Board or
any committee thereof of this Agreement, the Merger or any other Transaction
(the "Company Recommendation") and the Proxy Statement shall include the
Company Recommendation.
(c) No amendment or supplement to the Proxy Statement or
the Registration Statement will be made by Parent or the Company without the
approval of the other party (such approval not to be unreasonably withheld or
delayed). Parent and the Company each will advise the other, promptly after
they receive notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order, of the suspension of the qualification of Parent Class A
Shares issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) Parent represents that the information supplied by
Parent for inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company, (iii) the time of
the
37
Company Stockholders' Meeting and (iv) the Effective Time, contain any untrue
statement of a material fact or fail 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. If, at any
time prior to the Effective Time, any event or circumstance relating to Parent,
Merger Sub or any Parent Subsidiary, or their respective officers or directors,
should be discovered by Parent which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, Parent shall
promptly inform the Company. All documents that Parent is responsible for
filing with the SEC in connection with the Merger or the other transactions
contemplated by this Agreement will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and
the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(e) The Company represents that the information supplied
by the Company expressly for inclusion in the Registration Statement and the
Proxy Statement shall not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the stockholders of the Company,
(iii) the time of the Company Stockholders' Meeting and (iv) the Effective
Time, contain any untrue statement of a material fact or fail 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. If, at any time prior to the Effective Time, any event or
circumstance relating to the Company or any Company Subsidiary, or their
respective officers or directors, should be discovered by the Company which is
required by the applicable rules and regulations to be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement, the
Company shall promptly inform Parent. All documents that the Company is
responsible for filing with the SEC in connection with the Merger or the other
transactions contemplated by this Agreement will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
SECTION 6.02 Company Stockholders' Meeting and Parent
Shareholders' Meeting. (a) The Company shall call and hold the Company
Stockholders' Meeting as promptly as practicable for the purpose of voting upon
the adoption of this Agreement and the Company shall use its reasonable best
efforts to hold the Company Stockholders' Meeting as soon as practicable after
the date on which the Registration Statement becomes effective. In no event
shall the Company be required to hold the Company's Stockholders' Meeting prior
to the date that is 60 days after the date hereof. The Company shall use its
reasonable best efforts to solicit from its stockholders proxies in favor of the
adoption of this Agreement and shall take all other action necessary or
advisable to secure the required vote or consent of its stockholders, except in
the event and to the extent that the Company Board, in accordance with Section
6.04(c), withdraws or modifies the Company Recommendation.
(b) Parent shall call and hold a general meeting of the
shareholders of the Parent (the "Parent Shareholders' Meeting") for the purpose
of voting upon the approval of this Agreement and the Transactions and Parent
shall use its reasonable best efforts to hold the Parent Shareholders' Meeting
as promptly as practicable after the date on which the Euronext Prospectus is
approved by Euronext.
38
SECTION 6.03 Access to Information; Confidentiality. (a)
Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or the Company or any of their
respective subsidiaries is a party or pursuant to applicable Law, from the date
of this Agreement until the Effective Time,
(i) the Company shall (and shall cause its subsidiaries
to): (A) provide to Parent (and Parent's officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") access at reasonable
times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of the Company and the
Company Subsidiaries and to the books and records thereof, including
access to conduct any reasonable environmental assessment and (B)
furnish promptly to Parent such information concerning the business,
properties, contracts, assets, liabilities, personnel and other
aspects of the Company and the Company Subsidiaries as Parent or its
Representatives may reasonably request; and
(ii) Parent shall (and shall cause its subsidiaries to,
and use its reasonable best efforts to cause LNM to): (A) provide to
the Company and the Company's Representatives access at reasonable
times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of Parent and the Parent
Subsidiaries and to the books and records thereof and (B) furnish
promptly to the Parent such information concerning the business,
properties, contracts, assets, liabilities, personnel and other
aspects of Parent and the Parent Subsidiaries (including for the
purposes of this Section 6.03(a)(ii)(B), LNM and its Subsidiaries) as
is reasonably necessary in order for the Company to perform a due
diligence review with respect to the representations, warranties and
covenants provided to the Company pursuant to this Agreement.
(b) All information obtained by Parent or the Company
pursuant to this Section 6.03 shall be kept confidential in accordance with the
confidentiality agreement, dated September 28, 2004 (the "Confidentiality
Agreement"), between Parent and the Company.
(c) No investigation pursuant to this Section 6.03 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
(d) Each of the Parent and the Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the consummation of the transactions contemplated by this Agreement.
SECTION 6.04 No Solicitation of Transactions. (a) The Company
agrees that neither it nor any Company Subsidiary nor any of the directors,
officers or employees of it or any Company Subsidiary will, and that it will not
authorize or permit its and the Company Subsidiaries' agents, advisors and other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any Subsidiary), to, directly or indirectly, (i)
solicit (including by way of furnishing nonpublic information), or take any
other action intended or reasonably likely to facilitate, any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to its stockholders) that constitutes, or may reasonably be expected to
lead to, any Competing Transaction, or (ii) enter into or maintain
39
or continue discussions or negotiations with any person or entity in
furtherance of such inquiries or to obtain a proposal or offer for a Competing
Transaction, or (iii) agree to, approve, endorse or recommend any Competing
Transaction or enter into any letter of intent or other contract, agreement or
commitment contemplating or otherwise relating to any Competing Transaction, or
(iv) authorize or permit any of the officers, directors or employees of the
Company or any of the Company Subsidiaries, or any investment banker, financial
advisor, attorney, accountant or other representative retained by the Company
or any of the Company Subsidiaries, to take any such action. The Company shall
notify Parent as promptly as practicable (and in any event within one (1) day
after an executive officer of the Company attains knowledge thereof), orally
and promptly thereafter in writing, if any proposal or offer, or any inquiry or
contact with any person with respect thereto, regarding a Competing Transaction
is made, specifying the material terms and conditions thereof and the identity
of the party making such proposal or offer or inquiry or contact. The Company
shall provide Parent with forty-eight (48) hours prior notice (or such lesser
prior notice as is provided to the members of the Company Board) of any meeting
of the Company Board at which the Company Board is expected to discuss any
Competing Transaction. The Company immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to a Competing Transaction. The Company shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party and the Company also agrees to
promptly request each person that has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring (whether by merger,
acquisition of stock or assets or otherwise) the Company or any Company
Subsidiary, if any, to return (or if permitted by the applicable
confidentiality agreement, destroy) all confidential information heretofore
furnished to such person by or on behalf of the Company or any Company
Subsidiary and, if requested by Parent, to enforce such person's obligation to
do so.
(b) Notwithstanding anything to the contrary in this
Section 6.04, the Company Board may furnish or cause to be furnished
information to, and enter or cause to be entered into discussions with, a
person who has made an unsolicited, written proposal or offer regarding a
Competing Transaction, if the Company Board has (i) determined, in its good
faith judgment (after consultation with a financial advisor), that such
proposal or offer constitutes a Superior Proposal, (ii) provided written notice
to Parent of its intent to furnish information to or enter into discussions
with such person at least three business days prior to taking any such action
and (iii) obtained from such person an executed confidentiality agreement on
terms determined by the Company in good faith not to be substantially less
favorable to the Company in the aggregate than those contained in the
Confidentiality Agreement (it being understood that such confidentiality
agreement and any related agreements shall not include any provision calling
for any exclusive right to negotiate with such party or having the effect of
prohibiting the Company from satisfying its obligations under this Agreement).
The Company will use reasonable best efforts to keep Parent informed on a
reasonably prompt basis of the status of any negotiations it enters into with
any Person regarding a Superior Proposal, including any material amendments or
proposed material amendments thereto. The Company will provide Parent with all
information regarding the Company with which Parent has not previously been
provided that is provided to any person making a Superior Proposal.
(c) Except as permitted by this Section 6.04(c), neither
the Company Board nor any committee thereof shall withdraw or modify, or
propose to withdraw or modify, in a manner
40
adverse to Parent or Merger Sub, the Company Recommendation (a "Change in the
Company Recommendation") or approve or recommend, or cause or permit the
Company to enter into any letter of intent, agreement or obligation with
respect to, any Competing Transaction. Notwithstanding the foregoing, if the
Company Board determines, in its good faith judgment prior to the time of the
Company Stockholders' Meeting and after consultation with legal counsel (who
may be the Company's regularly engaged legal counsel), that it is required to
make a Change in the Company Recommendation to comply with its fiduciary
obligations to the Company and its stockholders under applicable Law, the
Company Board may (i) make a Change in the Company Recommendation or (ii)
terminate this Agreement pursuant to Section 8.01(j), but only, in the case of
this clause (ii), (A) after providing written notice to Parent (a "Notice of
Superior Proposal") advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal and
indicating that the Company Board intends to consider whether to effect a
Change in the Company Recommendation and (B) if Parent does not, within three
(3) business days of Parent's receipt of the Notice of Superior Proposal, make
an offer that the Company Board determines at meeting of the Company Board held
for such purpose, in its good faith judgment (after consultation with a
financial advisor) to be at least as favorable to the Company's stockholders as
such Superior Proposal. No disclosure that the Company Board may determine in
good faith (after consultation with counsel, who may be the Company's regularly
engaged counsel) that it or the Company is required to make under applicable
Law will constitute a violation of this Agreement. Notwithstanding anything to
the contrary contained in this Agreement, the obligation of the Company to
call, give notice of, convene and hold the Company Stockholders' Meeting shall
not be limited or otherwise affected by the commencement, disclosure,
announcement or submission to it of any Competing Transaction, or by any Change
in the Company Recommendation. The Company shall not submit to the vote of its
stockholders any Competing Transaction, or propose to do so, except as
permitted herein.
(d) A "Competing Transaction" means any of the following
(other than the Transactions): (i) any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or other
similar transaction involving the Company or any Material Company Subsidiary;
(ii) any sale, lease, exchange, transfer or other disposition (including a
disposition of stock of one or more Company Subsidiaries) of 15% or more of the
assets of the Company and the Company Subsidiaries taken as a whole; (iii) any
sale, exchange, transfer or other disposition of 15% or more of any class of
equity securities of the Company or any Material Company Subsidiary; (iv) any
tender offer or exchange offer that, if consummated, would result in any person
beneficially owning 15% or more of any class of equity securities of the
Company; (v) any solicitation in opposition to adoption of this Agreement by
the Company's stockholders or (vi) any other transaction the consummation of
which would reasonably be expected to prevent or materially delay any of the
Transactions.
(e) A "Superior Proposal" means an unsolicited written
proposal or offer made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, share exchange, business combination
or other similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction would hold
less than 50% of the equity interest in the surviving or resulting entity of
such transaction or (ii) the acquisition by any person or group (including by
means of a tender offer or an exchange offer or
41
a two-step transaction involving a tender offer followed with reasonable
promptness by a cash-out merger involving the Company), directly or indirectly,
of ownership of more than 50% of the then outstanding shares of voting stock of
the Company, in each case on pricing and other terms (including conditions to
consummation of the contemplated transaction) that the Company Board
determines, in its good faith judgment (after consultation with a financial
advisor), to be more favorable to the Company stockholders than the Merger.
SECTION 6.05 Certain Post-Closing Matters. From and after the
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to honor in accordance with their terms, all contracts, agreements,
arrangements, policies, plans and commitments of the Company and the Company
Subsidiaries as in effect immediately prior to the Effective Time that are
applicable to any current or former employees or directors of the Company or any
Subsidiary. In addition, if the Closing occurs, the parties identified in
Section 6.05 of the Parent Disclosure Schedule will take the actions therein
specified.
SECTION 6.06 Certain Employee Benefits and Other Matters. (a)
Promptly after the Effective Time, Parent will cause (i) a member of the Company
Board designated for such purpose prior to the Closing by the Company Board,
after consultation with Parent, or, if no such individual is so designated, the
Chairman of the Company Board, to be elected to Parent's Board of Directors and
(ii) the Company's CEO to be made the chief executive officer for all Parent's
United States operations; provided, however, that if the Company's current CEO
no longer holds that position at the time of the closing, then Parent's
obligations under this clause (ii) will be solely to consult with the Company
Board prior to the closing before making any substitute appointment.
(b) On or prior to December 31, 2004, the Company shall
pay to each participant in the Company's Officer Cash and Stock Bonus Plan and
the Return on Equity Bonus Program the participant's bonus for the fiscal year
ending December 31, 2004.
SECTION 6.07 Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VIII and IX of the Certificate of
Incorporation of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who, at
or prior to the Effective Time, were directors, officers, employees, fiduciaries
or agents of the Company, unless such modification shall be required by law.
(b) After the Effective Time, in the event of any
threatened or actual claim, action, suit, proceeding or investigation, whether
civil, criminal or administrative, including any such claim, action, suit,
proceeding or investigation in which any individual who is now, or has been at
any time prior to the date of this Agreement, or whom becomes prior to the
Effective Time, a director, officer or employee of the Company or any of the
Company Subsidiaries or who is or was serving at the request of the Company or
any of the Company Subsidiaries as a director, officer or employee of another
person (the "Indemnified Parties"), is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that such individual is or was a director, officer
or employee of the Company or
42
any of the Company Subsidiaries or (ii) this Agreement or any of the
transactions contemplated by this Agreement, whether asserted or arising before
or after the Effective Time, the Surviving Corporation will indemnify, defend
and hold harmless, such Indemnified Parties against such claims, actions or
suits or proceedings, to the fullest extent that would be permitted under the
DGCL (including reimbursement for reasonable fees and expenses incurred in
advance of the final disposition of any claim, action, suit, proceeding or
investigation to each Indemnified Party) (assuming for purposes of applying any
applicable limitations on indemnification under the DGCL that they were
directors, officers or employees of the Surviving Corporation at the time of
the relevant action or inaction). From and after the Effective Time, the
Surviving Corporation will fulfill and honor in all material respects the
obligations of the Company to indemnify, defend and hold harmless, the
Indemnified Parties as provided in the Company's Certificate of Incorporation
and Bylaws in effect on the date hereof, and any agreement specifically listed
in Section 6.07 (b) of the Company Disclosure Schedule; provided, however, to
the extent any such matter arises out of service by any such individual as a
director or officer of Parent or any Parent Subsidiary as of or after the
Effective Time, such indemnity shall be provided in accordance with the Deed of
Incorporation and Articles of Association of Parent, as in effect from time to
time, and any director and officer indemnification agreements between Parent
and such person.
(c) The Surviving Corporation shall use its reasonable
best efforts to maintain in effect for six years from the Effective Time, if
available, the directors' and officers' liability insurance policies maintained
by the Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions that are
not materially less favorable) with respect to matters occurring prior to the
Effective Time[; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 6.07(c) more than an
amount per year equal to 250% of current annual premiums paid by the Company
for such insurance which amount is set forth in Section 6.07(c) of the Company
Disclosure Schedule (the "Maximum Premium"). If such insurance coverage cannot
be obtained at all, or can only be obtained at an annual premium in excess of
the Maximum Premium, Parent will maintain policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium.
(d) In the event that Parent or the Surviving
Corporation or their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
case, proper provision shall be made so that the successor and assign of Parent
or the Surviving Corporation, as the case may be, shall assume responsibility
and liability for the obligations set forth with respect to Parent or the
Surviving Corporation, as the case may be, in this Section 6.07.
SECTION 6.08 Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which the notifying party determines could reasonably be
expected to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect (b) any failure of the Company,
Parent or Merger Sub, as the case may be, to comply with or satisfy, in any
material respect, any covenant or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.08 shall not limit or
43
otherwise affect the remedies available hereunder to the party receiving such
notice. Parent shall give prompt notice to the Company of the occurrence of any
material breach of the Richmond Agreement by any party thereto.
SECTION 6.09 Company Affiliates. No later than 30 days after
the date of this Agreement, the Company shall deliver to Parent a list of names
and addresses of those persons who were, in the Company's judgment, on such
date, affiliates (within the meaning of Rule 145 of the rules and regulations
promulgated under the Securities Act (each such person being a "Company
Affiliate")) of the Company. The Company shall provide Parent with such
information and documents as Parent shall reasonably request for purposes of
reviewing such list. The Company shall use its reasonable best efforts to
deliver or cause to be delivered to Parent, prior to the Effective Time, an
affiliate letter in the form attached hereto as Exhibit 6.09, executed by each
of the Company Affiliates identified in the foregoing list and any person who
shall, in the Company's judgment, have become a Company Affiliate subsequent to
the delivery of such list.
SECTION 6.10 Further Action; Reasonable Best Efforts. Upon the
terms and subject to the conditions of this Agreement, each of the parties
hereto shall (a) make as soon as reasonably practicable its respective filings,
and thereafter make any other required submissions, under the HSR Act and the
Foreign Merger Filings with respect to the Transactions and (b) 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 or otherwise to consummate and make effective the Transactions,
including, without limitation, using its reasonable best efforts to obtain all
Permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with the Company and the
Company Subsidiaries as are necessary for the consummation of the Transactions
and to fulfill the conditions to the Merger; provided that neither Merger Sub
nor Parent will be required by this Section 6.09 to take any action, including
entering into any consent decree, hold separate order or other arrangement, that
(x) (i) requires the divestiture of any assets of any of Merger Sub, Parent or
any of their respective subsidiaries or (ii) limits Parent's freedom of action
with respect to, or its ability to retain, any of Parent's or its affiliates'
assets or businesses, that, in any such case, if such action were to be taken
with respect to a comparable amount of assets or businesses of the Company and
the Company Subsidiaries, would have a Company Material Adverse Effect; or (y)
(i) requires the divestiture of any assets of any of the Company or any Company
Subsidiary or (ii) limits Parent's freedom of action with respect to, or its
ability to retain, the Company and the Company Subsidiaries or any of the
Company and the Company Subsidiaries' assets or businesses that, in any such
case, would have a Company Material Adverse Effect. Parent shall give notice
promptly to the Chairman of the Committee on Foreign Investment in the United
States pursuant to the Exon-Xxxxxx Provision of the Transactions, and each of
the parties hereto shall make such additional filings and submissions as may be
reasonably advisable under the Exon-Xxxxxx Provision in respect of the
Transactions. In case, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this Agreement, the
parties shall cause their respective proper officers and directors to use their
reasonable best efforts to take all such action.
SECTION 6.11 Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of section 1.368-2(g)
of the income tax regulations
44
promulgated under the Code. From and after the date of this Agreement and until
the Effective Time, each party hereto shall use its reasonable best efforts to
cause the Merger to qualify, and will not knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken which action or failure to act could (i) prevent the Merger from
qualifying, as a reorganization within the meaning of Section 368(a) of the
Code, or (ii) cause the parties to fail to comply with the requirements set
forth in Treasury Regulations Section 1.367(a)-3(c). Notwithstanding the
foregoing, the parties acknowledge and agree that any decision by Parent
whether to exercise any of the rights set forth in Section 1.01(b) shall remain
within the sole and absolute discretion of Parent.
SECTION 6.12 Obligations of Merger Sub. Parent shall take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
SECTION 6.13 Consents of Accountants. Parent and the Company
will each use all reasonable efforts to cause to be delivered to each other
consents and comfort letters from their respective independent auditors, in form
reasonably satisfactory to the recipient and customary in scope and substance
for consents and comfort letters delivered by independent public accountants in
connection with registration statements on Form F-4 under the Securities Act and
the Euronext Prospectus.
SECTION 6.14 NYSE Listing. Parent shall promptly prepare and
submit to the New York Stock Exchange, Inc. ("NYSE") and Euronext a listing
application covering the Parent Class A Shares to be issued in the Merger, and
shall use its reasonable efforts to obtain, prior to the Effective Time,
approval for the listing of such Parent Class A Shares, subject to official
notice of issuance to NYSE and will not voluntarily withdraw such listings
within three years of the Effective Date, and Euronext, and the Company shall
cooperate with Parent with respect to such listing.
SECTION 6.15 Subsequent Financial Statements. The Company
shall, if it determines that doing so is practicable, prior to making publicly
available its financial results for any period after the date of this Agreement
and prior to filing any report or document with the SEC after the date of this
Agreement, furnish drafts of such document to Parent, it being understood that
Parent shall have no liability by reason of such consultation.
SECTION 6.16 Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of Parent and the Company. Thereafter, unless otherwise
required by applicable Law or the requirements of the NYSE or Euronext, each of
Parent and the Company shall each use its reasonable best efforts to consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Merger or any of the other
Transactions.
SECTION 6.17 Shareholder Circular/Prospectus. (a) As promptly
as practicable after the execution of this Agreement and prior to the Effective
Time, Parent shall prepare the shareholder circular in connection with the
approval to be obtained from the shareholders of Parent for the Transactions and
shall prepare and file with Euronext the
45
prospectus to be made available in connection with the Transactions (the
"Euronext Prospectus"). Parent shall use its reasonable best efforts to cause
the Euronext Prospectus to be cleared as promptly as practicable by Euronext.
The Company shall furnish all information concerning the Company as Parent may
reasonably request in connection with the preparation and clearing by Euronext
of the Euronext Prospectus. Parent shall use its reasonable best efforts to
ensure that the Euronext Prospectus is available following the clearing of the
Euronext Prospectus by Euronext.
(b) The Company shall have an opportunity to review in
advance all written submissions to or filings with Euronext, to participate in
discussions with Euronext in connection with drafts of the Euronext Prospectus
and to comment on the sections of such submissions or filings that include any
disclosure relating to the Company, any of the Company Subsidiaries, and their
respective businesses, this Agreement or the Transactions and Parent shall
consider in good faith and take into account any comments which the Company may
provide to Parent with respect to any drafts of the Euronext Prospectus
reviewed by the Company.
(c) The Euronext Prospectus shall include the
recommendation of the Parent Board to the shareholders of Parent in favor of
approval of this Agreement and approval of the Transactions.
(d) The Company represents and warrants that the
information supplied by the Company expressly for inclusion in the Euronext
Prospectus shall not, at (i) the time the Euronext Prospectus is approved by
Euronext, (ii) the time the Euronext Prospectus (or any amendment thereof or
supplement thereto) is first mailed to the shareholders of Parent, (iii) the
time of the Parent Shareholders' Meeting and (iv) the Effective Date, contain
any untrue statement of a material fact or fail 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. If, at any time prior to the Effective Date, any event or
circumstance relating to the Company, or its respective officers or directors,
should be discovered by the Company which is required by applicable rules and
regulations to be set forth in an amendment or a supplement to the Euronext
Prospectus, the Company shall promptly inform Parent.
(e) Parent represents and warrants that the information
supplied by Parent for inclusion in the Euronext Prospectus shall not, at (i)
the time the Euronext Prospectus is approved by Euronext, (ii) the time the
Euronext Prospectus (or any amendment thereof or supplement thereto) is first
mailed to the shareholders of Parent, (iii) the time of the Parent
Shareholders' Meeting and (iv) the Effective Date, contain any untrue statement
of a material fact or fail 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. If, at any time prior
to the Effective Date, any event or circumstance relating to Parent or any
Parent Subsidiary thereof, or their respective officers or directors, should be
discovered by Parent which should be set forth in an amendment or a supplement
to the Euronext Prospectus, Parent shall promptly inform the Company. Parent
represents and warrants to the Company that the Euronext Prospectus will comply
as to form and substance in all material respects with the applicable
requirements of the listing and issuing rules of Euronext (Fondsenreglement)
and Euronext announcements.
46
SECTION 6.18 Sale and Charter; Capital Expenditures. (a) Prior
to the Closing, with respect to those certain shipping vessels owned by the
Company and used for shipping in the Great Lakes region of the United States as
described in Section 6.18 of the Company Disclosure Schedule (the "Great Lakes
Shipping Vessels"), the Company shall consummate a transaction in which it
transfers ownership of the Great Lakes Shipping Vessels to a third party
approved by the United States Maritime Administration and charters from such
approved third party the Great Lakes Shipping Vessels.
(b) Within 15 Business Days after the date hereof Parent
and the Company shall cause their representatives to consult with each other
for purposes of developing an appropriate program of capital expenditures for
the Company to pursue between the date hereof and the Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) LNM Transaction. The LNM Transaction shall have been
consummated on the terms set forth in the Richmond Agreement as in
effect on the date hereof, with such amendments thereto as have been
entered into with the approval of the parties thereto and the Company.
(b) Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act
and no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceeding for that
purpose shall have been initiated by the SEC.
(c) Company Stockholder Approval. This Agreement shall
have been adopted by the requisite affirmative vote of the
stockholders of the Company in accordance with the DGCL and the
Company's Certificate of Incorporation.
(d) Parent Stockholder Approval. This Agreement shall
have been adopted by the requisite affirmative vote of the
shareholders of Parent in accordance with Section 2:107A of the Dutch
Civil Code and the Parent's Articles of Association (collectively, the
"Parent Shareholder Approval").
(e) No Order. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any law, rule,
regulation, judgment, decree, executive order or award (an "Order")
which is then in effect and has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
(f) U.S. Antitrust Waiting Periods. Any waiting period
(and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
47
(g) Foreign Merger Approvals. All applicable Foreign
Merger Approvals of the transactions contemplated by this Agreement
shall have been obtained.
(h) NYSE Listing. The Parent Class A Shares to be issued
in the Merger shall have been authorized for listing on the NYSE and
Euronext, subject to official notice of issuance.
SECTION 7.02 Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver (where permissible) of the following
additional conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Agreement shall have
been true and correct when made and shall be true and correct as of
the Effective Time, with the same force and effect as if made as of
the Effective Time (other than such representations and warranties as
are made as of another date which shall be true and correct as of such
date), except where the failure to be so true and correct (without
giving effect to any limitations or qualification as to "materially"
(including the word "material") or "Company Material Adverse Effect"
set forth therein) would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time.
(c) Officer Certificate. The Company shall have
delivered to Parent a certificate, dated the date of the Closing,
signed by an executive officer of the Company, certifying as to the
satisfaction of the conditions specified in Sections 7.02(a) and
7.02(b).
(d) Consents. The consents, approvals and
authorizations, if any, listed on Section 7.02(d) of the Parent
Disclosure Schedule shall have been obtained.
(e) Material Adverse Effect. No event, circumstance,
change or effect shall have occurred since the date of this Agreement
that, individually or in the aggregate with all other events,
circumstances, changes and effects, is or could reasonably be expected
to be materially adverse to the business, condition (financial or
otherwise), assets, liabilities or results of operations of the
Company and the Company Subsidiaries taken as a whole; provided,
however, that the foregoing clause shall not include any event,
circumstance, change or effect resulting from (x) changes in general
economic conditions, or (y) general changes in the industry of
manufacturing, processing, selling, marketing and distributing steel
in which the Company and the Company Subsidiaries operate that do not
have a disproportionate effect (relative to other industry
participants) on the Company and the Company Subsidiaries, taken as a
whole.
(f) Tax Opinion. Parent shall have received the opinion
of Shearman & Sterling LLP, counsel to Parent, based upon customary or
reasonable representations and subject to customary or reasonable
limitations and assumptions, to the effect that, for United States
federal income tax purposes, the Merger will qualify as a
reorganization
48
within the meaning of Section 368(a) of the Code and each of Parent,
Merger Sub and the Company will be a party to the reorganization
within the meaning of Section 368(b) of the Code, which opinion shall
not have been withdrawn or modified in any material respect. The
representations upon which the opinion is based shall be provided in
representation letters signed and dated the date of such opinion by an
authorized officer of the representing entity, and shall not have been
withdrawn or modified in any material respect as of the Effective
Time.
SECTION 7.03 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Merger Sub contained in this Agreement
shall have been true and correct when made and shall be true and
correct as of the Effective Time, with the same force and effect as if
made as of the Effective Time (other than such representations and
warranties as are made as of another date which shall be true and
correct as of such date), except where the failure to be so true and
correct (without giving effect to any limitations or qualification as
to "materially" (including the word "material") or "Parent Material
Adverse Effect" set forth therein) would not, individually or in the
aggregate, have a Parent Material Adverse Effect. For the avoidance of
doubt, LNM and subsidiaries will be Parent Subsidiaries as of the
Effective Time.
(b) Agreements and Covenants. Parent and Merger Sub
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time.
(c) Officer Certificate. Parent shall have delivered to
the Company a certificate, dated the date of the Closing, signed by
the executive officer of Parent, certifying as to the satisfaction of
the conditions specified in Sections 7.03(a), 7.03(b) and 7.03(c).
(d) Tax Opinion. The Company shall have received the
opinion of Xxxxx Day, counsel to the Company, based upon customary or
reasonable representations and subject to customary or reasonable
limitations and assumptions to the effect that, for United States
federal income tax purposes, (1) either (i) the Merger will qualify as
a reorganization within the meaning of Section 368(a) of the Code and
each of Parent, Merger Sub and the Company will be a party to the
reorganization within the meaning of section 368(b) of the Code, or
(ii) the Reverse-Subsidiary Merger, together with the LMN Transaction,
will qualify as transfers of property described in Section 351(a)
(subject to Section 351(b)) of the Code by Richmond and each of the
stockholders of the Company, and (2) the transfer of Company Shares by
the stockholders of the Company will not be subject to Section
367(a)(1) of the Code, which opinion shall not have been withdrawn or
modified in any material respect. The representations upon which the
opinion is based shall be provided in representation letters signed
and dated the date of such opinion by an appropriate officer of the
representing entity, and shall not have been withdrawn or modified in
any material respect as of the Effective Time.
49
(e) Parent Material Adverse Effect. No event,
circumstance, change or effect shall have occurred since the date of
this Agreement that, individually or in the aggregate with all other
events, circumstances, changes and effects, is or could reasonably be
expected to be materially adverse to the business, condition
(financial or otherwise), assets, liabilities or results of operations
of Parent and the Parent Subsidiaries taken as a whole, giving effect
to the LNM Transaction as if it had closed on the date hereof;
provided, however that the foregoing clause shall not include any
event, circumstance, change or effect resulting from (x) changes in
general economic conditions, or (y) general changes in the industry of
manufacturing, processing, selling, marketing and distributing steel
in which Parent and the Parent Subsidiaries operate that do not have a
disproportionate effect (relative to other industry participants) on
Parent and the Parent Subsidiaries taken as a whole.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and
the Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite adoption of this Agreement by the
stockholders of the Company or Parent, as follows:
(a) by mutual written consent of Parent and the Company
duly authorized by the Boards of Directors of Parent and the Company;
or
(b) by either Parent or the Company if the Effective
Time shall not have occurred on or before April 30, 2005 (which date
may be extended at the written request of either Parent or the Company
for up to an additional sixty (60) calendar days to the extent
necessary to satisfy the conditions set forth in Section 7.01(f) or
Section 7.01(g) and so long as all other conditions have been
satisfied or shall be capable of being satisfied); provided, however,
that the right to terminate this Agreement under this Section 8.01(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date; or
(c) by either Parent or the Company if any Governmental
Authority in the United States or The Netherlands shall have enacted,
issued, promulgated, enforced or entered any injunction, order, decree
or ruling (whether temporary, preliminary or permanent) which has
become final and nonappealable and has the effect of making
consummation of the Merger or the LNM Transaction illegal or otherwise
preventing or prohibiting consummation of the Merger or the LNM
Transaction; or
(d) by Parent if a Company Triggering Event shall have
occurred; or
(e) by either Parent or the Company if this Agreement
shall fail to receive the requisite vote for adoption at the Company
Stockholders' Meeting; or
(f) by Parent if the Company Board withdraws, modifies
or changes the Company Recommendation in a manner adverse to Parent;
or
50
(g) by Parent upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth
in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set
forth in Section 7.02(a) or Section 7.02(b) would not be satisfied
("Terminating Company Breach"); provided, however, that, if such
Terminating Company Breach is curable by the Company, Parent may not
terminate this Agreement under this Section 8.01(g) for so long as the
Company continues to exercise its reasonable best efforts to cure such
breach, unless such breach is not cured within 45 days after notice of
such breach is provided by Parent to the Company; or
(h) by the Company upon a breach of any representation,
warranty, covenant or agreement on the part of Parent and Merger Sub
set forth in this Agreement, or if any representation or warranty of
Parent and Merger Sub shall have become untrue, in either case such
that the conditions set forth in Section 7.03(a) or Section 7.03(b)
would not be satisfied ("Terminating Parent Breach"); provided,
however, that, if such Terminating Parent Breach is curable by Parent
and Merger Sub, the Company may not terminate this Agreement under
this Section 8.01(h) for so long as Parent and Merger Sub continue to
exercise their reasonable best efforts to cure such breach, unless
such breach is not cured within 45 days after notice of such breach is
provided by the Company to Parent; or
(i) by the Company if the Richmond Agreement shall have
been terminated prior to consummation of the transactions contemplated
thereby, whether or not in accordance with its terms or any of the
conditions to consummation in the Richmond Agreement shall have become
incapable of being fulfilled; or
(j) by the Company in order to accept a Superior
Proposal; provided that in order for the termination of this Agreement
pursuant to this paragraph (j) to be effected, the Company shall have
complied with the provisions of the second sentence of Section
6.04(c), and the provisions of Section 8.03(b) (including the payment
of the Termination Fee); or
(k) by either Parent or the Company if this Agreement
shall fail to receive the requisite vote for adoption at the Parent
Shareholders' Meeting;
(l) by Parent if (i) the conditions set forth in Section
7.02(f) or Section 7.03(d) shall not be satisfied or waived, (ii) all
other conditions shall have been satisfied, and (iii) five Business
Days shall have elapsed after Parent has provided written notice to
the Company of its intention to terminate the Agreement pursuant to
this Section 8.01(l) without the Company having consented to the
completion of Merger as a Reverse-Subsidiary Merger.
For purposes of this Agreement, a "Company Triggering Event" shall be deemed to
have occurred if: (i) the Company Board shall have recommended to the
stockholders of the Company a Competing Transaction or shall have authorized the
Company to enter into any letter of intent or similar document or any agreement,
contract or commitment accepting any Competing Transaction; (ii) the Company
shall have failed to include in the Proxy Statement the Company Recommendation;
(iii) the Company Board fails to reaffirm the Company
51
Recommendation (which may include a reservation of the right to withdraw or
change the Company Recommendation in the future) within five (5) business days
after Parent requests in writing that such recommendation be reaffirmed or (iv)
a tender offer or exchange offer for 30% or more of the outstanding shares of
capital stock of the Company is commenced, and the Company Board fails to
recommend against or takes no position with respect to acceptance of such
tender offer or exchange offer by its stockholders within ten (10) business
days after such tender offer or exchange offer is commenced.
SECTION 8.02 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void, and there shall be no liability under this Agreement on
the part of any party hereto, except (a) for Sections 8.03, 8.04 and 8.05 and
Article IX and (b) nothing herein shall relieve any party from liability for any
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement prior to such termination; provided,
however, that the Confidentiality Agreement shall survive any termination of
this Agreement.
SECTION 8.03 Fees and Expenses. (a) Except as set forth in
this Section 8.03, all expenses incurred in connection with this Agreement and
the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Parent shall each pay one-half of all
Expenses for printing, mailing and filing fees relating to (i) printing, filing
and mailing the Registration Statement, the Proxy Statement and the Euronext
Listing Prospectus and all SEC and other regulatory filing fees incurred in
connection with the Registration Statement and the Proxy Statement and (ii) the
filing fee for the Notification and Report Forms, if any, filed under HSR Act
and the Form CO, if any, filed with the European Commission or any other Foreign
Merger Filings, if any, incurred by a party or on its behalf in connection with
or related to the preparation, printing, filing and mailing of the Registration
Statement, the Proxy Statement and the Euronext Listing Prospectus, the
solicitation of stockholder approvals, the filing of any required notices under
the HSR Act or other similar regulations and all other matters related to the
closing of the Merger and the other transactions contemplated by this Agreement.
As used in this Section 8.03, "Expenses" means expenses as defined in the
preceding sentence plus all other reasonable, documented out-of-pocket costs and
expenses, including all fees and expenses or counsel, accountants, experts,
investment bankers and other third-party fees and expenses, incurred by a party
or on its behalf in connection with or relating to the authorization,
preparation, negotiation, execution, performance or enforcement of this
Agreement.
(b) The Company agrees that:
(i) if Parent shall terminate this Agreement pursuant to
Section 8.01(d); or
(ii) if (A) Parent or the Company shall terminate this
Agreement pursuant to Section 8.01(b) and (B) (x) prior to the time of
such termination a Competing Transaction shall have been communicated
to the Company Board with respect to the Company and not withdrawn and
(y) the Company enters into an agreement providing for a Third Party
Acquisition within 12 months after the date of such termination; or
52
(iii) if (A) Parent or the Company shall terminate this
Agreement pursuant to Section 8.01(e), and (B) (x) prior to the time
of such failure to so approve this Agreement or the Merger, a
Competing Transaction shall have been publicly announced and not
withdrawn with respect to the Company and (y) the Company enters into
an agreement for a Third Party Acquisition within 12 months after the
date of such termination;
(iv) if Parent shall terminate this Agreement pursuant to
Section 8.01(f) and prior to the time of such termination a Competing
Transaction shall have been communicated to the Company Board and not
withdrawn with respect to the Company; or
(v) if the Company shall terminate this Agreement
pursuant to Section 8.01(j);
then the Company shall pay to Parent upon termination of this Agreement, in the
case of clause (b)(i), (b)(iv) or (b)(v) above, and upon entering into an
agreement for a Third Party Acquisition, in the case of clause (b)(ii) or
(b)(iii) above, a fee of $130,000,000 (the "Company Fee"), which amount shall be
payable in immediately available funds.
(c) The Company agrees that:
(i) if Parent shall terminate this Agreement pursuant to
Section 8.01(e) and (x) prior to the time of such termination no
Competing Transaction has been publicly announced with respect to the
Company and not withdrawn and (y) neither Parent nor Merger Sub is in
material breach of its covenants and agreements or its representations
and warranties contained in this Agreement; or
(ii) if Parent shall terminate this Agreement pursuant to
Section 8.01(f) and (x) prior to the time of such termination no
Competing Transaction has been communicated to the Company Board and
not withdrawn and (y) neither Parent nor Merger Sub is in material
breach of its covenants and agreements or its representations and
warranties contained in this Agreement; or
(iii) if Parent shall terminate this Agreement pursuant to
Section 8.01(g) and neither Parent nor Merger Sub is in material
breach of its covenants and agreements or its representations and
warranties contained in this Agreement;
then the Company shall, provided no payment is made or payable pursuant to
Section 8.03(b), reimburse Parent (not later than one business day after
submission of statements and documentation therefor) for all of its Expenses up
to an amount equal to the amount of Parent's Expenses, up to a maximum of
$10,000,000.
(d) Parent agrees that:
(i) if the Company shall terminate this Agreement
pursuant to Section 8.01(i), then Parent shall pay to the Company upon
termination of this Agreement a fee of $130,000,000 (the "Parent
Fee"), which amount shall be payable in immediately available funds;
and
53
(ii) if the Company shall terminate this Agreement
pursuant to Section 8.01(h) and 8.01(k) and the Company is not in
material breach of its covenants and agreements or its representations
and warranties contained in this Agreement, then Parent shall,
provided no payment is made or payable pursuant to clause (d)(i)
above, reimburse the Company (not later than one business day after
submission of statements and documentation therefor) for all of its
Expenses up to an amount equal to the amount of the Company's
Expenses, up to a maximum of $10,000,000.
(e) Each of the parties acknowledges that the agreements
contained in this Section 8.03 are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, the other
party would not enter into this Agreement. In the event that either party shall
fail to pay the amounts due pursuant to Section 8.03 when due, and, in order to
obtain such payment, the non-breaching party commences a suit that results in a
judgment against the breaching party for the amounts set forth in Section 8.03,
the breaching party will pay to the non-breaching party interest on the amounts
set forth in Section 8.03, commencing on the date that such amounts became due,
at a rate equal to the rate of interest publicly announced by Citibank, N.A.,
from time to time, in The City of New York, as such bank's base rate plus
2.00%. Payment of the fees and expenses described in this Section 8.03 shall
not be in lieu of any damages incurred in the event of willful breach of this
Agreement.
(f) "Third Party Acquisition" means any of the following
transactions (other than the transactions contemplated by this Agreement): (i)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than fifty percent (50%) of the aggregate equity interests in the surviving or
resulting entity of such transaction or of any direct or indirect parent
thereof; (ii) a sale or other disposition by the Company of assets representing
in excess of fifty percent (50%) of the aggregate fair market value of the
Company's business immediately prior to such sale or other disposition; (iii)
an acquisition by any person or group (including by way of a tender offer or an
exchange offer or an issuance of capital stock by the Company), directly or
indirectly, of beneficial ownership of fifty percent (50%) or more of the
voting power of the then outstanding shares of capital stock of the Company;
(iv) the adoption by the Company of a plan of liquidation or the
recapitalization of the Company by means of the payment of an extraordinary
dividend involving more than $1.0 billion or (v) the repurchase by the Company
or any of the Company Subsidiaries of 50% or more of the outstanding Shares.
SECTION 8.04 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the adoption of this Agreement by the stockholders of the Company, no
amendment may be made that would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of any other party
54
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be
bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
in any certificate delivered pursuant hereto shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to Section 8.01 (except
as provided in Section 8.02), as the case may be, except that the agreements set
forth in Articles I and II and Sections 6.03(b), 6.06 and 6.10 and this Article
IX shall survive the Effective Time.
SECTION 9.02 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or email or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
if to Parent or Merger Sub:
Ispat International N.V.
15th Floor, Xxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Facsimile No.: x00-00-000-0000
Attention: Company Secretary
with a copy to:
Ispat International Ltd.
Berkeley Square House
0xx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
Facsimile No.: x00-00-0000-0000
Attention: General Counsel
55
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Xx.
Xxxxx X. Xxxxxx
Email: xxxxxxxxx@xxxxxxxx.xxx
xxxxxxx@xxxxxxxx.xxx
if to the Company:
International Steel Group Inc.
0000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: General Counsel
Email: xxxxxxxxxx@xxxxxxxxx.xxx
with a copy to:
Xxxxx Day
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
E-mail: xxxxxxxxxx@xxxxxxxx.xxx
SECTION 9.03 Certain Definitions. (a) For purposes of this
Agreement:
"affiliate" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person.
"beneficial owner", with respect to any Shares, has the
meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks
are not required or authorized to close in Amsterdam or The City of New
York.
"Company Material Adverse Effect" means any event,
circumstance, change or effect that, individually or in the aggregate
with all other events, circumstances, changes and effects, is or could
reasonably be expected to (i) be materially adverse to the business,
condition (financial or otherwise), assets, liabilities or results of
operations of
56
the Company and the Company Subsidiaries taken as a whole or (ii)
prevent or materially delay the consummation of any of the
Transactions or otherwise prevent or materially delay the Company from
performing its obligations under this Agreement; provided, however,
that the foregoing clauses (i) and (ii) shall not include any event,
circumstance, change or effect resulting from (x) changes in general
economic conditions, or (y) general changes in the industry of
manufacturing, processing, selling, marketing and distributing steel
in which the Company and the Company Subsidiaries operate, in each
case, that do not have a disproportionate effect (relative to other
industry participants) on the Company and the Company Subsidiaries,
taken as a whole.
"control" (including the terms "controlled by" and "under
common control with") means 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 the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
"EC Merger Regulation" means Council Regulation (EC) No.
139/2004 of the European Community.
"Environment" means any land, soil, substrata, groundwater,
surface water, drinking water, sediment, air, or terrestrial or aquatic
biota.
"Environmental Claim" means any and all actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, notices of liability or potential liability, investigations,
proceedings, consent orders or consent agreements relating in any way
to any Environmental Law, any Environmental Permit or any Hazardous
Substances.
"Environmental Laws" means any United States federal, state or
local or non-United States laws (including common law), ordinances,
regulations, rules, codes, orders or other requirements of law relating
to (i) Releases or threatened Releases of Hazardous Substances or
materials containing Hazardous Substances, (ii) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous
Substances or materials containing Hazardous Substances, (iii)
pollution or protection of the Environment, health, safety or natural
resources, (iv) exposure to Hazardous Substances or (v) natural
resource damages.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any applicable Environmental Law.
"Foreign Merger Filings" means any submission application or
form required by the applicable laws of the European Commission, the
member states thereof, or any other country in which Parent or the
Company operate which has jurisdiction over the Merger and "Foreign
Merger Approvals" means any approval required to be obtained from any
such authority.
57
"Exon-Xxxxxx Provision" means the provisions of Section 721 of
Title VII of the Defense Production Act of 1950, as amended, and the
regulations promulgated thereunder.
"Hazardous Substances" means (i) those substances, chemicals,
materials or wastes defined in or regulated under the following United
States federal statutes and their state and non-United States
counterparts, as each may be amended from time to time, and all
regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act, (ii) petroleum
and petroleum products, including crude oil and any fractions thereof,
(iii) natural gas, synthetic gas, and any mixtures thereof, (iv)
polychlorinated biphenyls, asbestos, radon, lead and mold, (v) any
other contaminant and (vi) any substance, chemical, material or waste
regulated pursuant to, or with respect to which liability may be
imposed under, any Environmental Law.
"Intellectual Property" means (i) United States, non-United
States and international patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, trade dress,
logos, trade names, corporate names and other source identifiers, and
registrations and applications for registration thereof, (iii)
copyrightable works, copyrights, and registrations and applications for
registration thereof and (iv) confidential and proprietary information,
including trade secrets and know-how.
"knowledge of the Company" means the actual knowledge of any
executive officer of the Company.
"knowledge of Parent" means the actual knowledge of any
executive officer of Parent.
"LNM Disclosed Information" means any information disclosed in
a document listed in Exhibit A to the letter delivered to Parent from
LNM pursuant to the Richmond Agreement.
"Parent Material Adverse Effect" means any event,
circumstance, change or effect that, individually or in the aggregate
with all other events, circumstances, changes and effects, is or is
reasonably likely to (i) be materially adverse to the business,
financial condition or results of operations of Parent and its
subsidiaries (including without limitation from and after the date of
the Closing of the LNM Transaction, LNM and its subsidiaries) taken as
a whole or (ii) prevent or materially delay the consummation of any of
the Transactions or otherwise prevent or materially delay Parent from
performing its obligations under this Agreement; provided, however,
that the foregoing clauses (i) and (ii) shall not include any event,
circumstance, change or effect resulting from (x) changes in general
economic conditions, or (y) general changes in the industry of
manufacturing, processing, selling, marketing and distributing steel in
which Parent and the Parent
58
Subsidiaries operate, in each case, that do not have a
disproportionate effect (relative to other industry participants) on
Parent and the Parent Subsidiaries, taken as a whole.
"Parent Prospectus" means the draft dated October 23, 2004, of
the shareholder circular/prospectus to be distributed to the
shareholders of Parent in connection with the LNM Transaction.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government.
"Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like into or upon any land or water or air or otherwise
entering into the Environment.
"Remedial Action" means all action to (i) clean up, remove,
treat or handle in any other way Hazardous Substances in the
Environment, (ii) restore or reclaim the Environment or natural
resources, (iii) prevent the Release of Hazardous Substances so that
they do not migrate, endanger or threaten to endanger public health or
the Environment or (iv) perform remedial investigations, feasibility
studies, corrective actions, closures and post-remedial or post-closure
studies, investigations, operations, maintenance and monitoring on,
about or in any real property.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more
intermediaries.
"Taxes" shall mean (a) any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of like kind (together with
any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any taxing authority,
including, without limitation: taxes or other charges on or with
respect to income, franchise, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding,
ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs and
similar charges, (b) any liability for the payment of any Tax as a
result of membership in any affiliated, consolidated, combined or
unitary group of corporations of which the Company or any Company
Subsidiary is or has been a member and (c) any transferee or secondary
liability in respect of any Tax (whether imposed by Law or contractual
arrangement).
"Tax Returns" means any return, declaration, report, election,
claim for refund or information return or other statement or form
relating to, filed or required to be filed with any taxing authority,
including any schedule or attachment thereto, and including any
amendment thereof.
(b) The following terms have the meaning set forth in
the Sections set forth:
59
Location of
Defined Term Definition
------------ -------------
Action............................................................ Section 3.09
Agreement......................................................... Preamble
Assumed Company SAR............................................... Section 2.04(c)
Average Parent Stock Price........................................ Section 2.01(c)
Blue Sky Laws..................................................... Section 3.05(b)
Cash Consideration................................................ Section 2.01(c)
Cash Election..................................................... Section 2.01(d)
Cash Election Number.............................................. Section 2.01(d)
Cash Election Shares.............................................. Section 2.01(e)
Cash Fraction..................................................... Section 2.01(e)
Certificate of Merger............................................. Section 1.02
Certificates...................................................... Section 2.02(b)
Change in the Company Recommendation.............................. Section 6.04(c)
Closing........................................................... Section 1.02
Code.............................................................. Recitals
Company........................................................... Preamble
Company 2003-4 Balance Sheets..................................... Section 3.07(c)
Company Affiliate................................................. Section 6.09
Company Board..................................................... Recitals
Company Class B Common Stock...................................... Section 3.03(a)
Company Common Stock.............................................. Section 2.01(a)
Company Disclosure Schedule....................................... Article III
Company Fee....................................................... Section 8.03(b)(v)
Company Licensed Intellectual Property............................ Section 3.13
Company Owned Intellectual Property............................... Section 3.13
Company Permits................................................... Section 3.06
Company Preferred Stock........................................... Section 3.03(a)
Company Recommendation............................................ Section 6.01(b)
Company SAR....................................................... Section 2.04(c)
Company SEC Reports............................................... Section 3.07(a)
Company Shareholder Support Agreement............................. Recitals
Company Shares.................................................... Section 2.01(a)
Company Stock Option Plan......................................... Section 2.04(a)
Company Stock Options............................................. Section 2.04(a)
Company Stockholders' Meeting..................................... Section 6.01(a)
Company Subsidiary................................................ Section 3.01(c)
Company Triggering Event.......................................... Section 8.01
Competing Transaction............................................. Section 6.04(d)
Confidentiality Agreement......................................... Section 6.03(b)
Dissenting Shares................................................. Section 2.05(a)
DGCL.............................................................. Recitals
Effective Time.................................................... Section 1.02
Election.......................................................... Section 2.01(h)
Election Deadline................................................. Section 2.01(k)
60
Location of
Defined Term Definition
------------ -------------
ERISA............................................................. Section 3.10(a)
Euronext Prospectus............................................... Section 6.17(a)
Exchange Act...................................................... Section 3.07(a)
Exchange Agent.................................................... Section 2.02(a)
Exchange Fund..................................................... Section 2.02(a)
Exchange Ratio.................................................... Section 2.01(c)
Expenses.......................................................... Section 8.03(a)
FCPA.............................................................. Section 3.20
Form of Election.................................................. Section 2.01(i)
GAAP.............................................................. Section 3.07(b)
Governmental Authority............................................ Section 3.05(b)
Great Lakes Shipping Vessels...................................... Section 6.18(a)
HSR Act........................................................... Section 3.05(b)
Indemnified Parties............................................... Section 6.07(b)
IRS............................................................... Section 3.10(a)
Law............................................................... Section 3.05(a)
Lease Documents................................................... Section 3.12(b)
Liens............................................................. Section 3.12(a)
LNM Audited Financials............................................ Section 4.07(c)
LNM Closing....................................................... Recitals
LNM Interim Financials............................................ Section 4.07(c)
LNM Shareholder Support Agreement................................. Recitals
LNM Transaction................................................... Recitals
Material Company Subsidiary....................................... Section 3.01(c)
Material Contracts................................................ Section 3.17(a)
Material Parent Subsidiary........................................ Section 4.01(c)
Maximum Premium................................................... Section 6.07(c)
Merger............................................................ Recitals
Merger Consideration.............................................. Section 2.01(c)
Merger Sub........................................................ Preamble
Minimum Percentage................................................ 1.01(b)
Mixed Consideration............................................... Section 2.01(c)
Mixed Election.................................................... Section 2.01(h)
Multiemployer Plan................................................ Section 3.10(b)
Multiple Employer Plan............................................ Section 3.10(b)
No Election Shares................................................ Section 2.01(j)
Notice of Superior Proposal....................................... Section 6.04(c)
NYSE.............................................................. Section 6.14
Order............................................................. Section 7.01(e)
Parent............................................................ Preamble
Parent 2003-4 Balance Sheets...................................... Section 4.07(e)
Parent Board...................................................... Recitals
Parent Business Combination....................................... Section 2.01(l)
Parent Class A Shares............................................. Section 2.01(c)
61
Location of
Defined Term Definition
------------ -------------
Parent Class B Shares............................................. Section 4.03(a)
Parent Disclosure Schedule........................................ Article IV
Parent Fee........................................................ Section
8.03(d)(i)
Parent Permits.................................................... Section 4.06
Parent SEC Reports................................................ Section 4.07(a)
Parent Shareholder................................................ Recitals
Parent Shareholder Approval....................................... Section 7.01(d)
Parent Shareholders' Meeting...................................... Section 6.02(b)
Parent Shareholder Support Agreement.............................. Recitals
Parent Subsidiary................................................. Section 4.01(c)
Permitted Liens................................................... Section 3.12(a)
Plans............................................................. Section 3.10(a)
Proxy Statement................................................... Section 6.01(a)
Registration Statement............................................ Section 6.01(a)
Representatives................................................... Section 6.03(a)(i)
Reverse-Subsidiary Merger......................................... Section 1.01(a)
Richmond.......................................................... Recitals
Richmond Agreement................................................ Recitals
SEC............................................................... Section 3.01(c)
Securities Act.................................................... Section 3.07(a)
Stock Consideration............................................... Section 2.01(c)
Stock Election.................................................... Section 2.01(f)
Stock Election Number............................................. Section 2.01(f)
Stock Election Shares............................................. Section 2.01(g)
Stock Fraction.................................................... Section 2.01(g)
Stock Value....................................................... Section 1.01(b)
Stockholders...................................................... Recitals
Stockholder's Representative...................................... Section 2.01(i)
Superior Proposal................................................. Section 6.04(e)
Surviving Corporation............................................. Section 1.01(a)
Terminating Company Breach........................................ Section 8.01(g)
Terminating Parent Breach......................................... Section 8.01(h)
Third Party Acquisition........................................... Section 8.03(f)
Transactions...................................................... Section 3.04
SECTION 9.04 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 or
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 a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
62
For the avoidance of doubt, (1) the enforceability of the
Company Shareholder Support Agreement, the Parent Shareholder Support Agreement
and the LNM Shareholder Support Agreement (the "Support Agreements") will not
affect any party's obligations hereunder and these agreements are not to be
deemed to be a part of this Agreement and (2) the termination of this Agreement
will not affect parties relative rights and obligations under the
Confidentiality Agreement or, except as expressly provided herein or therein,
the Support Agreements.
SECTION 9.05 Entire Agreement; Assignment. This Agreement and
the Confidentiality Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and this Agreement supersedes, except
for the Confidentiality Agreement to the extent not waived in Section 6.03(d),
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned (whether pursuant to a merger, by operation of law or
otherwise), except that Merger Sub may assign all or any of its rights and
obligations hereunder to any affiliate of Parent controlled by Parent; provided
that such assignment does not adversely affect the qualification of the Merger
as a reorganization under Section 368(a) of the Code or the ability of Parent
and the Company to receive the opinions described in Sections 7.02(f) and
7.03(d); and provided further, that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
SECTION 9.06 Disclosure Schedules; Disclosure Information.
Notwithstanding anything to the contrary contained in the Parent Disclosure
Schedule, the Company Disclosure Schedule, the LNM Disclosure Information or in
this Agreement, the information and disclosures contained in any section of the
Parent Disclosure Schedule, the LNM Disclosure Information or the Company
Disclosure Schedule shall be deemed to be disclosed and incorporated by
reference in any other section of the Parent Disclosure Schedule or the Company
Disclosure Schedule, as applicable, as though fully set forth in such other
section for which the applicability of such information and disclosure is
readily apparent on the face of such information or disclosure.
SECTION 9.07 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 6.06 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.08 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
SECTION 9.09 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State (other
than those provisions set forth herein that are required to be governed by the
DGCL). All actions and proceedings arising out of or relating to this Agreement
shall be heard and determined exclusively in any New York state or federal court
63
sitting in the Borough of Manhattan of The City of New York. The parties hereto
hereby (a) submit to the exclusive jurisdiction of any state or federal court
sitting in the Borough of Manhattan of The City of New York for the purpose of
any Action arising out of or relating to this Agreement brought by any party
hereto and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
SECTION 9.10 Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement or the Transactions.
Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other hereto have been
induced to enter into this Agreement and the Transactions, as applicable, by,
among other things, the mutual waivers and certifications in this Section 9.09.
SECTION 9.11 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.12 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[Signature Page to Follow]
64
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ISPAT INTERNATIONAL N.V.
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xx. Xxxxxxx X. Xxxxxx
Title: Chairman
PARK ACQUISITION CORP.
By /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xx. Xxxxxxx Xxxxxx
Title: Treasurer
INTERNATIONAL STEEL GROUP INC.
By /s/ Xxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: President & Chief Executive
Officer
EXHIBIT 6.09
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[______] [__], 2004
Ispat International N.V.
15th Floor, Xxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of International Steel Group Inc., (the
"Company"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger and Reorganization, dated as of October 24, 2004
(the "Merger Agreement"), among Ispat International N.V., a company organized
under the laws of The Netherlands ("Parent"), Park Acquisition Corp., a Delaware
corporation ("Merger Sub"), and the Company, Merger Sub will be merged with and
into the Company (the "Merger"). Capitalized terms used in this letter agreement
without definition shall have the meanings assigned to them in the Merger
Agreement.
As a result of the Merger, I may receive Parent Class A
Shares, par value $[_____] per share, of Parent (the "Parent Shares"). I would
receive such Parent Shares in exchange for shares (or upon exercise of options
for shares) owned by me of common stock, par value $[_____] per share, of the
Company (the "Company Shares").
I represent, warrant and covenant to Parent that in the event I receive
any Parent Shares as a result of the Merger:
1. I shall not make any sale, transfer or other disposition of
the Parent Shares in violation of the Act or the Rules and Regulations.
A. I have carefully read this letter and the Merger
Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of the Parent Shares, to the extent I felt necessary, with my
counsel or counsel for the Company.
B. I have been advised that the issuance of the Parent
Shares to me pursuant to the Merger has been registered with the
Commission under the Act on a Registration Statement on Form F-4.
However, I have also been advised that, because at the time the Merger
is submitted for a vote of the stockholders of the Company, (a) I may
be deemed to be an affiliate of the Company and (b) the distribution
by me of the Parent Shares has
not been registered under the Act, I may not sell, transfer or
otherwise dispose of the Parent Shares issued to me in the Merger
unless (i) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer
or other disposition has been registered under the Act or (iii) in the
opinion of counsel reasonably acceptable to Parent, such sale,
transfer or other disposition is otherwise exempt from registration
under the Act.
C. I understand that Parent is under no obligation to
register the sale, transfer or other disposition of the Parent Shares
by me or on my behalf under the Act or, except as provided in
paragraph 2(A) below, to take any other action necessary in order to
make compliance with an exemption from such registration available.
D. I understand that there will be placed on the
certificates for the Parent Shares issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE
TERMS OF AN AGREEMENT DATED [______], 2004 BETWEEN THE
REGISTERED HOLDER HEREOF AND ISPAT INTERNATIONAL N.V., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
ISPAT INTERNATIONAL N.V."
E. I understand that unless a sale or transfer by me of
the Parent Shares is made in conformity with the provisions of Rule
145, or pursuant to a registration statement, Parent reserves the
right to put the following legend on the certificates issued to my
transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH
A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
F. Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a waiver of
any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
[2. By Parent's acceptance of this letter, Parent hereby agrees
with me as follows:
A. For so long as and to the extent necessary to permit
me to sell the Parent Shares pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Act, Parent shall (a) use its
reasonable efforts to (i) file, on a timely basis, all reports and
data required to be filed with the Commission by it pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and (ii) furnish to me upon request a written
statement as to whether Parent has complied with such reporting
requirements during the 12 months preceding any proposed sale of the
Parent Shares by me under Rule 145 and (b) otherwise use its
reasonable efforts to permit such sales pursuant to Rule 145 and Rule
144. Parent hereby represents to me that it has filed all reports
required to be filed with the Commission under Section 13 of the
Exchange Act during the preceding 12 months.
B. It is understood and agreed that certificates with
the legends set forth in paragraphs 1(E) and 1(F) above will be
substituted by delivery of certificates without such legends if (i)
one year shall have elapsed from the date the undersigned acquired the
Parent Shares received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two years shall
have elapsed from the date the undersigned acquired the Parent Shares
received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned or (iii) Parent has received either an
opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to Parent, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.]
3. It is understood and agreed that this letter agreement will
terminate and be of no further force and effect if the Merger Agreement is
terminated in accordance with its terms.
Very truly yours,
---------------------------------------
Name:
Agreed and accepted this [__] day
of [________], 2004, by
Ispat International N.V.
By:
-----------------------------------------
Name:
Title:
