Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CEMEX, S.A. de C.V.
TRICEM ACQUISITION, CORP.
AND
PUERTO RICAN CEMENT COMPANY, INC.
DATED AS OF
June 11, 2002
TABLE OF CONTENTS
Page
Article I
Definitions
Section 1.1 Definitions....................................................................................1
Article II
The Offer
Section 2.1 The Offer......................................................................................8
Section 2.2 Company Action................................................................................11
Section 2.3 Directors.....................................................................................12
Section 2.4 Merger Without Meeting of Shareholders........................................................14
Article III
The Merger And Related Matters
Section 3.1 The Merger....................................................................................14
Section 3.2 Certificate of Incorporation of the Surviving Corporation.....................................14
Section 3.3 By-Laws of the Surviving Corporation..........................................................14
Section 3.4 Directors and Officers of the Surviving Corporation...........................................15
Section 3.5 Closing.......................................................................................15
Section 3.6 Subsequent Actions............................................................................15
Article IV
Conversion Of Securities
Section 4.1 Conversion of Capital Stock...................................................................15
Section 4.2 Exchange of Certificates......................................................................16
Section 4.3 Appraisal Rights..............................................................................17
Section 4.4 Lost, Stolen or Destroyed Certificates........................................................18
Article V
Disclosure Schedules; Standards
For Representations And Warranties
Section 5.1 Disclosure Schedules..........................................................................18
Section 5.2 Standards.....................................................................................18
Article VI
Representations And Warranties Of The Company
Section 6.1 Due Organization, Good Standing and Power.....................................................19
Section 6.2 Authorization and Validity of Agreement.......................................................19
Section 6.3 Capitalization................................................................................20
Section 6.4 Consents and Approvals; No Violations.........................................................21
Section 6.5 Company Reports and Financial Statements......................................................22
Section 6.6 Information to Be Supplied....................................................................23
Section 6.7 Absence of Certain Events.....................................................................23
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Section 6.8 Litigation....................................................................................23
Section 6.9 Title to Properties; Encumbrances; Leases.....................................................24
Section 6.10 Compliance with Laws..........................................................................24
Section 6.11 Employee Benefit Plans........................................................................25
Section 6.12 Books and Records.............................................................................27
Section 6.13 Taxes.........................................................................................27
Section 6.14 Intellectual Property.........................................................................29
Section 6.15 Brokers; Schedule of Fees and Expenses........................................................29
Section 6.16 Environmental Matters.........................................................................29
Section 6.17 Takeover Statutes.............................................................................31
Section 6.18 Voting Requirements; Board Approval...........................................................31
Section 6.19 Opinion of Financial Advisor..................................................................32
Section 6.20 Contracts.....................................................................................32
Section 6.21 Plants and Equipment..........................................................................33
Section 6.22 Labor and Employment Matters..................................................................33
Section 6.23 Certain Contracts.............................................................................33
Section 6.24 Insurance.....................................................................................34
Section 6.25 Certain Actions...............................................................................34
Section 6.26 Xxxxx Loans and Loan Commitments..............................................................34
Article VII
Representations And Warranties Of Parent And Purchaser
Section 7.1 Due Organization; Good Standing...............................................................36
Section 7.2 Authorization and Validity of Agreement.......................................................36
Section 7.3 Consents and Approvals; No Violations.........................................................37
Section 7.4 Information to Be Supplied....................................................................37
Section 7.5 Broker's or Finder's Fee......................................................................38
Section 7.6 Ownership of Capital Stock....................................................................38
Section 7.7 No Prior Activities...........................................................................38
Section 7.8 Sufficient Funds..............................................................................38
Article VIII
Covenants
Section 8.1 Access to Information Concerning Properties and Records.......................................38
Section 8.2 Conduct of the Business of the Company Pending the Closing Date...............................39
Section 8.3 Company Shareholder Meeting; Preparation of Proxy Statement...................................43
Section 8.4 Reasonable Best Efforts; Notification.........................................................44
Section 8.5 No Solicitation...............................................................................45
Section 8.6 Antitrust Laws................................................................................48
Section 8.7 Indemnification; Directors' and Officers' Insurance...........................................48
Section 8.8 Public Announcements..........................................................................49
Section 8.9 Employee Benefits Plans.......................................................................50
Section 8.10 Availability of Sufficient Funds..............................................................51
Article IX
Conditions To The Merger
Section 9.1 Conditions to Obligations of Each Party.......................................................51
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Article X
Termination And Abandonment
Section 10.1 Termination...................................................................................52
Section 10.2 Effect of Termination.........................................................................54
Section 10.3 Payment of Certain Fees.......................................................................54
Article XI
Miscellaneous
Section 11.1 Representations and Warranties................................................................55
Section 11.2 Extension; Waiver.............................................................................55
Section 11.3 Notices.......................................................................................56
Section 11.4 Entire Agreement..............................................................................57
Section 11.5 Binding Effect; Benefit; Assignment...........................................................57
Section 11.6 Amendment and Modification....................................................................57
Section 11.7 Further Actions...............................................................................58
Section 11.8 Interpretation................................................................................58
Section 11.9 Enforcement...................................................................................58
Section 11.10 Fees and Expenses.............................................................................59
Section 11.11 Counterparts..................................................................................59
Section 11.12 Applicable Law................................................................................59
Section 11.13 Severability..................................................................................59
Section 11.14 Waiver of Jury Trial..........................................................................59
Section 11.15 Time..........................................................................................59
Section 11.16 Effect on Confidentiality Agreement...........................................................59
Annex I - Certain Conditions of the Offer
Exhibit A - Form of Transaction Support Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 11, 2002 (this
"AGREEMENT"), by and among Cemex, S.A. de C.V., a Mexico corporation
("PARENT"), Tricem Acquisition, Corp., a Puerto Rico corporation and an
indirect subsidiary of Parent ("PURCHASER"), and Puerto Rican Cement Company,
Inc., a Puerto Rico corporation (the "COMPANY").
WHEREAS, the Boards of Directors of each of Purchaser and the
Company have determined that it is advisable and in the best interests of each
corporation and its respective shareholders to consummate the acquisition of
the Company by Purchaser, upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance thereof, it is proposed that
Purchaser make a cash tender offer to acquire all shares of the issued and
outstanding common stock, U.S. $1.00 par value, of the Company (the "COMPANY
COMMON STOCK") for U.S. $35.00 per share, net to the seller in cash;
WHEREAS, Parent, Purchaser and certain holders of Company
Common Stock are contemporaneously with the execution of this Agreement
entering into separate Transaction Support Agreements, the form of which is
attached hereto as Exhibit A (collectively, the "TRANSACTION SUPPORT
AGREEMENTS"); and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of each of Purchaser and the Company have approved this Agreement
and the transactions contemplated hereby, including the merger of Purchaser
with and into the Company, with the Company as the surviving corporation,
following the Offer (as hereinafter defined) and the Board of Directors of the
Company has also taken such action as is necessary to render inapplicable to
this Agreement and the Transaction Support Agreements and the transactions
contemplated hereby and thereby the provisions of Article TENTH of the
Company's Certificate of Incorporation.
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. When used in this
Agreement, the following terms shall have the respective meanings specified
therefor below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined).
"ACQUISITION AGREEMENT" shall have the meaning set forth in
Section 8.5(b).
"AFFILIATE" of any Person shall mean any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person; provided that for the
purposes of this definition, "control" (including with correlative meanings,
the terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or partnership
interests, by contract or, otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble
hereto.
"ANTITRUST AUTHORITIES" shall have the meaning set forth in
Section 8.6(d).
"ANTITRUST LAW" shall have the meaning set forth in Section
8.6(d).
"BALANCE SHEET" means the audited balance sheet of the
Company and its consolidated Subsidiaries as of December 31, 2001.
"BANCO POPULAR LOAN AGREEMENTS" means that certain U.S. $5.9
million Credit Agreement between the Company and Banco Popular de Puerto Rico,
dated December 28, 2001 and that certain U.S. $15.6 million Credit Agreement
between the Company and Banco Popular de Puerto Rico, dated August 10, 2001.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
a federal holiday, and shall consist of the time period from 12:01 a.m. through
12:00 midnight Eastern time.
"CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 3.1(b).
"CERTIFICATES" shall have the meaning set forth in Section
4.2(b).
"CLEANUP" shall have the meaning set forth in Section 6.16.
"CLOSING" shall have the meaning set forth in Section 3.5.
"CLOSING DATE" shall have the meaning set forth in Section
3.5.
"CODE" shall mean the Internal Revenue Code of 1986, as may
be amended from time to time.
"COMPANY" shall have the meaning set forth in the preamble
hereto.
"COMPANY BENEFIT PLANS" shall have the meaning set forth in
Section 6.11(a).
"COMPANY'S BOARD OF DIRECTORS" shall have the meaning set
forth in Section 2.1(a).
"COMPANY BUDGET" shall have the meaning set forth in Section
8.2(b).
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"COMPANY COMMON STOCK" shall have the meaning set forth in
the recitals hereof.
"COMPANY DISCLOSURE SCHEDULE" shall have the meaning set
forth in Section 5.1.
"COMPANY EMPLOYEES" shall have the meaning set forth in
Section 8.9(c).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean (i) a material
adverse effect on the ability of the Company to perform in all respects its
obligations under this Agreement or to consummate the transactions contemplated
hereby, (ii) a material adverse effect on the business, assets, liabilities,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole, (iii) as to matters which can reasonably be
quantified in economic terms, any effect which has resulted in or would be
reasonably expected to result in, with respect to the Company and its
Subsidiaries, taken as a whole, a diminution or decrease in the value of
properties or assets, an increase in liabilities or obligations (whether
accrued, contingent or otherwise), an adverse change in the cash flows,
business or financial condition, or any combination thereof involving,
individually or in the aggregate, with respect to all applicable
representations or warranties, more than U.S. $15 million; provided, that, in
calculating such amount, any amounts which are included in the "baskets" set
forth in (1) clause (iii) of the last sentence of Section 6.5(c), (2) the first
sentence of Section 6.8, (3) Section 6.23(a) and (4) Section 8.2(b)(11)(E) will
be included in the determination of whether such U.S. $15 million amount is
exceeded, or (iv) a material adverse effect on the long-term ability of the
Company and its Subsidiaries, taken as a whole, to continue their operations or
to obtain their required supply of raw materials or other production inputs;
provided, however, that any effect relating to (a) any changes or developments
in the economy in general, the cement, ready mix or construction industries in
Puerto Rico generally or effects of weather or meteorological events or acts of
terrorism or war, provided, that the Company and its Subsidiaries are not
affected by such changes or effects in a materially disproportionate manner as
compared to other companies in such industries in Puerto Rico, or (b) the
negotiation, announcement, execution, delivery, consummation or anticipation of
the transactions contemplated by, or compliance with, this Agreement and the
transactions contemplated hereby, shall be excluded for purposes of determining
whether a Company Material Adverse Effect has occurred.
"COMPANY PREFERRED STOCK" shall mean that preferred stock of
the Company having a par value of five dollars ($5.00) per share as authorized
by the Company's Certificate of Incorporation.
"COMPANY SEC REPORTS" shall mean all forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, filed by
the Company or any of its Subsidiaries with the SEC since December 31, 1999.
"COMPANY SHAREHOLDER APPROVAL" shall mean the approval of
this Agreement and the Merger at the Company Shareholder Meeting by the holders
of a majority of all outstanding shares of Company Common Stock, voting as one
class, with each share having one vote.
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"COMPANY SHAREHOLDER MEETING" shall have the meaning set
forth in Section 8.3(a).
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality
agreement between the Company and Cemex, Inc., dated May 24, 2002.
"CONSUMMATION OF THE OFFER" shall mean the acceptance for
payment of shares of Company Common Stock by Purchaser pursuant to the Offer,
in accordance with the terms of this Agreement.
"CONTRACTS" shall have the meaning set forth in Section 6.4.
"CURE PERIOD" shall have the meaning set forth in Section
2.1(a).
"DISSENTING SHAREHOLDERS" shall have the meaning set forth in
Section 4.1(c).
"EFFECTIVE TIME" shall have the meaning set forth in Section
3.1(b).
"ENVIRONMENTAL CLAIMS" shall have the meaning set forth in
Section 6.16.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in
Section 6.16.
"ERISA" shall have the meaning set forth in Section 6.11.
"ERISA AFFILIATE" shall have the meaning set forth in Section
6.11.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
"FINANCIAL STATEMENTS" means the audited and unaudited
financial statements of the Company and its consolidated Subsidiaries included
in the Company SEC Reports.
"FOREIGN PLAN" shall have the meaning set forth in Section
6.11.
"GAAP" shall mean generally accepted accounting principles of
the United States of America, as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in
Section 6.4.
"HAZARDOUS MATERIALS" shall have the meaning set forth in
Section 6.16.
"HSR ACT" shall have the meaning set forth in Section 6.4.
"INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.7(a).
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"INDEPENDENT DIRECTORS" shall have the meaning set forth in
Section 2.3(a).
"INITIAL EXPIRATION DATE" shall have the meaning set forth in
Section 2.1(a).
"INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set
forth in Section 6.14.
"ISSUANCE OBLIGATION" shall have the meaning set forth in
Section 6.3(a).
"JOINT PRESS RELEASE" shall have meaning set forth in Section
2.1(b).
"KNOWLEDGE" shall mean, when used in any representation,
warranty or covenant of the Company contained herein, the actual or deemed
knowledge (as defined below) of the individuals listed on Schedule 1.1 hereto.
For purposes hereof, each such individual shall be deemed to have knowledge of
any item, matter, fact, occurrence, circumstance or condition which such
individual should have known through the exercise of reasonable care or after
reasonable inquiry.
"LANDLORD LEASES" shall have the meaning set forth in Section
6.9(b).
"LAWS" shall have the meaning set forth in Section 6.4.
"LIENS" shall mean all security interests, liens, claims,
pledges, options, rights of first refusal, charges or other encumbrances of any
nature or any other similar limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided
under applicable U.S. federal, state or Puerto Rico securities Laws).
"MATERIAL CONTRACT" shall have the meaning set forth in
Section 6.20(a).
"MEASUREMENT DATE" shall mean the first to occur of (a) the
date upon which Parent first designates one or more directors of the Company
pursuant to Section 2.3(a) and (b) the date upon which the Effective Time
occurs.
"MERGER" shall have the meaning set forth in Section 3.1(a).
"MERGER CONSIDERATION" shall have the meaning set forth in
Section 4.1(c).
"MINIMUM CONDITION" shall have the meaning set forth in
Section 2.1(a).
"NLRB" shall have the meaning set forth in Section 6.11.
"OFFER" shall have the meaning set forth in Section 2.1(a).
"OFFER DOCUMENTS" shall have the meaning set forth in Section
2.1(c).
"OFFER PRICE" shall have the meaning set forth in Section
2.1(a).
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"OFFER TO PURCHASE" shall have the meaning set forth in
Section 2.1(a).
"ORDERS" shall have the meaning set forth in Section 6.4.
"PARENT" shall have the meaning set forth in the preamble
hereto.
"PARENT DESIGNEES" shall have the meaning set forth in
Section 2.3.
"PARENT DISCLOSURE SCHEDULE" shall have the meaning set forth
in Section 5.1.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any event,
change, occurrence, effect, fact or circumstance that is materially adverse to
the ability of Parent or Purchaser to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
"PAYING AGENT" shall have the meaning set forth in Section
4.2(a).
"PBGC" shall have the meaning set forth in Section 6.11.
"PERMITS" shall have the meaning set forth in Section
6.10(b).
"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, a
limited liability company, any other entity, a group and a government or other
department or agency thereof.
"XXXXX" shall have the meaning set forth in Section 6.26.
"XXXXX DEBTORS" shall have the meaning set forth in Section
6.26.
"XXXXX LOAN COMMITMENTS" shall have the meaning set forth in
Section 6.26.
"XXXXX LOAN DOCUMENTS" shall have the meaning set forth in
Section 6.26.
"PONCE LOANS" shall have the meaning set forth in Section
6.26.
"PRGCL" shall mean the General Corporation Law of the
Commonwealth of Puerto Rico, as currently in effect and as amended from time to
time.
"PROXY STATEMENT" shall have the meaning set forth in Section
8.3(b).
"PUERTO RICO" shall mean the Commonwealth of Puerto Rico.
"PURCHASER" shall have the meaning set forth in the preamble
hereto.
"QUALIFIED PERSON" shall have the meaning set forth in
Section 2.3(a).
6
"REJECTION PERIOD" shall have the meaning set forth in
Section 2.1(a).
"RELEASE" shall have the meaning set forth in Section 6.16.
"RETURNS" shall have the meaning set forth in Section
6.13(a).
"SCHEDULE 14D-9" shall have the meaning set forth in Section
2.2(c).
"SCHEDULE TO" shall have the meaning set forth in Section
2.1(c).
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SUBSEQUENT AMENDMENT" shall have the meaning set forth in
Section 2.1.
"SUBSIDIARY" with respect to a Person shall mean (x) any
partnership of which such Person or any of its Subsidiaries is a general
partner (excluding any such partnership where such Person or any Subsidiary of
such Person does not have a majority of the voting interest in such
partnership) or (y) any other entity in which such Person together with any of
its Subsidiaries owns or has the power to vote more than 50% of the equity
interests in such entity having general voting power to participate in the
election of the governing body of such entity.
"SUFFICIENT FUNDS" shall have the meaning set forth in
Section 7.8.
"SUPERIOR PROPOSAL" shall have the meaning set forth in
Section 8.5(a).
"SURVIVING CORPORATION" shall have the meaning set forth in
Section 3.1(a).
"TAKEOVER PROPOSAL" shall have the meaning set forth in
Section 8.5(a).
"TAXES" shall have the meaning set forth in Section 6.13(a).
"TENANT LEASES" shall have the meaning set forth in Section
6.9(b).
"TERMINATION DATE" shall mean ninety days following
commencement of the Offer; provided, however, that if the condition provided
for in clause (a) (ii) of Annex I shall not have been satisfied on or prior to
such date, then the Termination Date shall be extended until ten Business Days
after such condition has been satisfied, but in no event shall the Termination
Date be extended beyond one hundred and eighty days following commencement of
the Offer.
"TERMINATION FEE" shall have the meaning set forth in Section
10.3.
"THIRD PARTY ACQUISITION EVENT" shall have the meaning set
forth in Section 10.3.
"U.S.$" shall mean United States dollars.
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"VOTING DEBT" shall have the meaning set forth in Section
6.3(a).
"WARN ACT" shall have the meaning set forth in Section
6.22(c).
ARTICLE II
THE OFFER
SECTION 2.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated pursuant to Section 10.1 hereof, as promptly as reasonably
practicable, but in no event later than fifteen Business Days following the
public announcement of the terms of this Agreement (which public announcement
shall occur no later than the first Business Day following the execution of
this Agreement), Purchaser shall, and Parent shall cause Purchaser to, commence
(within the meaning of Rule 14d-2 under the Exchange Act) a tender offer (as it
may be amended from time to time as permitted by this Agreement, the "OFFER")
to purchase all of the shares of Company Common Stock issued and outstanding at
a price of U.S. $35.00 per share, net to the seller in cash (such price, or
such higher price per share of Company Common Stock as may be paid in the
Offer, being referred to herein as the "OFFER PRICE"). The obligation of
Purchaser to accept for payment and pay for shares of Company Common Stock
tendered pursuant to the Offer shall be subject only to the condition that
there shall be validly tendered (other than by guaranteed delivery where actual
delivery has not occurred) in accordance with the terms of the Offer, prior to
the expiration date of the Offer and not withdrawn, a number of shares of
Company Common Stock that, together with the shares of Company Common Stock
then owned by Parent and/or Purchaser, represents at least a majority of the
shares of Company Common Stock outstanding on a fully diluted basis (after
giving effect to the conversion or exercise of all outstanding options,
warrants and other rights to acquire, and securities exercisable or convertible
into, Company Common Stock, whether or not exercised or converted at the time
of determination) (the "MINIMUM CONDITION") and to the satisfaction or waiver
by Purchaser as permitted hereunder of the other conditions set forth in Annex
I hereto. The Offer shall be made by means of an offer to purchase (the "OFFER
TO PURCHASE") and the related letter of transmittal, each in form reasonably
satisfactory to the Company, containing the terms set forth in this Agreement
and the conditions set forth in Annex I. Parent and Purchaser agree that the
Offer to Purchase will state at least in the summary term sheet and in
appropriate places in the Offer to Purchase that "Purchaser's obligation to
purchase shares of Company Common Stock under the Offer is not conditioned on
any financing arrangements or subject to any financing condition." Without
limiting the foregoing, effective upon Consummation of the Offer, the holder of
such Company Common Stock will sell and assign to Purchaser all right, title
and interest in and to all of the shares of Company Common Stock tendered
(including, but not limited to, such holder's right to any and all dividends
and distributions, if any, with a record date before, and a payment date after,
the scheduled or extended expiration date).
Purchaser expressly reserves the right, subject to compliance
with the Exchange Act, to waive any of the conditions to the Offer and to make
any change in the terms of or conditions to the Offer; provided that, without
the prior written consent of the Company, which consent must be expressly
authorized by the board of directors of the Company (the "COMPANY'S BOARD OF
DIRECTORS"), (i) the Minimum Condition may not be waived or
8
changed and (ii) no change may be made that changes the form of consideration
to be paid, decreases the Offer Price, decreases the number of shares of
Company Common Stock sought in the Offer, adds to or modifies any of the
conditions to the Offer set forth in Annex I, makes any other change in the
terms of the Offer that is materially adverse to the holders of the Company
Common Stock or (except as provided in the next sentence) changes the
expiration date of the Offer. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, extend the expiration date of the Offer
beyond the Initial Expiration Date, (i) if, immediately before the scheduled or
extended expiration date of the Offer, any of the conditions to the Offer shall
not have been satisfied or, to the extent permitted, waived, until such
conditions are satisfied or waived, (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable Law or (iii) for
up to 10 additional business days in increments of not more than two business
days each (but in no event beyond the Termination Date), if, immediately prior
to the scheduled or extended expiration date of the Offer, the Company Common
Stock tendered and not withdrawn pursuant to the Offer constitutes more than
80% and less than 90% of the outstanding Company Common Stock, notwithstanding
that all conditions to the Offer are satisfied as of such expiration date of
the Offer; provided, that in the case of any extension under clause (iii),
Parent or Purchaser may not thereafter assert the failure of any of the
conditions provided for in clause (b)(ii) of Annex I or, for purposes of clause
(b)(iii) or (c) of Annex I, a Company Material Adverse Effect or a material
breach of a representation or warranty, in each such case, by reason of an
event other than a knowing, intentional breach of a covenant by the Company
occurring after the initial extension under clause (iii). In addition,
Purchaser shall at the request of the Company extend the Offer for a period of
time sufficient to provide the applicable Cure Period to the Company in the
event of a breach by the Company of a representation, warranty, covenant or
other agreement of the Company under this Agreement which breach, in the
reasonable judgment of Parent, is capable of being cured during the applicable
Cure Period, provided that, at the time of the then scheduled expiration of the
Offer, all other conditions to the Offer have been satisfied or waived; and
provided, further, that Purchaser shall not be required to extend the Offer for
any Cure Period if the Company shall fail to give to Parent notice of its
Knowledge of any such breach of a representation, warranty, covenant or
agreement within four Business Days of its receipt of such Knowledge. For
purposes of this Agreement, "CURE PERIOD" shall mean thirty days from the date
on which the Company has Knowledge of a breach by the Company of a
representation, warranty, covenant or other agreement under this Agreement,
provided that in the event that the Company first has Knowledge of a breach by
the Company of a representation, warranty, covenant or other agreement under
this Agreement after the Initial Expiration Date, the Cure Period with respect
to such breach shall not extend beyond the then-scheduled expiration date of
the Offer; and "INITIAL EXPIRATION DATE" shall mean 12:00 midnight Eastern time
on the date that is the twentieth Business Day from the commencement date of
the Offer in accordance with Rule 14d-2 under the Exchange Act.
If any of the conditions to the Offer (other than those set
forth in clause (c) of Annex I) is not satisfied or waived on any scheduled or
extended expiration date of the Offer, Purchaser shall, and Parent shall cause
Purchaser to, extend the Offer, if such condition or conditions could
reasonably be expected to be satisfied, from time to time until such conditions
are satisfied or waived; provided, that Purchaser shall not be required to
extend the Offer beyond the earlier to occur of (x) the Termination Date or (y)
in the event that it has become publicly known that any Takeover Proposal or
amended Takeover Proposal has been made, the expiration
9
of the applicable Rejection Period therefor without such Takeover Proposal or
amended Takeover Proposal being publicly rejected by the Company at or prior to
the time of such expiration. For the purposes of this Agreement, "REJECTION
PERIOD" shall mean (i) with respect to any Takeover Proposal, ten Business Days
after the earlier of the time of receipt by the Company of such Takeover
Proposal or such time as the Takeover Proposal has become publicly known; (ii)
with respect to an amendment to such Takeover Proposal, two Business Days after
the earlier of the time of receipt of such amended Takeover Proposal or such
time as the amended Takeover Proposal has become publicly known; and (iii) with
respect to any subsequent amendment to such Takeover Proposal (a "SUBSEQUENT
AMENDMENT"), twenty-four hours after the earlier of the time of receipt of such
subsequently amended Takeover Proposal or such time as the subsequently amended
Takeover Proposal has become publicly known; provided that any Takeover
Proposal made by any Person, any Affiliate of such Person, or group of Persons
or their respective Affiliates shall not be deemed to be a new Takeover
Proposal if such Person, Affiliate of such Person or member of a group with
such Person or their respective Affiliates previously has made a Takeover
Proposal. Subject to the foregoing and upon the terms and subject to the
conditions of the Offer, Purchaser shall, and Parent shall cause it to, accept
for payment and pay for, as promptly as practicable after the expiration of the
Offer (or as required by Rule 14d-11 under the Exchange Act), all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer.
In addition, if, at the scheduled or extended expiration date of the Offer, the
Minimum Condition has been satisfied but Company Common Stock tendered and not
withdrawn pursuant to the Offer constitutes less than 90% of the outstanding
Company Common Stock, without the consent of the Company, Purchaser shall have
the right, after it has accepted and paid for all of the Company Common Stock
tendered in the initial offer period, to provide for a "subsequent offering
period" (as contemplated by Rule 14d-11 under the Exchange Act) for up to 20
Business Days after Purchaser's acceptance for payment of the shares of Company
Common Stock then tendered and not withdrawn pursuant to the Offer. During any
such subsequent offering period, Purchaser shall immediately accept for payment
and promptly pay for all shares of Company Common Stock as they are tendered
pursuant to the Offer in accordance with Rule 14d-11 under the Exchange Act.
(b) No later than the first Business Day following execution
of this Agreement, and subject to the conditions of this Agreement, Parent
shall issue a joint press release with the Company (the "JOINT PRESS RELEASE")
regarding this Agreement and its intent to make the Offer and shall file with
the SEC the Joint Press Release, under cover of Schedule TO, indicating on the
front of such Schedule TO that such filing contains pre-commencement
communications.
(c) As soon as practicable on the date of commencement of the
Offer, Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto and including
the exhibits thereto, the "SCHEDULE TO") with respect to the Offer. The
Schedule TO will include or incorporate by reference as exhibits the Offer to
Purchase and forms of the letter of transmittal and summary advertisement and
all other ancillary documents (collectively, together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"). Parent and Purchaser will take all
steps necessary to cause the Offer Documents to be disseminated to holders of
shares of Company Common Stock to the extent required by applicable federal
securities Laws. Parent, Purchaser and the Company each agree promptly to
correct any information provided by it for use in the
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Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect. Parent and Purchaser agree to take
all steps necessary to cause the Schedule TO as so corrected to be filed with
the SEC and the Offer Documents as so corrected to be disseminated to holders
of shares of Company Common Stock, in each case as and to the extent required
by applicable federal securities Laws including applicable SEC rules and
regulations thereunder. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule TO and the Offer Documents
prior to their being filed with the SEC or disseminated to the holders of
shares of Company Common Stock. In conducting the Offer, Parent and Purchaser
shall comply in all material respects with the provisions of the Exchange Act
and any other applicable Law. Purchaser and Parent also agree to provide the
Company and its counsel in writing with any comments Purchaser, Parent or their
counsel may receive from the SEC or its staff with respect to the Schedule TO
or the Offer Documents promptly after the receipt of such comments and shall
consult with and provide the Company and its counsel a reasonable opportunity
to review and comment on the response of Purchaser to such comments prior to
responding.
SECTION 2.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents that the Company's Board of Directors, at a meeting duly called
and held, has, by the unanimous vote of all directors present, (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are fair to the Company's shareholders and are advisable
and in the best interests of the Company and its shareholders, (ii) approved
and adopted this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, in accordance with the requirements of the PRGCL and
has also taken such action as is necessary to render inapplicable to this
Agreement and the Transaction Support Agreements and the transactions
contemplated hereby and thereby the provisions of Article TENTH of the
Company's Certificate of Incorporation and (iii) resolved to recommend
acceptance of the Offer and, to the extent required by applicable Law, approval
and adoption of this Agreement and the Merger by its shareholders. The Company
further represents that UBS Warburg, L.L.C. ("UBS WARBURG") has delivered to
the Company's Board of Directors its oral opinion (to be promptly confirmed in
writing) that the consideration to be paid in the Offer and the Merger is fair
to the holders of shares of Company Common Stock (other than Parent or any of
its Affiliates) from a financial point of view. The Company has not been
advised by any of its directors or executive officers who own shares of Company
Common Stock that such director or executive officer does not intend to tender
his or her shares of Company Common Stock pursuant to the Offer. In connection
with the Offer, the Company will, or will cause its transfer agent to, promptly
furnish Parent with a list of its shareholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of shares of Company Common Stock and lists in the Company's
possession or control of securities positions of shares of Company Common Stock
held in stock depositories, in each case as of a recent date, and will provide
to Parent such additional information (including updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance as
Parent may reasonably request in connection with the Offer. Subject to the
requirements of applicable Laws, and, except for such steps as are necessary to
disseminate the Schedule TO and the Offer Documents and any other documents
necessary to consummate the Offer and the transactions contemplated by this
Agreement, Parent and Purchaser shall hold in confidence the information
11
contained in any such labels, listings and files, shall use such information
only in connection with the Offer and the Merger, and, if this Agreement shall
be terminated, shall, upon request, destroy all copies of such information then
in their possession (and certify such destruction to the Company), except to
the extent that such information can be shown to have been previously known on
a nonconfidential basis by Parent or Purchaser, in the public domain through no
fault of Parent or Purchaser or later Lawfully acquired by Parent or Purchaser
on a nonconfidential basis.
(b) Not later than the first Business Day following execution
of this Agreement and subject to the conditions of this Agreement, the Company
shall issue the Joint Press Release with Parent and shall file with the SEC the
Joint Press Release, under cover of Schedule 14D-9, indicating on the front of
such Schedule 14D-9 that such filing contains pre-commencement communications.
(c) As soon as practicable on the day that the Offer is
commenced, the Company shall file with the SEC and disseminate to holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities Laws, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"SCHEDULE 14D-9") that shall reflect the recommendations of the Company's Board
of Directors referred to in Section 2.2(a) above. The Company, Parent and
Purchaser each agree promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect. The Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to holders of shares of Company Common Stock, in each
case as and to the extent required by applicable federal securities Laws.
Parent and its counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 prior to its being filed with the SEC. The
Company also agrees to provide Parent and its counsel in writing with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments and
shall consult with and provide Parent and its counsel a reasonable opportunity
to review and comment on the response of the Company to such comments prior to
responding.
SECTION 2.3 DIRECTORS.
(a) Promptly upon Consummation of the Offer, Parent shall be
entitled to designate for appointment or election to the Company's Board of
Directors, upon written notice to the Company, such number of directors,
rounded up to the next whole number, on the Company's Board of Directors such
that the percentage of its designees on the Board shall equal the percentage of
the outstanding shares of Company Common Stock owned of record or beneficially
by Parent and its direct or indirect Subsidiaries (the "PARENT DESIGNEES"). In
connection with the foregoing, the Company has taken all action reasonably
necessary to permit the Parent Designees to (i) be elected to the Company's
Board of Directors promptly following Consummation of the Offer, including
without limitation, increasing the size of the Company's Board of Directors and
obtaining the resignation of such number of its current directors as is
necessary to give effect to the foregoing provision and (ii) constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (A) each committee of the Company's Board of
Directors, (B) each board of directors (or similar body) of
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each Subsidiary of the Company and (C) each committee (or similar body) of each
such board. Notwithstanding the foregoing, until the Effective Time, the
Company's Board of Directors shall have at least three directors who are
directors of the Company on the date of this Agreement and who are not officers
of the Company or any of its Subsidiaries (the "INDEPENDENT DIRECTORS");
provided, however, that (x) notwithstanding the foregoing, in no event shall the
requirement to have at least three Independent Directors result in Parent's
designees constituting less than a majority of the Company's Board of Directors
unless Parent shall have failed to designate a sufficient number of Persons to
constitute at least a majority and (y) if the number of Independent Directors
shall be reduced below three for any reason whatsoever (or if immediately
following Consummation of the Offer there are not at least three then-existing
directors of the Company who (1) are Qualified Persons (as defined below) and
(2) are willing to serve as Independent Directors), then the number of
Independent Directors required hereunder shall be reduced to equal the number of
then-serving Independent Directors, unless the remaining Independent Director or
Independent Directors are able to identify a person or persons, as the case may
be, who are not officers or Affiliates of the Company, Parent or any of their
respective Subsidiaries (any such person being referred to herein as a
"QUALIFIED PERSON") willing to serve as an Independent Director, in which case
such remaining Independent Director or Independent Directors shall be entitled
(but not required) to designate any such Qualified Person or Persons to fill
such vacancies, and such designated Qualified Person shall be deemed to be an
Independent Director for purposes of this Agreement, or if no Independent
Directors then remain, the other Directors shall be entitled (but not required)
to designate three Qualified Persons to fill such vacancies, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
The Company shall promptly take all actions required pursuant
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under this Section 2.3(a), including mailing
to shareholders the information required by such Section 14(f) and Rule 14f-1
(which the Company shall mail together with the Schedule 14D-9 if it receives
from Parent and Purchaser the information below on a basis timely to permit
such mailing) as is necessary to enable the Parent Designees to be elected to
the Company's Board of Directors. The Company's obligations to appoint the
Parent Designees to the Company's Board of Directors shall be subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Parent or Purchaser shall supply the Company in writing any
information with respect to either of them and their nominees, officers,
directors and Affiliates required by such Section 14(f) and Rule 14f-1 as is
necessary in connection with the appointment of any of Parent's designees under
this Section 2.3(a). The provisions of this Section 2.3(a) are in addition to
and shall not limit any rights that Purchaser, Parent or any of their
Affiliates may have as a holder or beneficial owner of shares of Company Common
Stock as a matter of Law with respect to the election of directors or
otherwise.
(b) Following the election or appointment of Parent's
designees pursuant to Section 2.3(a), the approval by affirmative vote or
written consent by a majority of the Independent Directors then in office (or,
if there shall be only one Independent Director then in office, the Independent
Director) shall be required to authorize (and such authorization shall
constitute the authorization of the Company's Board of Directors and no other
action on the part of the Company, including any action by any committee
thereof or any other director of the Company, shall be required or permitted to
authorize) (i) any amendment or termination of this
13
Agreement by the Company, (ii) any extension of time for performance of any
obligation or action hereunder by Parent or Purchaser or (iii) any waiver or
exercise of any of the Company's rights under this Agreement. Any action that
requires approval by the Independent Directors shall be deemed to be approved
by a majority of the Independent Directors if there is no Independent Director
and such action is approved by the Company's Board of Directors.
SECTION 2.4 MERGER WITHOUT MEETING OF
SHAREHOLDERS. If following Consummation of the Offer (or any subsequent
offering period), Purchaser owns at least 90% of the outstanding shares of
Company Common Stock, each of the parties hereto shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without the Company Shareholder Meeting, in
accordance with Section 3053 of the PRGCL.
ARTICLE III
THE MERGER AND RELATED MATTERS
SECTION 3.1 THE MERGER.
(a) Upon the terms and subject to the conditions of this
Agreement, in accordance with the PRGCL, at the Effective Time the Company and
Purchaser shall consummate a merger (the "MERGER") pursuant to which (i)
Purchaser shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease and (ii) the Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"SURVIVING CORPORATION") and shall continue its corporate existence under the
Laws of the Commonwealth of Puerto Rico.
(b) Upon the terms and subject to the conditions of this
Agreement, on the date of the Closing (or on such other date as Parent and the
Company may agree), Parent, Purchaser and the Company shall file with the
Department of State of Puerto Rico a certificate of merger or other appropriate
documents (in any such case, the "CERTIFICATE OF MERGER") executed and
acknowledged in accordance with the relevant provisions of the PRGCL, and shall
make all other filings or recordings required under the PRGCL. The Merger shall
become effective on the later of the date on which the Certificate of Merger
has been duly filed with the Department of State of Puerto Rico or such time as
is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "EFFECTIVE TIME."
(c) From and after the Effective Time, the Merger shall have
the effects set forth in this Agreement and in Section 3059 of the PRGCL.
SECTION 3.2 CERTIFICATE OF INCORPORATION OF
THE SURVIVING CORPORATION. The Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until such time that the Certificate
of Incorporation is amended thereafter in accordance with the PRGCL and subject
to Section 8.7(a) hereof.
SECTION 3.3 BY-LAWS OF THE SURVIVING
CORPORATION. The By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the
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Surviving Corporation until such time that the By-Laws are amended thereafter
in accordance with the PRGCL and subject to Section 8.7(a) hereof.
SECTION 3.4 DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION. At the Effective Time, the directors of Purchaser
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each of such directors to hold office, subject to the applicable
provisions of the PRGCL and the Certificate of Incorporation and By-Laws of the
Surviving Corporation, until the earlier of their resignation or the next
annual shareholders' meeting of the Surviving Corporation and until their
respective successors shall be duly elected or appointed and qualified. At the
Effective Time, the officers of the Company immediately prior to the Effective
Time shall, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, be the officers of the
Surviving Corporation until the earlier of their resignation or their
respective successors shall be duly elected or appointed and qualified.
SECTION 3.5 CLOSING. The closing of the Merger
(the "CLOSING") shall take place at 10:00 a.m., local time, on a date to be
specified by the parties, or, if no such date is specified, on the second
Business Day after satisfaction or, to the extent permitted by applicable Law,
waiver by the applicable parties, of all of the conditions set forth in Article
IX hereof (the "CLOSING DATE"), at a location to be mutually agreed to by the
Company and Parent.
SECTION 3.6 SUBSEQUENT ACTIONS. If at any time
after the Effective Time the Surviving Corporation determines that any deeds,
bills of sale, instruments of conveyance, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the
Company or Purchaser vested or to be vested in the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Purchaser, all such deeds, bills of sale, instruments of conveyance,
assignments and assurances and to take and do, in the name and on behalf of
each of such entity or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
ARTICLE IV
CONVERSION OF SECURITIES
SECTION 4.1 CONVERSION OF CAPITAL STOCK. As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holders of any shares of Company Common Stock or any shares of capital
stock of Purchaser:
(a) Purchaser Capital Stock. Each share of capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and become one fully paid and nonassessable share of common
stock of the Surviving Corporation.
15
(b) Cancellation of Treasury Stock and Purchaser-Owned Stock.
All shares of Company Common Stock that are owned by the Company, any
Subsidiary of the Company, Parent or any Subsidiary of Parent immediately prior
to the Effective Time shall be cancelled and retired and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares of Company Common Stock. Each share of
Company Common Stock (other than shares to be cancelled in accordance with
Section 4.1(b) and any shares that are held by shareholders exercising
appraisal rights pursuant to Section 3062 of the PRGCL ("DISSENTING
SHAREHOLDERS")) issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive the Offer Price in cash, payable
to the holder thereof, without interest (the "MERGER CONSIDERATION"), upon
surrender of the certificate formerly representing such share in the manner
provided in Section 4.2. All such shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 4.2, without interest.
SECTION 4.2 EXCHANGE OF CERTIFICATES.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company organized under the Laws of the United States
or any state thereof and located therein reasonably acceptable to the Company
to act as agent for the holders of shares of Company Common Stock in connection
with the Merger (the "PAYING AGENT") to receive in trust the funds to which
holders of such shares shall become entitled pursuant to Section 4.1(c). At the
Effective Time, Parent shall deposit with the Paying Agent cash in U.S. dollars
in an amount sufficient to pay the Merger Consideration as provided herein. The
Paying Agent shall invest such funds as directed by the Parent on a daily
basis; provided that no such investment or loss thereon shall affect the
amounts payable to the Company's shareholders pursuant to this Article IV.
Parent and the Surviving Corporation shall replace any monies lost through an
investment made pursuant to this Section 4.2. Any interest and other income
resulting from such investments shall be the exclusive property of and shall be
paid promptly to the Parent.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES"),
whose shares were converted pursuant to Section 4.1 into the right to receive
the Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each share formerly represented by such Certificate and the Certificate
16
so surrendered shall forthwith be cancelled. If payment of the Merger
Consideration is to be made to a Person other than the Person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the Person requesting such payment shall
have paid any transfer and other Taxes required by reason of the payment of the
Merger Consideration to a Person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 4.2, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 4.2.
The right of any shareholder to receive the Merger Consideration shall be
subject to and reduced by any applicable withholding Tax obligation.
(c) Transfer Books; No Further Ownership Rights in the Shares
of Company Common Stock. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of the shares of Company Common Stock on the records of the
Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of the shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock, except as otherwise provided
for herein or by applicable Law, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time that may have been declared or
made by the Company on such shares of Company Common Stock in accordance with
the terms of this Agreement or prior to the date of this Agreement and that
remain unpaid at the Effective Time. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Article IV except as otherwise
provided by Law.
(d) Termination of Fund; No Liability. At any time following
six months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) that had been made available to the
Paying Agent and that have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, none of Parent, Purchaser, the Surviving Corporation or the
Paying Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
SECTION 4.3 APPRAISAL RIGHTS. Notwithstanding
anything in this Agreement to the contrary, if any Dissenting Shareholder shall
demand to be paid the fair cash value of such holder's shares of Company Common
Stock, as provided in Section 3062 of the PRGCL, such shares shall not be
converted into or be exchangeable for the right to receive the Merger
Consideration except as provided in this Section 4.3, and the Company shall
give Parent notice of any written objections to this Agreement or the Merger
under Section 3062 of the PRGCL received by the Company and of any demands
received by the Company for the fair
17
cash value of any shares of Company Common Stock and Parent shall have the
right to participate in all negotiations and proceedings with respect to any
such demands. Neither the Company nor the Surviving Corporation shall, except
with the prior written consent of Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If any
Dissenting Shareholder shall fail to perfect or shall have effectively
withdrawn or lost the right to dissent, the shares of Company Common Stock held
by such Dissenting Shareholder shall thereupon be treated as though such shares
had been converted into the Merger Consideration at the Effective Time pursuant
to Section 4.1.
SECTION 4.4 LOST, STOLEN OR DESTROYED
CERTIFICATES. If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such Person of a bond in such reasonable amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent shall deliver the Merger Consideration for each
of the shares of Company Common Stock represented by such Certificate.
ARTICLE V
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
SECTION 5.1 DISCLOSURE SCHEDULES. Prior to the
execution and delivery of this Agreement, the Company has delivered to Parent,
and Parent has delivered to the Company, a schedule (in the case of the
Company, the "COMPANY DISCLOSURE SCHEDULE," and in the case of Parent, the
"PARENT DISCLOSURE SCHEDULE") setting forth, among other things, items the
disclosure of which the Company or Parent, as the case may be, desires or is
required to make either in response to an express disclosure requirement
contained in a provision of this Agreement or as an exception to one or more of
such party's representations, warranties, covenants or agreements contained in
Article VI, in the case of the Company, or Article VII, in the case of Parent
and Purchaser, or to one or more of such party's covenants contained in Article
VIII. Notwithstanding anything in this Agreement to the contrary (i) no such
item is required to be set forth in the Disclosure Schedule as an exception to
a representation or warranty (other than the representations and warranties
contained in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5, 6.6, 6.7, 6.15,
6.17, 6.18, 6.19, 6.25, 7.1, 7.2, 7.4 and 7.5) if its absence would not result
in the related representation or warranty being deemed untrue or incorrect
under the standard established by Section 5.2, and (ii) the mere inclusion of
an item in a Disclosure Schedule in response to an express disclosure
requirement or as an exception to a representation, warranty or covenant shall
not be deemed an admission by a party that such item is material or represents
a material exception or material fact, event or circumstance or that such item
has had or would reasonably be expected to have a Company Material Adverse
Effect or Parent Material Adverse Effect, as the case may be.
SECTION 5.2 STANDARDS. No representation or
warranty of the Company contained in Article VI (other than the representations
and warranties contained in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5,
6.6, 6.7, 6.15, 6.17, 6.18, 6.19 and 6.25) or of Parent and Purchaser in
Article VII (other than the representations and warranties contained in
Sections 7.1, 7.2, 7.4 and 7.5) shall be deemed untrue or incorrect for any
purpose under this Agreement or the
18
Offer and no party hereto shall be deemed to have breached any such
representation or warranty for any purpose under this Agreement, in any case as
a consequence of the existence or absence of any fact, circumstance or event
unless such fact, circumstance or event, individually or when taken together
with all other facts, circumstances or events inconsistent with any such
representations or warranties contained in Article VI, in the case of the
Company, or Article VII, in the case of Parent and Purchaser, has had or would
reasonably be expected to have a Company Material Adverse Effect or Parent
Material Adverse Effect, as the case may be.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the
Company represents and warrants to, and covenants and agrees with, Parent and
Purchaser as set forth below in this Article VI. Each exception set forth in
the Company Disclosure Schedule and each other response to this Agreement set
forth in the Company Disclosure Schedule is identified by reference to, or has
been grouped under a heading referring to, a specific individual Section of
this Agreement.
SECTION 6.1 DUE ORGANIZATION, GOOD STANDING
AND POWER.
(a) The Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization, and each such Person has all requisite
corporate (or partnership, or limited liability company as applicable) power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(b) The Company and each of its Subsidiaries is duly
qualified or licensed to do business as a foreign corporation or other entity
and is in good standing in each jurisdiction in which such qualification is
required.
(c) The Company has made available to Parent true, complete
and correct copies of the Certificate of Incorporation and By-Laws of the
Company, in each case as amended (if so amended) to the date of this Agreement,
and has made available the certificates or articles of incorporation and
by-laws or other organizational documents of its Subsidiaries, in each case as
amended (if so amended) to the date of this Agreement.
(d) The respective certificates or articles of incorporation
and by-laws or other organizational documents of the Subsidiaries of the
Company do not contain any provision limiting or otherwise restricting the
ability of the Company to control such Subsidiaries. Section 6.1(d) of the
Company Disclosure Schedule sets forth a list of all Subsidiaries of the
Company and their respective jurisdictions of incorporation or organization and
identifies the Company's (direct or indirect) percentage of equity ownership
therein.
SECTION 6.2 AUTHORIZATION AND VALIDITY OF
AGREEMENT. The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the Company
Shareholder Approval, if necessary, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution,
19
delivery and performance of this Agreement by the Company, and the consummation
by it of the transactions contemplated hereby, have been duly authorized and
approved by the Company's Board of Directors and no other corporate action on
the part of the Company is necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby, other than obtaining the Company Shareholder
Approval, if necessary, and the filing of the Certificate of Merger. This
Agreement has been duly executed and delivered by the Company and, assuming the
due and valid authorization, execution and delivery of this Agreement by each
of Parent and Purchaser, this Agreement is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
SECTION 6.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 2,000,000 shares of Company
Preferred Stock. As of March 31, 2002, (i) 5,148,474 shares of Company Common
Stock were issued and outstanding, (ii) zero shares of Company Preferred Stock
were issued and outstanding and (iii) 851,526 shares of Company Common Stock
were held by the Company in its treasury. All issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and free from preemptive rights. There are no
outstanding or authorized options, warrants, rights, subscriptions, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to shares of capital stock or other equity
interests of the Company or any of its Subsidiaries, pursuant to which the
Company or any of its Subsidiaries is or may become obligated to issue shares
of its capital stock or other equity interests or any securities convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
the capital stock or other equity interests of the Company or any of its
Subsidiaries (each an "ISSUANCE OBLIGATION"). There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire any
outstanding securities of the Company. The Company has no authorized or
outstanding bonds, debentures, notes or other indebtedness the holders of which
have the right to vote (or convertible or exchangeable into or exercisable for
securities the holders of which have the right to vote) with the shareholders
of the Company on any matter ("VOTING DEBT"). There are no restrictions (other
than restrictions under state corporation statutes or similar Laws) of any kind
which prevent or restrict the payment of dividends by the Company or any of its
Subsidiaries and there are no limitations or restrictions (other than
restrictions on sales or other dispositions under federal, state or Puerto Rico
securities Laws) on the right to sell or otherwise dispose of such capital
stock or other ownership interests.
(b) All of the issued and outstanding shares of capital stock
of each Subsidiary are beneficially owned by the Company, directly or
indirectly, and all such shares are validly issued, fully paid and
nonassessable and free from preemptive rights. No Subsidiary of the Company has
outstanding Voting Debt and there are no obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of any of its Subsidiaries or any capital stock of, or other
ownership interests in, any of its Subsidiaries.
(c) Except for the Company's interest in its Subsidiaries, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible
20
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity which is material to the Company and its
Subsidiaries, taken as a whole.
(d) No indebtedness of the Company or any of its Subsidiaries
contains any restriction upon (i) the prepayment of any indebtedness of the
Company or its Subsidiaries, (ii) the incurrence of indebtedness by the Company
or its Subsidiaries or (iii) the ability of the Company or any of its
Subsidiaries to grant any Lien on the properties or assets of the Company or
its Subsidiaries.
SECTION 6.4 CONSENTS AND APPROVALS; NO
VIOLATIONS. Assuming (i) the filings required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and any similar
filings as may be required pursuant to Puerto Rico or other Law, are made and
the waiting periods thereunder (if applicable) have been terminated or expired,
(ii) the prior notification, reporting, approval or consent requirements of
other antitrust or competition Laws as may be applicable are satisfied and any
antitrust filings/notifications that must or may be effected in countries
having jurisdiction are made and any applicable waiting periods thereunder have
been terminated or expired, (iii) the applicable requirements of the Exchange
Act are met, (iv) the requirements under any applicable foreign, state or
Puerto Rico securities or blue sky Laws are met, (v) the filing of the
Certificate of Merger and other appropriate merger documents, if any, as
required by the PRGCL, are made, and (vi) in the case of this Agreement and the
Merger, the Company Shareholder Approval is received if necessary, the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby (including the changes in
the composition of the Company's Board of Directors) and the performance by the
Company of its obligations hereunder and the performance of the Transaction
Support Agreements do not and will not: (A) violate or conflict with any
provision of the Company's Certificate of Incorporation (including Article
TENTH thereof) or the Company's By-Laws or the comparable governing documents
of any of its Subsidiaries; (B) cause the Company to violate or conflict with
(x) any United States federal, state, foreign or Puerto Rico statute, law,
ordinance, rule or regulation (together, "LAWS") or (y) any order, judgment,
decree or writ (together, "ORDERS") of any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, Puerto Rico, any foreign country or any domestic or foreign state,
county, city or other political subdivision (a "GOVERNMENTAL AUTHORITY") or (z)
any Permit, in each case, applicable to the Company or any of its Subsidiaries
or by which any of their respective properties or assets may be bound; (C)
require any filing with, or permit, consent or approval of, or the giving of
any notice to, any Governmental Authority by the Company; or (D) result in a
violation or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default under, or result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a benefit
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, contract, understanding,
arrangement, lease or other instrument, whether written or oral, ("CONTRACTS")
to which the Company or any of its Subsidiaries is a party, or by which any
such Person or any of its properties or assets are bound. There are no
third-party consents or approvals required to be obtained by the Company under
the Contracts prior to the consummation of the transactions contemplated by
this Agreement.
21
SECTION 6.5 COMPANY REPORTS AND FINANCIAL
STATEMENTS.
(a) Since December 31, 1999, the Company and, to the extent
applicable, its Subsidiaries, have filed all forms, reports and documents
(including exhibits and all other information incorporated therein) with the
SEC required to be filed by it pursuant to the federal securities Laws and the
SEC rules and regulations thereunder, and all forms, reports, schedules,
registration statements and other documents filed with the SEC by the Company
and, to the extent applicable, its Subsidiaries have complied in all material
respects with all applicable requirements of the federal securities Laws,
including the SEC rules and regulations promulgated thereunder. The Company
has, prior to the date of this Agreement, made available to Parent true,
complete and correct copies of all Company SEC Reports filed by the Company and
its Subsidiaries with the SEC between December 31, 1999 and the date of this
Agreement. As of their respective dates, the Company SEC Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Section 6.5(a) of the Company Disclosure Schedule contains a true,
complete and correct copy of all correspondence since December 31, 1999 to date
between the Company and the SEC, other than routine transmittal letters.
(b) The Financial Statements (i) comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC, (ii) were prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes or schedules thereto) and (iii) present fairly in all material respects
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in shareholders' equity and cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to normal
year-end adjustments).
(c) Except as set forth on the Balance Sheet, neither the
Company nor any of its Subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), in each case that
is required by GAAP to be set forth on a consolidated balance sheet of the
Company and its consolidated Subsidiaries, except for (i) liabilities and
obligations incurred in connection with this Agreement and fees and expenses
related thereto, and (ii) liabilities and obligations incurred in the ordinary
course of business consistent with past practice which would not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is in default in
respect of the terms and conditions of any indebtedness or other agreement
which would reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. The Company has no obligations under any
"off-balance sheet" financings or similar transactions, other than such
obligations (i) that are specifically disclosed in its reports to the SEC, (ii)
that constitute lease transactions entered into in the ordinary course of
business, or (iii) that are not specified in clauses (i) or (ii) and do not
represent obligations in excess of U.S. $100,000 in the aggregate.
22
SECTION 6.6 INFORMATION TO BE SUPPLIED.
(a) Each of the Schedule 14D-9 and the Proxy Statement and
the other documents required to be filed by the Company with the SEC in
connection with the Offer, the Merger and the other transactions contemplated
hereby will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC thereunder and will
not, on the date of its filing or, in the case of the Proxy Statement, on the
date it is mailed to shareholders of the Company and at the time of the Company
Shareholder Meeting, and none of the written information supplied or to be
supplied by the Company expressly for inclusion or incorporation by reference
in the Schedule TO or the Offer Documents will at the time the Schedule TO or
the Offer Documents are filed with the SEC and first published, sent or given
to the Company's shareholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section
6.6, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Proxy Statement or the
Schedule 14D-9 based on information supplied by Parent or Purchaser expressly
for inclusion or incorporation by reference therein or based on information
which is not included in or incorporated by reference in such documents but
which should have been disclosed pursuant to Section 7.4.
SECTION 6.7 ABSENCE OF CERTAIN EVENTS. Except
as explicitly disclosed in the Company SEC Reports filed prior to the date of
this Agreement or as required or expressly permitted by this Agreement, since
December 31, 2001 the Company and its Subsidiaries have in all material
respects operated their respective businesses only in the ordinary course and
there has not occurred (i) any event, change, occurrence, effect, fact,
circumstance or condition which would reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect; and (ii) as of the
date hereof, neither the Company nor any of its Subsidiaries has taken any of
the actions described in Sections 8.2(b)(1), (2), (3), (5), (6), (7), (8), (9),
(10), (13), (14), (15), (17) or (18).
SECTION 6.8 LITIGATION. Other than with
respect to claims that are subject to complete insurance coverage (other than
with respect to deductibles pursuant to the Company's insurance policies)
pursuant to the Company's general liability, automobile or workers compensation
insurance policies and which do not exceed U.S. $25,000 individually or U.S.
$250,000 in the aggregate, and except as explicitly disclosed in the Company
SEC Reports filed prior to the date of this Agreement, there are no
investigations, actions, suits or proceedings pending against the Company or
its Subsidiaries or, to the Knowledge of the Company, threatened against the
Company or its Subsidiaries (or any of their respective properties, rights or
franchises), at Law or in equity, or before or by any Puerto Rico, federal,
state, local or foreign commission, board, bureau, agency, regulatory or
administrative instrumentality or other Governmental Authority or any
arbitrator or arbitration tribunal. The Company does not have Knowledge of any
valid basis for any action, proceeding or investigation against the Company or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is
subject to any judgment that has not been satisfied in all respects or any
order or decree that remains in effect,
23
which in any such case was entered in any lawsuit or proceeding in which the
Company or any of its Subsidiaries was a party.
SECTION 6.9 TITLE TO PROPERTIES; ENCUMBRANCES;
LEASES.
(a) The Company and each of its Subsidiaries has good, valid
and indefeasible title to all of its tangible properties and assets, with full
right to convey the same; in each case subject to no Liens, except for (A)
Liens reflected in the Balance Sheet, (B) Liens consisting of zoning or
planning restrictions, easements, permits and other restrictions or limitations
on the use of real property or irregularities in title thereto that do not
detract from the value of, or impair the use of, such property by the Company
or any of its Subsidiaries in the operation of their respective businesses and
(C) Liens for current Taxes, assessments or governmental charges or levies on
property not yet due or which are being contested in good faith. Neither the
Company nor any of its Subsidiaries has granted any options or rights of first
refusal or rights of first offer to third parties to purchase or otherwise
acquire an interest in any of its tangible properties and assets. All
properties and assets reflected in the Balance Sheet have an aggregate fair
market and realizable value at least equal to the aggregate value thereof as
reflected therein.
(b) The Company and each of its Subsidiaries has valid
leasehold interests in each of its leased premises (collectively, the "TENANT
LEASES"). Each Tenant Lease is in full force and effect, no notice of any
default has been delivered by any landlord under any of the Tenant Leases and
to the Knowledge of the Company there are no facts which would now or with the
giving of notice or the passage of time or both be a default under the terms of
any of the Tenant Leases. There are no pending claims by any tenant as to
premises leased to tenants by the Company or any of its Subsidiaries
(collectively, the "LANDLORD LEASES") and there are no pending claims by such
tenants for offsets against rent or other monetary claims made by tenants
against the Company or any of its Subsidiaries in its capacity as landlord.
SECTION 6.10 COMPLIANCE WITH LAWS. Except with
respect to Taxes, which are the subject of Section 6.13, environmental matters,
which are the subject of Section 6.16, employee benefits matters, which are the
subject of Section 6.11, and labor matters, which are the subject of Section
6.22, and except as explicitly disclosed in the Company SEC Reports filed prior
to the date of this Agreement:
(a) The Company and each of its Subsidiaries have complied
and are presently complying with all applicable Laws, and neither the Company
nor any of its Subsidiaries has received written notification of any asserted
present or past failure to so comply.
(b) The Company and its Subsidiaries hold, to the extent
legally required, all Puerto Rico, federal, state, local and foreign permits,
approvals, licenses, authorizations, certificates, rights, exemptions and
orders from Governmental Authorities (the "PERMITS") that are required for the
operation of the respective businesses of the Company and its Subsidiaries as
now conducted.
24
(c) Each of the Company's and its Subsidiaries' tangible
properties and assets is in material compliance with all applicable Laws,
including, without limitation, all Laws with respect to zoning, building, fire
and health codes.
SECTION 6.11 EMPLOYEE BENEFIT PLANS
(a) Section 6.11(a) of the Company Disclosure Schedule
contains a true and complete list of each deferred compensation and each
incentive compensation, equity compensation plan, "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination or
severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA AFFILIATE"), that together
with the Company would be deemed a "single employer" within the meaning of
section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is
party, whether written or oral, for the benefit of any employee or former
employee of the Company or any Subsidiary of the Company (the "COMPANY BENEFIT
PLANS").
(b) With respect to each Company Benefit Plan, the Company
has furnished to Buyer a complete and correct copy of each Company Benefit Plan
and any amendments thereto (or if the Company Benefit Plan is not a written
plan, a description thereof), any related trust or other funding vehicle, any
reports or summaries required under ERISA or the Code and the most recent
determination letter received from the Internal Revenue Service with respect to
each Company Benefit Plan intended to qualify under section 401 of the Code.
(c) No liability under Title IV of ERISA has been incurred by
the Company, any Subsidiary of the Company or any ERISA Affiliate since
December 31, 1997 that has not been satisfied in full, and, to the Knowledge of
the Company, no condition exists that presents a material risk to the Company,
any Subsidiary of the Company or any ERISA Affiliate of incurring any liability
under such Title, other than liability for premiums due to the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will be made when
due. Insofar as the representation made in this Section 6.11(c) applies to
Section 4064, 4069 or 4204 of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which the Company, any Subsidiary of the Company or any ERISA Affiliate made,
or was required to make, contributions during the six-year period ending on the
last day of the most recent plan year ended before the date of this Agreement.
The PBGC has not instituted proceedings to terminate any Company Benefit Plan
and, to the Knowledge of the Company, no condition exists that presents a
material risk that such proceedings will be instituted. All contributions and
premiums required to be paid under (i) the terms of each of the Company Benefit
Plans subject to ERISA and (ii) Section 302 of ERISA and Section 412 of the
Code, have, to the extent due, been paid in full or properly recorded on the
financial statements or records of the Company or an ERISA Affiliate. No
Company Benefit Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived.
25
(d) No Company Benefit Plan is a "multiemployer pension
plan," as defined in section 3(37) of ERISA, nor is any Company Benefit Plan a
plan described in section 4063(a) of ERISA.
(e) Each of the Company Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code. The administrator of each of
the Company Benefit Plans that is intended to be "qualified" within the meaning
of Section 401(a) of the Code has received a currently effective determination
letter from the IRS stating that it is so qualified, and, to the Knowledge of
the Company no event has occurred which would adversely affect the Company's
ability to rely on such determination. None of the Company, any Subsidiary of
the Company, any ERISA Affiliate, any of the Company Benefit Plans, any trust
created thereunder, nor to the Company's Knowledge, any trustee or
administrator thereof has engaged in a transaction or has taken or failed to
take any action in connection with which the Company, any Subsidiary of the
Company or any ERISA Affiliate could be subject to any material liability for
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
tax imposed pursuant to Section 4975, 4976 or 4980B of the Code. There are no
pending or, to the Knowledge of the Company, threatened claims by or on behalf
of any Company Benefit Plan, by any employee or beneficiary under any such
Company Benefit Plan or otherwise involving any such Company Benefit Plan
(other than routine claims for benefits). Neither the Company nor any ERISA
Affiliate is a party to any agreement or understanding, whether written or
unwritten, with the PBGC, the IRS, the Department of Labor or the Centers for
Medicare and Medicaid Services with respect to a Company Benefit Plan.
(f) Section 6.11(f) of the Company Disclosure Schedule sets
forth (i) each Company Benefit Plan which provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Subsidiary of the Company
for periods extending beyond their retirement or other termination of service,
other than (x) coverage mandated by applicable law, (y) death benefits under
any "pension plan," or (z) benefits the full cost of which is borne by the
current or former employee (or his beneficiary) and (ii) any unfunded liability
of the Company or and Subsidiary of the Company with respect to each such
Company Benefit Plan.
(g) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee or officer.
(h) No "leased employee," as that term is defined in Section
414(n) of the Code, performs services for the Company. The Company has not (i)
used the services or workers provided by third party contract labor suppliers,
temporary employees, "leased employees," or individuals who have provided
services as independent contractors in such a manner as would reasonably be
expected to cause such workers to have become eligible to participate in the
Company Benefit Plans or (ii) used the services of individuals to an extent
that would reasonably be expected to result in the disqualification of any of
the Company Benefit
26
Plans or the imposition of penalties or excise taxes with respect to the
Company Benefit Plans by the Internal Revenue Service, the Department of Labor,
the PBGC, or any other Governmental Body.
(i) With respect to each Company Benefit Plan established or
maintained outside of the United States of America primarily for benefit of
employees of the Company residing outside the United States of America (a
"FOREIGN PLAN"): (i) all employer and employee contributions to each Foreign
Plan required by law or by the terms of such Foreign Plan have been made, or,
if applicable, accrued, in accordance with normal accounting practices; (ii)
the fair market value of the assets of each funded Foreign Plan, the liability
of each insurer for any Foreign Plan funded through insurance or the book
reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the Measurement Date, with respect to all current and former
participants in such plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Foreign Plan and
no transaction contemplated by this Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and (iii) each
Foreign Plan required to be registered has been registered and has been
maintained in good standing with applicable regulatory authorities.
SECTION 6.12 BOOKS AND RECORDS. The books of
account, minute books, stock record books and other records of the Company and
the Subsidiaries of the Company have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the Exchange
Act. The Company has made available to Parent the complete minute books of the
Company and its Subsidiaries for all periods after December 31, 1997, and such
minute books contain true and correct records of all corporate action taken by
the Company's and each of its Subsidiaries' shareholders, Boards of Directors
and committees of the Boards of Directors since December 31, 1997, and no
meeting of any of such shareholders, the Boards of Directors or such committees
has been held for which minutes have not been prepared and are not contained in
such minute books.
SECTION 6.13 TAXES. Except as explicitly
disclosed in the Company SEC Reports filed prior to the date of this Agreement:
(a) The Company and each of its Subsidiaries has timely filed
or caused to be timely filed with the appropriate taxing authorities all
returns, statements, forms and reports for federal income and other Taxes (as
hereinafter defined) ("RETURNS") that are required to be filed by, or with
respect to, the Company and such Subsidiaries on or prior to the Closing Date.
The Returns as filed were true, correct and complete and accurately reflect all
liability for Taxes for the periods covered thereby. "TAXES" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
including, without limitation, all Puerto Rico, federal, state, local, foreign
and other income, franchise, profits, capital gains, capital stock, transfer,
sales, use, value-added, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Return), all estimated taxes, and all deficiency
assessments, additions to tax, penalties and interest with respect thereto and
shall include any
27
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify, any Person.
(b) All Taxes and liabilities for Taxes of the Company and
its Subsidiaries that have become due and payable have been timely paid or
fully provided for as a liability on the Financial Statements of the Company
and its Subsidiaries (or in the notes thereto) in accordance with GAAP. Since
the date of the Balance Sheet, neither the Company nor any of its Subsidiaries
has incurred liability for Taxes other than in the ordinary course of business.
(c) No deficiencies for any Taxes have been asserted or
assessed against the Company or any of its Subsidiaries, which are not fully
reserved for or which are not being contested in good faith by appropriate
proceedings. No Governmental Authority is currently conducting a tax audit or
investigation with respect to the Company or any of its Subsidiaries, or has
asked in writing for an extension or waiver of an applicable statute of
limitations. With respect to Taxes or any Return, no power of attorney has been
executed by the Company or any of its Subsidiaries. To the Company's Knowledge,
there is no dispute or claim concerning any liability for Taxes of the Company
or any Company Subsidiary either claimed or raised by any taxing authority in
writing.
(d) Neither the Company nor any of its Subsidiaries has been
a member of any affiliated group within the meaning of Section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
Puerto Rico, state, local or foreign Law (other than a group the common parent
of which is the Company), or has any liability for Taxes of any Person (other
than the Company and its Subsidiaries) under Treasury Regulation Section
1.1502-6 or any similar provision of Puerto Rico, state, local or foreign Law
as a transferee or successor, by contract or otherwise.
(e) All Taxes which the Company or any of its Subsidiaries is
(or was) required by Law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(f) There are no Tax sharing, allocation, indemnification or
similar agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which the Company (or any of its Subsidiaries) could be liable for
any Taxes of any party other than the Company or any Subsidiary of the Company.
(g) Neither the Company nor any of its Subsidiaries is a
party to any agreement, plan, contract or arrangement that could result,
separately or in the aggregate, in a payment of any "excess parachute payments"
within the meaning of Section 280G of the Code.
(h) No election under Section 341(f) of the Code has been
made or shall be made prior to the Closing Date to treat the Company or any of
its Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
(i) No transaction contemplated by this Agreement is
subject to withholding under Section 1445 of the Code.
28
(j) There are no Liens for Taxes upon any property or assets
of the Company or any of its Subsidiaries, except for Liens for Taxes not yet
due or for which adequate reserves have been established in accordance with
GAAP.
(k) No unresolved claim that the Company or any of its
Subsidiaries is or may be subject to Taxes has been made by any taxing
authority in a jurisdiction where the Company or any of its Subsidiaries does
not pay Taxes or file Returns.
SECTION 6.14 INTELLECTUAL PROPERTY. The Company
and its Subsidiaries own, or are validly licensed or otherwise have the right
to use in the manner currently used, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights and other proprietary intellectual property rights and
computer programs (collectively, "INTELLECTUAL PROPERTY RIGHTS") which are used
in the conduct of the business of the Company and its Subsidiaries and the
consummation of the transactions contemplated hereby will not alter or impair
any Intellectual Property Rights in any respect. No claims are pending or, to
the Knowledge of the Company, threatened against the Company or any of its
Subsidiaries that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. To the Knowledge of the Company, no person is
infringing the rights of the Company or any of its Subsidiaries with respect to
any Intellectual Property Right.
SECTION 6.15 BROKERS; SCHEDULE OF FEES AND
EXPENSES. No broker, investment banker, financial advisor or other person,
other than UBS Warburg, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the Company. The
estimated professional fees and expenses incurred and to be incurred by the
Company in connection with the Offer, the Merger and the other transactions
contemplated hereby (including the fees of UBS Warburg and the fees of the
Company's legal counsel) are set forth in Section 6.15 of the Company
Disclosure Schedule. The Company has furnished to Parent a true, complete and
correct description of the financial details of all agreements between the
Company and UBS Warburg relating to the Offer, the Merger and the other
transactions contemplated hereby, copies of which have been provided to Parent.
SECTION 6.16 ENVIRONMENTAL MATTERS.
(a) Definitions.
(i) "Cleanup" means all actions required under
Environmental Laws to: (1) cleanup, remove, treat or remediate the
Release of Hazardous Materials in the indoor or outdoor environment;
(2) prevent the Release of Hazardous Materials so that they do not
migrate, endanger or threaten the indoor or outdoor environment; (3)
perform government-required pre-remedial studies and investigations
and post-remedial monitoring and care; or (4) respond to any lawful
government requests for information or documents in any way relating
to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of the Release of Hazardous
Materials in the indoor or outdoor environment.
29
(ii) "Environmental Claim" means any written claim,
action, cause of action, or investigation or notice by any person or
entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, Cleanup costs,
governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the Release of any Hazardous Materials at any
location, whether or not owned or operated by the Company, or (b)
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
(iii) "Environmental Laws" means all applicable
written federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the
environment, including without limitation, laws relating to Releases
or threatened Releases of Hazardous Materials or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
Release, disposal, transport or handling of Hazardous Materials and
all laws and regulations with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials.
(iv) "Hazardous Materials" means all substances
defined as Hazardous Substances, Oils, Pollutants or Contaminants in
the National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. ss. 300.5, or defined as such by, or regulated as such
under, any Environmental Law.
(v) "Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the indoor or outdoor environment
(including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any
property, including the movement of Hazardous Materials through or in
the air, soil, surface water, groundwater or property.
(b) Representations and Warranties on Environmental
Matters.
(i) The Company is in material compliance with all
Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company of all material permits and other
material governmental authorizations required under Environmental
Laws, and material compliance with the terms and conditions thereof).
The Company has not received any written communication, whether from a
governmental authority, citizens group or employee, alleging that the
Company is not in such material compliance, and. to the Knowledge of
the Company, there are no past or present actions, activities,
circumstances, conditions, events or incidents that may prevent or
interfere with such compliance in the future.
(ii) No transfers of permits or other governmental
authorizations under Environmental Laws, and no additional permits or
other governmental authorizations under Environmental Laws, will be
required to permit the Buyer to conduct the business of the Company in
material compliance with all Environmental Laws immediately following
the Effective Time, as conducted by the Company immediately prior to
the Effective Time. To the extent that such transfers or additional
permits and other
30
governmental authorizations are required, the Company agrees to use
its reasonable best efforts to cooperate with the Parent to effect
such transfers and obtain such permits and other governmental
authorizations prior to the Effective Time.
(iii) There is no Environmental Claim pending or, to
the Knowledge of the Company, threatened against the Company or
against any person or entity whose liability for any Environmental
Claim the Company has expressly retained or assumed either
contractually or by operation of law.
(iv) The Company has not and, to the Knowledge of
the Company, no other person has placed, stored, deposited,
discharged, buried, dumped or disposed of Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial
or industrial activities, operations or processes, on, beneath or
adjacent to any property currently or formerly owned, operated or
leased by the Company, except for inventories of such substances to be
used, and wastes generated therefrom, in the ordinary course of
business of the Company (which inventories and wastes, if any, were
and are stored or disposed of in accordance with applicable
Environmental Laws and in a manner such that there has been no Release
of any such substances).
(v) The Company has delivered or otherwise made
available for inspection to Parent true, complete and correct copies
and results of any material reports, studies, analyses, tests or
monitoring possessed or initiated by the Company pertaining to
Hazardous Materials in, on, beneath or adjacent to any property
currently or formerly owned, operated or leased by the Company, or
regarding the Company's material compliance with Environmental Laws.
SECTION 6.17 TAKEOVER STATUTES. The Company's
Board of Directors has approved the Offer, the Merger and this Agreement and,
assuming the accuracy of Parent's and Purchaser's representations in Section
7.6, such approval is sufficient and no further action by the Company Board of
Directors is required to render inapplicable to the Offer, the Merger, this
Agreement and the other transactions contemplated hereby the provisions of
Article TENTH of the Company's Certificate of Incorporation. The Company's
Board of Directors has also taken such action as is necessary to render
inapplicable to the Transaction Support Agreements and the transactions
contemplated thereby the provisions of Article TENTH of the Company's
Certificate of Incorporation. No other "fair price," "moratorium," "control
share," "business combination," "affiliate transaction," or other anti-takeover
statute or similar statute or regulation of any jurisdiction is applicable to
the Offer, the Merger, this Agreement and the other transactions contemplated
hereby.
SECTION 6.18 VOTING REQUIREMENTS; BOARD
APPROVAL.
(a) The affirmative vote of the holders of a majority of the
outstanding shares of the Company Common Stock, voting as one class with each
share having one vote, is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve this Agreement, the Merger
and the transactions contemplated hereby.
31
(b) The Company's Board of Directors has, as of the date of
this Agreement, (i) unanimously determined that the Offer and the Merger are
fair to the Company's shareholders, and are in the best interests of the
Company and its shareholders, (ii) approved this Agreement and the transactions
contemplated hereby and (iii) resolved to recommend that the shareholders of
the Company approve and adopt this Agreement, the Offer and the Merger.
SECTION 6.19 OPINION OF FINANCIAL ADVISOR. The
Company has received the oral opinion of UBS Warburg (to be promptly confirmed
in writing) to the effect that, as of the date of this Agreement, the
consideration to be paid in the Offer and the Merger is fair to the holders of
shares of the Company Common Stock (other than Parent or any of its Affiliates)
from a financial point of view, and a true, complete and correct copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to
Parent. The Company has been authorized by UBS Warburg to permit the inclusion
of such opinion in its entirety in the Schedule 14D-9 and Proxy Statement, and
references thereto in Schedule TO and the Offer Documents so long as such
references are in form and substance reasonably satisfactory to UBS Warburg and
its counsel.
SECTION 6.20 CONTRACTS.
(a) Neither the Company nor any of its Subsidiaries is a
party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) that: (i) is an employment agreement that upon
Consummation of the Offer or the effectiveness of the Merger, will (either
alone or upon the occurrence of any additional acts or events) result in any
payment or benefits (whether of severance pay or otherwise) becoming due, or
the acceleration or vesting of any rights to any payment or benefits, from
Parent, Purchaser, the Company or the Surviving Corporation or any of their
respective Subsidiaries to any officer, director, consultant or employee
thereof, (ii) is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed (in whole or in part) after the date
of this Agreement that has not been filed or incorporated by reference in the
Company SEC Reports, (iii) which contains any material prohibition on the
conduct of any business or line of business, or any material limitation on the
scope of business that may be conducted, by the Company of any of its
Subsidiaries, including geographic limitations on the Company's or any of its
Subsidiaries' activities or (iv) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement. Each contract, arrangement, commitment or understanding of the type
described in this Section 6.20(a), whether or not set forth in Section 6.20(a)
of the Company Disclosure Schedule, is referred to herein as a "MATERIAL
CONTRACT." The Company has previously made available to Parent true, complete
and correct copies of each Material Contract.
(b) Each Material Contract is valid and binding and in full
force and effect, (ii) no default exists on the part of the Company or any of
its Subsidiaries under any such Material Contract and no event or condition
exists which constitutes or, after notice or lapse of time or both, would
constitute, a default on the part of the Company or any of its Subsidiaries
32
under any such Material Contract and (iii) to the Knowledge of the Company no
other party to such Material Contract is in default in any respect thereunder.
SECTION 6.21 PLANTS AND EQUIPMENT. The plants,
structures and equipment necessary for the continued operation of the Company
or any of its Subsidiaries are structurally sound with no defects and, taking
into account ordinary wear and tear, are in good operating condition and repair
and are sufficient to produce the products of the Company and its Subsidiaries,
taken as a whole, in quantities not less than the quantities produced in any
calendar year since 1996. Other than as set forth in the Company Budget, none
of such plants, structures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs, which in nature and cost
are consistent with past practice or normal expectations. Each of the
facilities of the Company and its Subsidiaries has all required mining Permits
and concessions to produce raw materials and production inputs in sufficient
quantities for the production of products of the Company and its Subsidiaries
in the amounts currently produced.
SECTION 6.22 LABOR AND EMPLOYMENT MATTERS.
Except as set forth on Schedule 6.22 of the Company's Disclosure Schedule, (a)
the Company is not party to or bound by any collective bargaining agreement or
any other agreements with a labor union; (b) to the Knowledge of the Company
there has been no labor union prior to the date hereof organizing any employees
of the Company into one or more collective bargaining units and the Company has
not received notice that any representation petition respecting the employees
of the Company has been filed with the National Labor Relations Board ("NLRB");
(c) there is not now, and there has not been since December 31, 1999 any actual
or, to the Knowledge of the Company, threatened labor dispute, strike, slowdown
or work stoppage which affects or may affect the business of the Company or
which may interfere with its continued operations; (d) to the Knowledge of the
Company, neither the Company nor any employee, agent or representative thereof,
have since December 31, 1999 committed any unfair labor practice as defined in
the National Labor Relations Act, as amended, and there is no pending or, to
the Knowledge of the Company, threatened charge or complaint against the
Company by or with the NLRB or any representative thereof; (e) to the Knowledge
of the Company, the Company is in compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, health and safety, and wages and hours; (f) the Company has not
received written notice of any investigation, charge or complaint against the
Company pending before the Equal Employment Opportunity Commission or any other
federal, state, or Puerto Rico government agency or court or other tribunal
regarding an unlawful employment practice; (g) there are no complaints,
lawsuits, arbitrations or other proceedings pending or, to the Knowledge of the
Company, threatened by or on behalf of any present or former employee of the
Company alleging breach of any express or implied contract of employment; (h)
the Company is and has been in compliance with all notice and other
requirements under the Worker Adjustment and Retaining Notification Act
("WARN") or similar Puerto Rico statute.
SECTION 6.23 CERTAIN CONTRACTS
(a) There are no Contracts (other than loan agreements)
between (i) the Company or any of its Subsidiaries, on the one hand, and (ii)
any director, officer or employee of the Company or its Subsidiaries, any
Affiliate of any director, officer or employee of the Company or its
Subsidiaries or any Person the equity interests of which are more that 5% owned
33
by any director, officer or employee of the Company or its Subsidiaries, on the
other hand, other than any such Contracts that will terminate or expire prior
to or as of Consummation of the Offer, in each case providing for payments in
the aggregate of more than U.S. $25,000 in any 12-month period or U.S. $50,000
over the remaining duration of any such Contracts, and not to exceed U.S.
$250,000 in the aggregate.
(b) There are no Contracts between the Company or any of its
Subsidiaries with any Person (i) requiring that the Company or such Subsidiary
purchase or sell any product or service exclusively from or to any Person, (ii)
prohibiting the Company or any of its Subsidiaries from selling products or
services to any Person, (iii) requiring the Company or any of its Subsidiaries
to purchase all of their requirements of any product or service from any Person
or (iv) requiring the Company to pay for any product or service regardless of
whether or not the Company avails itself of such product or service.
(c) There are no Contracts between the Company or any of
its Subsidiaries with any Person with a term of more than two years providing
for payments of more than U.S. $50,000 in any 12-month period or U.S. $100,000
over the remaining duration of any such Contracts and not to exceed U.S.
$250,000 in the aggregate in any 12-month period that are not cancelable by the
Company without penalty, payment or other obligation.
SECTION 6.24 INSURANCE. The Company and its
Subsidiaries have insurance coverage in amounts and with deductibles which are
customary for a company similar in size, location and industry to the Company
and its Subsidiaries.
SECTION 6.25 CERTAIN ACTIONS. None of the
Company or any of its Subsidiaries, or any of their respective officers,
directors or, to the Knowledge of the Company, any of their employees or
representatives has taken any action or made any payment since December 31,
1997 that would constitute a breach of the United States Foreign Corrupt
Practices Act.
SECTION 6.26 XXXXX LOANS AND LOAN COMMITMENTS
(a) Definitions.
(i) "XXXXX DEBTORS" means the Person or Persons,
directly or indirectly, obligated on or in respect of a Xxxxx Loan or
Xxxxx Loan Commitment (other than the Company or any Subsidiary of the
Company), including any guarantor or other provider of security.
(ii) "XXXXX LOANS" means all of the following owed
to or held by Xxxxx or by the Company relating to Xxxxx (including any
of the following fully or partially charged off the books of the
Company):
(A) loans, advances or other extensions of
credit, including customer liabilities (on letters of credit
or otherwise), and including in all cases loans made to pay
interest accruing on loans whether or not due or payable
(sometimes referred to as capitalized interest);
34
(B) all Liens (including security
interests), rights (including rights of set-off), remedies,
powers, privileges, demands, priorities, equities and
benefits owned or held by, or accruing or to accrue to or for
the benefit of, the holder of the obligations or instruments
referred to in clause (A) above, including but not limited to
those arising under or based upon Xxxxx Loan Documents,
standby letters of credit, payment bonds and performance
bonds at any time and from time to time existing with respect
to any of the obligations or instruments referred to in
clause (A) above; and
(C) all amendments, modifications,
renewals, extensions, refinancings and refundings of or for
any of the foregoing.
(iii) "XXXXX LOAN COMMITMENTS" means the collective
reference to each commitment or obligation on the part of Xxxxx or the
Company relating to Xxxxx to extend credit to any Person.
(iv) "XXXXX LOAN DOCUMENTS" means the agreements,
instruments, certificates, or other documents at any time evidencing
or otherwise relating to, governing, or executed in connection with,
or as security for a Xxxxx Loan or a Xxxxx Loan Commitment, including
without limitation, security agreements, notes, bonds, acceptances and
letters of credit issued in connection therewith, loan agreements,
letter of credit applications, letters of credit, drafts, guarantees,
assignments, security agreements, pledges, subordination or priority
agreements, undertakings, security instruments, financing statements,
certificates, documents, participation and assignment agreements and
inter-creditor agreements, and all amendments, modifications,
renewals, extensions, rearrangements and substitutions with respect to
any of the foregoing.
(v) "XXXXX" means Xxxxx Capital Corp., a wholly
owned Subsidiary of the Company.
(b) Representations on Xxxxx Loans and Xxxxx Loan
Commitments.
(i) Each Xxxxx Loan or Xxxxx Loan Commitment was
made by Xxxxx or the Company in the ordinary course of business
consistent with past practice, is at a rate of interest usual and
customary for such Xxxxx Loan or Xxxxx Loan Commitment and is
collectible in accordance with its terms, subject to any reserves for
uncollectible Xxxxx Loans set forth on the Balance Sheet and
applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors' rights generally. Each Xxxxx Loan is
secured by a Lien on collateral with a value in excess of the amount
owed under such Xxxxx Loan. Section 6.26 of the Company Disclosure
Schedule sets forth as of the date of this Agreement: (i) the unpaid
principal balance of each Xxxxx Loan as well as the aggregate amount
of any Xxxxx Loan Commitment, (ii) the payment status and maturity
date of each Xxxxx Loan and (iii) the interest rate associated with
each Xxxxx Loan and Xxxxx Loan Commitment.
(ii) Each Xxxxx Loan Document constitutes a valid,
legal and binding obligation of the Debtors thereunder, enforceable in
accordance with its terms, subject to
35
applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors' rights generally; each Xxxxx Loan
Document contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization of the benefits intended to be provided thereby, including
by the security interest or Lien created and granted (or purported to
be created or granted) by such Xxxxx Loan Document; all Liens granted
to Xxxxx or the Company in any collateral described in any Xxxxx Loan
Document as security for each Xxxxx Loan and Xxxxx Loan Commitment
constitute valid and perfected Liens in such collateral (assuming the
relevant Debtor has rights in the collateral as to permit attachment);
(iii) All Xxxxx Loans, Xxxxx Loan Commitments and
related Xxxxx Loan Documents were issued, made and maintained in
material compliance with applicable Law; there is no valid claim
pending against the Company with respect to, or, to the Knowledge of
the Company, any valid defense to the enforcement by the Company of,
such Xxxxx Loan or Xxxxx Loan Commitment and neither the Company nor
any of its Affiliates has taken or failed to take any action that
would reasonably be expected to entitle any Debtor or other party to
assert successfully any claim or defense against the Company, Parent
or Purchaser (including without limitation any right not to repay any
such obligation or any part thereof or any right to subordinate the
claims related to such Xxxxx Loan to any other claim); and
(iv) None of the rights or remedies under the Xxxxx
Loan Documents in favor of Xxxxx or the Company have been materially
amended, modified, waived, supplemented, subordinated or otherwise
altered by Xxxxx, the Company or any of its Affiliates.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the Parent Disclosure Schedule, each
of Parent and Purchaser represents and warrants to, and covenants and agrees
with, the Company as set forth in this Article VII. Each exception set forth in
the Parent Disclosure Schedule and each other response to this Agreement set
forth in the Parent Disclosure Schedule is identified by reference to, or has
been grouped under a heading referring to, a specific individual Section of
this Agreement.
SECTION 7.1 DUE ORGANIZATION; GOOD STANDING.
Each of Parent and Purchaser is a corporation duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its incorporation.
SECTION 7.2 AUTHORIZATION AND VALIDITY OF
AGREEMENT. Each of Parent and Purchaser has the requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Parent and Purchaser,
and the consummation by each such party of the transactions contemplated
hereby, have been duly authorized and approved by the respective boards of
directors of Parent and Purchaser and by the sole shareholder of Purchaser and
no other corporate action on the part of
36
either of Parent or Purchaser is necessary to authorize the execution, delivery
and performance of this Agreement by each of Parent and Purchaser and the
consummation of the transactions contemplated hereby other than filing the
Certificate of Merger. This Agreement has been duly executed and delivered by
each of Parent and Purchaser and, assuming the due and valid authorization,
execution and delivery of this Agreement by the Company, this Agreement is a
valid and binding obligation of each of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with its terms.
SECTION 7.3 CONSENTS AND APPROVALS; NO
VIOLATIONS. Assuming (i) the filings required under the HSR Act are made and
the waiting periods thereunder (if applicable) have been terminated or expired,
(ii) the prior notification and reporting requirements of other antitrust or
competition Laws as may be applicable are satisfied and any antitrust
filings/notifications which must or may be effected in countries having
jurisdiction are made and any waiting periods thereunder have been terminated
or expired, (iii) the applicable requirements of the Exchange Act are met, (iv)
the requirements under any applicable Puerto Rico, foreign or state securities
or blue sky Laws are met and (v) the filing of the Certificate of Merger and
other appropriate merger documents, if any, as required by the PRGCL are made,
the execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated hereby
and the performance of each of Parent and Purchaser of its obligations
hereunder do not and will not: (A) violate or conflict with any provision of
the governing documents of Parent, Purchaser or any of their respective
Subsidiaries; (B) violate or conflict with any Laws or Orders of any
Governmental Authority or any Permit applicable to Parent, Purchaser or any of
their respective Subsidiaries or by which any of their respective properties or
assets may be bound; (C) require any filing with, or permit, consent or
approval of, or the giving of any notice to, any Governmental Authority; or (D)
result in a violation or breach of, conflict with, constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any Lien upon any of the properties or assets of Parent, Purchaser or any of
their respective Subsidiaries under, or give rise to any obligation, right of
termination, cancellation, acceleration or increase of any obligation or a loss
of a benefit under, any of the terms, conditions or provisions of any Contracts
to which Parent, Purchaser or any of their respective Subsidiaries is a party,
or by which any such Person or any of its properties or assets are bound.
SECTION 7.4 INFORMATION TO BE SUPPLIED.
(a) Each of the Schedule TO and the Offer Documents and the
other documents required to be filed by Parent with the SEC in connection with
the Offer, the Merger and the other transactions contemplated hereby will
comply as to form, in all material respects, with the requirements of the
Exchange Act and will not, on the date of its filing, and none of the
information supplied or to be supplied by Parent or Purchaser expressly for
inclusion or incorporation by reference in the Schedule 14D-9 or the Proxy
Statement will, in the case of the Schedule 14D-9, at the time the Schedule
14D-9 is filed with the SEC and first published, sent or given to the Company's
shareholders or, in the case of the Proxy Statement on the dates the Proxy
Statement is mailed to shareholders of the Company and at the time of the
Company Shareholder Meeting will not, contain any untrue statement of a
material fact or omit to state any
37
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section
7.4, no representation or warranty is made by Parent with respect to statements
made or incorporated by reference in the Schedule TO, the Offer Documents, the
Schedule 14D-9 or Proxy Statement based on information supplied by the Company
expressly for inclusion or incorporation by reference therein or based on
information which is not made in or incorporated by reference in such documents
but which should have been disclosed pursuant to Section 6.6.
SECTION 7.5 BROKER'S OR FINDER'S FEE. Except
for Xxxxxxx, Xxxxx & Co. (whose fees and expenses will be paid by Parent or
Purchaser), no agent, broker, Person or firm acting on behalf of Parent or
Purchaser is, or will be, entitled to any fee, commission or broker's or
finder's fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated hereby.
SECTION 7.6 OWNERSHIP OF CAPITAL STOCK.
Neither Parent, Purchaser nor any of their respective Subsidiaries beneficially
owns, directly or indirectly, any capital stock of the Company or is a party to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any capital stock of the Company, other than as
contemplated by this Agreement and the Transaction Support Agreements. As of
the date of this Agreement, none of Purchaser, Parent or any Affiliate of
Parent is an "Interested Stockholder" of the Company, as such term is defined
in Article Tenth of the Company's Certificate of Incorporation.
SECTION 7.7 NO PRIOR ACTIVITIES. Purchaser was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement, has no Subsidiaries and has undertaken no business or
activities other than in connection with entering into this Agreement and
engaging in the transactions contemplated hereby. All of the issued and
outstanding shares of capital stock of Purchaser are issued and outstanding,
are duly authorized, validly issued, fully paid and nonassessable.
SECTION 7.8 SUFFICIENT FUNDS. Parent and
Purchaser have sufficient funds to purchase all of the shares of Company Common
Stock outstanding on a fully diluted basis at the Offer Price, to retire all
outstanding indebtedness of the Company and its Subsidiaries and to pay all
costs, fees and expenses related to the transactions contemplated by this
Agreement (collectively, "SUFFICIENT FUNDS") and such funds will be available
at the times required under this Agreement.
ARTICLE VIII
COVENANTS
SECTION 8.1 ACCESS TO INFORMATION CONCERNING
PROPERTIES AND RECORDS. During the period commencing on the date hereof and
ending on the earliest of (i) the Closing Date, (ii) the date on which this
Agreement is terminated pursuant to Section 10.1 hereof and (iii) July 18,
2002, the Company shall, and shall cause its Subsidiaries to, upon
38
reasonable notice, afford Parent, and Parent's counsel, accountants,
consultants, financing sources and other authorized representatives, access
during normal business hours to its and the Company's Subsidiaries' executive
officers, properties, books and records in order that they may have the
opportunity to make such investigations as they shall reasonably deem necessary
of the Company's and its Subsidiaries' affairs, including, without limitation,
operational, market, financial, legal, environmental, building and mechanical
inspections (including, without limitation, subsurface or other physically
invasive investigations) and title and survey due diligence; such investigation
shall not, however, affect the representations and warranties made by the
Company in this Agreement, provided, however, that if as of July 18, 2002 or
any date thereafter it has come to the attention of Parent that there has been
a breach by the Company of a representation, warranty or covenant hereunder,
the date set forth in clause (iii) shall be extended for so long as, and only
to the extent necessary for, Parent to continue to investigate the matters
causing or otherwise relating to any such breach or, if later, any Cure Period
relating to such breach and provided, further, that all such access shall be
reinstated promptly upon Consummation of the Offer. The Company shall furnish
promptly to Parent and Purchaser (x) a copy of each form, report, schedule,
statement, registration statement and other document filed by it during such
period pursuant to the requirements of Puerto Rico, federal, state or foreign
securities Laws and (y) all other information concerning the Company's or its
Subsidiaries' business, properties and personnel as Parent or Purchaser may
reasonably request. The Company agrees to cause its officers and employees to
furnish such additional financial and operating data and other information and
respond to such inquiries as Parent or Purchaser shall from time to time
reasonably request. Parent and Purchaser shall make all reasonable efforts to
minimize any disruption to the businesses of the Company and its Subsidiaries
which may result from the requests made hereunder. The foregoing provisions of
this Section 8.1 shall not require the Company or any of its Subsidiaries to
disclose any information the disclosure of which in the reasonable good faith
judgment of the Company after consultation with outside counsel would (i)
violate any applicable antitrust or competition Law or (ii) violate any
contractual obligation of the Company or its Subsidiaries to any third party to
maintain the confidentiality of such information; provided, however, that with
respect to any information covered by this clause (ii), the Company shall use
commercially reasonable efforts to obtain the consent of any such third party
to such disclosure; provided, further, however that this clause (ii) shall not
limit or restrict any obligation of the Company to disclose information to
Parent pursuant to Section 8.5 or Section 10.1(c)(i). All information exchanged
pursuant to this Section 8.1 shall be subject to the Confidentiality Agreement.
SECTION 8.2 CONDUCT OF THE BUSINESS OF THE
COMPANY PENDING THE CLOSING DATE. Except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by Parent, which consent or approval shall
not be unreasonably withheld, conditioned or delayed in the case of clauses
8.2(b)(4) or (12), and except as set forth in Section 8.2 of the Company
Disclosure Schedule, during the period commencing on the date hereof until the
Effective Time:
(a) The Company and each of its Subsidiaries shall conduct
their respective operations only according to their ordinary and usual course
of business consistent with past practice and shall use their reasonable best
efforts to preserve intact their respective business organizations, keep
available the services of their officers and employees and maintain
satisfactory relationships with those Persons having significant business
relationships with them;
39
(b) Neither the Company nor any of its Subsidiaries
shall:
(1) make any change in or amendment to
its certificate or articles of incorporation or its
by-laws or similar organizational documents;
(2) issue or sell, or authorize to issue or
sell, any shares of its capital stock, Voting Debt
or any other securities, or issue or sell, or
authorize to issue or sell, any securities
convertible into, or options, warrants or rights to
purchase or subscribe for, or enter into any
arrangement or contract with respect to the issuance
or sale of, any shares of its capital stock, Voting
Debt or any other securities, or make any other
changes in its capital structure;
(3) declare, pay or set aside any dividend
or other distribution or payment with respect to, or
split, combine, redeem or reclassify, or purchase or
otherwise acquire, any shares of its capital stock
or its other securities, other than (A) normal
quarterly cash dividends not in excess of U.S. $0.19
per share declared and paid in accordance with the
Company's past dividend policy, provided that the
timing of the declaration, record and payment dates,
shall be the same dates as were used by the Company
in the last calendar year, or, if any such date
shall not be a Business Day, the next succeeding
Business Day, and provided further, that no such
cash dividends shall be declared after Consummation
of the Offer or (B) dividends payable by a wholly
owned Subsidiary of the Company to the Company or
another wholly owned Subsidiary of the Company;
(4) incur any capital expenditures or any
obligations or liabilities in respect thereof,
except (A) with respect to expansion projects, for
expenditures for such projects which are consistent
with the budget for the Company set forth in Section
8.2(b) of the Company Disclosure Schedule (the
"COMPANY BUDGET"), (B) those required for
maintenance and replacement in the ordinary course
of business not to exceed the amounts provided for
maintenance and replacement in the Company Budget
and (C) capital expenditures outside the scope of
the Company Budget that do not exceed U.S. $250,000
in the aggregate.
(5) acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any
other manner, any business or any corporation,
partnership, joint venture, association or other
business organization or division thereof (excluding
any of the Company's Subsidiaries) or (B) any
assets, including real estate, except purchases of
inventory, equipment, or other non-material assets
in the ordinary course of business consistent with
the Company Budget;
(6) (A) except to the extent required under
existing Company Benefit Plans as in effect on the
date of this Agreement, increase the compensation or
fringe benefits of any of its directors, officers or
40
employees or grant any severance or termination pay
not currently required to be paid under existing
severance plans; (B) enter into any employment or
consulting agreement or arrangement with any present
or former director or officer of the Company or any
of its Subsidiaries, or any employment or consulting
agreement with any other employee of the Company or
any of its Subsidiaries; or (C) except in the
ordinary course of business consistent with past
practice and to the extent necessary to fill
vacancies, hire or agree to hire, or enter into any
written employment agreement with, any new or
additional employee or officer having an annual base
salary of U.S. $40,000 or more or, in the aggregate,
annual base salaries of U.S. $500,000 or more;
(7) except as required to comply with
applicable Law or expressly provided in this
Agreement, (A) adopt, enter into, terminate or amend
any Company Benefit Plan, collective bargaining
agreement or other arrangement for the current or
future benefit or welfare of any director, officer
or current or former employee, (B) pay any benefit
not required under any Company Benefit Plan,
accelerate the payment, right of payment or vesting
of any bonus, severance, profit sharing, retirement,
deferred compensation, stock option, insurance or
other compensation or benefits, (C) grant any awards
under any bonus, incentive, performance or other
compensation plan or arrangement or Company Benefit
Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related
awards, performance units or restricted stock, or
the removal of existing restrictions in any Company
Benefit Plans or agreements or awards made
thereunder) or (D) except as required by the current
terms thereof take any action to fund or in any
other way secure the payment of compensation or
benefits under any employee plan, agreement,
contract or arrangement or Company Benefit Plan;
(8) transfer, lease (as lessor), license,
sell, mortgage, pledge, dispose of, encumber or
subject to any Lien, any assets, other than in the
ordinary course of business and consistent with past
practice, except as provided for in Section
8.2(b)(11) or in an amount in the aggregate not to
exceed U.S. $250,000;
(9) except as required by applicable
Law or GAAP, make any change in its methods of
accounting;
(10) adopt or enter into a plan of complete
or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its
Subsidiaries (other than the Merger), except as
provided for in Section 8.5;
(11) (A) Incur any long-term indebtedness
(other than under existing revolving credit
facilities, as may be amended as contemplated
hereby) or, except in the ordinary course of
business consistent with past
41
practice, any short-term indebtedness; (B) modify
any material indebtedness or other liability; (C)
assume, guarantee, endorse or otherwise become
liable or responsible (whether directly,
contingently or otherwise) for the obligations or
indebtedness of any other Person; (D) make any
loans, advances or capital contributions to, or
investments in, any other Person (other than in or
to wholly owned Subsidiaries of the Company, or by
wholly owned Subsidiaries to the Company, or
customary loans or advances to employees); (E) other
than with respect to the settlement of any claim
that is completely covered (other than with respect
to deductibles to the Company's insurance policies)
by the Company's insurance carrier, settle any
claims against the Company or any of its
Subsidiaries where the amounts payable by the
Company and its Subsidiaries would exceed U.S.
$25,000 individually or U.S. $250,000 in the
aggregate, in each such case without admission of
liability; or (F) except in the ordinary course of
business consistent with past practice, enter into
any material commitment or transaction;
(12) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction of
any such claims, liabilities or obligations, in the
ordinary course of business and consistent with past
practice, or of claims, liabilities or obligations
reflected or reserved against in, or contemplated
by, the Financial Statements;
(13) enter into any agreement,
understanding or commitment (including with any
Antitrust Authority) that contains any material
prohibition on the conduct of any business or line
of business, or any material limitation on the scope
of business that may be conducted, by the Company or
any of its Subsidiaries, including geographic
limitations on the Company's or any of its
Subsidiaries' activities;
(14) (A) announce, implement or effect any
material reduction in labor force, lay-off, early
retirement program, severance program or other
program or effort concerning the termination of
employment of employees of the Company or its
Subsidiaries; provided, however, that routine
employee terminations for cause shall not be
considered subject to this clause (14) or (B)
terminate the employment of any officer of the
Company other than for cause or agree that any
voluntary termination of employment by an officer of
the Company occurring prior to the Effective Time
shall be treated as having been with "good reason";
(15) take any action including, without
limitation, the adoption of any shareholder rights
plan or amendments to its Certificate or Articles of
Incorporation or By-Laws (or comparable governing
documents) or any resolution of the Company's Board
of Directors, which would, directly or indirectly,
restrict or impair the ability of Parent to vote, or
otherwise to
42
exercise the rights and receive the benefits of a
shareholder with respect to, securities of the
Company acquired by Purchaser in the Offer or the
Merger, or permit any shareholder to acquire
securities of the Company on a basis not available
to Parent or Purchaser in the event that Parent or
Purchaser were to acquire any additional shares of
the Company Common Stock or approve any "Business
Combination" (as defined in Article TENTH of the
Company's Certificate of Incorporation) with any
person other than Parent and Purchaser for the
purposes of Article TENTH of the Company's
Certificate of Incorporation (subject to the
Company's right to take action specifically
permitted by Section 8.5 prior to Consummation of
the Offer);
(16) enter into any Material Contract, or
terminate or materially modify or amend any such
Material Contract to which it is a party or waive or
assign any of its material rights or claims except
in the ordinary course of business consistent with
past practice;
(17) other than consistent with past
practice or as required by a change in Law or
required by Law because of a change in facts, make
any Tax election or enter into any settlement or
compromise of any liability for Taxes that in either
case is material;
(18) permit any insurance policy, other
than a policy providing coverage for losses not in
excess of U.S. $25,000, naming it as a beneficiary
or a loss payable payee to be cancelled or
terminated, other than pursuant to an expiration in
accordance with its terms, unless a new policy with
substantially similar coverage is in effect as of
the date of such cancellation or termination; or
(19) agree or commit, in writing or
otherwise, to take any of the foregoing actions.
For purposes of this Section 8.2(b) (other than Section 8.2(b)(13)), references
to "material" (but not "materially") mean material to the Company and its
Subsidiaries, taken as a whole.
(c) The Company (i) shall not, and shall not permit any of
its Subsidiaries to, take any action that would, or would reasonably be
expected to, result in (A) any of the conditions to the Offer set forth in
Article IX or Annex I not being satisfied (subject to the Company's right to
take action specifically permitted by Section 8.5) or (B) a Company Material
Adverse Effect and (ii) shall not intentionally take, or permit any of its
Subsidiaries to take, any action that would, or would reasonably be expected
to, result in any of its representations and warranties set forth in this
Agreement becoming untrue in any respect.
SECTION 8.3 COMPANY SHAREHOLDER MEETING;
PREPARATION OF PROXY STATEMENT. Subject to Section 2.4, as promptly as
practicable following Consummation of the Offer, if required by applicable Law
in order to consummate the Merger, the Company, acting through the Company's
Board of Directors, shall, in accordance with applicable Law:
43
(a) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "COMPANY SHAREHOLDER MEETING") for the purpose
of considering and taking action upon the approval of the Merger and the
adoption of this Agreement;
(b) prepare and file with the SEC a preliminary proxy or
information statement in accordance with the Exchange Act relating to the
Merger and this Agreement and use its reasonable best efforts to obtain and
furnish the information required to be included by the Exchange Act and the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement, including any amendment or supplement thereto (the
"PROXY STATEMENT"), to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel;
(c) include in the Proxy Statement the recommendation of the
Company's Board of Directors that shareholders of the Company vote in favor of
approval of the Merger and adoption of this Agreement; and
(d) if proxies are solicited from Company shareholders, use
reasonable best efforts to solicit from its shareholders proxies, and to take
all other action necessary and advisable, to secure the vote of shareholders
required by applicable Law and the Company's Certificate of Incorporation or
By-Laws to obtain the approval for this Agreement and the Merger.
SECTION 8.4 REASONABLE BEST EFFORTS;
NOTIFICATION
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer and the Merger, and the other transactions
contemplated by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from any Governmental
Authority and the making of all necessary registrations and filings (including
filings with any Governmental Authority, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any Governmental Authority, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any Lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated by this Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed, and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement;
provided, however, that no loan agreement or contract for borrowed money
entered into by the Company or any of its Subsidiaries shall be repaid except
as currently required by its terms, in whole or in part, and no contract shall
be amended to increase the amount payable thereunder or otherwise to be more
burdensome to the Company or any of its Subsidiaries in order to obtain any
such consent, approval or authorization without first
44
obtaining the written approval of Parent (which approval shall not be
unreasonably withheld). Nothing contained in this Section 8.4 shall prohibit
the Company and its Subsidiaries from taking any action permitted by Section
8.5 or from terminating this Agreement pursuant to Section 10.1.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by the Company contained in this Agreement
becoming untrue or incorrect, subject to the standard established in Section
5.2 where applicable in any respect that would cause the condition to the Offer
set forth in paragraph (c)(2) of Annex I hereto to fail to be satisfied; or
(ii) the failure by the Company to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement; provided, that no such notification shall affect
the representations, warranties, covenants or agreements of the Company or the
conditions to the obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to the Company of (i) any
representation or warranty made by Parent or Purchaser contained in this
Agreement becoming untrue or incorrect, subject to the standard established in
Section 5.2 where applicable, in any respect or (ii) the failure by Parent or
Purchaser to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided that no such notification shall affect the representations,
warranties, covenants or agreements of Parent or Purchaser or the conditions to
the obligations of the parties under this Agreement.
SECTION 8.5 NO SOLICITATION.
(a) The Company shall, and shall cause its Affiliates,
officers, directors, employees, financial advisors, attorneys and other
advisors, representatives and agents to, immediately cease any existing
activities, discussions or negotiations conducted with any parties other than
Parent or Purchaser with respect to any Takeover Proposal (as defined below).
The Company shall not, nor shall it authorize or permit any of its Affiliates
to, nor shall it authorize or permit any officer, director or employee of or
any financial advisor, attorney or other advisor, representative or agent of it
or any of its Affiliates, to (i) directly or indirectly solicit, facilitate,
initiate or encourage the making or submission of, any Takeover Proposal
(including, without limitation, taking any action which would make Article
TENTH of the Company's Certificate of Incorporation not applicable to a
Takeover Proposal), (ii) enter into any agreement, arrangement or understanding
with respect to any Takeover Proposal or enter into any agreement, arrangement
or understanding requiring it to abandon or terminate this Agreement or to fail
to consummate the Merger or any other transaction contemplated by this
Agreement, (iii) initiate or participate in any discussions or negotiations
regarding, or furnish or disclose to any Person (other than a party to this
Agreement) any information with respect to, or take any other action
intentionally to facilitate or in furtherance of any inquiries or the making of
any proposal that constitutes, or could reasonably be expected to lead to, any
Takeover Proposal, or (iv) grant any waiver or release under any standstill or
similar agreement with respect to any class of the Company's equity securities
(other than to permit the Company to receive a Takeover Proposal that did not
result from a breach of any other provision of this Section 8.5(a)); provided
that prior to Consummation of the Offer, in response to a Takeover Proposal
that did not result from the
45
breach of this Section 8.5 and following delivery to Parent of notice of the
Takeover Proposal in compliance with its obligations under Section 8.5(d)
hereof, the Company may (1) in response to any Takeover Proposal, request
clarifications from (but not, except as contemplated by clause (2) below,
participate in discussions or negotiations with) any third party which makes
such Takeover Proposal, if such action is taken solely for the purpose of
obtaining information reasonably necessary for the Company to ascertain whether
such Takeover Proposal is a Superior Proposal, and (2) participate in
discussions or negotiations with or furnish information (pursuant to a
confidentiality/standstill agreement with customary terms as reasonably
determined in good faith by the Company after consultation with outside
counsel; provided that each such agreement is at least as limiting as any such
agreement between Parent and the Company) to any third party which has made a
bona fide Takeover Proposal if (A) the Company's Board of Directors reasonably
determines in good faith (after consultation with its financial advisor) that
taking such action would be reasonably likely to lead to the delivery to the
Company of a Superior Proposal and (B) the Company's Board of Directors
determines in good faith (after consultation with outside legal counsel) that
it is necessary to take such actions in order to comply with its fiduciary
duties under applicable Law. Without limiting the foregoing, the Company agrees
that any violation of the restrictions set forth in this Section 8.5(a)
directly or indirectly by any of its Subsidiaries, officers, Affiliates or
directors or any advisor, representative, consultant or agent retained by the
Company or any of its Subsidiaries or Affiliates in connection with the
transactions contemplated hereby, whether or not such Person is purporting to
act on behalf of the Company or any of its Subsidiaries, shall constitute a
breach of this Section 8.5(a) by the Company. The Company will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the prior sentence of the obligations undertaken in this Section
8.5. For purposes of this Section 8.5, a Person shall be deemed to have
facilitated or encouraged an action or result only if any act or omission by
such Person (i) would reasonably be expected to facilitate or encourage such
action or result or (ii) was intended by such Person to facilitate or encourage
such action or result.
For purposes of this Agreement, "TAKEOVER PROPOSAL" means any
indication of interest in, or proposal or offer for, (i) any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company or any of
its Subsidiaries or 15% or more of any class of equity securities of the
Company or any of its Subsidiaries, (ii) any tender offer or exchange offer
that, if consummated, would result in any Person beneficially owning 15% or
more of any class of equity securities of the Company or any of its
Subsidiaries or (iii) any merger, consolidation, business combination, sale of
all or any substantial portion of the assets, recapitalization, liquidation or
a dissolution of, or similar transaction of the Company or any of its
Subsidiaries other than the Offer or the Merger, which in any such case has
been communicated (including as a result of any press release or other public
disclosure) to (1) any of the individuals signing a Transaction Support
Agreement on behalf of a stockholder party thereto, (2) any of the Persons
identified as having Knowledge in Schedule 1.1 or (3) the Company's Board of
Directors generally; and "SUPERIOR PROPOSAL" means a bona fide written Takeover
Proposal made by a third party to purchase all of the outstanding equity
securities of the Company pursuant to a tender offer, exchange offer, merger or
other business combination (x) on terms which the Company's Board of Directors
determines in good faith to be superior to the Company and its shareholders
(other than Parent, Purchaser and their respective Affiliates), in their
capacity as shareholders, from a financial point of view (taking into account,
among other things, all legal, financial, regulatory and other aspects of the
proposal and identity
46
of the offeror and the financial capacity of the offeror to consummate the
transaction) as compared to the transactions contemplated hereby and any
alternative proposed by Parent or Purchaser in accordance with Section 10.1(c)
hereof, such determination having been made only after consultation with the
Company's financial advisor, (y) for which financing is committed or cash is
available and (z) which is reasonably capable of being consummated.
(b) The Company agrees that, except as set forth in Section
8.5(c), neither the Company's Board of Directors nor any committee thereof
shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent or Purchaser, the approval or recommendation of the
Company's Board of Directors of the Offer, the Merger or this Agreement, unless
the Company's Board of Directors shall have determined in good faith, after
consultation with its outside counsel that such withdrawal or modification is
necessary in order to satisfy its fiduciary duties to the Company's
shareholders under applicable Law, (ii) approve or recommend, or, in the case
of a committee, propose to the Company's Board of Directors to approve or
recommend, any Takeover Proposal or (iii) approve, recommend or cause it to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "ACQUISITION AGREEMENT") related to any
Takeover Proposal. For purposes of this clause (b), if the Company Board of
Directors or any such committee proposal is publicly disclosed, regardless of
the source of, or the circumstances surrounding, the disclosure, such Company
Board of Directors or committee proposal shall be deemed to have been made
publicly.
(c) Notwithstanding anything to the contrary herein, prior to
Consummation of the Offer, the Company and/or the Company's Board of Directors
may take the actions otherwise prohibited by Sections 8.5(a) and 8.5(b) if (i)
a third party makes a Takeover Proposal which the Company has determined to be
a Superior Proposal in accordance with Section 8.5(a), (ii) the Company
complies with its obligations under Section 8.5(d), (iii) all of the conditions
to the Company's right to terminate this Agreement in accordance with Section
10.1(c) hereof shall have been satisfied (including expiration of the five
Business Day period described therein (or such shorter period as may be
provided therein) and payment of all amounts due and payable pursuant to
Section 10.3 and (iv) simultaneously therewith, this Agreement is terminated in
accordance with Section 10.1(c)(i) hereof.
(d) The Company agrees that in addition to the obligations of
the Company set forth in paragraphs (a), (b) and (c) of this Section 8.5,
promptly after (but in no event more than two calendar days after) receipt
thereof, the Company shall advise Parent in writing of (i) any Takeover
Proposal or amended Takeover Proposal or (ii) any Superior Proposal, as well as
in either such case the material terms and conditions of such Takeover Proposal
or Superior Proposal together with copies of any written materials received by
the Company in connection with any of the foregoing and the identity of the
Person making any such Takeover Proposal or Superior Proposal. In connection
with the foregoing, the Company agrees that it shall simultaneously provide to
Parent any non-public information concerning the Company provided to any other
Person in connection with any such Takeover Proposal or Superior Proposal which
was not previously provided to Parent.
(e) Parent and Purchaser agree that nothing contained in this
Section 8.5 shall prohibit the Company from taking and disclosing to its
shareholders a position
47
contemplated by Rule 14D-9 and Rule 14e-2 promulgated under the Exchange Act
with respect to any tender offer or from making any required disclosure to the
Company's shareholders if, in the reasonable good faith judgment of the
Company's Board of Directors, after consultation with outside counsel, failure
so to disclose would be inconsistent with its disclosure obligations under
applicable Law.
SECTION 8.6 ANTITRUST LAWS.
(a) Each party hereto shall (i) take promptly (but in no
event later than fifteen Business Days following the date of this Agreement as
to initial filings) all actions necessary to make the filings required of it or
any of its Affiliates under any applicable Antitrust Laws in connection with
this Agreement and the transactions contemplated hereby, (ii) comply at the
earliest practicable date with any formal or informal request for additional
information or documentary material received by it or any of its Affiliates
from any Antitrust Authority and (iii) cooperate with one another in connection
with any filing under applicable Antitrust Laws and in connection with
resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement initiated by any Antitrust Authority.
(b) Each party hereto shall use its reasonable best efforts
to resolve such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law; provided,
however, that the Company shall not, without the prior written consent of
Parent, commit to any divestiture transaction and Parent shall not be required
to divest or hold separate or otherwise take or commence to take any action
that, in the reasonable discretion of Parent, materially limits its ability to
conduct the business or its ability to retain the Company or any material
portion of the assets of the Company.
(c) Each party hereto shall promptly inform the other parties
of any material communication made to, or received by such party from, any
Antitrust Authority or any other Governmental Authority regarding any of the
transactions contemplated hereby.
(d) For purposes of this Agreement, (i) "ANTITRUST
AUTHORITIES" means the Federal Trade Commission, the Antitrust Division of the
Department of Justice, the attorneys general of the several states of the
United States and any other Governmental Authority having jurisdiction with
respect to the transactions contemplated hereby pursuant to applicable
Antitrust Laws and (ii) "ANTITRUST LAW" means the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other Puerto Rico, federal, state and foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
Laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
SECTION 8.7 INDEMNIFICATION; DIRECTORS' AND
OFFICERS' INSURANCE.
(a) Parent, Purchaser and the Surviving Corporation agree
that all rights to indemnification existing in favor of the present or former
directors, officers, employees, fiduciaries and agents of the Company or any of
its Subsidiaries (collectively, the "INDEMNIFIED PARTIES") for acts or
omissions of such Persons occurring at or prior to the Effective Time, as
provided in the Company's Certificate of Incorporation or By-Laws or the
48
certificate or articles of incorporation, by-laws or similar organizational
documents of any of its Subsidiaries or the terms of any individual indemnity
agreement or other arrangement with any director or executive officer, which
agreement or arrangement is listed in Section 8.7 of the Company Disclosure
Schedule, in each case as in effect as of the date of this Agreement, shall
survive the Merger and shall continue in full force and effect for six years
after the Effective Time (without modification or amendment, except as required
by applicable Law) in accordance with their terms, to the fullest extent
permitted by Law, and shall be enforceable by the Indemnified Parties against
the Surviving Corporation, and the Surviving Corporation shall also advance
fees and expenses (including reasonable attorney's fees) as incurred to the
fullest extent permitted under applicable Law upon receipt of any undertaking
required by applicable Law. Notwithstanding the foregoing, Parent and the
Surviving Corporation shall not be required to indemnify any Indemnified Party
to the extent that the indemnifiable amount is paid by an insurer pursuant to
Section 8.7(b). If within six years from the Effective Time, the Surviving
Corporation is merged with and into Parent or another Person, the certificate
of incorporation and bylaws (or equivalent organizational documents) of Parent
or such other Person shall, for at least the six-year period following the
Effective Time, provide rights to indemnification for the Indemnified Persons
at least equivalent to those in the certificate of incorporation and bylaws of
the Surviving Corporation. Subject to the foregoing, nothing is this Section
8.7 shall prevent a merger, consolidation, or business combination of the
Surviving Corporation with another entity.
(b) Purchaser shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company
(provided that Purchaser may substitute therefor policies of at least
equivalent coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective Time.
Notwithstanding the foregoing sentence or Section 8.2 to the contrary, the
Company shall have the right to procure, prior to the Effective Time, a policy
for directors' and officers' liability insurance with respect to matters
occurring prior to the Effective Time, having a term lasting no less than six
years following the Effective Time and providing U.S. $15,000,000 (or such
lesser amount as may be obtained pursuant to the proviso at the end of this
sentence) in coverage, and containing terms and conditions which are no less
advantageous than the Company's current policies with respect to such
insurance, provided that the aggregate premium payable therefor shall not
exceed U.S. $350,000. The provisions of this Section 8.7 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties. Notwithstanding any other provision of this Agreement to
the contrary, the provisions of this Section 8.7(b) may not be amended, waived
or altered in any respect without the prior written unanimous approval of the
Company's Board of Directors.
(c) Nothing in this Agreement is intended to, shall be
construed to, or shall release, waive or impair any rights to directors' and
officers' insurance claims under any policy that is or has been in existence
with respect to the Company or any of its Subsidiaries or any of their
respective officers, directors or employees, it being understood and agreed
that the indemnification provided for in this Section 8.7 is not prior to or in
substitution for any such claims under such policies.
SECTION 8.8 PUBLIC ANNOUNCEMENTS. The Joint
Press Release referenced in Section 2.1(b) with respect to the execution of
this Agreement shall be reasonably
49
acceptable to Parent and the Company. Thereafter, Parent and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and review by the other party of such
release or statement, except as may be required by Law, court process or by
obligations pursuant to any listing agreement with a national securities
exchange, or as may be permitted pursuant to Section 8.5.
SECTION 8.9 EMPLOYEE BENEFITS PLANS.
(a) From and after the Measurement Date, the Company and the
Surviving Corporation, as the case may be, shall honor in accordance with their
respective terms (as in effect on the date of this Agreement), all the
Company's employment, severance and termination agreements, plans and policies
existing prior to the execution of this Agreement which are between the Company
or any of its Subsidiaries and any director, officer, employee or consultant
thereof and which have been disclosed in Section 8.9 of the Company Disclosure
Schedule. Parent acknowledges and agrees that Consummation of the Offer would
constitute a "Change in Control" (or the similar relevant defined term) for all
purposes pursuant to those agreements and arrangements indicated on Section 8.9
of the Company Disclosure Schedule.
(b) From and after the Measurement Date, the Company and
the Surviving Corporation, as the case may be, shall provide severance pay to
any employee of the Company or any Subsidiary of the Company in such amount as
may be required by Act no. 80, approved May 30, 1976, 29 L.P.R.A. ss. 185a et.
seq.
(c) For a period of six months from and after the Measurement
Date, Parent shall, unless the employees of the Company and its Subsidiaries at
the Measurement Date (the "COMPANY EMPLOYEES") shall otherwise agree or
different terms are negotiated with the relevant union representing such
employees, cause the Surviving Corporation to provide to the Company Employees
employee benefits that are, in the aggregate, no less favorable than those
provided immediately prior to the Measurement Date to Company Employees;
provided, however, that nothing contained in this Section 8.9 shall require
Parent or Purchaser to continue or replace, or cause to be continued or
replaced, any Company Benefit Plan or Parent Benefit Plan after the Measurement
Date.
(d) Subject to compliance with Section 8.9(a), nothing
contained in this Section 8.9 or elsewhere in this Agreement shall be construed
to prevent the termination of employment of any Company Employee or any change
in the compensation or employee benefits available to any Company Employee or
the amendment or termination of any particular Company Benefit Plan to the
extent permitted by its terms as in effect immediately prior to the Measurement
Date.
(e) For all purposes under any employee benefit plans of
Parent and its Subsidiaries providing benefits to any Company Employee after
the Effective Time, (all such employee benefit plans are hereinafter referred
to as the "New Plans"), each such Company Employee shall be credited with his
or her years of service with the Company and its Subsidiaries before the
Effective Time, to the same extent as such employee was entitled, before
50
the Effective Time, to credit for such service under any similar Company
Benefit Plans for purposes of (i) eligibility to participate and (ii) vesting,
but in no event shall such service be taken into account in determining the
accrual of benefits under any New Plan, including, but not limited to, a
defined benefit plan. In addition, and without limiting the generality of the
foregoing, (x) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a Company Benefit Plan in
which such employee participated immediately before the Effective Time and (y)
for purposes of each New Plan providing medical, dental, pharmaceutical or
vision benefits to any Company Employee, Parent shall cause all pre-existing
condition exclusions of such New Plan to be waived for such employee and his or
her covered dependents (other than limitations or waiting periods that are
already in effect with respect to such employees and dependents and that have
not been satisfied as of the Effective Time), and Parent shall cause any
eligible expenses incurred by such employee and his or her covered dependents
during the portion of the plan year of the Company Benefit Plan ending on the
date such employee's participation in the corresponding New Plan begins, to be
taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such New Plan.
SECTION 8.10 AVAILABILITY OF SUFFICIENT FUNDS.
Until the Closing Date, Parent and Purchaser shall make available Sufficient
Funds at the times required under this Agreement.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 CONDITIONS TO OBLIGATIONS OF EACH
PARTY. The obligations of the Company, Parent and Purchaser to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) This Agreement shall have been approved and adopted by
the requisite vote of the shareholders of the Company, if required by
applicable Law, in order to consummate the Merger;
(b) No provision of any applicable Law or regulation and no
judgment, injunction, order or decree of any Governmental Authority of
competent jurisdiction shall prohibit the consummation of the Merger; and
(c) Purchaser, Parent or any Affiliate of Parent shall have
purchased shares of Company Common Stock pursuant to the Offer; provided,
however, that neither Parent nor Purchaser shall be entitled to rely on the
condition in this Section 9.1(c) if either of them shall have failed to
purchase shares of Company Common Stock pursuant to the Offer in breach of
their obligations under this Agreement.
51
ARTICLE X
TERMINATION AND ABANDONMENT
SECTION 10.1 TERMINATION. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the Company Shareholder Approval:
(a) by mutual written consent of Parent and the Company;
provided, that any such consent by the Company on or after the Measurement Date
shall have been duly authorized by unanimous vote of the Company's Board of
Directors, including all Independent Directors; or
(b) by Parent:
(i) if at any time prior to Consummation of the
Offer, the Company has breached any representation or warranty, or
prior to the Effective Time has breached any covenant or other
agreement contained in this Agreement, which (A) would give rise to
the failure of a condition set forth in clause (c) of Annex I, (B)
cannot be or has not been cured within the applicable Cure Period
therefor or by the Termination Date, whichever is earlier, and (C) has
not been waived by Parent pursuant to the provisions hereof (provided
that Parent may not terminate this Agreement pursuant to this clause
(i) if either Parent or Purchaser is then in material breach of any
representation, warranty, covenant or other agreement contained in
this Agreement);
(ii) if at any time prior to Consummation of the
Offer, (A) the Company, or the Company's Board of Directors, as the
case may be, shall have (w) after the date hereof, entered into any
agreement, other than a confidentiality/standstill agreement permitted
under Section 8.5, with respect to any Takeover Proposal other than
the Offer or the Merger, (x) amended, conditioned, qualified,
withdrawn, modified or contradicted or resolved to do any of the
foregoing, in a manner adverse to Parent or Purchaser, its approval
and recommendation of the Offer, the Merger and this Agreement
(regardless of whether such action was permitted under this
Agreement), (y) approved or recommended any Takeover Proposal other
than the Offer or the Merger or (z) failed to reject any Takeover
Proposal or amended Takeover Proposal within the applicable Rejection
Period therefor (except that Parent may not terminate this Agreement
pursuant to this clause (z) prior to the Initial Expiration Date), or
(B) the Company or the Company's Board of Directors shall have
resolved to do any of the foregoing; or
(iii) if the Company breaches in any material
respect its obligations under Section 8.5 hereof; or
(c) by the Company:
(i) if at any time prior to Consummation of the
Offer (A) a Superior Proposal is received by the Company and (B) the
Company's Board of Directors reasonably determines in good faith
(after consultation with outside counsel) that it is necessary to
terminate this Agreement and enter into an agreement to effect the
Superior Proposal in order to comply with its fiduciary duties to the
Company's shareholders under
52
applicable Law; provided that the Company may not terminate this
Agreement pursuant to this Section 10.1(c)(i) unless and until (x)
five Business Days have elapsed following delivery to Parent of a
written notice of such determination by the Company's Board of
Directors and during such five Business Day period the Company has
fully cooperated with Parent, including, without limitation, informing
Parent of the terms and conditions of such Superior Proposal, with the
intent of enabling both parties to agree to a modification of the
terms and conditions of this Agreement so that the transactions
contemplated hereby may be effected; (y) at the end of such five
Business Day period the Takeover Proposal continues to constitute a
Superior Proposal and the Company's Board of Directors confirms its
determination (after consultation with outside counsel) that it is
necessary to terminate this Agreement and enter into an agreement to
effect the Superior Proposal to comply with its fiduciary duties under
applicable Law; and (z) (1) at or prior to such termination, Parent
has received the Termination Fee set forth in Section 10.3 hereof by
wire transfer in immediately available funds and (2) immediately
following such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior
Proposal; provided, however, that, if the written notice contemplated
in clause (x) above is given to Parent less than five Business Days,
but more than two Business Days, prior to the then-scheduled
expiration of the Offer, then the Company will be permitted to
terminate this Agreement under this Section 10.1(c)(i) no earlier than
24 hours before such scheduled expiration if the Company has complied
with all of the requirements of this Section 10.1(c)(i) (with the five
Business Day period set forth in clauses (x) and (y) above being
deemed to end when such 24-hour period begins for purposes of
determining such compliance) unless, prior to the beginning of such
24-hour period, Purchaser shall have extended the Offer to a date that
is at least five Business Days after the delivery of such notice to
Parent, in which case the Company's right to terminate this Agreement
pursuant to this Section 10.1(c)(i) shall be determined without regard
to this proviso; provided, further, that it is understood and agreed
that if the written notice contemplated in clause (x) above is given
to Parent less than two Business Days prior to the then-scheduled
expiration of the Offer, the Company's right to terminate this
Agreement pursuant to this Section 10.1(c)(i) shall be subject to
compliance with all of the requirements of this Section 10.1(c)(i),
including the five Business Day period set forth in clauses (x) and
(y) hereof without regard to the immediately preceding proviso; or
(ii) if Parent or Purchaser shall have (x) failed to
commence the Offer as provided in Section 2.1, provided the Company is
not in material breach of its obligations under this Agreement ,(y)
failed to pay for shares of Company Common Stock pursuant to the Offer
in accordance with Section 2.1 hereof or (z) breached in any material
respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach cannot
be or has not been cured within 30 days after receipt of written
notice thereof by Parent or by the Termination Date, whichever is
earlier; or
(iii) if Parent or Purchaser breach their
obligations to make available Sufficient Funds at the times required
under this Agreement; or
53
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or
before the Termination Date; provided that the right to terminate this
Agreement pursuant to this clause shall not be available to any party
whose failure to fulfill any material obligation of this Agreement or
other material breach of this Agreement has been the cause of, or
resulted in, the failure of the Offer to have been consummated on or
prior to the aforesaid date; or
(ii) if, as a result of the failure of any of the
conditions set forth in Annex I to this Agreement, the Offer shall
have terminated or expired in accordance with its terms without
Purchaser having purchased any shares of Company Common Stock pursuant
to the Offer; provided that the right to terminate this Agreement
pursuant to this clause shall not be available to any party whose
failure to fulfill any material obligation under this Agreement or
other material breach of this Agreement has resulted in the failure of
such condition; or
(iii) if any court of competent jurisdiction or any
Governmental Authority shall have issued an order, decree or ruling or
taken any other action permanently restricting, enjoining, restraining
or otherwise prohibiting Consummation of the Offer or consummation of
the Merger and such order, decree, ruling or other action shall have
become final and nonappealable.
SECTION 10.2 EFFECT OF TERMINATION. In the
event of termination of this Agreement by Parent or the Company, as provided in
Section 10.1, this Agreement shall forthwith become void and there shall be no
liability hereunder on the part of the Company, Parent or Purchaser or their
respective officers or directors (except as set forth in the Confidentiality
Agreement, this Section 10.2 and Sections 10.3, 11.3, 11.4, 11.5, 11.8, 11.9,
11.10, 11.12, 11.13, 11.14 and 11.16 which shall survive the termination);
provided, however, that nothing contained in this Section 10.2 shall relieve
any party hereto from any liability for any breach of this Agreement. In
addition, in the event of termination of this Agreement in accordance with its
terms (including payment of any applicable Termination Fee due and payable
pursuant to Section 10.3), Purchaser shall, and Parent shall cause Purchaser
to, promptly terminate the Offer without accepting any shares of Company Common
Stock for payment.
SECTION 10.3 PAYMENT OF CERTAIN FEES
(a) If this Agreement is terminated by Parent in accordance
with Section 10.1(b)(ii) or 10.1(b)(iii) by the Company pursuant to Section
10.1(c)(i), then the Company shall pay to Parent a termination fee in an amount
equal to U.S. $5,400,000 (the "TERMINATION FEE").
(b) If (i) this Agreement is terminated by (A) Parent
pursuant to Section 10.1(b)(i), (B) Parent or the Company pursuant to Section
10.1(d)(i), or (C) Parent or the Company pursuant to Section 10.1(d)(ii), and
(ii) the Minimum Condition or any of the conditions listed in Section (c) of
Annex I to this Agreement shall fail to have been satisfied as of the date of
such termination, and (iii) it has become publicly known that a Takeover
Proposal or
54
amended Takeover Proposal has been made after the date of this Agreement and
prior to the effective date of such termination and (iv) concurrently with or
within 12 months of the date of such termination to a Third Party Acquisition
Event occurs, then the Company shall within one Business Day of the occurrence
of such Third Party Acquisition Event, if any, pay to Parent the Termination
Fee.
"THIRD PARTY ACQUISITION EVENT" shall mean (i) the
consummation of a Takeover Proposal involving the purchase of a majority of
either the equity securities of the Company or of the consolidated assets of
the Company and its Subsidiaries, taken as a whole, or any such transaction
that, if it had been proposed prior to the termination of this Agreement would
have constituted a Takeover Proposal or (ii) the entering into by the Company
or any of its Subsidiaries of a definitive agreement with respect to any such
transaction.
(c) Any payment of the Termination Fee pursuant to this
Section 10.3 shall be made by wire transfer of immediately available funds. If
the Company fails to pay to Parent the Termination Fee when due hereunder, the
Company shall pay the reasonable costs and expenses (including legal fees and
expenses) incurred by Parent in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee and/or expense at the publicly
announced prime rate for leading money center banks as published in The Wall
Street Journal from the date such fee and/or expense was required to be paid to
the date it is paid.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 REPRESENTATIONS AND WARRANTIES.
The respective representations and warranties of the Company, on the one hand,
and Parent and Purchaser, on the other hand, contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any party.
Each and every such representation and warranty shall expire with, and be
terminated and extinguished by, the Closing and thereafter none of the Company,
Parent or Purchaser shall be under any liability whatsoever with respect to any
such representation or warranty. This Section 11.1 shall have no effect upon
any other obligation of the parties hereto, whether to be performed before or
after the Effective Time.
SECTION 11.2 EXTENSION; WAIVER. At any time
prior to the Effective Time, the parties hereto, by action taken by or on
behalf of the respective Boards of Directors of the Company (or, if required by
Section 2.3, the Independent Directors), Parent or Purchaser, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party
or (iii) subject to the proviso of Section 11.6, waive compliance with any of
the agreements or conditions contained herein by the other parties hereto. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
55
SECTION 11.3 NOTICES. All notices, requests,
demands, waivers and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered in person or mailed, certified or registered mail with
postage prepaid, or sent by telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Puerto Rican Cement Company, Inc.
X.X. Xxx 000000
Xxx Xxxx, Xxxxxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attention: President
with a copy (which shall not constitute notice) to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxxx III
(b) if to either Parent or Purchaser, to it at:
c/o CEMEX, Inc.
000 Xxxxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxx
and
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte.
Xxxxxxxxx, XX, Xxxxxx 00000
Telecopy: 011-52818-328-3082
Attention: Xxxxxx Xxxxxxxxxx
56
in each case, with a copy (which shall not
constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
and
Xxxxxx, Xxxxx & Xxxxxx
00 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
SECTION 11.4 ENTIRE AGREEMENT. The
Confidentiality Agreement (subject to Section 11.16) and this Agreement and the
schedules and other documents referred to herein or delivered pursuant hereto,
collectively contain the entire understanding of the parties hereto with
respect to the subject matter contained herein and supersede all prior
agreements and understandings, oral and written, with respect thereto.
SECTION 11.5 BINDING EFFECT; BENEFIT;
ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and, with respect to the provisions of Section 8.7 hereof,
shall inure to the benefit of the Persons or entities benefiting from the
provisions thereof who are intended to be third-party beneficiaries thereof and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, except that Purchaser may assign and transfer its rights and
obligations hereunder to any of its Affiliates, provided that such assignment
shall not release Parent from its obligations hereunder. Except as provided in
the immediately preceding sentence, nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 11.6 AMENDMENT AND MODIFICATION.
Subject to applicable Law, this Agreement may be amended, modified and
supplemented in writing by the parties hereto in all respects before the
Effective Time (whether before or after the Company Shareholder Approval), by
action taken by the respective Boards of Directors of Parent, Purchaser and the
Company (or, if required by Section 2.3, the Independent Directors) or by the
57
respective officers authorized by such Boards of Directors or the Independent
Directors, as the case may be; provided, however, that after the Company
Shareholder Approval, no amendment shall be made which by Law requires further
approval by the shareholders of the Company without such further approval.
SECTION 11.7 FURTHER ACTIONS. Each of the
parties hereto agrees that, except as otherwise provided in this Agreement and
subject to its legal obligations and fiduciary duties, it will use its
reasonable best efforts to fulfill all conditions precedent specified herein,
to the extent that such conditions are within its control, and to do all things
reasonably necessary to consummate the transactions contemplated hereby.
SECTION 11.8 INTERPRETATION. When a reference
is made in this Agreement to Sections, Exhibits or Schedules, such reference
shall be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to June 11, 2002.
SECTION 11.9 ENFORCEMENT. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms. It
is accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy to
which they are entitled at Law or in equity. Each of the parties hereto (a)
irrevocably and unconditionally consents to submit to the jurisdiction of any
court located in County of New York, State of New York (a "STATE COURT") or in
the United States District Court for the Southern District of New York (the
"FEDERAL COURT") for the purpose of any action arising out of or based upon
this Agreement or any of the transactions contemplated by this Agreement
brought by any party hereto and for the recognition and enforcement of any
judgment rendered in respect thereof, (b) waives, and agrees not to assert by
way of motion, as a defense, or otherwise, in any such action, any claim that
it is not subject to the personal jurisdiction of the above-named courts, that
its assets or property is exempt or immune from attachment or execution, that
the action is brought in an inconvenient forum, that the venue of the action is
improper, or that this Agreement or the transactions contemplated by this
Agreement may not be enforced in or by any of the above-named courts and (c)
agrees that it will not bring any action relating to this Agreement in any
court other than a State Court or the Federal Court. Each of Parent, Purchaser
and the Company irrevocably appoints LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., as
its agent for the sole purpose of receiving service of process or other legal
summons in connection with any proceedings in the State of New York. If the
appointment of the person mentioned in this Section 11.9 ceases to be
effective, Parent, Purchaser and the Company each agrees that it will promptly
appoint a further person in the State of New York to accept service of process
on its behalf in the State of New York and so notify the other parties to this
Agreement. Nothing contained in this Section 11.9 shall affect the right to
serve process in any other manner permitted by Law.
58
SECTION 11.10 FEES AND EXPENSES. Except as
otherwise set forth in Section 10.3, all fees and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses
(including any HSR Act filing fees, which shall be for the account of Parent
and Purchaser), whether or not Consummation of the Offer occurs.
SECTION 11.11 COUNTERPARTS. This Agreement may
be executed in several counterparts, each of which shall be deemed to be an
original, and all of which together shall be deemed to be one and the same
instrument.
SECTION 11.12 APPLICABLE LAW. This Agreement and
the legal relations between the parties hereto shall be governed by and
construed in accordance with the Laws of the State of New York (without regard
to the conflict of Laws rules thereof), except to the extent that the PRGCL is
mandatorily applicable to the Merger.
SECTION 11.13 SEVERABILITY. If any term,
provision, covenant or restriction contained in this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions contained in this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
SECTION 11.14 WAIVER OF JURY TRIAL. Each of the
parties to this Agreement hereby irrevocably waives all right to a trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Agreement or the transactions contemplated hereby.
SECTION 11.15 TIME. Time is of the essence with
respect to this Agreement, the Offer, the Merger and the other transactions
contemplated hereby.
SECTION 11.16 EFFECT ON CONFIDENTIALITY
AGREEMENT. The Company agrees that the execution and delivery of this Agreement
constitutes the consent of the Company's Board of Directors to the taking by
Parent and Purchaser of the actions otherwise prohibited by the standstill
provisions set forth in the sixth paragraph, and the non-solicitation
provisions set forth in the seventh paragraph, of the Confidentiality
Agreement, whether through the transactions contemplated by this Agreement, the
Transaction Support Agreements or otherwise. The Company and Parent agree that
notwithstanding anything in Section 10.2 or in the Confidentiality Agreement to
the contrary, the standstill provisions set forth in the sixth paragraph of the
Confidentiality Agreement shall not survive and shall forthwith become void in
the event that the Options (as defined in the Transaction Support Agreements)
become exercisable pursuant to the terms of the Transaction Support Agreements.
[SIGNATURE PAGE FOLLOWS]
59
IN WITNESS WHEREOF, each of Parent, Purchaser and the Company
has caused this Agreement to be executed by its officers thereunto duly
authorized, all as of the date first above written.
CEMEX, S.A. de C.V.
By:
----------------------------------------
Name:
Title:
TRICEM ACQUISITION, CORP.
By:
----------------------------------------
Name:
Title:
PUERTO RICAN CEMENT COMPANY, INC.
By:
----------------------------------------
Name:
Title:
60
ANNEX I
CERTAIN CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I which are not
defined herein shall have the meanings set forth in the Agreement to which this
Annex I is attached, except that the term the "Merger Agreement" shall be
deemed to refer to the Agreement to which this Annex I is attached.
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) promulgated under the
Exchange Act (relating to Purchaser's obligations to pay for or return tendered
shares of Company Common Stock promptly after termination or withdrawal of the
Offer), pay for any shares of Company Common Stock tendered pursuant to the
Offer, and may terminate or amend the Offer in accordance with the Merger
Agreement, if:
(a) immediately prior to any scheduled or extended
expiration date of the Offer:
(i) the Minimum Condition shall not have been
satisfied;
(ii) the applicable waiting period under the HSR
Act shall not have expired or been terminated;
(iii) any necessary consent from lenders under the
Banco Popular Loan Agreements to waive any "change of control"
defaults that may occur thereunder by reason of consummation of the
Offer or the Merger shall not have been obtained; or
(iv) if the consent of the Nuclear Regulatory
Commission identified in Section 6.4 of the Company Disclosure
Schedules shall not have been obtained;
(b) immediately prior to any scheduled or extended
expiration date of the Offer, any of the following conditions exists:
(i) there shall have been any action threatened
or taken, or any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or deemed
applicable to the Offer or the Merger by any domestic or foreign
federal or state governmental regulatory or administrative agency or
authority or court or legislative body or commission which directly or
indirectly (1) prohibits, or imposes any material limitations, other
than limitations generally affecting the industries in which the
Company and Parent and their respective Subsidiaries conduct their
business, on, Parent's or Purchaser's ownership or operation (or that
of any of their respective Subsidiaries) of all or a material portion
of the Company's and its Subsidiaries' businesses or assets as a whole,
or compels Parent or Purchaser or their respective Subsidiaries to
dispose of or hold separate any material portion of the business or
assets of the Company or Parent in each case taken as a whole, (2)
prohibits, or makes illegal, Consummation of the Offer or consummation
of the Merger or the other transactions contemplated by the Merger
Agreement, (3) results in the material delay in the ability of
Purchaser, or renders Purchaser unable, to accept for payment, pay for
or purchase a material amount of the shares of Company Common Stock,
or (4) imposes material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the shares
of the Company Common Stock including, without limitation, the right
to vote the shares of the Company Common Stock purchased by it on all
matters properly presented to the Company's shareholders;
(ii) there shall have occurred (1) any general
suspension of trading in, or limitation on prices for, securities in
the New York Stock Exchange (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index
and excluding any suspension or limitation resulting from physical
damage or interference with any exchange not related to market
conditions), (2) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States
(whether or not mandatory);
(iii) other than as explicitly disclosed in the
Company Disclosure Schedule or the Company SEC Reports filed prior to
the date of the Merger Agreement, any change shall have occurred (or
any development shall have occurred) after December 31, 2001, in the
business, assets, liabilities, financial condition or results of
operations of the Company or any of its Subsidiaries that has had or
would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; or
(iv) the Company's Board of Directors shall have
withdrawn, or modified or changed in a manner adverse to Parent or
Purchaser (including by amendment of the Schedule 14D-9), its
recommendation of the Offer, the Merger Agreement, or the Merger, or
recommended another proposal or offer regarding a Takeover Proposal,
or shall have resolved to do any of the foregoing; or
(v) the Merger Agreement shall have been
terminated in accordance with its terms; or
(c) immediately prior to any scheduled or extended expiration
date of the Offer, (1) the Company shall have breached or failed to perform in
any material respect any of its obligations under the Merger Agreement required
to have been performed at or prior to such time, or (2) (i) subject to Section
5.2 of the Merger Agreement, the representations and warranties of the Company
set forth in the Merger Agreement (other than the representations and
warranties set forth in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5, 6.6,
6.7, 6.15, 6.17, 6.18, 6.19 and 6.25) shall fail to be true and correct as of
the date of the Merger Agreement and as of any scheduled or extended expiration
date of the Offer as though made on such date (or, in each case, if made as of
a specified date, as of such date) and (ii) the representations and warranties
of the Company set forth in Sections 6.1(a), 6.1(c), 6.1(d), 6.2, 6.3, 6.5,
6.6, 6.7, 6.15, 6.17, 6.18, 6.19 and 6.25 of the Merger Agreement shall fail to
be true and correct in all material respects as of the date of the Merger
Agreement and as of any scheduled or extended expiration date of the Offer as
though made on such date (or, in each case, if made as of a specified date, as
of such date), or the Company shall have failed to deliver to Parent and
Purchaser a certificate executed by an appropriate officer of the Company
reasonably acceptable to Parent as to the satisfaction of
Annex I-2
the condition set forth in this paragraph (c) immediately prior to the
scheduled or any extended time of expiration of the Offer; or
(d) the Company shall have failed to deliver to Parent and
Purchaser resignations of a sufficient number of the incumbent directors on the
Company's Board of Directors effective as of the Consummation of the Offer,
and/or duly adopted resolutions of the Company's Board of Directors, such that
the Company has satisfied its obligations pursuant to Section 2.3 of the Merger
Agreement that are required to be satisfied prior to Consummation of the Offer;
which in the reasonable good faith judgment of the Parent or Purchaser but
subject to the provisions of the Merger Agreement, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser) giving rise to such conditions make it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payment for shares of
Company Common Stock.
Subject to the provisions of the Merger Agreement, the
foregoing conditions are for the sole benefit of Parent and Purchaser and may
be asserted by Purchaser or, subject to the terms of the Merger Agreement may
be waived by Parent or Purchaser, in whole or in part at any time and from time
to time in the reasonable discretion of Parent or Purchaser at any time prior
to the scheduled or extended expiration date of the Offer. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time prior to
the scheduled or extended expiration date of the Offer.
Annex I-3
[EXECUTION VERSION]
TRANSACTION SUPPORT AGREEMENT
This Transaction Support Agreement, dated as of June 11, 2002
(this "Agreement"), is made by and among Cemex, S.A. de C.V., a Mexico
corporation ("Parent"), Tricem Acquisition, Corp., a Puerto Rico corporation
("Purchaser"), and the stockholder of Puerto Rican Cement Company, Inc., a
Puerto Rico corporation (the "Company"), identified on the signature page
hereto (the "Stockholder").
WITNESSETH:
WHEREAS, Parent, Purchaser and the Company are entering into
an Agreement and Plan of Merger, dated as of the date hereof (as it may be
amended from time to time, the "Merger Agreement"; capitalized terms used and
not otherwise defined in this Agreement have the meanings ascribed to such
terms in the Merger Agreement), pursuant to which (i) Purchaser shall commence
a cash tender offer (as such tender offer may hereafter be amended from time to
time in accordance with the Merger Agreement, the "Offer") to acquire each
issued and outstanding share of common stock, par value $1.00 per share, of the
Company ("Common Stock") in exchange for a net amount of $35.00 in cash (the
"Offer Price") in accordance with and subject to the terms and conditions of
the Merger Agreement and the Offer; and (ii) following consummation of the
Offer, the Company shall merge with Purchaser (the "Merger");
WHEREAS, the Stockholder is the record or beneficial owner of
the number of shares of Common Stock set forth on Schedule A hereto (all such
shares of Common Stock and any shares of Common Stock hereafter acquired by the
Stockholder, the "Shares");
WHEREAS, as a condition to entering into the Merger Agreement
and incurring the obligations set forth therein, including the Offer, Parent
and Purchaser have required that the Stockholder agree to enter into this
Agreement and certain other stockholders of the Company agree to enter into
similar Transaction Support Agreements; and
WHEREAS, the Stockholder wishes to induce Parent and
Purchaser to enter into the Merger Agreement and, therefore, the Stockholder is
willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
TENDER OF SHARES
Section 1.01 Tender of Shares. The Stockholder agrees to
promptly (and, in any event, not later than two Business Days prior to the
scheduled expiration date of the Offer) tender or cause to be tendered into the
Offer, pursuant to and in accordance with the terms of the Offer, and not
withdraw or cause to be withdrawn (except following the termination of the
Offer in accordance with its terms), all of the Shares. The Stockholder
acknowledges and agrees that Purchaser's obligation to accept for payment
shares of Common Stock in the Offer, including any Shares tendered by a
Stockholder, is subject to the terms and conditions of the Merger Agreement and
the Offer.
ARTICLE II
VOTING AGREEMENT
Section 2.01 Voting Agreement. The Stockholder hereby
agrees that, from and after the date hereof and until the date (the "Voting
Termination Date") that is the later of (i) the termination of the Merger
Agreement in accordance with its terms or (ii) the Option Termination Date (as
defined below), if any, at any meeting of the stockholders of the Company,
however called, and in any action by consent of the stockholders of the
Company, the Stockholder shall vote (or cause to be voted) all the Shares (i)
in favor of adoption of the Merger Agreement, the Merger and all the
transactions contemplated by the Merger Agreement and this Agreement and
otherwise in such manner as may be necessary to consummate the Merger; (ii)
against any action, proposal, agreement or transaction that would result in a
breach of any covenant, obligation, agreement, representation or warranty of
the Company under the Merger Agreement or of the Stockholder contained in this
Agreement; and (iii) against any action, agreement, transaction (other than the
Merger Agreement or the transactions contemplated thereby) or proposal
(including any Takeover Proposal or Superior Proposal) that could reasonably be
expected to result in any of the conditions to the Company's obligations under
the Merger Agreement not being fulfilled or that is intended, or could
reasonably be expected, to impede, interfere, delay, discourage or adversely
affect the Merger Agreement, the Offer, the Merger or this Agreement. Any vote
by the Stockholder that is not in accordance with this Section 2.01 shall be
considered null and void, and the provisions of Section 2.02 shall be deemed to
take immediate effect.
Section 2.02 Irrevocable Proxy. If, and only if, the
Stockholder fails to comply with the provisions of Section 2.01, the
Stockholder hereby agrees that such failure shall result, without any further
action by the Stockholder effective as of the date of such failure, in the
constitution and appointment of Parent and each of its executive officers from
and after the date of such determination until the Voting Termination Date (at
which point such constitution and appointment shall automatically be revoked)
as the Stockholder's attorney, agent and proxy (such constitution and
appointment, the "Irrevocable Proxy"), with full power of substitution, to vote
and otherwise act with
2
respect to all the Shares at any meeting of the stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed
meeting), and in any action by written consent of the stockholders of the
Company, on the matters and in the manner specified in Section 2.01. THIS PROXY
AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST AND, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, SHALL BE VALID AND BINDING ON ANY PERSON
TO WHOM THE STOCKHOLDER MAY TRANSFER ANY OF ITS SHARES IN BREACH OF THIS
AGREEMENT. The Stockholder hereby revokes all other proxies and powers of
attorney with respect to all the Shares that may have heretofore been appointed
or granted, and no subsequent proxy or power of attorney shall be given (and if
given, shall not be effective) by the Stockholder with respect thereto. All
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of the Stockholder and any obligation of the Stockholder under this
Agreement shall be binding upon the heirs, personal representatives, successors
and assigns of the Stockholder.
ARTICLE III
THE OPTION
Section 3.01 Grant of Option. The Stockholder hereby
grants to Parent an irrevocable option (each, an "Option" and, collectively,
the "Options") to purchase all of the Shares (the "Option Shares") at a
purchase price per Share (the "Purchase Price") equal to $35.00, less the value
of any dividends per Option Share declared or paid from and after the date of
this Agreement through the end of the Option Exercise Period and subject to
adjustment pursuant to Section 7.13(a), other than any dividends paid in
accordance with clause (A) of Section 8.2(b)(3) of the Merger Agreement.
Section 3.02 Payment of the Purchase Price. The Purchase
Price shall be payable by Parent in cash by wire transfer in immediately
available funds to a bank account to be designated by the Stockholder in a
written notice to Parent at least two Business Days prior to the Closing Date
(as defined below).
Section 3.03 Exercise of Option.
(a) If either (i) a Termination Fee has been
paid or is payable pursuant to Section 10.3 of the Merger Agreement, (ii) the
Merger Agreement is terminated as a result of the failure to satisfy the
Minimum Condition (as defined in the Merger Agreement) to the Offer and at or
prior to the time of such termination it has become publicly known that a
Takeover Proposal has been made or (iii) if a Subsequent Amendment (as defined
in the Merger Agreement) is received by the Company or becomes publicly known,
then each of the Options shall become exercisable by Parent for a period (the
"Option Exercise Period") commencing on the earlier of the date on which a
Subsequent Amendment is received by Company or becomes publicly known and the
date on which the Merger Agreement is terminated and ending at 11:59 p.m. (New
York time) on the 30th day following the date on which the Merger Agreement is
terminated (the day on which the Option Exercise Period ends, the "Option
Termination Date"). The
3
Options shall be exercisable in whole but not in part, and in no event shall
Parent be permitted to exercise an Option with respect to the Shares unless
Parent concurrently exercises all Options to purchase the shares of Common
Stock subject to each Transaction Support Agreement from all stockholders who
have executed a Transaction Support Agreement.
(b) If Parent wishes to exercise the Options
during the Option Exercise Period, Parent shall send a written notice (the
"Exercise Notice") to the Stockholder of its intention to exercise the
Stockholder's Option, specifying the place, and, if then known, the time and
the date (the "Closing Date") of the closing of such purchase (the "Closing").
The Closing Date shall, subject to satisfaction of the conditions in paragraph
(d), occur on the later of (i) the third Business Day after the date on which
such Exercise Notice is delivered and (ii) one Business Day following the
expiration or termination of the waiting period under the HSR Act applicable to
the consummation of the purchase and sale of the Shares hereunder.
(c) At the Closing, (i) the Stockholder shall
deliver to Parent (or its designee) the Shares by delivery of a certificate or
certificates evidencing such Shares duly endorsed to Parent or accompanied by
stock powers duly executed in favor of Parent, with all necessary stock
transfer stamps affixed, and (ii) Parent shall pay for the Shares in accordance
with Section 3.02.
(d) The Closing shall be subject to the
satisfaction or, in the case of clause (iii) below, waiver by the Stockholder
of each of the following conditions:
(i) no Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any
Law that is then in effect and no order of any Governmental
Authority shall have been entered or be in effect, in either
case that has the effect of making the acquisition of the
Shares by Parent illegal or otherwise restricting, preventing
or prohibiting consummation of the purchase and sale of the
Shares pursuant to the exercise of the Options; and
(ii) any waiting period under the HSR
Act applicable to the consummation of the purchase and sale
of the Shares hereunder shall have expired or been
terminated.
(e) At the Closing, (i) the Stockholder will
deliver good and valid title to the Shares free and clear of any Liens and,
upon delivery to Parent of such Shares and payment for the Purchase Price
therefor as contemplated herein, Parent will receive good, valid and marketable
title to the Shares free and clear of any Liens, and (ii) Parent shall deliver
to the Stockholder the Purchase Price.
4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and
to Purchaser as follows:
Section 4.01 Organization, Authority and Qualification
of the Stockholder. The Stockholder is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization or
formation and has all necessary power and authority to enter into this
Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The Stockholder is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified would not prevent or materially delay the ability
of the Stockholder to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement. The execution and delivery of
this Agreement by the Stockholder, the performance by the Stockholder of its
obligations hereunder and the consummation by the Stockholder of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Stockholder. This Agreement has been duly and validly
executed and delivered by the Stockholder and (assuming due authorization,
execution and delivery by Parent and Purchaser) this Agreement constitutes a
legal, valid and binding obligation of the Stockholder enforceable against the
Stockholder in accordance with its terms.
Section 4.02 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this
Agreement by the Stockholder does not, and the performance of this Agreement by
the Stockholder shall not, (i) conflict with or violate the certificate of
incorporation and by-laws, agreement of limited partnership, limited liability
company agreement or equivalent organizational documents, as the case may be,
of the Stockholder, (ii) assuming satisfaction of the requirements set forth in
4.02(b) below, conflict with or violate any Law applicable to the Stockholder
or by which any property or asset of the Stockholder is bound or affected or
(iii) result in any breach of, or constitute a default (or event that 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 on any Shares (other than pursuant to this
Agreement) pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
of the Stockholder, except for any such conflicts, violations, breaches,
defaults or other occurrences that would not prevent or materially delay the
ability of the Stockholder to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement.
(b) The execution and delivery of this
Agreement by the Stockholder does not, and the performance of this Agreement by
the Stockholder shall 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 the premerger notification requirements of the HSR Act, and (ii) where
the failure to obtain such consents, approvals, authorizations
5
or permits, or to make such filings or notifications, would not prevent or
materially delay the ability of the Stockholder to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement.
Section 4.03 Ownership of Shares. As of the date hereof,
the Stockholder is the record or beneficial owner of, and has good title to,
the number of Shares set forth on Schedule A hereto. Except as set forth on
Schedule A, the Shares are all the securities of the Company owned, either of
record or beneficially, by the Stockholder as of the date hereof and the
Stockholder does not have any option or other right to acquire any other
securities of the Company. The Shares owned by the Stockholder are owned free
and clear of all Liens, other than any Liens created by this Agreement. Except
as provided in this Agreement, the Stockholder has not appointed or granted any
proxy, which appointment or grant is still effective, with respect to the
Shares owned by the Stockholder.
Section 4.04 Absence of Litigation. As of the date of
this Agreement, there is no litigation, suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Stockholder, threatened
against the Stockholder, or any property or asset of the Stockholder, before
any Governmental Authority that seeks to delay or prevent the consummation of
the transactions contemplated by this Agreement.
Section 4.05 Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Stockholder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser hereby severally but not jointly
represents and warrants to the Stockholder as to itself as follows:
Section 5.01 Organization, Authority and Qualification.
Each of Parent and Purchaser is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
necessary power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
Each of Parent and Purchaser is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the properties owned or
leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so
licensed or qualified would not prevent or materially delay the ability of
Parent or Purchaser to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement. The execution and delivery of
this Agreement by each of Parent and Purchaser, the performance by each of
Parent and Purchaser of its obligations hereunder and the consummation by each
of Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all requisite action on the part of each of Parent and
6
Purchaser. This Agreement has been duly and validly executed and delivered by
each of Parent and Purchaser and (assuming due authorization, execution and
delivery by the Stockholder) this Agreement constitutes a legal, valid and
binding obligation of each of Parent and Purchaser enforceable against Parent
and Purchaser in accordance with its terms.
Section 5.02 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this
Agreement by each of Parent and Purchaser do not, and the performance of this
Agreement by each of Parent and Purchaser shall not, (i) conflict with or
violate the certificate of incorporation and by-laws of Parent or Purchaser,
(ii) assuming satisfaction of the requirements set forth in Section 5.02(b)
below, conflict with or violate any Law applicable to Parent or Purchaser or by
which any property or asset of Parent or Purchaser is bound or affected or
(iii) result in any breach of, or constitute a default (or event that 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,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation of Parent or Purchaser,
except for any such conflicts, violations, breaches, defaults or other
occurrences that would not prevent or materially delay the ability of Parent or
Purchaser to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement.
(b) The execution and delivery of this
Agreement by each of Parent and Purchaser do not, and the performance of this
Agreement by each of Parent and Purchaser shall 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
Securities Act, the Exchange Act, Blue Sky Laws and the premerger notification
requirements of the HSR Act, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay the ability of Parent or
Purchaser to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement.
ARTICLE VI
COVENANTS OF THE STOCKHOLDER
Section 6.01 No Disposition or Encumbrance of Shares.
The Stockholder hereby agrees that, except as contemplated by this Agreement,
the Stockholder shall not (i) sell, transfer, tender (except into the Offer),
pledge, assign, contribute to the capital of any entity, hypothecate, give or
otherwise dispose of, grant a proxy or power of attorney with respect to (other
than the Irrevocable Proxy), deposit into any voting trust, enter into any
voting agreement, or create or permit to exist any Liens of any nature
whatsoever (other than pursuant to this Agreement) with respect to, any of the
Shares (or agree or consent to, or offer to do, any of the foregoing), or (ii)
take any action that would make any representation or warranty of the
Stockholder herein untrue or
7
incorrect in any material respect or have the effect of preventing or disabling
the Stockholder from performing the Stockholder's obligations hereunder.
Section 6.02 No Solicitation of Transactions. The
Stockholder shall not, directly or indirectly, through any director, officer,
affiliate, employee, representative, agent or otherwise, (i) solicit, initiate,
endorse, accept or encourage the submission of any Takeover Proposal, or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or otherwise cooperate in any way with
respect to, or participate in, assist, facilitate, endorse or encourage any
proposal that constitutes, or may reasonably be expected to lead to, a Takeover
Proposal; provided, however, that nothing herein shall prevent any director,
officer or stockholder of the Stockholder from acting in his or her capacity as
a director of the Company, or taking any action in such capacity (including at
the direction of the Company Board), but only in either such case as and to the
extent permitted by Section 8.5 of the Merger Agreement. The Stockholder shall,
and shall direct or cause its directors, officers, affiliates, employees,
representatives and agents to, immediately cease and cause to be terminated any
discussions or negotiations with any parties that may be ongoing with respect
to a Takeover Proposal.
Section 6.03 Further Action; Reasonable Best Efforts.
Upon the terms and subject to the conditions hereof, Parent, Purchaser and the
Stockholder shall use their reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement.
Section 6.04 Information for Offer Documents and Proxy
Statement; Disclosure. The Stockholder covenants and agrees that none of the
information relating to the Stockholder and its affiliates for inclusion in the
Schedule 14D-9, the Offer Documents or, if applicable, the Proxy Statement that
has been furnished to Parent by the Stockholder for inclusion in such documents
will, at (i) the time the Schedule 14D-9 or the Proxy Statement (or any
amendment or supplement thereto) is first filed with the SEC or mailed to
stockholders of the Company or (ii) the time of the Company Stockholders
Meeting (in the case of information included in the Proxy Statement), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Stockholder agrees to permit Parent and Purchaser to publish
and disclose in the Offer Documents and, if applicable, the Proxy Statement and
any related filings under applicable securities Laws the Stockholder's identity
and ownership of Shares and the nature of its commitments, arrangements and
understandings under this Agreement and any other information regarding the
Stockholder as required by applicable Law.
8
ARTICLE VII
MISCELLANEOUS
Section 7.01 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 telecopy 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 7.01):
(a) if to the Stockholder:
[Insert Addresses]
(b) if to Parent or Purchaser:
c/o CEMEX
000 Xxxxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxx
and
CEMEX, S.A. de C.V.
Ave. Constitucion 444 Pte.
Xxxxxxxxx, XX, Xxxxxx 00000
Telecopy: 011-52818-328-3082
Attention: Xxxxxx Xxxxxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
and
Xxxxxx, Xxxxx & Xxxxxx
00 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx
Section 7.02 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
9
contemplated hereby and by the Merger Agreement are 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 such transactions be consummated as originally
contemplated to the fullest extent possible.
Section 7.03 Entire Agreement; Assignment. This
Agreement constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes 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 by operation of law
or otherwise, except that Parent and Purchaser may assign all or any of their
rights and obligations hereunder to any wholly owned subsidiary of Parent,
provided that no such assignment shall relieve Parent or Purchaser of its
obligations hereunder.
Section 7.04 Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto and,
except as set forth in Section 7.10 hereof, 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.
Section 7.05 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 in equity.
Section 7.06 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 Corporation Law of the Commonwealth of Puerto Rico). 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 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 may not be enforced in or by any of the above-named courts.
Section 7.07 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
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connection with this Agreement. 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 others hereto have been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications in this Section 7.07.
Section 7.08 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 7.09 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.
Section 7.10 Amendment. This Agreement may not be
amended except by an instrument in writing signed by all the parties hereto.
Notwithstanding the foregoing, the provisions of this Agreement shall not be
amended without the prior written consent of the Company.
Section 7.11 Waiver. Any party to this Agreement may
(i) extend the time for the performance of any obligation or other act of any
other party hereto, (ii) waive any inaccuracy in the representations and
warranties of another party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement of another party
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.
Section 7.12 Costs and Expenses of This Agreement and
the Merger Agreement. All costs and expenses of the parties hereto, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
Section 7.13 Adjustments.
(a) In the event (i) of any increase or
decrease or other change in the Shares by reason of stock dividend, stock
split, recapitalizations, combinations, exchanges of shares or the like or (ii)
that a Stockholder becomes the beneficial owner of any additional shares of
Common Stock or other securities of the Company, then (x) the terms of this
Agreement shall apply to the shares of capital stock and other securities of
the Company held by the Stockholder immediately following the effectiveness of
the events described in clause (i), or the Stockholder becoming the beneficial
owner thereof pursuant to clause (ii), and (y) the Purchase Price shall be
equitably adjusted to reflect the impact of any event described in clause (i).
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(b) The Stockholder hereby agrees to promptly
notify Parent and Purchaser of the number of any new Shares or other securities
acquired by the Stockholder, if any, after the date hereof.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
CEMEX, S.A. DE C.V.
By:
----------------------------------------
Name:
Title:
TRICEM ACQUISITION, CORP.
By:
----------------------------------------
Name:
Title:
[Insert Shareholder Signature Block]
SCHEDULE A
NUMBER OF SHARES OF COMMON STOCK
