EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
BLUESCOPE STEEL LIMITED,
BSL ACQUISITION CORPORATION AND
XXXXXX MANUFACTURING COMPANY
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 15, 2004
TABLE OF CONTENTS
ARTICLE I THE MERGER............................................................................. 1
Section 1.1 The Merger............................................................................. 1
Section 1.2 Effective Time......................................................................... 2
Section 1.3 Effect of the Merger; Closing.......................................................... 2
Section 1.4 Certificate of Incorporation; By-laws; Directors and Officers.......................... 2
Section 1.5 Conversion of Shares................................................................... 3
Section 1.6 Dissenting Shares...................................................................... 3
Section 1.7 Payment Fund; Surrender of Shares; Stock Transfer Books................................ 4
Section 1.8 Existing Options of the Company........................................................ 6
Section 1.9 Certain Adjustments.................................................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT............................................... 8
Section 2.1 Corporate Organization................................................................. 8
Section 2.2 Authority Relative to this Agreement................................................... 8
Section 2.3 No Conflict; Required Filings and Consents............................................. 8
Section 2.4 Litigation............................................................................. 9
Section 2.5 Operations of Purchaser................................................................ 9
Section 2.6 Capital Resources...................................................................... 9
Section 2.7 Interest in the Company................................................................ 9
Section 2.8 Brokers................................................................................ 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 10
Section 3.1 Organization and Qualification; Subsidiaries........................................... 10
Section 3.2 Capitalization......................................................................... 10
Section 3.3 Authority Relative to this Agreement................................................... 11
Section 3.4 No Conflict; Required Filings and Consents............................................. 12
Section 3.5 SEC Filings; Financial Statements...................................................... 13
Section 3.6 Absence of Certain Changes or Events................................................... 14
Section 3.7 Litigation............................................................................. 15
Section 3.8 Title to Assets........................................................................ 15
Section 3.9 Employee Benefit Plans................................................................. 15
Section 3.10 Labor and Employment Matters........................................................... 18
Section 3.11 Compliance; Permits.................................................................... 18
Section 3.12 Taxes.................................................................................. 19
Section 3.13 Environmental Matters.................................................................. 20
Section 3.14 Insurance.............................................................................. 22
Section 3.15 Intellectual Property.................................................................. 22
Section 3.16 Joint Ventures......................................................................... 24
Section 3.17 Related Party Transactions............................................................. 24
Section 3.18 State Takeover Statutes................................................................ 24
-i-
Section 3.19 Required Vote of Company Stockholders.................................................. 25
Section 3.20 The Rights Agreement................................................................... 25
Section 3.21 Opinion of Financial Advisor........................................................... 25
Section 3.22 Brokers................................................................................ 25
Section 3.23 China Business......................................................................... 25
Section 3.24 Change of Control Agreements........................................................... 26
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER................................................. 26
Section 4.1 Conduct of Business Pending the Merger................................................. 26
Section 4.2 No Shopping............................................................................ 29
ARTICLE V ADDITIONAL AGREEMENTS.................................................................. 31
Section 5.1 Proxy Statement........................................................................ 31
Section 5.2 Company Stockholders Meeting........................................................... 32
Section 5.3 Notification of Certain Matters........................................................ 32
Section 5.4 Access to Information.................................................................. 32
Section 5.5 Commercially Reasonable Efforts........................................................ 33
Section 5.6 Public Announcements................................................................... 34
Section 5.7 Agreement to Defend and Indemnify...................................................... 34
Section 5.8 Stockholder Litigation................................................................. 36
Section 5.9 Delisting.............................................................................. 36
Section 5.10 Employee and Termination Benefits...................................................... 36
Section 5.11 Purchaser.............................................................................. 37
Section 5.12 Section 16 Matters..................................................................... 37
Section 5.13 Third Party Standstill Agreements...................................................... 37
Section 5.14 Director Resignations.................................................................. 38
Section 5.15 Sale of Xxxxxx......................................................................... 38
Section 5.16 First Quarter Financial Statements..................................................... 38
ARTICLE VI CONDITIONS OF MERGER................................................................... 38
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger............................ 38
Section 6.2 Additional Conditions to Obligations of Parent and Purchaser to Effect the
Merger................................................................................. 39
Section 6.3 Additional Conditions to Obligations of the Company to Effect the Merger............... 40
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...................................................... 41
Section 7.1 Termination............................................................................ 41
Section 7.2 Effect of Termination.................................................................. 42
ARTICLE VIII GENERAL PROVISIONS..................................................................... 43
Section 8.1 Non-Survival of Representations, Warranties and Agreements............................. 43
Section 8.2 Notices................................................................................ 43
-ii-
Section 8.3 Expenses............................................................................... 44
Section 8.4 Certain Definitions.................................................................... 44
Section 8.5 Headings; References................................................................... 47
Section 8.6 Severability........................................................................... 47
Section 8.7 Entire Agreement; No Third-Party Beneficiaries......................................... 47
Section 8.8 Assignment............................................................................. 47
Section 8.9 GOVERNING LAW.......................................................................... 48
Section 8.10 Amendment.............................................................................. 48
Section 8.11 Waiver................................................................................. 48
Section 8.12 Consent to Jurisdiction; Waiver of Jury Trial.......................................... 48
Section 8.13 Interpretation......................................................................... 49
Section 8.14 Counterparts........................................................................... 49
Section 8.15 Obligations of Parent and of the Company............................................... 49
-iii-
TABLE OF DEFINITIONS
1994 Notes............................................................... 46
1998 Notes............................................................... 46
2001 Notes............................................................... 46
Acquisition Proposal..................................................... 29
Acquisition Transaction.................................................. 30
affiliate................................................................ 44
Affiliated Group......................................................... 20
Agreement................................................................ 1
Backlog.................................................................. 38
Board of Directors....................................................... 1
Business Day............................................................. 44
By-Laws.................................................................. 2
Capital Stock............................................................ 27
Certificate.............................................................. 4
Certificate of Merger.................................................... 2
Change of Control Agreements............................................. 44
Change of Control Termination Agreements................................. 26
Change of Control Termination Payments................................... 26
Charter.................................................................. 2
Closing.................................................................. 2
Closing Date............................................................. 2
Code..................................................................... 45
Company.................................................................. 1
Company Common Stock..................................................... 10
Company Compensation and Benefit Plans................................... 15
Company Employees........................................................ 36
Company Financial Statements............................................. 13
Company Material Adverse Change.......................................... 45
Company Material Adverse Effect.......................................... 45
Company Pension Plan..................................................... 16
Company Preferred Stock.................................................. 10
Company Related Person................................................... 24
Company Representatives.................................................. 29
Company SEC Documents.................................................... 13
Company Stockholders Meeting............................................. 31
Competition Laws......................................................... 45
Confidentiality Agreement................................................ 30
Contracts................................................................ 9
Control.................................................................. 45
Converted Shares......................................................... 3
Delaware Law............................................................. 45
Disclosure Schedule...................................................... 10
Dissenting Shares........................................................ 3
DOJ ..................................................................... 34
Earliest Possible Closing Date........................................... 2
EBIT..................................................................... 38
Effective Time........................................................... 2
Employees................................................................ 15
Environmental Laws....................................................... 21
Environmental Releases................................................... 21
ERISA.................................................................... 15
ERISA Affiliate.......................................................... 16
ERISA Plans.............................................................. 16
Exchange Act............................................................. 46
Executive Officer........................................................ 46
Existing Options......................................................... 7
Expense Reimbursement.................................................... 43
FTC ..................................................................... 34
GAAP..................................................................... 13
Governmental Entity...................................................... 46
Hazardous Substances..................................................... 21
HSR Act.................................................................. 45
Improved Terms........................................................... 30
Indemnified Person....................................................... 34
Intellectual Property.................................................... 23
Intellectual Property Contracts.......................................... 23
In-the-Money Options..................................................... 6
IRS ..................................................................... 16
IT Assets................................................................ 23
Joint Venture............................................................ 24
Knowledge................................................................ 46
Law ..................................................................... 46
Letter of Transmittal.................................................... 4
Lien..................................................................... 46
Material Contract........................................................ 28
Merger................................................................... 1
Merger Consideration..................................................... 3
Multiemployer Plan....................................................... 16
Net Cash Flow............................................................ 38
New Company Plans........................................................ 36
Non-Recourse Borrowings.................................................. 14
Notes.................................................................... 46
Option Cancellation and Termination Acknowledgment....................... 7
-1-
Option Plans............................................................. 6
Order.................................................................... 38
Parent................................................................... 1
Parent Material Adverse Effect........................................... 46
Paying Agent............................................................. 4
Payment Fund............................................................. 4
PBGC..................................................................... 17
Permits.................................................................. 19
Permitted Liens.......................................................... 46
Person................................................................... 47
PRC ..................................................................... 25
Proxy Statement.......................................................... 31
Purchaser................................................................ 1
Requisite Vote........................................................... 11
Rights Agreement......................................................... 10
Scheduled Intellectual Property.......................................... 22
SEC ..................................................................... 47
Securities Act........................................................... 47
Shares................................................................... 1
Subsidiary............................................................... 47
Superior Proposal........................................................ 31
Surviving Corporation.................................................... 2
Tax Return............................................................... 20
Tax Sharing Agreement.................................................... 20
Taxes.................................................................... 20
Termination Date......................................................... 41
Termination Fee.......................................................... 42
Trade Secrets............................................................ 24
Voting Debt.............................................................. 11
Wholly Owned Subsidiaries................................................ 27
-2-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated February 15, 2004 (this
"AGREEMENT"), is among XXXXXX MANUFACTURING COMPANY, a Delaware corporation (the
"COMPANY"), BLUESCOPE STEEL LIMITED, an Australian company ("PARENT"), and BSL
ACQUISITION CORPORATION, a Delaware corporation and a wholly owned Subsidiary of
Parent ("PURCHASER").
BACKGROUND INFORMATION
A. The Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that it is advisable and in the best interests of its
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein.
B. The Board of Directors and the boards of directors of Parent
and Purchaser each have approved and declared advisable this Agreement, which
provides for the merger of Purchaser with and into the Company (the "MERGER") in
accordance with Delaware Law, whereby all of the issued and outstanding shares
of Company Common Stock (the "SHARES"), other than Dissenting Shares and any
shares of Company Common Stock owned by Parent, Purchaser or held in the
treasury of the Company, will be converted into the right to receive the Merger
Consideration.
C. The Board of Directors has unanimously resolved to recommend
this Agreement and acceptance of the Merger to the holders of the Shares and has
determined that the consideration to be paid for each Share in the Merger is
fair to the holders of the Shares and to recommend that the holders of the
Shares adopt this Agreement, on the terms and subject to the conditions set
forth herein.
D. On or prior to the execution and delivery of this Agreement,
the holders of the Notes have agreed with the Company and Parent that the
Make-Whole Amounts (as defined in the governing instruments of the Notes)
payable upon consummation of the Merger will be calculated based upon an
interest rate of (i) 8.27% with respect to the 1994 Notes, (ii) 6.82% with
respect to the 1998 Notes, and (iii) 8.12% with respect to the 2001 Notes.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Purchaser hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time and on the terms and
subject to the conditions set forth herein, Purchaser shall be merged with and
into the Company, the separate corporate existence of Purchaser shall cease, and
the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the Merger
hereinafter sometimes is referred to as the "SURVIVING CORPORATION."
Section 1.2 Effective Time. On or as promptly as practicable after the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger (the "CERTIFICATE OF MERGER") with the Secretary
of State of the State of Delaware, in such form as required by, and executed and
acknowledged in accordance with the relevant provisions of, Delaware Law. The
Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Secretary of State of the State of Delaware (the time
of such filing, the "EFFECTIVE TIME").
Section 1.3 Effect of the Merger; Closing. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all property, rights, privileges, powers and
franchises of the Company and Purchaser shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Purchaser shall become
the debts, liabilities and duties of the Surviving Corporation. The closing of
the Merger (the "CLOSING") shall take place at a time and on a date (the
"CLOSING DATE") to be agreed by the parties, which shall be as soon as
practicable, but in no event (i) earlier than 9:00 A.M., Chicago time, on the
third Business Day after the first date on which the Company shall have complied
with all of its obligations under Section 5.16 and all disputes between the
parties with respect to the amount of EBIT, Net Cash Flow and Backlog for the
three months ended and as of March 31, 2004 have been finally resolved (the
"EARLIEST POSSIBLE CLOSING DATE") or (ii) later than 9:00 A.M., Chicago time, on
the third Business Day after the Earliest Possible Closing Date and satisfaction
or waiver of the latest to occur of the conditions precedent set forth in
Article VI (other than those conditions that by their nature are to be satisfied
at Closing, but subject to the satisfaction or waiver of those conditions), at
the offices of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000-0000, unless another time, date or location is agreed to
in writing by the parties.
Section 1.4 Certificate of Incorporation; By-laws; Directors and
Officers. At the Effective Time:
(a) The certificate of incorporation of the Company, as in effect
immediately before the Effective Time, shall be the certificate of incorporation
of the Surviving Corporation (the "CHARTER") until thereafter amended as
provided by Law and such Charter; provided, however, that at the Effective Time
the Charter shall be amended so that it is identical to the certificate of
incorporation of the Purchaser immediately before the Effective Time to the
maximum extent permitted by Delaware Law.
(b) The by-laws of Purchaser, as in effect immediately before the
Effective Time, shall be the by-laws of the Surviving Corporation (the
"BY-LAWS") until thereafter amended as provided by Law, the Charter and the
By-Laws.
(c) The board of directors of Purchaser immediately before the
Effective Time will be the initial board of directors of the Surviving
Corporation, and the officers of the Company
-2-
immediately before the Effective Time will be the initial officers of the
Surviving Corporation, in each case from and after the Effective Time until
their successors are elected or appointed and qualified or their earlier death,
resignation or removal.
Section 1.5 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any further action on the part of Purchaser, the Company
or the holder of any capital stock of Purchaser or the Company:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be canceled pursuant to Section 1.5(b)
and any Dissenting Shares) (the "CONVERTED SHARES") shall be converted into the
right to receive $22.50 in cash payable to the holder thereof, without interest
(the "MERGER CONSIDERATION"), upon surrender of the certificate which
immediately prior to the Effective Time represented such Converted Share in the
manner provided in Section 1.7. At the Effective Time, all Converted Shares
shall automatically be canceled and extinguished, will no longer be outstanding,
and will cease to exist, and each holder of a certificate which immediately
prior to the Effective Time represented a Converted Share will cease to have any
rights with respect thereto, other than the right to receive the Merger
Consideration as provided in this Section 1.5.
(b) Each Share issued and outstanding immediately before the
Effective Time and held in the treasury of the Company or owned by any
Subsidiary of the Company or by Parent, Purchaser or any of their respective
Subsidiaries shall be automatically canceled and extinguished, will no longer be
outstanding and will cease to exist. No payment or other consideration shall be
payable with respect to such Shares or their cancellation.
(c) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately before the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
Section 1.6 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares that are issued and outstanding immediately prior to the
Effective Time and that are held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded appraisal of the
Shares owned by such holder in accordance with Delaware Law (including, but not
limited to, Section 262 thereof) and as of the Effective Time has neither failed
to perfect nor effectively withdrawn or lost the right to such appraisal
("DISSENTING SHARES"), shall not be converted into or represent the right to
receive the Merger Consideration pursuant to Section 1.5, and the holder thereof
shall be entitled only to such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of Section 1.6(a), if any
holder of Dissenting Shares shall fail to perfect or effectively withdraws or
loses (through failure to perfect or otherwise) the right to appraisal, then
such holder's Shares shall be treated as if they had been automatically
converted as of the Effective Time into and represent only the right to receive
the
-3-
Merger Consideration as provided in Section 1.5, without interest thereon, upon
surrender of the certificate or certificates formerly representing such Shares.
(c) The Company shall give Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company, and (ii) the opportunity to direct and
control all negotiations and proceedings with respect to demands for appraisal
under Delaware Law. The Company may participate in such negotiations or
proceedings but shall not voluntarily make any payment with respect to any
demands for appraisal and shall not, except with the prior written consent of
Purchaser, settle or offer to settle any such demands.
Section 1.7 Payment Fund; Surrender of Shares; Stock Transfer Books.
(a) At or prior to the Effective Time, Parent shall deposit, or
shall cause to be deposited, with a bank or trust company selected by the Parent
and who is reasonably satisfactory to the Company (the "PAYING AGENT") for the
benefit of the holders of Converted Shares cash for exchange and payment in
accordance with this Section 1.7, through the Paying Agent in an amount equal to
the sum of (i) the aggregate amount payable to holders of Converted Shares
pursuant to Section 1.5 and (ii) the aggregate amount payable to holders of
In-the-Money Options pursuant to Section 1.8 (such cash being hereinafter
referred to as the "PAYMENT FUND"). The Payment Fund shall not be used for any
other purpose. The Paying Agent shall invest the Payment Fund, as directed by
Parent, on a daily basis; provided, however, that all such investments shall be
in (i) obligations of, or guaranteed by, the United States of America having a
maturity of three months or less, (ii) commercial paper obligations receiving
the highest rating from either Xxxxx'x Investors Service, Inc. or Standard and
Poor's Corporation, or (iii) certificates of deposit of federally insured
commercial banks with capital exceeding $1 billion having a maturity of three
months or less. Any interest and other income resulting from such investments
shall be paid to Parent. Any losses resulting from such investments shall be the
sole responsibility of Parent and shall not in any way limit Parent's
obligations to holders of Shares and Existing Options.
(b) Promptly after the Effective Time, Parent will instruct the
Paying Agent to mail as soon as reasonably practicable after the Effective Time
(but in any event no later than five Business Days after the Paying Agent
receives an electronic copy of the Company's stock records as of the Effective
Time, suitable for the Paying Agent's use, from the Company's transfer agent) to
each holder of a certificate (a "CERTIFICATE") formerly representing Converted
Shares who has not previously surrendered his or her Certificates, a letter of
transmittal reasonably acceptable to the Company advising such holders of the
effectiveness of the Merger and the procedures for surrendering Certificates to
the Paying Agent (which shall specify that delivery shall be effected, and risk
of loss and title to such holder's Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and shall be in such form and
have such other provisions as to which Parent and the Company may agree) (the
"LETTER OF TRANSMITTAL").
-4-
(c) Upon the later of the Effective Time and the surrender of a
Certificate for cancellation (or the affidavits and indemnification regarding
the loss or destruction of such Certificates reasonably acceptable to Parent) to
the Paying Agent together with the Letter of Transmittal, duly executed, and
such other customary documents as may be required pursuant thereto, the holder
of such Certificate shall be entitled to receive in exchange therefor, and the
Paying Agent shall deliver in accordance with the Letter of Transmittal, a check
in the amount equal to the product of (i) the number of Converted Shares
represented thereby and (ii) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrue on
any amount payable upon surrender of any Certificate. In the event of a transfer
of ownership of Shares which is not registered in the stock transfer books of
the Company, the cash payable in respect of such Shares under Section 1.5 may be
paid to a transferee if the Certificate formerly evidencing such Shares is
surrendered to the Paying Agent, accompanied by all documents reasonably
required to evidence and effect such transfer and by evidence reasonably
acceptable to the Paying Agent that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 1.7, each
Certificate shall be deemed at any time after the Effective Time to evidence
only the right to receive upon such surrender the Merger Consideration.
(d) All cash paid upon the surrender for exchange of Certificates
in accordance with the terms of this Section 1.7 shall be deemed to have been
paid in full satisfaction of all rights pertaining to the Shares formerly
represented by such Certificates.
(e) Any portion of the Payment Fund which remains undistributed to
the holders of the Shares for 270 days after the Effective Time shall be
delivered by the Paying Agent to Parent and any holders of Shares who have not
theretofore complied with this Section 1.7 shall thereafter look only to Parent
for payment of the Merger Consideration.
(f) None of Parent, Purchaser, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Laws.
(g) Parent, Purchaser and the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to the holder of
the Converted Shares or the Existing Options, as the case may be, pursuant to
this Agreement such amounts as Parent, Purchaser or the Paying Agent is required
to deduct and withhold with respect to the making of such payment under the Code
or any other applicable Law. To the extent that amounts are so withheld by
Parent, Purchaser or the Paying Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Converted Shares or the Existing Options, as the case may be, in respect of
which such deduction and withholding was made by Parent, Purchaser or the Paying
Agent.
(h) If any Certificate shall have been lost, stolen or destroyed,
upon the making of a customary 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 or the
-5-
Surviving Corporation with respect to such Certificate, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate the cash that
would have been payable in respect thereof pursuant to this Agreement had such
lost, stolen or destroyed Certificate been surrendered.
(i) In the event this Agreement is terminated without the
occurrence of the Effective Time, the Paying Agent shall return the Payment Fund
to Parent, and Parent shall, or shall cause the Paying Agent to, return
promptly, but in any event within three Business Days after such termination,
any Certificates theretofore submitted or delivered to the Paying Agent, without
charge to the Person who submitted such Certificates.
(j) At and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
any reason, they shall be canceled and exchanged as provided in this Section
1.7, except as otherwise required by Law.
Section 1.8 Existing Options of the Company.
(a) The Company shall cancel all of the outstanding Existing
Options, whether vested or unvested, effective from and after the Effective Time
and shall obtain and deliver to Purchaser on or prior to the Closing a written
agreement, in form and substance reasonably acceptable to the Purchaser, from
each holder of an Existing Option agreeing to such cancellation, in each case
without incurring any liability or paying any consideration for such
cancellation or agreements. After such cancellation, the holders of such
Existing Options shall have no further rights with respect to such Existing
Options except for the rights granted in this Section 1.8. The Company shall
take all actions necessary to ensure that from and after the Effective Time
neither the Surviving Corporation nor any of its Subsidiaries will be bound by
any options, rights, awards or arrangements which would entitle any Person,
other than Parent or Purchaser to beneficially own, directly or indirectly, any
shares of capital stock of, or other equity interest in, the Surviving
Corporation or any of its Subsidiaries or to receive any payments in respect of
such options, rights, awards or other arrangements (other than as provided for
in this Section 1.8). From and after the Effective Time, each holder of a vested
stock option granted under the Company's stock incentive plans referred to in
Section 3.2(a) (the "OPTION PLANS") which has a per share exercise price that is
less than the Merger Consideration ("IN-THE-MONEY OPTIONS") shall be entitled to
receive from Parent, as soon as reasonably practicable after the surrender
thereof, an amount of cash equal to the product of (x) the excess of the Merger
Consideration over the per share exercise price of such option, and (y) the
number of shares of Company Common Stock issuable upon exercise of such option;
provided, however, that prior to such payment, such holder must have (i)
delivered such option (or a duly executed affidavit of loss in a form reasonably
acceptable to Parent) to the Paying Agent, and (ii) duly authorized, executed
and delivered to the Paying Agent an acknowledgment of cancellation and
termination or such other documents necessary, or customarily required, in a
form which shall be reasonably satisfactory to Parent and the Company,
indicating such holder's acknowledgment that, except
-6-
for such holder's rights to receive the consideration set forth in this Section
1.8, any and all claims with respect to any such option shall be fully released
and terminated (the "OPTION CANCELLATION AND TERMINATION ACKNOWLEDGMENT"). Prior
to or upon the Effective Time, Parent shall instruct the Paying Agent to mail as
soon as reasonably practicable after the Effective Time, but in no event later
than five Business Days after the Paying Agent receives an electronic copy of
the Company's option records as of the Effective Time, suitable for the Paying
Agent's use, to each holder of a vested stock option issued under the Option
Plans entitled to receive cash in exchange for such option pursuant to this
Section 1.8(a) and who has not previously exercised such option: (i) a letter of
transmittal reasonably acceptable to the Company (which shall specify that
delivery shall be effected only upon proper delivery to the Paying Agent of (A)
such option (or a duly executed affidavit of loss in a form reasonably
acceptable to Parent), and (B) the duly executed Option Cancellation and
Termination Acknowledgment, and shall be in such form and have such other
provisions as to which Parent and the Company may agree), and (ii) instructions
reasonably acceptable to the Company for use in effecting the surrender,
cancellation and termination of such option in exchange for cash in accordance
with this Section 1.8.
(b) As of the Effective Time, all Option Plans and Existing
Options shall terminate and all rights under any provision of any other plan,
program or arrangement providing for the issuance or grant of any Existing
Options or any other interest in respect of the capital stock of the Company or
any of its Subsidiaries shall be canceled. At and after the Effective Time, no
Person shall have any right under the Option Plans or Existing Options or any
other plan, program or arrangement with respect to equity securities of Parent,
the Surviving Corporation or any of their respective Subsidiaries (other than as
set forth in Section 1.8(a) above).
(c) As used in this Agreement, "EXISTING OPTIONS" means any of the
following relating to any capital stock of, or other equity interest in, the
Company or any of its Subsidiaries: (i) options or warrants (whether vested or
not) to purchase or other rights (including registration rights), agreements,
contracts or binding commitments of any character to which the Company or any of
its Subsidiaries is a party relating to the issued or unissued capital stock of,
or other equity or phantom equity interests in, the Company or any of its
Subsidiaries which could require the Company or any of its Subsidiaries to
grant, issue or sell any shares of the capital stock of, or other equity or
phantom equity interests in, the Company or any of its Subsidiaries, by sale,
lease, license or otherwise; (ii) rights or securities convertible into, or
exchangeable or exercisable for, or otherwise conferring any rights to subscribe
for or purchase any shares of the capital stock of, or other equity or phantom
equity interests in, the Company or any of its Subsidiaries; (iii) agreements,
contracts and binding commitments to which the Company or any of its
Subsidiaries is a party with respect to any right to purchase, put or call for
any shares of the capital stock of, or other equity or phantom equity interests
in, the Company or any of its Subsidiaries; or (iv) stock appreciation rights,
limited stock appreciation rights, performance awards or restricted stock of the
Company or any of its Subsidiaries; provided, however, that the Rights Agreement
shall not constitute an Existing Option.
Section 1.9 Certain Adjustments. If, during the period between the date
of this Agreement and the Effective Time or earlier termination of this
Agreement, any outstanding
-7-
Shares are changed into a different number or class of shares by reason of any
stock split, division or subdivision of shares, stock dividend, reverse stock
split, consolidation of shares, reclassification, recapitalization or other
similar transaction, then the Merger Consideration applicable to such Shares
shall be appropriately and equitably adjusted.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 2.1 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and (in the case of Purchaser only)
in good standing under the Laws of the jurisdiction in which it is organized and
has the requisite corporate power and authority to own, operate or lease the
properties and assets that it purports to own, operate or lease and to carry on
its business as it is now being conducted, except for any failures to have such
power or authority or be in such good standing which, when taken together with
all other such failures, do not, and are not reasonably likely to, have or
result in a Parent Material Adverse Effect. Purchaser is a wholly owned
Subsidiary of Parent. Parent has previously delivered to the Company a true and
correct copy of the certificate of incorporation and by-laws (or comparable
organizational documents) of each of Parent and Purchaser, as currently in
effect.
Section 2.2 Authority Relative to this Agreement. Each of Parent and
Purchaser has the necessary corporate power and authority to execute and deliver
this Agreement and, subject to the filing of the Certificate of Merger as
required by Delaware Law, to carry out each of their respective obligations
hereunder and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and Purchaser, the
performance by Parent and Purchaser or their respective obligations hereunder
and the consummation by Parent and Purchaser of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Purchaser and, subject to the filing of the Certificate
of Merger as required by Delaware Law, no other corporate action is necessary
for the execution and delivery of this Agreement by Parent or Purchaser, the
performance by Parent or Purchaser of their respective obligations hereunder and
the consummation by Parent or Purchaser of the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by Parent and
Purchaser and constitutes the legal, valid and binding obligation of each such
corporation, enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, moratorium and other
similar Laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 2.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Purchaser does not, and the performance by Parent and Purchaser of their
respective obligations hereunder and the consummation by Parent and Purchaser of
the transactions contemplated by this Agreement will not (i) violate any Law,
court order, judgment, decree or injunction applicable to Parent or Purchaser or
by which any of their property is bound, (ii) violate the certificate of
incorporation
-8-
or by-laws (or comparable organizational documents) of either Parent or
Purchaser, or (iii) violate or result in any breach of or constitute a default
under (in each case with or without notice or lapse of time or both), or give to
others any rights of termination or cancellation of, or result in any change in
any of the rights or obligations under, or the creation of a Lien on any of the
property or assets of Parent or Purchaser pursuant to, any agreement, contract,
commitment, indenture, instrument, permit, license or other legally binding
obligation (collectively, "CONTRACTS") to which Parent or Purchaser is a party
or by which Parent or Purchaser or any of their property is bound, except in the
case of clauses (i) and (iii) for any such violations, breaches or defaults
which, individually or in the aggregate, are not reasonably likely to have or
result in a Parent Material Adverse Effect.
(b) Except for filings under the HSR Act and the filing of the
Certificate of Merger as required by Delaware Law, neither Parent nor Purchaser
is required to give any notice, make any report, registration or other filing
with, or to obtain any waiver, consent, approval, permit or authorization from,
any Governmental Entity or any third party in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, the failure of which to give, make
or obtain, individually or in the aggregate, is reasonably likely to have or
result in a Parent Material Adverse Effect.
Section 2.4 Litigation. There are no claims, actions, suits,
proceedings or investigations of any nature pending or, to the Knowledge of
Parent, threatened against Parent or Purchaser by or before any Governmental
Entity which, individually or in the aggregate, are reasonably likely to have or
result in a Parent Material Adverse Effect. Parent is not subject to any court
orders, judgments, decrees or injunctions which, individually or in the
aggregate, are reasonably likely to have or result in a Parent Material Adverse
Effect.
Section 2.5 Operations of Purchaser. Purchaser is a wholly owned
Subsidiary of Parent, was formed solely for the purpose of engaging in the
Merger and the other transactions contemplated by this Agreement, has engaged in
no other business activities and has conducted its operations only as
contemplated by this Agreement.
Section 2.6 Capital Resources. Parent will have available to it upon
the consummation of the Merger sufficient funds to pay the Merger Consideration
to holders of Converted Shares and to satisfy all of its other obligations under
this Agreement.
Section 2.7 Interest in the Company. Immediately prior to the execution
and delivery of this Agreement, neither Parent nor any of its Subsidiaries
beneficially owned any Shares. As of the date hereof, neither Parent nor any of
its affiliates is an "Interested Stockholder" as such term is defined in Section
203 of Delaware Law, or an "Acquiring Person" as such term is defined in the
Rights Agreement.
Section 2.8 Brokers. Except for Credit Suisse First Boston Australia
Limited, 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
Parent or Purchaser.
-9-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections or subsections of the
disclosure schedule delivered to Parent by the Company and executed by each of
them as of the date of this Agreement (the "DISCLOSURE SCHEDULE"), the Company
hereby represents and warrants to Parent and Purchaser as follows:
Section 3.1 Organization and Qualification; Subsidiaries. The Company
and each of its Subsidiaries (a) is a corporation or other legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction in which it is organized and has the requisite corporate or other
power, as the case may be, and authority to own, operate or lease the properties
and assets that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and (b) is duly qualified as a foreign
corporation or other legal entity to do business, and is in good standing, in
each other jurisdiction where the ownership, operation or lease of its
properties and assets or the nature of its business makes such qualification
necessary, except in the case of clause (b) for failures to be so qualified or
in good standing which, individually or in the aggregate, do not, and are not
reasonably likely to, have or result in a Company Material Adverse Effect. The
Company has previously delivered to Parent a true and correct copy of the
certificate of incorporation and by-laws (or comparable organizational
documents) of the Company and each of its Subsidiaries, as currently in effect,
each as amended to date, and each of the documents so delivered is in full force
and effect.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of common stock, no par value (the "COMPANY COMMON STOCK"),
and 10,000 shares of Class A preferred stock, par value $100 per share, and
200,000 shares of Class 1 preferred stock, no par value (the "COMPANY PREFERRED
STOCK"), of which 150,000 shares were reserved for issuance upon exercise of
preferred share rights issuable pursuant to the Rights Agreement between the
Company and UMB Bank, N.A., dated September 16, 1998 (the "RIGHTS AGREEMENT").
As of the close of business on February 6, 2004, (i) 6,334,382 shares of Company
Common Stock were issued and outstanding, all of which were duly authorized,
validly issued, fully paid and nonassessable and (ii) 2,753,818 shares of
Company Common Stock were held in the treasury of the Company. The Company has
no shares of Company Common Stock reserved for issuance, except that, as of
February 6, 2004, there were 716,710 shares of Company Common Stock reserved for
issuance under the Option Plans, as listed in Section 3.2(a) of the Disclosure
Schedule in the amounts stated in such schedule. No shares of the Company
Preferred Stock were issued and outstanding as of February 6, 2004. Section
3.2(a) of the Disclosure Schedule sets forth the holders of all Existing Options
and the number of Shares, grant date, exercise prices and expiration dates for
each grant to such holders. There are no existing (i) options, warrants,
conversion rights, calls, preemptive rights, convertible or exchangeable
securities, subscriptions or other rights, agreements, contracts or commitments
of any character obligating the Company or any of its Subsidiaries to issue,
transfer or sell, or giving any Person any right to subscribe for or acquire,
any shares of capital stock of, or other equity interest in, the Company
-10-
or any of its Subsidiaries or securities convertible into, or exercisable or
exchangeable for, any such shares or equity interests, (ii) rights, agreements,
contracts or commitments of any character obligating the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire, or giving any Person
any right to sell to any of them, any capital stock of, or other equity interest
in, the Company or any of its Subsidiaries, or (iii) voting trusts or similar
agreements to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries. The Company does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or convertible
or exchangeable into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter (collectively, "VOTING
DEBT"). The Company does not own, directly or indirectly, any voting interest
which may require a filing by Parent or any of its affiliates under the HSR Act
(excluding the filing required for the Merger).
(b) All outstanding shares of capital stock of, or other equity
interests in, each of the Company's Subsidiaries (i) have been duly authorized
and validly issued and are fully paid and nonassessable; (ii) are free and clear
of all Liens; and (iii) are free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other equity interests but excluding any restrictions imposed by
applicable securities Laws). All outstanding shares of capital stock (or
equivalent equity interests of entities other than corporations) of each of the
Company's Subsidiaries are beneficially owned by the Company and/or one of its
direct or indirect wholly owned Subsidiaries (other than director's qualifying
shares or similar requirements of a foreign jurisdiction). Section 3.2(b) of the
Disclosure Schedule contains a true and correct list of the Company's
Subsidiaries and the capitalization and current ownership of each such
Subsidiary. Neither the Company nor any of its Subsidiaries owns (directly or
indirectly) any shares of capital stock of, or other equity interest in, any
Person or any interest convertible into or exercisable or exchangeable for any
such shares or equity interests.
Section 3.3 Authority Relative to this Agreement. The Company has the
necessary corporate power and authority to execute and deliver this Agreement
and, subject to obtaining the affirmative vote of the holders of a majority of
the outstanding Shares for adoption and approval of this Agreement and the
Merger at a special meeting of the stockholders of the Company duly called and
held for such purpose (the "REQUISITE VOTE") and the filing of a Certificate of
Merger as required by Delaware Law, to carry out its obligations hereunder and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company, the performance by the Company of its
obligations hereunder and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company and, subject to obtaining the
Requisite Vote and the filing of the Certificate of Merger as required by
Delaware Law, no other corporate action is necessary for the execution and
delivery of this Agreement by the Company, the performance by the Company of its
obligations hereunder and the consummation by the Company of the transactions
contemplated by this Agreement. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms,
-11-
subject to bankruptcy, insolvency, fraudulent transfer, moratorium and other
similar Laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 3.4 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company
does not, and the performance by the Company of its obligations hereunder and
the consummation by the Company of the transactions contemplated by this
Agreement will not, (i) violate any Law, court order, judgment, decree or
injunction applicable to the Company or any of its Subsidiaries or Joint
Ventures or by which its or their property is bound, (ii) violate the
certificates of incorporation or by-laws (or comparable organizational
documents) of the Company or any of its Subsidiaries or Joint Ventures, or (iii)
violate or result in any breach of or constitute a default under (with or
without notice or lapse of time or both), or give to others any rights of
termination or cancellation of, or result in any change in any of the rights or
obligations under, or the creation of a Lien (other than a Permitted Lien) on
any of the properties or assets of the Company or any of its Subsidiaries or
Joint Ventures pursuant to, any Contract or Permit to which the Company or any
of its Subsidiaries or Joint Ventures is a party or by which the Company or any
of its Subsidiaries or their property is bound, except in the case of clauses
(i) and (iii) for any such violations, breaches or defaults which, individually
or in the aggregate, are not reasonably likely to have or result in a Company
Material Adverse Effect.
(b) Except for filings under the HSR Act, obtaining the Requisite
Vote and the filing of the Certificate of Merger as required by Delaware Law,
neither the Company nor any of its Subsidiaries or Joint Ventures is required to
give any notice, make any report, registration or other filing with, or to
obtain any waiver, consent, approval, permit or authorization of, any
Governmental Entity or any third party in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, the failure of which to give, make
or obtain, individually or in the aggregate, is reasonably likely to have or
result in a Company Material Adverse Effect.
(c) The Board of Directors, at a meeting duly called and held,
unanimously adopted resolutions that are still in full force and effect as of
the date hereof and, subject to Section 4.2, will remain in full force and
effect, (i) approving and declaring advisable the Merger, this Agreement and the
transactions contemplated by this Agreement, (ii) declaring that it is in the
best interests of the Company's stockholders that the Company enter into this
Agreement and consummate the Merger and the other transactions contemplated by
this Agreement, on the terms and subject to the conditions set forth herein,
(iii) recommending that the Company's stockholders approve and adopt this
Agreement and the Merger, (iv) approving the acquisition of the Shares by Parent
or Purchaser pursuant to the Merger and the other transactions contemplated by
this Agreement, (v) exempting this Agreement and the transactions contemplated
by this Agreement from the restrictions of Section 203 of Delaware Law and (vi)
approving this Merger Agreement and the transactions contemplated hereby for
purposes of Article VI of the certificate of incorporation of the Company.
-12-
(d) Neither the Company nor any of its Subsidiaries or Joint
Ventures is a party to or bound by any non-competition Contracts or other
Contract that purports to limit in any material respect either the type of
business in which the Company or its Subsidiaries (or, after giving effect to
the Merger, Parent or its Subsidiaries) may engage or the manner or locations in
which any of them may so engage in any business.
(e) Section 3.4(e) of the Disclosure Schedule sets forth a correct
and complete list of all claims held by the Company or any of its Subsidiaries
or Joint Ventures, as creditors or claimants, with respect to debtors or
debtors-in-possession subject to proceedings under chapter 11 of title 11 of the
United States Code, together with a correct and complete list of all orders
entered by the applicable United States Bankruptcy Court with respect to each
such proceeding. None of such orders, individually or in the aggregate, are
reasonably likely to have or result in a Company Material Adverse Effect.
Section 3.5 SEC Filings; Financial Statements.
(a) The Company has timely filed with the SEC all forms, reports,
schedules, certifications, statements and other documents required to be filed
by it since January 1, 2001, and on or prior to the date of this Agreement under
the Exchange Act or the Securities Act (collectively, including any amendments
to any such documents filed prior to the date of this Agreement, the "COMPANY
SEC DOCUMENTS"). As of their respective filing dates, the Company SEC Documents
including, without limitation, any financial statements or schedules included
therein (i) did not, and any such documents filed with the SEC after the date of
this Agreement will 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, and (ii) complied, and any such documents filed with
the SEC after the date of this Agreement will comply, in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, at such time of filing.
(b) The Company Financial Statements comply, and any financial
statements filed by the Company with the SEC after the date of this Agreement
will comply, in all material respects with the applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto),
provided that any interim unaudited financial statements may not have notes and
may be subject to normal year end audit adjustments, none of which will be
material in effect or amount. The Company Financial Statements fairly present,
and any financial statements filed by the Company with the SEC after the date of
this Agreement will fairly present, in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the date of the
balance sheets in such Company Financial Statements and the consolidated results
of operations, cash flows and changes in retained earnings of the Company and
its Subsidiaries for each of the periods covered by the Company Financial
Statements. As used in this Agreement, "COMPANY FINANCIAL STATEMENTS" shall mean
the audited or unaudited, as the case may be, consolidated balance
-13-
sheets and consolidated statements of earnings and retained earnings,
comprehensive income and cash flows of the Company and its Subsidiaries, and the
related notes thereto, for each of the years ended on December 31, 2001 and 2002
and for each of the indicated periods ended on March 31, 2003, June 30, 2003 and
September 30, 2003, in each case which is included in the Company SEC Documents.
The fact that the audit report of the Company's independent accountants with
respect to the Company's audited consolidated financial statements for the year
ended December 31, 2003 or any subsequent period contains a going concern
qualification shall not, by itself, constitute a breach of any representation or
warranty contained in Section 3.5(a) or this Section 3.5(b). The most recent
financial forecasts for 2004 provided by the Company to Parent have been
prepared in good faith by the management of the Company upon assumptions they
believe to be reasonable and represent their best estimates of the future
financial performance and condition of the Company and its Subsidiaries. Such
forecasts are the most recent financial forecasts that the Company has provided
to its creditors.
(c) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature, in each case except for (a) liabilities, obligations or
contingencies which (i) are accrued or reserved against in the December 31, 2002
balance sheet included in the Company's Annual Report or Form 10-K for the year
then ended or reflected in the notes thereto (but only to the extent they are so
reserved or accrued against or reflected) or (ii) were incurred since December
31, 2002 and are accrued or reserved against in the September 30, 2003 balance
sheet included in the Company's Quarterly Report on Form 10-Q for the quarter
then ended or reflected in the notes thereto (but only to the extent so reserved
or accrued against or reflected), (b) account or trade payables, other expense
accruals and non-recourse borrowings incurred in connection with the Company's
real estate development business ("NON-RECOURSE BORROWINGS"), in each case that
were incurred in the ordinary course of business and consistent with past
practices, (c) Contracts which have been filed with the SEC and retention bonus
agreements, true and complete copies of which have been provided to Parent, in
each case prior to the date of this Agreement, or (d) liabilities, obligations
or contingencies which, individually or in the aggregate, have not had since
December 31, 2002, and are not reasonably likely to have or result in, a Company
Material Adverse Effect.
(d) The Company and its Subsidiaries maintain books and records
reflecting their assets and liabilities which are accurate in all material
respects and maintain internal accounting controls which provide reasonable
assurance that (i) transactions are executed with appropriate authorizations;
(ii) transactions are recorded as necessary to permit timely preparation of the
consolidated financial statements of the Company and to maintain accountability
for the Company's consolidated assets; (iii) access to the assets of the Company
and its Subsidiaries is permitted only in accordance with appropriate
authorizations; and (iv) the reporting of the Company's assets is compared with
existing assets at regular intervals.
Section 3.6 Absence of Certain Changes or Events. Since December 31,
2002, except as required by this Agreement, or as described in the Company SEC
Documents, (a) the Company and its Subsidiaries have conducted their respective
operations only in, and have not engaged in any material transaction other than
according to, the ordinary course of business consistent with past practices,
(b) there has not been any Company Material Adverse Change,
-14-
and (c) the Company and its Subsidiaries have not taken any action that, if
taken after the date hereof, would constitute a violation of Section 4.1 (other
than clauses (d)(ii)(B), (d)(iii), (g), (j), (k) and (l) thereof); provided,
however, that solely for the purposes of this representation and warranty,
clause (d)(ii)(C) thereof shall be restated in its entirety as "any sales of
other assets or properties at fair market value in the ordinary course of
business consistent with past practice" and clause (f) thereof shall be restated
in its entirety as "neither the Company nor any of its Subsidiaries shall enter
into any Contract other than in the ordinary course of business consistent with
past practice".
Section 3.7 Litigation. Except as disclosed in the Company SEC
Documents, there are no civil, criminal, administrative or employee claims,
actions, suits, proceedings or investigations of any nature pending or, to the
Knowledge of the Company, threatened against the Company or any of its
Subsidiaries or Joint Ventures, or any properties or assets of the Company or
any of its Subsidiaries or Joint Ventures, by or before any Governmental Entity
other than those which, individually or in the aggregate, do not, and are not
reasonably likely to, have or result in a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries or any of its Joint Ventures is
a party to or subject to the provisions of any judgments, orders, writs,
injunctions, decrees or awards of any Governmental Entity other than those
which, individually or in the aggregate, do not, and are not reasonably likely
to, have or result in a Company Material Adverse Effect.
Section 3.8 Title to Assets. The Company and each of its Subsidiaries
has good and marketable title to all of its properties and assets, real and
personal, reflected in the balance sheet included in the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 2003 (except properties
and assets sold or otherwise disposed of since September 30, 2003 in the
ordinary course of business consistent with past practices), or with respect to
leased properties and assets, valid leasehold interests in such properties and
assets, in each case free and clear of all Liens, except for Permitted Liens.
The property and equipment of the Company and each of its Subsidiaries that are
used in the business of the Company and its Subsidiaries are (taken as a whole)
in reasonable operating condition and repair, subject to normal wear and tear.
Section 3.9 Employee Benefit Plans.
(a) All benefit and compensation plans, contracts, policies or
arrangements currently covering current or former employees of the Company and
its Subsidiaries (for purposes of this Section 3.9, the "EMPLOYEES") and current
or former directors of the Company, including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and deferred compensation,
stock option, stock purchase, stock appreciation rights, stock based, incentive
and bonus plans (the "COMPANY COMPENSATION AND BENEFIT PLANS") are listed in
Section 3.9(a) of the Disclosure Schedule and each Company Compensation and
Benefit Plan which has received a favorable opinion letter from the Internal
Revenue Service National Office, including any master or prototype plan, has
been separately identified. True and complete copies of all Company Compensation
and Benefit Plans listed in Section 3.9(a) of the Disclosure Schedule,
including, but not limited to, any trust instruments, insurance contracts and,
with respect to any employee
-15-
stock ownership plan, loan agreements, forming a part of any Company
Compensation and Benefit Plans, and all currently effective amendments thereto,
have been provided, or made available to, Parent.
(b) All Company Compensation and Benefit Plans, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA (each, a
"MULTIEMPLOYER PLAN"), are in full compliance with ERISA, the Code and other
applicable Laws, except for any such non-compliances which, individually or in
the aggregate, do not, and are not reasonably likely to, have or result in a
Company Material Adverse Effect. Each Company Compensation and Benefit Plan
which is subject to ERISA (the "ERISA PLANS") that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA, other than
Multiemployer Plans, (a "COMPANY PENSION PLAN") and that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS") covering all
tax Law changes prior to the Economic Growth and Tax Relief Reconciliation Act
of 2001 or has applied to the IRS for such favorable determination letter within
the applicable remedial amendment period under Section 401(b) of the Code, and
the Company is not aware of any circumstances likely to result in the loss of
the qualification of such plan under Section 401(a) of the Code. Any voluntary
employees' beneficiary association within the meaning of Section 501(c)(9) of
the Code which provides benefits under a Company Compensation and Benefit Plan
has (i) received an opinion letter from the IRS recognizing its exempt status
under Section 501(c)(9) of the Code and (ii) filed a timely notice with the IRS
pursuant to Section 505(c) of the Code, and the Company is not aware of
circumstances likely to result in the loss of such exempt status under Section
501(c)(9) of the Code. As of the date hereof, there is no pending or, to the
Knowledge of the Company, threatened litigation relating to the Company
Compensation and Benefit Plans, except for any such litigation that,
individually or in the aggregate, does not, and is not reasonably likely to,
have or result in a Company Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has (i) engaged in a transaction with respect to any ERISA
Plan that, assuming the taxable period of such transaction expired as of the
date hereof, could subject the Company or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA or
(ii) incurred or reasonably expects to incur a tax or penalty imposed by Section
4980F of the Code or Section 502 of ERISA, except for any such taxes or
penalties that, individually or in the aggregate, do not, and are not reasonably
likely to, have or result in a Company Material Adverse Effect.
(c) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any Subsidiary with respect
to any ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA AFFILIATE"). The Company and its Subsidiaries have not incurred and do
not expect to incur any withdrawal liability with respect to a Multiemployer
Plan under Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived or extended, other than pursuant to Pension
-16-
Benefit Guaranty Corporation ("PBGC") Reg. Section 4043.66, has been required to
be filed for any Company Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof or will be required to be filed in
connection with the transactions contemplated by this Agreement.
(d) All contributions required to be made under each Company
Compensation and Benefit Plan, as of the date hereof, have been timely made
(giving effect to waivers or extensions) and all obligations in respect of each
Company Compensation and Benefit Plan have been properly accrued and reflected
in the most recent consolidated balance sheet filed or incorporated by reference
in the Company SEC Documents prior to the date hereof. Neither any Company
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA, and no ERISA Affiliate has an
outstanding funding waiver. It is not reasonably anticipated that required
minimum contributions to any Company Pension Plan under Section 412 of the Code
will be materially increased by application of Section 412(l) of the Code.
Neither the Company nor its Subsidiaries has provided, or is required to
provide, security to any Company Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Under each Company Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit liabilities",
within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis
of the actuarial assumptions contained in the Company Pension Plan's most recent
actuarial valuation), did not exceed the then current value of the assets of
such Company Pension Plan. There has been no material change in the financial
condition of any Company Pension Plan since the last day of the most recent plan
year.
(f) Neither the Company nor its Subsidiaries have any obligations
for retiree health and life benefits under any ERISA Plan or collective
bargaining agreement. The Company or its Subsidiaries may amend or terminate any
such plan at any time without incurring any liability thereunder other than in
respect of claims incurred prior to such amendment or termination.
(g) There has been no amendment to, announcement by the Company or
any of its Subsidiaries relating to, or change in employee participation or
coverage under, any Company Compensation and Benefit Plan which would increase
the expense of maintaining such plan above the level of the expense incurred
therefor for the most recent fiscal year, except for any such increases that,
individually or in the aggregate, do not, and are not reasonably likely to, have
or result in a Company Material Adverse Effect. Neither the execution of this
Agreement, stockholder approval of this Agreement nor the consummation of the
Merger and the other transactions contemplated hereby will (w) entitle any
employees of the Company or its Subsidiaries to severance pay or any increase in
severance pay upon any termination of employment after the date hereof, (x)
accelerate the time of payment or vesting or result in any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or result in any other material obligation pursuant
to, any of the Company Compensation and Benefit Plans, (y) limit or restrict the
right of the Company, or,
-17-
after the consummation of the transactions contemplated hereby, Parent, to
merge, amend or terminate any of the Company Compensation and Benefit Plans or
(z) result in payments under any of the Company Compensation and Benefit Plans
which would not be deductible under Section 162(m) or Section 280G of the Code.
(h) A true, accurate and complete copy of the master list of the
current employees of the Company and its Subsidiaries, setting forth the
employing entity, the total headcount and total compensation for the most recent
fiscal quarter/year has been provided to Parent. The Company has provided Parent
with true and complete copies of all Company severance policies and guidelines,
whether written or oral. There are no claims, actions, suits, or proceedings of
any nature pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries by any current or former employees, directors
or officers of the Company or any of its Subsidiaries other than those which,
individually or in the aggregate, do not and are not reasonably likely to have
or result in a Company Material Adverse Effect.
Section 3.10 Labor and Employment Matters.
(a) There is no pending, nor has the Company or any of its
Subsidiaries experienced any, dispute over labor practices, strike or organized
work stoppage, and, to the Knowledge of the Company, there is no dispute over
labor practices, strike or organized work stoppage, that has been threatened in
writing against the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement. To the Knowledge of the Company, no bona
fide union organizing activities are in process or have been proposed or
threatened involving any employees of the Company or any of its Subsidiaries,
and no petitions have been filed or, to the Knowledge of the Company, have been
threatened in writing, or proposed to be filed, for union organization or
representation of employees of the Company or any of its Subsidiaries not
presently organized.
(c) To the Knowledge of the Company, neither the Company nor any
of its Subsidiaries is in material violation of any labor Laws in any country
(or political subdivision thereof) in which they transact business except for
such violations as, individually or in the aggregate, do not, and are not
reasonably likely to, have or result in a Company Material Adverse Effect.
Section 3.11 Compliance; Permits.
(a) Except as disclosed in the Company SEC Documents, the
businesses of each of the Company and its Subsidiaries and Joint Ventures have
not been, and are not being, conducted in breach or violation of, or default
under, or non-compliance with any term, condition or provision of (i) their
respective certificates of incorporation or by-laws (or comparable
organizational documents); (ii) any Contract to which the Company or any of its
Subsidiaries or Joint Ventures is a party or by which any of them or any of
their property is bound; or (iii) any Law, court order, judgment, decree,
injunction or Permit applicable to the Company or any of its Subsidiaries or
Joint Ventures (including without limitation all workplace or occupational
health and safety Laws, antitrust Laws and foreign corrupt practices Laws),
except, with respect to the
-18-
foregoing clauses (ii) and (iii), any such breaches, violations, defaults or
non-compliance that, individually or in the aggregate, do not, and are not
reasonably likely to have or result in a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries or Joint Ventures has received
any notice, and the Company has no Knowledge of any material claim, alleging any
such breaches, violations, defaults or non-compliance.
(b) Each of the Company and its Subsidiaries and Joint Ventures
hold all licenses, permits, consents, authorizations, waivers, grants,
franchises, registrations and approvals of any Governmental Entity or other
Persons necessary for the ownership, leasing, operation and use of their
respective property and assets and the conduct of their respective businesses as
currently or proposed to be conducted ("PERMITS"), except for any failures to
hold such Permits which, individually or in the aggregate, do not, and are not
reasonably likely, to have or result in a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received notice that any
Permit will be terminated or modified or cannot be renewed in the ordinary
course of business and the Company has no Knowledge of any reasonable basis for
any such termination, modification or nonrenewal, except for any such
terminations, modifications or nonrenewals which, individually or in the
aggregate, do not, and are not reasonably likely to, have or result in any
Company Material Adverse Effect.
Section 3.12 Taxes.
(a) Except where the failure to do so does not have and is not
reasonably likely to have or result in a Company Material Adverse Effect, (i)
the Company and each of its Subsidiaries (1) have prepared and timely filed
(taking into account any extension of time within which to file) all Tax Returns
required to be filed by any of them and all such filed Tax Returns are true and
correct in all material respects, and any such Tax Returns in respect of which
the Company and its Subsidiaries could have, upon re-examination or audit,
additional tax liability of $1 million or more have been examined by the
Internal Revenue Service or the appropriate Governmental Entity or the period in
respect of which such Tax Returns were required to be filed has expired; (2)
have paid all Taxes that are shown as due and payable on such filed Tax Returns
or that the Company or any of its Subsidiaries are obligated to pay without the
filing of a Tax Return; (3) have paid all other assessments received to date and
all deficiencies assessed by any Governmental Entity in respect of Taxes; (4)
have withheld from amounts owing to any employee, creditor or other Person all
Taxes required by Law to be withheld and have paid over to the proper
Governmental Entity in a timely manner all such withheld amounts to the extent
due and payable; (5) have not waived any applicable statute of limitations with
respect to United States federal, state or local income Taxes and have not
otherwise agreed to any extension of time with respect to a United States
federal, state or local Tax assessment or deficiency; (6) have not been members
of an Affiliated Group filing a consolidated federal income Tax Return (other
than a group the common parent of which is the Company); (7) are not parties to
any Tax Sharing Agreement other than with each other; (8) will not be required,
as a result of (A) a change in accounting method for a Tax period beginning on
or before the Closing Date, to include any adjustment under Section 481(c) of
the Code (or any similar provision of state, local or foreign Tax law) in
taxable income for any Tax period beginning on or after the Closing Date, or (B)
any "closing agreement" as described in Section 7121 of the Code (or any similar
-19-
provision of state, local or foreign Tax law), to include any item of income in
or exclude any item of deduction from any Tax period beginning on or after the
Closing Date; and (9) have not made with respect to the Company or any of its
Subsidiaries (including any of their predecessors) any consent under Section 341
of the Code; (ii) no material issues that have been raised by the relevant
Governmental Entity in connection with the examination of the Tax Returns
referred to in clause (i) (1) are currently pending; (iii) no closing
agreements, private letter rulings, technical advice memoranda, or similar
agreements, rulings or memoranda, have been entered into or issued by any
Governmental Entity with respect to the Company or any of its Subsidiaries; (iv)
no Liens for Taxes exist with respect to any of the properties or assets of the
Company or its Subsidiaries, except for Permitted Liens; (v) the Company has
provided, or made available to, Purchaser true and correct copies of all
material federal, state and local Tax Returns filed by the Company and its
Subsidiaries on which the statute of limitations has not expired; and (vi) there
are not being conducted or threatened in writing any material audits,
examinations, investigations, litigation, or other proceedings in respect of
Taxes of the Company or any Subsidiary. No tax is required to be withheld from
the shareholders of the Company at the Effective Time pursuant to Section 1445
of the Code as a result of the transfer contemplated by this Agreement.
(b) As used in this Agreement, the term:
(i) "AFFILIATED GROUP" means any affiliated group within
the meaning of Section 1504(a) of the Code or any similar group defined
under a similar provision of state, local or foreign Law.
(ii) "TAXES" means all taxes, charges, fees, levies or
other assessments imposed by any United States Federal, state, or local
taxing authority or by any non-U.S. taxing authority including, but not
limited to, income, gross receipts, excise, property, sales, use,
transfer, payroll, value added, withholding, social security, national
insurance (or other similar contributions or payments), franchise,
estimated, severance, stamp, and other taxes (including any interest,
fines, penalties or additions attributable to or imposed on or with
respect to any such taxes, charges, fees, levies or other assessments).
(iii) "TAX RETURN" means any return, report, information
return or other document with respect to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
(iv) "TAX SHARING AGREEMENT" means a written agreement the
principal purpose of which is to allocate Taxes among the Company and
another Person and does not include the provision of an acquisition
lease or other agreement which provides for indemnification of Taxes.
Section 3.13 Environmental Matters.
(a) The Company and each of its Subsidiaries (and any predecessor
or affiliate for which the Company or any such Subsidiary is liable but only to
the extent of such liability): (i) is and has at all times been in compliance
with applicable Environmental Laws except for any such
-20-
failures to be in compliance which, individually or in the aggregate, do not,
and are not reasonably likely to, have or result in a Company Material Adverse
Effect and (ii) has not received any material communication (written or oral),
from a Governmental Entity or third party indicating that the Company or any of
its Subsidiaries is in violation of, or subject to liability under, any
applicable Environmental Laws. The Company has delivered to Purchaser copies of
all material environmental reports, studies, assessments, sampling data,
correspondence and other environmental information in its possession relating to
the Company or any of its Subsidiaries or their current or former properties or
operations.
(b) Except for any such matters which, individually or in the
aggregate, do not, and are not reasonably likely to, have or result in a Company
Material Adverse Effect, (i) there is no property (including soils, groundwater,
surface water, buildings or other structures) currently or formerly owned or
operated by the Company, any of its Subsidiaries or any of their respective
predecessors or affiliates that has been contaminated with any Hazardous
Substance for which the Company or any of its Subsidiaries could incur
liability; (ii) there is no third party property with respect to which the
Company or any of its Subsidiaries is subject to any liability for Hazardous
Substance disposal or contamination; (iii) there has been no release or threat
of release of any Hazardous Substance with which the Company or any of its
Subsidiaries has been associated; (iv) there is no order, decree, injunction or
other arrangement with any Governmental Entity or any indemnity or other
agreement with any third party to which the Company or any of its Subsidiaries
is subject relating to liability under any Environmental Law or otherwise
relating to any Hazardous Substance; and (v) there are no other circumstances or
conditions involving the Company or any of its Subsidiaries that could
reasonably be expected to result in any claim, liability, investigation, cost or
restriction on the ownership, use or transfer of any property in connection with
any Environmental Law.
(c) As used in this Agreement, the term:
(i) "ENVIRONMENTAL LAWS" means any federal, state, local
or foreign statute, Law, rule, ordinance, code, policy, rule of common
law and regulations relating to pollution or protection of human health
(including those parts of the Occupational Safety and Health Act
relating to Hazardous Substances) or the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata, buildings, structures, vessels and
equipment) including, without limitation, Laws and regulations relating
to Environmental Releases or threatened Environmental Releases of
Hazardous Substances, noise, odor, wetlands, or otherwise relating to
the presence, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances, as
now or hereafter in effect.
(ii) "ENVIRONMENTAL RELEASES" means any release, spill,
emission, leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface water or
ground water.
(iii) "HAZARDOUS SUBSTANCES" means: (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea
-21-
formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls above
permissible regulated levels, black mold, and radon gas; (B) any
chemicals, materials or substances which are regulated, defined as or
included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"waste," "special waste," or words of similar import, under any
Environmental Law; and (C) any other chemical, material, substance or
waste where the use, handling, disposal of, or any exposure to, is
prohibited, limited or regulated pursuant to any Environmental Law or
is otherwise the subject of any action by any Governmental Entity.
Section 3.14 Insurance. The Company has provided to Parent a true and
complete list of all material casualty insurance (including but not limited to
commercial general liability, directors and officers, product liability, vehicle
liability, worker's compensation, excess liability) and property insurance
(including but not limited to fire extended coverage, sprinkler leakage,
employee dishonesty and business interruption) policies maintained by the
Company or any of its Subsidiaries. Such insurance policies provide appropriate
coverage for all normal risks incident to the business of the Company and its
Subsidiaries and their respective properties and assets, are in character and
amount which are commercially reasonable for the business of the Company and its
Subsidiaries, are valid and enforceable by the Company and/or its Subsidiaries,
and are sufficient for compliance with all Laws currently applicable to the
Company or any of its Subsidiaries except for any such failures to maintain
insurance policies that, individually or in the aggregate, do not, and are not
reasonably likely to, have or result in a Company Material Adverse Effect. All
of the Company and its Subsidiaries' directors and officers insurance and
worker's compensation insurance policies are set forth on Section 3.14 of the
Disclosure Schedule. Neither the Company nor any of its Subsidiaries has
received any notice of cancellation, termination, non-renewal, material change
or refusal to insure with respect to any written insurance policy currently in
force of, or any application for insurance in the last three years by, the
Company or any of its Subsidiaries.
Section 3.15 Intellectual Property.
(a) Section 3.15(a) of the Disclosure Schedule sets forth a true
and complete list of all material (i) Intellectual Property owned by the Company
or any of its Subsidiaries, indicating for each registered item the registration
or application number and the applicable filing jurisdiction (collectively, the
"SCHEDULED INTELLECTUAL PROPERTY"), and (ii) Intellectual Property Contracts
(other than licenses for commercial "off-the-shelf" or "shrink-wrap" software
that has not been modified or customized for the Company or any of its
Subsidiaries by the applicable software licensor). Except for any such matters
which, individually or in the aggregate, do not, and are not reasonably likely
to, have or result in a Company Material Adverse Effect: (i) the Company and its
Subsidiaries exclusively own (beneficially, and of record where applicable) all
Scheduled Intellectual Property, free and clear of all Liens, exclusive licenses
and non-exclusive licenses not granted in the ordinary course of business; (ii)
the Scheduled Intellectual Property is valid, subsisting and enforceable, and is
not subject to any outstanding order, judgment, decree or agreement adversely
affecting the Company's use thereof or its rights thereto; (iii) the Company
-22-
and its Subsidiaries have sufficient rights to use all Intellectual Property and
Trade Secrets used in their business as presently conducted, all of which rights
shall survive unchanged the consummation of the transactions contemplated by
this Agreement; (iv) the Company and its Subsidiaries do not and have not
infringed or otherwise violated the Intellectual Property or Trade Secret rights
of any third party; (v) to the Company's Knowledge, no Person is violating any
Intellectual Property or Trade Secret right that the Company or its Subsidiaries
own or hold exclusively; (vi) the Company and its Subsidiaries have taken
reasonable measures to protect the confidentiality of all Trade Secrets that are
owned, used or held by the Company and its Subsidiaries and, to the Company's
Knowledge, such Trade Secrets have not been used, disclosed to or discovered by
any Person except pursuant to valid and appropriate non-disclosure and/or
license agreements which have not been breached; (vii) each Intellectual
Property Contract is legal, valid, binding and enforceable against the other
party, and is in full force and effect, subject to applicable bankruptcy and
insolvency laws and general principles of equity, and will continue to be so
immediately following the consummation of the transactions contemplated by this
Agreement; (viii) the IT Assets operate and perform as required by the Company
and its Subsidiaries in connection with its business, and have not materially
malfunctioned or failed within the past three (3) years; and (ix) the Company
and its Subsidiaries have implemented reasonable backup and disaster recover
technology consistent with industry practices. Neither the Company nor any of
its Subsidiaries has licensed any other Person to use any of the Scheduled
Intellectual Property other than the Joint Ventures listed in Section 3.16 of
the Disclosure Schedule to the extent (but only to the extent) disclosed
therein.
(b) As used in this section, the terms appearing below have the
following meanings:
(i) "INTELLECTUAL PROPERTY" means all (A) trademarks,
service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed
names, fictitious names, trade names, and other indicia of origin, all
applications and registrations for the foregoing, and all goodwill
associated therewith and symbolized thereby, including all renewals of
same; and (B) all patents, registrations, invention disclosures and
applications therefor, including divisions, continuations,
continuations-in-part and renewal applications, and including renewals,
extensions and reissues.
(ii) "INTELLECTUAL PROPERTY CONTRACTS" means agreements
concerning Intellectual Property or Trade Secrets to which the Company
or any of its Subsidiaries is a party, including without limitation
agreements granting the Company and the Subsidiaries rights to use
licensed Intellectual Property or Trade Secrets, non-assertion
agreements, settlement agreements, agreements granting others rights to
use Scheduled Intellectual Property, trademark coexistence agreements
and trademark consent agreements.
(iii) "IT ASSETS" means the Company's and the Subsidiaries'
computers, computer software, computer design or engineering software,
applications or programs, firmware, middleware, servers, workstations,
routers, hubs, switches, data
-23-
communications lines, and all other information technology equipment,
and all associated documentation.
(iv) "TRADE SECRETS" mean any confidential information,
trade secrets and know-how, including processes, schematics, business
methods, formulae, drawings, prototypes, models, designs, customer
lists and supplier lists.
Section 3.16 Joint Ventures. Section 3.16 of the Disclosure Schedule
sets forth a correct and complete list of each of the Company's Joint Ventures,
including for each such entity (i) its name and the Company's interest therein
and (ii) a brief description of its principal line or lines of business. With
respect to each of the Company's Joint Ventures, the Company has made available
to Parent correct and complete copies (or descriptions of oral agreements, if
any) of all agreements which (i) are the governing instruments or constituent
documents of such Joint Venture, (ii) contain any change of control provisions,
put options or call options related to the interests in the Joint Venture,
rights of first refusal or other similar provisions or any provisions that are
reasonably likely to affect the ability of Parent, together with the remaining
co-owners of each such entity, to direct and control its business operations
after consummation of the Merger, or (iii) evidence any commitment (whether or
not contingent) for future investment of capital or otherwise to be directly or
indirectly made by Parent, the Company or any of their respective Subsidiaries
therein.
As used herein, "JOINT VENTURE" of a Person shall mean any other Person
that is not a Subsidiary of the first Person and in which the first Person owns
directly or indirectly a 25% or greater equity, voting or other ownership
interest.
Section 3.17 Related Party Transactions. Except for those Contracts
disclosed in the Company SEC Documents or any benefits under Company
Compensation and Benefit Plans which benefits are available to substantially all
the employees of the Company and its Subsidiaries, there are no Contracts
currently in effect entered into by the Company or any of its Subsidiaries with
any Person who is an officer or director of the Company or any of its
Subsidiaries, any relative or spouse living with such a Person, or any affiliate
of the Company or any of its Subsidiaries (each, a "COMPANY RELATED PERSON").
Except for ordinary course business expense reimbursement or as disclosed in the
Company SEC Documents, there are no amounts owed to the Company or any of its
Subsidiaries by any Company Related Person.
Section 3.18 State Takeover Statutes. Assuming the accuracy of Parent's
representations and warranties in Section 2.7 hereof, the Board of Directors has
taken all actions necessary so that no "fair price," "moratorium," "control
share acquisition" or other anti-takeover statute or regulation, is, or at the
Effective Time will be, applicable to the Company, the Shares, the Merger or the
other transactions contemplated by this Agreement. Assuming the accuracy of
Parent's representations and warranties in Section 2.7 hereof, the Board of
Directors has taken all necessary action so that Parent will not be (i) subject
to any anti-takeover provision of the Company's certificate of incorporation or
by-laws or (ii) prohibited from entering into a "business combination" with the
Company as an "interested stockholder" (in each case as such
-24-
term is used in Section 203 of the Delaware Law) as a result of the execution of
this Agreement or the consummation of the Merger or the other transactions
contemplated hereby.
Section 3.19 Required Vote of Company Stockholders. The affirmative
vote of the holders of a majority of the outstanding Shares is the only vote of
any class of capital stock of the Company required by Delaware Law or the
certificate of incorporation or the by-laws of the Company to adopt this
Agreement.
Section 3.20 The Rights Agreement. The Board of Directors has taken all
necessary action to amend the Rights Agreement so that, (i) neither Parent nor
Purchaser shall become an "Acquiring Person", (ii) no "Shares Acquisition Date"
or "Distribution Date" shall occur and (iii) the "Rights" will not separate from
the "Common Shares" or become exercisable, in each case as a result of the
announcement, execution, delivery or performance of this Agreement or the
consummation of the Merger or any other action or transaction contemplated
hereby or thereby or in connection herewith or therewith. The "Rights" will
expire immediately prior to the Effective Time and no Person will thereafter
have any rights under the "Rights" or the Rights Agreement. The Board is
authorized to make the foregoing amendments under the Rights Agreement without
the need for any consent or other authorization by any holders of "Rights" and
such amendments are valid and legally binding on, and enforceable against, all
holders of "Rights". All capitalized terms in quotation marks in this Section
3.20 shall have the meanings assigned to such terms in the Rights Agreement.
Section 3.21 Opinion of Financial Advisor. Xxxxxx X. Xxxx Advisors LLC
has rendered an opinion to the Board of Directors, dated the date of this
Agreement, to the effect that, as of such date, the Merger Consideration is fair
from a financial point of view to the holders of Shares.
Section 3.22 Brokers. Except for a fee of $2.95 million payable to
Xxxxxx X. Xxxx Advisors LLC, no broker, finder or investment banker is entitled
to any brokerage, finder's, financial advisor's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company. The Company has heretofore
furnished to Parent true and correct information concerning the arrangements
between the Company and Xxxxxx X. Xxxx Advisors LLC pursuant to which such firm
would be entitled to any payment as a result of the transactions contemplated by
this Agreement.
Section 3.23 China Business. Xxxxxx (Shanghai) Inc. has at all times
been and is in compliance with all obligations it has had or has to obtain
re-approval and re-accreditation of any of its material licenses, consents and
approvals pursuant to the applicable Laws in the People's Republic of China (the
"PRC") including seeking re-accreditation of its business license under the (i)
Rules for the Administration of Foreign-Funded Construction Enterprises
(promulgated by Decree 113 on September 27, 2002), (ii) Rules for the
Administration of Foreign-Funded Construction Engineering Design Enterprises
(promulgated by Decree 114 on September 27, 2002), and (iii) the corresponding
implementation regulations (effective on April 8, 2003). Xxxxxx (Tianjin) Inc.
has at all times been and is in compliance with all obligations it has had or
-25-
has to obtain any re-approval and re-accreditation of any of its material
licenses, consents and approvals pursuant to the applicable Laws in the PRC.
Xxxxxx (Tianjin) Inc. is in the process of obtaining a national Steel Structure
Design Certificate and a national Special Contractor Certificate for Metal
Building projects and (i) to the Company's Knowledge there is no reason why
these certificates will not be granted to Xxxxxx (Tianjin) Inc. on favorable
terms within a reasonable period, and (ii) the Company warrants that Xxxxxx
(Tianjin) Inc. is in the process of preparing complete and accurate applications
to obtain the certificates in compliance with the applicable Laws in the PRC.
The Intellectual Property and Trade Secrets licensed by the Company or any of
its Subsidiaries to Xxxxxx (Shanghai) Inc. and Xxxxxx (Tianjin) Inc. have been
or are in the process of being registered in the PRC and all royalties payable
under such licenses have been or are in the process of being fully paid. All the
registered capital of Xxxxxx (Shanghai) Inc. and Xxxxxx (Tianjin) Inc. has been
fully paid. Xxxxxx (Shanghai) Inc. and Xxxxxx (Tianjin) Inc. are wholly owned
foreign enterprises and are duly established and validly existing under the laws
and regulations of the PRC.
Section 3.24 Change of Control Agreements. The Company has entered into
agreements in the form attached as Exhibit A hereto (the "CHANGE OF CONTROL
TERMINATION AGREEMENTS") with each of Xxxx Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxx,
Xxxxx Xxxxxx and Xxxxxxx Xxxxxxx pursuant to which the Company will pay prior to
Closing an aggregate of $5,293,716 (collectively, the "CHANGE OF CONTROL
TERMINATION PAYMENTS").
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.1 .Conduct of Business Pending the Merger. The Company agrees
that, during the period between the date of this Agreement and the Effective
Time or earlier termination of this Agreement, unless Parent shall otherwise
consent in writing or as expressly contemplated by this Agreement:
(a) the business of the Company and its Subsidiaries will be
conducted only in, and the Company shall not take, or permit any Subsidiary to
take, any action except in the ordinary course of business and in a manner
consistent with past practices; and, to the extent consistent with the
foregoing, the Company and its Subsidiaries will use their commercially
reasonable efforts to preserve intact the business organization of the Company
and its Subsidiaries, to keep available the services of the present officers and
employees of the Company and its Subsidiaries, to preserve the present
relationships and goodwill of the Company and its Subsidiaries with customers,
suppliers, distributors, creditors, lessors, unions, employees, business
associates and other Persons with which the Company or any Subsidiary has
significant business relations, maintain and keep material properties and assets
in as good repair and condition as such are in as of the date hereof, subject to
ordinary wear and tear, and maintain in effect all material Permits;
(b) the Company and its Subsidiaries will not amend their
respective certificates of incorporation or by-laws (or comparable
organizational documents);
(c) neither the Company nor any of its Subsidiaries shall (i)
issue, sell, pledge, dispose of or encumber any capital stock or Voting Debt of,
or other equity interest in, the
-26-
Company or any of its Subsidiaries (collectively, "CAPITAL STOCK") owned by it
other than to the Company or one of its direct or indirect wholly owned
Subsidiaries (collectively, "WHOLLY OWNED SUBSIDIARIES"); (ii) split, combine,
subdivide or reclassify any of its outstanding Capital Stock; (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock or property in
respect of any Capital Stock other than dividends and distributions by Wholly
Owned Subsidiaries, provided that no such dividends or distributions shall be
made by any Wholly Owned Subsidiary incorporated or operating in the PRC or
Mauritius (A) at any time on or prior to April 30, 2004 or (B) at any time after
such date without the prior written consent of Parent, which consent shall not
be unreasonably withheld or delayed; or (iv) repurchase, redeem or otherwise
acquire, directly or indirectly, any Capital Stock or any securities convertible
into, or exchangeable or exercisable for, any Capital Stock;
(d) neither the Company nor any of its Subsidiaries shall (i)
issue, sell, pledge, dispose of or encumber any Capital Stock or securities
convertible into, or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any Capital Stock or any
other property or assets (other than (A) Shares issuable pursuant to stock
options outstanding on the date hereof and (B) securities issuable under the
Rights Agreement if required by the terms thereof); (ii) transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber (including
without limitation by merger, consolidation, spin off or otherwise) any
properties or assets other than (A) any sales of inventory in the ordinary
course of business consistent with past practice, (B) any sale of any asset
listed in Section 4.1(d)(ii)(B) of the Disclosure Schedule for cash in an amount
equal to or greater than the minimum sale price set forth for such asset in such
Section of the Disclosure Schedule and (C) any sales of other assets or
properties at fair market value for a purchase price of less than $1 million in
any single transaction or series of related transactions or an aggregate
purchase price of less than $3 million for all such sales; (iii) make or
authorize or commit for any capital expenditures other than capital expenditures
for maintenance purposes or knowledge-based engineering technology in amounts
not in excess of, or incurred earlier than, those set forth in the budget set
forth in Section 4.1(d)(iii) of the Disclosure Schedule; or (iv) amend any of
the terms of its outstanding securities;
(e) neither the Company nor any of its Subsidiaries shall (i)
incur, assume or modify in any material respect any indebtedness for borrowed
money (other than Non-Recourse Borrowings incurred in the ordinary course of
business consistent with past practice) (A) at any time on or prior to April 29,
2004 or (B) at any time after such date without the prior written consent of
Parent, which consent shall not be unreasonably withheld or delayed; (ii) incur,
assume or modify in any material respect any liability other than in the
ordinary and usual course of business in amounts and for purposes consistent
with past practice; (iii) prepay any such indebtedness except as may be required
by the lenders pursuant to the terms of such indebtedness; (iv) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any third party, including by
means of any "keep well" or other agreement to support or maintain any financial
statement condition of another Person, except in the ordinary and usual course
of business consistent with past practice; or (v) change any accounting
principle, practice or method except as required by changes in GAAP;
-27-
(f) neither the Company nor any of its Subsidiaries shall enter
into any Contract other than in the ordinary course of business consistent with
past practice or, without limiting the foregoing, any Contract pursuant to which
the Company or any of its Subsidiaries could be obligated to purchase goods or
services which does not terminate or can not be terminated by the Company or
such Subsidiary in each case within 6 months from the effective date of the
Contract without the payment of any penalty or other consideration (other than
Contracts with subcontractors entered into in the ordinary course of business
consistent with past practice in respect of construction Contracts otherwise
permitted by this Agreement), or any Contract pursuant to which the Company or
any of its Subsidiaries could be obligated to pay or receive consideration with
a fair market value of exceeding (i) in the case of any lease, $250,000 in any
year or (ii) in the case of any Contract to sell goods or services relating to
(A) the BUCON businesses conducted by the Company and its Subsidiaries, $7
million, (B) the PRC businesses conducted by the Company and its Subsidiaries,
$5 million, (C) the Xxxxxx business conducted by the Company and its
Subsidiaries, $1.0 million, (D) the Vistawall businesses conducted by the
Company and its Subsidiaries, $1.5 million, or (E) the domestic metal building
businesses conducted by the Company and its Subsidiaries, $2.5 million (each, a
"MATERIAL CONTRACT"), or modify, amend, or terminate any existing Material
Contract or customer discount;
(g) neither the Company nor any of its Subsidiaries shall
undertake any new real estate development projects other than, with the prior
written consent of Parent (such consent not to be unreasonably withheld or
delayed), fee-based real estate development projects with respect to which
neither the Company nor any of its Subsidiaries invests or has at risk any
capital;
(h) neither the Company nor any of its Subsidiaries shall settle,
compromise, waive, terminate, release or assign any material rights or claims of
any nature whatsoever other than in the ordinary course of business consistent
with past practice;
(i) neither the Company nor any of its Subsidiaries shall merge or
consolidate with any Person (other than those involving only the Company and/or
one or more Wholly Owned Subsidiaries) or acquire by any manner any equity
interest in, or assets or liabilities of, any other Person;
(j) neither the Company nor any of its Subsidiaries shall (i)
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify, any Company Compensation and Benefit Plans or (ii)
except for normal increases in salary for employees (other than officers) which
are made in the ordinary course of business and consistent with its existing
policies and practices, increase the salary, wage, bonus or other compensation
of any of its directors, officers or employees;
(k) neither the Company nor any of its Subsidiaries shall grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any existing or prospective director, officer or other employee
of the Company or its Subsidiaries;
(l) neither the Company nor any of its Subsidiaries shall make any
Tax election, file any material income Tax Return, settle any Tax audit or
proceeding, request any Tax private letter ruling, enter into any Tax closing
agreement or permit any insurance policy naming it as a
-28-
beneficiary or loss-payable payee to be canceled or terminated except in the
ordinary and usual course of business;
(m) neither the Company nor any of its Subsidiaries shall fail to
use its commercially reasonable efforts to keep in full force and effect all
material insurance policies covering it, its directors, officers and employees
and its assets existing as of the date hereof and, for any such policy it is
unable to keep in force, to replace it with a substantially similar policy with
a substantially similar cost and no lapse in coverage; and
(n) neither the Company nor any of its Subsidiaries will authorize
or enter into any Contract to do any of the foregoing.
Notwithstanding anything to the contrary contained herein, nothing in this
Agreement shall limit the Company's ability to make the Change of Control
Termination Payments.
Section 4.2 No Shopping.
(a) During the period between the date of this Agreement and the
Effective Time or the earlier termination of this Agreement, the Company and its
Subsidiaries shall not, and shall direct and cause each of their officers,
directors, employees, financial advisors, attorneys, accountants or other agents
or representatives (collectively, the "COMPANY REPRESENTATIVES") not to,
directly or indirectly, (i) solicit, initiate or knowingly take any action to
facilitate or knowingly encourage any inquiries, or the making of a proposal or
offer from any Person relating to, or that could reasonably be expected to lead
to, an Acquisition Transaction (each, an "ACQUISITION PROPOSAL"); (ii) enter
into or participate in any discussions or negotiations with, furnish any
confidential non-public information relating to the Company or any of its
Subsidiaries to, or afford access to the business, personnel, properties,
assets, books or records of the Company or any of its Subsidiaries to, any third
party relating to an Acquisition Proposal or otherwise knowingly facilitate or
knowingly encourage any effort or attempt to make or implement an Acquisition
Proposal with respect to an Acquisition Transaction; or (iii) enter into any
Contract with respect to an Acquisition Transaction.
(b) Notwithstanding the provisions of Section 4.2(a) or any other
provision of this Agreement, at any time prior to (but not after) this Agreement
is submitted for a vote at the Company Stockholder Meeting, (A) the Company may
furnish confidential or non-public information to any third party that has made
an unsolicited bona fide written Acquisition Proposal which did not result from
a breach of Section 4.2(a), (B) the Company may engage in discussions and
negotiations with any such third party, and (C) the Board of Directors may
recommend any such Acquisition Proposal to the stockholders of the Company and
withdraw or adversely amend or modify its recommendation of this Agreement and
the Merger if and only to the extent that before taking any such action (i) in
the case of the actions referred to in clause (A), (B) or (C), the Company has
complied with Section 4.2(c) with respect to such Acquisition Proposal and the
Board of Directors has determined, in good faith and after consultation with its
outside legal counsel, that failing to take such action would constitute a
breach of their fiduciary duties under applicable Law, (ii) in the case of the
actions referred to in clause (A), such Acquisition Proposal constitutes a
Superior Proposal or the Board of Directors determines, in
- 29 -
good faith after consultation with its financial advisors and outside legal
counsel, that such Acquisition Proposal is reasonably likely to lead to a
Superior Proposal, (iii) in the case of the actions referred to in clause (A) or
(B), the Company and such third party have entered into a confidentiality
agreement with terms no more favorable to such third party than the
Confidentiality Agreement, dated as of November 17, 2003 (the "CONFIDENTIALITY
AGREEMENT"), between Parent and the Company, and (iv) in the case of the actions
referred to in clause (B) or (C), such Acquisition Proposal constitutes a
Superior Proposal and the Company shall have given Parent written notice of its
intent to take such actions at least five Business Days before doing so and
negotiated in good faith any improvements in the terms of this Agreement which
Parent seeks to make during this notice period (any improved terms which Parent
offers, and Buyer can accept, in a legally binding manner, "IMPROVED TERMS").
Nothing in this Agreement shall prevent the Company or its Board of Directors
from complying with its disclosure obligations under Rule 14e-2 promulgated
under the Exchange Act with respect to an Acquisition Proposal; provided,
however, that if such disclosure constitutes a withdrawal or adverse amendment
or modification by the Board of Directors of its approval or recommendation of
this Agreement and the Merger, then Parent shall be entitled to the rights
afforded to it in Sections 7.1(g) and 7.2(b).
(c) The Company shall notify Parent as soon as practicable in
writing if it receives any Acquisition Proposal or any requests for information,
discussions or negotiations from any third party relating to an Acquisition
Transaction. Such notice to Parent shall include the identity of such third
party and the material terms and conditions of any such Acquisition Proposal or
request, to the extent known. The Company shall thereafter keep Parent informed,
on a current basis, of the status and terms of any such Acquisition Proposal or
request and the status of any discussions or negotiations with such third party
related thereto. The Company will concurrently provide to Parent any information
that it provides or makes available to any third party pursuant to this Section
4.2.
(d) The Company agrees that it will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any Acquisition Transaction. The
Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of this Section 4.2(d)
of the obligations undertaken in Section 4.2(a) and in the Confidentiality
Agreement. The Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
the Company or any of its Subsidiaries.
(e) As used in this Agreement, the term (i) "ACQUISITION
TRANSACTION" means (other than the Merger) (A) a merger, consolidation, share
exchange or other business combination, reorganization, sale of shares of
capital stock, tender offer or exchange offer or similar transaction involving
the Company or any of its Subsidiaries; (B) acquisition in any manner, directly
or indirectly, of more than 15% of the outstanding voting securities of, or
other equity interests in, or more than 15% of the assets of, the Company or any
of its Subsidiaries, in any single or multi-step transaction or series of
related transactions; or (C) the acquisition in any
-30-
manner, directly or indirectly, of any material portion of the business or
assets of the Company and its Subsidiaries, and (ii) "SUPERIOR PROPOSAL" means
any Acquisition Proposal which involves or affects at least a majority of the
shares of capital stock of the Company by voting power or all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, and
which, in any such case, the Board of Directors shall have determined, in good
faith and after consultation with its financial advisor (whose advice shall be
communicated to Parent in reasonable detail) and outside legal counsel, (i) is
reasonably likely to be consummated on the terms proposed, taking into account
all legal, financial, regulatory and other aspects of the Acquisition Proposal
and (ii) if consummated, would result in a transaction more favorable from a
financial point of view to the stockholders of the Company than the transactions
contemplated by this Agreement taking into account the proposed timing and any
Improved Terms.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Proxy Statement. As promptly as practicable after the date
of this Agreement, the Company shall prepare and file with the SEC, use its
reasonable best efforts to have cleared by the SEC, and promptly thereafter mail
to its stockholders, a proxy statement soliciting votes for the approval and
adoption of this Agreement and the Merger at a special meeting of stockholders
of the Company to be held for such purpose (such proxy statement, as amended or
supplemented, is referred to herein as the "PROXY STATEMENT" and such meeting is
referred to herein as the "COMPANY STOCKHOLDERS MEETING"). The parties agree to
cooperate with each other in the preparation of the Proxy Statement and other
proxy solicitation materials of the Company. Parent and its counsel shall be
given reasonable opportunity to review and comment on the draft Proxy Statement
each time before it is filed with the SEC. The Proxy Statement shall contain the
recommendation of the Board of Directors that the Company's stockholders approve
and adopt this Agreement, subject to any withdrawal, modification or amendment
thereof made in accordance with this Agreement. The Company shall provide Parent
and its counsel in writing with any written comments (and orally, any oral
comments) the Company or its counsel may receive from the SEC or its staff with
respect to the Proxy Statement promptly after receipt of those comments and
shall consult with Parent and its counsel prior to responding to such comments
and shall give due regard to any comments made by such Persons. The Company
agrees that the Proxy Statement will, when filed by the Company with the SEC,
comply in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations thereunder and, on the date it is first mailed
to stockholders of the Company and at the time of the Company Stockholders
Meeting, the Proxy Statement will 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. The preceding sentence shall not apply to
any information contained in the Proxy Statement which has been supplied by or
on behalf of Parent or Purchaser for inclusion therein and Parent agrees that it
will provide as promptly as reasonably practicable any information with respect
to itself and its Subsidiaries which is required to be included in the Proxy
Statement and that such information shall not, on the date the Proxy Statement
is first mailed to stockholders of the Company and at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state
-31-
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Section 5.2 Company Stockholders Meeting. As promptly as practicable
after the date of this Agreement and clearance by the SEC of the Proxy
Statement, the Company shall promptly take all action necessary in accordance
with Delaware Law and its certificate of incorporation and by-laws to convene
the Company Stockholders Meeting. The Company's Board of Directors shall
recommend that the stockholders of the Company approve and adopt this Agreement
and shall not withdraw or adversely modify or amend such recommendation except
as permitted by Section 4.2(b). Unless and until the Board of Directors shall
have withdrawn such recommendation in accordance with Section 4.2(b), the
Company shall take all lawful action to solicit proxies for the approval and
adoption of this Agreement and the Merger. The Company shall submit this
Agreement and the Merger for adoption and approval by its stockholders at the
Company Stockholder Meeting even if subsequent to the date hereof the Board of
Directors determines that this Agreement is no longer advisable and withdraws or
adversely modifies or amends its recommendation of this Agreement and the Merger
or recommends that its stockholders vote against such adoption and approval.
Section 5.3 Notification of Certain Matters. Promptly after becoming
aware of such facts, each of the Company and Parent shall promptly notify the
other of: (a) the occurrence or non-occurrence of any event that could
reasonably be expected to cause any condition relating to its representation or
warranty contained in this Agreement not to be satisfied on and as of any date
after the date of this Agreement, and (b) any failure by it or any of its
Subsidiaries to comply with or satisfy, in any material respect, any covenant or
agreement to be complied with or satisfied by it hereunder.
Section 5.4 Access to Information. From the date hereof to the
Effective Time, subject to applicable Laws, including applicable Competition
Laws relating to the exchange of information, the Company shall, and shall cause
its Subsidiaries to, afford Parent and its officers, directors, employees,
financial advisors and other authorized representatives reasonable access upon
reasonable notice and during normal business hours to the properties, books,
records and personnel of the Company and its Subsidiaries to obtain information
concerning the business, properties, results of operations and personnel of the
Company and its Subsidiaries, as Parent may reasonably request, in a manner that
does not unreasonably disrupt the Company's business and subject to the
Confidentiality Agreement. From the date hereof to the Effective Time upon
reasonable notice, if Parent or Purchaser becomes aware of any facts or
circumstances of which they were not aware prior to the execution and delivery
of this Agreement and after taking into account such new facts or circumstances
it would be reasonable for Parent as the prospective purchaser of the Company to
conduct any environmental assessments or sampling, then Parent and its agents
and representatives shall be given access to the properties of the Company and
its Subsidiaries for the purpose of conducting such environmental assessments
and sampling according to a scope of work to be determined by Parent in its sole
discretion. The Company shall cooperate and assist Parent and its agents in
conducting these investigations by affording access to the environmental files,
personnel and outside environmental consultants of the Company and its
Subsidiaries during regular business hours or at such other time as the parties
-32-
mutually agree. No investigation by or on behalf of Parent pursuant to this
Section 5.4 shall affect or modify in any respect any of the Company's
representations and warranties or the parties' obligations hereunder.
Section 5.5 Commercially Reasonable Efforts.
(a) On the terms and subject to the conditions set forth herein,
each of the parties agrees to use (and cause each of its Subsidiaries to use)
its commercially reasonable 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, subject to
applicable Laws, to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement and to
obtain satisfaction or waiver of the conditions precedent to consummation of the
Merger, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity; (ii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by this Agreement
or thereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed; and (iii)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to carry out the purposes of, this
Agreement; provided, that nothing in this Section 5.5 shall require or be
construed to require Parent or any of its Subsidiaries to offer or agree to sell
or hold separate (before or after the Effective Time) any assets, business or
interest in any assets or businesses of Parent, the Company or any of their
respective Subsidiaries or any Joint Venture (or to consent to the sale, or
agreement to sell, by the Company, any of its Subsidiaries or any Joint Venture
of any of their respective assets or businesses) or to agree to any material
changes, restrictions, conditions or limitations on or in the operations of any
such assets or businesses.
(b) In connection with and without limiting the foregoing, the
Company and Parent will, in compliance with applicable Laws: (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement or any of the
other transactions contemplated by this Agreement, and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Merger, this Agreement or any of the other transactions contemplated by this
Agreement, take all action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(c) Each of Parent and the Company will (i) make the filings
required of such party under Competition Laws with respect to the Merger and the
other transactions contemplated by this Agreement as soon as practicable or as
otherwise required after the date of this Agreement, but in no event later than
ten Business Days after the date hereof; (ii) comply at the earliest
-33-
practicable date with any request under the HSR Act for additional information,
documents or other materials received by such party from the Federal Trade
Commission (the "FTC") or the Department of Justice (the "DOJ") or any other
Governmental Entity in respect of such filings or the Merger and the other
transactions contemplated by this Agreement; (iii) promptly notify the other of
(A) the receipt of any comments on, or any request of amendments or supplements
to, any such filings or information, documents, or other materials by any
Governmental Entity or official, and (B) any other communications from or with
any Governmental Entity with respect to the Merger; and (iv) cooperate with the
other party in connection with making any filing under Competition Laws and in
connection with any filings, conferences or other submissions related to
resolving any investigation or other inquiry by any such Governmental Entity
under Competition Laws with respect to the Merger and the other transactions
contemplated by this Agreement, including (A) supplying the other party with
information which may be required to effectuate any such filings or
applications, (B) keeping the other party apprised of the status of matters
relating to the completion of the transactions contemplated by this Agreement
and working cooperatively in connection with obtaining any consents from any
Governmental Entity, (C) not participating in any meeting with any Governmental
Entity unless it consults with the other party in advance, to the extent
permitted by such Governmental Entity and subject to the Confidentiality
Agreement, and (D) providing copies of all such documents and correspondence to
the non-filing party and its advisors prior to filing and, if requested,
accepting all reasonable additions, deletions or changes suggested in connection
therewith.
Section 5.6 Public Announcements. Parent and the Company will consult
with each other before holding any press conferences, analysts calls or other
meetings or discussions and before issuing any press releases or other public
announcements with respect to the transactions contemplated by this Agreement.
The parties will provide each other the opportunity to review and comment upon
any press release or other public announcement or statement with respect to the
transactions contemplated by this Agreement and will not issue any such press
release or other public announcement or statement prior to such consultation,
except as may be required by applicable Law, court process or by obligations
pursuant to the rules of, or any listing agreement with, any securities exchange
on which their securities are listed. The parties agree that the initial press
release or releases to be issued with respect to the transactions contemplated
by this Agreement will be mutually agreed upon prior to the issuance thereof.
Section 5.7 Agreement to Defend and Indemnify.
(a) From and after the Effective Time, Parent shall indemnify and
hold harmless each present and former director and officer of the Company (when
acting in such capacity), determined as of the Effective Time (each, together
with such Person's heirs, executors or administrators, an "INDEMNIFIED PERSON"),
against any costs or expenses (including reasonable attorneys' fees and
expenses), judgments, fines, losses, claims, damages and liabilities incurred in
connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or relating to any action or omission occurring or alleged to occur prior
to the Effective Time or the Merger or the other transactions contemplated by
this Agreement, in each case to the fullest extent that the Company would have
been permitted under Delaware Law and the Company's certificate of incorporation
-34-
and by-laws in effect on the date of this Agreement to indemnify such
Indemnified Person (and Parent shall also advance expenses as incurred to the
fullest extent that the Company would have been permitted to do so thereunder;
provided that the Person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such Person is not
entitled to such indemnification).
(b) Any Indemnified Person wishing to claim indemnification under
paragraph (a) of this Section 5.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Person except to the extent such failure prejudices Parent. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right to assume and control the defense thereof (with
counsel reasonably satisfactory to the Indemnified Person) and Parent shall not
be liable to such Indemnified Persons for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Persons in
connection with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or has done so but is not pursuing
such defense in good faith or counsel for the Indemnified Persons advises in
writing that there are issues which raise or are likely to raise conflicts of
interest between Parent or the Surviving Corporation and the Indemnified
Persons, the Indemnified Persons may retain counsel reasonably satisfactory to
Parent, and Parent shall pay all reasonable fees and expenses of such counsel
for the Indemnified Persons promptly as statements setting forth such fees and
expenses in reasonable detail are received; provided, however, that Parent shall
be obligated pursuant to this paragraph (b) to pay for only one firm of counsel
for all Indemnified Persons in any jurisdiction, (ii) the Indemnified Persons
shall cooperate in the defense of any such matter and (iii) Parent shall not be
liable for any settlement effected without its prior written consent; and
provided, further, that Parent shall not have any obligation hereunder to any
Indemnified Person if and when a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final, that the
indemnification of such Indemnified Person in the manner contemplated hereby is
prohibited by applicable Law. In any claim, action, suit, proceeding or
investigation of which the Surviving Corporation or Parent shall have assumed
the defense, the Surviving Corporation or Parent shall not settle such matter
unless such settlement (x) includes an unconditional release of such Indemnified
Person from all liability arising out of or in connection with such matter, (y)
does not include any admission of fault or culpability by, or on behalf of, such
Indemnified Person or payment of any money by such Indemnified person and (z)
does not result in the imposition against such Indemnified Person of injunctive
or other equitable relief.
(c) Prior to the Effective Time, the Company will purchase "tail"
policies under its existing directors' and officers' liability insurance
policies with Federal Insurance Company (of the Chubb Group) and Liberty Mutual
Insurance Company, effective for a period of six years commencing on the Closing
Date. In addition, the Company will purchase "tail" policies under its existing
fiduciary liability insurance policy with Federal Insurance Company (of the
Chubb Group) and under its existing directors' and officers' liability insurance
policy with Arch Specialty Insurance Company, in each case effective for a
period of three years commencing on the Closing Date. The total cost of all such
tail policies purchased in accordance with the
-35-
provisions of this Section 5.7 shall not exceed $1,760,000. Neither Parent nor
the Surviving Corporation shall take any action to cause the foregoing "tail"
policies to be modified, terminated or cancelled prior to the end of such six-
and three-year periods, as applicable. This Section 5.7 shall survive the
consummation of the Merger. Notwithstanding Section 8.7, this Section 5.7 is
intended to be for the benefit of and to grant third party rights to Indemnified
Persons whether or not parties to this Agreement and each of the Indemnified
Persons shall be entitled to enforce the covenants contained herein. The
covenants contained in this Section 5.7 shall not be deemed exclusive of other
rights to which an Indemnified Person is entitled, whether pursuant to Law,
contract or otherwise.
(d) If Parent or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers all or substantially all of its assets to any Person, then and in each
such case, proper provision shall be made so that the successors and assigns of
the Parent assume the obligations set forth in this Section 5.7.
Section 5.8 Stockholder Litigation. The Company will consult with
Parent and keep Parent informed about the defense of any stockholder litigation
against the Company and/or its officers or directors relating to the
transactions contemplated by this Agreement. The Company shall not settle any
such litigation without Parent's prior written consent.
Section 5.9 Delisting. Each of the parties hereto agrees to cooperate
with each other in taking, or causing to be taken, all actions necessary to
delist the Company Common Stock from The New York Stock Exchange and to
de-register the Company Common Stock under the Exchange Act, provided that such
delisting and de-registering shall not be effective until after the Effective
Time.
Section 5.10 Employee and Termination Benefits.
(a) Parent shall cause the Surviving Corporation and its
Subsidiaries through at least December 31, 2004 to provide benefits under
employee benefit plans (other than any such plans which involve issuing
securities of the Company or other equity based compensation) to the employees
of the Company and its Subsidiaries as of the Effective Time ("COMPANY
EMPLOYEES") that are, in the aggregate, substantially similar to those provided
to them as of the Effective Time; provided, however, notwithstanding the
foregoing, that Parent may cause the Company to discontinue its supplemental
retirement pension and deferred compensation plans after the Effective Time.
With respect to any compensation and benefits plans in which Company Employees
first become eligible to participate on or after the Effective Time (the "NEW
COMPANY PLANS"), the Surviving Corporation shall: (i) waive any pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements contained in any health and welfare New Company Plans as
they apply to Company Employees and their dependents to the extent such
conditions, exclusions and waiting periods have been satisfied under comparable
plans of the Company or its Subsidiaries as of the Effective Time, (ii) cause
any deductibles, coinsurance or maximum out-of-pocket payments made by a Company
Employee under any Company Compensation and Benefit Plan during the applicable
plan year
-36-
in which such Company Employee first participates in a comparable New Company
Plan to reduce the amount of deductibles, coinsurance and maximum out-of-pocket
payments under such New Company Plan if such Company Employee was enrolled under
such Company Compensation and Benefit Plan immediately prior to the effective
time of coverage in such New Company Plans, and (iii) except for purposes of
qualifying for subsidized early retirement benefits, recognize service of
Company Employees accrued prior to the Effective Time for purposes of
eligibility to participate and vesting credit in any New Company Plan in which
such Company Employee may be eligible to participate after the Effective Time,
to the extent such service would have been taken into account under the
comparable Company Compensation and Benefit Plans.
(b) From and after the Effective Time, the Surviving Corporation
shall, and shall cause its Subsidiaries to, honor and assume, in accordance with
their terms, all written employment and severance agreements between the Company
or any of its Subsidiaries and any Company Employees which are listed in Section
5.10(b) of the Disclosure Schedule and all benefits or other amounts earned or
accrued to the extent vested or which become vested in the ordinary course,
through the Effective Time, under all Company Compensation and Benefit Plans.
(c) In the event of any termination of any Company Compensation
and Benefit Plan, terminated Company or Surviving Corporation employees and
qualified beneficiaries will have the right to continued coverage under group
health plans of the Surviving Corporation or Parent, as the case may be, as
required by Code Section 4980B(f) and ERISA Sections 601 through 609.
Section 5.11 Purchaser. Parent will take all action necessary (a) to
cause Purchaser to perform its obligations under this Agreement and (b) to
ensure that, prior to the Effective Time, Purchaser shall not conduct any
business or make any investments other than as specifically contemplated by or
in furtherance of this Agreement, or incur or guarantee any indebtedness other
than as necessary for the consummation of the transactions contemplated hereby.
Section 5.12 Section 16 Matters. Prior to the Effective Time, the
Company may take all such steps as may be required and permitted to cause the
transactions contemplated by this Agreement, including any dispositions of
shares of Company Common Stock (including derivative securities with respect of
Company Common Stock) by each individual who is or will be subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 5.13 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, neither the Company nor
any of its Subsidiaries shall terminate, amend, modify or waive any provision of
or release any of its rights under any confidentiality or standstill agreement
to which it is a party. During such period, the Company shall enforce, to the
fullest extent permitted under applicable Law, the provisions of any such
agreement, including, but not limited to, by obtaining injunctions to prevent
any breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court having jurisdiction.
-37-
Section 5.14 Director Resignations. The Company shall procure the
resignation or removal of each of the members of the Board of Directors as of
the Effective Time.
Section 5.15 Sale of Xxxxxx. The Company will use its commercially
reasonable efforts prior to the Closing to enter into an agreement to sell such
of the assets used or held for use by the Company or any of its Subsidiaries in
connection with the operation of the Xxxxxx Building Systems business (including
without limitation all of the capital stock of any of the Company's Subsidiaries
which have conducted all or any part of such business) as Parent shall
determine, and to have the buyer assume and indemnify the Company and its
Subsidiaries against all liabilities relating to or arising out of such business
and assets, in each case on terms acceptable to Parent.
Section 5.16 First Quarter Financial Statements. As soon as practicable
after March 31, 2004 but in no event later than April 19, 2004, the Company
shall deliver to Parent unaudited consolidated financial statements of the
Company for the three months ended March 31, 2004 which would satisfy the
standards set forth in Section 3.5(b) if such provision applied to such
financial statements and which, among other things, sets forth the Company's
consolidated earnings before interest and taxes and net cash flow for such
three-month period and its backlog as of March 31, 2004 of firm orders with
profit margins consistent with past practice, in each case prepared in
accordance with GAAP on a consistent basis (but excluding notes and year end
accruals) and on a basis consistent with the forecasts for such period
previously provided by the Company to Parent (such amounts, determined as
provided above, "EBIT", "NET CASH FLOW" and "BACKLOG", respectively). Prior to
Closing, the Company shall provide Parent and its advisors access to the books,
records, employees and external advisors of the Company and its Subsidiaries as
Parent shall reasonably request in order to preview, review and confirm the
accuracy of the unaudited financial statements and EBIT, Net Cash Flow and
Backlog provided pursuant to this Section 5.16.
ARTICLE VI
CONDITIONS OF MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver on or prior to the Closing Date of each of
the following conditions (any or all of which may be waived by the parties
hereto in writing, in whole or in part, to the extent permitted by applicable
Law):
(a) Stockholder Approval. This Agreement shall have been duly
adopted by the Requisite Vote at the Company Stockholders Meeting.
(b) No Challenge. No Law, court order, judgment, decree or
injunction (whether temporary, preliminary or permanent) shall be in effect or
shall have been promulgated, enacted, entered or enforced, and no other action
shall have been taken, by any Governmental Entity or by any court of competent
jurisdiction, that in any of the foregoing cases has the effect of making
illegal, or directly or indirectly restraining, prohibiting or restricting, the
consummation of the Merger (collectively, an "ORDER"), no Governmental Entity
shall have instituted any proceeding
-38-
or taken any other action, or threatened to institute any proceeding or take any
other action, to obtain any such Order and no other Person shall have instituted
any proceeding or taken any other action seeking any such Order which is
reasonably likely to be successful.
(c) Governmental and Regulatory Approvals. All consents,
approvals, authorizations and actions of, filings with and notices to, any
Governmental Entity required of Parent, Purchaser, the Company or any of its
Subsidiaries to consummate the Merger and the other transactions contemplated by
this Agreement (other than those provided for in Section 1.2), shall have been
obtained or made other than those the failure of which to obtain or make,
individually or in the aggregate, is not reasonably likely to (i) have or result
in a Company Material Adverse Effect (without giving effect to clauses (ii) and
(iii) of the definition thereof), (ii) restrict or impair in any material way
Parent's ability to own or transact business with, or to operate the businesses
of, the Company and its Subsidiaries or (iii) expose the parties hereto or any
of their respective officers, directors, employees, advisors, agents or
affiliates to the risk of criminal or material financial liability.
(d) Competition Laws. The waiting period (including any extension
thereof) applicable to the consummation of the Merger under the HSR Act (or
under any other Competition Laws), if any, shall have expired or been earlier
terminated.
Section 6.2 Additional Conditions to Obligations of Parent and
Purchaser to Effect the Merger. The obligations of Parent and Purchaser to
effect the Merger shall be further subject to the satisfaction or waiver by
Parent of the following conditions on or prior to the Closing Date:
(a) Representations and Warranties. Those representations and
warranties of the Company set forth in this Agreement which are qualified by
materiality or a Company Material Adverse Effect or words of similar effect
shall be true and correct without regard to any such qualifications as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date); provided,
however, that notwithstanding the foregoing, this condition shall be deemed to
be satisfied unless the failures of such representations and warranties to be so
true and correct, individually or in the aggregate, has, or is reasonably likely
to have or result in, a Company Material Adverse Effect. Those representations
and warranties of the Company set forth in this Agreement which are not so
qualified by materiality or a Company Material Adverse Effect or words of
similar effect shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties expressly
relate to an earlier date in which case such representations and warranties
shall be true and correct in all material respects as of such earlier date).
Notwithstanding the foregoing, (i) the representation and warranties set forth
in Section 3.9(f) shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date and (ii)
solely to the extent they relate to the PRC business of the Company and its
Subsidiaries, the representations and warranties in Sections 3.9, 3.10 and 3.23
shall be true and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date in all respects other than
those
-39-
which, individually or in the aggregate, do not, and are not reasonably likely
to, have or result in a material adverse effect on the financial condition,
results of operations, assets, liabilities or business of such PRC business,
taken as a whole. Purchaser shall have received a certificate of the chief
executive officer and the chief financial officer of the Company, dated the
Closing Date, certifying the satisfaction of this condition.
(b) Agreements and Covenants. The Company shall have performed in
all material respects all obligations and complied in all material respects with
all agreements and covenants of the Company required to be performed or complied
with by it under this Agreement; provided, however, that notwithstanding the
foregoing the Company shall have performed and complied with all of its
obligations, agreements and covenants under Section 1.8 hereof. Purchaser shall
have received a certificate of the chief executive officer and the chief
financial officer of the Company, dated the Closing Date, certifying the
satisfaction of this condition.
(c) Consents, etc. Any consent, authorization, order or approval
of (or filing or registration with) any third party identified in Section 6.2(c)
of the Disclosure Schedule shall have been obtained.
(d) Environmental Remediation. There shall not exist any facts,
circumstances or conditions of the type described in Section 3.13(b) (without
giving effect to the Company Material Adverse Effect qualification thereof or
any exceptions thereto contained in the Disclosure Schedule) which, individually
or in the aggregate are reasonably likely to cost more than $5 million to
correct or remediate.
(e) Resignations. Each of the members of the Board of Directors
shall have resigned and Purchaser shall have received evidence of such
resignations reasonably satisfactory to it.
(f) Company Material Adverse Change. No Company Material Adverse
Change shall have occurred since the date of this Agreement.
(g) Rights Agreement. The Rights Agreement shall have been
terminated and shall have no further legal force or effect.
(h) Change of Control Termination Payments. The Company shall have
paid the Change of Control Termination Payments in full.
(i) Section 1445. At the Closing, the Company shall deliver to
Purchaser an affidavit of the Company, in a form reasonably satisfactory to
Parent and Purchaser, stating that an interest in the Company does not
constitute a "United States real property interest" within the meaning of
Section 897(c) of the Code. The affidavit shall be dated and signed by a
responsible officer of the Company who verifies under penalties of perjury that
the affidavit is correct to the officer's knowledge and belief.
Section 6.3 Additional Conditions to Obligations of the Company to
Effect the Merger. The obligations of the Company to effect the Merger shall be
further subject to the
-40-
satisfaction or waiver by the Company of the following conditions on or prior to
the Closing Date:
(a) Representations and Warranties. Those representations and
warranties of Parent set forth in this Agreement which are qualified by
materiality or a Parent Material Adverse Effect or words of similar effect shall
be true and correct as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations shall be true and correct as of such earlier date).
Those representations and warranties of Parent set forth in this Agreement which
are not so qualified by materiality or a Parent Material Adverse Effect or words
of similar effect shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on the Closing
Date (except to the extent such representations and warranties expressly relate
to an earlier date in which case such representations and warranties shall be
true and correct in all material respects as of such earlier date). The Company
shall have received a certificate of an executive officer of Parent, dated the
Closing Date, certifying the satisfaction of this condition.
(b) Agreements and Covenants. Parent and Purchaser shall have
performed in all material respects all obligations and complied in all material
respects with all agreements and covenants of Parent and Purchaser required to
be performed or complied with by them under this Agreement. The Company shall
have received a certificate of an executive officer of Parent, dated the Closing
Date, certifying the satisfaction of this condition.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
Merger contemplated by this Agreement may be abandoned at any time prior to the
Effective Time, whether before or after the adoption of this Agreement by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if the Merger has not been
consummated by August 1, 2004 (the "TERMINATION DATE"); provided, however, that
no party may terminate this Agreement pursuant to this paragraph (b) if such
party's failure to fulfill any of its obligations under this Agreement shall
have caused or materially contributed to the failure of the Merger to occur on
or before the Termination Date;
(c) by either Parent or the Company, if the vote on the adoption
and approval of this Agreement and the Merger is taken at the Company
Stockholders Meeting and the Requisite Vote is not obtained;
(d) by either Parent or the Company, if a court of competent
jurisdiction or Governmental Entity shall have enacted any Law or issued any
order, decree, injunction or ruling or taken any other action (which order,
decree, injunction, ruling or actions the parties hereto shall use their
reasonable best efforts to lift), in each case which has become final and
non-
-41-
appealable and which permanently restrains, enjoins or otherwise prohibits or
makes illegal the transactions contemplated by this Agreement;
(e) by the Company by action of the Board of Directors, if Parent
or Purchaser shall have breached any of their respective representations,
warranties, covenants or other agreements contained in this Agreement, or any
such representation or warranty shall have become untrue as of, and as if made
on, any day after the date of this Agreement, in each case such that any of the
conditions set forth in Section 6.3 would not be satisfied and such breach or
failure of condition is not reasonably capable of being cured or, if it is, is
not cured within 20 Business Days after written notice of such breach or failure
of condition is given to Parent by the Company;
(f) by Parent, if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, or any such representation or warranty shall have
become untrue as of, and as if made on, any day after the date of this
Agreement, in each case such that any of the conditions set forth in Section 6.2
would not be satisfied and such breach or failure of condition is not reasonably
capable of being cured or, if it is, is not cured within 20 Business Days after
written notice of such breach or failure of condition is given to the Company by
Parent; or
(g) by Parent, if (i) the Board of Directors shall have failed to
recommend, or shall have withdrawn, adversely modified or adversely amended its
approval or recommendation of this Agreement or the Merger to the stockholders
of the Company or failed to reconfirm such approval or recommendation within ten
days after a written request by Parent to do so, it being understood that any
disclosure by the Company that is limited solely to a factual description of any
Acquisition Proposal and the material terms and conditions thereof shall not, by
itself, be deemed to be a withdrawal, adverse modification or adverse amendment
of such approval or recommendation, or (ii) there shall have been any breach of
Section 4.2 by the Company, any of its Subsidiaries or any Company
Representative.
Section 7.2 Effect of Termination.
(a) In the event of termination of this Agreement as provided in
Section 7.1, the terminating party shall provide prompt written notice to the
other party of such termination and the applicable grounds therefor under
Section 7.1 (except in the case of a termination pursuant to Section 7.1(a)),
and this Agreement shall forthwith become void and of no further force and
effect, and there shall be no liability or obligation on the part of the Parent,
Purchaser or the Company (or any of their respective officers, directors,
agents, advisors or representatives) under this Agreement, except as otherwise
provided in Section 8.1 hereof; provided, however, that the termination of this
Agreement shall not relieve any party from any liability for any breach of this
Agreement occurring prior to termination.
(b) In the event that this Agreement is terminated by Parent
pursuant to Section 7.1(g), then the Company shall promptly, but in any event no
later than two Business Days after the date of termination, pay Parent a
termination fee of $5.5 million (the "TERMINATION FEE") and the Company shall
promptly, but in no event later than two days after being notified of such by
Parent, pay all of the charges and expenses incurred by Parent and
-42-
Purchaser in connection with this Agreement and the transactions contemplated by
this Agreement up to a maximum amount of $1.5 million (the "EXPENSE
REIMBURSEMENT"), in each case payable by wire transfer of same day funds.
(c) If this Agreement is terminated pursuant to Section 7.1(b) or
7.1(c) and prior to any such termination any Person shall have proposed or
offered to enter into an Acquisition Transaction and such proposal or offer
shall have become publicly known, or shall have publicly announced a bona fide
intention to pursue an Acquisition Transaction (in each case whether or not
conditional), to enter into an Acquisition Transaction, then (i) the Company
shall promptly, but in no event later than two days after being notified of the
amount thereof by Parent, pay the Expense Reimbursement to Parent by wire
transfer of same day funds and (ii) if within 12 months after the date of any
such termination the Company or any of its Subsidiaries enters into a definitive
agreement providing for, or consummates, any transaction that would fall within
the definition of an Acquisition Transaction if the phrase "more than 15%" was
deleted and replaced with the phrase "a majority" each time it appears in such
definition and if clause (A) of such definition applied to mergers or
consolidations only if immediately after consummation thereof the holders of the
Company's shares immediately prior to such consummation own less than a majority
of the outstanding shares of the surviving company, then the Company shall
promptly, but in no event later than two Business Days after the date on which
one of those events first occurs, pay Parent the Termination Fee by wire
transfer of same day funds.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall not
survive the Effective Time or termination of this Agreement, except that the
agreements set forth in (i) Article I, this Article VIII and Section 5.7 shall
survive the Effective Time indefinitely and (ii) this Article VIII and Sections
5.6 and 7.2 shall survive any such termination indefinitely.
Section 8.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made (i) as of the date delivered, if delivered personally or by overnight
courier, or (ii) when receipt is confirmed by return facsimile, if transmitted
by facsimile (with a confirming copy of such communication to be sent as
provided in clause (i) above), and, in each case to the parties at the following
addresses or facsimile number (or at such other address for a party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
(a) if to Parent or Purchaser:
BlueScope Steel Limited
Xxxxx 00
000 Xxxxxxx Xxxxxx
Xxxxxxxxx XXX 0000 Xxxxxxxxx
Attention: Xxxxxxx Xxxxxx
Facsimile: x00 0 0000 0000
-43-
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. XxXxxxxxx
Facsimile: (000) 000-0000
(b) if to the Company:
Xxxxxx Manufacturing Company
0000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx
Facsimile: x0 (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxx. 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Section 8.3 Expenses. Except as otherwise provided in Section 7.2, all
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees, costs and expenses, whether or not the Merger is consummated. In
connection with any claim, dispute, disagreement or other conflict involving the
enforcement of this Article VIII or Section 7.2(b) or (c), the parties agree
that the prevailing party shall be reimbursed by the other party for all
reasonable attorneys' fees and costs and expenses associated with such conflict.
Section 8.4 Certain Definitions. As used in this Agreement, the term:
(a) "AFFILIATE" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "BUSINESS DAY" means any day other than Saturday, Sunday, or
day on which banks in The City of New York or Melbourne, Australia are
authorized by law or executive order to close;
(c) "CHANGE OF CONTROL AGREEMENTS" means the agreements with Xxxx
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxxx in the
form of the Change of
-44-
Control Employment Agreement listed as Exhibit 10.3 in the Company's Form 10-K
for the year ended December 31, 1990, as modified by any amendments thereto to
date;
(d) "CODE" means the Internal Revenue Code of 1986, as amended;
(e) "COMPANY MATERIAL ADVERSE CHANGE" means any change, event,
occurrence or development which has had or is reasonably likely to have or
result in a Company Material Adverse Effect; provided, however, that
notwithstanding and without limiting the foregoing, each of the following shall
be conclusively deemed to constitute a Company Material Adverse Change since the
date of this Agreement for purposes of Section 6.2(f): (i) any material adverse
difference between the Company's audited consolidated financial statements and
the annual results announced by the Company on February 15, 2004, (ii) any
default in payment or acceleration of any amounts owed by the Company or any of
its Subsidiaries under the Notes or the Credit Agreement, dated as of June 20,
2001, by and among the Company, Certain Lenders named therein and Bank of
America, N.A., (iii) the commencement of any reorganization, bankruptcy,
insolvency, dissolution, liquidation or similar proceeding involving the Company
or any of its significant Subsidiaries (as defined in Regulation S-X under the
Securities Act); or (iv) EBIT is less than $(8.30) million, Net Cash Flow is
less than $(8.25) million or Backlog is less than $305 million; or (v) any two
of the following are true: EBIT is less than $(7.25) million, Net Cash Flow is
less than $(7.10) million and Backlog is less than $317 million (it being agreed
that in the case of two negative numbers the one with the larger absolute value
shall be considered less than the other one for such purposes);
(f) "COMPANY MATERIAL ADVERSE EFFECT" means a material adverse
effect on (i) the financial condition, results of operations, assets,
liabilities or business of the Company and its Subsidiaries, taken as a whole,
(ii) the ability of the Company to perform without delay or restrictions its
obligations under this Agreement or the transactions contemplated on its part
hereby or (iii) the consummation or implementation of the transactions
contemplated by this Agreement;
(g) "COMPETITION LAWS" means 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, lessening of competition or restraint of trade, and
includes the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT") and, to the extent applicable, equivalent Laws of the European
Union or the Member States thereof, Canada and any other country in which the
Company or any of its Subsidiaries has operations or derives revenue;
(h) "CONTROL" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
(i) "DELAWARE LAW" means the General Corporation Law of the State
of Delaware, as amended;
-45-
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended;
(k) "EXECUTIVE OFFICER" shall have the meaning assigned to such
term in Rule 3b-7 under the Exchange Act;
(l) "GOVERNMENTAL ENTITY" means a federal, state or local or
foreign government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental United States or foreign
self-regulatory agency, commission or authority or any arbitral tribunal;
(m) "KNOWLEDGE" or words of similar import means (i) with respect
to the Company or any of its Subsidiaries, the actual knowledge of any Executive
Officer of the Company, and any other knowledge they would have gained by making
a reasonable investigation and inquiry of the matter in question; and (ii) with
the respect to Parent and/or Purchaser, the actual knowledge of any Executive
Officer of Parent and any other knowledge they would have gained by making a
reasonable investigation and inquiry of the matter in question;
(n) "LAW" means any foreign, federal, state, local, municipal or
provincial law, statute, code, ordinance, regulation, rule, franchise, license,
permit, principle of common law or other legally enforceable obligation imposed
by a court or other Governmental Entity in the applicable jurisdiction, other
than Environmental Laws;
(o) "LIEN" means a lien, encumbrance, pledge, claim, option,
charge, easement, restriction, covenant, condition of record, encroachment,
encumbrance or security interest;
(p) "NOTES" means the 8.02% Notes due December 30, 2003 (the "1994
NOTES"), 6.57% Notes due March 20, 2013 (the "1998 NOTES"), and 7.87% Notes due
December 30, 2016 (the "2001 NOTES"), in each case issued by the Company and as
amended to date;
(q) "PARENT MATERIAL ADVERSE EFFECT" means a material adverse
effect on (i) the ability of Parent or Purchaser to perform without delay or
restrictions its obligations under this Agreement or the transactions
contemplated on their part hereby or (ii) the consummation or implementation of
the transactions contemplated by this Agreement;
(r) "PERMITTED LIENS" means (i) Liens as reflected on the December
31, 2002 balance sheet, including the notes thereto, included in the Company
Financial Statements or as reflected on the balance sheet, including the notes
thereto, included in the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 2003, (ii) Liens for Taxes not yet due and payable, (iii)
statutory Liens securing payments not yet due, including carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other similar Liens,
(iv) pledges or deposits in connection with workers' compensation, unemployment
insurance and other social security legislation, (v) Liens set forth in Section
8.4(r) of the Disclosure Schedule, and (vi) other Liens which, individually or
in the aggregate, do not, and are not reasonably likely to, have or result in a
Company Material Adverse Effect;
-46-
(s) "PERSON" means any individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
Governmental Entity or other entity or organization;
(t) "SEC" means the United States Securities and Exchange
Commission;
(u) "SECURITIES ACT" means the Securities Act of 1933, as amended;
(v) "SUBSIDIARY" means, as to any Person, any other Person more
than 50% of the shares of the voting stock or other voting interests of which
are owned or controlled, or the ability to select or elect more than 50% of the
directors or similar managers is held, directly or indirectly, by such first
Person or one or more of its Subsidiaries or by such first Person and one or
more of its Subsidiaries.
Section 8.5 Headings; References. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning, scope, intent or interpretation of this Agreement or any of the
provisions hereof. Any references in this Agreement (including in any Exhibit or
Schedule hereto) to a "Section," "Article," or "Exhibit" shall mean a Section,
Article or Exhibit of or to this Agreement unless expressly stated otherwise.
Section 8.6 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision, and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 8.7 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement constitute the entire agreement, and
supersede any and all other prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof including without limitation each of the exclusivity letters dated
December 16, 2003 and February 3, 2004 between the Company and Parent. Except as
expressly provided in Section 5.7 (which is intended to be for the benefit of
the Persons covered thereby and may be enforced by such Persons only following
the Effective Time), this Agreement is not intended to confer upon any other
Person any rights or remedies hereunder.
Section 8.8 Assignment. 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 hereunder to any affiliate of Parent or to or for the
account of any financing sources solely and specifically for the purposes of
securing any debt; provided, however, that no such assignment shall relieve the
assigning party of its obligations hereunder. This Agreement shall be binding
upon, and shall be
-47-
enforceable by and inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 8.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 8.10 Amendment. This Agreement may be amended by agreement of
the parties hereto in writing by action taken by (i) Parent and Purchaser, and
(ii) by or on behalf of the Board of Directors at any time before the Effective
Time notwithstanding the adoption of this Agreement by the stockholders of the
Company; provided, however, that, after the adoption of this Agreement by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share will be
converted upon consummation of the Merger or alter or change any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the holders of Shares. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
Section 8.11 Waiver. At any time before the Effective Time, any party
hereto 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 or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only as
against such party and only if set forth in an instrument in writing signed by
such party. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the party granting such waiver in any other respect or at any other time.
Neither the waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall be construed as
a waiver of any other breach or default of a similar nature, or as a waiver of
any of such provisions, rights or privileges hereunder. Nothing any party or any
of its affiliates or representatives knew or should have known shall act as a
waiver of any breach, default or inaccuracy of a representation and warranty by
any other party under this Agreement or limit the scope of any representation,
warranty, covenant or condition or heighten any materiality threshold contained
herein. The rights and remedies herein provided are cumulative and none is
exclusive of any other, or of any rights or remedies that any party may
otherwise have at Law or in equity.
Section 8.12 Consent to Jurisdiction; Waiver of Jury Trial. (a) Each of
the parties hereto (i) consents to submit itself to the personal jurisdiction of
any federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement; (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court; and (iii) agrees that it will not bring any action relating to this
Agreement or any
-48-
of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF SUCH ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND
(iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.
Section 8.13 Interpretation. In the event of an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
Section 8.14 Counterparts. This Agreement may be executed 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
shall constitute one and the same agreement.
Section 8.15 Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]
-49-
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BLUESCOPE STEEL LIMITED
By: /s/ XXXXX X. XXXXX
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
BSL ACQUISITION CORPORATION
By: /s/ XXXXX XXXXXX
----------------------------------
Name: Xxxxx Xxxxxx
Title: Director
XXXXXX MANUFACTURING COMPANY
By: /s/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman
-50-
