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