AGREEMENT AND PLAN OF MERGER
AMONG
CEMENTOS PORTLAND, S.A.,
CP ACQUISITION, INC.
AND
GIANT CEMENT HOLDING, INC.
Dated as of November 4, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I
THE OFFER......................................................................2
SECTION 1.1 THE OFFER.......................................................2
SECTION 1.2 COMPANY ACTIONS.................................................3
SECTION 1.3 SHAREHOLDER LISTS...............................................4
SECTION 1.4 DIRECTORS; SECTION 14(f)........................................5
ARTICLE II
THE MERGER.....................................................................6
SECTION 2.1 THE MERGER......................................................6
SECTION 2.2 EFFECTIVE TIME..................................................6
SECTION 2.3 EFFECTS OF THE MERGER...........................................6
SECTION 2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS........................7
SECTION 2.5 DIRECTORS AND OFFICERS..........................................7
SECTION 2.6 CONVERSION OF SECURITIES........................................7
SECTION 2.7 DISSENTING SHARES...............................................8
SECTION 2.8 SURRENDER OF SHARES.............................................8
SECTION 2.9 NO FURTHER TRANSFER OR OWNERSHIP RIGHTS........................10
SECTION 2.10 TREATMENT OF OPTIONS...........................................10
SECTION 2.11 LOST CERTIFICATES..............................................10
SECTION 2.12 CLOSING........................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................................11
SECTION 3.1 ORGANIZATION AND QUALIFICATION.................................11
SECTION 3.2 CAPITALIZATION.................................................12
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT...........................12
SECTION 3.4 ABSENCE OF CERTAIN CHANGES.....................................13
SECTION 3.5 SEC REPORTS....................................................13
SECTION 3.6 PROXY STATEMENT................................................14
SECTION 3.7 CONSENTS AND APPROVALS; NO VIOLATION...........................14
SECTION 3.8 BROKERAGE FEES AND COMMISSIONS.................................15
SECTION 3.9 SCHEDULE 14D-9; OFFER DOCUMENTS................................15
SECTION 3.10 LITIGATION.....................................................16
SECTION 3.11 ERISA COMPLIANCE...............................................16
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SECTION 3.12 TAXES..........................................................18
SECTION 3.13 COMPLIANCE WITH APPLICABLE LAWS................................19
SECTION 3.14 ENVIRONMENTAL MATTERS..........................................20
SECTION 3.15 CONTRACTS......................................................21
SECTION 3.16 LABOR MATTERS..................................................21
SECTION 3.17 TITLE TO PROPERTIES............................................22
SECTION 3.18 UNDISCLOSED LIABILITIES........................................22
SECTION 3.19 OPINION OF COMPANY FINANCIAL ADVISOR...........................22
SECTION 3.20 INSURANCE......................................................23
SECTION 3.21 STATE TAKEOVER STATUTES........................................23
SECTION 3.22 YEAR 2000......................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER.......................................................24
SECTION 4.1 ORGANIZATION AND QUALIFICATION.................................24
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT...........................24
SECTION 4.3 PROXY STATEMENT................................................24
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATION...........................25
SECTION 4.5 FINANCING......................................................25
SECTION 4.6 BROKERAGE FEES AND COMMISSIONS.................................25
SECTION 4.7 SCHEDULE 14D-1; OFFER DOCUMENTS................................25
SECTION 4.8 LITIGATION.....................................................26
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER........................................26
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER..........26
SECTION 5.2 PROHIBITED ACTIONS BY THE COMPANY..............................26
ARTICLE VI
COVENANTS.....................................................................29
SECTION 6.1 NO SOLICITATION................................................29
SECTION 6.2 ACCESS TO INFORMATION..........................................31
SECTION 6.3 REASONABLE BEST EFFORTS........................................32
SECTION 6.4 INDEMNIFICATION OF DIRECTORS AND OFFICERS......................32
SECTION 6.5 EVENT NOTICES AND OTHER ACTIONS................................33
SECTION 6.6 EMPLOYMENT ARRANGEMENTS; EMPLOYEE PLANS AND BENEFITS...........34
SECTION 6.7 MEETING OF THE COMPANY'S STOCKHOLDERS..........................35
SECTION 6.8 PROXY STATEMENT................................................35
SECTION 6.9 PUBLIC ANNOUNCEMENTS...........................................36
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER .....................................36
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.....36
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER ...............................................36
SECTION 8.1 TERMINATION....................................................36
SECTION 8.2 EFFECT OF TERMINATION..........................................38
SECTION 8.3 TERMINATION FEE................................................38
SECTION 8.4 AMENDMENT......................................................40
SECTION 8.5 EXTENSION; WAIVER..............................................40
ARTICLE IX
MISCELLANEOUS.................................................................40
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................40
SECTION 9.2 ENTIRE AGREEMENT; ASSIGNMENT...................................40
SECTION 9.3 ENFORCEMENT OF THE AGREEMENT...................................41
SECTION 9.4 SEVERABILITY...................................................41
SECTION 9.5 NOTICES........................................................41
SECTION 9.6 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE..........42
SECTION 9.7 GOVERNING LAW; CONSENT TO JURISDICTION.........................42
SECTION 9.8 DESCRIPTIVE HEADINGS...........................................43
SECTION 9.9 PARTIES IN INTEREST............................................43
SECTION 9.10 COUNTERPARTS...................................................43
SECTION 9.11 CERTAIN DEFINITIONS............................................43
SECTION 9.12 INTERPRETATION.................................................46
ANNEX A
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
November 4, 1999 among Cementos Portland, S.A., a corporation organized under
the laws of the Kingdom of Spain ("Parent"), CP Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Purchaser"), and Giant
Cement Holding, Inc., a Delaware corporation (the "Company").
Background
WHEREAS, the Board of Directors of the Company has determined that it
is fair to, advisable and in the best interests of the Company and the
stockholders of the Company to enter into and consummate this Agreement with
Purchaser, providing for the merger of Purchaser with and into the Company with
the Company as the surviving corporation (the "Merger"), in accordance with the
Delaware General Corporation Law (the "DGCL") and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of Parent and Purchaser have approved
the Merger of Purchaser with and into the Company and such other transactions in
accordance with the DGCL upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (as amended or supplemented in accordance with this Agreement, the
"Offer") to purchase for cash all of the issued and outstanding shares of common
stock, par value $.01 per share (referred to herein as either the "Shares" or
"Company Common Stock"), of the Company at a price per share of $31.00, net to
the seller in cash (the "Share Price");
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each share in the Offer and the Merger is fair to
the holders of such shares and has resolved to recommend that the holders of
such shares tender their shares pursuant to the Offer and approve and adopt this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
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ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Subject to the provisions of this Agreement, and provided that
this Agreement shall not have been terminated in accordance with Section 8.1 and
so long as none of the events or circumstances set forth in Annex A hereto shall
have occurred and be continuing, not later than the fifth business day after the
date of public announcement of the execution of this Agreement, Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), and Parent shall cause Purchaser to
commence, the Offer at the Share Price. The obligation of Purchaser to
consummate the Offer, to accept for payment and to pay for any Shares tendered
pursuant to the Offer shall be subject only to those conditions set forth in
Annex A and the other conditions to the Offer set forth in this Agreement.
Purchaser expressly reserves the right, in its sole discretion, to waive any
such condition; provided that, without the prior written consent of the Company,
Parent or Purchaser shall not waive the Minimum Condition (as defined in Annex
A). The initial expiration date of the Offer shall be the 20th business day
following the commencement of the Offer (determined using Rule 14d-2(a) under
the Exchange Act).
(b) Purchaser expressly reserves the right, in its sole discretion, to
modify and make changes to the terms and conditions of the Offer; provided that
without the prior written consent of the Company, no modification or change may
be made which (i) decreases the consideration payable in the Offer, (ii) changes
the form of consideration payable in the Offer (other than by adding
consideration), (iii) changes the Minimum Condition, (iv) decreases the maximum
number of Shares sought pursuant to the Offer, (v) changes the conditions to the
Offer in a manner adverse to the stockholders of the Company, (vi) imposes
additional conditions to the Offer (other than in respect of any consideration
which is payable in addition to the Share Price), (vii) changes any other terms
of the Offer in a manner adverse to the stockholders of the Company, or (viii)
except as provided in the next sentence, extends the Offer. Notwithstanding the
foregoing, Purchaser may (but shall not be required under this Agreement or
otherwise to), without the prior written consent of the Company, (A) extend the
Offer on one or more occasions for such period as may be determined by Purchaser
in its sole discretion (each such extension period not to exceed 10 business
days at a time), if at the then scheduled expiration date of the Offer any of
the conditions to Purchaser's obligations to accept for payment and pay for
Shares shall not be satisfied or waived, (B) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer, and(C) extend the Offer on one or more occasions for an aggregate period
of not more than five business days if the Minimum Condition has been satisfied
but less than 90% of then outstanding Shares have been validly tendered and not
properly withdrawn. Without limiting the right of Purchaser to extend the Offer
pursuant to the immediately preceding sentence, in the event the Minimum
Condition shall not have been satisfied or that the condition set forth in
paragraph (d) of Annex A with respect to
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the HSR Act (as defined herein) or with respect to an action or proceeding by a
Governmental Entity that shall not have been satisfied or waived at the
scheduled or any extended expiration date of the Offer, at the request of the
Company, Purchaser shall, and Parent shall cause Purchaser to, extend the
expiration date of the Offer, in five business day increments, until the
earliest to occur of (x) the satisfaction or waiver of the Minimum Condition or
such other condition, (y) the termination of this Agreement in accordance with
its terms and (z) January 31, 2000. It is agreed that the conditions to the
Offer set forth on Annex A are for the benefit of Purchaser and may be asserted
by Purchaser or, except with respect to the Minimum Condition as set forth in
Section 1.1(a), may be waived by Purchaser, in whole or in part at any time and
from time to time, in its sole discretion. On the terms and subject to the
conditions of the Offer and this Agreement, promptly after expiration of the
Offer, Purchaser shall accept for payment and pay for, and Parent shall cause
Purchaser to accept for payment and pay for, all Shares validly tendered and not
withdrawn pursuant to the Offer that Purchaser becomes obligated to purchase
pursuant to the Offer. Parent shall provide, or cause to be provided, the funds
necessary to purchase any and all of the Shares that Purchaser becomes obligated
to purchase pursuant to the Offer in accordance with the terms of this
Agreement.
(c) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC with respect to the Offer a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1") with respect to the Offer
which will comply in all material respects with the provisions of applicable
federal securities laws, and will contain the offer to purchase relating to the
Offer (the "Offer to Purchase") and forms of related letter of transmittal and
summary advertisement (which documents, together with any supplements or
amendments thereto and including the exhibits thereto, are referred to herein
collectively as the "Offer Documents"). Parent shall deliver copies of the
proposed forms of the Schedule 14D-1 and the Offer Documents to the Company
within a reasonable time prior to the commencement of the Offer for review and
comment by the Company and its counsel. Parent agrees to provide the Company and
its counsel in writing any comments that Purchaser, Parent or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt thereof. The Company, Parent and Purchaser shall promptly
correct any information provided by it for use in the Schedule 14D-1 or the
Offer Documents that shall be or shall have become false or misleading in any
material respect and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 or Offer Documents as so corrected to be
filed with the SEC and disseminated to the stockholders of the Company, as and
to the extent required by applicable federal securities laws.
Section 1.2 Company Actions.
(a) The Company hereby consents to the Offer and represents and
warrants that (i) its Board of Directors, at a meeting duly called and held on
November 4, 1999, has duly and unanimously adopted resolutions approving the
Offer, the Merger and this Agreement and the other transactions contemplated
hereby and thereby (collectively, the "Transactions") in accordance with the
requirements of the DGCL, determining that the terms of the Offer and the Merger
are fair to, and in the best interests of, the Company's stockholders and
recommending acceptance of the Offer
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and adoption of the Merger and this Agreement by the stockholders of the
Company, and (ii) Xxxxxxx Xxxxx & Co., Inc. (the "Company Financial Advisor")
has delivered to the Company's Board of Directors its opinion (the "Fairness
Opinion"), dated the date of this Agreement, to the effect that, as of such
date, the cash consideration to be received by the holders of the Company Common
Stock pursuant to the Offer and the Merger, taken together, is fair from a
financial point of view to such holders (other than Parent and its affiliates)
and a complete and correct signed copy of such opinion has been delivered by the
Company to Parent. The Company has been authorized by the Company Financial
Advisor to permit the inclusion of the Fairness Opinion (and, subject to prior
review and consent by the Company Financial Advisor, a reference thereto) in the
Schedule 14D-9 referred to below and the Proxy Statement and, subject to the
Company Financial Advisor's prior review and consent, a reference thereto in the
Schedule 14D-1. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Company's Board of Directors described
in this Section 1.2. The Company has been advised by each of its directors and
by each executive officer who as of the date hereof is actually aware (to the
knowledge of the Company) of the Transactions that such person intends to tender
pursuant to the Offer all Shares owned by such person.
(b) The Company shall file with the SEC on the date of the
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall comply in all material
respects with the provisions of applicable federal securities laws, and will,
subject to Section 6.1 hereof, contain such recommendations of the Company's
Board of Directors in favor of the Offer and the Merger, and shall disseminate
the Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act
and shall mail the Schedule 14D-9 together with the Offer Documents. The Company
shall deliver the proposed forms of the Schedule 14D-9 and the exhibits thereto
to Parent within a reasonable time prior to the commencement of the Offer for
review and comment by Parent and its counsel. Parent and its counsel shall be
given a reasonable opportunity to review any amendments and supplements to the
Schedule 14D-9 prior to their filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel in writing any comments that the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt
thereof. Each of the Company, Parent and Purchaser shall promptly correct any
information provided by it for use in the Schedule 14D-9 that shall be or shall
have become false or misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to the stockholders of the Company, as
and to the extent required by applicable federal securities laws.
Section 1.3 Shareholder Lists. In connection with the Offer, the
Company shall promptly furnish to, or cause to be furnished to, Parent and
Purchaser mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of a recent date and
of those Persons becoming record holders subsequent to such date (to the extent
available), together with all other information in the Company's possession or
control regarding the beneficial owners
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of Shares and shall furnish Parent and Purchaser with such information and
assistance as Parent, Purchaser or their respective agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Purchaser shall, and shall cause each of
their affiliates and their respective advisors to, hold the information
contained in any of such labels and lists in confidence, use such information
only in connection with the Offer and the Merger, and, if this Agreement is
terminated, deliver to the Company or destroy all copies of such information or
extracts therefrom then in their possession or under their control.
Section 1.4 Directors; Section 14(f).
(a) Immediately upon the acceptance for payment of and payment for a
majority of the Shares by Purchaser pursuant to the Offer, Purchaser shall be
entitled to designate the number of directors, rounded up to the nearest whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors and (ii) the
percentage that the number of Shares beneficially owned by Parent bears to the
total number of Shares outstanding on a fully diluted basis. In furtherance
thereof, concurrently with such acceptance for payment and payment for such
Shares the Company shall, upon request of Parent and in compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, use its best
efforts promptly either to increase the size of its Board of Directors or to
secure the resignations of such number of its incumbent directors, or both, as
is necessary to enable such designees of Parent to be so elected or appointed to
the Company's Board of Directors, and the Company shall take all actions
available to the Company to cause such designees of Parent to be so elected or
appointed. At such time, the Company shall, if requested by Parent, also take
all action necessary to cause the persons designated by Parent to constitute the
number of members, rounded up to the nearest whole number on (i) each committee
of the Company's Board of Directors, (ii) each board of directors (or similar
body) of each subsidiary of the Company and (iii) each committee (or similar
body) of each such board that represents the same percentage as such individuals
represent on the Company's Board of Directors.
(b) Notwithstanding the foregoing, the Company shall use its best
efforts to ensure that, in the event that Purchaser's designees are elected to
the Board of Directors of the Company, such Board of Directors shall have, at
all times prior to the Effective Time, at least two directors who are directors
on the date of this Agreement and who are not officers or affiliates of the
Company (it being understood that for purposes of this sentence, a director of
the Company shall not be deemed an affiliate of the Company solely as a result
of his status as a director of the Company), Parent or any of their respective
subsidiaries (the "Independent Directors"); and provided further, that, in such
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever the remaining Independent Director may designate a person to
fill such vacancy who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors may designate two persons to fill such vacancies who shall
5
not be officers or affiliates of the Parent or any of its subsidiaries (other
than the Company), and such persons shall be deemed to be Independent Directors
for purposes of this Agreement.
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors and prior to the
Effective Time, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder, any waiver of any condition to the
Company's obligations hereunder or any of the Company's rights hereunder or
other action by the Company hereunder may be effected only by the action of the
Independent Directors of the Company, which action shall be deemed to constitute
the action of any committee specifically designated by the Board of Directors of
the Company to approve the actions contemplated hereby and the full Board of
Directors of the Company; provided that, notwithstanding compliance with the
provisions of this Section 1.4(c), if there shall be no Independent Directors,
such actions may be effected by majority vote of the entire Board of Directors
of the Company, except that no such action shall amend the terms of this
Agreement or modify the terms of the Offer or the Merger in a manner materially
adverse to the holders of Shares.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, Purchaser
shall be merged with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII. Following the
Merger, the Company shall continue as the surviving corporation (the "Surviving
Corporation") under the name "Giant Cement Holding, Inc." and shall continue its
existence under the laws of the State of Delaware, and the separate corporate
existence of Purchaser shall cease. At the election of Parent, any direct or
indirect wholly owned subsidiary of Parent may be substituted for Purchaser as a
constituent corporation in the Merger.
Section 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware (the "Delaware Secretary"), in such form as required by and executed in
accordance with the relevant provisions of the DGCL (the date and time of the
filing of the Certificate of Merger with the Delaware Secretary (or such later
time as is specified in the Certificate of Merger) being the "Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and
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duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4 Certificate of Incorporation and By-laws.
(a) At the Effective Time and without any further action on the part
of the Company and Purchaser, the Certificate of Incorporation of Purchaser (the
"Certificate of Incorporation"), as in effect immediately prior to the Effective
Time until thereafter further amended as provided therein and under the DGCL,
shall be the certificate of incorporation of the Surviving Corporation following
the Merger.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the By-laws of Purchaser shall be the By-laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
Section 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 2.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(i) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(ii) Each Share held in the treasury of the Company and each
Share owned by Purchaser or any direct or indirect subsidiary of the
Company, in each case immediately prior to the Effective Time, shall
be canceled and retired without any conversion thereof and no payment
or distribution shall be made with respect thereto.
(iii) Each issued and outstanding Share (other than Shares
canceled pursuant to Section 2.6(ii) and any Dissenting Shares (as
defined in Section 2.7(a)) shall be converted into the right to
receive the Share Price or any higher price that may be paid pursuant
to the Offer (the "Merger Consideration") payable to the holder
thereof, without interest, upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.8, less
any required withholding taxes.
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Section 2.7 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
that are issued and outstanding immediately prior to the Effective Time and
which are held by stockholders who have not voted such Shares in favor of the
Merger (or consented thereto in writing), who shall have delivered a written
objection to the Merger and a demand for appraisal of such Shares in accordance
with Section 262 of the DGCL (insofar as such Section is applicable to the
Merger and provides for appraisal rights with respect thereto) and who shall not
have failed to perfect or shall not have effectively withdrawn or lost their
rights to appraisal and payment under the DGCL (the "Dissenting Shares"), shall
not be converted into the right to receive the Merger Consideration, but shall
instead entitle the holder thereof to receive that consideration determined
pursuant to Section 262 of the DGCL; provided, however, that if such holder
shall have failed to perfect or shall have effectively withdrawn such holder's
right to appraisal and payment under the DGCL, such holder's Shares shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to the applicable provisions of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to participate
in and, following consummation of the Offer, direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of Parent, make any payment
with respect to any such demands for appraisal or offer to settle or settle any
such demands.
Section 2.8 Surrender of Shares.
(a) Prior to the mailing of the Proxy Statement, Parent shall appoint
a bank or trust company which is reasonably satisfactory to the Company to act
as paying agent (the "Paying Agent") for the payment of the Merger
Consideration. Prior to the Effective Time, Parent shall deposit, or shall cause
to be deposited, with the Paying Agent for the benefit of former holders of
Shares sufficient funds to make all payments pursuant to this Section 2.8. Such
funds shall be invested by the Paying Agent as directed by the Surviving
Corporation. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
8
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
aggregate amount of Merger Consideration into which the number of Shares
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. If any Merger Consideration is
to be remitted to a person whose name is other than that in which the
Certificate for Shares surrendered for exchange is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form for transfer,
and that the person requesting such exchange shall have paid any transfer and/or
other taxes required by reason of the remittance of Merger Consideration to a
person whose name is other than that of the registered holder of the Certificate
surrendered, or the person requesting such exchange shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. No interest shall be paid or accrued, upon the surrender
of the Certificates, for the benefit of holders of the Certificates on any
Merger Consideration.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) and only as general creditors thereof for payment of their
claim for Merger Consideration to which such holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificates
representing Shares shall not have been surrendered prior to six months after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any governmental entity), any such cash shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of Shares such amounts as Parent (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under the Code
(as defined herein), or any provision of any applicable state, local or foreign
law, rule or regulation. To the extent that amounts are so withheld by Parent
and paid by Parent to the applicable taxing authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of shares in respect of which such deduction and withholding was
made by Parent.
9
Section 2.9 No Further Transfer or Ownership Rights. After the
Effective Time, there shall be no further transfer on the records of the Company
(or the Surviving Corporation) or its transfer agent of certificates
representing Shares which have been converted pursuant to this Agreement into
the right to receive Merger Consideration, and if such certificates are
presented to the Company for transfer, they shall be canceled against delivery
of Merger Consideration. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided for herein or by applicable law. All Merger Consideration
paid upon the surrender for exchange of Certificates representing shares in
accordance with the terms of this Article II shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Shares exchanged
for Merger Consideration theretofore represented by such Certificates.
Section 2.10 Treatment of Options. Prior to the first purchase of
Shares pursuant to the Offer, the Board of Directors of the Company (or, if
appropriate, any committee thereof) shall adopt appropriate resolutions and take
all other actions necessary to provide that each outstanding stock option, stock
appreciation right (an "SAR"), or any other award providing for the issuance or
grant of any other interest in respect of the capital stock of the Company or
any subsidiary (each an "Option") heretofore granted under the Company's 1994
Employee Stock Option Plan and the Company's 1994 Director Stock Option Plan
(collectively, the "Stock Option Plans"), whether or not then vested or
exercisable, shall, at or immediately prior to the Effective Time, be canceled,
and each holder thereof shall be entitled to receive a payment in cash from the
Company (which amount shall be subject to any applicable withholding taxes and
shall be paid without interest, the "Cash Payment"), upon cancellation, equal to
the product of (x) the total number of Shares subject or related to such Option,
whether or not then vested or exercisable, and (y) the excess, if any, of the
Merger Consideration over the exercise price or purchase price, as the case may
be, per Share subject or related to such Option, each such Cash Payment to be
paid to each holder of an outstanding Option upon cancellation. The Stock Option
Plans (and any Benefit Plan (as defined herein) or other plan, program or
arrangement other than the Company's tax-qualified defined contribution plan)
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any subsidiary shall terminate as of the
Effective Time.
Section 2.11 Lost Certificates. If any certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by any
person claiming such certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such certificate,
the Paying Agent will pay, in exchange for such lost, stolen or destroyed
certificate, the Merger Consideration to be paid in respect of the Shares
represented by such certificate as contemplated by Section 2.6.
Section 2.12 Closing. Upon the terms and subject to the conditions
hereof, as soon as practicable after consummation of the Offer (and in any event
within two business days after the satisfaction or waiver of the conditions set
forth in Section 7.1), and to the extent required by the DGCL after the vote of
the stockholders of the Company in favor of the approval of the Merger and
10
this Agreement has been obtained, the Company and Purchaser (or Parent if
appropriate) shall execute and file with the Delaware Secretary the Certificate
of Merger, and the parties shall take all such other and further actions as may
be required by law to make the Merger effective. Prior to the filing referred to
in this Section 2.11, a closing (the "Closing") will be held at the offices of
Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (or such other
place as the parties may agree) for the purpose of confirming all of the
foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization and Qualification.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power to carry on its business as it is now being conducted. The
Company is duly qualified as a foreign corporation or licensed to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed or in good standing has not had and could not reasonably
be expected to have a Material Adverse Effect on the Company. The Company has
delivered to Parent complete and correct copies of its Certificate of
Incorporation and Bylaws, each as amended to date.
(b) The only subsidiaries of the Company are those set forth on
Section 3.1(b)(i) of the Company Disclosure Schedule. Except as set forth on
Schedule 3.1(b)(ii) of the Company Disclosure Schedule, each subsidiary of the
Company is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite
corporate power to carry on its business as it is now being conducted. Each
subsidiary of the Company is duly qualified as a foreign corporation or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed or in good standing has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) All of the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and non-assessable and,
except as set forth in Section 3.1(c) of the Company Disclosure Schedule, are
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another such wholly owned subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, rights of first refusal,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital
11
stock of its subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
limited liability company, joint venture or other entity.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 20,000,000
Shares and 2,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock"). All of the issued and outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable and are not
subject to preemptive rights. As of November 2, 1999, 8,731,562 Shares were
issued and outstanding, 760,000 Shares were reserved for issuance pursuant to
outstanding Options issued under Stock Option Plans and no shares of Preferred
Stock were issued and outstanding. Except upon the exercise of such then
outstanding Options, no additional Shares or shares of Preferred Stock have been
issued since November 2, 1999. Except as set forth in Section 3.2(a) of the
Company Disclosure Schedule: (i) there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote ("Voting Company Debt"); (ii) there are no
outstanding securities, options, warrants, calls, rights, convertible or
exchangeable securities, "phantom" stock rights, SARs, stock-based performance
units, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its subsidiaries is a party or by which any of them
is bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, unit, commitment,
agreement, arrangement or undertaking; and (iii) there are not any outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire, or providing preemptive rights with respect to, any
shares of, or any outstanding options, warrants or rights of any kind to acquire
any shares of, or any outstanding securities that are convertible into or
exchangeable for any shares of, capital stock of the Company or any of its
subsidiaries. Upon the Company taking the actions referred to in Section 2.10,
no holder of Options will have any right to receive shares of capital stock of
the Surviving Corporation upon exercise of Options.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, there are no voting trusts, proxies or other agreements, commitments
or understandings of any character to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound with respect
to the voting of any shares of capital stock of the Company or any of its
subsidiaries or with respect to the registration of the offering, sale or
delivery of any shares of capital stock of the Company or any of its
subsidiaries under the Securities Act of 1933, as amended (the "Securities
Act").
Section 3.3 Authority Relative to this Agreement (a) The Company has
all requisite corporate power and authority to execute and deliver this
Agreement and each instrument
12
required hereby to be executed and delivered by the Company prior to or at the
Effective Time, to perform its obligations hereunder and thereunder, and to
consummate the Transactions (subject to the Company Stockholder Approval (as
defined herein) with respect to the Merger). The execution and delivery of this
Agreement and each instrument required hereby to be executed and delivered by
the Company prior to or at the Effective Time and the performance of its
obligations hereunder and thereunder and the consummation by the Company of the
Transactions have been duly and validly authorized by the Board of Directors of
the Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Transactions (other
than the Company Stockholder Approval and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company, and, assuming this
Agreement constitutes a valid and binding obligation of Parent and Purchaser,
this Agreement constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other similar laws affecting the rights and
remedies of creditors generally, and subject to general principles of equity,
whether applied by a court of law or equity.
(b) The only vote of holders of any class or series of capital stock
of the Company or any of its subsidiaries necessary to adopt or approve this
Agreement and the Merger is the adoption of this Agreement by the holders of a
majority of the outstanding Shares (the "Company Stockholder Approval"), subject
to Section 6.7(c).
Section 3.4 Absence of Certain Changes. Except as specifically
disclosed in the Company's filings and reports under the Exchange Act filed and
publicly available prior to the date of this Agreement or as set forth in
Section 3.4 of the Company Disclosure Schedule, since December 31, 1998: (i) the
Company and its subsidiaries have conducted their business only in the ordinary
course, and during such period there has not been any event, change, effect or
development that has had or could reasonably be expected to have a Material
Adverse Effect on the Company; and (ii) there has not been (A) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
capital stock of the Company or any repurchase, redemption or other acquisition
by the Company or any of its subsidiaries of any capital stock of the Company;
(B) any damage, destruction or loss, whether or not covered by insurance that
has had or could reasonably be expected to have a Material Adverse Effect on the
Company; or (C) any change in accounting methods, principles or practices by the
Company affecting the consolidated assets, liabilities, results of operations or
business of the Company, except insofar as have been required by a change in
generally accepted accounting principles.
Section 3.5 SEC Reports. Since January 1, 1998, the Company has filed
all required forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities laws and the SEC rules and regulations
thereunder (collectively, the "Company SEC Documents"), all of which have
complied as of their respective filing dates in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules promulgated thereunder. None of such forms, reports or documents at the
time filed contained any
13
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Documents
(including the notes thereto) at the time filed complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (and include, in the case of any unaudited interim
financial statements, reasonable accruals for normal year-end adjustments). No
subsidiaries of the Company are required to file periodic reports with the SEC
under the Exchange Act.
Section 3.6 Proxy Statement. If a Proxy Statement is required for the
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, except that no representation is
made by the Company with respect to information supplied by or on behalf of
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company specifically for
inclusion in the Proxy Statement shall, at the time the Proxy Statement is
mailed or at the time of the Stockholder Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to any of the information relating to and supplied by or on behalf
of Parent and Purchaser specifically for inclusion in the Proxy Statement. The
letter to stockholders, notice of meeting, proxy statement and form of proxy, or
the information statement, as the case may be, to be distributed to stockholders
in connection with the Merger, or any schedule required to be filed with the SEC
in connection therewith, together with any amendments or supplements thereto,
are collectively referred to herein as the "Proxy Statement." If, at any time
prior to the Effective Time, any event relating to the Company or any of its
affiliates, officers or directors is discovered by the Company that shall be set
forth in a supplement to the Proxy Statement, the Company will promptly inform
Parent and Purchaser and prepare, file and disseminate such supplement as may be
required by applicable law.
Section 3.7 Consents and Approvals; No Violation. Subject to obtaining
the Company Stockholder Approval (if required under the DGCL) and the taking of
the actions described in the immediately succeeding sentence, the execution,
delivery and performance of this Agreement do not, and the consummation of the
Transactions by the Company will not, conflict with, or result in any violation
of, or default (with or without notice or lapse to time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of a material benefit 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 result in the termination of, or require that any consent be obtained or any
notice be given with respect to, (i) the Certificate of Incorporation or
14
Bylaws of the Company or the comparable charter or organizational documents of
any of its subsidiaries, (ii) except as set forth in Section 3.7 of the Company
Disclosure Schedule, any loan or credit agreement note, bond, mortgage,
indenture, lease, license or other agreement, instrument, Contract or Permit
applicable to the Company or any of its subsidiaries or their respective
properties or assets, (iii) any judgment, order, writ, injunction, decree, law,
statute, ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iv) any licenses to
which the Company or any of its subsidiaries is a party, other than, in the case
of clauses (ii), (iii) and (iv), any such conflicts, violations, defaults,
rights, Liens, losses of a material benefit, consents or notices that have not
and could not reasonably be expected to have a Material Adverse Effect on the
Company. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by the Company
or any of its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the Transactions,
except for (i) the filing of a premerger notification and report form by the
Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing with the SEC of (x) the Schedule 14D-9,
(y) if required, the Proxy Statement relating to the approval by the Company's
stockholders of this Agreement and (z) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and the
Transactions contemplated by this Agreement, (iii) the filing of the Certificate
of Merger pursuant to the DGCL and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company or materially adversely affect (or
materially delay) the consummation of the Offer.
Section 3.8 Brokerage Fees and Commissions. Except for those fees and
expenses payable to the Company Financial Advisor pursuant to the letter
agreement, dated June 10, 1999, no person is entitled to receive any investment
banking, brokerage or finder's fee or commission in connection with this
Agreement or the Transactions based upon arrangements made by or on behalf of
the Company or any of its subsidiaries or by any affiliate of the Company or any
of its subsidiaries. A copy of the above agreement has previously been delivered
to Parent.
Section 3.9 Schedule 14D-9; Offer Documents. Neither the Schedule
14D-9, any other document required to be filed by the Company with the SEC in
connection with the Transactions, nor any information supplied by the Company in
writing for inclusion in the Offer Documents or the Schedule 14D-1 shall, at the
respective times the Schedule 14D-9, any other filings by the Company, the
Schedule 14D-1, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9 and any other document
required to be filed by the Company with the SEC in connection with the
Transactions will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference
15
therein based on information supplied by or on behalf of Parent or Purchaser
specifically for inclusion or incorporation by reference therein.
Section 3.10 Litigation. Except as disclosed in the Company SEC
Documents filed prior to the date hereof, there is no claim, suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries that individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect on the
Company, or which questions or challenges the validity of this Agreement, the
Transactions or any action taken or to be taken by the Company or which attempts
to restrain, enjoin or prohibit the Transactions. Except as disclosed in the
Company SEC Documents, there is no judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against the Company or any
of its subsidiaries which individually or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.11 ERISA Compliance. (a) Section 3.11(a) of the Company
Disclosure Schedule sets forth a list of all "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and any other pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus or incentive plans or other employee programs, arrangements or
agreements including, without limitation, sick leave, salary continuation for
disability and scholarship programs currently maintained by, sponsored in whole
or in part by, or contributed to by the Company or its subsidiaries or any
entity required to be aggregated with the Company (each, an "ERISA Affiliate")
pursuant to Section 414 of the Code covering any employee or former employee of
the Company or any ERISA Affiliate (collectively, the "Benefit Plans").
(b) True, correct and complete copies of the following documents, with
respect to each of the Benefit Plans have been made available or delivered to
Purchaser by the Company, to the extent applicable: (i) any plans, all
amendments thereto and related trust documents, and amendments thereto; (ii) the
most recent Forms 5500 and all schedules thereto and the most recent actuarial
reports, if any; (iii) the most recent IRS determination letter; (iv) summary
plan descriptions; (v) written communications to employees materially amending
or otherwise materially changing the terms of any Benefit Plan; and (vi) written
descriptions of all non-written agreements relating to the Benefit Plans.
(c) Except as disclosed on Section 3.11(c) of the Company Disclosure
Schedule: (i) each of the Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) or 501 of the Code has been determined by the Internal
Revenue Service to be so qualified (which may be a favorable determination
letter issued to a prototype sponsor); and to the knowledge of the Company, no
facts exist which would likely result in the loss of such qualification; (ii)
each of the Benefit Plans is in material compliance with their terms and the
applicable terms of ERISA and the Code and any other applicable laws, rules and
regulations; and (iii) to the Company's knowledge, no claim, lawsuit,
arbitration or other action has been threatened or instituted against any
Benefit Plan or the assets of any trust under such plans (other than routine
benefit claims).
16
(d) With respect to any Benefit Plan that is subject to Title IV of
ERISA (a "Title IV Plan"), except as otherwise disclosed in Section 3.11(d) of
the Company Disclosure Schedule: (i) no liability to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred (other than for premiums not yet
due); (ii) no notice of intent to terminate any such plan in a "distress
termination" under Section 4041 of ERISA has been filed with PBGC or distributed
to participants; (iii) no proceedings to terminate any such plan have been
instituted by the PBGC; (iv) no "accumulated funding deficiency", within the
meaning of Section 412 of the Code or Section 302 of ERISA, whether or not
waived, exists; (v) no lien has arisen or is reasonably expected to arise under
Section 412 of the Code or Section 302 of ERISA on the assets of the Company or
any subsidiary; and (vi) with respect to each Title IV Plan the funding
information set forth in footnote 10 of the Company's financial statements for
the period ending December 31, 1998 that are contained in the Company SEC
Documents fairly reports in all material respects the information contained
therein concerning the relation of liabilities, determined using the accumulated
benefit obligation methodology of Statement of Financial Accounting Standards
No. 87, of each Title IV Plan to the fair market value of such Title IV Plan's
assets.
(e) No Benefit Plan is a multiemployer plan, as defined in Section
3(37) of ERISA ("Multiemployer Plan"), or is or has been subject to Sections
4063 or 4064 of ERISA ("Multiple Employer Plans") and none of the Company or any
ERISA Affiliate has any liability (contingent or otherwise) with respect to any
Multiemployer Plan or Multiple Employer Plan.
(f) Except as set forth in Section 3.11(f) of the Company Disclosure
Schedule, all contributions (including all employer contributions and employee
salary reduction contributions) required to have been made under any of the
Benefit Plans or by law (without regard to any waivers granted under Section 412
of the Code), to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extension), and all contributions for any period ending on or before the Closing
Date which are not yet due will have been to the extent required by generally
accepted accounting principles accrued on the balance sheet on or prior to the
Closing Date.
(g) No Company or any ERISA Affiliate or any organization to which
Company is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction, within the meaning of Section
4069 of ERISA.
(h) Except as set forth in Section 3.11(h) of the Company Disclosure
Schedule, none of the Benefit Plans provide for post-employment life or health
insurance, benefits or coverage for any participant or any beneficiary of a
participant, except as may be required under the Consolidate Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") and at the expense of the
participant or the participant's beneficiary. Each of the Company and any ERISA
Affiliate which maintains a "group health plan" within the meaning Section
5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder.
17
(i) Except as set forth in Section 3.11(i) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee (current, former or retired) of the
Company, (ii) increase any benefits otherwise payable under any Benefit Plan or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits under any such plan.
(j) Except as set forth in Schedule 3.11(j) of the Company Disclosure
Schedule, no stock or other security issued by the Company forms or has formed a
material part of the assets of any Benefit Plan.
Section 3.12 Taxes. Except as set forth in Section 3.12 of the Company
Disclosure Schedule:
(a) all federal, State, local and foreign income and franchise Tax
Returns and all other material Tax Returns (as defined herein) that are required
to be filed by or with respect to the Company or any of its subsidiaries have
been timely filed, and all such Tax Returns are true, complete and accurate and
correctly reflect the income, or other measure of Tax (as defined herein),
required to be shown thereon; all Taxes due for the periods covered by such
returns have been paid in full; and the most recent financial statements
contained in the Company SEC Documents reflect an adequate reserve for all Taxes
of the Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements;
(b) no federal, State, local or foreign income or franchise or other
material Tax Return of the Company or any of its subsidiaries is under audit or
examination by any taxing authority, and no written notice of such an audit or
examination or any assertion of any claim for Taxes has been received by the
Company or a subsidiary;
(c) there is not in force any extension of time with respect to the
due date for the filing of any Tax Return or any waiver or agreement for any
extension of time for the assessment or payment of any Tax due with respect to
the period covered by any Tax Return;
(d) since October 1, 1994 none of the Company and its subsidiaries has
been a member of an affiliated group filing a consolidated federal income Tax
Return other than the affiliated group of which the Company is the common parent
corporation;
(e) neither the Company nor any of its subsidiaries is bound by any
tax sharing, tax indemnity or similar agreement with respect to Taxes;
(f) neither the Company nor any of its subsidiaries has made any
payments, or is a party to any agreement or arrangement that could obligate it
to make any payments, in each case that would not be deductible under Section
162(m) or 280G of the Code;
18
(g) there are no liens for Taxes upon any asset of the Company or any
of its subsidiaries, other than liens for Taxes not yet due;
(h) the Company has made available to Parent complete copies of all
federal, State, local and foreign income or material franchise Tax Returns of
the Company and any of its subsidiaries and any audit report or other document
issued by any taxing authority with respect to the Company or any of its
subsidiaries, in each case for the three prior taxable periods;
(i) no claim has been made by a taxing authority in a jurisdiction
where the Company or any of its subsidiaries does not now file income or
franchise Tax Returns that the Company or a subsidiary is or may be subject to
income or franchise taxation by that jurisdiction;
(j) the Company is not and has not been, for the five year period
prior to the date hereof, a "United States real property holding corporation"
within the meaning of Section 897 of the Code; and
(k) neither the Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355 of the Code) in a distribution of stock under the Code.
As used herein, "Tax Returns" shall mean all returns and reports of or
with respect to any Tax which are required to be filed by or with respect to the
Company or any of its subsidiaries other than returns or reports of or with
respect to Benefit Plans, and "Taxes" shall mean (i) all taxes, charges,
imposts, tariffs, fees, levies or other similar assessments or liabilities,
including income taxes, ad valorem taxes, excise taxes, withholding taxes, stamp
taxes or other taxes of or with respect to gross receipts, premiums, real
property, personal property, windfall profits, sales, use, transfers, licensing,
employment, payroll and franchises imposed by or under any statute, law, rule or
regulation, and such terms shall include any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any such tax or any contest or dispute thereof; (ii) liability
of the Company or any fiduciary for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated, combined
consolidated or unitary group for any taxable period; and (iii) liability of the
Company or any subsidiary for the payment of any amounts of the type described
in clauses (i) or (ii) as a result of any express or implied obligation to
indemnify any other person.
Section 3.13 Compliance with Applicable Laws. Except for any of the
following which could not reasonably be expected to have a Material Adverse
Effect on the Company and except as set forth on Section 3.13 of the Company
Disclosure Schedule:
(a) the Company and its subsidiaries have all Federal, state, local
and foreign governmental approvals, authorizations, certificates, franchises,
licenses, notices, permits and rights ("Permits") necessary for it to own, lease
or operate its properties and assets and to carry on its business as now
conducted and there has occurred no default under any such Permit; and
19
(b) neither the Company nor any of its subsidiaries is in violation of
any applicable law, rule, regulation, judgement, order or decree.
Section 3.14 Environmental Matters. Except as disclosed on Section
3.14(a) of the Company Disclosure Schedule:
(a) the Company and its subsidiaries currently maintain, and are in
compliance with all material Federal, state, local, and foreign governmental
approvals, authorizations, licenses, permits issued pursuant to applicable
Environmental Laws ("Environmental Permits" (defined herein)) necessary for it
to own, lease or operate its properties and assets and to carry on its business
as now conducted, including, but not limited to, permits and authorizations
required under the Resource Conservation and Recovery Act, and any such
Environmental Permits are valid and enforceable. No proceeding is pending or to
the Company's and its subsidiaries' knowledge, is threatened, and the Company
and its subsidiaries know of no grounds which exist to revoke or limit any such
Environmental Permit that is reasonably likely to result in Environmental Costs
and Liabilities in excess of $500,000.
(b) each of the Company and its subsidiaries is in compliance with
Environmental Laws (as defined herein) and the Company has not received any
notice of, nor is there pending or, to the knowledge of the Company and its
subsidiaries, threatened, any legal proceeding alleging the violation of any
Environmental Law that is reasonably likely to result in Environmental Costs and
Liabilities in excess of $500,000. Neither the Company nor its subsidiaries has
received any written notices, orders or directives from any Governmental
Authority arising under any Environmental Permit or any federal, state or local
investigation respecting (i) Environmental Laws, (ii) Remedial Action (as
defined herein) or (iii) the Release of any Hazardous Materials (as defined
herein) with respect to the business of the Company or any of the properties or
assets owned, operated or occupied by the Company allegedly that is reasonably
likely to result in Environmental Costs and Liabilities (as defined herein) in
excess of $500,000.
(c) each of the Company and its subsidiaries and their respective
properties, assets, businesses and operations is, and to the Company's knowledge
has been, and their respective properties, assets, businesses and operations
are, and to the Company's knowledge have been, in compliance with all
Environmental Laws and Environmental Permits, except for such non-compliances
as would not reasonably be likely to result in Environmental Costs and
Liabilities in excess of $500,000.
(d) there have been no Releases of Hazardous Materials in, on, under,
from or affecting such properties, any surrounding site or any off-site location
that are reasonably likely to result in Environmental Costs and Liabilities in
excess of $500,000.
(e) there are no Hazardous Materials, including asbestos containing
materials, located at, on or under any of the properties or assets owned,
operated or occupied (or to the
20
knowledge of the Company, formerly owned, operated or occupied) by the Company
that are reasonably likely to result in Environmental Costs and Liabilities in
excess of $500,000.
(f) the Company has delivered, or caused to be delivered, to Purchaser
copies of material environmental audits, evaluations, reports, assessments,
studies and tests relating to the business or the ownership or use of the
properties or assets of the Company within the past 5 years which are within the
possession or control of the Company, including assessments and reports
addressing any facilities burning hazardous waste as fuel under the Resource
Conservation and Recovery Act and with respect to the Clean Air Act, the company
has made available all materials relevant to compliance with regulations
promulgated at 64 Fed. Reg. 31898 (1999) (to be codified at 40 CFR Part 63) and
64 Fed. Reg. 52828 (1999) (to be codified at scattered parts of title 40 CFR)
concerning the operation of cement kilns, including, but not limited to, any
estimated budgets for capital expenditures required for compliance.
(g) no written claims have been made, and no suits or proceedings are
pending or, to the Company's knowledge, threatened, by any employee against the
Company that are premised on exposure to asbestos or asbestos-containing
material or PCBs.
(h) no underground storage tanks, abandoned xxxxx or landfills are
located on any real property owned, operated or occupied by the Company, except
for those tanks, xxxxx or landfills maintained in compliance with applicable
Environmental Laws which are not likely to result in Environmental Costs and
Liabilities in excess of $500,000.
Section 3.15 Contracts. All of the material contracts that are
required to be described in the Company SEC Documents or required to be filed as
exhibits thereto have been described or filed as required. The Company is not,
and to the knowledge of the Company the other parties thereto are not, in
violation of, or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under) any such contract, except for violations or defaults that
individually or in the aggregate have not and could not reasonably be expected
to have a Material Adverse Effect on the Company.
Section 3.16 Labor Matters. Except as set forth in Section 3.16 of the
Company Disclosure Schedule, (i) none of the employees of the Company (the
"Employees") is represented in his or her capacity as an employee of the Company
by any labor organization; (ii) the Company has not recognized any labor
organization nor has any labor organization been elected as the collective
bargaining agent of any Employees, nor has the Company entered into any
collective bargaining agreement or union contract recognizing any labor
organization as the bargaining agent of any Employees; (iii) there is no union
organization activity involving any of the Employees, pending, or to the
knowledge of the Company, threatened, nor has there ever been union
representation involving any of the Employees; (iv) there is no picketing
pending, or to the knowledge of the Company, threatened, and there are no
strikes, slowdowns, work stoppages, other job actions, lockouts, arbitrations,
grievances or other labor disputes involving any of the Employees, pending, or
to the knowledge of the Company, threatened that individually or in the
21
aggregate could reasonably be expected to have a Material Adverse Effect, (v)
there are no complaints, charges or claims against the Company pending or, to
any of the knowledge of the Company, threatened which could be brought or filed,
with any public or governmental authority, arbitrator or court based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment or failure to employ by the Company, of any individual
that individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect on the Company; (vi) the Company is in compliance with
all laws, regulations and orders relating to the employment of labor, including
all such laws, regulations and orders relating to wages, hours, the Worker
Adjustment and Retraining Notification Act and any similar state or local "mass
layoff" or "plant closing" law ("WARN"), collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax, except
where the failure to be in compliance, individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect; and (vii) there
has been no "mass layoff" or "plant closing" as defined by WARN with respect to
the Company within the six (6) months prior to Closing.
Section 3.17 Title to Properties. The Company has title to, or
leasehold interests in, its properties sufficient to operate such properties and
to conduct its business in the ordinary course, except for any defects in such
titles, or any easements, restrictive covenants or similar encumbrances that
individually or in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect on the Company. The Company and its
subsidiaries have all patents, trademarks, tradenames, service marks,
copyrights, know-how, processes and all agreements and other rights necessary to
carry on their business in substantially the same manner as now conducted. The
patents, trademarks and copyrights owned by the Company are valid and
enforceable and to the knowledge of the Company do not infringe on the rights of
any persons.
Section 3.18 Undisclosed Liabilities. Except as and to the extent
specifically disclosed in the Company SEC Documents or accrued on the June 30,
1999 balance sheet included in the Company SEC Documents, or as set forth in
Section 3.18 of the Company Disclosure Schedule, and except for liabilities
incurred in the ordinary course of business and otherwise not in contravention
of this Agreement, the Company and each of its subsidiaries does not have any
liabilities or obligations of any nature (whether absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet prepared in
accordance with generally accepted accounting principles other than liabilities
or obligations that individually or in the aggregate would not have a Material
Adverse Effect on the Company.
Section 3.19 Opinion of Company Financial Advisor. The Company has
received the Fairness Opinion to the effect that, as of the date of this
Agreement, the consideration to be received by the holders of the Company Common
Stock pursuant to the Offer and the Merger, taken together, is fair from a
financial point of view to such holders (other than Parent and its affiliates)
and a complete and correct signed copy of such opinion has been delivered by the
Company to Parent. The Company has been authorized by the Company Financial
Advisor to permit the inclusion of the Fairness Opinion (and, subject to prior
review and consent by the Company
22
Financial Advisor, a reference thereto) in the Schedule 14D-9 and the Proxy
Statement and, subject to the Company Financial Advisor's prior review and
consent, a reference thereto in the Schedule 14D-1.
Section 3.20 Insurance. The Company and its subsidiaries maintain
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are, in the
Company's judgment, reasonable for the assets and properties of the Company and
its subsidiaries and customary in the Company's industry, except where the
failure to maintain any such policy has not had and could not reasonably be
expected to have a Material Adverse Effect on the Company. As of the date of
this Agreement, except as individually or in the aggregate have not had and
could not reasonably be expected to have a Material Adverse Effect on the
Company and except as set forth in Section 3.20 of the Company's Disclosure
Schedule, all such policies are in full force and effect, all premiums due and
payable thereon have been paid or accrued, and no notice of cancellation or
termination has been received by the Company with respect to any such policy.
Section 3.21 State Takeover Statutes. The Company has taken all action
necessary to render Section 203 of the DGCL inapplicable to Parent, Purchaser
and their respective affiliates, and to the Offer, the Merger, and this
Agreement. No other "fair price," "moratorium," "control share acquisition,"
"business combination," or other state takeover statute or similar statute or
regulation applies or purports to apply to the Company, Parent, Purchaser,
affiliates of Parent or Purchaser, the Offer, the Merger, and this Agreement.
The Company has no shareholder rights or "poison pill" that would be applicable
to the Offer, the Merger, this Agreement or the transactions contemplated
hereby. As a result of the foregoing actions, the only action required to
authorize the Merger is the Company Shareholder Approval and no further action
is required to authorize the other Transactions.
Section 3.22 Year 2000. Except as disclosed in the SEC Documents filed
prior to the date hereof, the Company and its subsidiaries have reviewed the
areas within their business and operations which could reasonably be expected to
have a "Year 2000 Problem" that would have a Material Adverse Effect on the
Company. Based on such review, the issues and costs with respect to Year 2000
Compliance have not had and could not reasonably be expected to have a Material
Adverse Effect on the Company. For purposes of this Agreement, "Year 2000
Compliance" means the ability to process (including calculate, compare,
sequence, display or store), transmit or receive data or data/time data from,
into and between the twentieth and twenty-first centuries, and the years 1999
and 2000, and leap year calculations without error or malfunction.
23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1 Organization and Qualification. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power to carry on its business as it is now being conducted. Each of
Parent and Purchaser is duly qualified as a foreign corporation or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing could not reasonably be expected to
preclude the consummation of the Offer or the Merger.
Section 4.2 Authority Relative to this Agreement. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and each instrument required hereby to be executed and delivered
by Parent or Purchaser prior to or at the Effective Time, to perform its
obligations hereunder and thereunder, and to consummate the Transactions. The
execution and delivery by Parent and Purchaser of this Agreement and each
instrument required hereby to be exercised and delivered by Parent or Purchaser
prior to or at the Effective Time and the performance of their respective
obligations hereunder and thereunder, and the consummation by Parent and
Purchaser of the Transactions have been duly and validly authorized by the
respective Boards of Directors (or similar organizational bodies) of Parent and
Purchaser and the stockholder of Purchaser, and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize this Agreement, or
commence the Offer or to consummate the Transactions (including the Offer) other
than filing and recordation of appropriate merger documents as required by the
DGCL. This Agreement has been duly and validly executed and delivered by each of
Parent and Purchaser and, assuming this Agreement constitutes a valid and
binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of each of Parent and Purchaser, enforceable against each of
Parent and Purchaser in accordance with its terms, except as may be limited by
bankruptcy, insolvency or other similar laws affecting the rights and remedies
of creditors generally, and subject to general principles of equity, whether
applied by a court of law or equity.
Section 4.3 Proxy Statement. None of the information supplied in
writing by Parent, Purchaser and their respective affiliates specifically for
inclusion in the Proxy Statement, if required, shall, at the time the Proxy
Statement is mailed, at the time of the Stockholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that Parent and Purchaser make no
representation or warranty as to any of the information relating to and supplied
24
by or on behalf of the Company specifically for inclusion in the Proxy
Statement. If, at any time prior to the Effective Time, any event relating to
Parent, Purchaser or any of their respective affiliates, officers or directors
is discovered by Parent that should be set forth in a supplement to the Proxy
Statement, Parent will promptly inform the Company.
Section 4.4 Consents and Approvals; No Violation. Subject to the
taking of the actions described in the immediately succeeding sentence, the
execution and delivery of this Agreement do not, and the consummation of the
Transactions will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the material properties or assets of Parent under (i) the certificate of
incorporation or bylaws (or similar organizational documents) of Parent or
Purchaser, (ii) any loan or credit agreement, note, bond, indenture, lease or
other agreement, instrument or Permit applicable to Parent or Purchaser or their
respective properties or assets, (iii) any judgment, order, writ, injunction,
decree, law, statute, ordinance, rule or regulation applicable to Parent or
Purchaser or their respective properties or assets, other than, in the case of
clause (ii) and (iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not (x) impair in any material
respect the ability of Parent and Purchaser to perform their respective
obligations under this Agreement or (y) prevent or impede the consummation of
any of the Transactions. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
person is required by Parent or Purchaser in connection with the execution and
delivery of this Agreement or the consummation by Parent or Purchaser, as the
case may be, of any of the Transactions, except (A) in connection with the HSR
Act, (B) pursuant to the Exchange Act, (C) the filing of the Certificate of
Merger pursuant to the DGCL, or (D) where the failure to obtain any such
consent, approval, authorization or permit, or to make any such filing or
notification, would not preclude consummation of the Offer or the Merger or
would not otherwise prevent Parent from performing its obligations under this
Agreement.
Section 4.5 Financing. Parent will have at each of (i) the time of
acceptance for purchase by Purchaser of Shares pursuant to the Offer and (ii)
the Effective Time, and will make available to Purchaser, the funds necessary to
consummate the Offer and the Merger on the terms contemplated by this Agreement.
Section 4.6 Brokerage Fees and Commissions. Except for those fees and
expenses payable to Xxxxxxxx & Co. Inc., and excluding financing fees, no person
is entitled to receive any investment banking brokerage or finder's fee or
commission in connection with this Agreement or the Transactions based upon
arrangements may by or on behalf of Parent or Purchaser.
Section 4.7 Schedule 14D-1; Offer Documents. Neither the Schedule
14D-1, the Offer Documents nor any information supplied by Parent or Purchaser
in writing for inclusion in the Schedule 14D-9 shall, at the respective times
the Schedule 14D-9, the Schedule 14D-1, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders of the Company contain any untrue statement of a material fact
or omit
25
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Schedule 14D-1 and the Offer Documents will comply
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, no
representation or warranty is made by Parent or Purchaser with respect to
statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
therein.
Section 4.8 Litigation. There is no claim, suit, action or proceeding
pending or, to the knowledge of Parent or Purchaser, threatened against Parent
or Purchaser, which questions or challenges the validity of this Agreement, the
Transactions or any action or to be taken by Parent or Purchaser or which
attempts to restrain, enjoin or prohibit the Transaction.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business of the Company Pending the Merger. The
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use its reasonable efforts to preserve intact its business
organization, retain the services of its respective key employees and maintain
its relationships with its respective customers and suppliers and others having
business dealings with it to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain supplies
and inventories in quantities consistent with its customary business practice;
and
(d) use its reasonable efforts to keep in full force and effect
insurance comparable in amount and scope of coverage to that currently
maintained.
Section 5.2 Prohibited Actions by the Company. Without limiting the
generality of Section 5.1, except as set forth in Section 5.2 of the Company
Disclosure Schedule, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent
(which consent shall not be unreasonably withheld or delayed),
26
from the date of this Agreement until the Effective Time, it will not do, and
will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) grant any severance or termination pay (other than pursuant to
the severance policy or practice of the Company or its subsidiaries as disclosed
in Section 3.11(a) of the Company Disclosure Schedule and in effect on the date
of this Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish, adopt,
enter into or amend in any material respect any collective bargaining agreement
or any Benefit Plan of the Company or any ERISA Affiliate; or (iv) take any
action to accelerate any rights or benefits, or make any determinations under
any collective bargaining agreement or Benefit Plan of the Company or any ERISA
Affiliate; provided that the Company shall adopt appropriate resolutions and
take all other actions necessary to provide that each outstanding Option granted
under the Stock Option Plans, whether or not vested or exercisable, shall, at or
immediately prior to the Effective Time, be canceled, and each holder thereof
shall be entitled to receive a Cash Payment, upon cancellation equal to the
product of (x) the total number of Shares subject or related to such Option,
whether or not then vested or exercisable, and (y) the excess, if any, of the
Merger Consideration over the exercise price or purchase price, as the case may
be, per outstanding Option;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for dividends by a wholly owned subsidiary of
the Company to the Company or another wholly owned subsidiary of the Company;
(c) redeem, purchase or otherwise acquire, or offer or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned subsidiaries directly from any wholly owned subsidiary of the
Company in exchange for capital contributions or loans to such subsidiary, or
(ii) any purchase, forfeiture or retirement of shares of Company Common Stock or
the Options occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Company or any of its
subsidiaries, in a manner otherwise consistent with the terms of this Agreement;
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in, the
Company or any of its subsidiaries or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for, shares
of such capital stock or such equity interests;
27
(e) offer, sell, issue or grant, or authorize or propose the offering,
sale, issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for (or accelerate
any right to convert or exchange securities for) any shares of capital stock of,
or other equity interest in, or any options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, or any
Voting Company Debt or other voting securities of, the Company or any of its
subsidiaries, or any "phantom" stock, "phantom" stock rights, SARs or
stock-based performance units;
(f) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets of any
other person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past practice);
(g) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for dispositions of excess
or obsolete assets and sales of inventories in the ordinary course of business
and consistent with past practice;
(h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of December 31, 1998 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may be
required by a change in generally accepted accounting principles;
(j) (i) issue or sell any debt securities or warrants or other rights
to acquire any debt securities of the Company or any of its subsidiaries,
guarantee any such indebtedness or debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, or (ii) make any loans, advances or capital contributions
to, or investments in, any other person, other than to or in the Company or any
direct or indirect wholly owned subsidiary of the Company; provided, however,
nothing shall limit the Company's right to borrow pursuant to its revolving
credit agreement in the ordinary course of business;
(k) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company SEC Documents or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
28
(l) make any Tax election except in a manner consistent with past
practice, change any method of accounting for Tax purposes, or settle or
compromise any material Tax liability;
(m) make or agree to make any new capital expenditures which
individually are in excess of $500,000 or which in the aggregate are in excess
of $2,000,000; or
(n) agree in writing or otherwise to take any of the foregoing
actions.
ARTICLE VI
COVENANTS
Section 6.1 No Solicitation.
(a) From and after the date hereof until the Effective Time or the
termination of this Agreement in accordance with Section 8.1, the Company and
its subsidiaries shall not, and the Company shall direct their respective
officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its subsidiaries) not to, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or take any other action to
facilitate, any inquiries or the making or submission of any Acquisition
Proposal (as defined herein) or enter into or maintain or continue discussions
or negotiate with any person or group in furtherance of such inquiries or to
obtain or induce any person or group to make or submit an Acquisition Proposal
or agree to or endorse any Acquisition Proposal or assist or participate in,
facilitate or knowingly encourage, any effort or attempt by any other person or
group to do or seek any of the foregoing or authorize any of its officers,
directors or employees or any of its subsidiaries or affiliates or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it or any of its subsidiaries to take any
such action; provided, however, that nothing contained in this Agreement shall
prohibit the Company or the Board of Directors of the Company from, prior to the
earlier to occur of the acceptance for payment for the Shares pursuant to the
Offer or adoption of this Agreement by the requisite vote of the stockholders of
the Company, (i) furnishing information to or (ii) entering into discussions or
negotiations with any person or entity that makes an unsolicited written
Acquisition Proposal, if, and only to the extent that in each case referred to
in (i) and (ii) above, (A) the Board of Directors of the Company, based on the
advice of independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that the failure to do so
would result in a breach of the fiduciary duty of the Board of Directors of the
Company to stockholders of the Company under applicable law and (B) prior to
taking such action, the Company (x) provides reasonable notice to Parent to the
effect that it intends to take such action and (y) receives from such person an
executed confidentiality agreement in reasonably customary form and in any event
containing terms at least as stringent as those contained in the confidentiality
agreement between Parent and the Company.
29
(b) Except as expressly permitted by this Section 6.1, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify in a manner adverse to Parent or Purchaser or fail to make, or propose
to withdraw or modify in a manner adverse to Parent or Purchaser or fail to
make, its approval or recommendation of the Offer or the Merger or of this
Agreement, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal, or (iii) cause the Company to accept such Acquisition
Proposal and/or enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Acquisition Proposal; provided, however, that prior
to the earlier to occur of acceptance for payment of Shares pursuant to the
Offer or adoption of this Agreement by the requisite vote of the stockholders of
the Company, the Board of Directors of the Company may terminate this Agreement
if, and only to the extent that (A) such Acquisition Proposal is a Superior
Proposal, (B) the Board of Directors of the Company, based on the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that the failure to do so would
result in a breach of the fiduciary duty of the Board of Directors of the
Company to the stockholders of the Company under applicable law, (C) the Company
complies with its obligations under Section 8.3, (D) the Company is not in
breach of this Section 6.1 which breach has resulted in a Superior Proposal, and
(E) the Company shall have complied with its obligations under Section
8.1(d)(ii).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, prior to providing any information or entering
into discussions or negotiations with any person in connection with an
Acquisition Proposal or any inquiry with respect to or which could lead to an
Acquisition Proposal by such person, the Company shall promptly advise Parent of
any request for information or the submission or receipt of any Acquisition
Proposal, or any inquiry with respect to or which could lead to any Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the person making any such request,
Acquisition Proposal or inquiry and its response or responses thereto. The
Company will keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request, Acquisition Proposal or
inquiry and shall promptly give Parent a copy of any information delivered to
such person which has not previously been delivered by the Company to Parent or
Purchaser. The Company will and will cause its subsidiaries and the officers,
directors, employees and other agents and advisors of the Company and its
subsidiaries to, immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted prior to the
date of this Agreement with respect to any of the foregoing.
(d) "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the Transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 20% or more of the consolidated assets of the Company
and its subsidiaries, taken as a whole; (iii) any tender offer (including a self
tender offer) or exchange offer that, if consummated, would result in any person
or group beneficially owning more than 20% of the outstanding shares of any
class of equity securities of the Company or its subsidiaries or the filing
30
of a registration statement under the Securities Act in connection therewith;
(iv) any acquisition of 20% or more of the outstanding shares of capital stock
of the Company or the filing of a registration statement under the Securities
Act in connection therewith or any other acquisition or disposition the
consummation of which would prevent or materially diminish the benefits to
Parent of the Merger; or (v) any public announcement by the Company or any third
party of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. "Superior Proposal" means any
proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction, for at least 75% of then outstanding Shares, or all
or substantially all of the consolidated assets of the Company, which the Board
of Directors of the Company determines in good faith (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders (taking into account relevant legal, financial and
regulatory considerations and other aspects of such proposal and the third party
making such proposal and the conditions and prospects for completion of such
proposal) than the Offer and the Merger.
(e) Nothing contained in this Section 6.1 shall prohibit the Company
or the Board of Directors of the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if the
Board of Directors of the Company, based on the advice of independent legal
counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that the failure to take such action would result in a
breach of the fiduciary duty of the Board of Directors to the stockholders of
the Company under applicable law; provided that neither the Board of Directors
of the Company nor any committee thereof shall withdraw or modify, or shall
propose to withdraw or modify, the approval or recommendation of the Board of
Directors of the Company of the Offer or the Merger or shall approve or
recommend, or shall publicly propose to approve or recommend, an Acquisition
Proposal unless the Company and the Board of Directors of the Company have
complied in all material respects with all the provisions of this Section 6.1.
Section 6.2 Access to Information. Between the date of this Agreement
and the Effective Time, the Company shall, and shall cause its subsidiaries to
(a) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full access during
normal business hours and at all other reasonable times to the officers, agents,
properties (provided that any access for environmental due diligence shall be
limited to conducting a Phase I environmental assessment consistent with ASTM
standards using a consultant reasonably acceptable to the Company), offices and
other facilities of the Company and its subsidiaries and to their books and
records (including all Tax Returns and all books and records related to Taxes
and such returns), (b) permit Parent to make such inspections as it may require
(and the Company shall cooperate with Parent in any inspections), and (c)
furnish promptly to Parent and its representatives a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and such
other information concerning the business, properties, contracts, records and
personnel of the
31
Company and its subsidiaries (including financial, operating and other data and
information) in the possession of the Company or the Company's counsel,
accountants or other consultants or agents as may be reasonably requested, from
time to time, by or on behalf of Parent.
Section 6.3 Reasonable Best Efforts. Subject to the terms and
conditions herein (including Section 6.1), each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as soon as reasonably practicable the Transactions contemplated by this
Agreement. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Each of the Company, Parent and Purchaser shall cooperate and
use their respective reasonable best efforts to make all filings, to obtain all
actions or nonactions, waivers, Permits and orders of Governmental Entities
necessary to consummate the Transactions contemplated by this Agreement and to
take all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, provided
that nothing in this Section 6.3 shall obligate Parent to consent to any action
that will diminish the value of the Company to it. The Company agrees to
cooperate with Purchaser and to assist Purchaser in identifying the
Environmental Permits required by Purchaser to operate the business from and
after the Closing Date and either transferring existing Environmental Permits of
the Company, where permissible, or obtaining new Environmental Permits. Each of
the parties hereto will furnish to the other parties such necessary information
and reasonable assistance as such other parties may reasonably request in
connection with the foregoing.
Section 6.4 Indemnification of Directors and Officers.
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring at or prior to the Effective Time existing as of the date
hereof in favor of the current or former directors or officers, employees and
agents of the Company and its subsidiaries as provided in their respective
certificates of incorporation, bylaws or agreements disclosed in the Company SEC
Documents or filed as exhibits thereto as in effect on the date hereof shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of six years from the Effective Time. Parent shall
cause to be maintained for a period of six years from the Effective Time the
Company's current directors' and officers' insurance and indemnification policy
and fiduciary liability policy (the "D&O Insurance") (provided that Parent may
substitute therefor, at its election, policies or financial guarantees with the
same carriers or other reputable and financially sound carriers of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous than the existing D&O Insurance) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who are directors and officers of the Company on the date of this
Agreement (or were prior to the date of this Agreement), so long as the annual
premium after the date of this Agreement for such D&O Insurance during such
six-year period would not exceed 300% of the annual premium as of the date of
this Agreement. If, during such six-year period, such insurance coverage cannot
be obtained at all or can
32
only be obtained for an amount in excess of 300% of the annual premium therefor
as of the date of this Agreement, Parent shall use reasonable best efforts to
cause insurance coverage to be obtained for an amount equal to 300% of the
current annual premium therefor, on terms and conditions substantially similar
to the existing D&O Insurance. Set forth in Section 6.4(a) of the Company
Disclosure Schedule is the amount of the annual premium currently paid by the
Company for its directors' and officers' liability insurance.
(b) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made in writing against any present or former
director or officer of the Company based on or arising out of the services of
such person at or prior to the Effective Time in the capacity of such person as
a director or officer of the Company (and such director or officer shall have
given Parent written notice of such claim or claims within such six year
period), the provisions of subsection (a) of this Section respecting the rights
to indemnify the current or former directors or officers under the certificate
of incorporation and bylaws of the Company and its subsidiaries shall continue
in effect until the final disposition of all such claims.
(c) Notwithstanding anything to the contrary in this Section 6.4,
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
(d) The provisions of this Section 6.4 are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder and the heirs and representatives of such person.
Section 6.5 Event Notices and Other Actions. (a) From and after the
date of this Agreement until the Effective Time, the Company shall promptly
notify Parent and Purchaser of (i) the occurrence or nonoccurrence of any event,
the occurrence or nonoccurrence of which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied, (ii) the
Company's failure to comply with any covenant or agreement to be complied with
by it pursuant to this Agreement which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied and (iii)
any representation or warranty made by the Company contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified as to
materiality becoming untrue or inaccurate in any material respect. The Company's
delivery of any notice pursuant to this Section 6.5(a) shall not cure any breach
of any representation or warranty of the Company contained in this Agreement or
otherwise limit or affect the remedies available hereunder to Parent or
Purchaser.
(b) The Company shall not, and shall not permit any of its
subsidiaries to, knowingly take any action or nonaction within its reasonable
control that will, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in this Agreement
that is qualified as to materiality becoming untrue, (ii) any of such
33
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) except as otherwise permitted by Section 6.1, any
condition to the Offer set forth in Annex A, or any condition to the Merger set
forth in Article VII, not being satisfied.
Section 6.6 Employment Arrangements; Employee Plans and Benefits.
(a) Employment Arrangements and Accrued Benefits. From and after the
consummation of the Offer, Parent shall honor, fulfill and discharge and shall
cause the Surviving Corporation to honor, fulfill and discharge in accordance
with their terms (i) all existing employment, severance, consulting, change of
control and indemnification agreements and other bonus and compensation
arrangements between the Company or any of its subsidiaries and any current or
former officer, director or employee of the Company or any of its subsidiaries
as set forth on Schedule 6.6 of the Company Disclosure Schedule and (ii) with
respect to all employees, officers and directors of the Company, all legal and
contractual obligations for benefits or other amounts earned or accrued through
the Effective Time under the Benefit Plans disclosed in Schedule 3.11(a) of the
Company Disclosure Schedule.
(b) Post-Closing Benefits. For a period commencing on the Effective
Date through December 31, 2000, Parent shall provide or cause the Surviving
Corporation provide to current and former employees of the Company, compensation
and benefits that are at least comparable in the aggregate, to the compensation
and Benefit Plans currently in place for such employees excluding any equity
plans; provided, however, that with respect to employees who are subject to
collective bargaining, all compensation and benefits shall be provided in
accordance with the applicable collective bargaining agreements. From and after
the Effective Time, Parent shall, and shall cause the Surviving Corporation to,
credit the each employee and former employee of the Company for their service
with the Company and any predecessor entities to the extent credited under such
Benefit Plan (and any other service credited by the Company under its benefit
plans) prior to the Effective Time for all purposes (including, without
limitation, eligibility to participate, vesting, benefit accrual, eligibility to
commence benefits and severance) under any benefit plans of Parent or the
Surviving Corporation in which the employee or former employee of the Company
participate, to the same extent as if such service had been rendered to Parent
or any of its subsidiaries; provided, however, that the foregoing shall not
result in any duplication of benefits for the same period of service. From and
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, recognize any and all appropriate out-of-pocket expenses of each
employee or former employee of the Company for purposes of determining such
employee's and former employee's (including their beneficiaries and dependents)
deductible and co-payment expenses under the Company's medical benefit plans.
Parent shall waive, or cause to be waived, any pre-existing condition limitation
under any welfare benefit plan maintained by Parent or any of its subsidiaries
in which employees of the Company (and their respective eligible dependents)
will be eligible to participate on or following the Effective Time to the extent
such pre-existing condition limitation was waived or satisfied under the
comparable Benefit Plan.
34
(c) No Right to Employment. Nothing contained in this Agreement shall
confer upon any employee of the Company, any ERISA Affiliate or any of the
Company's subsidiaries any right with respect to employment by Parent, Purchaser
or any of Parent's subsidiaries or affiliates, nor shall anything herein
interfere with the right of Parent, Purchaser or any of Parent's subsidiaries or
affiliates to terminate the employment of any such employee at anytime, with or
without cause, or, except as provided in Sections 6.6(a) or (b) restrict Parent,
Purchaser or any of Parent's subsidiaries or affiliates in the exercise of their
independent business judgment in modifying any other terms and conditions of the
employment of any such employee.
Section 6.7 Meeting of the Company's Stockholders.
(a) To the extent required by applicable law, the Company shall
promptly after consummation of the Offer take all action necessary in accordance
with the DGCL and its Certificate of Incorporation and Bylaws to convene a
Stockholder Meeting to consider and vote on the Merger and this Agreement. At
the Stockholder Meeting, all of the Shares then owned by Parent, Purchaser or
any other subsidiary of Parent shall be voted to approve the Merger and this
Agreement. The Board of Directors of the Company shall recommend that the
Company's stockholders vote to approve the Merger and this Agreement if such
vote is sought, shall use its best efforts to solicit from stockholders of the
Company proxies in favor of the Merger and shall take all other action in its
judgment necessary and appropriate to secure the vote of stockholders required
by the DGCL to effect the Merger (including to the extent feasible providing
access to Parent's proxy solicitor to one of the ports provided to the Company
by ADP).
(b) Parent and Purchaser shall not, and they shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the Shares acquired pursuant to the Offer or otherwise prior to the Stockholder
Meeting; provided, however, that this Section 6.7(b) shall not apply to the
sale, transfer, assignment, encumbrance or other disposition of any or all such
Shares in transactions involving solely Parent, Purchaser and/or one or more of
their wholly-owned subsidiaries.
(c) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties hereto agree,
at the request of the Company, to take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 253 (in lieu of
Section 251) of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the stockholders of the Company.
Section 6.8 Proxy Statement. If required under applicable law, the
Company and Parent shall prepare the Proxy Statement, file it with the SEC under
the Exchange Act as promptly as practicable after Purchaser purchases Shares
pursuant to the Offer, and use all reasonable efforts to have it cleared by the
SEC. As promptly as practicable after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the stockholders of the
Company as of the record date for the Stockholder Meeting.
35
Section 6.9 Public Announcements. Parent and the Company shall to the
fullest extent practicable consult with each other before issuing any press
release or otherwise making any public statement with respect to the Offer and
the Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or stock
exchange requirement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
(a) if required by the DGCL, this Agreement shall have been approved
by the affirmative vote of the stockholders of the Company by the requisite vote
in accordance with applicable law; provided, that this Section 7.1(a) shall not
affect the obligations contained in Section 6.7(a);
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that each of the parties shall have used its
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal, subject to the other terms of this Agreement as promptly as
possible any injunction or other order that may be entered; and
(c) Purchaser shall have purchased Shares pursuant to the Offer.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time (notwithstanding
approval thereof by the stockholders of the Company) prior to the Effective
Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final
36
action restraining, enjoining or otherwise prohibiting the consummation of the
Offer or the Merger and such order, decree or ruling or other action is or shall
have become nonappealable;
(c) by Parent or Purchaser if due to the occurrence and continued
existence of any of the conditions set forth in Annex A hereto, Purchaser shall
have (i) failed to commence the Offer within the time required by Regulation 14D
under the Exchange Act or (ii) terminated the Offer without purchasing any
Shares pursuant to the Offer or (iii) failed to accept for payment Shares
pursuant to the Offer prior to January 31, 2000;
(d) by the Company (i) if there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company which would entitle Parent to terminate this Agreement in accordance
with the provisions hereof following the expiration of any applicable notice and
cure periods, and Purchaser shall have (A) failed to commence the Offer within
the time required by Regulation 14D under the Exchange Act, (B) terminated the
Offer without purchasing any Shares pursuant to the Offer, or (C) failed to
accept for payment Shares pursuant to the Offer prior to January 31, 2000; or
(ii) if prior to the acceptance of Shares pursuant to the Offer (w) the Company
notifies Parent in writing that it intends to enter into an agreement with
respect to a Superior Proposal in accordance with Section 6.1, (x) the Company
has complied in all material respects with the provisions thereof, including the
notice provisions therein, (y) Parent does not make, within three business days
after receipt of the Company's notification pursuant to clause (x) an offer that
the Company's Board of Directors determines in good faith, based on the advice
of its financial advisors, is at least as favorable to the Company's
stockholders than the Superior Proposal and (z) the Company accepts under the
circumstances permitted by Section 6.1 such Superior Proposal;
(e) by Parent or Purchaser prior to the purchase of Shares pursuant to
the Offer, if (i) any representation or warranty of the Company contained in
this Agreement (after reading out any materiality or dollar qualifications)
shall not be true and correct at any time prior to the acceptance for payment of
Shares pursuant to the Offer, except where the failure to be true and correct is
not individually or in the aggregate reasonably likely to have a Material
Adverse Effect on the Company (other than to the extent such representation and
warranty expressly relates to an earlier date, in which case such representation
and warranty shall not be true and correct as of such date except where the
failure to be true and correct is not individually or in the aggregate
reasonably likely to have a Material Adverse Effect on the Company), or (ii) the
Company shall not have performed and complied with each covenant or agreement
contained in the Agreement and required to be performed or complied with by it,
except where the failure to so perform or comply is not reasonably likely to
have a Material Adverse Effect on the Company or materially and adversely affect
the consummation of the Offer, and which breach, in the case of clause (i) and
(ii) above, shall not have been cured prior to the earlier of (A) 15 days
following notice of such breach and (B) two business days prior to the date on
which the Offer expires, or (iii) the Board of Directors of the Company or any
committee thereof shall have withdrawn, or modified, amended or changed
(including by amendment of the Schedule 14D-9), or publicly announced an
intention to do so, in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, the Merger,
37
or this Agreement, or shall have approved or recommended to the Company's
stockholders, or publicly announced an intention to do so, an Acquisition
Proposal or any other acquisition of Shares other than the Offer and the Merger,
or shall have adopted any resolutions to effect any of the foregoing; or
(f) by the Company prior to the purchase of any Shares pursuant to the
Offer if (i) there shall have been a material breach of any representation or
warranty in this Agreement on the part of Parent or Purchaser which materially
adversely affects (or materially delays) the consummation of the Offer or (ii)
Parent or Purchaser shall not have performed or complied with, in all material
respects (without reference to any materiality qualifications therein), each
covenant or agreement contained in this Agreement and required to be performed
or complied with by them, and such breach materially adversely affects (or
materially delays) the consummation of the Offer, and which breach, in the case
of clause (i) and clause (ii) above, shall not have been cured prior to the
earlier of (A) 15 days following notice of such breach and (B) two business days
prior to the date on which the Offer expires.
Section 8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of Sections 8.2, 8.3, 9.3, 9.4 and 9.7, shall forthwith
become void and have no effect, without any liability on the part of any party
or its affiliates, directors, officers, counsel, employees, agents or
stockholders. Subject to Section 8.3 below, no termination of this Agreement
shall relieve any party to this Agreement of liability for breach of this
Agreement.
Section 8.3 Termination Fee
(a) Except as provided in Section 8.3(b) and (c), all fees and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(c) or the Company terminates pursuant to Section
8.1(d)(i), in either case due to a failure to achieve the Minimum
Condition, and Parent and Purchaser are not in material breach of this
Agreement in circumstances when, prior to such termination any third
party shall have acquired beneficial ownership of at least a majority
of the outstanding Shares or announced an intention to make or
consummate an Acquisition Proposal for at least a majority of the
consolidated assets of the Company or a majority of the outstanding
Shares of the Company, and, in the case of such an Acquisition
Proposal which has not been consummated prior to such termination,
within 12 months from the date of termination of this Agreement such
Acquisition Proposal or any other Acquisition Proposal for at least a
majority of the consolidated assets of the Company or at least a
majority of the outstanding Shares of the
38
Company has been consummated for consideration per Share higher than
the per Share consideration in the Offer or for an aggregate
consideration, including the retention of any equity by stockholders,
of more than the aggregate consideration of the Offer and the Merger;
(ii) Parent or Purchaser terminates this Agreement (x) pursuant
to Section 8.1(e)(iii) or (y) pursuant to Section 8.1(c) because of
the occurrence and continued existence of the conditions set forth in
paragraph (g) of Annex A; or
(iii) the Company terminates this Agreement pursuant to Section
8.1(d)(ii);
then, in any such case, the Company shall pay to Parent, a fee, in cash, equal
to $10,000,000 (which amount shall be deemed to include reimbursement of all
Expenses)(the "Termination Fee") concurrently with the termination of this
Agreement, provided, however, that any Termination Fee payable pursuant to
Section 8.3(b)(i) in the case of a Acquisition Proposal which has not been
consummated prior to the termination of this Agreement shall be paid
concurrently with the consummation of such Acquisition Proposal or any other
Acquisition Proposal for at least a majority of the consolidated assets of the
Company or at least a majority of the outstanding Shares of the Company for
consideration per Share higher than the per Share consideration in the Offer or
for an aggregate consideration, including the retention of any equity by
stockholders, of more than the aggregate consideration of the Offer and the
Merger; provided further, however, that the Company in no event shall be
obligated to pay more than one such Termination Fee with respect to all such
agreements and occurrences and such termination. Any payment required to be made
pursuant to this subsection (b) shall be made to Parent by wire transfer of
immediately available funds to an account designated by Parent.
(c) If this Agreement is terminated by Parent or Purchaser pursuant to
Section 8.1(c) because of the occurrence and continued existence of the
conditions set forth in paragraph (a) of Annex A or pursuant to Sections
8.1(e)(i) and the condition does not result from a willful breach, promptly upon
demand the Company shall reimburse Parent and Purchaser for all their actual
reasonable documented out-of-pocket fees and expenses incurred by Parent,
Purchaser and their respective affiliates in connection with this Agreement, the
Offer and the Merger, including all such fees and expenses of counsel,
accountants, investment bankers, experts and consultants to each of Parent and
Purchaser and their respective affiliates, commitment and other actual
reasonable documented fees and expenses payable to financing sources and the
expenses of the preparation, printing, filing and mailing of the Offer Documents
and any other related costs and expenses (the "Expenses"); provided, however,
that in no event shall such Expenses exceed a maximum amount of $1,000,000.
Payment of Expenses shall be the sole and exclusive remedy of Parent and
Purchaser for such a breach.
(d) For purposes of this Section 8.3, "willful" shall mean that the
Agreement is terminated as a result of one or more representations and
warranties not being true when made and one or more of the persons listed on
Schedule 8.3(d) of the Company Disclosure Schedules had
39
actual knowledge at that time of events, facts, circumstances or conditions not
disclosed hereunder which caused such representations and warranties to be false
or misleading.
Section 8.4 Amendment. To the extent permitted by applicable law and
subject to Section 1.4(c), this Agreement may be amended by action taken by or
on behalf of the Boards of Directors of the Company, Parent and Purchaser at any
time before or after approval of this Agreement by the stockholders of the
Company but, after any such Stockholder approval, no amendment shall be made
that by law requires the further approval of such stockholders without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
Section 8.5 Extension; Waiver. At any time prior to the Effective
Time, subject to Section 1.1(b), a party may (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties of the other
parties contained herein or in any document, certificate or writing delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions of the other parties hereto contained herein; provided that after the
approval of the Merger by the stockholders of the Company, no extensions or
waivers shall be made that by law require further approval by such stockholders
without the approval of such stockholders. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Non-Survival of Representations and Warranties. None of
the representations and warranties made in this Agreement shall survive after
the Effective Time. This Section 9.1 shall not limit any covenant or agreement
of the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 9.2 Entire Agreement; Assignment. This Agreement (including
the Company Disclosure Schedule) and, to the extent contemplated in Section 6.3,
the Confidentiality Agreement, (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof and (b) shall not be assigned
by operation of law or otherwise; provided that Parent or Purchaser may assign
any of their rights and obligations to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent or Purchaser
of its obligations hereunder. Any of Parent, Purchaser or any direct or indirect
wholly owned subsidiary of Parent may purchase Shares under the Offer. Any
attempted assignment in violation of this Section 9.2 shall be void. Subject to
the preceding sentences, this
40
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.3 Enforcement of the Agreement. The Company agrees that
irreparable damage would occur to Parent and Purchaser in the event that any of
the provisions of this Agreement were not performed by the Company in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that Parent and Purchaser shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are
entitled at law or in equity. The Company further agrees to waive any
requirement for the securing or posting of any bond in connection with obtaining
any such injunction or other equitable relief.
Section 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that Transactions are fulfilled to the extent possible. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
Section 9.5 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing (including telecopy or
similar writing) and shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 9.5 and
the appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 9.5 (or at such
other address for a party as shall be specified by like notice):
if to Parent or Purchaser:
Cementos Portland, S.A.
Xxxx Xxxxxxx, 00
00000 Xxxxxx, Xxxxx
Attention: Xxxxxx Xxxxxx, Deputy Managing Director
Telecopy: 011-34-91-396-0231
41
with a copy to:
Xxxxxxxxx, Xxxxxxx & Xxxxx LLP
Xxx Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
if to the Company:
Giant Cement Holding, Inc.
000-X Xxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, President and Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
Section 9.7 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the substantive laws of
the State of New York regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto. In addition, the Company,
Parent and Purchaser hereby (i) consent to submit to the personal jurisdiction
of any Federal court located in the Southern District of New York or any New
York state court located in the borough of Manhattan, City of New York in the
event any dispute arises out of
42
this Agreement or any of the Transactions, (ii) agree not to attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agree not to bring any action relating to this Agreement or
any of the Transactions in any court other than a Federal court located in the
Southern District of New York or any New York state court located in the borough
of Manhattan, City of New York and (iv) waive any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the Transactions. The Company, Parent and Purchaser hereby irrevocably
and unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the Transactions in the
courts of the State of New York or of the United States of America located in
the Southern District of New York or any New York state court located in the
borough of Manhattan, City of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.8 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 6.4(d) (which are intended to be for the benefit of the
persons entitled to therein, and may be enforced by such persons).
Section 9.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 9.11 Certain Definitions. For purposes of this Agreement
(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "affiliate" of a person shall mean (i) a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first-mentioned person and (ii) an
"associate", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act.
(b) "beneficial owner" (including the term "beneficially own" or
correlative terms) shall have the meaning ascribed to such term under Rule
13d-3(a) under the Exchange Act.
(c) "business day" shall have the meaning ascribed to such term under
Rule 14d-1 of the Exchange Act.
43
(d) "Company Disclosure Schedule" shall mean a letter dated the date
of the Agreement delivered by the Company to Parent and Purchaser concurrently
with the execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in Article
III and covenants contained in Article V by specific section and subsection
references.
(e) "control" (including the terms "controlling," "controlled by" and
"under common control with" or correlative terms) shall mean the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities or as trustee or executor, by contract or credit
arrangement, or otherwise.
(f) "Environment" means all air, surface water, groundwater, drinking
water or land, including land surface or subsurface.
(g) "Environmental Costs and Liabilities" means any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including, without limitation, fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and Remedial Action) arising from any
non-compliance with or violation of or liability under Environmental Law or
order or contract with any Governmental Authority or based on any claim by any
third person.
(h) "Environmental Laws" means any federal, state, local, or foreign
law (including common law) statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction, including the requirement to register
underground storage tanks, relating to: (i) emissions, discharges, releases or
threatened releases of Hazardous Material (as defined herein) into the
environment, including, without limitation, into ambient air, soil, sediments,
land surface or subsurface, buildings or facilities, surface water, groundwater,
publicly-owned treatment works, septic systems or land; (ii) the generation,
treatment, storage, recycling, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material, or (iii) regulating the
environment, natural resources, or public or employee health and safety,
including without limitation, the following statutes, their implementing
regulations, and any state corollaries: the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 et seq., the Toxic Substances
Control Act, 15 U.S.C. section 2601 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Clean Air Act, 33 U.S.C. ss. 2601 and the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq., the
Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq., and the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq., as such laws have been
amended or supplemented.
(i) "Environmental Permit" means any permit, license, approval,
consent, registration, certificate or other authorization issued under any
applicable law, regulation and other
44
requirement of any country, state, municipality or other subdivision thereof
relating to pollution or protection of health or the environment, including, but
not limited to (i) laws, regulations or other requirements governing discharges,
releases of Hazardous Materials (as defined herein) into ambient air, surface
water, ground water or land, (ii) otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Materials, or (iii) the containment, cleanup, or other
remediation of Hazardous Materials from any real property.
(j) "Governmental Entity" means any Federal, state or local government
or any court, administrative or regulatory agency or commission or other
domestic governmental authority or agency in the United States or the Kingdom of
Spain.
(k) "group" shall have the meaning ascribed to such term under Rule
13d-5(b)(1) under the Exchange Act.
(l) "Hazardous Materials" means any substance, material, or waste
which is regulated by any government authority and in amounts and concentrations
which are regulated, including without limitation, any substance, material, or
waste which is (i) hazardous materials, pollutants or contaminants, medical,
hazardous or infectious wastes, hazardous waste constitutents, hazardous
chemicals, hazardous or toxic pollutants, hazardous or toxic substances, or
extremely hazardous waste or restricted hazardous waste, as those terms are
defined in or regulated by any Environmental Law, (ii) petroleum, including
crude oil and any fractions thereof, (iii) natural gas, synthetic gas and any
mixtures thereof, (iv) radioactive materials including, without limitation,
source, byproduct or special nuclear materials, (v) pesticides, (vi) friable
asbestos, (vii) ureaformaldehyde, and (viii) polychlorinated biphenyls (PCBs).
(m) "knowledge of the Company" and "to the Company's knowledge" shall
mean the actual knowledge of the President, Chief Executive Officer, Chief
Financial Officer or the Vice President, Environmental Affairs.
(n) "Material Adverse Effect" shall mean any change or effect that is
(after giving effect to any appropriate reserves for such matter on the
financial statements included in the Company SEC Documents filed prior to the
date hereof) materially adverse to the business, results of operations, assets,
liabilities or financial condition of the Company and its subsidiaries, taken as
a whole, or any event, matter, condition or effect which precludes the Company
from materially performing its material obligations under this Agreement or the
consummation of the Transactions; provided, however, that in determining whether
there has been a Material Adverse Effect, any adverse effect directly
attributable to the following shall be disregarded: (i) general economic or
business conditions; (ii) general industry conditions; (iii) the taking of any
action permitted or required by this Agreement; (iv) the announcement or
pendency of the Offer, or the Merger; (v) the breach by Parent or Purchaser of
this Agreement; and (vi) a decline in the Company's stock price.
(o) "person" shall mean a natural person, company, corporation,
partnership, association, trust or any unincorporated organization.
45
(p) "Releases" means past or present spills, leaks, discharges,
disposal, pumping, pouring, emissions, injection, emptying, leaching, escaping,
disposing, or dumping of Hazardous Materials into the indoor or outdoor
Environment or out of any property owned, leased, or operated by the Company or
any of its affiliates.
(q) "Remedial Action" means all actions, including, without
limitation, any capital expenditures undertaken to (i) clean up, remove, treat,
or in any other way address any Hazardous Material or other substance; (ii)
prevent the Release or threat of Release, or minimize the further Release of any
Hazardous Material or other substance so it does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (iii) perform pre- remedial studies and investigations or
post-remedial monitoring and care; or (iv) bring facilities on any property
owned, operated or leased by the Seller and the facilities located and
operations conducted thereon into compliance with all Environmental Laws and
Environmental Permits.
(r) "subsidiary" shall mean, when used with reference to a person
means any corporation or other business entity of which such person directly or
indirectly owns (i) the majority of the outstanding voting securities or (ii)
voting securities or equity interests which give such person the power to elect
a majority of the board of directors or similar governing body of such entity.
Section 9.12 Interpretation. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
46
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, on the day
and year first above written.
GIANT CEMENT HOLDING, INC.
By: XXXX X. XXXXXXX
-------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
CEMENTOS PORTLAND, S.A.
By: XXXXXX XXXXXX
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Deputy Managing Director
CP ACQUISITION, INC.
By: XXXXXX XXXXXX
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
47
ANNEX A
to
Agreement and Plan of Merger
Conditions to the Offer. Notwithstanding any other provision of the
Offer or this Agreement, in addition to (and not in limitation of) Purchaser's
rights pursuant to the Merger Agreement to extend and amend the Offer at any
time, in its sole discretion, to the extent permitted by Section 1.1 of the
Merger Agreement, Purchaser shall not be required to accept for payment or,
subject to Rule 14e-1(c) of the Exchange Act, pay for and may delay the
acceptance for payment of or, subject to Rule 14e-1(c) of the Exchange Act, the
payment for, any Shares not theretofore accepted for payment or paid for, and
Purchaser may terminate or amend the Offer if (i) a number of Shares
representing at least a majority of the outstanding Shares, on a fully diluted
basis, shall not have been validly tendered and not withdrawn immediately prior
to the expiration of the Offer ("Minimum Condition") or (ii) at any time on or
after the date of the Merger Agreement and prior to the time of acceptance of
such Shares for payment or the payment therefor, any of the following conditions
has occurred and continues to occur:
(a) any representation and warranty of the Company in the Agreement
(after reading out any materiality and dollar qualifications) shall not be true
and correct as of such time, except where the failure to be so true and correct
is not individually or in the aggregate reasonably likely to have a Material
Adverse Effect on the Company (other than to the extent any such representation
and warranty expressly relates to an earlier date, in which case such
representation and warranty shall not be true and correct as of such date,
except where the failure to be so true and correct is not individually or in the
aggregate reasonably likely to have a Material Adverse Effect on the Company)
and which breach shall not have been cured prior to the earlier of (i) 15 days
following notice of such breach and (ii) two business days prior to the date on
which the Offer expires;
(b) the Company shall not have performed and complied with each
covenant or agreement contained in the Agreement and required to be performed or
complied with by it, except where the failure to so perform or comply is not
reasonably likely to have a Material Adverse Effect on the Company or materially
and adversely affect the consummation of the Offer, and which breach shall not
have been cured prior to the earlier of (i) 15 days following notice of such
breach and (ii) two business days prior to the date on which the Offer expires;
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the NASDAQ
National Market or the Madrid Stock Exchange (excluding any coordinated trading
halt triggered as a result of a specified decrease in a market index) related to
market conditions, (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States or the Kingdom of Spain by
any Governmental Entity, (iii) any material mandatory limitation by any
Governmental Entity on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war, armed hostilities or other national
or international calamity directly or indirectly involving the United States
48
or the Kingdom of Spain, or (v) a drop of more than 33.33% in the Dow Xxxxx
Industrial Average Index, measured against the value of such index on the date
of this Agreement;
(d) any applicable waiting period under the HSR Act shall not have
expired or been terminated or there shall be pending before or threatened by any
Governmental Entity any suit, action, investigation or proceeding, (i)
challenging the acquisition by Parent or Purchaser of any Shares, seeking to
make illegal, materially delay, make materially more costly or otherwise
directly or indirectly restrain or prohibit the making or consummation of the
Offer and the Merger or seeking to obtain from the Company, Parent or Purchaser
any damages that are material in relation to the Company and its subsidiaries
taken as whole, (ii) seeking to prohibit Parent or any of its subsidiaries or
affiliates from effectively controlling in any material respect the business or
operations of the Company or its subsidiaries, (iii) requiring divestiture by
Purchaser or any of its affiliates of any Shares or current business or material
assets or (iv) which otherwise is reasonably likely to have a Material Adverse
Effect on the Company or Parent;
(e) there shall be any judgment, order or injunction (including with
respect to competition or antitrust matters) enacted, entered, promulgated or
issued with respect to (i) Parent, the Company or any of their respective
subsidiaries or affiliates or (ii) the Offer or the Merger by any Governmental
Entity or court, that has resulted or is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) though (iv)
of paragraph (d) above;
(f) since the date of the Merger Agreement, there shall have occurred
any events, changes, effects or developments that, individually or in the
aggregate, have had or are reasonably likely to have, a Material Adverse Effect
on the Company;
(g) the Board of Directors of the Company or any committee thereof
shall have (i) withdrawn, or modified, amended or changed (including by
amendment of the Schedule 14D-9), or publicly announced an intention to do so,
in a manner adverse to Parent or Purchaser, its approval or recommendation of
the Offer, the Merger, or this Agreement, (ii) approved or recommended to the
Company's stockholders or publicly announced an intention to do so, an
Acquisition Proposal or any other acquisition of Shares other than the Offer and
the Merger or (iii) adopted any resolution to effect any of the foregoing; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition and, subject to Section 1.1, may
be waived by Purchaser or Parent, in whole or in part, at any time and from time
to time, in the sole discretion of Purchaser or Parent. The failure by Purchaser
or Parent or any of their respective affiliates at any time to exercise any of
the foregoing rights will not be deemed a waiver of any right, the waiver of any
such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
49
