EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
TEMPLE-INLAND INC.,
TEMPLE-INLAND ACQUISITION CORPORATION
and
XXXXXXX CONTAINER CORPORATION
Dated as of September 27, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER................................................................3
Section 1.1 The Offer..............................................3
Section 1.2 The Notes Tender Offers................................4
Section 1.3 Company Action.........................................7
Section 1.4 Directors..............................................9
ARTICLE II
THE MERGER..............................................................11
Section 2.1 The Merger............................................11
Section 2.2 Closing...............................................11
Section 2.3 Effective Time........................................11
Section 2.4 Effects of the Merger.................................11
Section 2.5 Certificate of Incorporation and By-Laws..............12
Section 2.6 Directors.............................................12
Section 2.7 Officers..............................................12
ARTICLE III
CONVERSION OF SECURITIES................................................12
Section 3.1 Effect on Capital Stock...............................12
Section 3.2 Exchange of Certificates..............................13
Section 3.3 Dissenting Shares.....................................15
Section 3.4 Company Options.......................................15
Section 3.5 Company Warrants......................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................17
Section 4.1 Organization, Standing and Corporate Power............17
Section 4.2 Subsidiaries..........................................18
Section 4.3 Capital Structure.....................................18
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Section 4.4 Authority; Noncontravention; Filings and Consents.....19
Section 4.5 Vote Required.........................................21
Section 4.6 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities...............................21
Section 4.7 Information Supplied..................................22
Section 4.8 Books and Records.....................................23
Section 4.9 Inventory.............................................23
Section 4.10 Absence of Certain Changes or Events..................23
Section 4.11 Litigation............................................24
Section 4.12 Employee Benefit Plans; ERISA.........................24
Section 4.13 Taxes.................................................30
Section 4.14 State Takeover Statutes; Rights Agreement.............33
Section 4.15 Brokers; Schedule of Fees and Expenses................34
Section 4.16 Permits; Compliance with Laws.........................34
Section 4.17 Environmental Matters.................................35
Section 4.18 Contracts; Debt Instruments...........................36
Section 4.19 Title to Properties...................................38
Section 4.20 Labor and Employment Difficulties.....................39
Section 4.21 Opinions of Financial Advisors........................39
Section 4.22 Interests of Officers and Directors...................40
Section 4.23 Intellectual Property.................................40
Section 4.24 Insurance.............................................43
Section 4.25 Customers and Suppliers...............................43
Section 4.26 Regulation as a Utility...............................43
Section 4.27 Qualifying Facility...................................43
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY...................................................44
Section 5.1 Organization, Standing and Corporate Power............44
Section 5.2 Authority; Noncontravention; Filings and Consents.....44
Section 5.3 Information Supplied..................................46
Section 5.4 Brokers...............................................46
Section 5.5 No Prior Activities; Assets of Merger Subsidiary......46
Section 5.6 Sufficient Funds......................................47
Section 5.7 No Vote Required......................................47
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ARTICLE VI
COVENANTS OF THE COMPANY................................................47
Section 6.1 Conduct of Business...................................47
Section 6.2 State Takeover Statutes...............................51
Section 6.3 Access to Information.................................51
Section 6.4 No Solicitation by the Company........................52
Section 6.5 Litigation............................................54
Section 6.6 Rights Agreement......................................54
Section 6.7 Certain Obligations of the Company....................55
ARTICLE VII
COVENANTS OF PARENT AND MERGER SUBSIDIARY...............................55
Section 7.1 Indemnification.......................................55
Section 7.2 Obligations of Merger Subsidiary......................56
Section 7.3 Employees.............................................56
ARTICLE VIII
ADDITIONAL AGREEMENTS...................................................58
Section 8.1 Stockholder Approval; Preparation of Company
Proxy Statement.......................................58
Section 8.2 HSR Act Filings; Reasonable Efforts; Notification.....59
Section 8.3 Public Announcements..................................62
Section 8.4 Confidentiality.......................................62
ARTICLE IX
CONDITIONS PRECEDENT....................................................62
Section 9.1 Conditions to Each Party's Obligation to Effect the
Merger................................................62
ARTICLE X
TERMINATION.............................................................63
Section 10.1 Termination...........................................63
Section 10.2 Effect of Termination.................................65
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ARTICLE XI
GENERAL PROVISIONS......................................................65
Section 11.1 Fees and Expenses.....................................65
Section 11.2 Amendment and Modification............................66
Section 11.3 Extension; Waiver.....................................66
Section 11.4 Nonsurvival of Representations and Warranties.........67
Section 11.5 Notices...............................................67
Section 11.6 Interpretation........................................68
Section 11.7 Counterparts..........................................68
Section 11.8 Entire Agreement; No Third-Party Beneficiaries........68
Section 11.9 Governing Law.........................................69
Section 11.10 Assignment............................................69
Section 11.11 Enforcement...........................................69
Section 11.12 Severability..........................................69
Annex I...................................................................I-1
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LIST OF DEFINED TERMS
9-3/4% Senior Notes.........................................................1
9-3/4% Senior Notes Tender Offer............................................1
9-3/8% Senior Notes.........................................................1
9-3/8% Senior Notes Tender Offer............................................1
Acquisition Proposal.......................................................54
Agreement...................................................................1
Antitrust Laws.............................................................60
Appointment Date...........................................................47
Balance Sheet..............................................................23
Benefit Plans..............................................................25
Certificate of Merger......................................................11
Certificates...............................................................13
Closing....................................................................11
Closing Date...............................................................11
Code.......................................................................25
Company.....................................................................1
Company Board...............................................................2
Company Class B Stock......................................................18
Company Common Stock........................................................1
Company Disclosure Schedule................................................17
Company Intellectual Property..............................................40
Company Material Adverse Effect............................................17
Company Preferred Stock....................................................18
Company Proxy Statement....................................................21
Company SEC Documents......................................................21
Company Stockholder Vote...................................................19
Company Stockholders Meeting...............................................59
Company Warrant............................................................16
Confidentiality Agreement..................................................62
Consents...................................................................20
D&O Insurance..............................................................55
DGCL........................................................................2
Effective Time.............................................................11
Environmental Claim........................................................36
Environmental Law .........................................................36
ERISA......................................................................25
ERISA Affiliate............................................................24
ERISA Plans................................................................25
Exchange Act................................................................4
Exchange Fund..............................................................13
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Fully Diluted Shares........................................................3
GAAP.......................................................................22
Governmental Entity........................................................20
Hazardous Substance........................................................36
HSR Act....................................................................21
Indemnified Parties........................................................55
Indentures..................................................................5
Independent Directors......................................................10
License Agreements.........................................................41
Liens......................................................................18
Merger.....................................................................11
Merger Consideration.......................................................13
Merger Subsidiary ..........................................................1
Minimum Stock Condition.....................................................3
Minimum Note Condition......................................................5
Noteholders.................................................................6
Notes.......................................................................1
Notes Offer to Purchase.....................................................5
Notes Tender Offers.........................................................1
Notes Tender Offers Documents...............................................6
Offer.......................................................................1
Offer Documents.............................................................4
Option Plans...............................................................16
Order......................................................................60
Parent......................................................................1
Parent Material Adverse Effect.............................................44
Paying Agent...............................................................13
PBGC.......................................................................26
Permits....................................................................34
Proposed Amendments.........................................................6
Recommendations.............................................................7
Rights.....................................................................18
Rights Agreement...........................................................18
Schedule 14D-9..............................................................8
SEC.........................................................................4
Securities Act.............................................................21
Senior Notes................................................................1
Senior Subordinated Notes...................................................1
Senior Subordinated Notes Tender Offer......................................1
Shares......................................................................1
Software...................................................................40
Stock Option Agreement......................................................2
Stockholders................................................................2
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Stockholders Agreement......................................................2
Subsidiary.................................................................17
Superior Proposal..........................................................54
Supplemental Indentures.....................................................6
Surviving Corporation......................................................11
Tax Returns................................................................30
Termination Fee............................................................66
Trade Secrets..............................................................40
Trademarks.................................................................40
Trustee....................................................................16
WARN Act...................................................................39
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 27, 2001, is by and among Temple-Inland Inc., a Delaware corporation
("Parent"), Temple-Inland Acquisition Corporation, a Delaware corporation and
an indirect, wholly-owned subsidiary of Parent ("Merger Subsidiary"), and
Xxxxxxx Container Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, the Board of Directors of each of Parent, Merger Subsidiary
and the Company have unanimously approved the acquisition of the Company by
Parent and Merger Subsidiary;
WHEREAS, in furtherance of such acquisition, it is proposed that
Merger Subsidiary shall make a cash tender offer (the "Offer") to acquire all of
the issued and outstanding shares of Class A Common Stock, par value $.0001 per
share (the "Company Common Stock"), of the Company (the "Shares"), including the
associated Rights (defined below in Section 4.3), in accordance with the terms
provided in this Agreement;
WHEREAS, in furtherance of such acquisition, it is proposed that
simultaneously with the commencement of the Offer, Parent or its designee shall
make (i) a tender offer (the "9-3/8% Senior Notes Tender Offer") for all of the
$200 million aggregate principal amount at maturity of the Company's outstanding
9-3/8% Senior Notes due 2007 (the "9-3/8% Senior Notes"); (ii) a tender offer
(the "9-3/4% Senior Notes Tender Offer") for all of the $225 million aggregate
principal amount at maturity of the Company's outstanding 9-3/4% Senior Notes
due 2007 (the "9-3/4% Senior Notes," and, together with the 9-3/8% Senior Notes,
the "Senior Notes"), and (iii) a tender offer (the "Senior Subordinated Notes
Tender Offer," and, together with the 9-3/8% Senior Notes Tender Offer and the
9-3/4% Senior Notes Tender Offer, the "Notes Tender Offers") for all of the $250
million aggregate principal amount at maturity of the Company's outstanding
9-7/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes," and,
together with the Senior Notes, the "Notes");
WHEREAS, consummation of the Offer is expressly conditioned upon
consummation of each of the Notes Tender Offers;
WHEREAS, in furtherance of such acquisition, the Board of each of
Parent, Merger Subsidiary and the Company have approved this Agreement and the
Merger (as defined in Section 2.1) following the Offer in accordance with the
General Corporation Law of the State of Delaware (the "DGCL") and upon the terms
and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has determined that the consideration to be paid for each Share in connection
with the Offer and the Merger is fair to the holders of such Shares and has
resolved to recommend that the holders of such Shares accept the Offer and
approve this Agreement and each of the transactions contemplated by this
Agreement upon the terms and subject to the conditions set forth herein;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Subsidiary to enter into this Agreement, Parent and certain stockholders
of the Company (collectively, the "Stockholders") are entering into an
agreement, dated as of the date hereof (the "Stockholders Agreement") pursuant
to which the Stock holders will agree to tender all of their Shares in the Offer
and to take certain other actions in furtherance of the transactions
contemplated by this Agreement upon the terms and subject to the conditions set
forth in the Stockholders Agreement; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Subsidiary to enter into this Agreement, the Company, is entering into a
Stock Option Agreement, dated as of the date hereof (the "Stock Option
Agreement"), with Parent and Merger Subsidiary pursuant to which the Company is
granting to Merger Subsidiary an option to purchase Shares upon the terms and
subject to the conditions set forth in the Stock Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Subsidiary and the Company
hereby agree as follows:
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ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that (i) this Agreement shall not
have been terminated in accordance with Section 10.1 and (ii) none of the events
set forth in Annex I hereto shall have occurred or be existing and not have been
waived, Merger Subsidiary shall, not later than five business days from the
first public announcement of the execution of this Agreement, commence the
Offer. Each Share (including the associated Right) accepted by Merger Subsidiary
in accordance with the Offer shall be purchased for $1.80, net to the seller in
cash, without interest. The Offer shall be subject to the conditions (i) that
there shall be validly tendered in accordance with the terms of the Offer prior
to the expiration date of the Offer and not withdrawn a number of Shares which,
together with the Shares then owned by Parent and Merger Subsidiary, represents
at least two-thirds of the total number of outstanding Shares, assuming the
exercise of all outstanding warrants, options, rights and convertible securities
(if any) (other than the Rights, Parent's option to acquire Company Common Stock
pursuant to the Stock Option Agreement, to the extent not then exercised and
options cancelled pursuant to Section 3.4(a) hereof) and the issuance of all
Shares that the Company is obligated to issue pursuant thereto (such total
number of outstanding Shares being hereinafter referred to as the "Fully Diluted
Shares") (the "Minimum Stock Condition"), (ii) that Parent shall have
simultaneously accepted for payment Notes in each of the Notes Tender Offers,
and (iii) that the other conditions set forth in Annex I hereto shall have been
satisfied or waived. Parent and Merger Subsidiary expressly reserve the right to
waive the conditions to the Offer and to make any change in the terms or
conditions of the Offer; provided that, without the written consent of the
Company, no change may be made which changes the form or amount of consideration
to be paid (other than by adding consideration), imposes conditions to the Offer
in addition to those set forth in Annex I or changes or waives the Minimum Stock
Condition or amends any other term of the Offer in a manner materially adverse
to the holders of Shares. If on the initial scheduled expiration date of the
Offer, which shall be no earlier than 20 business days after the date the Offer
is commenced, all conditions to the Offer shall not have been satisfied or
waived, Merger Subsidiary may, from time to time, in its sole discretion, extend
the expiration date; provided that without the prior written consent of the
Company, Merger Subsidiary may not extend the Offer beyond December 28, 2001
(except that Parent may extend the expiration date of the Offer after December
28, 2001 as required to comply with any rule, regulation or interpretation of
the SEC). Subject to the terms and conditions of the Offer, Parent shall
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cause Merger Subsidiary to accept for payment and pay for, as promptly as
practicable after the expiration of the Offer, all Shares validly tendered and
not withdrawn pursuant to the Offer. In addition, Merger Subsidiary may extend
the Offer after the acceptance of Shares thereunder for a further period of time
by means of a subsequent offering period under Rule 14d-11 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of not
more than 20 business days to meet the objective (which is not a condition to
the Offer) that there be validly tendered, in accordance with the terms of the
Offer, prior to the expiration date of the Offer (as so extended) and not
withdrawn a number of Shares, which together with Shares then owned by Parent
and Merger Subsidiary, represents at least 90% of the Fully Diluted Shares.
(b) As soon as practicable after the date of this Agreement, and not
later than five business days from the first public announcement of the
execution of this Agreement, Parent shall, and Parent shall cause Merger
Subsidiary to, file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto and any other filings pursuant to which the Offer will be
made, the "Offer Documents"). Parent, Merger Subsidiary and the Company each
agree promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect. Parent and Merger Subsidiary agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC. In addition, Parent and
Merger Subsidiary agree to provide the Company and its counsel with any
comments, whether written or oral, that Parent or Merger Subsidiary or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments or other
communications.
Section 1.2 The Notes Tender Offers. (a) Provided that this Agreement
shall not have been terminated in accordance with Section 10.1 and none of the
events or circumstances set forth in Annex I hereto shall have occurred and be
existing and not have been waived, Parent agrees that it or its designee will
commence the Notes Tender Offers as promptly as reasonably practicable after
the date hereof, but in no event later than five business days after the first
public announcement of the execution hereof. The aggregate consideration
payable to each holder of
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Notes pursuant to the Notes Tender Offers shall be an amount in cash set forth
in the Offer to Purchase and Consent Solicitation Statement made by Parent in
connection with the Notes Tender Offers attached as Exhibit A hereto as amended
from time to time (the "Notes Offer to Purchase"). In connection with the Notes
Tender Offers, Parent intends to solicit consents to amend, eliminate or waive
certain sections of the Indenture relating to the 9-3/8% Senior Notes, dated as
of February 23, 1998 among the Company, the guarantors party thereto and State
Street Bank and Trust Company, as trustee, the Indenture relating to the 9-3/4%
Senior Notes, dated as of June 12, 1997 among the Company, the guarantors party
thereto and Fleet National Bank, as trustee, and the Indenture relating to the
Senior Subordinated Notes, dated as of February 23, 1998 among the Company, the
guarantors party thereto and Chase Bank of Texas, National Association, as
trustee (collectively, the "Indentures"), as set forth in the Notes Offer to
Purchase. Parent's obligation to accept for payment and pay for the Notes and
related consents tendered pursuant to the Notes Tender Offers shall be subject
to the conditions that (i) the aggregate principal amount of each series of
Notes validly tendered and not withdrawn prior to the expiration of the Notes
Tender Offers, combined with the Notes already owned by Parent, Merger
Subsidiary and their affiliates, constitutes at least 90% of the aggregate
principal amount of each of the 9-3/8% Senior Notes, the 9-3/4% Senior Notes and
the Senior Subordinated Notes outstanding at the expiration of the Notes Tender
Offer with respect to each of such series of Notes (the "Minimum Note
Condition"), (ii) Parent receives consents from at least a majority of the
outstanding principal amount of each series of the Notes, and (iii) the other
conditions set forth in Annex I hereto shall have been satisfied or waived
(including, without limitation, the Minimum Stock Condition). Parent expressly
reserves the right to waive any such condition (including without limitation the
Minimum Note Condition), to increase the price payable for each Note and related
consent tendered in the Notes Tender Offers, and to make any other changes in
the terms and conditions of the Notes Tender Offers; provided, however, that
Parent agrees that no change may be made without the consent of the Company
which decreases the price payable for each Note and related consent tendered in
the Notes Tender Offers, which increases the Minimum Note Condition, which
eliminates the Minimum Stock Condition, which amends or eliminates any section
of the Indentures, that, by the terms thereof, requires the approval of the
holders of 100% of the outstanding principal amount of the Notes, which
otherwise modifies or amends the conditions to the Notes Tender Offers or any
other term of the Notes Tender Offers in a manner that is materially adverse to
the tendering holders of the Notes, which imposes conditions to the Notes Tender
Offers in addition to those set forth in Annex I hereto, or which extends the
expiration date of the Notes Tender Offers beyond December 28, 2001 (except that
Parent may extend the expiration date of the
5
Notes Tender Offers after December 28, 2001 as required to comply with any rule,
regulation or interpretation of the SEC or to coincide with the termination date
of the Offer); provided, however, that Parent expressly reserves the right, in
its sole discretion, to reduce the minimum percentage of any series of Notes to
be purchased in the Notes Tender Offers. The Notes Tender Offers shall provide
that any tender of Notes under the Notes Tender Offers shall also constitute a
consent to the amendments to the Indentures. Subject to the terms and
conditions of the Notes Tender Offers (including, without limitation, the
Minimum Note Condition), Parent agrees to accept for payment and to pay for, as
promptly as practicable after expiration of the Notes Tender Offers, all Notes
and related consents validly tendered and not withdrawn.
(b) Parent agrees to disseminate to the record holders of the Notes,
and to the extent disclosed to Parent by the Company, the beneficial owners of
the Notes (collectively, the "Noteholders"), the Notes Tender Offers pursuant to
the terms of the Notes Offer to Purchase, together with related letters of
transmittal and similar ancillary agreements (such documents, together with all
supplements and amendments thereto, being referred to herein collectively as the
"Notes Tender Offers Documents"), which shall have been provided to the Company
and its counsel a reasonable time prior to dissemination to holders of the Notes
and to which the Company shall not have reasonably objected. Parent and the
Company agree to correct promptly any information provided by any of them for
use in the Notes Tender Offers Documents which shall have become false or
misleading, and Parent further agrees to take all steps necessary to cause the
Notes Tender Offers Documents as so corrected to be disseminated to holders of
Notes, in each case as and to the extent required by applicable Federal
securities laws.
(c) At such time as Parent receives consents from at least a majority
of each series of the outstanding principal amount of the Notes, the Company
agrees to execute, and to cause the guarantors party to the Indentures to
execute, and will use all reasonable efforts to cause the trustees under the
Indentures to execute, supplemental indentures (the "Supplemental Indentures")
in order to give effect to the amendments of the Indentures contemplated in the
Notes Tender Offers Documents; provided, however, that notwithstanding the fact
that the Supplemental Indentures will become effective upon such execution, the
proposed amendments set forth therein (the "Proposed Amendments") will not
become operative unless and until the Minimum Note Condition is satisfied or
waived and all other conditions to the Notes Tender Offers set forth on Annex I
have been satisfied or waived by Parent and Parent accepts all Notes (and
related consents) validly tendered for purchase and
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payment pursuant to the Notes Tender Offers. In such event, the parties hereto
agree that the Proposed Amendments will be deemed operative as of immediately
prior to such acceptance for payment, and Parent will thereafter be obligated to
make all payments for the Notes (and related consents) so tendered.
(d) The Company agrees to promptly furnish Parent with mailing labels
containing the names and addresses of all record holders of Notes and security
position listings of the Notes held in depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of Noteholders. The Company agrees to
furnish Parent with such additional information, including, without limitation,
updated listings and computer files of Noteholders, mailing labels and security
position listings, and such other assistance as Parent or its agents may
reasonably request. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Notes Tender Offers
Documents and any other documents necessary to consummate the transactions
contemplated thereby, Parent shall hold in confidence the information contained
in such labels, listings and files, shall use such information only in
connection with the Notes Tender Offers and, if this Agreement shall be
terminated in accordance with Section 10.1, shall deliver to or cause to be
delivered to the Company all copies of such information, labels, listings and
files then in its possession or in the possession of its agents or
representatives.
Section 1.3 Company Action. (a) The Company hereby approves of and
consents to the Offer and the Notes Tender Offers and represents that the
Company Board has unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are
advisable and are fair to and in the best interest of the Company's
stockholders, (ii) approved and adopted this Agreement, including the Offer, the
Merger, the Stock Option Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby, which approval constitutes
approval under Section 203 of the DGCL such that the Offer, the Merger, this
Agreement, the Stock Option Agreement and the Stockholders Agreement and the
other transactions contemplated hereby and thereby are not and shall not be
subject to any restriction of Section 203 of the DGCL, and (iii) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares to Merger Subsidiary thereunder and approve and adopt this Agreement and
the Merger (the recommendations referred to in this clause (iii) are
collectively referred to in this Agreement as the "Recommendations"). The
Company further represents that Deutsche Banc Alex. Xxxxx and Xxxxxxxxxx Inc.
have rendered to the Company Board their opinions that the consideration to be
7
received by the Company's stockholders pursuant to this Agreement is fair to
such stockholders from a financial point of view. The Company has been advised
that all of its directors and executive officers presently intend to tender
their Shares pursuant to the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company will file with the SEC and disseminate to holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") which shall contain,
except as provided in Section 6.4, the Recommendations. At the time the Offer
Documents are first mailed to the stockholders of the Company, the Company shall
mail or cause to be mailed to the stockholders of the Company such Schedule
14D-9 together with such Offer Documents. The Company further agrees to take all
steps necessary to cause the Schedule 14D-9 to be disseminated to holders of the
Shares, as and to the extent required by applicable Federal securities laws.
Each of the Company, on the one hand, and Parent and Merger Subsidiary, on the
other hand, agrees promptly to correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect 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 to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable Federal securities laws. Parent and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, Merger
Subsidiary and their counsel with any comments, whether written or oral, that
the Company or its counsel may receive from time to time from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments or other communications.
(c) In connection with the Offer, the Company shall promptly furnish
Merger Subsidiary with mailing labels containing the names and addresses of all
record holders of Shares and with security position listings of Shares held in
stock depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and non-objecting beneficial owners of Shares. The
Company shall furnish Merger Subsidiary with such additional information,
including, without limitation, updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance as Parent, Merger Subsidiary or their agents may reasonably require
in communicating the Offer to the record and beneficial holders of Shares.
Subject to the requirements of applicable law, and except for
8
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Merger
Subsidiary shall hold in confidence the information contained in such labels,
listings and files, shall use such information solely in connection with the
Offer and the Merger, and, if this Agreement is terminated, will upon the
request of the Company deliver or cause to be delivered to the Company all
copies of such information, labels, listings and files then in their possession
or in the possession of their agents or representatives.
Section 1.4 Directors. (a) Promptly upon the purchase of and payment
for Shares by Merger Subsidiary or any of its affiliates pursuant to the Offer
as a result of which Parent or Merger Subsidiary beneficially own at least a
majority of the outstanding Shares, Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company Board
that equals the product of (i) the total number of directors on the Company
Board (giving effect to the election of any additional directors pursuant to
this Section 1.4) and (ii) the percentage that the number of Shares owned by
Parent or Merger Subsidiary (including Shares accepted for payment) bears to
the total number of Shares outstanding. In furtherance thereof, the Company
shall, upon request of the Parent, use its best efforts promptly either to
increase the size of its Board 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, and the Company
shall take all actions available to the Company to cause such designees of
Parent to be so elected and, subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, shall cause Parent's designees to be so
elected. At such time, the Company shall, if requested by Parent, also take all
action necessary to cause persons designated by Parent to constitute the same
percentage (rounded up to the next whole number) as is on (i) each committee of
the Company Board, (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.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.4(a), including mailing to
stockholders the information required by such Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary to enable Parent's
designees to be elected or appointed to the Company Board immediately after the
purchase of and payment for any Shares by Parent or any of its Subsidiaries (as
defined in Section 4.1) as a result of which Parent and its Subsidiaries
beneficially own at least a majority of then
9
outstanding Shares. Parent or Merger Subsidiary will supply the Company all
information with respect to either of them and their nominees, officers,
directors and affiliates required to be disclosed by such Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The provisions of this
Section 1.4 are in addition to and shall not limit any rights which Merger
Subsidiary, Parent or any of their affiliates may have as a holder or beneficial
owner of Shares as a matter of law with respect to the election of directors or
otherwise.
(c) In the event that Parent's designees are elected or appointed to
the Company Board, until the Effective Time, the Company Board shall have at
least two directors who are directors on the date hereof and are not employees
of the Company ("Independent Directors"), provided that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there be only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Independent Directors for purposes of this
Agreement or, if no Independent Director then remains, the other directors
shall designate two persons to fill such vacancies who shall not be
stockholders, affiliates, associates or employees of Parent, Merger Subsidiary
or the Company, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees constitute a majority of the
directors on the Company Board, the affirmative vote of a majority of the
Independent Directors shall be required after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, to (a) amend or
terminate this Agreement by the Company, (b) cause the Company to extend or
waive the time for the performance of any of the obligations or other acts of
Parent or Merger Subsidiary under this Agreement, (c) waive any of the Company's
rights hereunder, or (d) take any other action under or in connection with this
Agreement if such action materially and adversely affects holders of Shares
other than Parent or Merger Subsidiary; provided, that if, notwithstanding
reasonable efforts set forth above to ensure that at least two directors are
Independent Directors, there shall be no such directors, such actions (except
for any amendment, modification or waiver of Sections 2.3 or 8.1 hereof) may be
effected by unanimous vote of the entire Company Board.
10
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the relevant provisions of
the DGCL, Merger Subsidiary shall be merged with and into the Company (the
"Merger") at the Effective Time (hereinafter defined). Following the Merger, the
separate corporate existence of Merger Subsidiary shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Merger Subsidiary
in accordance with the DGCL.
Section 2.2 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of the
conditions set forth in Section 9.1, at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 0000 Xxx Xxxx Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000, unless
another date or place is agreed to in writing by the parties hereto (such date
upon which the Closing occurs, the "Closing Date").
Section 2.3 Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article IX (and subject to
no other condition set forth herein or otherwise), the parties shall use their
best efforts to consummate the Merger, including without limitation (if
required) voting all Shares held by such parties in favor of the Merger and
filing a certificate of merger or other appropriate documents (the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as Parent and the
Company shall agree and specify in the Certificate of Merger (the time the
Merger becomes effective, the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
11
Section 2.5 Certificate of Incorporation and By-Laws. (a) The
Certificate of Incorporation of Merger Subsidiary, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
(b) The By-Laws of Merger Subsidiary as in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation, until changed or amended
as provided therein or by applicable law.
Section 2.6 Directors. The directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their successors are
duly elected and qualified.
Section 2.7 Officers. The officers of Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their successors are
duly elected and qualified.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Merger
Subsidiary:
(a) Capital Stock of Merger Subsidiary. Each issued and out standing
share of the capital stock of Merger Subsidiary shall be converted into and
become one fully paid and nonassessable share of common stock, par value $.01
per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned by the Company or by any Subsidiary of the
Company and each share of Company Common Stock that is owned by Parent, Merger
Subsidiary or any other Subsidiary of Parent shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
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(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares to be canceled in accordance
with Section 3.1(b) or shares as to which appraisal rights have been exercised
in accordance with Section 3.3) shall be converted into the right to receive
$1.80, net to the seller in cash (the "Merger Consideration"), without interest.
As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
Section 3.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company to
act as agent for the holders of the Shares in connection with the Merger to
receive in trust the Merger Consideration to which holders of the Shares shall
become entitled pursuant to Section 3.1(c) (the "Paying Agent"). At the
Effective Time, Parent shall deposit with the Paying Agent, for the benefit of
the holders of shares of Company Common Stock, for payment in accordance with
this Article III, the aggregate Merger Consideration to be paid pursuant to
Section 3.1(c) (collectively, the "Exchange Fund") for the outstanding shares of
Company Common Stock. For purposes of determining the amount of Merger
Consideration to be deposited by Parent in the Exchange Fund, Parent shall
assume that no holder of Shares will perfect such holder's right to appraisal of
such holder's Shares.
(b) Exchange Procedure. As soon as practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates") whose shares
were converted into the right to receive the Merger Consideration pursuant to
Section 3.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in a
form and have such other provisions as Parent may reason ably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
13
the Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 3.1, and the Certificate so surrendered
shall be canceled. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, payment
may be made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. At any time after the Effective Time, each Certificate shall be
deemed to represent only the right to receive, without interest, upon surrender
the Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 3.1.
(c) No Further Ownership Rights in Company Common Stock. All Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of this Article III shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock represented by
such Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article III.
(d) Termination of Exchange Fund; No Liability. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates for
one year after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article III shall thereafter look only to Parent for payment of their claim for
Merger Consideration. None of Parent, Merger Subsidiary, the Company or the
Paying Agent shall be liable to any person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to one year after the Effective Time (or
immediately prior to such date on which any amounts payable pursuant to this
Article III would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.4(c)), any such amounts shall, to
the extent permitted by applicable escheat law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto. Any portion of the Merger Consideration deposited
in the
14
Exchange Fund pursuant to this Section 3.2 in consideration of Shares for which
appraisal rights, if any, have been perfected shall be returned to Parent, upon
demand.
(e) Investment of Exchange Fund. The Paying Agent shall invest any
cash in the Exchange Fund, as directed by Parent; provided that such investments
shall be in obligations of or guaranteed by the United States of America or of
any agency thereof and backed by the full faith and credit of the United States
of America or in commercial paper obligations rated A-1 or P-1 or better by
Standard & Poor's Ratings Group or Xxxxx'x Investor Service, Inc., respectively.
Any interest and other income resulting from such investments shall be paid to
Parent.
(f) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect thereto.
Section 3.3 Dissenting Shares. Notwithstanding Section 3.1(c), Shares
outstanding immediately prior to the Effective Time and held by a holder who has
demanded appraisal for such Shares in accordance with the DGCL shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal. If
after the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisal of Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
Section 3.4 Company Options.
(a) Stock Options. Prior to consummation of the Offer, the Company
shall take all necessary action to: (i) terminate, effective not later than the
Effective Time, the Xxxxxxx Container Corporation Employee Stock Purchase Plan
15
and all of the stock option plans listed in Section 4.12(a) of the Company
Disclosure Schedule (as defined in Section 4.2) (the "Option Plans"), (ii)
cancel, effective not later than the Effective Time, each option to purchase
shares of Company Common Stock granted under the Xxxxxxx Container Corporation
1997 Long-Term Equity Incentive Plan and the Xxxxxxx Container Corporation
Outside Director Stock Option Plan, that is outstanding and unexercised as of
such time, (iii) cancel, effective not later than the Effective Time, each
option to purchase shares of Company Common Stock granted under all Option Plans
held by any of the individuals listed in Section 3.4(a) of the Company
Disclosure Schedule that is outstanding and unexercised as of such time, (iv)
use its commercially reasonable efforts to obtain consents of the individual
holders to cancel, effective not later than the Effective Time, each outstanding
option to purchase shares of Company Common Stock granted under any Option Plans
that is outstanding and unexercised as of such time and that is not otherwise
canceled pursuant to the foregoing clauses (ii) and (iii) (it being under stood
that the failure of the Company to obtain the consent of any such holder, after
a good faith effort, shall not be deemed a breach of this clause (iv)).
(b) Compliance with Section 16. Prior to the Effective Time, the
Company shall take all action reasonably necessary to approve the disposition of
the Company Options and other awards in accordance with this Section 3.4 so as
to exempt such dispositions under Rule 16b-3 of the Exchange Act. By adopting
and approving this Agreement, the Board of Directors of the Company shall be
deemed to have approved and authorized each and every arrangement with respect
to the Option Plans and other plans, programs, agreements or arrangements as may
be deemed necessary or appropriate to give effect to the provisions of this
Section 3.4.
Section 3.5 Company Warrants. As of the Effective Time, the
unexercised Company Redeemable Exchangeable Warrants (each a "Company Warrant")
shall be exercisable (subject to the terms and conditions of the Warrant
Agreement between the Company and The Bank of New York, as successor trustee to
Xxxxxx Trust and Savings Bank (the "Trustee"), dated November 2, 1992) only for
such Merger Consideration as is paid and issued to the Trustee, designated
pursuant to the Trust Agreement between the Company and Xxxxxx Trust and Savings
Bank, in exchange for the shares of Company Common Stock held by such Trustee
immediately theretofore obtainable upon exercise of such Company Warrants.
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule attached hereto (the
"Company Disclosure Schedule"), which disclosure schedule shall make a specific
reference to the particular Section of this Agreement to which exception is
being taken, the Company hereby represents and warrants to Parent and Merger
Subsidiary as follows:
Section 4.1 Organization, Standing and Corporate Power. Each of the
Company and each of its Subsidiaries (as defined below) is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate or other power and authority, as the case may be, to carry on its
business as now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed and in good standing (individually or in the aggregate)
would not have, or be reasonably likely to have, a material adverse effect on
the condition (financial or otherwise), business, assets, liabilities, prospects
or results of operations of the Company and its Subsidiaries taken as a whole,
excluding effects from general economic conditions, general securities market
conditions, conditions affecting the Company's industry generally, or the
announcement of this Agreement or the transactions contemplated hereby (a
"Company Material Adverse Effect"). The Company has delivered or made available
to Parent complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificates of Incorporation and By-Laws or other comparable
charter or organizational documents of its Subsidiaries, in each case as
amended to the date of this Agreement. For purposes of this Agreement, a
"Subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person;
and a "person" means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity.
17
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure
Schedule contains a true and accurate list of each Subsidiary of the Company and
its respective jurisdiction of incorporation or organization, the outstanding
capital of each such Subsidiary and the jurisdictions in which each such
Subsidiary is qualified to do business. All the outstanding shares of capital
stock of, or other equity interests in, each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable and are owned
by the Company, by another Subsidiary of the Company or by the Company and
another such Subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock). Except for the capital stock of, or other equity interests
in, its Subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any person.
Section 4.3 Capital Structure. The authorized capital stock of the
Company consists of 25,000,000 shares of Preferred Stock, par value $0.01 per
share (the "Company Preferred Stock"), 125,000,000 shares of Company Common
Stock and 15,000,000 shares of Class B Common Stock, par value $.0001 per share
(the "Company Class B Stock"). As of September 26, 2001, (i) no shares of
Company Preferred Stock were issued and outstanding, (ii) 55,971,493 shares of
Company Common Stock were issued and outstanding, including associated Preferred
Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of June 12, 1995 (the "Rights Agreement"), between the Company and
Xxxxxx Trust and Savings Bank, as Rights Agent, (iii) no shares of Company Class
B Stock were issued and outstanding, (iv) 1,199,301 shares of Company Common
Stock were held by the Company in its treasury or by any of the Company's
Subsidiaries, (v) 2,260,836 shares of Company Common Stock were reserved for
issuance pursuant to the Option Plans (of which 1,854,403 were issuable upon the
exercise of outstanding Company Options), (vi) 827,135 shares of Company Common
Stock were issuable upon the exercise of outstanding Company Warrants, which are
included in the outstanding shares of Company Common Stock set forth in clause
(ii) above, and (vii) 2,130,500 shares were restricted shares of Common Stock,
which are included in the outstanding shares of Company Common Stock set forth
in clause (ii) above. Except as set forth above and except for the Company
Preferred Stock issuable upon exercise of the Rights and the Company Common
Stock issuable upon exercise of the Stock Option Agreement, as of the date of
this Agreement, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are, and all
18
shares which may be issued pursuant to the Option Plans, the Stock Option
Agreement and the Company Warrants will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth above,
there are no out standing bonds, debentures, notes or other indebtedness or
securities 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. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements 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 of 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, commitment, agreement, or undertaking. There are
no outstanding rights, commitments, agreements, or undertakings of any kind
obligating the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock or other voting securities of the
Company or any of its Subsidiaries or any securities of the type described in
the two immediately preceding sentences. There are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the Company or any of
its Subsidiaries. Except as provided by Section 3.4(a), following the Effective
Time, no holder of Company Options or Company Warrants will have any right to
receive shares of common stock of the Surviving Corporation upon exercise of
Company Options or Company Warrants. The Company has delivered or made
available to Parent complete and correct copies of the Option Plans, all forms
of Company Options and all warrant agreements relating to the Company Warrants.
Section 4.3 of the Company Disclosure Schedule sets forth a complete and
accurate list of all Company Options and Company Warrants outstanding as of the
date of this Agreement, and the respective exercise price of each outstanding
Company Option and Company Warrant.
Section 4.4 Authority; Noncontravention; Filings and Consents.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to the requisite approval of
this Agreement by the holders of the outstanding shares of Company Common Stock
(the "Company Stockholder Vote") with respect to the Merger, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
19
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the Merger
if required under the DGCL, to approval of this Agreement by the Company Stock
holder Vote. This Agreement has been duly executed and delivered by the Company
and, assuming that this Agreement constitutes a legal, valid and binding
obligation of Parent and Merger Subsidiary, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws, now or hereafter in effect, relating to or affecting
creditors' rights and remedies and to general principles of equity.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement 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 properties or assets of the Company or any of its
Subsidiaries under, (i) the Certificate of Incorporation or By-Laws of the
Company or the comparable charter or organizational documents of any of its
Subsidiaries in each case as amended to the date of this Agreement, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
paragraph (c) below, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a Company Material Adverse
Effect, (y) impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with or exemption by (collectively, "Consents") any
Federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by the
20
Company or the consummation by the Company of the transactions contemplated by
this Agreement, 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"), and any applicable filings under similar
foreign antitrust or competition laws and regulations, (ii) the filing with the
SEC of (A) the Schedule 14D-9, (B) if required, a proxy statement relating to
the Company Stock holders Meeting (defined below in Section 8.1(b)) (as amended
or supplemented from time to time, the "Company Proxy Statement"), and (C) such
reports under the Exchange Act and the Securities Act (as defined in Section
4.6), as may be required in connection with this Agreement, the Stock Option
Agreement and the Stockholders Agreement and the transactions contemplated
hereby and thereby, (iii) such filings as may be required under state securities
or "blue sky" laws, (iv) the filing of the Certificate of Merger with the
Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
and (v) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be made or obtained
individually or in the aggregate would not (x) have a Company Material Adverse
Effect, (y) impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
Section 4.5 Vote Required. The affirmative vote of the holders of
66-2/3 percent of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve the Merger.
No vote of any class or series of the Company's capital stock is necessary to
approve any of the transactions contemplated by this Agreement other than the
Merger.
Section 4.6 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities. The Company has filed and has heretofore made available
to Parent, true and complete copies of, all required reports, schedules, forms,
statements and other documents with the SEC since September 30, 1999 (the
"Company SEC Documents"). As of their respective dates, (i) the Company SEC
Documents complied, and all similar documents filed prior to the Closing Date
will comply, in all material respects with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and (ii) none of the Company SEC
Documents when filed contained, nor will any similar document filed after the
date of this Agreement contain, any untrue statement of a material fact or
omitted to state a material fact required to be stated
21
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the Company's
Subsidiaries is required to file any forms, reports or other documents with the
SEC. The financial statements of the Company included in the Company SEC
Documents (including any similar documents filed after the date of this
Agreement) as of their respective dates comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") (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 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 (subject, in the case of unaudited statements, to normal and recurring
year-end audit adjustments). Except as reflected in the financial statements of
the Company included in the Company SEC Documents, neither the Company nor any
of its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which are required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto other than any liabilities and obligations
(i) incurred since September 30, 2000 in the ordinary course of business, (ii)
pursuant to this Agreement and the transactions contemplated hereby or (iii)
which, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect.
Section 4.7 Information Supplied. Neither the Schedule 14D-9, nor any
of the information supplied or to be supplied by the Company or its Subsidiaries
or representatives for inclusion or incorporation by reference in the
Offer Documents will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first published,
sent or given to stockholders, 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 Company Proxy Statement will not, at the
time the Company Proxy Statement is first mailed to the Company's stockholders
or, at the time of the Company Stockholders Meeting, 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 the Company Proxy Statement will comply as to form in all material respects
with the requirements of all applicable laws, including
22
the Exchange Act and the rules and regulations thereunder. No representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent or Merger
Subsidiary specifically for inclusion or incorporation by reference therein.
Section 4.8 Books and Records. The books of account, minute books,
stock record books and other records of the Company and its Subsidiaries are
complete and correct in all material respects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act, including an adequate system of internal controls.
Section 4.9 Inventory. All of the inventories of the Company and each
of its Subsidiaries, whether reflected in the audited balance sheet of the
Company and its consolidated subsidiaries included in the audited financial
statements most recently filed by the Company with the SEC (the "Balance Sheet")
or otherwise, consist of a quality and quantity usable and salable in the
ordinary and usual course of business, except for items of obsolete materials
and materials of below-standard quality, all of which have been written off or
written down on the Balance Sheet to fair market value or for which adequate
reserves have been provided therein. All inventories not written off have been
priced at the lower of average cost or market. The quantities of each type of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable and warranted in the present circumstances of the
Company and each of its Subsidiaries. All work in process and finished goods
inventory is free of any defect or other deficiency.
Section 4.10 Absence of Certain Changes or Events. Since September
30, 2000, except as disclosed in the Company SEC Documents filed prior to the
date hereof, (i) the Company and each of its Subsidiaries has conducted its
respective business only in the ordinary and usual course, (ii) there has not
occurred any event or change (including the incurrence of any liabilities of any
nature, whether or not accrued, contingent or otherwise) having or reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect, and (iii) the Company has not taken any action which would have been
prohibited under Section 6.1 if such section applied to the period between
September 30, 2000 and the date of execution of this Agreement.
23
Section 4.11 Litigation. Except as disclosed in the Company SEC
Documents or in Section 4.11 of the Company Disclosure Schedule, there is no
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, could reasonably be expected to (i) have a Company Material
Adverse Effect, (ii) impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its Subsidiaries having,
or which, insofar as reasonably can be foreseen, in the future would have, any
such effect. Neither the Company nor any of its Subsidiaries is in default under
or in violation of, nor is there any valid basis for any claim of default under
or violation of, any material contract, commitment or restriction to which it is
a party or by which it is bound. The settlement agreement relating to the mass
toxic tort and insurance coverage litigation arising from the accident involving
the explosion of a rail car at Bogalusa, Louisiana in 1995 (the "Settlement
Agreement") is set forth in Section 4.11 of the Company Disclosure Schedule and
validly executed by all of the parties thereto and is in full force and effect
with respect to each of the parties thereto.
Section 4.12 Employee Benefit Plans; ERISA.
(a) Section 4.12(a) of the Company Disclosure Schedule contains a true
and complete list of each employment, bonus, deferred compensation, incentive
compensation, restricted stock, option, performance unit, phantom stock, dental,
health, accident, life, accidental death and dismemberment, fringe, cafeteria,
scholarship, flexible spending arrangement or reimbursement, group legal
services, long term care, dependent care, vacation, paid time off, sick leave,
educational assistance, wellness, employee assistance program, adoption
assistance, vision, voluntary employees beneficiary association, other
insurance, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or any of its Subsidiaries, or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), that together with
the Company or any of its Subsidiaries would be deemed a "single employer"
within the meaning of Section 4001(b)(1) of the Employee Retirement Income
24
Security Act of 1974, as amended ("ERISA"), for the benefit of any current or
former employee or director of the Company, or any of its Subsidiaries or any
ERISA Affiliate, whether formal or informal and whether legally binding or not
(the "Benefit Plans"), and the Company has advised Parent of the dates of
original adoption and any amendments to any Benefit Plans adopted or amended
since January 1, 2000 in the event that such Benefit Plans contain
"change-in-control" or provisions of similar effect that will be triggered by
the consummation of the Offer or the Merger. Section 4.12(a) of the Company
Disclosure Schedule identifies each of the Benefit Plans that is an "employee
welfare benefit plan," or "employee pension benefit plan" as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). None of the Benefit Plans was
entered into, adopted or amended in anticipation of or otherwise in
contemplation of the transactions contemplated by this Agreement or any other
transaction or potential transaction that had been specifically identified at
the time of any such adoption or amendment.
(b) With respect to each of the Benefit Plans, the Company has
heretofore delivered to the Parent true and complete copies of each of the
following documents, as applicable:
(i) the Benefit Plans (including all amendments thereto) for each
written Benefit Plan or a written description of any Benefit Plan that is not
otherwise in writing;
(ii) the annual report or Internal Revenue Service Form 5500
Series, if required under ERISA or the Internal Revenue Code of 1986, as
amended, (the "Code"), with respect to each ERISA Plan for the last three Plan
years ending prior to the date of this Agreement for which such a report was
filed;
(iii) the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three Plan years ending prior to the
date of this Agreement;
(iv) the most recent Summary Plan Description, together with
all Summary of Material Modifications issued with respect to such Summary Plan
Description, if required under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
25
(v) if the Benefit Plan is funded through a trust or any other
funding vehicle, the trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof, if any;
(vi) all contracts relating to the Benefit Plans with respect to
which the Company, any of its Subsidiaries or any ERISA Affiliate may have any
liability, including insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the
Internal Revenue Service with respect to each Benefit Plan that is intended to
be qualified under Section 401(a) of the Code.
(c) No liability under Title IV of ERISA has been incurred by the
Company, any of its Subsidiaries or any ERISA Affiliate since the effective date
of ERISA that has not been satisfied in full, and to the knowledge of the
Company no condition exists that presents a material risk to the Company, or any
of its Subsidiaries or any ERISA Affiliate of incurring any liability under
such Title, other than liability for premiums due to the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will be made when
due. Insofar as the representation made in this Section 4.12(c) applies to
Section 4064, 4069 or 4204 of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which the Company, any Subsidiary or any ERISA Affiliate made, or was required
to make, contributions during the six-year period ending on the last day of the
most recent plan year ended before the date of this Agreement. The PBGC has not
instituted proceedings to terminate any Benefit Plan and, to the knowledge of
the Company, no condition exists that presents a material risk that such
proceedings will be instituted.
(d) With respect to each of the ERISA Plans that is subject to Title
IV of ERISA, the present value of projected benefit obligations under such Plan,
as determined by the Plan's actuary based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such Plan's
actuary with respect to such Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such Plan allocable to such
projected benefit obligations.
(e) None of the Company, any of its Subsidiaries, any ERISA Affiliate,
any of the ERISA Plans, any trust created thereunder, nor to the Company's
26
knowledge, any trustee or administrator thereof has engaged in a transaction or
has taken or failed to take any action in connection with which the Company, any
of its Subsidiaries or any ERISA Affiliate could be subject to any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B of the Code.
(f) All contributions and premiums required to be paid under the terms
of each of the ERISA Plans and Section 302 of ERISA and Section 412 of the Code,
have, to the extent due, been paid in full or properly recorded on the financial
statements or records of the Company or its Subsidiaries. No Benefit Plan or any
trust established thereunder has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived.
(g) Except as set forth in Section 4.12(g) of the Company Disclosure
Schedule, no Plan is a "multiemployer plan," as such term is defined in Section
3(37) of ERISA, nor is any Benefit Plan described in Section 4063(a) of ERISA.
Neither the Company, any Subsidiary nor any ERISA Affiliate has made or suffered
a "complete withdrawal" or "partial withdrawal", as such terms are respectively
defined in Sections 4203 and 4205 of ERISA (or any liability arising therefrom
has been satisfied in full).
(h) Each of the Benefit Plans has been operated and administered in
all material respects in accordance with its terms and applicable laws,
including but not limited to ERISA and the Code.
(i) The Company has applied for and received a currently effective
determination letter from the Internal Revenue Service stating that each of the
ERISA Plans that is intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified and to the knowledge of the Company no event
has occurred since the date of such letter which would affect such qualified
status.
(j) Any Benefit Plan that is intended to satisfy the requirements of
Section 501(c)(9) of the Code has so satisfied such requirements.
(k) Except as disclosed in Section 4.12(k) of the Company Disclosure
Schedule, no amounts payable (individually or collectively and whether in cash,
Company Common Stock or other property) under any of the Benefit Plans or any
other contract, agreement or arrangement with respect to which the Company or
27
any of its Subsidiaries may have any liability could fail to be deductible for
federal income tax purposes by virtue of Section 162(m) or Section 280G of the
Code.
(l) Except as set forth in Section 4.12(l) of the Company Disclosure
Schedule, no Benefit Plan provides benefits, including without limitation death
or medical benefits (whether or not insured), with respect to current or former
employees after retirement or other termination of service (other than (i)
coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, or (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company or its Subsidiaries).
(m) Except as disclosed in Section 4.12(m) of the Company Disclosure
Schedule, the consummation of any of the transactions contemplated by this
Agreement (including without limitation the commencement or completion of the
Offer or the Company Stockholders Meeting (as defined in Section 8.1(b))) will
not, either alone or in combination with any other event, (i) entitle any
current or former employee, officer, director or consultant of the Company, any
of its Subsidiaries or any ERISA Affiliate to severance pay or any other
similar termination payment, or (ii) accelerate the time of payment or vesting,
or increase the amount of, or otherwise enhance, any benefit due to or otherwise
cause a requirement for any payment to any such employee, officer, director or
consultant. The aggregate sum of the payment obligations of the Company
disclosed in Attachment 4.12(m)(i) of the Company Disclosure Schedule will not
exceed $56 million (other than the accelerated vesting of the restricted
stock). Other than the Company's Supplemental Executive Retirement Plan,
Management Incentive Plan, the phantom stock grants and the agreements to be
amended pursuant to Section 7.3(b), no other Benefit Plan provides for benefits
that become payable solely by reason of the consummation of the Offer.
(n) There are no pending or, to the Company's knowledge, threatened or
anticipated claims by or on behalf of any Plan, by any employee or beneficiary
under any such Plan or otherwise involving any such Plan (other than routine
claims for benefits).
(o) Except as disclosed in Section 4.12(o) of the Company Disclosure
Schedule or as expressly permitted by this Agreement, since September 30, 2000,
there has not been (i) any acceleration, amendment or change of the period of
exercisability or vesting of any Company Options or restricted stock, stock
bonus
28
or other awards under the Option Plans or other equity-based plans (including
any discretionary acceleration of the exercise periods or vesting by the Company
Board or any committee thereof or any other persons administering an Option Plan
or other equity-based plan) or authorization of cash payments in exchange for
any Company Options, restricted stock, stock bonus or other awards granted under
any of such Option Plans or other equity-based plans or (ii) any adoption or
amendment by the Company or any of its Subsidiaries of any collective bargaining
agreement or Benefit Plan. None of the Company, any of its Subsidiaries nor any
ERISA Affiliate has any formal plan or commitment, whether legally binding or
not, to create any additional Plan or modify or change any existing Plan that
would affect any current or former employee or director of the Company, any of
its Subsidiaries or any ERISA Affiliate.
(p) Except with respect to changes required by law, there has been no
adoption of, amendment to, written interpretation or announcement (whether or
not written) by the Company or any of its Subsidiaries relating to, or change in
employee participation or coverage under, any Benefit Plan which would increase
materially the expense of maintaining such Benefit Plan above the level of the
expense incurred in respect thereof for the fiscal year ended on September 30,
2000.
(q) Neither the Company nor any ERISA Affiliate is a party to any
agreement or understanding, whether written or unwritten, with the PBGC, the
Internal Revenue Service, the Department of Labor or the Health Financing
Administration.
(r) To the knowledge of the Company, no representations or
communications, oral or written, with respect to the participation, eligibility
for benefits, vesting, benefit accrual or coverage under any Benefit Plan have
been made to employees, directors or agents (or any of their representatives or
beneficiaries) of the Company which are not in accordance with the terms and
conditions of the Benefit Plans.
(s) No "leased employee," as that term is defined in Section 414(n) of
the Code, performs services for the Company or any ERISA Affiliate. Neither the
Company nor any ERISA Affiliate has used the services or workers provided by
third party contract labor suppliers, temporary employees, "leased employees,"
or individuals who have provided services as independent contractors who have
become eligible to participate in the Benefit Plans or used the services of
individuals to an extent that would reasonably be expected to result in the
disqualification of any of the Benefit Plans or the imposition of penalties or
excise taxes with
29
respect to the Benefit Plans by the Internal Revenue Service, the Department of
Labor, the PBGC, or any other Governmental Entity.
Section 4.13 Taxes. As used in this Agreement, "tax" or "taxes" shall
include all Federal, state, local and foreign income, property, sales, excise
and other taxes, tariffs or governmental charges or assessments of any nature
whatsoever as well as any interest, penalties and additions thereto. Except as
set forth in Section 4.13 of the Company Disclosure Schedule:
(a) The Company and each of its Subsidiaries have duly filed all tax
returns, statements, reports and forms required to be filed with any taxing
authority (collectively, the "Tax Returns") excluding only such Tax Returns as
to which any failure to file does not have a Company Material Adverse Effect on
the Company and its Subsidiaries and have duly paid or caused to be duly paid in
full or made provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of all taxes (as
hereinafter defined) for all periods or portions thereof ending through the date
hereof. All such Tax Returns are correct and complete and accurately reflect all
liability for taxes for the periods covered thereby. All taxes owed and due by
the Company and all of its Subsidiaries relating to operations on or prior to
September 30, 2000 (whether or not shown on any Tax Return) have been paid or
have been adequately reflected on the financial statements. Since September 30,
2000, the Company has not incurred liability for any taxes other than in the
ordinary course of business. Neither the Company nor any of its Subsidiaries has
received written notice of any claim made by a govern mental authority in a
jurisdiction where neither the Company nor any of its Subsidiaries file Tax
Returns, that the Company is or may be subject to taxation by that jurisdiction.
(b) The Company and each of its subsidiaries has withheld and timely
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor, stock
holder, or other third party.
(c) The Federal income Tax Returns of the Company and its Subsidiaries
have been examined by the Internal Revenue Service (or the applicable statutes
of limitation for the assessment of Federal income taxes for such periods have
expired) for all periods through and including September 30, 1997, and no
material deficiencies were asserted as a result of such examinations that have
not been resolved or fully paid. The Company has provided Parent with correct
and
30
complete copies of its Federal income tax returns for taxable years ending
September 30, 1996 through September 30, 2000, and examination reports, and
statements of deficiencies with respect to Federal income taxes, if any,
assessed against or agreed to by the Company and any of its Subsidiaries with
respect to Federal income taxes for taxable years ending September 30, 1996
through September 30, 2000.
(d) No Federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are pending with regard to any taxes or Tax Returns of the Company or of any of
its Subsidiaries. No written notification has been received by the Company or by
any of its Subsidiaries that such an audit, examination or other proceeding is
pending or threatened with respect to any taxes due from or with respect to or
attributable to the Company or any of its Subsidiaries or any Tax Return filed
by or with respect to the Company or any Company Subsidiary. There is no dispute
or claim concerning any tax liability of the Company, or any of its Subsidiaries
either claimed or raised by any taxing authority in writing.
(e) Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of taxes or agreed to any extension of time
with respect to a tax assessment or deficiency.
(f) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any Company
Subsidiary.
(g) Neither the Company nor any of its Subsidiaries is a party to any
material tax sharing, tax indemnity or other agreement or arrangement with any
entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(h) None of the Company or any of its Subsidiaries has been a member
of any affiliated group within the meaning of Section 1504(a) of the Code, or
any similar affiliated or consolidated group for tax purposes under state, local
or foreign law (other than a group the common parent of which is the Company),
or has any liability for taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law as a transferee or successor, by
contract or otherwise.
31
(i) As of September 30, 2000, the Company had (i) regular net
operating loss carryforwards in the amount of approximately $650 million for
Federal income tax purposes, (ii) alternative minimum tax net operating loss
carryforwards in the amount of approximately $409 million for Federal income tax
purposes, and (iii) alternative minimum tax credits of approximately $5 million.
(j) Section 4.13(j) of the Company Disclosure Schedule sets forth the
net operating loss carryforwards of the Company and each Subsidiary in each
state in which the Company and/or each Subsidiary files an income or franchise
tax return.
(k) As of the date hereof, none of the net operating loss carryovers,
capital loss carryovers, or tax credits of any kind of the Company or any
Subsidiary is subject to any limitation on its use under Section 382, 383 or
1502 of the Code, or any provision of any regulation (whether final or
temporary) promulgated under such Code provisions.
(l) The Company has maintained records and made the required
determinations contemplated by the regulations (final and temporary) promulgated
under Section 382 of the Code with respect to testing dates, owner shifts, and
the determination of whether or not an ownership change has occurred. Except as
disclosed on Section 4.13(l) of the Company Disclosure Schedule, as of the date
hereof, no ownership change within the meaning of Code Section 382 has occurred
with respect to the Company or any Subsidiary.
(m) As of the date hereof, the Company has properly computed any
restructuring reductions due to bankruptcy to its regular and alternative
minimum tax net operating loss carry forwards in accordance with Sections 108
and 382(l)(5) of the Code and the regulations promulgated thereunder.
(n) As of the close of the Company's most recent taxable year for
Federal income tax purposes, the aggregate adjusted tax basis of the assets of
the Company and its Subsidiaries (including only those Subsidiaries which are
corporations included in the Company consolidated Federal income tax return),
excluding (i) stock of members of the affiliated group of which the Company is
the parent corporation, (ii) intercompany advances and indebtedness among such
members or between any such member and any entity treated as a partnership for
Federal income tax purposes, and (iii) the effect of any indebtedness or
liability on the tax basis of any equity interest in any entity treated as a
partnership for Federal income tax purposes,
32
exceeded $500 million for regular Federal income tax purposes. Section 4.13(n)
of the Company Disclosure Schedule sets forth the aggregate adjusted tax basis
of the assets of the Company and including its Subsidiaries as of the close of
the Company's most recent taxable year for regular Federal income tax purposes.
(o) As of the close of the Company's most recent taxable year for
Federal income tax purposes, the aggregate adjusted tax basis of the assets of
the Company and its Subsidiaries (including only those Subsidiaries which are
corporations included in the Company consolidated Federal income tax return),
excluding (i) stock of members of the affiliated group of which the Company is
the parent corporation, (ii) intercompany advances and indebtedness among such
members or between any such member and any entity treated as a partnership for
Federal income tax purposes, and (iii) the effect of any indebtedness or
liability on the tax basis of any equity interest in any entity treated as a
partnership for Federal income tax purposes, exceeded $700 million for Federal
alternative minimum tax purposes. Section 4.13(o) of the Company Disclosure
Schedule sets forth the aggregate adjusted tax basis of the assets of the
Company and including its Subsidiaries as of the close of the Company's most
recent taxable year for Federal alternative minimum tax purposes.
(p) The Company is the parent corporation of an affiliated group of
corporations filing a consolidated Federal income tax return.
(q) For Federal and state income tax purposes, the Company uses a
taxable year ending September 30.
(r) Each partnership (or entity treated as a partnership for Federal
income tax purposes) in which the Company or any Subsidiary (including only
those Subsidiaries which are corporations included in the Company consolidated
Federal income tax return) is a partner has an election under Section 754 of the
Code in effect.
Section 4.14 State Takeover Statutes; Rights Agreement. (a) The
Company Board has approved this Agreement, the Stock Option Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger, and such approval
constitutes approval of this Agreement, the Stock Option Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger by the Company Board
under the
33
provisions of Section 203 of the DGCL and represents all the action necessary to
ensure that such Section 203 does not apply to Parent or Merger Subsidiary in
connection with the transactions contemplated hereby and thereby, including the
Offer, the Merger and the option to purchase Shares pursuant to the Company
Stock Option. To the knowledge of the Company, no other "fair price", "control
share acquisition", "moratorium" or other anti-takeover statute or similar
statute or regulation, applies or purports to apply to this Agreement, the
Stock Option Agreement or the Stockholders Agreement or the transactions
contemplated hereby and thereby, including the Offer and the Merger.
(b) The Company has amended the Rights Agreement to provide that
neither Parent nor any of its affiliates will become an Acquiring Person
(defined in the Rights Agreement), that no Distribution Date, Shares Acquisition
Date or a Trigger Event (each defined in the Rights Agreement) will occur, and
that the Rights will not separate from the underlying shares of Company Common
Stock or give the holders thereof the right to acquire securities of any party
hereto, in each case as a result of the execution, delivery or performance of
this Agreement, the Stock Option Agreement or the Stockholders Agreement or the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement, the Stock Option Agreement or the Stockholders Agreement.
Section 4.15 Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Deutsche Banc
Alex. Xxxxx Inc. and Rothschild Inc. the fees of which will be in an aggregate
amount of less than $10 million (and a copy of whose engagement letter and a
calculation of the fees that would be due thereunder has been provided to
Parent), is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement, the Stock Option Agreement or the Stockholders Agreement based
upon arrangements made by or on behalf of the Company or any of its
Subsidiaries. No such engagement letter obligates the Company to continue to use
the services or pay fees or expenses in connection with any future transaction.
Section 4.16 Permits; Compliance with Laws. Each of the Company and
its Subsidiaries has in effect all material Federal, state, local and foreign
govern mental approvals, authorizations, certificates, filings, 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, except for
the absence of Permits and for defaults
34
under Permits which absence or defaults, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. The
Company and its Subsidiaries have been, and are, in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments, decrees or
orders of any Governmental Entity, and neither the Company nor any of its
Subsidiaries has received any notice from any Governmental Entity or any other
person that either the Company or any of its Subsidiaries is in violation of, or
has violated, any applicable statutes, laws, ordinances, regulations, rules,
judgments, decrees or orders, except such failures to comply or violations as,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
Section 4.17 Environmental Matters. The Company is in compliance in
all material respects with applicable Environmental Laws (as defined below),
including, without limitation, holding all material permits and authorizations
required pursuant to such laws for the ownership and operation of its business
as currently conducted and compliance in all material respects with the terms
thereof, and has no knowledge of any facts or circumstances that would prevent,
interfere with, or materially increase the cost of maintaining such compliance
in the future. Neither the Company nor any of its Subsidiaries has (i) placed,
held, located, released, transported or disposed of any Hazardous Substance
(defined below) on, under, from or at any of the Company's or any of its
Subsidiaries' properties or any other properties, other than in a manner that
would not require remediation pursuant to applicable Environmental Law, (ii) any
knowledge of the presence of any Hazardous Substances that have been released
into the environment on, under or at any of the Company's or any of its
Subsidiaries' properties other than that which would not require remediation
pursuant to applicable Environmental Law, or (iii) received any written notice
(A) of any material violation of any applicable Environmental Law that has not
been resolved, (B) of the institution or pendency of any material suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation, (C) requiring the response to or
remediation of a release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties, (D)
alleging non-compliance by the Company or any of its Subsidiaries with the terms
of any permit required under any Environmental Law in any manner reasonably
likely to require material expenditures or to result in material liability or
(E) demanding payment of a material amount for response to or remediation of a
release of Hazardous Substances at or arising from any of the Company's or any
of its Subsidiaries' properties or any other properties. There are no past or
present facts or circumstances that could reasonably be expected to form the
basis of any Environmental
35
Claim against the Company or any of its Subsidiaries or against any person or
entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law, except where such Environmental Claim, if made, would not have a Company
Material Adverse Effect. All material permits and other governmental
authorizations currently held or required to be held by the Company and its
Subsidiaries pursuant to any Environmental Laws are identified in Section 4.17
of the Company Disclosure Schedule. The Company has provided to Parent all
material assessments, reports, data, results of investigations or audits, and
other material information that is in the possession of or reasonably available
to the Company regarding environmental matters pertaining to or the
environmental condition of the business of the Company and its Subsidiaries, or
the compliance (or noncompliance) by the Company or any of its Subsidiaries with
any Environmental Laws. For purposes of this Agreement, the term "Environmental
Law" means all federal, state, local and foreign laws and regulations relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of Hazardous
Substances, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Substances
as enacted and in effect on or prior to the date hereof; "Hazardous Substance"
shall mean any chemical, pollutant, contaminant, waste, petroleum or petroleum
product and any material defined as toxic or hazardous or otherwise regulated
under any applicable Environmental Law; and "Environmental Claim" shall mean any
claim, action, investigation or notice by any person or entity alleging
potential liability for investigatory, cleanup or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (i) the presence, or release into the environment, of
any Hazardous Substance at any location whether or not owned or operated by the
Company or any of its Subsidiaries, now or in the past, or (ii) any violation,
or alleged violation, of any Environmental Law.
Section 4.18 Contracts; Debt Instruments. (a) Except as otherwise
disclosed in Section 4.18(a)(i) through (v) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to or subject to:
(i) any union contract;
(ii) any employment, consulting, severance, termination, or
indemnification agreement, contract or arrangement providing for future
payments,
36
written or oral, with any current or former officer or director which (1)
exceeds $100,000 per annum or (2) requires aggregate annual payments or total
payments over the life of such agreement, contract or arrangement to such
current or former officer, consultant, director or employee in excess of
$100,000 or $500,000, respectively, and is not terminable by it or its
Subsidiary on 30 days' notice or less without penalty or obligation to make
payments related to such termination;
(iii) any joint venture contract or similar arrangement or any
other agreement not in the ordinary course of business which has involved or is
expected to involve a sharing of revenues of $100,000 per annum or more with
other persons;
(iv) any lease for real or personal property in which the amount
of payments which the Company is required to make on an annual basis exceeds
$100,000;
(v) to the knowledge of the Company, any material agreement,
contract, policy, license, Permit, document, instrument, arrangement or
commitment involving revenues to the Company in excess of $500,000 which has not
been terminated or performed in its entirety and not renewed which may be, by
its terms, terminated by reason of the execution of this Agreement, the Stock
Option Agreement or the Stockholders Agreement or the consummation of the Offer,
the Merger or the Notes Tender Offers or the other transactions contemplated by
this Agreement, the Stock Option Agreement, the Stockholders Agreement or the
documents pursuant to which the Notes Tender Offers will be made; or
(vi) any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment that provides for an express non-
competition covenant with any person or in any geographic area and which limits
in any material respect the ability of the Company to compete in its current
business lines.
(b) All contracts, policies, agreements, leases, licenses,
Permits, documents, instruments, arrangements and other commitments listed in
Section 4.18(a)(i) through (v) and Section 4.18(c) of the Company Disclosure
Schedule or otherwise disclosed in the Company SEC Documents are valid and
binding agreements of the Company or a Subsidiary of the Company and are in
full force and effect, and neither the Company, any of its Subsidiaries nor, to
the knowledge of the Company, any other party thereto, is in default in any
material respect under the
37
terms of any such contract, plan, arrangement, agreement, lease, license,
Permit, instrument or other commitment.
(c) Set forth in Section 4.18(c) of the Company Disclosure Schedule is
(A) a list of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments pursuant to which any indebtedness of the
Company or any of its Subsidiaries in an aggregate principal amount in excess of
$1 million is outstanding or may be incurred and (B) the respective principal
amounts currently outstanding thereunder. For purposes of this Section 4.18(c),
"indebtedness" shall mean, with respect to any person, without duplication, (A)
all obligations of such person for borrowed money, or with respect to deposits
or advances of any kind to such person, (B) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments, (C) all
obligations of such person upon which interest charges are customarily paid, (D)
all obligations of such person under conditional sale or other title retention
agreements relating to property pur chased by such person, (E) all obligations
of such person issued or assumed as the deferred purchase price of property or
services (excluding obligations of such person to creditors for raw materials,
inventory, services and supplies incurred in the ordinary course of such
person's business), (F) all capitalized lease obligations of such person, (G)
all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof), (I) all letters of
credit issued for the account of such person (excluding letters of credit issued
for the benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such person to
purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(K) all guarantees and arrangements having the economic effect of a guarantee of
such person of any indebtedness of any other person; and, except as set forth in
Section 4.18(c) of the Company Disclosure Schedule, none of the agreements,
instruments or obligations set forth in (A) through (K) above are affected by
the consummation of the Offer or the Merger, or the other transactions
contemplated hereby.
Section 4.19 Title to Properties. (a) Each of the Company and its
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its tangible properties and assets, except for such assets that are no
longer used or useful in the conduct of its business, free and clear of all
Liens, except for defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in
38
the aggregate, do not and will not materially interfere with the ability of the
Company and its Subsidiaries to conduct their business as currently conducted.
(b) Each of the Company and its Subsidiaries has complied in all
material respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect. Each
of the Company and each of its subsidiaries enjoys peaceful and undisturbed
possession under all such leases.
Section 4.20 Labor and Employment Difficulties. Except as set forth in
Section 4.20 of the Company Disclosure Schedule, (a) the Company and all of its
Subsidiaries are in material compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and are not engaged in any unfair labor practice; (b) within
the past twelve months there has been no unfair labor practice charge or
complaint filed against the Company or any of its Subsidiaries, and there is no
such charge or complaint presently pending before the National Labor Relations
Board or any state labor relations agency; (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the knowledge of the
Company and its Subsidiaries, threatened against the Company or any of its
Subsidiaries; (d) to the knowledge of the Company and its Subsidiaries, no
representation question exists respecting any employees of the Company or any of
its Subsidiaries; (e) no material grievance or arbitration proceeding arising
out of or under any collective bargaining agreements is pending; (f) there are
no pending employment lawsuits, no pending administrative charges of employment
discrimination before the Equal Employment Opportunity Commission or any state
fair employment practices agency, and, to the knowledge of the Company, no such
threatened lawsuits or charges; (g) there are no pending actions or
investigations against the Company or its subsidiaries by the U.S. Department of
Labor, or any state labor relations agency, and, to the knowledge of the
Company, no such actions or investigations are threatened; (h) in the past
twelve months, neither the Company nor any of its Subsidiaries has experienced
any work stoppage; and (i) in the past twelve months, the Company and its
Subsidiaries have not effectuated a "plant closing", "mass layoff" or
"employment loss" in violation of the Worker Adjustment and Retraining
Notification Act of 0000 (xxx "XXXX Xxx").
Section 4.21 Opinions of Financial Advisors. The Company has received
the opinions of Deutsche Banc Alex. Xxxxx Inc. and Rothschild Inc., dated the
date hereof, signed, accurate and complete copies of which have been or promptly
will be provided to Parent, to the effect that, as of such date, the
consideration
39
to be received by the Company's stockholders pursuant to this Agreement is
fair to the Company's stockholders from a financial point of view. The Company
has been authorized by Deutsche Banc Alex. Xxxxx Inc. and Rothschild Inc. to
permit the inclusion of such opinions in their entirety in the Offer Documents,
the Schedule 14D-9 and the Company Proxy Statement so long as such inclusion is
in form and substance reasonably satisfactory to each of Deutsche Banc Alex.
Xxxxx Inc. and Rothschild Inc., as applicable, and its counsel.
Section 4.22 Interests of Officers and Directors. Except as described
in the Company SEC Documents, none of the Company's or its Subsidiaries'
officers or directors has any material direct or indirect interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of the Company or that of its Subsidiaries, or any supplier,
distributor or customer of the Company or any of its Subsidiaries.
Section 4.23 Intellectual Property. For purposes of this Section 4.23,
"Company Intellectual Property" means all the (i) trademarks, service marks,
trade names, Internet domain names, designs, logos, slogans, and general
intangibles of like nature, together with all goodwill, registrations and
applications related to the foregoing (collectively, "Trademarks"), (ii) patents
(including any registrations, continuations, continuations in part, renewals and
applications for any of the foregoing), (iii) copyrights (including any
registrations and applications for any of the foregoing), (iv) Software and (v)
technology, trade secrets and other confidential information, know-how,
inventions, proprietary processes, formulae, algorithms, models, and
methodologies (collectively, "Trade Secrets") held for use or used in the
conduct of the Company's and each of its Subsidiaries' business as currently con
ducted or contemplated to be conducted. For purposes of this Section 4.23, "Soft
xxxx" means any and all (i) computer programs, including any and all software
implementation of algorithms, models and methodologies, whether in source code
or object code, (ii) databases and compilations, including any and all data and
collections of data, and (iii) all documentation, including user manuals and
training materials, relating to any of the foregoing and the content and
information contained on any website. The Company Intellectual Property is
subsisting, in full force and effect, has not been cancelled, expired or
abandoned, and is valid and enforceable.
(a) Section 4.23(a) of the Company Disclosure Schedule sets forth a
complete and accurate list of all of the following that are owned by the Company
or any of its Subsidiaries: (i) patents and patent applications, (ii) trademark
and service xxxx registrations (including Internet domain name registrations),
trademark and
40
service xxxx applications and material unregistered trademarks, trade names and
service marks, (iii) copyright registrations, copyright applications and
material unregistered copyrights and (iv) Software (other than readily-available
commercial software having an acquisition price of less than $25,000).
(b) Section 4.23(b) of the Company Disclosure Schedule sets forth a
complete and accurate list of all agreements (whether oral or written, and
whether between the Company, any of its Subsidiaries and third parties or
inter-corporate) to which the Company or any of its Subsidiaries is a party or
otherwise bound, (i) granting or obtaining any right to use or practice any
rights under any Company Intellectual Property (other than licenses for readily
available commercial software programs having an acquisition price of less than
$25,000), or (ii) restricting the Company's or any of its Subsidiaries' rights
to use any Company Intellectual Property, including license agreements,
development agreements, distribution agreements, settlement agreements, consent
to use agreements, and covenants not to xxx (collectively, the "License
Agreements"). The License Agreements are valid and binding obligations of the
Company, and, to the knowledge of the Company, all other parties thereto,
enforceable in accordance with their terms, and there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice of lapse of time or both) a default by any party under any
such License Agreement. Neither the Company nor any of its Subsidiaries have
licensed or sublicensed its rights in any Company Intellectual Property other
than pursuant to the License Agreements. No royalties, honoraria or other fees
are payable by the Company or any of its Subsidiaries to any third parties for
the use of or right to use any Company Intellectual Property except pursuant to
the License Agreements.
(c) Except as set forth on Section 4.23(c) of the Company Disclosure
Schedule, the Company or one of its Subsidiaries owns or possesses adequate,
valid and enforceable licenses or other rights to use, free and clear of all
Liens, all Company Intellectual Property.
(d) Except as set forth in Section 4.23(d) of the Company Disclosure
Schedule, the Company's and its Subsidiaries' ownership, licenses or rights in
the Company Intellectual Property (including without limitation its ownership,
licenses or rights in Intellectual Property pursuant to the Trademark License
Agreement, dated July 7, 1992, between the Company and Mid-America Group Ltd.)
will not be affected by the consummation of the Offer or the Merger. The
consummation of the Offer or the Merger will not result in the loss or
impairment of the Company
41
or any of its Subsidiaries' right to own, use or bring any action for the
infringement of, any of the Company Intellectual Property, nor will it require
the Consent of any Governmental Entity or third party in respect of any such
Company Intellectual Property.
(e) To the knowledge of the Company, the conduct of the Company and
any of its Subsidiaries' business as currently conducted or planned to be
conducted does not conflict with or infringe on (either directly or indirectly
such as through contributory infringement or inducement to infringe) any
intellectual property rights owned or controlled by any third party. There is no
pending or, to the knowledge of the Company, threatened claim, suit, arbitration
or other adversarial proceeding before any court, agency, arbitral tribunal or
registration authority in any jurisdiction involving the Company Intellectual
Property or alleging that the activities or the conduct of the Company's or any
Company Subsidiary's businesses infringe upon, violate or constitute the
unauthorized use of the intellectual property rights of any third party or
challenging the Company or any of its Subsidiaries' ownership, use, validity,
enforceability or registrability of any Company Intellectual Property, except
for claims, suits, arbitrations or proceedings that individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect. There are no settlements, forebearances to xxx, consents, judgments, or
orders or similar obligations other than the License Agreements which (i)
restrict the Company's or any of its Subsidiaries' right to use any Company
Intellectual Property, (ii) restrict the Company's or any of its Subsidiaries'
businesses in order to accommodate a third party's intellectual property rights
or (iii) permit third parties to use any Company Intellectual Property owned or
controlled by the Company or any of its Subsidiaries.
(f) To the knowledge of the Company, no third party is using
misappropriating, infringing, diluting or violating any of the Company
Intellectual Property, and no such claims, suits, arbitrations or other
adversarial proceedings have been brought or threatened against any third party
by the Company or any of its Subsidiaries.
(g) The Company and each of its Subsidiaries take reasonable measures
to protect the confidentiality of Trade Secrets, including requiring their
employees and other parties having access thereto to execute written
non-disclosure agreements. To the knowledge of the Company, no Trade Secret has
been disclosed or authorized to be disclosed to any third party other than
pursuant to a non-disclo sure agreement that adequately protects the Company and
its applicable Subsidiary's
42
proprietary interests in and to such Trade Secrets. To the knowledge of the
Company, no party to any non-disclosure agreement relating to its Trade Secrets
is in breach or default thereof.
Section 4.24 Insurance. The Company and its Subsidiaries have obtained
and maintained in full force and effect insurance with responsible and reputable
insurance companies or associations in such amounts, on such terms and covering
such risks as is reasonably prudent, and each has maintained in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with the activities of the
Company and its Subsidiaries or any properties owned, occupied or controlled by
the Company or any of its Subsidiaries, in such amount as reasonably deemed
necessary by the Company or any of its Subsidiaries.
Section 4.25 Customers and Suppliers. Since June 30, 2001, there has
been no termination, cancellation or material curtailment of the business
relationship of the Company or any of its Subsidiaries with any customer or
supplier or group of affiliated customers or suppliers which individually or in
the aggregate would result in a Company Material Adverse Effect nor any written
notice of intent to so terminate, cancel or materially curtail (and would have
such an effect).
Section 4.26 Regulation as a Utility. Except as set forth in Section
4.26 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to regulation as a "holding company," electric utility,"
"public utility," "public utility holding company," or "public service company"
(or similar designations) by the United States, any state of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.
Section 4.27 Qualifying Facility. Each of (i) the approximately 50
megawatt project owned and operated by the Company or one of its Subsidiaries
and located at Antioch, California and (ii) the approximately 75 megawatt
project owned and operated by the Company or one of its Subsidiaries and located
at Bogalusa, Louisiana, meets all requirements for a "qualifying facility" under
the Public Utility Regulatory Policies Act of 1978, as amended, the Federal
Energy Regulatory Commission regulations implemented thereunder and all
administrative and judicial precedents relating thereto, including all
applicable requirements as to project size (in megawatts), fuel-type, operating
and efficiency standards, ownership and useful thermal output. None of the
Company or any of its Subsidiaries owns any other electrical generating
facilities.
43
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally hereby represent
and warrant to the Company as follows:
Section 5.1 Organization, Standing and Corporate Power. Each of Parent
and Merger Subsidiary 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 and authority to carry on its business as now being conducted.
Each of Parent and Merger Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed and in good
standing (individually or in the aggregate) would not have, or be reasonably
expected to have, a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities, prospects or results of operations of
Parent and its Subsidiaries taken as a whole, excluding effects from general
economic conditions, general securities market conditions, conditions affecting
Parent's industry generally or the announcement of this Agreement or the
transactions contemplated hereby (a "Parent Material Adverse Effect"). Parent
has delivered or made available to the Company complete and correct copies of
its and Merger Subsidiary's Certificate of Incorporation and By-Laws, in each
case as amended to the date of this Agreement.
Section 5.2 Authority; Noncontravention; Filings and Consents.
(a) Each of Parent and Merger Subsidiary has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Parent and Merger Subsidiary and the consummation by Parent and
Merger Subsidiary of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of each of Parent
and Merger Subsidiary. This Agreement has been duly executed and delivered by
each of Parent and Merger Subsidiary and, assuming that this Agreement
constitutes a legal, valid and binding obligation of the Company, constitutes a
legal,
44
valid and binding obligation of each of Parent and Merger Subsidiary,
enforceable against each of them in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws, now or
hereafter in effect, relating to or affecting creditors' rights and remedies and
to general principles of equity.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement 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 properties or assets of Parent or any of its
Subsidiaries under, (i) the Certificate of Incorporation or By-Laws of Parent or
Merger Subsidiary, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in paragraph (c) below, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger
Subsidiary or any other subsidiary of Parent or their respective properties or
assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (x) have a Parent Material Adverse Effect, (y) impair the
ability of Parent and Merger Subsidiary to perform their respective obligations
under this Agreement or (z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement.
(c) No Consent by any Governmental Entity is required by or with
respect to Parent or Merger Subsidiary in connection with the execution and
delivery by Parent and Merger Subsidiary of this Agreement or the consummation
by Parent or Merger Subsidiary of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger notification and report form
by Parent under the HSR Act and any applicable filings under similar foreign
antitrust or competition laws and regulations, (ii) the filing with the SEC of
(A) the Offer Documents, and (B) such reports under the Exchange Act as may be
required in connection with this Agreement, the Stock Option Agreement, the
Stockholders Agreement and the transactions contemplated hereby and thereby,
(iii) such filings as may be required under state securities or "blue sky" laws,
(iv) the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, and (v) such other
45
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be made or obtained individually or in the
aggregate would not (x) have a Parent Material Adverse Effect, (y) impair the
Parent's or Merger Subsidiary's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
Section 5.3 Information Supplied. Neither the Offer Documents nor any
of the information supplied or to be supplied by Parent or its Subsidiaries or
representatives for inclusion or incorporation by reference in the Schedule
14D-9 or the Company Proxy Statement will, at the respective times any such
documents or any amendments or supplements thereto are filed with the SEC, are
first published, sent or given to stockholders or become effective under the
Securities Act or, in the case of the Company Proxy Statement, at the time of
the Company Stockholders Meeting, 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 Offer Documents will comply as to
form in all material respects with the requirements of all applicable laws,
including the Exchange Act and the rules and regulations thereunder. No
representation or warranty is made by Parent or Merger Subsidiary with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference therein.
Section 5.4 Brokers. No broker, investment banker, financial advisor
or other person, other than Xxxxxxx Xxxxx Barney Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement or the Stockholders Agreement based
upon arrangements made by or on behalf of Parent or Merger Subsidiary.
Section 5.5 No Prior Activities; Assets of Merger Subsidiary. Merger
Subsidiary was formed solely for the purpose of the Merger and engaging in the
transactions contemplated hereby. As of the date hereof and the Effective Time,
except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated hereby and
activities, agreements or arrangements in connection with the transactions
contemplated hereby, Merger Subsidiary has not and will not have (i) incurred,
directly or indirectly through any of its subsidiaries or affiliates, any
obligations or liabilities, (ii) engaged in any business or activities of any
type or kind whatsoever or (iii) entered into any agreements or arrangements
with any person.
46
Section 5.6 Sufficient Funds. Either Parent or Merger Subsidiary has
available, or has obtained commitment letters (copies of which have heretofore
been provided to the Company) from financial institutions to borrow, sufficient
funds to pay the Merger Consideration, to purchase the Notes pursuant to the
Notes Tender Offers and to pay all fees and expenses related to the Merger.
Section 5.7 No Vote Required. No vote of any class or series of
Parent's or Merger Subsidiary's capital stock is necessary to approve this
Agreement, the Offer, the Notes Tender Offers, the Merger or the other
transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Conduct of Business. The Company covenants and agrees that
prior to the earlier of (i) the Effective Time and (ii) the time the directors
designated by the Parent have been elected to, and shall constitute a majority
of, the Company Board pursuant to Section 1.4 hereof (the "Appointment Date"),
except (i) as expressly provided in this Agreement, (ii) as set forth in Section
6.1 of the Company Disclosure Schedule, or (iii) as agreed in writing by Parent,
after the date hereof:
(a) the Company shall, and shall cause its Subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, distributors and others having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the Effective
Time;
(b) neither the Company nor any of its Subsidiaries shall (i) amend
its Certificate of Incorporation or By-laws or similar organizational document,
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities
47
(other than the issuance of Company Common Stock (1) upon the exercise of
Company Options outstanding on the date of this Agreement, (2) upon the exercise
of Company Warrants outstanding on the date of this Agreement or (3) pursuant to
the Rights Agreement), (iii) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, (iv) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (v) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(c) neither the Company nor any of its Subsidiaries shall (i) incur or
modify any indebtedness or other liability, other than in the ordinary and usual
course of business and consistent with past practice; or (ii) modify, amend or
terminate any of its material contracts or waive, release or assign any material
rights or claims, except in the ordinary course of business and consistent with
past practice;
(d) neither the Company nor any of its Subsidiaries shall (i) incur or
assume any indebtedness (either long-term or short-term), except indebtedness
under the Company's revolving credit facilities that when added to all other
outstanding indebtedness of the Company (as shown on Exhibit B, which shall be
updated and delivered to the Parent from time to time pursuant to a request of
the Parent) shall not exceed $985 million at any time prior to the Appointment
Date, provided, that in no event shall any such indebtedness be used to purchase
or repay any of the Notes (other than scheduled interest payments thereon); (ii)
modify the terms of any indebtedness or other liability unless agreed to in
writing by Parent (which agreement shall not be unreasonably withheld or
delayed); (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person, except as described in Section 6.1(d) of the Company
Disclosure Schedule and which are in the ordinary course of business and
consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other person (other than to or in
wholly owned Subsidiaries of the Company), except in the ordinary course of
business and consistent with past practice to employees for reasonable Company
related expenses (e.g., reasonable travel advances and moving expenses); or (v)
enter into any material commitment or transaction (including, but not limited
to, any capital expenditure or purchase, sale or lease of assets or real
estate), except capital expenditures no greater than $7 million in the aggregate
between September 1, 2001 and December 31, 2001 and except for sales of
inventory in the ordinary course of business and consistent with past practice;
48
(e) neither the Company nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other
than in the ordinary and usual course of business and consistent with past
practice;
(f) except as shall be required by any applicable employment agreement
or collective bargaining agreement in effect on the date hereof and set forth in
Section 6.1(f) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries shall make any change in the compensation payable or to
become payable to any of its officers, directors, employees, agents or
consultants (other than normal recurring increases in wages to employees who are
not officers or directors or affiliates in the ordinary course of business
consistent with past practice) or to persons providing management services, or
enter into or amend any employment, severance, consulting, termination or other
agreement or employee benefit plan or make any loans to any of its officers,
directors, employees (except as permitted in Section 6.1(d)), affiliates, agents
or consultants or make any change in its existing borrowing or lending
arrangements for or on behalf of any of such persons pursuant to an employee
benefit plan or otherwise;
(g) neither the Company nor any of its Subsidiaries shall (i) pay or
make any accrual or arrangement for payment of any pension, retirement allowance
or other employee benefit pursuant to any existing plan, agreement or
arrangement to any officer, director, employee or affiliate or pay or agree to
pay or make any accrual or arrangement for payment to any officers, directors,
employees or affiliates of the Company of any amount relating to unused vacation
days, except payments and accruals made in the ordinary course of business
consistent with past practice; (ii) adopt or pay, grant, issue, accelerate or
accrue salary or other payments or benefits pursuant to any pension,
profit-sharing, bonus, extra compensation, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other employee benefit plan, agreement or
arrangement, or any employment or consulting agreement with or for the benefit
of any director, officer, employee, agent or consultant, whether past or present
(for the avoidance of doubt, nothing in this Section 6.1(g)(ii) shall prevent
the Company from making ordinary payments of salary and fulfilling contractual
obligations existing on the date hereof); or (iii) amend in any material respect
any such existing plan, agreement or arrangement in a manner inconsistent with
the foregoing;
(h) neither the Company nor any of its Subsidiaries shall permit
49
any insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except policies providing
coverage for losses not in excess of $100,000;
(i) neither the Company nor any of its Subsidiaries shall enter into
any contract or transaction relating to the purchase of assets other than in the
ordinary course of business consistent with prior practices;
(j) neither the Company nor any of its Subsidiaries shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
subsidiaries;
(k) neither the Company nor any of its Subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
of its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries will (i) change
any of the accounting methods used by it unless required by GAAP, the Code or
Regulation S-X promulgated under the Exchange Act or (ii) make any material
election relating to taxes, change any material election relating to taxes
already made, adopt any material accounting method relating to taxes, change any
material accounting method relating to taxes unless required by GAAP or the
Code, enter into any closing agreement relating to taxes, settle any claim or
assessment relating to taxes or consent to any claim or assessment relating to
taxes or any waiver of the statute of limitations for any such claim or
assessment;
(m) neither the Company nor any of its Subsidiaries will take, or
agree to commit to take, any action that would or is reasonably likely to result
in any of the conditions to the Offer set forth in Annex I or any of the
conditions to the Merger set forth in Article IX not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company, Parent, Merger Subsidiary or the
holders of Shares to consummate the Offer or the Merger in accordance with the
terms hereof or materially delay such consummation;
50
(n) neither the Company nor any of its Subsidiaries will plan,
announce, implement or effect any material reduction in labor force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or its
Subsidiaries;
(o) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing; and
(p) the Company shall take all reasonable actions to obtain judicial
approval of the Settlement Agreement.
Section 6.2 State Takeover Statutes. The Company and the Company
Board shall (i) take all reasonable actions necessary to ensure that no "fair
price", "control share acquisition", "moratorium" or other anti-takeover
statute, or similar statute or regulation, is or becomes applicable to this
Agreement, the Stock Option Agreement or the Stockholders Agreement, or the
Offer, the Merger or any of the other transactions contemplated hereby or
thereby and (ii) if any "fair price", "control share acquisition", "moratorium"
or other anti-takeover statute, or similar statute or regulation, becomes
applicable to this Agreement, the Stock Option Agreement or the Stockholders
Agreement, or the Offer, the Merger or any other transaction contemplated hereby
or thereby, take all action necessary to ensure that the Offer, the Merger and
the other transactions contemplated hereby and thereby, may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other transactions contemplated hereby and thereby.
Section 6.3 Access to Information. Subject to applicable law and upon
reasonable request, the Company shall, and shall cause each of its Subsidiaries
to, afford to Parent and to Parent's officers, employees, accountants, counsel,
financial advisers and other representatives, full access during normal business
hours during the period prior to the Effective Time to all their respective
properties, books, contracts, commitments, personnel (including for the purpose
of interviewing such personnel in connection with the integration process) and
records and their accountants' work papers and, during such period, the Company
shall, and shall cause each of its Subsidiaries to, furnish promptly to Parent
(i) a copy of each report, schedule,
51
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws, (ii) a copy of
each material tax return, report and information statement filed by it during
such period, and (iii) all other information concerning its business, assets,
properties and personnel as Parent may reasonably request; provided that no
investigation pursuant to this Section 6.3 shall affect any representation or
warranty given by the Company to Parent hereunder. Any investigation pursuant
to this Section 6.3 shall be conducted in such a manner as not to interfere
unreasonably with the conduct of the business of the Company. Unless otherwise
required by law and until the Effective Time, Parent will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement. Following the execution of this Agreement,
Parent and the Company shall cooperate with each other and make all reasonable
efforts to minimize any disruption to the business which may result from the
announcement of the transactions contemplated hereby.
Section 6.4 No Solicitation by the Company.
(a) Neither the Company nor any of its Subsidiaries or affiliates
shall (and the Company shall cause the officers, directors, employees,
representatives and agents of the Company, each of its Subsidiaries and each
affiliate of the Company, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any person or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal (defined below in Section
6.4(c)), except that nothing contained in this Section 6.4 or any other
provision hereof shall prohibit the Company or the Company Board from (i) taking
and disclosing to the Company's stockholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company
stockholders as, in the good faith judgment of the Board, after receiving advice
from outside counsel, is required under applicable law, provided that the
Company may not, except as permitted by Section 6.4(b), withdraw or modify, or
propose to withdraw or modify, the Recommendations or its position with respect
to the Offer or the Merger or approve or recommend, or propose to approve or
recommend any Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal. Upon execution of this Agreement, the Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company
52
may furnish information concerning its business, properties or assets to any
corporation, partnership, person or other entity or group pursuant to
appropriate confidentiality agreements, and may negotiate and participate in
discussions and negotiations with such entity or group concerning an Acquisition
Proposal if:
(x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company Board relating
to any such transaction which the Company Board determines in good
faith, represents a superior transaction to the transactions
contemplated hereby and which is not subject to the receipt of any
necessary financing; and
(y) in the opinion of the Company Board such action is
required to discharge the Company Board's fiduciary duties under
applicable law, determined only after receipt of
(i) advice from the Company's investment banking firm
that the Acquisition Proposal is superior, from a financial point
of view, to the Offer and the Merger (which advice may include
analysis of the enterprise value if the Company's Board has been
advised by independent legal counsel that its fiduciary duties
requires them to do so), and
(ii) advice from independent legal counsel to the
Company that the failure to provide such information or access or
to engage in such discussions or negotiations would cause the
Company Board to violate its fiduciary duties under applicable
law.
The Company will promptly, but in any event within one business day, notify
Parent of the existence of any proposal, discussion, negotiation or inquiry
received by the Company, and the Company will promptly, but in any event within
one business day, communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will immediately provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent.
(b) Except as set forth below in this subsection (b), neither
the
53
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Merger Subsidiary, the
Recommendations or the approval by the Company Board or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, prior
to the time of acceptance for payment of Shares pursuant to the Offer, the
Company Board may withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger, approve or recommend a Superior Proposal
(as defined in Section 6.4(c)), or enter into an agreement with respect to a
Superior Proposal, in each case at any time after the fifth business day
following Parent's receipt of written notice from the Company advising Parent
that the Company Board has received a Superior Proposal which it intends to
accept, specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal, but only if the Company
shall have caused its financial and legal advisors to negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms.
(c) As used herein, "Acquisition Proposal" shall mean any proposal or
offer to acquire all or a substantial part of the business or properties of the
Company or any of its Subsidiaries or 15% or more of any capital stock of the
Company or any of its Subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
Subsidiary, division or operating or principal business unit of the Company.
"Superior Proposal" shall mean an Acquisition Proposal which satisfies both
subsection (x) and subsection (y) of Section 6.4(a).
Section 6.5 Litigation. The Company shall give Parent the opportunity
to participate (at Parent's own cost) in the defense of any litigation against
the Company and/or its directors relating to the transactions contemplated by
this Agreement, the Stock Option Agreement and the Stockholders Agreement.
Section 6.6 Rights Agreement. Except as expressly required by this
Agreement, the Company shall not, without the prior consent of Parent, amend the
Rights Agreement or take any other action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Rights
or any action to facilitate an Acquisition Proposal.
54
Section 6.7 Certain Obligations of the Company. The Company shall have
delivered documents satisfactory to the Parent evidencing that the Company's
obligations in respect of (i) the benefits disclosed in Attachment 4.12(m)(i) of
the Company Disclosure Schedule do not exceed $56 million and (ii) broker's or
advisory fees as referred to in Section 4.15 do not exceed $10 million.
ARTICLE VII
COVENANTS OF PARENT AND MERGER SUBSIDIARY
Section 7.1 Indemnification. From and after the Effective Time, the
Surviving Corporation will indemnify and hold harmless (including advancement of
expenses) the current and former directors and officers of the Company and its
wholly-owned Subsidiaries and Xxxxxxx Container de Mexico, S.A. de C.V. (the
"Indemnified Parties") in respect of claims made within six years following the
Effective Time for acts or omissions occurring on or prior to the Effective Time
to the extent provided in the Company's Certificate of Incorporation, By-Laws
and indemnity agreements in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. Parent will cause to be maintained for a period of not
less than four years from the Effective Time, at Parent's election either (i)
the Company's current directors' and officers' insurance and indemnification
policy to the extent that it provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") for all Indemnified Parties, (ii) a new
policy providing substantially similar coverage, or (iii) a "tail" policy on the
Company's existing D&O Insurance, so long as the annual premium therefor would
not be in excess of 150% of the amount per annum the Company paid in its last
full fiscal year, which amount has been disclosed to Parent, on terms and
conditions substantially similar to the existing D&O Insurance. If the existing
D&O Insurance cannot be maintained, expires or is terminated or canceled during
such four-year period, Parent will use reasonable efforts to cause to be
obtained as much D&O Insurance as can be obtained for the remainder of such
period for an annualized premium not in excess 150% of the amount per annum the
Company paid in its last full fiscal year, on terms and conditions substantially
similar to the existing D&O Insurance. This Section 7.1 shall survive the
consummation of the Merger at the Effective Time, is intended to benefit the
Company and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties. This Section 7.1 shall not limit or otherwise adversely affect any
rights any Indemnified Party may
55
have under any agreement with the Company or under the Company's Certificate of
Incorporation or By-Laws. If Parent, Merger Subsidiary or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person or shall not be the continuing or surviving
corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all its properties and assets to any Person, then, and in each
case, proper provision shall be made so that the successors and assigns of
Parent, Merger Subsidiary or the Surviving Corporation, as the case may be,
honor the indemnification obligations set forth in this Section 7.1.
Section 7.2 Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement (including ensuring that Merger Subsidiary will at the
appropriate times have sufficient funds to consummate the Offer and the Merger)
and to consummate the Offer, the Notes Tender Offers and the Merger on the terms
and conditions set forth in this Agreement.
Section 7.3 Employees.
(a) During the period commencing on the Effective Time and ending on
the first anniversary thereof, Parent shall cause the Surviving Corporation to
provide employees of the Company and the Company's Subsidiaries who were
employees of the Company or the Company's subsidiaries immediately before the
Effective Time with employee benefits that are substantially no less favorable
in the aggregate than either those currently provided by the Company and the
Company's Subsidiaries to such employees as of the date of this Agreement or
those provided from time to time by Parent and its Subsidiaries to their other
similarly situated employees; provided, however, that, during such one-year
period, the benefit provided to any such employee under any tax-qualified
defined benefit pension plan in which the employee participates shall be no less
than that determined under the formula in effect under the Xxxxxxx Container
Retirement Plan as in effect on the date hereof taking into account both (i) the
years of service recognized for such employee under such Retirement Plan as of
the Closing Date and (ii) such employee's service with Parent, the Surviving
Corporation, or any Subsidiary of Parent after the Closing Date during such
one-year period; provided, further, that nothing in this Section 7.3 shall
restrict Parent's or the Surviving Corporation's ability to change any Benefit
Plans in the future.
(b) To the extent that any benefit would become payable in
56
respect of consummation of the Offer under any Benefit Plan required to be
disclosed in Section 4.12(m) of the Company Disclosure Schedule, the Company
shall, prior to the initial expiration of the Offer, take all actions necessary:
(i) to the extent it may unilaterally do so, to amend all such Benefit Plans to
provide that any benefit that would have been required to be paid in respect of
the Offer will instead become payable in respect of the Merger; (ii) to the
extent not amended under the preceding clause (i), to amend all Benefit Plans
with respect to each individual listed on Section 7.3(b)(ii) of the Company
Disclosure Schedule such that any benefit that would have been required to be
paid in respect of the Offer will instead become payable in respect of the
Merger; (iii) to amend the Company's Supplemental Executive Retirement Plan and
the phantom stock grants to the extent such Benefit Plans apply to any
individuals not listed on Section 7.3(b)(ii) of the Company Disclosure Schedule,
such that any benefit that would have been required to be paid in respect of the
Offer will instead become payable in respect of the Merger, but, with respect to
the Supplemental Executive Retirement Plan, providing such individuals with a
payment for the time value of money in respect of the period between the Offer
and the Merger using a discount rate based on U.S. treasuries with the most
comparable maturities such that no benefit under that plan has been reduced
(provided that nothing in this Agreement shall prohibit the Company from
continuing to make periodic payments under and in accordance with the
Supplemental Executive Retirement Plan to any individual listed on Section
7.3(b)(iii) of the Company Disclosure Schedule who is receiving such periodic
payments as of the date of this Agreement until such time as such individual's
benefit is paid out in full by reason of the consummation of the Merger); and
(iv) to use commercially reasonable efforts to obtain the consent of each
affected individual to amend the Company's Management Incentive Plan and each
Severance Compensation Agreement (as amended) with respect to such individual,
to the extent it applies to any individuals not listed on Section 7.3(b)(ii) of
the Company Disclosure Schedule, such that any benefit that would have been
required to be paid in respect of the Offer will instead become payable in
respect of the Merger (it being understood that the failure to obtain the
consent of any such beneficiary, after a good faith effort, shall not be deemed
a breach of this clause (iv)). After the Appointment Date and prior to the
Effective Date, Parent agrees not to, and to cause the Company not to, terminate
the employment of any of the individuals listed in Section 7.3(b)(iv) of the
Company Disclosure Schedule or any individual who consents to the amendments
described in clause (iv) above.
(c) From and after the Effective Time, Surviving Corporation and its
wholly-owned Subsidiaries, as applicable, shall honor each Benefit Plan that
57
provides for severance (including without limitation change of control and
termination agreements) in accordance with its terms (as amended in accordance
with subsection (b) above, if applicable); provided that nothing in this
subsection (c) shall prevent Parent or the Surviving Corporation from causing
such Benefit Plan to be amended or terminated in accordance with its terms.
(d) For purposes of any employee benefit plan or arrangement
maintained by Parent, the Surviving Corporation or any Subsidiary of Parent,
Parent shall recognize (or cause to be recognized) service with the Company and
the Company's Subsidiaries and any predecessor entities (and any other service
credited by the Company under similar benefit plans) for purposes of vesting and
eligibility to participate; provided that the retirement benefit shall be
calculated as provided in Section 7.3(a) hereof.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Stockholder Approval; Preparation of Company Proxy
Statement. (a) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to Section
253 of the DGCL, the Company shall, as promptly as practicable following the
acceptance of Shares pursuant to the Offer, prepare and file with the SEC the
Company Proxy Statement. No filing of, or amendment or supplement to, or
correspondence to the SEC will be made by the Company without providing the
Parent with a reasonable opportunity to review and comment thereon. The Company
will advise Parent, promptly after it receives notice thereof, of any request by
the SEC for the amendment of the Company Proxy Statement or comments thereon
and responses thereto or requests by the SEC for additional information. If at
any time prior to the Company Stockholders Meeting any information relating to
the Company or Parent, or any of their respective affiliates, officers or
directors, should be discovered by the Company or Parent which should be set
forth in an amendment or supplement to the Company Proxy Statement, so that it
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly
58
filed with the SEC and, to the extent required by law, disseminated to the
stockholders of the Company.
(b) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to Section
253 of the DGCL, the Company shall as promptly as practicable following the
acceptance of Shares pursuant to the Offer duly call, give notice of, convene
and hold a meeting of its stockholders (the "Company Stockholders Meeting") for
the purpose of considering and taking action upon this Agreement and the Merger.
Once the Company Stockholders Meeting has been called and noticed, the Company
shall not postpone or adjourn the Company Stockholders Meeting (other than for
the absence of a quorum) without the consent of Parent. Subject to the Company's
right, pursuant to Section 6.4(b) hereof, to withdraw or modify the
Recommendations, the Company Board shall include in the Company Proxy Statement
a copy of the Recommendations as such Recommendations pertain to the Merger and
this Agreement. Notwithstanding the foregoing, the Company Board shall submit
this Agreement and the Merger for approval to the Company's stockholders whether
or not the Company Board determines in accordance with Section 6.4(b) after the
date hereof that this Agreement and the Merger are no longer advisable and
recommends that the stock holders of the Company reject it. The Company shall
use its best efforts to solicit from stockholders of the Company proxies in
favor of this Agreement and the Merger and shall take all other actions
necessary or advisable to secure the vote or consent of stockholders required by
the DGCL to effect the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b) above, in the
event that Merger Subsidiary shall acquire at least 90% of the outstanding
Shares in the Offer, the parties hereto shall take all necessary actions to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
Section 8.2 HSR Act Filings; Reasonable Efforts; Notification. (a)
Each of Parent and the Company shall (i) promptly (but in no event later than
five business days after the date of the first public announcement of this
Agreement) make or cause to be made the filings required of such party or any of
its Subsidiaries under the HSR Act and any other Antitrust Laws (as defined in
Section 8.2(b)) with respect to the Offer, the Merger and the other transactions
contemplated by this Agreement, the Stock Option Agreement and the Stockholders
Agreement, (ii) comply at the earliest practicable date with any request under
the HSR Act or such
59
other Antitrust Laws for additional information, documents, or other material
received by such party or any of its Subsidiaries from the Federal Trade
Commission or the Department of Justice or any other Governmental Entity in
respect of such filings, the Offer, the Merger or such other transactions, and
(iii) cooperate with the other party in connection with any such filing and in
connection with resolving any investigation or other inquiry of any such agency
or other Governmental Entity under any Antitrust Laws with respect to any such
filing, the Offer, the Merger or such other transactions. Each party shall
promptly inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings, the Offer, the Merger or such other transactions. Neither
party shall participate in any meeting with any Governmental Entity in respect
of any such filings, investigation, or other inquiry without giving the other
party notice of the meeting and, to the extent permitted by such Governmental
Entity, the opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the Offer, the Merger or any other transactions provided for in
this Agreement, the Stock Option Agreement or the Stockholders Agreement under
the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the
Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging the Offer, the Merger or
any other transactions provided for in this Agreement or the Stockholders
Agreement as violative of any Antitrust Law, and, if by mutual agreement,
Parent and the Company decide that litigation is in their best interests, each
of Parent and the Company shall cooperate and use all reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent (each an "Order"), that
is in effect and that prohibits, prevents, or restricts consummation of the
Offer, the Merger or any such other transactions. Each of Parent and the Company
shall use all reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under the HSR Act or other Antitrust Laws
with respect to the Offer, the Merger and such other transactions as promptly as
possible after the execution of this Agreement.
(c) Each of the parties agrees to use all reasonable efforts to take,
60
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Notes Tender Offers, the Merger, and the other
transactions contemplated by this Agreement and the Stockholders Agreement,
including (i) the obtaining of all other necessary actions or nonactions,
waivers, consents and approvals from Govern mental Entities and the making of
all other necessary registrations and filings (including other filings with
Governmental Entities, if any), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the preparation of the Offer
Documents, the Schedule 14D-9 and, if necessary, the Company Proxy Statement,
and (iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement and the Stockholders Agreement.
(d) Notwithstanding anything to the contrary in Section 8.2(a), (b) or
(c), (i) neither Parent nor any of its Subsidiaries shall be required to divest
any of their respective businesses, product lines or assets, (ii) neither Parent
nor any of its Subsidiaries shall be required to take or agree to take any other
action or agree to any limitation that could reasonably be expected to have a
Parent Material Adverse Effect, (iii) neither the Company nor its Subsidiaries
shall be required to divest any of their respective businesses, product lines or
assets, or to take or agree to take any other action or agree to any limitation
that could reasonably be expected to have a Company Material Adverse Effect,
(iv) no party shall be required to agree to the imposition of or to comply with,
any condition, obligation or restriction on Parent or any of its Subsidiaries or
on the Surviving Corporation or any of its Subsidiaries of the type referred to
in subclause (iii) or (iv) of clause (a) of Annex I, and (v) neither Parent nor
Merger Subsidiary shall be required to waive any of the conditions to the Offer
set forth in Annex I and none of the Parent, Merger Subsidiary or the Company
shall be required to waive any of the conditions to the Merger set forth in
Article IX.
(e) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of (i)
any representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
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(f) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement, the Stock Option Agreement or the
Stockholders Agreement;
(ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement, the
Stock Option Agreement or the Stockholders Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting it or any of its Subsidiaries which, if
pending on the date of this Agreement would have been required to have been
disclosed pursuant to Article IV or which relate to the consummation of the
transactions contemplated by this Agreement, the Stock Option Agreement or the
Stockholders Agreement.
Section 8.3 Public Announcements. Parent and Merger Subsidiary, on the
one hand, and the Company, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Offer, the Notes
Tender Offers 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 applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement will be a joint press release accept able to Parent and the
Company.
Section 8.4 Confidentiality. Each of Parent and the Company will hold,
and will cause its Representatives (defined in the Confidentiality Agreement,
dated January 19, 2000 (the "Confidentiality Agreement"), between Parent and the
Company) to hold, any Confidential Information (as defined in the
Confidentiality Agreement) in confidence in accordance with the terms of the
relevant Confidentiality Agreement.
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ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 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, to the extent permitted by applicable law,
waiver on or prior to the Closing Date of each of the following conditions:
(a) Stockholder Approval. If required by the DGCL, this Agreement and
the Merger shall have been approved and adopted by the Company Stock holder
Vote.
(b) Purchase of Shares in the Offer. Merger Subsidiary shall have
accepted for payment and purchased all Shares validly tendered and not withdrawn
pursuant to the Offer.
(c) HSR Approval. The applicable waiting period under the HSR Act and
any applicable foreign antitrust or competition laws and regulations shall have
expired or been terminated.
(d) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition shall be in effect preventing or
prohibiting consummation of the Merger.
ARTICLE X
TERMINATION
Section 10.1 Termination. The transactions contemplated by this
Agreement may be terminated or abandoned at any time prior to the Effective
Time, whether before or after stockholder approval thereof:
(a) Subject to Section 1.4(c), by the mutual written consent of Parent
and the Company;
(b) By either of the Company or Parent:
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(i) if (x) the Offer shall have been terminated or expired
without any Shares being purchased pursuant thereto or (y) Merger Subsidiary
shall not have accepted for payment any Shares pursuant to the Offer by December
28, 2001; provided, however, that the right to terminate this Agreement under
this Section 10.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of Merger Subsidiary to purchase the Shares pursuant to the
Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the acceptance for payment
of, or payment for, Shares pursuant to the Offer or the Merger and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) By the Company:
(i) in connection with entering into a definitive agreement as
permitted by Section 6.4(b), provided the Company has complied with all
provisions thereof, including the notice provisions therein, and that the
Company makes simultaneous payment to Parent of funds as required by Section
11.1(b); or
(ii) if Parent or Merger Subsidiary shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach cannot be or has
not been cured, in all material respects, within 10 days after the giving of
written notice of such breach to Parent or Merger Subsidiary, as applicable.
(d) By Parent:
(i) if, prior to the purchase of Shares by Merger Subsidiary
pursuant to the Offer, the Company Board shall have withdrawn, modified or
changed in a manner adverse to Parent or Merger Subsidiary the Recommendations
or its approval of the Offer, this Agreement or the Merger or shall have
recommended an Acquisition Proposal or shall have executed an agreement in
principle or definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent, Merger
Subsidiary or their affiliates; or
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(ii) if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached any representation, warranty, covenant or other
agreement contained in this Agreement which would give rise to the failure of a
condition set forth in paragraph (f) or (g) of Annex I hereto; or
(iii) the Offer is not commenced within 5 business days after the
first public announcement of this Agreement because of the failure of any of the
conditions set forth in Annex I being satisfied; or
(iv) there is a failure to satisfy the condition set forth in
clause (j) of Annex I within 20 business days following commencement of the
Offer.
Section 10.2 Effect of Termination. In the event of the termination or
abandonment of the transactions by any party hereto pursuant to the terms of
this Agreement, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination or abandonment of the transactions is made, and there shall be no
liability on the part of the Parent, Merger Subsidiary or the Company except (A)
for fraud or willful breach of this Agreement prior to such termination or
abandonment of the transactions and (B) as set forth in Section 11.1.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Fees and Expenses.
(a) Except as specifically provided to the contrary in this
Agreement, including Section 11.1(b), all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions shall be
paid by the party incurring such expenses.
(b) In the event that:
(i) the Company shall terminate or abandon the transactions
pursuant to Section 10.1(c)(i); or
(ii) (x) either the Company or Parent terminates or abandons
65
the transactions pursuant to Section 10.1(b)(i) and prior thereto there shall
have been publicly announced another Acquisition Proposal; or (y) Parent shall
terminate or abandon the transactions pursuant to Section 10.1(d)(i) or (ii);
then the Company shall pay to Parent an amount equal to $20 million (the
"Termination Fee") plus an amount equal to Parent's actual and reasonably
documented out-of-pocket fees and expenses incurred by Parent and Merger
Subsidiary in connection with the Offer, the Notes Tender Offers, the Merger,
this Agreement and the consummation of the transactions contemplated hereby up
to a maximum amount of $2.5 million in the aggregate (the "Expense
Reimbursement"). The Termination Fee and Expense Reimbursement shall be paid in
same day funds concurrently with the execution of an agreement referred to in
subsection (i) above or in the case of clause (ii) above no later than the date
of consummation of any Acquisition Proposal within 12 months of the termination
of this Agreement; provided, however, if an Acquisition Proposal is not
consummated within 12 months of the termination of this Agreement, no such
payments required by clause (ii) above shall be required to be paid.
Notwithstanding anything herein to the contrary, no Termination Fee or Expense
Reimbursement shall be payable if Parent or Merger Subsidiary was in material
breach of its representations, warranties or obligations under this Agreement at
the time its right to terminate this Agreement accrued.
Section 11.2 Amendment and Modification. Subject to applicable law and
Section 1.4(c), this Agreement may be amended, modified and supplemented in any
and all respects, whether before or after any vote of the stockholders of the
Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 1.4(c)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 11.3 Extension; Waiver. Subject to Section 1.4(c), at any time
prior to the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 11.2, waive compliance with any of the agreements or
conditions contained in this Agreement. Any such extension or waiver shall be
valid only if set forth in an
66
instrument in writing signed by each of the parties hereto. No failure or delay
by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
Section 11.4 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 11.4 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
Section 11.5 Notices. All notices, requests and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) or by
telecopy (with copies by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Subsidiary, to
Temple-Inland Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: M. Xxxxxxx Xxxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
(b) if to the Company, to
Xxxxxxx Container Corporation
000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
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Attention: Xxxxxx X. Xxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, P.C.
Xxxx X. Xxxxxxxxxx
Fax: 000-000-0000
Section 11.6 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". References herein to the "knowledge
of the Company" shall mean the knowledge of the executive officers of the
Company after reasonable inquiry.
Section 11.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 11.8 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Stock Option Agreement, the Stockholders Agreement and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) except as
provided in Section 7.1 are not intended to confer upon any person other than
the parties hereto and thereto any rights or remedies hereunder.
68
Section 11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 11.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties; any instrument purporting to
make such assignment shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 11.11 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal or state court sitting in the
State of Delaware.
Section 11.12 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
69
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
70
IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
TEMPLE-INLAND INC.
By: ____________________________
Name:
Title:
TEMPLE-INLAND ACQUISITION
CORPORATION
By: ____________________________
Name:
Title:
XXXXXXX CONTAINER CORPORATION
By: ___________________________
Name:
Title:
Annex I
Certain Conditions of the Offer. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) Merger Subsidiary's
rights to extend and amend the Offer at any time in its sole discretion (subject
to the provisions of the Agreement), Merger Subsidiary shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger
Subsidiary's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any Shares
not then paid for, if (i) any applicable waiting period under the HSR Act has
not expired or terminated, (ii) the Minimum Stock Condition has not been
satisfied, (iii) the Minimum Note Condition has not been satisfied, or (iv) at
any time on or after the date of the Agreement and before the acceptance for
payment of Shares, any of the following events shall occur and be continuing:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (i) seeking to prohibit or impose any
material limitations on Parent's or Merger Subsidiary's ownership or operation
(or that of any of their respective Subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to compel
Parent or Merger Subsidiary or their respective Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Parent or Merger Subsidiary of any
Shares under the Offer or pursuant to the Stock Option Agreement or the
Stockholders Agreement or the acquisition by Parent or Merger Subsidiary of any
Notes pursuant to the Notes Tender Offers, seeking to restrain or prohibit the
making or consummation of the Offer, the Merger, the Notes Tender Offers or the
performance of any of the other transactions contemplated by the Merger
Agreement, the Stock Option Agreement, the Stockholders Agreement or the
agreements and documents governing the Notes Tender Offers, or seeking to obtain
from the Company, Parent or Merger Subsidiary any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, (iii) seeking to
impose material limitations on the ability of Merger Subsidiary, or rendering
Merger Subsidiary unable, to accept for payment, pay for or purchase some or all
of the Shares pursuant to the Offer and the Merger or some or all of the Notes
pursuant to the Notes Tender Offers, (iv) seeking to impose material limitations
on the ability of Merger Subsidiary or Parent effectively to exercise full
rights of ownership of the Shares, including,
I-1
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders or to exercise full rights of
ownership of the Notes, or (v) which otherwise is reasonably likely to have a
Company Material Adverse Effect; or
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any Governmental
Entity, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange, American Stock Exchange or in the Nasdaq National Market, for a period
in excess of three hours (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index for a period of
less than two days and suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any United States or foreign governmental
authority on the extension of credit by banks or other financial institutions,
(v) a change in general financial bank or capital market conditions which
materially or adversely affects the ability of financial institutions in the
United States to extend credit or syndicate loans, or (vi) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(d) there shall have occurred a Company Material Adverse Effect;
or
(e) the Company Board or any committee thereof (i) shall have
withdrawn, modified or changed in a manner adverse to Parent or Merger
Subsidiary its approval or recommendation of the Offer, the Merger Agreement or
the Merger, (ii) shall have recommended the approval or acceptance of an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Merger Subsidiary or their affiliates, or (iii) shall
have executed an agreement in principle or definitive agreement relating to an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Merger Subsidiary or their affiliates; or
I-2
(f) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each case as
of the date of the Merger Agreement and as of the scheduled expiration of the
Offer, such that the aggregate effect of all such breaches of representations
and warranties shall have had or is reasonably likely to have a Company Material
Adverse Effect and such breach has not been cured within 10 days after Parent
gives written notice thereof to the Company or the representations and
warranties set forth in Sections 4.12(m) and 4.15 and the last sentence of
Section 4.11 of the Merger Agreement shall not be true and correct; or
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement and such breach has not been cured within 10 days
after Parent gives written notice thereof to the Company; or
(h) all consents necessary to the consummation of the Notes
Tender Offers, the Offer or the Merger including, without limitation, consents
from parties to loans, contracts, leases or other agreements shall not have been
obtained, other than consents the failure of which to obtain would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole;
or
(i) the Merger Agreement shall have been terminated in accordance
with its terms; or
(j) in the 20 business days following commencement of the Offer,
the environmental due diligence conducted by Parent shall have discovered a
condition or conditions at one or more of the Company's converting facilities or
the Company's xxxxx located in Pine Bluff, Arkansas, Bogalusa, Louisiana and
Antioch, California (in the case of the Pine Bluff and Bogalusa xxxxx, such due
diligence investigation is to be conducted in accordance with the procedures
set forth on Exhibit C attached hereto) that in the reasonable judgment of
Parent will require remediation or other expenditures in an aggregate amount in
excess of $5 million, with respect to the converting facilities and the Pine
Bluff and Bogalusa xxxxx, and in excess of $10 million, with respect to the
Antioch mill;
which in the sole judgment of Parent or Merger Subsidiary, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Merger Subsidiary)
I-3
giving rise to such condition makes it inadvisable to proceed with the Notes
Tender Offers or the Offer and/or with such acceptance for payment of or payment
for Shares.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary, may be waived by Parent or Merger Subsidiary, in whole or in part,
at any time and from time to time in the sole discretion of Parent or Merger
Subsidiary. The failure by Parent or Merger Subsidiary at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
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