Exhibit A
EXECUTION COPY
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
Dated as of November 27, 2006
Among
Asahi Tec Corporation
Argon Acquisition Corp.
And
Metaldyne Corporation
TABLE OF CONTENTS
Page
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ARTICLE I
The Merger
SECTION 1.01. The Merger.....................................................2
SECTION 1.02. Closing........................................................3
SECTION 1.03. Effective Time.................................................3
SECTION 1.04. Effects of the Merger..........................................3
SECTION 1.05. Certificate of Incorporation and By-laws.......................3
SECTION 1.06. Directors......................................................3
SECTION 1.07. Officers.......................................................3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.........................................4
SECTION 2.02. Exchange of Certificates........................................6
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization, Standing and Power................................9
SECTION 3.02. Company Subsidiaries; Equity Interests..........................9
SECTION 3.03. Capital Structure..............................................10
SECTION 3.04. Authority; Execution and Delivery; Enforceability..............11
SECTION 3.05. No Conflicts; Consents.........................................12
SECTION 3.06. SEC Documents; Undisclosed Liabilities.........................14
SECTION 3.07. Information Supplied...........................................15
SECTION 3.08. Absence of Certain Changes or Events...........................15
SECTION 3.09. Taxes..........................................................17
SECTION 3.10. Absence of Changes in Benefit Plans............................19
SECTION 3.11. ERISA Compliance; Excess Parachute Payments....................20
SECTION 3.12. Litigation.....................................................24
SECTION 3.13. Compliance with Applicable Laws................................24
SECTION 3.14. Environmental Matters..........................................25
SECTION 3.15. Intellectual Property..........................................27
SECTION 3.16. Contracts; Debt Instruments....................................27
SECTION 3.17. Title to Real Properties.......................................28
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SECTION 3.18. TM Distribution................................................28
SECTION 3.19. Customers and Suppliers........................................29
SECTION 3.20. Brokers; Schedule of Fees and Expenses.........................29
SECTION 3.21. Opinion of Financial Advisor...................................30
ARTICLE IV
Representations and Warranties of Parent and Acquisition Sub
SECTION 4.01. Organization, Standing and Power...............................30
SECTION 4.02. Acquisition Sub................................................30
SECTION 4.03. Authority; Execution and Delivery; Enforceability..............30
SECTION 4.04. No Conflicts; Consents.........................................31
SECTION 4.05. Information Supplied...........................................32
SECTION 4.06. Brokers........................................................32
SECTION 4.07. Financing......................................................32
SECTION 4.08. Section 203....................................................33
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business............................................33
SECTION 5.02. No Solicitation................................................37
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Information Statement; Action by
Written Consent................................................39
SECTION 6.02. Access to Information; Confidentiality.........................40
SECTION 6.03. Commercially Reasonable Efforts; Notification..................40
SECTION 6.04. Stock Options and Restricted Stock Units.......................42
SECTION 6.05. Benefit Plans..................................................43
SECTION 6.06. Indemnification................................................44
SECTION 6.07. Fees and Expenses..............................................45
SECTION 6.08. Public Announcements...........................................45
SECTION 6.09. Transfer Taxes.................................................46
SECTION 6.10. Stockholder Litigation.........................................46
SECTION 6.11. Financing; Consent Solicitations...............................46
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ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect The Merger.....48
SECTION 7.02. Conditions to Obligations of Parent and Acquisition Sub........49
SECTION 7.03. Condition to Obligation of the Company.........................51
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination....................................................51
SECTION 8.02. Effect of Termination..........................................52
SECTION 8.03. Amendment......................................................53
SECTION 8.04. Extension; Waiver..............................................53
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver......53
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties..................54
SECTION 9.02. Notices........................................................54
SECTION 9.03. Definitions....................................................55
SECTION 9.04. Interpretation.................................................57
SECTION 9.05. Severability...................................................57
SECTION 9.06. Counterparts...................................................57
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries.................57
SECTION 9.08. Governing Law..................................................57
SECTION 9.09. Assignment.....................................................57
SECTION 9.10. Enforcement....................................................58
SECTION 9.11. Tax Treatment..................................................58
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AMENDED AND RESTATED AGREEMENT AND PLAN OF
MERGER dated as of November 27, 2006, among Asahi Tec
Corporation, a Japanese corporation ("Parent"), Argon
Acquisition Corp., a Delaware corporation
("Acquisition Sub") and a wholly owned subsidiary of
Parent, and Metaldyne Corporation, a Delaware
corporation (the "Company").
WHEREAS the Parent, Acquisition Sub and the Company entered
into an Agreement and Plan of Merger dated as of August 31, 2006 (the "Original
Agreement"), and wish to amend and restate the Original Agreement as set forth
herein;
WHEREAS the respective Boards of Directors of Parent,
Acquisition Sub and the Company have approved the merger (the "Merger") of
Acquisition Sub into the Company, on the terms and subject to the conditions set
forth in this Agreement whereby each issued share of common stock, par value
$1.00 per share, of the Company (the "Company Common Stock") and each issued and
outstanding share of Company Preferred Stock (as defined in Section 3.03) not
owned by Parent, Acquisition Sub or the Company shall be converted into the
right to receive cash;
WHEREAS Parent has entered into a commitment to refinance
certain existing indebtedness of the Company and to pay related fees and
expenses;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter into this
Agreement, Parent and certain stockholders of the Company listed on Schedule 1.1
hereto (the "Principal Company Stockholders") have entered into an amended and
restated stock purchase agreement dated as of the date of this Agreement (the
"Parent Stock Purchase Agreement"), whereby the Principal Company Stockholders
will acquire shares of common stock of the Parent using the Merger Consideration
received by such Principal Company Stockholders as consideration for such shares
(the "Parent Stock Acquisition");
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter into this
Agreement, Parent, the Company and each of the holders of (i) the Series A
Company Preferred Stock, (ii) the Series A-1 Company Preferred Stock, and (iii)
the Series B Company Preferred Stock (each as defined in Section 3.03) each have
entered into an amended and restated agreement (each, an "Other Stock Purchase
Agreement") dated as of the date of this Agreement whereby holders of the
Company Preferred Stock (such holders, the "Company Preferred Stockholders")
shall acquire for cash shares of convertible preferred stock of Parent or common
stock of Parent using the Merger Consideration received by such holders as
consideration for such convertible preferred stock (the "Other Stock
Acquisition");
WHEREAS simultaneously with the execution and delivery of this
Agreement, each of the persons identified on Schedule 1.2 hereto has executed
and delivered an amended and restated employment agreement between such person
and the Company, which shall be effective as of the Effective Time and result in
a termination at the Effective Time of such person's existing employment
agreement with the Company;
WHEREAS as soon as reasonably practicable following the
execution and delivery of this Agreement, the Company will commence consent
solicitations with respect to its (a) 11% Senior Subordinated Notes due June 15,
2012 (the "11% Senior Subordinated Notes"), issued pursuant to an indenture
dated June 20, 2002 (the "11% Senior Subordinated Notes Indenture"), (b) 10%
Senior Subordinated Notes due January 15, 2014 (the "10% Senior Subordinated
Notes"), issued pursuant to an indenture dated December 31, 2003 (the "10%
Senior Subordinated Notes Indenture"), and (c) 10% Senior Notes due 2013 (the
"10% Senior Notes") and, together with the 11% Senior Subordinated Notes and the
10% Senior Subordinated Notes, the "Notes"), issued pursuant to an indenture
dated October 27, 2003 (the "10% Senior Notes Indenture" and, together with the
11% Senior Subordinated Notes Indenture and the 10% Senior Subordinated Notes
Indenture, the "Notes Indentures"), in the case of each of (a), (b) and (c) as
described in Schedule 6.11(b) (collectively, the "Consent Solicitations"); and
WHEREAS Parent, Acquisition Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Merger
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SECTION 1.01. The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Acquisition Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). At the Effective
Time, the separate corporate existence of Acquisition Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"). The Merger, the payment of cash in connection with the Merger and
the other transactions contemplated by this Agreement and the other Transaction
Agreements, other than the TM Distribution, are referred to in this Agreement
collectively as the "Transactions". At the election of Parent, any direct wholly
owned subsidiary of Parent with no or nominal assets and no liabilities may be
substituted for Acquisition Sub as a constituent corporation in the Merger. In
such event, the parties shall execute an appropriate amendment to this Agreement
in order to reflect the foregoing.
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SECTION 1.02. Closing. The closing (the "Closing") of the Merger
shall take place at the offices of Cravath, Swaine & Xxxxx LLP, 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at a mutually agreeable time during Tokyo
business hours on the second business day following the satisfaction (or, to the
extent permitted by Law as defined in Section 3.05, waiver by all parties) of
the conditions set forth in Section 7.01, or, if on such day any condition set
forth in Section 7.02 or 7.03 has not been satisfied (or, to the extent
permitted by Law, waived by the party or parties entitled to the benefits
thereof), as soon as practicable after all the conditions set forth in Article
VII have been satisfied (or, to the extent permitted by Law, waived by the
parties entitled to the benefits thereof), or at such other place, time and date
as shall be agreed in writing between Parent and the Company. The date on which
the Closing occurs is referred to in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Prior to the Closing, Parent and the
Company shall prepare, and on the Closing Date or as soon as practicable
thereafter Parent and the Company shall file with the Secretary of State of the
State of Delaware, a certificate of merger or other appropriate documents (in
any such case, 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 such 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 being the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Surviving Corporation shall be amended at
the Effective Time to read in the form of Exhibit A, and, as so amended, such
Certificate of Incorporation 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 Acquisition Sub as in effect immediately prior to
the Effective Time and as heretofore provided to the Company shall be the
By-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable Law.
SECTION 1.06. Directors. The directors of Acquisition Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
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the earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock. At 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 common stock of Acquisition Sub:
(a) Capital Stock of Acquisition Sub. Each issued and outstanding share
of common stock of Acquisition Sub shall be converted into and become one fully
paid and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent- Owned Stock. Each share
of Company Common Stock that is owned by the Company, Parent, Acquisition Sub or
any subsidiary thereof shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and no consideration shall be
delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock and Company Preferred Stock. (i)
Subject to Sections 2.01(b), 2.01(c)(ii) and 2.01(d), (1) each issued share of
Company Common Stock owned by a Principal Company Stockholder shall be converted
into the right to receive $1.5243 in cash (such amount per share of Company
Common Stock, the "PCS Common Merger Consideration"), (2) each other issued
share of Company Common Stock shall be converted into the right to receive cash
in an amount equal to the greater of (A) $2.57 and (B) the product of (x) the
Common Price Ratio (as defined below) and (y) $2.57 (such greater amount per
share of Company Common Stock, the "Common Merger Consideration"), (3) each
issued share of Series A Company Preferred Stock (as defined below) shall be
converted into the right to receive in cash the quotient of (x) $44,893,310
divided by (y) the number of such issued shares, (4) each issued share of Series
A-1 Company Preferred Stock (as defined below) shall be converted into the right
to receive in cash the quotient of $53,106,702 divided by (y) the number of such
issued shares and (5) each issued share of Series B Company Preferred Stock (as
defined below) shall be converted into the right to receive in cash the quotient
of (x) $16,681,233 divided by (y) the number of such issued shares.
(ii) In the event that any cash payment will be due following the
Effective Time from the Company to a holder of a Company Stock Option
pursuant to Section 6.04 (after taking into account any such holder that
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irrevocably waives his or her right to any such payment), the PCS Common
Merger Consideration and the Common Merger Consideration shall be
appropriately adjusted (pro rata, on a per share basis) so that the
aggregate amount of the Merger Consideration and such payment or payments
following such adjustment equals the amount of the Merger Consideration
(excluding any such payment or payments) prior to such adjustment.
(iii) For purposes of this Agreement: (1) "Common Price Ratio"
means a fraction equal the quotient of (x) the Closing Common Price divided
by (y) the Signing Common Price, (2) "Signing Common Price" means $2.9693
and (3) "Closing Common Price" means the average of the closing prices in
Japanese yen of a share of Common Stock of the Parent on the Tokyo Stock
Exchange ("TSE") for the thirty trading day period ending on the second
business day prior to the Closing Date, converted into U.S. dollars at the
4:00 p.m., New York time, exchange rate of Japanese yen to U.S. dollars
published by the Wall Street Journal (New York City edition) on the second
business day immediately prior to the Closing Date.
(iv) The cash payable upon the conversion of shares of Company
Common Stock and Company Preferred Stock pursuant to this Section 2.01(c)
is referred to collectively as the "Merger Consideration". As of the
Effective Time, all such shares of Company Common Stock and Company
Preferred Stock shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock or Company Preferred
Stock shall cease to have any rights with respect thereto, except the right
to receive the applicable Merger Consideration, without interest, upon
surrender of such certificate in accordance with this Section 2.01 and
Section 2.02.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares ("Appraisal Shares") of Company Common Stock and Company
Preferred Stock that are outstanding immediately prior to the Effective Time
and that are held by any person who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who complies in all
respects with, Section 262 of the DGCL ("Section 262") shall not be converted
into Merger Consideration as provided in Section 2.01(c), but rather the
holders of Appraisal Shares shall be entitled to payment of the fair value of
such Appraisal Shares in accordance with Section 262; provided, however, that
if any such holder shall fail to perfect or otherwise shall waive, withdraw or
lose the right to appraisal under Section 262, then the right of such holder to
be paid the fair value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be deemed to have been converted as of the Effective
Time into, and to have become exchangeable solely for the right to receive,
Merger Consideration as provided in Section 2.01(c). The Company shall serve
prompt notice to Parent of any demands received by the Company for appraisal of
any shares of Company Common Stock or
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Company Preferred Stock, and Parent shall have the right to participate in and
direct all negotiations and proceedings with respect to such demands. Prior to
the Effective Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall, with the Company's consent not to be unreasonably
withheld, select a bank or trust company to act as paying agent for the payment
of the Merger Consideration to the Principal Company Stockholders and to the
holders of the Company Preferred Stock (the "PCS Paying Agent") and a second
bank or trust company to act as paying agent for the payment of the Merger
Consideration to the other common stockholders of the Company (the "Other Paying
Agent" and, together with the PCS Paying Agent, the "Paying Agents"), in each
case upon surrender of certificates representing Company Common Stock or Company
Preferred Stock. Parent, on behalf of the Surviving Corporation, shall provide
to the PCS Paying Agent at the Effective Time in immediately available funds all
the cash necessary to pay for the shares of Company Common Stock of the
Principal Company Stockholders and the shares of the Company Preferred Stock of
the holders thereof and shall provide to the Other Paying Agent at the Effective
Time in immediately available funds all the cash necessary to pay for the shares
of Company Common Stock of the other stockholders of the Company, in each case
such shares of Company Common Stock or Company Preferred Stock having been
converted into the right to receive cash pursuant to Section 2.01(c) (such cash
being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedure. With respect to the Company Common Stock of
the Principal Company Stockholders and the Company Preferred Stock of the
holders thereof, not less than two business days prior to the Closing Date the
PCS Paying Agent shall mail or otherwise deliver to each Principal Company
Stockholder or holder of Company Preferred Stock that is a holder of record of
certificate or certificates (the "Certificates") that immediately prior to the
Effective Time will represent outstanding shares of Company Common Stock or
Company Preferred Stock whose shares will be converted into the right to
receive the Merger Consideration pursuant to Section 2.01, (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 PCS Paying Agent and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates at the Effective Time in
exchange for Merger Consideration. With respect to the other Company Common
Stock, as soon as reasonably practicable after the Effective Time, the Other
Paying Agent shall mail to each other holder of record of a Certificate or
Certificates that immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive Merger Consideration pursuant to Section 2.01, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall
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pass, only upon delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for Merger Consideration. Upon surrender of a
Certificate for cancelation to the applicable 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 the amount of cash into which
the shares of Company Common Stock or Company Preferred Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.01, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Company Common Stock that 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 Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the shares of Company Common Stock
or Company Preferred Stock theretofore represented by such Certificate have
been converted pursuant to Section 2.01. No interest shall be paid or accrue on
the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock or Company Preferred Stock
shall be deemed to have been paid in full satisfaction of all rights pertaining
to such shares of Company Common Stock and Company Preferred Stock and after the
Effective Time there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of shares of Company Common Stock or
Company Preferred Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any certificates formerly representing
shares of Company Common Stock are presented to the Surviving Corporation or a
Paying Agent for any reason, they shall be canceled and exchanged as provided in
this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains
undistributed to the holders of Company Common Stock or Company Preferred Stock
for twelve months after the Effective Time shall be delivered to Parent, upon
demand, and any holder of Company Common Stock who has not theretofore complied
with this Article II shall thereafter look only to Parent and the Surviving
Corporation for payment of its claim for Merger Consideration.
(e) No Liability. None of Parent, Acquisition Sub, the Company or the
Paying Agents shall be liable to any person in respect of any cash from the
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Exchange Fund properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.05), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(f) Investment of Exchange Fund. The Other Paying Agent shall invest
any cash included in the Exchange Fund held by it, as directed by Parent, in (i)
direct obligations of the United States of America, (ii) obligations for which
the full faith and credit of the United States of America is pledged to provide
for the payment of all principal and interest or (iii) commercial paper
obligations receiving the highest rating from either Xxxxx'x Investor Services,
Inc. or Standard & Poor's, a division of The McGraw Hill Companies, or a
combination thereof; provided that, in any such case, no such instrument shall
have a maturity exceeding three months from the date of the investment therein.
Any interest and other income resulting from such investments shall be paid to
Parent.
(g) Withholding Rights. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock or Company Preferred Stock pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Code (as defined in Section
3.09), or under any provision of Federal, state, local or foreign tax Law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority by Parent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holders of the shares of Company
Common Stock or Company Preferred Stock in respect of which such deduction and
withholding was made by Parent.
(h) Lost Certificates. If any Certificate shall have been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, defaced or destroyed and, if
reasonably required by the Surviving Corporation, the posting by such person of
a bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the applicable Paying Agent shall pay in respect of such lost,
stolen, defaced or destroyed Certificate the Merger Consideration with respect
to each share of Company Common Stock formerly represented by such Certificate.
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ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Acquisition Sub that,
except as set forth in the letter, dated as of the date of this Agreement, from
the Company to Parent and Acquisition Sub (the "Company Disclosure Letter")
(provided that, unless the context indicates or requires otherwise, (i) the
representations and warranties contained herein are made giving effect to the
proposed distribution to all the holders of the Company Common Stock of the
Company's equity interests in TriMas Corporation as described in Exhibit B (the
"TM Distribution"), as if the consummation of the TM Distribution had occurred
prior to the date hereof, (ii) none of these representations and warranties,
other than Sections 3.05, 3.06, 3.07, 3.12, 3.13 and 3.18, shall relate to
TriMas Corporation) and (iii) to the extent that Sections 3.06, 3.07, 3.12, and
3.13 relate to TriMas Corporation, such Sections shall only relate to the
Company's ownership of securities of TriMas Corporation and any liabilities
(contingent or otherwise) of the Company or any Company Subsidiary relating
thereto):
SECTION 3.01. Organization, Standing and Power. Each of the Company and
each of its subsidiaries, including such entities organized under the laws of
non-U.S. jurisdictions (the "Company Subsidiaries"), is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority, except, in the case of the
Company Subsidiaries that are not Significant Company Subsidiaries (as defined
below), where the failure to be duly organized, validly existing and in good
standing, individually or in the aggregate, has not had and would not be
reasonably likely to have a material adverse effect on the Company (a "Company
Material Adverse Effect"). The Company and each Company Subsidiary is duly
qualified to do business in each jurisdiction where the nature of its business
or their ownership or leasing of its properties make such qualification
necessary or the failure to so qualify has had or would be reasonably likely to
have a Company Material Adverse Effect. The Company has made available to Parent
true and complete copies of the certificates of incorporation of the Company, as
amended to the date of this Agreement (as so amended, the "Company Charter"),
and the By-laws of the Company, as amended to the date of this Agreement (as so
amended, the "Company By-laws").
SECTION 3.02. Company Subsidiaries; Equity Interests. (a) Section
3.02(a) of the Company Disclosure Letter lists each Significant Company
Subsidiary (as defined below) and its jurisdiction of organization. All the
outstanding shares of capital stock of each Company Subsidiary have been validly
issued and are fully paid and nonassessable and are, as of the date of this
Agreement, owned by the Company, by one or more Company Subsidiaries or by the
Company and another Company Subsidiary, free and clear of all pledges, liens,
charges, mortgages, rights of
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first refusal, options, restrictions (other than restrictions imposed
under applicable Law), leases, licenses, easements, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"). The Company
has made available to Parent true and complete copies of the certificate of
incorporation and by-laws, or comparable charter and organizational documents,
of each Significant Company Subsidiary, in each case amended through the date
of this Agreement. For purposes of this Agreement, a "Significant Company
Subsidiary" means any subsidiary of the Company that constitutes a significant
subsidiary within the meaning of Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission ("SEC").
(b) Except for its interests in the Company Subsidiaries, the Company
does not as of the date of this Agreement own, directly or indirectly, any
capital stock, membership interest, partnership interest, joint venture interest
or other equity interest with a fair market value in excess of $2,000,000 in any
person.
SECTION 3.03. Capital Structure. (a) The authorized capital stock of
the Company consists of 250,000,000 shares of Company Common Stock and
25,000,000 shares of preferred stock, par value $1.00 per share ("Company
Preferred Stock" and, together with the Company Common Stock, the "Company
Capital Stock"). As of the date of this Agreement, (i) 42,795,963 shares of
Company Common Stock, 361,001 shares of Series A Company Preferred Stock (the
"Series A Company Preferred Stock"), 644,540 shares of Series A-1 Company
Preferred Stock (the "Series A-1 Company Preferred Stock"), and 184,153 shares
of Series B Company Preferred Stock (the "Series B Company Preferred Stock")
were issued and outstanding, (ii) no shares of Company Common Stock were held
by the Company in its treasury and (iii) 3,251,342 shares of Company Common
Stock were subject to outstanding Company Stock Options (as defined in Section
6.04), 111,844 shares of Company Common Stock were subject to contracts to
issue Company Stock Options, 48,797 shares of Company Common Stock were subject
to outstanding Company RSUs (as defined in Section 6.04) and 1,596,814
additional shares of Company Common Stock were reserved for issuance pursuant
to the Company Stock Plan (as defined in Section 6.04). Except as set forth
above, as of the date of this Agreement, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. As of the date of this Agreement, there were outstanding no
Company Stock Options to purchase shares of Company Common Stock with exercise
prices on a per share basis lower than $3.00 and the weighted average exercise
price of all Company Stock Options was equal to $9.37 per share (without giving
effect to any adjustment to the exercise price thereof required for the TM
Distribution). All outstanding shares of Company Common Stock are, and all such
shares that may be issued prior to the Effective Time will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, the Company Charter, the Company By-laws or any Contract
(as defined in Section 3.05) to which the Company is a party or otherwise
bound. There are not any bonds, debentures,
10
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which holders of Company Common Stock may vote ("Voting Company
Debt"). Except as set forth above, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (i) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, Contract, arrangement or
undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of Company Common Stock. There are not any outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary.
(b) Section 3.03(b) of the Company Disclosure Letter sets forth a true,
complete and correct list of all outstanding Company Stock Options and Company
RSUs, the number of shares of Company Common Stock subject to each such Company
Stock Option and Company RSU, the grant date, exercise price (as applicable),
expiration date and vesting schedule of each such Company Stock Option and
Company RSU and the names of the holders of each Company Stock Option and
Company RSU. All outstanding Company Stock Options and Company RSUs are
evidenced by the Company Stock Option or Company RSU agreements set forth in
Section 3.03(b) of the Company Disclosure Letter, and no Company Stock Option
agreement or Company RSU agreement contains terms that are inconsistent with, or
in addition to, the terms contained therein.
(c) All Company Stock Options and Company RSUs may, by their terms, be
treated as provided for in Section 6.04.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and the Transaction Agreements to which it is a party
and to consummate the Transactions to which it is a party. The execution and
delivery by the Company of this Agreement and each of the Transaction
Agreements to which it is a party and the consummation by the Company of the
Transactions to which it is a party have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the
Merger, to receipt of the Company Stockholder Approval. The Company has duly
executed and delivered this Agreement, and each Transaction Agreement to which
it is a party and this Agreement and each Transaction
11
Agreement to which it is a party, assuming the due authorization, execution and
delivery thereof by the other parties hereto and thereto, constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.
(b) The Board of Directors of the Company (the "Company Board"), at a
meeting duly called and held duly and unanimously adopted resolutions (i)
approving this Agreement and the other Transaction Agreements, the Merger and
the other Transactions, (ii) determining that the terms of the Merger and the
other Transactions are fair to and in the best interests of the stockholders of
the Company, (iii) directing that this Agreement be submitted to a vote of the
Company's stockholders, (iv) recommending that the Company's stockholders adopt
this Agreement and (v) declaring that this Agreement is advisable. Such
resolutions are sufficient to render inapplicable to Parent and Acquisition Sub,
this Agreement and the other Transaction Agreements, and the Merger and the
other Transactions the restrictions on "business combinations" contained in
Section 203 of the DGCL to the extent it is applicable. To the Company's
knowledge, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Company with respect to this Agreement and
the other Transaction Agreements, the Merger or any other Transaction. (c) The
only consent or vote of holders of any class or series of Company Capital Stock
necessary to approve and adopt this Agreement and the Merger is the adoption of
this Agreement by the holders of a majority of the outstanding Company Common
Stock (the "Company Stockholder Approval"), which may be effected either by the
written consent or the affirmative vote at a stockholders meeting of the holders
of a majority of the outstanding Company Common Stock. The written consent or
affirmative vote of the holders of Company Capital Stock, or any of them, is not
necessary to approve any Transaction Agreement other than this Agreement or to
consummate any Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents. (a) The execution and delivery
by the Company of this Agreement and each Transaction Agreement to which it is
a party do not, and the consummation of the Merger and the other Transactions
to which it is a party and compliance with and performance of the terms hereof
and thereof 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, cancelation or acceleration of any obligation or to loss
of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
Company Subsidiary under, any provision of (i) the Company Charter, the Company
By-laws or the comparable charter or organizational documents of any
Significant Company Subsidiary, (ii) any contract, lease, license, indenture,
note, bond, agreement, permit, concession, franchise or other instrument (a
"Contract") to which the Company or any Company Subsidiary is a party or by
which any of their respective properties or assets is
12
bound or (iii) subject to the filings and other matters referred to in Section
3.05(b), any material judgment, order or decree ("Judgment") or statute, law
(including common law), ordinance, rule or regulation ("Law") applicable to the
Company or any Company Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Company Material Adverse Effect (excluding for purposes of
this Section 3.05(a) and the application of Section 7.02(a) hereto, clause
(a)(iii) of the definition "material adverse effect").
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from,
any Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity") is
required to be obtained or made by or with respect to the Company or any
Company Subsidiary in connection with the execution, delivery and performance
of this Agreement or any Transaction Agreement to which it is a party, the
consummation of the Transactions to which it is a party, other than (i)
compliance with and filings under (A) the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) Japanese Anti-Monopoly
Law (Law No. 54 of 1947, as amended), (the "Japanese Anti-Monopoly Law"), (C)
other Antitrust Laws (as defined in Section 6.03(c)), (D) the Foreign Exchange
and Foreign Trade Law of Japan (Law No. 228 of 1949, as amended) (the "FEL"),
(E) the rules and regulations of the TSE, (F) the Japanese Corporation Law (the
"JCL") and (G) the Japanese Commercial Registration Law (Law Xx. 000 xx 0000,
xx xxxxxxx) (xxx "XXX"), (xx) the filing with the SEC of (A) an information or
proxy statement with respect to the Merger and the 280G Approval (such
information or proxy statement, including all information required to be
included therein by Rule 13e-3 promulgated under the Securities and Exchange
Act of 1934, as amended (the "Exchange Act") as such information or proxy
statement is amended from time to time, the "Information Statement") and (B)
such reports under Section 13 of the Exchange Act as may be required in
connection with this Agreement, the other Transaction Agreements, the Merger
and the other Transactions, (iii) the filing with the Kanto Local Finance
Bureau (the "Bureau") of such registration, reports and other information (such
registration, reports and other information, as amended from time to time, the
"Japanese Information Statement") as may be required under the Japanese
Securities and Exchange Law (Law No. 25 of 1948, as amended) (the "SEL") in
connection with the Parent Stock Purchase Agreement, the other Transaction
Agreements, the Parent Stock Acquisition and the other Transactions, (iv) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of the other
jurisdictions in which the Company is qualified to do business, (v) compliance
with and such filings as may be required under applicable Environmental Laws
(as defined in Section 3.14), (vi) such filings as may be required in
connection with the taxes described in Section 6.09, (vii) filings under any
applicable state takeover Law and (viii) such other items (A) required solely
by reason of the participation of Parent (as opposed to any third party)
13
in the Transactions or (B) that, individually or in the aggregate,
have not had and would not be reasonably likely to have a Company Material
Adverse Effect (excluding for purposes of this Section 3.05(b) and the
application of Section 7.02(a) hereto, clause (a)(iii) of the definition
"material adverse effect").
SECTION 3.06. SEC Documents; Undisclosed Liabilities. (a) The Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company with the SEC since January 3, 2005, pursuant to
Sections 13(a) and 15(d) of the Exchange Act (the "Company SEC Documents").
(b) As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company included in the Company SEC Documents comply as of
their respective dates 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 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 shown (subject, in the case of
unaudited statements, to normal year-end audit adjustments and lack of footnote
disclosure as permitted by Form 10-Q of the SEC).
(c) Except as set forth in the most recent audited consolidated balance
sheet of the Company (including the notes thereto) included in the Filed Company
SEC Documents (as defined in Section 3.08) and except for liabilities and
obligations incurred in the ordinary course of business since the date of such
balance sheet, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto that,
individually or in the aggregate, would be reasonably likely to have a Company
Material Adverse Effect.
(d) With respect to each Company SEC Document that is a report on Form
10-K or 10-Q or an amendment thereto, the Company is in compliance in all
material respects with the applicable requirements of the Xxxxxxxx-Xxxxx Act in
effect from time to time.
14
(e) The effectiveness of any additional disclosure requirement or
applicable accounting rule, consensus or pronouncement that as of the date of
this Agreement has been adopted by the SEC, Financial Accounting Standards Board
or any similar body but that is not yet in effect, is not reasonably likely to
lead to any material change in the Company's disclosures as set forth in the
Filed Company SEC Documents.
(f) None of the Company Subsidiaries is, or has at any time since
January 3, 2005, been, subject to (separately from the Company) the reporting
requirements of Sections 13(a) and 15(d) of the Exchange Act.
SECTION 3.07. Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in the
Information Statement or any other document (including Schedule 13e-3) required
to be filed by the Company with the SEC relating to the Transactions, including
the Merger (together with the Information Statement, the "Company Disclosure
Documents") will 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 Disclosure Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein or omitted
therefrom based on information supplied by Parent or Acquisition Sub in writing
for inclusion or incorporation by reference therein.
SECTION 3.08. Absence of Certain Changes or Events. (a) From the date
of the most recent audited financial statements included in the Company SEC
Documents filed and publicly available prior to the date of this Agreement (the
"Filed Company SEC Documents") to the date of this Agreement, the Company has
conducted its business only in the ordinary course, and during such period
there has not been:
(i) any event, change, effect, development or state of facts that,
individually or in the aggregate, has had or would be reasonably likely to
have a Company Material Adverse Effect;
(ii) any declaration, setting aside, allotment or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any Company Common Stock or any repurchase for value by the
Company of any Company Common Stock;
(iii) any split, combination or reclassification of any Company
Common Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares
of Company Common Stock;
(iv) (A) any grant by the Company or any Company Subsidiary to any
current director or officer of the Company or to any other employee or
15
independent contractor of the Company or any Company Subsidiary reasonably
likely to earn annual base compensation and bonuses in 2006 of $200,000 or
more (any such current director or officer of the Company or other
employee or independent contractor, a "Covered Participant") of any loan
or any increase in any type of compensation, benefits, perquisites or
bonus or award opportunity, except for grants of normal cash bonus
opportunities, normal increases of cash compensation and increases in
fringe or other benefits that are not material, in each case in the
ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Filed Company SEC
Documents, (B) any grant by the Company or any Company Subsidiary to any
Covered Participant of any severance, change in control, termination or
similar compensation or benefits or increases therein, or of the right to
receive any severance, change in control, termination or similar
compensation or benefits or increases therein, except as was required
under employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the Filed
Company SEC Documents, (C) any action by the Company or any Company
Subsidiary to fund or in any other way secure the payment of a material
amount of compensation or benefits under any Company Benefit Plan (as
defined in Section 3.10(a)) or Company Benefit Agreement (as defined in
Section 3.10(b)) or (D) any entry by the Company or any Company Subsidiary
into, or any amendment of, any Company Benefit Agreement with any Covered
Participant;
(v) any damage, destruction or loss, whether or not covered by
insurance, that, individually or in the aggregate, would be reasonably
likely to have a Company Material Adverse Effect;
(vi) any change in accounting methods, principles or practices by the
Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except
insofar as may have been required by a change in GAAP or applicable Law;
(vii) any material elections with respect to Taxes (as defined in
Section 3.09) by the Company or any Company Subsidiary or settlement
or compromise by the Company or any Company Subsidiary of any material
Tax liability or refund claim;
(viii) any material revaluation by the Company or any Company
Subsidiary of any of the material assets of the Company or any Company
Subsidiary, except insofar as may have been required by applicable Law; or
(ix) any action by the Company or any Company Subsidiary which,
if taken after the date hereof, would constitute a breach of any
provisions of Section 5.01(a)(ii), (iv), (vii), (viii) or (xii) or any
authorization, consent or
16
agreement by the Company or any Company Subsidiary to take any of the
actions prohibited by the foregoing provisions of Section 5.01(a).
SECTION 3.09. Taxes. (a) The Company, and each Company Subsidiary,
has duly and timely filed, or has caused to be timely filed on its behalf, all
material Tax Returns required to be filed by it. All such Tax Returns were true,
correct and complete in all material respects. All material Taxes owed (whether
or not shown on any Tax Return) have been timely paid in full. To the Company's
knowledge, no claim has been made in writing during the three year period ending
on the Closing Date by an authority in a jurisdiction where the Company, or any
Company Subsidiary, does not file Tax Returns that the Company, or any Company
Subsidiary, is or may be subject to taxation by that jurisdiction. There are no
liens with respect to Taxes upon any asset of the Company, or any Company
Subsidiary, other than liens for Taxes not yet due and payable.
(b) The Company, and each Company Subsidiary, has deducted, withheld
and timely paid to the appropriate governmental authority all material Taxes
required to be deducted, withheld or paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, and the Company, and each Company Subsidiary, has complied with all
material reporting and record keeping requirements.
(c) No dispute, audit, investigation, proceeding or claim concerning
any material Tax liability of the Company, or any Company Subsidiary, has been
raised by a governmental authority in writing, and to the Company's knowledge,
no such dispute, audit, investigation, proceeding, or claim is pending or being
conducted. The Company has provided or made available to Parent true, correct
and complete copies of all material Tax Returns, examination reports, and
statements of deficiencies filed, assessed against, or agreed to by the Company
or any Company Subsidiary since January 1, 2001.
(d) The Company, and each Company Subsidiary, has not waived any
statute of limitations in respect of material Taxes or agreed to any extension
of time with respect to a material Tax assessment or deficiency. The Company,
and each Company Subsidiary, has not executed any power of attorney with respect
to any Tax, other than powers of attorney that are no longer in force. Section
3.09(d) of the Company Disclosure Letter lists all closing agreements, private
letter rulings, technical advice memoranda or similar agreements or rulings
relating to Taxes that have been entered into or issued by any governmental
authority with or in respect of the Company, and each Company Subsidiary since
January 1, 2001.
(e) Since January 1, 2001, the Company, and each Company Subsidiary,
has not been a member of an "affiliated group" within the meaning of Code
Section 1504(a) filing a consolidated federal income Tax Return (other than the
"affiliated group" as defined in Code Section 1504(a) the common parent of which
is Company). The Company, and each Company Subsidiary, is not a party to any
17
contractual obligation relating to Tax sharing or Tax allocation, other than
customary commercial agreements with vendors, lenders, customers and other third
parties (such as tax gross-ups in loan agreements or property tax escalation
clauses in real estate leases) entered into in the ordinary course of business.
The Company, and each Company Subsidiary, does not have any material liability
for the Taxes of any person under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor or by
contract. (f) The Company, and each Company Subsidiary, will not be required to
include any amount in taxable income or exclude any item of deduction or loss
from taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of (a) any "closing agreement" as described in Code
Section 7121 (or any corresponding or similar provision of state, local or
foreign Income Tax law) executed on or prior to the Closing Date, (b) any
deferred intercompany gain or excess loss account described in Treas. Reg.
Section 1502 (or any corresponding or similar provision or administrative rule
of federal, state, local or foreign law), (c) any installment sale or open
transaction disposition made on or prior to the Closing Date, or (d) any prepaid
amount received on or prior to the Closing Date.
(g) The Company, and each Company Subsidiary, has not been a United
States real property holding company within the meaning of Code ss. 897(c)(2)
during the period specified in Code ss. 897(c)(l)(A)(ii).
(h) The Company, and each Company Subsidiary, has not, since January 1,
2001, been a "distributing corporation" or a "controlled corporation" within the
meaning of Code Section 355(a)(1)(A).
(i) Neither the Company nor any Company Subsidiary has participated in
any "listed transaction", as defined in Treas. Reg. Section 1.6011-4(b).
(j) For purposes of this Agreement:
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Tax" or "Taxes" means (i) any and all federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar,
including FICA), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind or any charge of any kind in the nature of
(or similar to) taxes whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and (ii) any liability for the payment of any
amounts of the type described in clause (i) of this definition as a result of
being a member of an affiliated, consolidated, combined or unitary group for any
18
period, as a result of any tax sharing or tax allocation agreement, arrangement
or understanding, or as a result of being liable for another person's taxes as a
transferee or successor or by contract.
"Tax Return" or "Return" means all Federal, state, local, provincial
and foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. (a) From the date of
the most recent audited financial statements included in the Filed Company SEC
Documents to the date of this Agreement, neither the Company nor any Company
Subsidiary has terminated, adopted, amended, modified or agreed to terminate,
adopt, amend or modify (or announced an intention to terminate, adopt, amend or
modify), in any material respect, any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
equity compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock option, phantom stock, performance, retirement, thrift,
savings, stock bonus, cafeteria, paid time off, perquisite, fringe benefit,
vacation, unemployment insurance, severance, change in control, termination,
retention, disability, death benefit, hospitalization, medical or other welfare
benefit or other employee benefit plan, program, policy or arrangement, whether
oral or written, funded or unfunded, sponsored, maintained, contributed to or
required to be sponsored, maintained or contributed to by the Company or any
Company Subsidiary or any other person or entity that, together with the Company
or any Company Subsidiary, is treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code or any other applicable Law (each, a "Commonly
Controlled Entity"), in each case providing benefits to any current or former
director, officer, employee or independent contractor of the Company or any
Company Subsidiary (each, a "Participant") and whether or not subject to United
States law (all such plans, programs and arrangements, including any such plan,
program or arrangement entered into or adopted on or after the date of this
Agreement, "Company Benefit Plans") or has made any material change in any
actuarial or other assumption used to calculate funding obligations with respect
to any Company Benefit Plan that is a Company Pension Plan (as defined in
Section 3.11(a)), or any material change in the manner in which contributions to
any such Company Pension Plan are made or the basis on which such contributions
are determined.
(b) As of the date of this Agreement, there is not any material (i)
employment, deferred compensation, severance, change in control, termination,
employee benefit, loan, indemnification, retention, equity compensation, bonus,
award, consulting or similar agreement between the Company or any Company
Subsidiary, on the one hand, and any Participant, on the other hand, (ii)
agreement between the Company or any Company Subsidiary, on the one hand, and
any Participant, on the other hand, the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of transactions
involving the Company or any Company Subsidiary
19
of the nature contemplated by this Agreement or (iii) trust or insurance
Contract or other agreement to fund or otherwise secure payment of any
compensation or benefit to be provided to any Participant (all such agreements
under clauses (i), (ii) and (iii), collectively, "Company Benefit Agreements").
(c) To the Company's knowledge, the exercise price of each Company
Stock Option is not less than the fair market value of a share of Company Common
Stock as determined on the date of grant of such Company Stock Option.
SECTION 3.11. ERISA Compliance; Excess Parachute Payments. (a) Section
3.11(a) of the Company Disclosure Letter contains a complete and correct list of
all Company Benefit Plans that are "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (a "Company Pension Plan") or "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other material Company
Benefit Plans. The Company has delivered or made available to Parent complete
and correct copies of (i) each such Company Benefit Plan and each material
Company Benefit Agreement (or, in the case of any such Company Benefit Plan or
material Company Benefit Agreement that is unwritten, a written description
thereof), (ii) the two most recent annual reports required to be filed, or such
similar reports, statements, information returns or material correspondence
required to be filed with or delivered to any Governmental Entity, with respect
to each material Company Benefit Plan (including reports filed on Form 5500 with
accompanying schedules and attachments), (iii) the most recent summary plan
description for each material Company Benefit Plan for which a summary plan
description is required under applicable Law, and any summary of material
modifications prepared for each material Company Benefit Plan, (iv) each trust
agreement and group annuity or insurance contract and other documents relating
to the funding or payment of benefits under any material Company Benefit Plan,
(v) the most recent determination or qualification letter issued by any
Governmental Entity for each Company Benefit Plan intended to qualify for
favorable tax treatment for which such a letter has been obtained, as well as a
true, correct and complete copy of each pending application therefor, if
applicable, and (vi) the two most recent actuarial valuations for each material
Company Benefit Plan for which actuarial valuations have been obtained.
(b) Each Company Benefit Plan has been administered in compliance with
its terms, and each Company Benefit Plan (and the Company and the Company
Subsidiaries with respect to such plans) is in compliance with applicable Law,
including ERISA and the Code, and the terms of any applicable collective
bargaining agreements, except for such instances of noncompliance with either
plan terms or Laws that, individually or in the aggregate, have not had and
would not reasonably be likely to have a Company Material Adverse Effect.
(c) Each Company Pension Plan intended to be tax qualified under United
States Laws is so qualified and has been the subject of determination letters
20
from the Internal Revenue Service with respect to all tax Law changes with
respect to which the Internal Revenue Service is willing to provide a
determination letter, to the effect that such Company Pension Plan is qualified
and exempt from United States Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code; no such determination letter has been revoked
(nor, to the knowledge of the Company, has revocation been threatened) nor has
any such Company Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would adversely
affect its qualification or require security under Section 307 of ERISA, except
for such failures to qualify or to obtain such a determination letter and such
revocations of determination letters and amendments that, individually or in the
aggregate, have not had and would not be reasonably likely to have a Company
Material Adverse Effect. Each Company Benefit Plan required to have been
approved by any non-U.S. Governmental Entity (or permitted to have been approved
to obtain any beneficial tax or other status) has been so approved; no such
approval has been revoked (nor, to the knowledge of the Company, has revocation
been threatened) and no event has occurred since the date of the most recent
approval that could reasonably be expected to affect any such approval, except
for such failures to approve, revocations of approval and events that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Company Material Adverse Effect.
(d) Except for liability that would not be reasonably likely to have a
Company Material Adverse Effect, no liability under Title IV of ERISA or to the
Pension Benefit Guaranty Corporation (other than PBGC insurance premiums) has
been or is expected to be incurred by the Company or any Company Subsidiary or
Commonly Controlled Entity with respect to any ongoing, frozen or terminated
"single-employer" plan (as defined in Section 4001(a)(15) of ERISA), currently
or formerly maintained by any of them. None of the Company Pension Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, nor has any waiver of the minimum
funding standards of Section 302 of ERISA or Section 412 of the Code been
requested. None of the Company Pension Plans and related trusts has been
terminated, nor has there been any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Company Pension Plan, in each case during the
last six years, and no notice of a reportable event will be required to be filed
in connection with the Transactions, except for such terminations and reportable
events that, individually or in the aggregate, have not had and would not be
reasonably likely to have a Company Material Adverse Effect. None of the
Company, any Company Subsidiary or any Commonly Controlled Entity has incurred,
or reasonably expects to incur, a "complete withdrawal" or a "partial
withdrawal" (as each such term is defined in Sections 4203 and 4205,
respectively, of ERISA) since the effective date of such Sections 4203 and 4205
with respect to any Company Pension Plan that is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA that has had or would be reasonably
likely to have a Company Material Adverse Effect.
21
(e) None of the Company, any Company Subsidiary, any employee of the
Company or any Company Subsidiary, any of the Company Benefit Plans, including
the Company Pension Plans and, to the knowledge of the Company, any trusts
created under any of the Company Benefit Plans or any trustee, administrator or
other fiduciary of any Company Benefit Plan or trust created thereunder and any
agent of the foregoing, has engaged in a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Company, any Company Subsidiary,
any such employee or any of the Company Benefit Plans, or, to the knowledge of
the Company, any such trust, trustee, administrator or other fiduciary, to the
tax or penalty on prohibited transactions imposed by Section 4975 of the Code,
the sanctions imposed under Title I of ERISA or other substantially similar
applicable Law or any other liability for breach of fiduciary duty under ERISA
or any other applicable Law, except for such prohibited transactions and other
breaches of fiduciary responsibility that, individually or in the aggregate,
have not had and would not be reasonably likely to have a Company Material
Adverse Effect.
(f) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, whether or not subject to ERISA, (i) no such Company
Benefit Plan is funded through a "welfare benefits fund" (as defined in Section
419(e) of the Code), (ii) each such Company Benefit Plan that is a "group health
plan" (as defined in Section 5000(b)(1) of the Code) complies with the
applicable requirements of Section 4980B(f) of the Code and any similar state
statute, except for such failures to comply that, individually or in the
aggregate, have not had and would not be reasonably likely to have a Company
Material Adverse Effect, (iii) no such Company Benefit Plan provides benefits
after termination of employment, except where the cost thereof is borne entirely
by the former employee (or his or her eligible dependents or beneficiaries) or
as required by Section 4980B(f) of the Code and (iv) each such Company Benefit
Plan (including any such Company Benefit Plan covering retirees or other former
employees) may be amended or terminated without material liability to the
Company or any Company Subsidiary on or at any time after the Effective Time.
(g) Except pursuant to arrangements agreed in writing by Parent or its
affiliates, no amount, economic benefit or other entitlement that could be
received (whether in cash or property or the vesting of property) as a result of
any of the Transactions (alone or in combination with any other event) by any
person who is a "disqualified individual" (as defined in Treasury Regulation
Section 1.280G-1) with respect to the Company ("Potential Parachute Payment")
would be characterized as an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code), and no such disqualified individual is entitled to
receive any additional payment from the Company, the Surviving Corporation or
any other person in the event that the excise tax required by Section 4999(a) of
the Code is imposed on such disqualified individual.
(h) Except pursuant to (i) arrangements agreed in writing by Parent or
its affiliates and (ii) the accelerated vesting of Company Stock Options held
22
by any Participant, no Participant will be entitled to (A)(1) any severance,
separation, change of control, termination, bonus or other additional
compensation or benefits, or (2) any acceleration of the time of payment or
vesting of any compensation or benefits or any forgiveness of indebtedness owed
by such Participant, in each case as a result of any of the Transactions (alone
or in combination with any other event) or in connection with the termination of
such Participant's employment on or after the Effective Time or (B) any
compensation or benefits related to or contingent upon, or the value of which
will be calculated on the basis of, any of the Transactions (alone or in
combination with any other event). The execution and delivery of this Agreement
and the consummation of the Transactions (alone or in combination with any other
event) and compliance by the Company with the provisions hereof do not and will
not require the funding (whether through a grantor trust or otherwise) of any
Company Benefit Plan, Company Benefit Agreement or any other employment
arrangement and will not limit the Company's ability to amend, modify or
terminate any Company Benefit Plan or Company Benefit Agreement.
(i) Since January 1, 2003, and through the date of this Agreement,
neither the Company nor any Company Subsidiary has received notice of, and, to
the knowledge of the Company, there are no (i) pending termination proceedings
or other suits, claims (except claims for benefits payable in the normal
operation of the Company Benefit Plans), actions or proceedings against, or
involving or asserting any rights or claims to benefits under, any Company
Benefit Plan or Company Benefit Agreement or (ii) pending investigations (other
than routine inquiries) by any Governmental Entity with respect to any Company
Benefit Plan or Company Benefit Agreement, except for such proceedings, suits,
claims, actions and investigations that, individually or in the aggregate, have
not had and would not be reasonably likely to have a Company Material Adverse
Effect.
(j) Neither the Company nor any Company Subsidiary has any liability or
obligations, including under or on account of a Company Benefit Plan or Company
Benefit Agreement, arising out of the hiring of persons to provide services to
the Company or any Company Subsidiary and treating such persons as consultants
or independent contractors and not as employees of the Company or any Company
Subsidiary, except for any such liability and obligations that, individually or
in the aggregate, have not had and would not be reasonably likely to have a
Company Material Adverse Effect.
(k) None of the employees of the Company or any Company Subsidiary is a
member of, represented by or otherwise subject to any (i) labor union, works
council or similar organization or (ii) collective bargaining agreement,
industry-wide collective bargaining agreement or any similar collective
agreement, in each case with respect to such employee's employment by the
Company or any Company Subsidiary, and the Company and the Company Subsidiaries
do not have any obligation (including to inform or consult with any such
employees or their representatives in respect of the
23
Transactions) with respect to any such organization or agreement. Each of the
Company and the Company Subsidiaries is in compliance with all applicable Laws
and orders with respect to labor relations, employment and employment practices,
occupational safety and health standards, terms and conditions of employment,
payment of wages, classification of employees, immigration, visa, work status,
pay equity and workers compensation, and is not engaged in any unfair labor
practice, except for such failures to comply and unfair labor practices that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Company Material Adverse Effect. There is no unfair labor
practice charge or complaint against the Company or any Company Subsidiary
pending or, to the knowledge of the Company, threatened before the National
Labor Relations Board or any comparable Governmental Entity that has had or
would be reasonably likely to have a Company Material Adverse Effect. Since
December 31, 2003, there has been no, and there currently is no, labor strike,
material dispute, request for representation, union organization attempt,
slowdown or stoppage actually pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Company Subsidiary that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect. No grievance or arbitration proceeding
arising out of a collective bargaining agreement is pending or, to the knowledge
of the Company, threatened against the Company or any Company Subsidiary that
has had or would be reasonably likely to have a Company Material Adverse Effect.
SECTION 3.12. Litigation. (a) As of the date of this Agreement, there
is no claim, demand, suit, action or proceeding pending or, to the knowledge of
the Company, threatened in writing against or affecting the Company or any
Company Subsidiary that involves an amount in controversy in excess of $1.0
million, seeks material injunctive relief or would be reasonably likely to have
a Company Material Adverse Effect, if resolved in accordance with the
plaintiff's demands.
(b) There is no suit, action or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Company
Subsidiary nor is there any judgment outstanding against the Company or any
Company Subsidiary that, individually or in the aggregate, has had or would be
reasonably likely to have a Company Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. The Company and the
Company Subsidiaries and their relevant personnel and operations are in
compliance with all applicable Laws, including those relating to occupational
health and safety except for any such failure to be in compliance as,
individually or in the aggregate, has not had and would not be reasonably likely
to have a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary has received any written communication during the past two years from
a Governmental Entity that alleges that the Company or a Company Subsidiary is
not in compliance with any applicable Law except for such failure to be in
compliance as, individually or in the aggregate, has not had and would not be
reasonably likely to have a Company Material Adverse Effect.
24
The Company and the Company Subsidiaries have in effect all permits, licenses,
variances, exemptions, authorizations, operating certificates, franchises,
orders and approvals of all Governmental Entities (collectively, "Permits"),
necessary for them to own, lease or operate their properties and assets and to
carry on their businesses as now conducted, except for such Permits the absence
of which, individually or in the aggregate, has not had and would not be
reasonably likely to have a Company Material Adverse Effect and there has
occurred no violation of, default (with or without the lapse of time or the
giving of notice, or both) under, or event giving to others any right of
termination, amendment or cancelation of, with or without notice or lapse of
time or both, any such Permit, except for such violations, defaults or events
that, individually or in the aggregate, have not had and would not be reasonably
likely to have a Company Material Adverse Effect. This Section 3.13 does not
relate to matters with respect to Taxes, which are the subject of Section 3.09
or to Environmental Permits or Environmental Laws, which are the subject of
Section 3.14.
SECTION 3.14. Environmental Matters. Except for such matters that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Company Material Adverse Effect:
(a) The Company and each of the Company Subsidiaries are in compliance
with all Environmental Laws (as defined below).
(b) Since July 31, 2003, neither the Company nor any of the Company
Subsidiaries has received any written communication that alleges that the
Company or any of its subsidiaries is in violation of or has liability under any
Environmental Law or written request for information pursuant to any
Environmental Law.
(c) (i) The Company and each of the Company Subsidiaries have obtained
and are in compliance with all Permits pursuant to Environmental Law
(collectively "Environmental Permits") necessary for their operations as
presently conducted and (ii) all such Environmental Permits are valid and in
good standing.
(d) There are no Environmental Claims pending or, to the knowledge of
the Company, threatened in writing, against the Company or any of the Company
Subsidiaries.
(e) Neither the Company nor any of the Company Subsidiaries has entered
into or agreed to, or is otherwise subject to, any Judgment relating to any
Environmental Law or to the investigation or remediation of Hazardous Materials
(as defined below).
(f) There has been no treatment, storage or Release (as defined below)
of any Hazardous Material that would be reasonably likely to form the basis of
any Environmental Claim against the Company or any of the Company Subsidiaries
25
or against any person whose liabilities the Company or any of the Company
Subsidiaries has retained or assumed either contractually or by operation of
law.
(g) None of the Company, the Company Subsidiaries or any Person whose
liabilities the Company or any of the Company Subsidiaries has, or may have,
retained or assumed, either contractually or by operation of law, has
manufactured, sold or distributed any products containing asbestos in any form.
(h) (i) Neither the Company nor any of the Company Subsidiaries has
retained or assumed, either contractually or by operation of law, any
liabilities or obligations that would be reasonably likely to form the basis of
any Environmental Claim (as defined below) against the Company or any of the
Company Subsidiaries, and (ii) to the knowledge of the Company, no Environmental
Claims are pending against any Person whose liabilities the Company or any of
the Company Subsidiaries has, or may have, retained or assumed, either
contractually or by operation of law.
(i) Definitions. As used in this Agreement:
(1) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, directives, claims, liens,
Judgments, investigations, proceedings or written notices of noncompliance,
violation or potential responsibility alleging liability of whatever kind
or nature (including liability or responsibility for the costs of
enforcement proceedings, investigations, cleanup, governmental response,
removal or remediation, natural resources damages, property damages,
personal injuries, medical monitoring, penalties, contribution,
indemnification and injunctive relief) arising out of, based on or
resulting from (x) the presence or Release of, or exposure to, any
Hazardous Materials at any location; or (y) the failure to comply with any
Environmental Law;
(2) "Environmental Laws" means all applicable Federal, state,
local and foreign laws, rules, regulations, Judgments, legally binding
agreements or Environmental Permits issued, promulgated or entered into by
or with any Governmental Entity, relating to pollution or protection or
restoration of natural resources or the environment (including ambient air,
indoor air, surface water, groundwater, land surface or subsurface strata),
endangered or threatened species or human health (to the extent relating to
exposure to Hazardous Materials);
(3) "Hazardous Materials" means (y) any petroleum or petroleum
products, radioactive materials or wastes, asbestos in any form, urea
formaldehyde foam insulation and polychlorinated biphenyls; and (z) any
other chemical, material, substance or waste that is prohibited, limited or
regulated under any Environmental Law; and
26
(4) "Release" means any actual or threatened release, spill,
emission, leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into or through the environment
(including ambient air, indoor air, surface water, groundwater, land
surface or subsurface strata) or within any building, structure, facility
or fixture.
SECTION 3.15. Intellectual Property. The Company or one of the Company
Subsidiaries owns, or is validly licensed or otherwise has the right to use, all
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, service marks, service xxxx rights, copyrights, domain names and other
proprietary intellectual property rights and computer programs (collectively,
"Intellectual Property Rights") used in the conduct of the business of the
Company and the Company Subsidiaries, except where the failure to own, be
validly licensed or have the right to use such Intellectual Property Rights,
individually or in the aggregate, has not had and would not be reasonably likely
to have a Company Material Adverse Effect. No claims are pending or, to the
knowledge of the Company, threatened in writing that the Company or any Company
Subsidiary is infringing or otherwise adversely affecting the rights of any
person with regard to any Intellectual Property Right, except for any such
claims that, individually or in the aggregate, have not had and would not be
reasonably likely to have a Company Material Adverse Effect. To the knowledge of
the Company, no person is infringing the rights of the Company or any Company
Subsidiary with respect to any Intellectual Property Right, except for such
infringements that, individually or in the aggregate, have not had and would not
be reasonably likely to have a Company Material Adverse Effect.
SECTION 3.16. Contracts; Debt Instruments. (a) Except as filed by the
Company as an exhibit to a Filed SEC Document, there are no Contracts that are
"material contracts" within the meaning of Section 601 of Regulation S-K of the
SEC (any such Contract a "Company Material Contract"). None of the Company, any
of the Company Subsidiaries or, to the knowledge of the Company, any other party
to any Company Material Contract is in violation of or in default under (nor
does there exist any condition which upon the passage of time or the giving of
notice would cause such a violation of or default under) any Company Material
Contract, to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that, individually or in the
aggregate, have not resulted and would not be reasonably likely to result in a
Company Material Adverse Effect.
(b) All Company Material Contracts are valid, binding and in full force
and effect and are enforceable by the Company or the applicable Company
Subsidiary in accordance with their terms, except for such failures to be valid,
binding, in full force and effect or enforceable that, individually or in the
aggregate, have not had and would not be reasonably likely to have a Company
Material Adverse Effect. None of the Company and the Company Subsidiaries has
received any written notice of the intention of any party to terminate any
27
Company Material Contract. Complete and correct copies of all Company Material
Contracts, together with all material modifications and amendments thereto, have
been made available to Parent (either as an exhibit to a Filed SEC Document or
otherwise).
SECTION 3.17. Title to Real Properties. (a) Each of the Company and
each Company Subsidiary has good and marketable title to, or valid leasehold
interests in, all its real properties free and clear of all Liens, except for
such defects in title, easements, restrictive covenants and similar encumbrances
or impediments that, individually or in the aggregate, have not had and would
not be reasonably likely to have a Company Material Adverse Effect.
(b) Except where the failure to comply, the failure to be in full force
and effect or the default has not had and would not be reasonably likely to have
a Company Material Adverse Effect, each of the Company and each Company
Subsidiary has complied in all respects with the terms of all leases to which it
is a party and under which it is in occupancy, all such leases are in full force
and effect and no extant notice of default has been given by either party to
such leases, and no event has occurred, which with the giving of notice or the
passage of time or both would constitute a default under any of such leases.
SECTION 3.18. TM Distribution. (a) The Company has all requisite
corporate power and authority to consummate the TM Distribution. The declaration
(subject to the satisfaction of the TM Distribution Conditions (as defined
below)) and public announcement of the TM Distribution has been duly authorized
by all necessary corporate action on the part of the Company. The Company Board,
at a meeting duly called and held, duly and unanimously adopted resolutions
declaring the TM Distribution, subject to the satisfaction of the TM
Distribution Conditions. The payment of the TM Distribution, which will be made
to Company common stockholders of record as of one business day prior to the
Closing Date, is subject to (i) the receipt and effectiveness of the consents
required from the holders of the Notes and the Company Preferred Stock, (ii) the
completion of the Financing or Alternative Financing on terms permitting the TM
Distribution, (iii) the Company obtaining a customary solvency opinion verifying
the adequacy of the Company's corporate surplus for the TM Distribution under
Delaware law and (iv) the consummation of the Merger (collectively, the "TM
Distribution Conditions").
(b) Subject to the satisfaction of the TM Distribution Conditions, the
consummation of the TM Distribution 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, cancelation or acceleration
of any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under, any provision of (i)
the Company Charter, the Company By-laws or the comparable charter or
organizational documents of
28
any Significant Company Subsidiary, (ii) any Contract to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets is bound or (iii) subject to the filings and other matters referred to
in Section 3.18(c), any material Judgment or Law applicable to the Company or
any Company Subsidiary or their respective properties or assets, other than, in
the case of clauses (ii) and (iii) above, any such items that, individually or
in the aggregate, have not had and would not be reasonably likely to have a
Company Material Adverse Effect (excluding for purposes of this Section 3.18(b)
and the application of Section 7.02(a) hereto, clause (a)(iii) of the definition
"material adverse effect").
(c) Subject to the satisfaction of the TM Distribution Conditions, no
consent of, or registration, declaration or filing with, or permit from, any
Governmental Entity is required to be obtained or made by or with respect to the
Company or any Company Subsidiary in connection with the consummation of the TM
Distribution, other than (i) compliance with and filings under the HSR Act, (ii)
the preparation and distribution (A) of an information statement with respect to
the TM Distribution and (B) such reports under Section 13 of the Exchange Act as
may be required in connection with the TM Distribution, (ii) compliance with and
such filings as may be required under applicable Environmental Laws (as defined
in Section 3.14), (iii) such filings as may be required in connection with the
taxes described in Section 6.09, (iv) filings under any applicable state
takeover Law and (v) such other items that, individually or in the aggregate,
have not had and would not be reasonably likely to have a Company Material
Adverse Effect (excluding for purposes of this Section 3.18(c) and the
application of Section 7.02(a) hereto, clause (a)(iii) of the definition
"material adverse effect").
SECTION 3.19. Customers and Suppliers. (a) Since January 1, 2005, there
has been no adverse change in the relationship of the Company with any customer
of the Company or any Company Subsidiary with annual sales of $50 million or
more or any of the 15 largest suppliers to the Company or any Company Subsidiary
by annual sales volume (excluding utilities) except in any such case for any
such change that, individually or in the aggregate, has not had and would not be
reasonably likely to have a Company Material Adverse Effect.
(b) To the Knowledge of the Company, there is no material dispute with
any customer with annual sales of $50 million or more in connection with any
product sold by the Company or any Company Subsidiary to any such customer that
has given rise or would be reasonably likely to give rise to a material
liability or cost, except for such dispute that, individually or in the
aggregate, has not had and would not be reasonably likely to have a Company
Material Adverse Effect.
SECTION 3.20. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Lazard Freres &
Co. LLC, the fees and expenses of which will be paid by the Company andhave been
disclosed to Parent in the Company Disclosure Letter, is entitled to any
29
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Merger and the other Transactions based upon arrangements
made by or on behalf of the Company.
SECTION 3.21. Opinion of Financial Advisor. The Company has received
the opinion of Lazard Freres & Co. LLC, dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the Merger by
holders of Company Common Stock, other than the Principal Company Stockholders,
is fair to such holders of Company Common Stock from a financial point of view,
a signed copy of which opinion has been delivered to Parent.
ARTICLE IV
Representations and Warranties of Parent and Acquisition Sub
------------------------------------------------------------
Parent and Acquisition Sub, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Organization, Standing and Power. (a) Each of Parent and
Acquisition Sub is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has full corporate
power and authority to conduct its businesses as presently conducted.
SECTION 4.02. Acquisition Sub. (a) Since the date of its incorporation,
Acquisition Sub has not carried on any business or conducted any operations
other than the execution of this Agreement, the Transaction Agreements to which
it is a party and the Commitments (as defined in Section 4.07), arranging the
Financing (as defined in Section 4.07) and the performance of its obligations
hereunder and thereunder and matters ancillary thereto.
(b) The authorized capital stock of Acquisition Sub consists of 1,000
shares of common stock, par value $0.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Parent free
and clear of any Lien.
(c) As of the date of this Agreement, neither Parent nor Sub owns any
shares of Company Common Stock.
SECTION 4.03. Authority; Execution and Delivery; Enforceability. Each
of Parent and Acquisition Sub has all requisite corporate power and authority to
execute and deliver this Agreement and each Transaction Agreement to which it is
a party and to consummate the Transactions to which it is a party subject to the
compliance by Parent with Section 6.03(e). The execution and delivery by each of
Parent and Acquisition Sub of this Agreement and each Transaction Agreement to
30
which it is a party and the consummation by it of the Transactions to which it
is a party have been duly authorized by all necessary corporate action on the
part of Parent and Acquisition Sub subject to the compliance by Parent with
Section 6.03(e). Each of Parent and Acquisition Sub has duly executed and
delivered this Agreement and each Transaction Agreement to which it is a party,
and this Agreement and each Transaction Agreement to which it is a party,
assuming the due authorization, execution and delivery thereof by the other
parties thereto, constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
SECTION 4.04. No Conflicts; Consents. (a) The execution and delivery by
each of Parent and Acquisition Sub of this Agreement and each Transaction
Agreement to which it is a party, do not, the execution of the Parent Voting
Agreement does not and the consummation of the Merger and the other Transactions
to which it is a party and compliance with and performance of the terms hereof
and thereof 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, cancelation or acceleration of any obligation or to loss
of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, any provision of (i) the charter or organizational documents
of Parent or any of its subsidiaries, (ii) subject to effectiveness of the
Parent Facility Amendments (as defined in Section 4.07) as contemplated by the
Parent Consent Letter (as defined in Section 4.07), any material Contract to
which Parent or any of its subsidiaries is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 4.04(b), any material Judgment or material
Law applicable to Parent or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually or in the aggregate, have not had and would
not be reasonably likely to have, a material adverse effect on Parent (a "Parent
Material Adverse Effect") (excluding for purposes of this Section 4.04(a) and
the application of Section 7.03(a) hereto, clause (a)(iii) of the definition
"material adverse effect").
(b) No Consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Parent or any of its subsidiaries in connection with the execution, delivery
and performance of this Agreement or any Transaction Agreement to which
Parent or Acquisition Sub is a party or the consummation of the Transactions
to which Parent or Acquisition Sub is a party or in connection with the
execution and performance of the Parent Voting Agreement, other than (i)
compliance with and filings under (A) the HSR Act, (B) the Japanese
Anti-Monopoly Law, (C) other Antitrust Laws, (D) the FEL, (E) the rules and
regulations of the TSE, (F) the JCL and (G) the CRL, (ii) the filing with the
SEC of such reports under the Exchange Act as may be required in connection
with this Agreement and the other Transaction Agreements, the Merger and the
other Transactions, (iii) the filing with the Bureau of the Japanese
Information Statement as may be required under the SEL in
31
connection with the Parent Stock Purchase Agreement, the other Transaction
Agreements, the Parent Stock Acquisition and the other Transactions, (iv) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of the other
jurisdictions in which the Company is qualified to do business, (v) compliance
with and such filings as may be required under applicable Environmental Laws,
(vi) such filings as may be required in connection with the taxes described in
Section 6.09, (vii) filings under any applicable state takeover Law and (viii)
such other items (A) required solely by reason of the participation of the
Company (as opposed to any third party) in the Transactions or (B) that,
individually or in the aggregate, have not had and would not be reasonably
likely to have a Parent Material Adverse Effect (excluding for purposes of this
Section 4.04(b) and the application of Section 7.03(a) hereto, clause (a)(iii)
of the definition "material adverse effect").
SECTION 4.05. Information Supplied. None of the information supplied or
to be supplied by Parent or Acquisition Sub for inclusion or incorporation by
reference in the Information Statement will 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.
SECTION 4.06. Brokers. No broker, investment banker, financial advisor
or other person, other than Deutsche Bank Securities, Inc. and RHJI, 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 Merger and the other Transactions based upon arrangements made by or on
behalf of Parent.
SECTION 4.07. Financing. (a) Parent has received and accepted (1) a
commitment letter dated November 27, 2006 (the "Commitment Letter"), from the
lenders party thereto (collectively, the "Lenders") relating to the commitment
of the Lenders to provide the debt financing required by the Company and its
subsidiaries to effect the Refinancing and to pay related fees and expenses of
the Transactions, (2) a commitment letter dated November 27, 2006 (the "Parent
Commitment Letter"), from Aozora Bank, Ltd., (the "Aozora") relating to the
commitment of Aozora to provide the bridge financing (the "Bridge Financing")
required by Parent, the Company, the Principal Company Stockholders and the
holders of Company Preferred Stock to consummate the Merger, the Parent Stock
Acquisition and the Other Stock Acquisitions, (3) the commitment letter dated
November 27, 2006, from Aozora, on behalf of the lenders (the "Parent
Lenders") under Parent's existing credit facility (the "Parent Consent
Letter") to enter into a consent agreement confirming the approval by the
Parent Lenders of certain amendments to Parent's existing credit facility
required thereunder by Parent in connection with the Transactions and
Refinancing (as defined below) (the "Parent Facility Amendments") and (4) a
commitment letter dated November 27, 2006 (the "Equity Commitment" and,
together with the Commitment Letter, Parent
32
Commitment Letter and the Parent Consent Letter, the "Commitments"), between
RHJ International S.A. ("RHJI"), and Parent relating to the agreement of RHJI
to provide the equity financing to Parent specified therein (the "RHJI equity
financing"). Parent has provided or made available to the Company a true,
correct and complete copy of each of the Commitments. The financing
contemplated by the Commitment Letter, the Parent Consent Letter and Parent
Commitment Letter is referred to herein as the "Financing."
(b) Subject to their terms and conditions, the Financing, RHJI equity
financing and HIP Stock Acquisition, when funded in accordance with the
applicable terms and conditions of the Commitment Letter, Parent Commitment
Letter, Parent Consent Letter, Equity Commitment and HIP Stock Purchase
Agreement, will provide Acquisition Sub with funds at the Effective Time
sufficient to (i) consummate the Merger, (ii) finance the Consent Solicitations,
(iii) refinance the existing indebtedness of the Company and its subsidiaries
described in the Commitment Letter (the "Refinancing"), (iv) provide the Bridge
Financing and (v) pay related fees and expenses of the Transactions.
SECTION 4.08. Section 203. As of the date of this Agreement, neither
Parent nor Acquisition Sub nor any of their "affiliates" or "associates" has
been an "interested stockholder" of the Company within the prior 3 years, as
those terms are defined in Section 203 of the DGCL.
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business. (a) Conduct of Business by the
Company. Except for matters set forth in the Company Disclosure Letter or
otherwise expressly permitted by this Agreement, from the date of this Agreement
to the Effective Time the Company shall, and shall cause each Company Subsidiary
to, conduct its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted and, to the extent
consistent therewith, use all commercially reasonable efforts to preserve intact
its current business organization, keep available the services of its current
officers and employees and keep its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them. In addition, and without limiting the generality of the foregoing, except
for matters set forth in the Company Disclosure Letter or otherwise expressly
permitted by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any Company Subsidiary to, do
any of the following without the prior written consent of Parent:
(i) (A) declare, set aside, allot or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, other
than the TM
33
Distribution or dividends and distributions by a direct or indirect wholly
owned subsidiary of the Company to its parent, (B) 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 (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights, restricted stock
units or stock-based performance units, other than the issuance of Company
Common Stock upon the exercise of Company Stock Options or the vesting of
Company RSUs outstanding on the date of this Agreement and in accordance
with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents.
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or (B) any assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except (I) purchases of inventory, (II) new
prepaid expenditures that in the aggregate, are not in excess of the sum of
(x) $10 million plus (y) the product of $2 million multiplied by the number
of full months between the date of this Agreement and the Closing Date and
(III) repairs, each of (I), (II) and (III) in the ordinary course of
business consistent with past practice and (IV) capital expenditures
permitted by Section 5.01(a)(ix);
(v) (A) grant to any Participant any loan or increase in
compensation, benefits or perquisites, other than in individual cases to
respond to competitive offers of employment to Participants (other than
Covered Participants reasonably likely to earn aggregate base and bonus
compensation in 2006 of $500,000 or more) in the ordinary course of
business consistent with past practice, (B) grant to any Participant any
increase in severance, change in control, termination or similar
compensation or benefits, or pay any bonus to any Participant, in each case
except to the extent required under any Company Benefit Plan or Company
Benefit Agreement as in effect on the date hereof, (C) take any action to
fund or in any other way secure the payment of compensation or benefits
under any Company Benefit Plan or Company Benefit Agreement, (D) establish,
34
adopt, enter into, amend, modify or terminate any collective bargaining
agreement or other labor union Contract, Company Benefit Plan or Company
Benefit Agreement, (E) pay or provide to any Participant any benefit not
provided for under a Company Benefit Plan or Company Benefit Agreement as
in effect on the date hereof other than the payment of base compensation in
the ordinary course of business consistent with past practice and other
than in individual cases to respond to competitive offers of employment to
Participants (other than Covered Participants reasonably likely to earn
aggregate base and bonus compensation in 2006 of $500,000 or more) in the
ordinary course of business, (F) grant any awards under any Company Benefit
Plan (including the grant of Company Stock Options, Company RSUs or other
stock-based or stock-related awards or the removal or modification of
existing restrictions in any Contract, Company Benefit Plan or Company
Benefit Agreement on awards made thereunder) or (G) take any action to
accelerate any compensation or benefits, including vesting and payment, or
make any material determinations, under any collective bargaining
agreement, Company Benefit Plan or Company Benefit Agreement;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as may
have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice and the TM Distribution;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
the Company or any Company Subsidiary, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except
for short-term borrowings incurred in the ordinary course of business
consistent with past practice that can be repaid at Closing without
penalty or premium and except for (1) borrowings incurred in the ordinary
course of business consistent with past practice under the existing
equipment facility of the Company and the Company Subsidiaries and (2)
capital leases with respect to computer equipment and similar hardware
and software entered into in the ordinary course of business consistent
with past practice, in each case to the extent the related capital
expenditure is permitted under Section 5.01(a)(ix) or (B) make any loans,
advances or capital contributions to, or investments in, any
35
other person, other than to or in the Company or any direct or indirect
wholly owned Company Subsidiary;
(ix) make or agree to make any new capital expenditure or
expenditures that in the aggregate, are in excess of the sum of $20 million
plus the product of $5.0 million multiplied by the number of full months
between the date of this Agreement and the Closing Date;
(x) enter into, modify, amend or terminate any Contract or waive,
release or assign any material rights or claims thereunder, which if so
entered into, modified, amended, terminated, waived, released or assigned
would reasonably be likely to (A) adversely affect in any material respect
the Company, (B) impair in any material respect the ability of the Company
to perform its obligations under this Agreement or (C) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement;
(xi) except as required by GAAP, revalue any material assets of
the Company or any of its Subsidiaries or make any change in accounting
methods, principles or practices;
(xii) (A) pay, discharge or satisfy any 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 consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed Company SEC Documents
or incurred in the ordinary course of business consistent with past
practice, (B) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value or (C) waive
the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Company
Subsidiary is a party except for confidentiality agreements in the ordinary
course of business consistent with past practice;
(xiii) cancel or terminate any insurance policy or arrangement
naming or providing for it as a beneficiary or a loss payable payee (unless
such policy or arrangement is canceled or terminated in the ordinary course
of business and concurrently replaced with a policy or arrangement with
substantially similar coverage);
(xiv) make or change any material tax election; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
36
(b) Advice of Changes. The Company shall promptly advise Parent orally
and in writing of any change or event that has or could be reasonably likely to
have a Company Material Adverse Effect.
(c) Periodic Reports. In connection with the continuing operation of
the business of the Company and the Company Subsidiaries between the date of
this Agreement and the Effective Time and to the extent permitted by Antitrust
Laws (as defined in Section 6.03(c)), the Company shall use commercially
reasonable efforts to report in good faith on a regular basis to the
representatives of Parent regarding material operational developments and the
general status of ongoing operations pursuant to procedures reasonably requested
in writing by Parent or its representatives; provided that the consultation
required by this Section 5.01(d) shall be conducted in a manner so as not to
disrupt in any material respect the business of the Company and the Company
Subsidiaries; provided further that the Company and the Company Subsidiaries
shall not report to Parent or its representatives any non-public information
related to output, pricing or any other competitively-sensitive matter. Parent
and Sub acknowledge that neither Parent nor Sub shall have any approval rights
under this Section 5.01(d). The Company acknowledges that any such reports shall
not constitute a waiver by either Parent or Sub of any rights it may have under
this Agreement and that neither Parent nor Sub shall have any liability or
responsibility for any actions of the Company, any Company Subsidiary or any of
their respective directors or officers with respect to matters that are the
subject of such reports. All information exchanged pursuant to this Section
5.01(c) shall be subject to the Confidentiality Agreement (as defined in Section
6.02). For the avoidance of doubt, the Company shall not be required to provide
any information pursuant to this Section 5.01(c) to the extent such information
is not required to be provided pursuant to Section 6.02.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall
it authorize or permit any Company Subsidiary to, nor shall it authorize or
permit any officer, director or employee of, or any investment banker,
attorney or other advisor or representative (each, a "Representative" and
collectively, "Representatives") of, the Company or any Company Subsidiary to,
(i) directly or indirectly solicit, initiate or encourage the submission of,
any Company Takeover Proposal (as defined in Section 5.02(e)), (ii) enter into
any agreement with respect to any Company Takeover Proposal or (iii) directly
or indirectly participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Company Takeover
Proposal; provided, however, that, during the period prior to the Company
Stockholder Approval, the Company and its Representatives may, to the extent
required by the fiduciary obligations of the Company Board, as determined in
good faith by a majority of the members thereof after consultation with
outside counsel, in response to a Superior Company Proposal (as defined in
Section 5.02(e)) or a Company Takeover Proposal from a person that the Company
Board determines, in good faith following consultation with outside counsel,
37
is reasonably capable of making a Superior Company Proposal that, in each
case, was not solicited by the Company after December 21, 2005, and that did
not otherwise result from a breach or a deemed breach of this Section 5.02(a),
and subject to compliance with Section 5.02(c), (x) furnish information with
respect to the Company to the person making such Superior Company Proposal or
Company Takeover Proposal and its Representatives pursuant to a
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement (as defined in Section 6.02) and (y) participate in
discussions and/or negotiations with such person and its Representatives
regarding any such Superior Company Proposal or Company Takeover Proposal.
Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in the preceding sentence by any Representative or
affiliate of the Company or any Company Subsidiary shall be deemed to be a
breach of this Section 5.02(a) by the Company. Other than as permitted by the
proviso to the first sentence of this Section 5.02(a), the Company shall, and
shall cause its Representatives to, cease immediately all discussions and
negotiations regarding any proposal that constitutes, or may reasonably be
expected to lead to, a Company Takeover Proposal.
(b) The Company promptly shall advise Parent orally and in writing of
any Company Takeover Proposal or any inquiry with respect to or that could
reasonably be expected to lead to any Company Takeover Proposal and the identity
of the person making any such Company Takeover Proposal or inquiry including any
change to the material details of any such Company Takeover Proposal or inquiry.
The Company shall (i) keep Parent fully informed of the status including any
change to the material details of any such Company Takeover Proposal or inquiry
and (ii) provide to Parent as soon as practicable after receipt or delivery
thereof with copies of all material correspondence and other written material
sent or provided to the Company from any third party in connection with any
Company Takeover Proposal or sent or provided by the Company to any third party
in connection with any Company Takeover Proposal.
(c) Nothing contained in this Section 5.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14d-9 or 14e-2 promulgated under the Exchange Act or from making any required
disclosure to the Company's stockholders if, in the good faith judgment of the
Company Board, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable Law.
(d) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer
for a merger, consolidation, dissolution, recapitalization or other
business combination involving the Company, (ii) any proposal for the
issuance by the Company of over 20% of its equity securities as
consideration for the assets or securities of another person or (iii)
any proposal or offer to acquire in any manner, directly or indirectly,
over 20% of the equity securities or consolidated total assets of the
38
Company, in each case other than the Transactions. For the avoidance of
doubt, the TM Distribution and all proposals related thereto shall not
be deemed to be a Company Takeover Proposal.
"Superior Company Proposal" means any proposal made by a third
party to acquire 50% or more of the equity securities or consolidated
assets of the Company, pursuant to a tender or exchange offer, a
merger, a consolidation, a liquidation or dissolution, a
recapitalization, a sale of its assets or otherwise, (i) on terms which
a majority of the members of the Company Board determines in good faith
to be more favorable to the holders of Company Common Stock than the
Merger, taking into account all the terms and conditions of such
proposal and this Agreement and (ii) that is reasonably capable of
being completed, taking into account all financial, regulatory, legal
and other aspects of such proposal; provided that the Company Board
shall not so determine that any such proposal is a Superior Company
Proposal until the Company has complied in all material respects with
Section 5.02(b) with respect to such proposal. For the avoidance of
doubt, the TM Distribution and all proposals related thereto shall not
be deemed to be a Superior Company Proposal.
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of Information Statement; Action by Written
Consent. (a) The Company shall, as soon as practicable following the date of
this Agreement, prepare and file with the SEC the Information Statement
(including all information required by Rule 13e-3 promulgated under the Exchange
Act) in preliminary form, and each of the Company and Parent shall use its
commercially reasonable efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Information
Statement or on any other Company Disclosure Document or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Information Statement or any other
Company Disclosure Document. If at any time prior to the Effective Time there
shall occur any event that should be set forth in an amendment or supplement to
the Information Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. The Company shall not mail any
Information Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. The Company shall use its commercially reasonable efforts to
cause the Information Statement to be mailed to the Company's stockholders as
promptly as practicable after filing with the SEC. Notwithstanding the
foregoing, prior to filing or mailing the
39
Information Statement or any other Company Disclosure Document (or any
amendment or supplement thereto) or responding to any comments of the SEC with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response and (ii) shall include in such
document or response all reasonable comments proposed by Parent.
(b) Parent shall, promptly following the date of this Agreement, seek
the Company Stockholder Approval by the written consent of the holders of a
majority of the outstanding Company Common Stock. The Company shall, through the
Company Board, recommend to its stockholders that they give the Company
Stockholder Approval, except to the extent that the Company Board shall have
withdrawn or modified its approval or recommendation of this Agreement or the
Merger after the Company Board shall have determined in good faith, after
consultation with outside counsel, that the failure to do so would be
inconsistent with its obligations under applicable Law.
SECTION 6.02. Access to Information; Confidentiality. Each of the
Company and Parent shall, and shall cause each of their subsidiaries to, afford
to the other party, and to the other party's officers, employees, accountants,
counsel, financial advisors and other representatives, affiliates and sources
and potential sources of financing (and representatives of each of the
foregoing), reasonable access during normal business hours during the period
prior to the Effective Time (as long as such access is not unreasonably
disruptive to the business of such party or its subsidiaries) to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, each of the Company and Parent shall, and shall cause each
of its subsidiaries to, furnish promptly to the other party (a) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws and
(b) all other information concerning its business, properties and personnel as
the other party may reasonably request; provided, however, that either party may
withhold (i) any document or information that is subject to the terms of a
confidentiality agreement with a third party, (ii) such portions of documents or
information relating to output, pricing or other matters that are highly
sensitive if the exchange of such documents (or portions thereof) or
information, as determined by such party's counsel, would reasonably be expected
to raise antitrust concerns for such party (or any of its affiliates) or (iii)
such portions of documents or information that would reasonably be expected to
jeopardize any attorney-client privilege or contravene any Law or fiduciary duty
(provided that each party shall in good faith seek and implement a reasonable
alternative to provide the other party's counsel with access to such document or
information). All information exchanged pursuant to this Section 6.02 shall be
subject to the confidentiality agreement dated September 29, 2005, between the
Company and RHJI (the "Confidentiality Agreement").
SECTION 6.03. Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this Agreement,
each of the parties shall use its commercially reasonable efforts to take, or
cause to be taken, all
40
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 Merger and
the other Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or any other Transaction Agreement or the
consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of the Transaction Agreements. Without limiting the generality of the
foregoing, the parties hereto acknowledge that it is the intention of each of
the parties hereto that the TM Distribution (including obtaining all necessary
third party consents and approvals with respect thereto, including as required
under any securities laws) shall become payable immediately following the
Effective Time to Company common stockholders of record one business day prior
to the Closing Date and each party hereto shall use its commercially reasonable
efforts to achieve the same. In connection with and without limiting the
foregoing, the Company and the Company Board shall (i) take all action necessary
to ensure that the TM Distribution is paid on terms and conditions consistent
with the TM Distribution Conditions and the terms set forth in Exhibit B, (ii)
take all action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to any Transaction or this
Agreement or any other Transaction Agreement, and (iii) if any state takeover
statute or similar statute or regulation becomes applicable to this Agreement or
any other Transaction Agreement, take all action necessary to ensure that the
Merger and the other Transactions may be consummated as promptly as practicable
on the terms contemplated by this Agreement and the Transaction Agreements and
otherwise to minimize the effect of such statute or regulation on the Merger and
the other Transactions. Nothing in this Agreement shall be deemed to require any
party to waive any substantial rights or agree to any substantial limitation on
its operations or to dispose of any significant asset or collection of assets.
Notwithstanding the foregoing, the Company and its Representatives shall not be
prohibited under this Section 6.03(a) from taking any action permitted by
Section 5.02(b). Subject to applicable Law relating to the exchange of
information, the Company and Parent and their respective counsel shall have the
right to review in advance, and to the extent practicable each shall consult the
other on, any filing made with, or written materials submitted to, any
Governmental Entity in connection with the Merger and the other Transactions.
The Company and Parent shall provide the other party and its counsel with the
opportunity to participate in any meeting with any Governmental Entity in
respect of any filing, investigation or other inquiry in connection with the
Merger or the other Transactions.
41
(b) The Company shall give prompt notice to Parent, and Parent or
Acquisition Sub shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement or any
Transaction Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty that is not so
qualified 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 be deemed to be a
waiver or cure of any such breach or failure to comply or affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement or the
Transaction Agreements.
(c) Nothing in Section 6.03(a) shall require Parent to dispose of any
of its assets or to limit its freedom of action with respect to any of its
businesses, or to consent to any disposition of the Company's assets or limits
on the Company's freedom of action with respect to any of its businesses, or to
commit or agree to any of the foregoing, and nothing in Section 6.03(a) shall
authorize the Company to commit or agree to any of the foregoing, to obtain any
consents, approvals, permits or authorizations to remove any impediments to the
Merger relating to the HSR Act, the Japanese Anti-Monopoly law or other
antitrust, competition or premerger notification, trade regulation law,
regulation or order ("Antitrust Laws") or to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or other order
in any suit or proceeding relating to Antitrust Laws.
(d) Nothing in this Section 6.03 shall require Parent to (i) consent to
any action or omission by the Company that would be inconsistent with Section
5.01 absent such consent or (ii) agree to amend or waive any provision of this
Agreement.
(e) As soon as reasonably practicable following the execution of this
Agreement, Parent, in its capacity as the sole stockholder of Sub, shall adopt
this Agreement.
SECTION 6.04. Stock Options and Restricted Stock Units. (a) As soon
as practicable following the date of this Agreement, the Company Board (or, if
appropriate, any committee administering the Company Stock Plan) shall adopt
such resolutions or take such other actions as are required to adjust the
terms of each outstanding Company Stock Option, whether vested or unvested, to
provide that each such Company Stock Option shall be rolled over at the
Effective Time by canceling such Company Stock Option in exchange for a cash
payment by the Company of an amount equal to (A) the excess, if any, of (1)
the Common Merger Consideration over (2) the exercise price per share of
Company Common Stock subject to such Company Stock Option (adjusted to reflect
the TM Distribution), multiplied by (B) the number of shares of Company Common
Stock that are subject to such Company Stock Option immediately prior to the
Effective Time and for which such Company Stock Option shall
42
not theretofore have been exercised. Parent will make available options on its
common stock to employees of the Company set forth on Section 6.04(a) of the
Parent Disclosure Letter (as it may be supplemented by Parent prior to the
Effective Time), on the terms and conditions provided therein.
(b) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the Company Stock
Plan) shall adopt such resolutions or take such other actions as are required to
adjust the terms of all outstanding Company RSUs heretofore granted under the
Company Stock Plan, whether vested or unvested, to provide that each such
Company RSU shall be canceled at the Effective Time in exchange for a cash
payment by the Company of an amount equal to (i) (A) if the holder of such
Company RSU is a Principal Company Stockholder, $2.57 or (B) if the holder of
such Company RSU is not a Principal Company Stockholder, the Common Merger
Consideration multiplied by (ii) the number of shares of Company Common Stock
that are subject to such Company RSU for which such Company RSU shall not
theretofore have been settled.
(c) All amounts payable pursuant to this Section 6.04 shall be subject
to any required withholding of Taxes (with amounts so withheld and paid over to
the appropriate taxing authority being treated for all purposes of this
Agreement as having been paid to the applicable holders) and shall be paid
without interest.
(d) The Company Stock Plan shall terminate as of the Effective Time,
and the provisions in any other Company Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time no holder of a
Company Stock Option or Company RSU or any Participant shall have any right
thereunder to acquire any capital stock of the Company or the Surviving
Corporation or any other equity interest therein.
(e) In this Agreement:
"Company Stock Option" means any option to purchase Company Common
Stock granted under the Company Stock Plan.
"Company RSU" means any restricted stock unit granted under any Company
Stock Plan.
"Company Stock Plan" means the 2001 Long Term Equity Incentive Plan.
SECTION 6.05. Benefit Plans. (a) For one year following the Effective
Time, Parent either (i) shall maintain or cause the Surviving Corporation to
maintain the Company Benefit Plans (other than plans providing for the
issuance of Company Common Stock or based on the value of Company Common
Stock) at the benefit levels in effect on the date of this Agreement or (ii)
shall provide or cause the Surviving
43
Corporation to provide benefits (other than benefits under plans providing for
the issuance of Company Capital Stock or based on the value of Company Capital
Stock) to employees of the Company and the Company Subsidiaries that, taken as
a whole, are not materially less favorable in the aggregate to such employees
than those provided to such employees as of the date of this Agreement.
Nothing herein shall be construed to prohibit Parent or the Surviving
Corporation from amending or terminating such Company Benefit Plans in
accordance with their terms and with applicable Law, so long as Parent is in
compliance with the other terms of this Section 6.05(a).
(b) The service of each employee of the Company and the Company
Subsidiaries prior to the Effective Time shall be treated as service with Parent
or any of its subsidiaries for purposes of each employee benefit plan of Parent
or any of its subsidiaries in which such employee is eligible to participate
after the Effective Time, including for purposes of eligibility, vesting,
benefit levels and accruals (but not for purposes of benefit accrual under any
defined benefit pension plans); provided, however, that such service shall not
be recognized to the extent that such recognition would result in any
duplication of benefits.
(c) Parent shall waive, or cause to be waived, any pre-existing
condition limitation under any welfare benefit plan maintained by Parent or any
of its affiliates (other than the Company and Company Subsidiaries) in which
employees of the Company and the Company Subsidiaries (and their eligible
dependents) will be eligible to participate from and after the Effective Time,
except to the extent that such pre-existing condition limitation would have been
applicable under the comparable Company Benefit Plan immediately prior to the
Effective Time. Parent shall recognize, or cause to be recognized, the dollar
amount of all expenses incurred by each employee of the Company and the Company
Subsidiaries (and his or her eligible dependents) during the calendar year in
which the Effective Time occurs for purposes of satisfying such year's
deductible and co-payment limitations under the relevant welfare benefit plans
in which they will be eligible to participate from and after the Effective Time.
(d) The provisions of this Section 6.05 are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 6.06. Indemnification. (a) Parent shall cause to be
maintained for a period of not less than six years from the Effective Time 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 persons who are directors and
officers of the Company on the date of this Agreement, so long as the annual
premium therefor would not be in excess of 150% of the last annual premium
paid prior to the date of this Agreement (such 150% amount, the "Maximum
Premium"). If the existing D&O Insurance expires, is terminated or canceled
during such six-year period, Parent shall use all commercially reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained
44
for the remainder of such period for an annualized premium not in excess of
the Maximum Premium, on terms and conditions no less advantageous than the
existing D&O Insurance. In lieu of continuing the existing D&O Insurance, (i)
Parent may obtain after the Effective Time a "tail" D&O Insurance policy on
terms and conditions no less advantageous than the existing D&O Insurance for
a period of six years from the Effective Time; provided that the annualized
premium shall not exceed the Maximum Premium and (ii) the Company may obtain
prior to the Effective Time a "tail" D&O Insurance policy in an amount and on
terms and conditions no more advantageous than the existing D&O Insurance for
a period of six years from the Effective Time; provided that the lump sum
premium shall not exceed $962,000. The Company represents to Parent that the
Maximum Premium is $650,000.
(b) Parent shall, to the fullest extent permitted by Law, cause the
Surviving Corporation to honor all the Company's obligations to indemnify or
hold harmless (including any obligations to advance funds for expenses) the
current or former directors or officers of the Company for acts or omissions by
such directors and officers occurring prior to the Effective Time to the extent
that such obligations of the Company exist on the date of this Agreement,
whether pursuant to the Company Charter, the Company By-laws, individual
indemnity agreements or otherwise, and such obligations shall survive the Merger
and shall continue in full force and effect in accordance with the terms of the
Company Charter, the Company By-laws and such individual indemnity agreements
from the Effective Time until the expiration of the applicable statute of
limitations with respect to any claims against such directors or officers
arising out of such acts or omissions. Parent shall, to the fullest extent
permitted by Law, cause the Surviving Corporation to advance funds for expenses
incurred by a director or officer in defending a civil or criminal action, suit
or proceeding relating to the indemnification obligations referenced in the
immediately preceding sentence in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall be ultimately
determined that he or she is not entitled to the indemnification referenced in
the immediately preceding sentence.
SECTION 6.07. Fees and Expenses. Except as provided below, all fees and
expenses incurred in connection with the Merger and the other Transactions shall
be paid by the party incurring such fees or expenses, whether or not the Merger
is consummated.
SECTION 6.08. Public Announcements. Parent and Acquisition Sub, on the
one hand, and the Company, on the other hand, shall 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 Merger
and the other Transactions 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.
45
SECTION 6.09. Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the Transactions shall be paid by either Acquisition Sub or the
Surviving Corporation, and the Company shall cooperate with Acquisition Sub and
Parent in preparing, executing and filing any Tax Returns with respect to such
Transfer Taxes.
SECTION 6.10. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any Transaction;
provided, however, that no such settlement shall be agreed to without Parent's
consent, which shall not be unreasonably withheld, delayed or conditioned.
SECTION 6.11. Financing; Consent Solicitations. (a) Financing. Parent
and Acquisition Sub shall use their commercially reasonable efforts to obtain
the proceeds of the Financing on the terms and conditions described in the
Commitment Letter, Parent Consent Letter and Parent Commitment Letter and to
obtain the funds contemplated by the Equity Commitment (and to contribute such
funds to the Company), including using commercially reasonable efforts to (A)
negotiate definitive agreements with respect to the Financing consistent with
the terms and conditions contained in the Commitment Letter and (B) satisfy on
a timely basis all conditions in such definitive agreements the satisfaction
of which is within the control of Parent or Acquisition Sub. Parent and
Acquisition Sub shall use their commercially reasonable efforts to comply with
their respective obligations, and enforce their respective rights, under the
Commitment Letter, the Parent Consent Letter and Parent Commitment Letter and
shall cause RHJI to comply with its obligations under the Equity Commitment.
Parent shall keep the Company informed on a reasonably current basis in
reasonable detail of the status of its efforts to obtain the proceeds of the
Financing and shall not permit any amendment or modification to, or any waiver
of any material provision or remedy under, any of the Commitment Letter, the
Parent Consent Letter, Parent Commitment Letter or the Equity Commitment if
such amendment, modification, waiver or remedy amends the conditions to the
drawdown of the Financing in a manner adverse to the interests of the Company
and its shareholders, in each case, in any material respect or would adversely
affect in any material respect the ability of Parent or the Company to effect
the Financing or obtain the proceeds of the Equity Commitment. The Company
shall also use commercially reasonable efforts to assist and cooperate with
Parent and Acquisition Sub in connection with their efforts to obtain the
proceeds of the Financing, including providing reasonably required information
relating to the Company and the Company Subsidiaries to the financial
institution or institutions providing the Financing and executing and
delivering, and causing the Company Subsidiaries to execute and deliver,
definitive agreements with respect to the Financing and customary
certificates, legal opinions (which may be reasoned, if counsel reasonably
believes it cannot give the opinion otherwise) or other documents and
instruments relating to guarantees, the pledge of collateral and other matters
ancillary to the Financing as may be reasonably requested
46
by Parent in connection with the Financing; provided, however, that no
obligation of the Company or any Company Subsidiary under any such certificate,
document or instrument shall be effective until the Effective Time and none of
the Company or any Company Subsidiary shall be required to pay any commitment or
other similar fee or incur any other liability in connection with the Financing
prior to the Effective Time. In the event that the Financing is not available to
consummate the Refinancing and pay related fees and expenses of the Transactions
contemplated by this Agreement and the other Transaction Agreements, then Parent
shall promptly notify the Company and Parent and Acquisition Sub shall use their
commercially reasonable efforts to obtain alternative financing on terms that
are no less favorable to Parent and Acquisition Sub than those set forth in the
Commitment Letter, Parent Consent Letter or Parent Commitment Letter, as
applicable, and in the same amounts as contemplated by the Commitment Letter
(including for working capital purposes following the Closing) or Parent
Commitment Letter, as applicable (the "Alternative Financing"); provided that no
such Alternative Financing shall require a greater cash equity commitment than
that contemplated by the Equity Commitment.
(b) Consent Solicitations. As soon as practicable following the
execution and delivery of this Agreement the Company shall commence the
Consent Solicitations with respect to all of its 11% Senior Subordinated
Notes, 10% Senior Subordinated Notes and 10% Senior Notes whereby the Company
shall solicit the consents of the holders of the Notes regarding amendments to
the covenants contained in the respective Notes Indentures (the "Indenture
Amendments"), in each case contemplated by Schedule 6.11(b) hereto. In
accordance with the terms of the Consent Solicitations, assuming the requisite
consents are received, the Company shall execute supplemental indentures to
each of the Notes Indentures among the Company, the guarantors named therein
and the trustee party thereto reflecting the Indenture Amendments, which
supplemental indentures shall become operative concurrently with the Effective
Time, and shall use its commercially reasonable efforts to cause the trustees
under the Indentures to promptly enter into such supplemental indentures as
applicable. Parent and the Company each shall use its commercially reasonable
efforts to proceed with and complete the Consent Solicitations as required to
satisfy the condition precedents in Section 7.01(e) and shall consult and
cooperate with each other in all such efforts; provided that (i) Parent shall
have the sole right to control decisions with respect to the strategy and
conduct of the Consent Solicitations (including modifying the terms and
structure thereof as set forth on Schedule 6.11(b) hereto; provided that it
shall have no obligation whatsoever to modify the terms of the Consent
Solicitations set forth therein) and (ii) the consent of the Company shall be
required to modify or waive material terms or conditions of the Consent
Solicitations if such would be reasonably likely to materially and adversely
impact the probability of a successful outcome for the Consent Solicitations
or would conflict with the provisions of any Transaction Agreement and
documents delivered in connection with the foregoing. Promptly following the
date of this Agreement, the Company shall prepare and mail the documentation
to be sent to the holders of the Notes in connection with the Consent
Solicitations, but only after receipt of
47
approval from Parent (which approval shall not be unreasonably withheld, delayed
or conditioned). The Company shall provide, shall cause the Company Subsidiaries
to provide, and shall use its commercially reasonable efforts to cause their
respective Representatives to provide, all cooperation requested by Parent in
connection with the Consent Solicitations including assisting in the preparation
and execution of all documents required in connection therewith. All
documentation for the Consent Solicitations will be customary for transactions
of this nature and shall be in form and substance reasonably satisfactory to
Parent and the Company. The Consent Solicitations and other actions taken in
connection therewith shall be conducted in accordance with the terms of the
applicable Indentures and all applicable rules and regulations of the SEC and
other applicable Laws. If at any time prior to the Effective Time any
information relating to the Company or any Company Subsidiary or any of their
affiliates, officers or directors, should be discovered by the Company, Parent
or Acquisition Sub which if not set forth in an amendment or supplement to the
documents mailed to Note holders in respect of the Consent Solicitations would
reasonably be expected to cause such documents to 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, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall promptly by prepared and, if required, filed with the SEC and/or
disseminated to the holders of Notes.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obligation To Effect The
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company shall have obtained the Company
Stockholder Approval and not less than 20 days prior to the Closing Date shall
have sent or given to each holder of the Company Common Stock the Information
Statement in compliance with Rule 14c-2 promulgated under the Exchange Act and
shall have complied with Rule 13e-3 promulgated under the Exchange Act.
(b) Antitrust. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired. Any consents, approvals and filings under any foreign Antitrust
Law, the absence of which would prohibit the consummation of the Merger or would
be reasonably likely to have a Parent Material Adverse Effect, shall have been
obtained or made.
48
(c) No Injunctions or Restraints. No temporary judgment issued by any
court of competent jurisdiction or other law preventing the consummation of the
Merger shall be in effect; provided, however, that prior to asserting this
condition, subject to Section 6.03, the applicable party shall have used its
commercially reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such judgment that may be
entered.
(d) Parent Stock Purchase Agreement. Parent and Principal Company
Stockholders shall have consummated the transactions contemplated by the Parent
Stock Purchase Agreement without the amendment, modification or waiver in any
material respect of any material term or condition thereof.
(e) Consent Solicitations. The Company shall have completed the Consent
Solicitations and shall have received consent from holders of a majority of the
outstanding Notes of each series consenting to the Transactions and the TM
Distribution; provided, however, that prior to asserting this condition, the
applicable party shall have complied in all material respects with its
obligations under Section 6.11.
(f) Financing. Parent and Acquisition Sub shall have obtained the
proceeds contemplated by the Financing or the Alternative Financing; provided,
however, that prior to asserting this condition, the applicable party shall have
complied in all material respects with its obligations under Section 6.11.
(g) Other Stock Purchase Agreements. The transactions contemplated by
the Other Stock Purchase Agreements shall have been consummated without the
amendment, modification or waiver in any material respect of any material term
or condition thereof.
SECTION 7.02. Conditions to Obligations of Parent and Acquisition Sub.
The obligations of Parent and Acquisition Sub to effect the Merger are further
subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company in this Agreement (other than those set forth in Sections 3.01,
3.03, 3.04 and 3.18(a)) shall be true and correct, as of the date of this
Agreement and as of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall be true and
correct, on and as of such earlier date), other than for such failures to be
true and correct that, individually or in the aggregate, have not had and would
not be reasonably likely to have a Company Material Adverse Effect (it being
agreed that for purposes of determining whether such representations and
warranties shall be true and correct and applying the foregoing Company Material
Adverse Effect qualifier, all such representations and warranties that already
are qualified by reference to a Company Material Adverse Effect or other
materiality qualifier shall be deemed to be not so qualified). The
representations and warranties of the Company set
49
forth in Sections 3.01, 3.03, 3.04 and 3.18(a) that are qualified by a Company
Material Adverse Effect or other materiality qualifier shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, as of the date of this Agreement and as of the Closing Date as though
made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct, or true and correct in
all material respects, as applicable, on and as of such earlier date). Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(c) Absence of Company Material Adverse Effect. Since the date of this
Agreement, there shall not have been any event, change, effect, development or
state of facts that, individually or in the aggregate, has had or would be
reasonably likely to have a Company Material Adverse Effect.
(d) Parent Lender Consent. The Parent Facility Amendments shall have
become effective on the terms and conditions contemplated in the Parent Consent
Letter.
(e) TM Distribution. If the TM Distribution shall be paid, it shall be
payable only on terms consistent in all material respects with the TM
Distribution Conditions and the terms set forth in Exhibit B.
(f) 280G. The Company shall have taken all steps necessary in
compliance with Section 280G(b)(5) of the Code and the Treasury Regulations
promulgated thereunder, including providing adequate disclosure to shareholders
(within the meaning of Section 280G(b)(5)(B)(ii) of the Code and the Treasury
Regulations promulgated thereunder) and conducting a vote of all shareholders
(within the meaning of Treasury Regulation Section 1.280G-1, Q/A-7(b)), (the
"280G Approval") so that in the event the shareholder approval requirements of
Section 280G(b)(5)(B)(i) of the Code are met in connection with such shareholder
vote, no Potential Parachute Payment would be treated as an "excess parachute
payment" (as defined in Section 280G(b) of the Code), without regard to whether
or not such shareholder approval requirements are actually met in connection
with such shareholder vote.
(g) Corporate Rating and Term Facility Pricing. The corporate ratings
of the Company (as such term is used in the Commitment Letter) shall be at
least B3 by Xxxxx'x Investors Service, Inc. and at least B- by Standard &
Poor's Ratings Group (in each case with at least stable outlook), assuming
consummation of the Transactions, or the Applicable Margin (as defined in the
Commitment Letter) on Eurodollar Loans (as
50
defined in the Commitment Letter) under the Term Facility (as defined in the
Commitment Letter) shall be less than or equal to (i) if the Closing occurs on
or prior December 31, 2006, 4.5% and (ii) if the Closing occurs after December
31, 2006, 5.0%.
SECTION 7.03. Condition to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Acquisition Sub in this Agreement shall be true and correct in all
material respects, as of the date of this Agreement and as of the Closing Date
as though made on the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects, on and as of such earlier date) and the Company shall have received a
certificate signed on behalf of Parent and Acquisition Sub to such effect.
(b) Performance of Obligations of Parent and Acquisition Sub. Parent
and Acquisition Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
(c) TM Distribution. The TM Distribution shall be payable on terms
consistent in all material respects with the TM Distribution Conditions and the
terms set forth in Exhibit B; provided, however, that prior to the Company
asserting this condition, the Company shall have complied in all material
respects with its obligations under Section 6.03.
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of Company
Stockholder Approval:
(a) by mutual written consent of Parent, Acquisition Sub and the
Company;
(b) by either Parent or the Company:
51
(i) if the Merger is not consummated on or before March 15, 2007
(the "Outside Date"), unless the failure to consummate the Merger is
the result of a willful and material breach of this Agreement by the
party seeking to terminate this Agreement; provided, however, that the
passage of such period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order, decree, ruling
or action restraining, enjoining or otherwise prohibiting the
consummation of the Merger;
(ii) if any Governmental Entity issues an order, decree or ruling
or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(iii) if the Company Stockholder Approval is not validly obtained
on or prior to November 27, 2006; or
(iv) if the Parent Stock Purchase Agreement is terminated in
accordance with its terms;
(c) by Parent, if the Company breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in any Transaction Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section
7.02(a) or 7.02(b), and (ii) cannot be or has not been cured by the Outside
Date (provided that Parent is not then in willful and material breach of
any representation, warranty or covenant contained in this Agreement);
(d) by the Company prior to the receipt of the Company Stockholder
Approval in accordance with Section 8.05(b); provided, however, that the
Company shall have complied with all provisions thereof, including the
notice provisions therein; or
(e) by the Company, if Parent or Acquisition Sub breaches or fails to
perform in any material respect any of its representations, warranties or
covenants contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section
7.03(a) or 7.03(b), and (ii) cannot be or has not been cured by the Outside
Date (provided that the Company is not then in willful and material breach
of any representation, warranty or covenant contained in this Agreement).
SECTION 8.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Acquisition Sub or the Company,
other than Section 3.20, Section 4.06, the last sentence of Section 6.02,
Section 6.07, this Section 8.02 and Article IX, which
52
provisions shall survive such termination, and except to the extent that such
termination results from the willful and material breach by a party of any
representation, warranty or covenant set forth in this Agreement, in which case
the aggrieved party shall be entitled to all remedies available at law or in
equity.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
at any time before or after receipt of the Company Stockholder Approval;
provided, however, that (i) after receipt of the Company Stockholder Approval,
there shall be made no amendment that by Law requires further approval by the
stockholders of the Company without the further approval of such stockholders
and (ii) no amendment shall be made to this Agreement after the Effective Time.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 8.04. Extension; Waiver. 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 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Subject to the proviso in Section 8.03, no
extension or waiver by the Company shall require the approval of the
stockholders of the Company. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
Waiver. (a) A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require in the case of
Parent, Acquisition Sub or the Company, action by its Board of Directors or the
duly authorized designee of its Board of Directors. Termination of this
Agreement prior to the Effective Time shall not require the approval of the
stockholders of the Company.
(b) The Company may terminate this Agreement pursuant to Section
8.01(d) only if prior to the Company Stockholder Approval (i) the Company
Board has received a Superior Company Proposal, (ii) in light of such Superior
Company Proposal a majority of the directors of the Company shall have
determined in good faith, after consultation with outside counsel, that it is
necessary for the Company Board to withdraw or modify its approval or
recommendation of this Agreement or the Merger in order to comply with its
fiduciary duty under applicable Law, (iii) the Company has notified Parent in
writing of the determinations described in clause (ii) above and has given
Parent an opportunity to submit a revised proposal, (iv) at least five
business days following receipt by Parent of the notice referred to in clause
(iii) above, and taking into account any revised proposal made by Parent since
receipt of the notice referred to in
53
clause (iii) above, such Superior Company Proposal remains a Superior Company
Proposal and a majority of the directors of the Company has again made the
determinations referred to in clause (ii) above, (v) the Company is in
compliance with Section 5.02, (vi) the Company has concurrently with such
termination paid Parent a termination fee of $2,500,000, (vii) the Company Board
concurrently approves, and the Company concurrently enters into, a definitive
agreement providing for the implementation of such Superior Company Proposal and
(viii) Parent is not at such time entitled to terminate this Agreement pursuant
to Section 8.01(c).
ARTICLE IX
General Provisions
------------------
SECTION 9.01. 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 9.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by 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 Sub, to
Asahi Tec Corporation
000-0 Xxxxxxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxx 000-0000, Xxxxx
Fax: 00-000-00-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxxx Mori & Tomotsune
Izumi Xxxxxx Xxxxx
0-0-0, Xxxxxxxx, Xxxxxx-xx,
Xxxxx 000-0000, Xxxxx
Fax: (00) 0000-0000
Attention: Xxxxxxxx Xxxxxx, Esq.
54
with a copy to:
RHJ International SA
Xxxxxx Xxxxxx 000
0000 Xxxxxxxx
Xxxxxxx
Attention: Xxx Xxxxx
with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
(b) if to the Company, to
Metaldyne Corporation
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer and General Counsel
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx LLP
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
W. Xxxxxx Xxxxx
SECTION 9.03. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"$" means United States Dollars, the lawful currency of the United
States.
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"HIP Stock Acquisition" means the Other Stock Acquisition on the terms
and subject to the conditions of the HIP Preferred Stock Purchase Agreement.
"HIP Stock Purchase Agreement" means the Other Stock Purchase Agreement
dated as of the date of this Agreement and entered into by Parent and the
holders of the Series B Company Preferred Stock.
A "material adverse effect" on a party means (a) a material adverse
effect on the business, assets, financial condition or results of operations of
the party and its subsidiaries, taken as a whole except, in each case, to the
extent arising or resulting from, or caused or attributable to, any of the
following, individually or taken together: (i) general U.S., Japanese or global
economic, political or market conditions to the extent not materially
disproportionately affecting the party and its subsidiaries, taken as whole,
relative to other automotive industry participants in the party's geographic
area, (ii) changes in applicable generally accepted accounting principles or
Law, (iii) the public announcement of the Transactions, the consummation of the
Transactions or the execution of the Transaction Agreements or (iv) acts of
terrorism or war to the extent not materially disproportionately affecting the
party and its subsidiaries, taken as whole, relative to other automotive
industry participants in the party's geographic area, (b) a material adverse
effect on the ability of the party to perform its obligations under this
Agreement or the other Transaction Agreements to which it is a party or (c) a
material adverse effect on the ability of the party to consummate the
Transactions to which it is a party or, in the case of the Company, the TM
Distribution.
"Parent Voting Agreement" means the voting agreement executed by RHJI
and dated as of the date of this Agreement, whereby RHJI agrees to take
specified actions in furtherance of the Transactions and approve the amendment
of Parent's articles of incorporation to authorize the issuance of convertible
preferred stock of Parent.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
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.
"Transaction Agreements" means this Agreement, the Parent Voting
Agreement, the Parent Stock Purchase Agreement and the Other Stock Purchase
Agreements and the documents delivered in connection with the foregoing. For the
avoidance of doubt, documents delivered in connection with the TM Distribution
shall not be deemed to be Transaction Documents.
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SECTION 9.04. 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".
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06. 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 9.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, and the Transaction Agreements taken together with the Company
Disclosure Letter, (a) constitute the entire agreement, and supersede after the
date of this Agreement all prior agreements and understandings (including the
Original Agreement), both written and oral, among the parties with respect to
the Transactions (other than the Confidentiality Agreement) and (b) except for
Sections 6.04 and 6.06, are not intended to confer upon any person other than
the parties any rights or remedies. Notwithstanding clause (b) of the
immediately preceding sentence, following the Effective Time the provisions of
Article II shall be enforceable by holders of Certificates.
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent the laws of the State of Delaware are
mandatorily applicable to the Merger.
SECTION 9.09. 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, except that Acquisition Sub may assign,
in its sole discretion, any of or all its rights, interests and obligations
under this Agreement to Parent or to any direct wholly owned subsidiary of
Parent, but no such assignment shall relieve Acquisition Sub
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of any of its obligations under this Agreement. Any purported assignment without
such consent shall be void. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement or any
Transaction 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
or any Transaction Agreement and to enforce specifically the terms and
provisions of this Agreement and each other Transaction Agreement in any New
York state court, any Federal court located in the State of New York or the
State of Delaware or in any 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 New York state court, any Federal court located in the State of New York
or the State of Delaware or in any Delaware state court in the event any dispute
arises out of this Agreement, any Transaction Agreement or any Transaction, (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, (c) agrees that it will
not bring any action relating to this Agreement or any other Transaction
Agreement or any Transaction in any court other than any New York state court,
any Federal court sitting in the State of New York or the State of Delaware or
any Delaware state court and (d) waives any right to trial by jury with respect
to any action related to or arising out of this Agreement or any other
Transaction Agreement or any other Transaction.
SECTION 9.11. Tax Treatment. (a) The Principal Company Stockholders
intend to report this transaction as subject to Code Section 351. Unless
otherwise required by law, none of the parties hereto or their affiliates shall
take any position inconsistent with the foregoing.
(b) To avoid application of Code Section 367(a)(1), Parent covenants
that, after the Closing, Parent will ensure that the Company complies with the
reporting requirements in Treasury Regulation Section 1.367(a)-3(c)(6).
(c) Parent shall provide to the Principal Company Stockholders any
information concerning Parent or the Company necessary to comply with the
requirements of Section 6038B of the Code and final and temporary Treasury
Regulations promulgated thereunder (and any successor Regulations).
(d) Parent agrees it will promptly notify the Principal Company
Stockholders after any event of disposition occurs which is described in
Treasury Regulation Section 1.367(a)-8.
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IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have duly
executed this Agreement, all as of the date first written above.
ASAHI TEC CORPORATION,
by
/s/ XXXXX XXXXXXXX
--------------------------------------------------------------------------------
Name: Xxxxx Xxxxxxxx Title: President
ARGON ACQUISITION CORP.,
by
/s/ XXXXX XXXXXXXX
--------------------------------------------------------------------------------
Name: Xxxxx Xxxxxxxx Title: President
METALDYNE CORPORATION,
by
/s/ XXXXXX X. XXXXX
--------------------------------------------------------------------------------
Name: Xxxxxx X. Xxxxx Title: EVP Commercial Operations and
Business Development
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