EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
XXXX INDUSTRIES, INC.
AND
PIROD HOLDINGS, INC.
DATED AS OF DECEMBER 22, 1998
TABLE OF CONTENTS
Page
----
1. The Merger................................................................1
1.1. Surviving Corporation............................................1
1.2. Effective Time...................................................1
1.3. Effect of the Merger.............................................2
1.4. Certificate of Incorporation; By-Laws............................2
1.5. Directors and Officers...........................................2
1.6. Conversion of Securities.........................................2
1.7. Fractional Shares................................................8
1.8. Warrants of PIROD................................................8
1.9. Options of PIROD.................................................9
1.10. XXXX Shareholder Meeting........................................10
1.11. PIROD Shareholder Action........................................10
1.12. Additional Actions..............................................10
2. Closing..................................................................11
3. Representations and Warranties of XXXX...................................11
3.1. Organization, Good Standing, etc................................11
3.2. Authorized XXXX Shares, Absence of Options, Warrants, etc.......11
3.3. Effect of Agreement.............................................12
3.4. Contracts and Commitments.......................................13
3.5. SEC Filings; Financial Statements...............................13
3.6. Absence of Liabilities..........................................14
3.7. Absence of Certain Changes or Events............................14
3.8. Tax and Other Returns...........................................15
3.9. Employment Arrangements.........................................16
3.10. Property........................................................16
3.11. Patents, Trademarks, etc........................................16
3.12. Absence of Defaults by Others...................................17
3.13. Litigation......................................................17
3.14. Disclosure Documents............................................17
3.15. Brokers' and Finders' Fees......................................17
3.16. Insurance.......................................................18
3.17. Pension, Retirement and Profit Sharing Plans....................18
3.18. Environmental Matters...........................................18
3.19. Labor Matters...................................................19
3.20. Compliance with Laws and Court Orders...........................20
3.21. Licenses and Permits............................................20
4. Representations and Warranties of PIROD..................................20
4.1. Organization, Good Standing, etc................................20
4.2. Authorized Shares, Absence of Options, Warrants, etc............21
4.3. Effect of Agreement.............................................22
4.4. Contracts and Commitments.......................................22
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4.5. Financial Statements............................................23
4.6. Absence of Liabilities..........................................23
4.7. Absence of Certain Changes or Events............................24
4.8. Tax and Other Returns...........................................25
4.9. Employment Arrangements.........................................25
4.10. PROPERTY........................................................25
4.11. Patents, Trademarks, etc........................................25
4.12. Absence of Defaults by Others...................................26
4.13. Litigation......................................................26
4.14. Disclosure Documents............................................26
4.15. Brokers' and Finders' Fees......................................26
4.16. Insurance.......................................................27
4.17. Pension, Retirement and Profit Sharing Plans....................27
4.18. Environmental Matters...........................................27
4.19. Financing.......................................................28
4.20. Ownership of XXXX Shares........................................28
4.21. Labor Matters...................................................29
4.22. Compliance with Laws and Court Orders...........................29
4.23. Licenses and Permits............................................29
5. Conduct and Transactions Prior to Closing Date...........................29
5.1. Conduct of Business by XXXX and PIROD Pending the Closing Date..29
5.2. Agreements of XXXX and PIROD....................................32
5.3. Reasonable Efforts; Notification................................32
6. Conditions Precedent to the Closing......................................34
6.1. Conditions to the Obligations of Both Parties...................34
6.2. Conditions to the Obligations of XXXX...........................35
6.3. Conditions to the Obligations of PIROD..........................36
7. Amendment of Agreement; Waivers..........................................37
7.1. Amendment.......................................................37
7.2. Waiver..........................................................37
8. Termination..............................................................38
8.1. Termination.....................................................38
8.2. Notice and Effect of Termination................................38
9. Miscellaneous............................................................39
9.1. Procedure for Termination, Amendment, Extension or Waiver.......39
9.2. Survival of Representations and Warranties......................39
9.3. Notices.........................................................39
9.4. Expenses........................................................40
9.5. Headings........................................................40
9.6. Governing Law; Jurisdiction.....................................40
9.7. Assignment......................................................41
9.8. Officers' and Directors' Insurance; Indemnification.............41
9.9. XXXX and PIROD Material Adverse Effect..........................42
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9.10. Entire Agreement................................................42
9.11. Confidentiality.................................................42
9.12. Knowledge.......................................................43
iii
Defined Term Section Defined Term Section
------------ -------- ------------- --------
Agreement Preamble PIROD Financial Statements 4.5
Applicable PIROD Merger Consideration 1.6.1 PIROD Material Adverse Effect 9.9
ASTs 3.18.5 PIROD Option 1.9
Bankruptcy Court 3.3 PIROD Plan 4.17
Cash Consideration 1.6.3(a) PIROD Real Estate 4.18.1
Cash Election Number 1.6.4(a) PIROD Schedule 4
Cash Election Shares 1.6.3(a) PIROD Shares 1.6.1
Cashed Shares 1.6.6(a) PIROD Shareholders Preamble
Certificate of Merger 1.2 PIROD Shareholders
Voting Agreement Preamble
Closing 2 PIROD Stockholders Agreement 4.2
Code Preamble PIROD Warrant 1.8.4
D&O Insurance 9.8.1 Proration Factor 1.6.4(b)
Effective Time 1.2 Proxy Statement 1.8.2
Election Date 1.6.5(b) RCRA 3.18.5
Environmental Laws 3.18.1 Retained XXXX Shares 1.6.3(b)
ERISA 3.17 XXXX Preamble
Exchange Act 3.14 XXXX'x Balance Sheet 3.6
Exchange Agent 1.6.5(b) XXXX Certificate 1.6.3(a)
Exchange Fund 1.6.6(a) XXXX A-7 Exchange Warrant 1.8.3
Financing Letter 4.19 XXXX Class Exchange Warrant 1.8.2
Form of Election 1.6.5(b) XXXX Exchange Options 1.9
FTC 3.3 XXXX Exchange Warrant 1.8.4
GCL 1.1 XXXX Material Adverse Effect 9.9
Governmental Entity 3.3 XXXX Meeting 1.10.1
Hazardous Substance 3.18.3 XXXX Options 3.2
HSR Act 5.3.1 XXXX Plan 3.17
Xxxxxxx Exchange Warrant 1.8.1 XXXX Real Estate 3.18.1
Xxxxxxx Warrant 1.8.1 XXXX SEC Reports 3.5
Justice 3.3 XXXX Schedule 3
Maximum Premium 9.8.1 XXXX Shares Preamble
Merger Preamble XXXX Shareholders Preamble
NASD 3.3 XXXX Stockholders Agreement Preamble
Order 5.3.3 SEC 1.6.5(b)
PCBs 3.18.5 Securities Act 1.10.4
Permits 3.21; 4.23 Superior Proposal 8.1.3(a)
Plan of Reorganization 3.3 Surviving Corporation 1.1
PIROD Preamble Takeover Proposal 5.1.8
PIROD's Balance Sheet 4.6 10-K 3.5
PIROD Certificate 1.6.1 10-Q 3.5
PIROD Class A Shares 1.6.1 Trust Preamble
PIROD Class A-7 Warrant 1.8.3 Trust Voting Agreement Preamble
PIROD Class L Warrants 1.8.2 USTs 3.18.5
PIROD Class L Shares 1.6.1
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AGREEMENT AND PLAN OF MERGER, dated as of December 22, 1998 (this
"Agreement"), between XXXX Industries, Inc., a Delaware corporation ("XXXX"),
and PiRod Holdings, Inc., a Delaware corporation ("PIROD").
WHEREAS, the respective boards of directors of XXXX and PIROD have approved
the merger of XXXX and PIROD upon the terms and subject to the conditions set
forth in this Agreement (the "Merger");
WHEREAS, in furtherance of the Merger, the boards of directors of XXXX and
PIROD have adopted resolutions approving the Merger, the voting agreements
(described below), and recommending that XXXX'x stockholders (the "XXXX
Shareholders") and PIROD's stockholders (the "PIROD Shareholders"),
respectively, vote to approve the Merger;
WHEREAS, the Merger is intended to qualify as a reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code (the "Code") with respect to
the PIROD Shareholders and to be treated under the Code as a redemption of
certain shares of XXXX common stock, $.01 par value ("XXXX Shares") from certain
XXXX Shareholders;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to XXXX and PIROD to enter into this Agreement, PIROD and the UNR
Asbestos-Disease Claims Trust (the "Trust"), are entering into a voting
agreement of even date herewith (the "Trust Voting Agreement") and XXXX and
certain PIROD Shareholders are entering into a voting agreement of even date
herewith (the "PIROD Shareholders Voting Agreement") pursuant to which the Trust
and certain PIROD Shareholders have agreed, upon the terms and subject to the
conditions set forth therein, to vote in favor of the Merger; and
WHEREAS, concurrently with the execution of this Agreement, the Trust and
all the PIROD Shareholders are entering into a Stockholders Agreement of even
date herewith (the "XXXX Stockholders Agreement") pursuant to which the parties
have agreed to certain matters following the Merger;
Now, therefore, the parties hereto agree as follows:
1. THE MERGER.
1.1. SURVIVING CORPORATION. Upon the terms and subject to the conditions
set forth in Section 6, and in accordance with the Delaware General Corporation
Law (the "GCL"), at the Effective Time (as defined in Section 1.2) PIROD shall
be merged with and into XXXX. As a result of the Merger, the separate corporate
existence of PIROD shall cease and XXXX shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
1.2. EFFECTIVE TIME. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Section 6, the parties
hereto shall cause the Merger to be consummated by filing a Certificate of
Merger with the Secretary of State
of the State of Delaware (the "Certificate of Merger") in such form as
required by, and executed in accordance with the relevant provisions of, the
GCL (the date and time of such filing being (the "Effective Time").
1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the GCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of XXXX and PIROD shall
vest in the Surviving Corporation, and all debts, liabilities and duties of XXXX
and PIROD shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4. CERTIFICATE OF INCORPORATION; BY-LAWS.
1.4.1. The Certificate of Incorporation of XXXX shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of
Incorporation.
1.4.2. The By-Laws of XXXX shall be amended and restated, effective
as of the Effective Time, as set forth in Exhibit 1.4.2 hereto. The
By-Laws of XXXX, as so amended and restated, shall be the By-Laws of
the Surviving Corporation until thereafter amended as provided by law,
the Certificate of Incorporation of the Surviving Corporation and such
By-Laws.
1.5. DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Surviving Corporation, shall be the directors (determined in accordance with the
XXXX Stockholders Agreement) and officers of XXXX, respectively, in each case to
serve until their respective successors are duly elected or appointed and
qualified.
1.6. CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of PIROD, XXXX, or the holders of any
of the following securities:
1.6.1. Common Stock of PIROD. All of the shares of Class A
common stock, $0.001 par value per share, of PIROD (the "PIROD Class A
Shares") issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive 3.7282 XXXX Shares
and all of the shares of Class L common stock, $0.001 par value per
share, of PIROD (the "PIROD Class L Shares") issued and outstanding
immediately prior to the Effective Time shall be converted into the
right to receive 61.6859 XXXX Shares (the "Applicable PIROD Merger
Consideration"). The PIROD Class A Shares and the PIROD Class L
Shares are referred to collectively herein as the "PIROD Shares."
Exhibit 1.6.1 hereto lists the aggregate number of XXXX Shares that
each holder of PIROD Shares will be entitled to receive upon
consummation of the Merger. All PIROD Shares so converted into the
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right to receive the Applicable PIROD Merger Consideration shall no
longer be outstanding, shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate
representing any such PIROD Shares (a "PIROD Certificate") shall, to
the extent such PIROD Certificate represents PIROD Shares, cease to
have any rights with respect thereto, except the right to receive the
Applicable PIROD Merger Consideration upon surrender of the PIROD
Certificate in accordance with Section 1.6.6.
1.6.2. Cancellation of Treasury Stock. Each PIROD Share that is
owned by PIROD or by any wholly-owned subsidiary of PIROD, and each
XXXX Share that is owned by XXXX or any wholly-owned subsidiary of
XXXX, shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
1.6.3. Retention or Exchange of XXXX Shares. Except as
otherwise provided herein and subject to Sections 1.6.4 and 1.6.5,
each XXXX Share issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger, be treated as follows:
(a) each XXXX Share with respect to which an election to
receive $3.78 in cash (the "Cash Consideration") has been made
and not revoked in accordance with Section 1.6.5 (the "Cash
Election Shares") shall be converted into the right to receive
the Cash Consideration. All XXXX Shares so converted into the
right to receive the Cash Consideration shall no longer be
outstanding, shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate
representing any such XXXX Shares (a "XXXX Certificate") shall
cease to have any rights with respect thereto.
(b) each other XXXX Share (the "Retained XXXX Shares") shall be
retained by the holder thereof.
1.6.4. Proration.
(a) Notwithstanding anything in this Agreement to the contrary,
the aggregate number of XXXX Shares (the "Cash Election Number") to be
converted into the right to receive the Cash Consideration shall be
equal to that number obtained by dividing the Available Cash by $3.78.
For purposes of this Section 1.6.4(a), Available Cash shall be equal
to the least of: (A) $105.0 million; (B) the product of $3.78
multiplied by the total number of Cash Election Shares; and (C) the
total borrowings made available to the Surviving Corporation at the
Effective Time under its senior credit agreement for the purpose of
paying the Cash Consideration plus (ii) $12.8 million, MINUS the sum
of (a) the total amount of indebtedness of XXXX and PIROD
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to be repaid in connection with the Merger, including any and all accrued
but unpaid interest thereon, premiums and prepayment penalties, if any,
(b) the good faith estimate of the amount of fees and expenses
incurred by XXXX and PIROD in connection with the Merger and the
transactions contemplated thereby (including all investment banking,
legal and accounting fees and expenses); and (c) the difference, if
any, between the amount of cash-on-hand of the Surviving Corporation
at the Effective Time and $12.8 million (but only to the extent such
amount of cash-on-hand is less than $12.8 million).
(b) If the number of Cash Election Shares is greater than the
Cash Election Number, then each Cash Election Share shall (i) receive
the Cash Consideration in accordance with the terms of Section
1.6.3(a) or (b) be retained as a Retained XXXX Share in accordance
with the terms of Section 1.6.3(b) in the following manner:
(i) A proration factor (the "Proration Factor") shall be
determined by dividing the Cash Election Number by the total
number of Cash Election Shares.
(ii) The number of Cash Election Shares converted into the
right to receive cash in accordance with the terms of Section
1.6.3(a) shall be determined by multiplying the Proration Factor
by the total number of Cash Election Shares covered by such
election, rounded down to the nearest whole number.
(iii) All Cash Election Shares, other than those shares
that shall receive cash in accordance with Section 1.6.4(b)(ii),
shall be deemed to be Retained XXXX Shares (on a consistent basis
among XXXX Shareholders who made the election referred to in
Section 1.6.3(a), pro rata to the number of XXXX Shares as to
which they made such election).
1.6.5. Election Procedures.
(a) Each person who, on or prior to the Election Date (as
defined in Section 1.6.5(b) below), is a record holder of XXXX Shares
will be entitled, subject to Section 1.6.4 hereof, to make an
unconditional election on or prior to such Election Date specifying
the number of XXXX Shares which he desires to have converted into the
right to receive the Cash Consideration.
(b) Subject to any required clearance by the Securities and
Exchange Commission (the "SEC"), XXXX shall prepare a form of election
(the "Form of Election"), which form shall be subject to the
reasonable approval of PIROD, to be mailed by XXXX with the Proxy
Statement (as defined below) to the record holders of XXXX Shares as
of the record date
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for XXXX Shareholder Meeting (as defined below), which Form of Election
shall be used by each record holder of XXXX Shares who elects to specify
the number of XXXX Shares which he desires to have converted into the
right to receive the Cash Consideration in the Merger, subject to the
provisions of Section 1.6.4 hereof. XXXX will use its commercially
reasonable best efforts to make the Form of Election available to all
persons who become holders of XXXX Shares during the period between such
record date and the Election Date, with a copy of the Proxy Statement.
Any such holder's election shall have been properly made only if such
bank or trust company as shall be mutually acceptable to XXXX and PIROD,
acting as exchange agent (the "Exchange Agent") shall have received at
its designated office, by 5:00 p.m., New York City time on the business
day immediately prior to the date of the XXXX Shareholder Meeting (the
"Election Date"), a Form of Election properly completed and signed and
accompanied by XXXX Certificates to which such Form of Election relates,
duly endorsed in blank or otherwise in a form acceptable for transfer on
the books of XXXX (or by an appropriate guarantee of delivery of such
XXXX Certificates as set forth in such Form of Election from a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States,
provided such XXXX Certificates are in fact delivered to the Exchange
Agent within three New York Stock Exchange trading days after the date
of execution of such guarantee of delivery).
(c) Any Form of Election may be revoked by the holder submitting
it to the Exchange Agent only by written notice received by the
Exchange Agent (i) prior to 5:00 p.m., New York City time on the
Election Date or (ii) after the Election Date, if XXXX and PIROD
determine, on or prior to the Election Date, that the Closing (as
hereinafter defined) is not likely to occur within three business days
following the Election Date, in which case any Form of Election shall
remain revocable until a subsequent date which shall be a date prior
to the Closing determined by XXXX and PIROD. In addition, all Forms
of Election shall automatically be revoked if the Exchange Agent is
notified in writing by XXXX and PIROD that the Merger Agreement has
been terminated. If a Form of Election is revoked, the XXXX
Certificates (or guarantees of delivery, as appropriate) to which such
Form of Election relates shall be promptly returned to the XXXX
Shareholder submitting the same to the Exchange Agent.
(d) The determination of the Exchange Agent shall be binding
with respect to whether or not elections have been properly made or
revoked pursuant to this Section 1.6.5 and when elections and
revocations were received by it. If the Exchange Agent determines
that any election was not properly made, such XXXX Shares shall be
treated by the Exchange Agent as Retained XXXX Shares. The Exchange
Agent
5
shall also make all computations as to the allocation and the
proration contemplated by Section 1.6.4, and any such computation
shall be conclusive and binding on the holders of XXXX Shares. The
Exchange Agent may, with the mutual agreement of XXXX and PIROD, make
such rules as are consistent with this Section 1.6.5 for the
implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
1.6.6. Exchange or Retention of XXXX Shares; Exchange of PIROD
Shares.
(a) By the Effective Time, XXXX and PIROD shall take all steps
necessary to cause to be deposited on a timely basis with the Exchange
Agent in an account (the "Exchange Fund") the Cash Consideration to
which holders of XXXX Shares shall be entitled at the Effective Time
pursuant to Section 1.6.3(a) and Section 1.6.4(b) (the "Cashed
Shares").
(b) Promptly after the Effective Time, XXXX shall cause the
Exchange Agent to mail to each record holder of a PIROD Certificate a
form of letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to such PIROD Certificates
shall pass, only upon proper delivery of such PIROD Certificates to
the Exchange Agent and instructions for use in surrendering such PIROD
Certificates and receiving the Applicable PIROD Merger Consideration
in respect thereof.
(c) Promptly after the Effective Time, the Exchange Agent shall
pay to the record holder on the Election Date of XXXX Certificates
that represented Cashed Shares the Cash Consideration multiplied by
the number of Cashed Shares, in consideration therefor. Upon such
payment, such XXXX Certificate shall forthwith be cancelled. Promptly
after the Effective Time, XXXX shall also cause the Exchange Agent to
mail to each record holder a certificate for the Cash Election Shares
which are deemed to be Retained XXXX Shares pursuant to Section
1.6.4(b)(iii) hereof.
(d) If the Cash Consideration (or any portion thereof) is to be
delivered to any person other than the person in whose name the XXXX
Certificate surrendered is registered, it shall be a condition to such
right to receive such Cash Consideration that the XXXX Certificate so
surrendered shall be properly endorsed or otherwise be in proper form
for transfer and that the person surrendering such XXXX Certificate
shall pay to the Exchange Agent any transfer or other taxes required
by reason of the payment of the Cash Consideration to a person other
than the registered holder of the XXXX Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not applicable.
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(e) Until surrendered in accordance with Section 1.6.6(b), each
PIROD Certificate (other than PIROD Certificates representing PIROD
Shares held in the treasury of PIROD or by any wholly-owned subsidiary
of PIROD) shall represent solely the right to receive the Applicable
PIROD Merger Consideration relating thereto. If the Applicable PIROD
Merger Consideration is to be delivered to any person other than the
person in whose name the PIROD Certificate surrendered is registered,
it shall be a condition to such right to receive such Applicable PIROD
Merger Consideration that the PIROD Certificate so surrendered shall
be properly endorsed or otherwise be in proper form for transfer and
that the person surrendering such PIROD Certificate shall pay to the
Exchange Agent any transfer or other taxes required by reason of the
payment of the Applicable PIROD Merger Consideration to a person other
than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable.
(f) Promptly following the date which is six months after the
Effective Time, the Exchange Agent shall deliver to the Surviving
Corporation all cash, securities and other documents in its possession
relating to the transactions described in the Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
PIROD Certificate may surrender such PIROD Certificate to XXXX and
(subject to applicable abandoned property, escheat and similar laws)
receive in consideration therefor the Applicable PIROD Merger
Consideration related thereto, without any interest thereon.
(g) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation or of PIROD of any
XXXX or PIROD Shares which were outstanding immediately prior to the
Effective Time and, in the case of XXXX Shares, which were entitled to
the Cash Consideration. If, after the Effective Time, certificates
formerly representing PIROD Shares are presented to XXXX or the
Exchange Agent for exchange for the Applicable PIROD Merger
Consideration, they shall be surrendered and cancelled in return for
the payment of the Applicable PIROD Merger Consideration relating
thereto.
(h) None of XXXX, PIROD or the Exchange Agent shall be liable to
any person in respect of any Cash Consideration or Applicable PIROD
Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any PIROD
Certificates shall not have been surrendered prior to seven years
after the Effective Time (or immediately prior to such earlier date on
which the Applicable PIROD Merger Consideration would otherwise
escheat to or become the property of any governmental entity), any
such distributions or cash in respect of such PIROD Certificate shall,
to the extent permitted by applicable law, become
7
the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
1.7. FRACTIONAL SHARES. No certificate or script representing fractional
XXXX Shares shall be issued upon the surrender for exchange of PIROD
Certificates, no dividend or distribution of XXXX shall relate to such
fractional share interests and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of XXXX. Any
fractional XXXX Share interests will be settled in cash by the Exchange Agent
from funds made available to it by XXXX or PIROD, such cash to be equal to the
fraction of a XXXX Share to which the party surrendering a PIROD Certificate
would otherwise be entitled times the average reported closing price for XXXX
Shares on the Nasdaq National Market System on the five trading days preceding
the Closing.
1.8. WARRANTS OF PIROD.
1.8.1. The Xxxxxxx Warrant. The outstanding warrant for PIROD
Class L Shares issued to Xxxxxxx National Life Insurance Company (the
"Xxxxxxx Warrant") shall be converted into a warrant (the "Xxxxxxx
Exchange Warrant") to purchase that number of XXXX Shares equal to
61.6859 times the number of Class L PIROD Shares purchasable under the
Xxxxxxx Warrant immediately prior to the Effective Time (without
regard to actual restrictions on exercisability), and with other terms
and conditions that are the same as the terms and conditions of such
Xxxxxxx Warrant immediately before the Effective Time; provided,
however, that the exercise price to purchase each XXXX Share under the
Xxxxxxx Exchange Warrant will be adjusted so that the aggregate
exercise price of all XXXX Shares under such Xxxxxxx Exchange Warrant
is equal to the aggregate price of all PIROD Class L Shares under the
Xxxxxxx Warrant so converted.
1.8.2. Other Class L Warrants. Each of the outstanding warrants
for Class L Shares other than the Xxxxxxx Warrant (each a "PIROD Class
L Warrant") shall be converted into a warrant (each a "XXXX Class L
Exchange Warrant") to purchase that number of XXXX Shares equal to
46.5854 times the number of Class L PIROD Shares purchasable under the
PIROD Class L Warrant immediately prior to the Effective Time (without
regard to actual restrictions on exercisability), and with other terms
and conditions that are the same as the terms and conditions of such
PIROD Class L Warrant immediately before the Effective Time; provided,
however, that the exercise price to purchase each XXXX Share under the
XXXX Class L Exchange Warrant will be adjusted so that the aggregate
exercise price of all XXXX Shares under such XXXX Class L Exchange
Warrant is equal to the aggregate price of all PIROD Class L Shares
under the PIROD Class L Warrant so converted.
1.8.3. Class A-7 Warrants. The outstanding warrant for PIROD Class
A-7 Shares (the
8
"PIROD A-7 Warrant") shall be converted into a warrant (the "XXXX A-7
Exchange Warrant") to purchase that number of XXXX Shares equal to
3.7282 times the number of Class A-7 PIROD Shares purchasable under the
PIROD A-7 Warrant immediately prior to the Effective Time (without
regard to actual restrictions on exercisability), and with other terms
and conditions that are the same as the terms and conditions of such
PIROD A-7 Warrant immediately before the Effective Time; provided,
however, that the exercise price to purchase each XXXX Share under the
XXXX A-7 Exchange Warrant will be adjusted so that the aggregate
exercise price of all XXXX Shares under such XXXX A-7 Exchange Warrant
is equal to the aggregate price of all PIROD Class A-7 Shares under the
PIROD A-7 Warrant so converted.
1.8.4. General. The Xxxxxxx Warrant, the PIROD Class L Warrants
and the PIROD Class A-7 Warrant are collectively referred to as the
"PIROD Warrants". The Xxxxxxx Exchange Warrant, the XXXX Class L
Exchange Warrants and the XXXX A-7 Exchange Warrant are each referred
to as a "XXXX Exchange Warrant". Exhibit 1.8.4 hereto lists the
number of XXXX Shares, and the exercise price per share thereof, that
will be issuable pursuant to each XXXX Exchange Warrant to be issued
in connection with Merger upon conversion of the PIROD Warrants. In
connection with the issuance of the XXXX Exchange Warrants, XXXX shall
(i) reserve for issuance the number of XXXX Shares that will in the
aggregate become subject to the XXXX Exchange Warrants pursuant to
this Section 1.8 and (ii) from and after the Effective Time, upon the
exercise of the XXXX Exchange Warrants, make available for issuance
all XXXX shares covered thereby, subject to the terms and conditions
applicable thereto.
1.9. OPTIONS OF PIROD. Each of the outstanding stock options issued under
PIROD's 1997 Stock Option Plan (each a "PIROD Option") shall be converted into
an option (each a "XXXX Exchange Option") to purchase that number of XXXX Shares
equal to the Applicable PIROD Merger Consideration times the number of PIROD
Shares of the applicable class purchasable under the PIROD Option immediately
prior to the Effective Time (without regard to actual restrictions on
exercisability), and with other terms and conditions that are the same as the
terms and conditions of such PIROD Option immediately before the Effective Time;
provided, however, that the exercise price to purchase each XXXX Share under a
XXXX Exchange Option will be adjusted so that the aggregate exercise price of
all XXXX Shares under such XXXX Exchange Option is equal to the aggregate
exercise price of all PIROD Shares under the PIROD Option so converted. Exhibit
1.9 hereto lists the number of XXXX Shares, and the exercise price per share
thereof, that will be issuable pursuant to each XXXX Exchange Option to be
issued in connection with the Merger. The XXXX Exchange Options shall satisfy
the provisions of Section 424(a) of the Code. In connection with the issuance
of the XXXX Exchange Options, XXXX shall (i) reserve for issuance the number of
XXXX Shares that will become subject to the XXXX Exchange Options pursuant to
this Section 1.9 and (ii) from and after the Effective Time, upon the exercise
of the XXXX Exchange Options, make available for
9
issuance all XXXX Shares covered thereby, subject to the terms and conditions
applicable thereto.
1.10. XXXX SHAREHOLDER MEETING. XXXX, acting through its board of
directors, shall, in accordance with applicable law:
1.10.1. duly call, give notice of, convene and hold an annual or
special meeting of XXXX Shareholders (the "XXXX Meeting") as soon as
practicable for the purpose of approving and adopting this Agreement;
1.10.2. subject to a determination in good faith by XXXX'x board
of directors of its fiduciary duties under applicable law, include in
the proxy statement for, or any information statement with respect to,
the XXXX Meeting (the "Proxy Statement") the recommendation of its
board of directors that XXXX Shareholders vote in favor of the
approval and adoption of this Agreement; and
1.10.3. use all commercially reasonable best efforts (i) to
obtain and furnish the information required to be included by it in
the Proxy Statement, and, after consultation with PIROD, respond
promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version of the Proxy Statement and cause
the Proxy Statement to be mailed to XXXX Shareholders at the earliest
practicable time, and (ii) subject to the fiduciary duties of the
board of directors under applicable law, to obtain the necessary
approval of the Merger by XXXX Shareholders.
1.10.4 use commercially reasonable best efforts to prepare and
file with the SEC, and have declared effective by the SEC, a
registration statement on Form S-4 registering under the Securities
Act of 1933 (the "Securities Act") the XXXX Shares issuable in the
Merger.
1.11. PIROD SHAREHOLDER ACTION. PIROD shall cause the PIROD
Shareholders to take all action necessary, in accordance with applicable law,
to approve this Agreement as soon as reasonably practicable.
1.12. ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
(a) to vest, perfect or confirm in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of XXXX or
PIROD or (b) to otherwise carry out the provisions of this Agreement, each of
XXXX and PIROD and its directors and officers shall be deemed to have granted to
such Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in law and to take all acts
necessary, proper or desirable to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the provisions of this Agreement, and the directors and
officers of the Surviving Corporation
10
are authorized in the name of XXXX and PIROD, as the case may be, or
otherwise to take any and all such action.
2. CLOSING.
Immediately preceding and consummating with the filing of the Certificate
of Merger referred to in Section 1.2, a closing (the "Closing") shall take place
at such date, time and place, subject to Section 9 hereof, as the parties may
agree upon as soon as practicable after the satisfaction of the conditions (or
due waiver thereof) set forth in Section 6. The time and date of the Closing
are referred to in this Agreement as the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF XXXX.
XXXX represents and warrants (except as set forth in the 10-K or 10-Q, as
herein defined, or in that certain schedule dated the date hereof (the "XXXX
Schedule") and delivered to PIROD prior to the execution hereof) that:
3.1. ORGANIZATION, GOOD STANDING, ETC. XXXX and each of its subsidiaries
are corporations duly organized, validly existing and in good standing under the
laws of the respective states of their incorporation, have all requisite power
to own their properties and to carry on their businesses as now being conducted
and are duly qualified to do business and are in good standing in all other
jurisdictions in which qualification as a foreign corporation is required,
except for such failure to be qualified and in good standing, if any, which when
taken together with all other such failures of XXXX and its subsidiaries would
not in the aggregate have a XXXX Material Adverse Effect (as defined in Section
9.9). Each such corporation, state or country of incorporation and jurisdiction
is set forth in Section 3.1 of the XXXX Schedule. XXXX has heretofore made
available to PIROD a complete and correct copy of the Certificate of
Incorporation and the By-Laws or equivalent organizational documents, each as
amended to the date of this Agreement, of XXXX and each of its subsidiaries.
Such Certificates of Incorporation, By-Laws and equivalent organizational
documents are in full force and effect. Neither XXXX nor any subsidiary is in
violation of any provision of its Certificate of Incorporation, By-Laws or
equivalent organizational documents, except for such violations that would not,
individually or in the aggregate, have a XXXX Material Adverse Effect.
3.2. AUTHORIZED XXXX SHARES, ABSENCE OF OPTIONS, WARRANTS, ETC. The
authorized capital stock of XXXX consists of 60,000,000 XXXX Shares, of which
52,816,009 XXXX Shares are issued and outstanding as of the date of this
Agreement and 635,016 XXXX Shares are held in its treasury. All of the
outstanding XXXX Shares are, and all XXXX Shares issuable upon due exercise of
outstanding employee stock options ("XXXX Options") will be, when issued in
accordance with the terms of the XXXX Options, duly authorized, validly issued,
fully paid and nonassessable by XXXX. There are no voting trusts or other
agreements or understandings with respect to the voting of any XXXX Shares known
to XXXX (other than the Trust Voting Agreement); and there are no outstanding
options, warrants, calls, rights of conversion or exchange or other rights,
commitments or agreements of any character relating to the authorized or issued
XXXX
11
Shares known to XXXX, except for the exercise rights of the holders of XXXX
Options with respect to a maximum of 1,160,000 XXXX Shares, agreements with
respect to a maximum of 280,000 XXXX Shares issued pursuant to Restricted Stock
Agreements, which XXXX Options (with numbers of XXXX Shares, exercise prices,
holders and duration) and Restricted Stock Agreements (with the number of XXXX
Shares covered by each agreement and parties thereto) are set forth on Section
3.3 of the XXXX Schedule, and the need for Bankruptcy Court approval of a sale
of the Shares by the Trust as noted in Section 3.3 below. XXXX is the owner of
all outstanding capital stock of each of its subsidiaries; no capital stock of
any of such subsidiaries is held in the treasury of any of such subsidiaries;
there are no other shares of capital stock of any class of any of such
subsidiaries reserved for issuance as of the date of this Agreement; there are
no voting trusts or other agreements or understandings with respect to the
voting of any of the equity securities of such subsidiaries; and there are no
outstanding options, warrants, calls, rights of conversion or exchange or other
rights, commitments or agreements of any character relating to equity securities
of any of such subsidiaries. All such capital stock has been duly authorized
and validly issued and is fully paid and non-assessable. Section 3.2 of the
XXXX Schedule lists all stocks, bonds, debentures and other interests in or
securities of such subsidiaries and of other business enterprises owned by XXXX
or any of its subsidiaries.
3.3. EFFECT OF AGREEMENT. The execution, delivery and performance by XXXX
of this Agreement and the consummation by XXXX of the transactions contemplated
hereby are within XXXX'x corporate powers and, except for any required approval
by the XXXX Shareholders by majority vote in connection with the consummation of
the Merger, have been duly authorized by all necessary corporate and stockholder
action. This Agreement constitutes a valid and binding agreement of XXXX,
enforceable against XXXX in accordance with its terms, subject to the effect of
any applicable bankruptcy, reorganization, insolvency, moratorium or similar law
affecting creditors' rights generally and general principles of equity. The
execution and delivery of this Agreement by XXXX and the consummation of the
Merger have been duly authorized by the board of directors of XXXX, do not
require the consent, approval or authorization of or filing with any person or
any Federal, state or local government or any court, administrative agency or
commission or other domestic or foreign governmental authority or agency (a
"Governmental Entity") other than the approval of XXXX Shareholders at the XXXX
Shareholder Meeting, the filing of the Certificate of Merger contemplated by
Section 1.2, the filings with the SEC, the National Association of Securities
Dealers, Inc. ("NASD"), the Federal Trade Commission (the "FTC") and the U.S.
Department of Justice ("Justice") contemplated by Section 5.3.1, the approval of
the sale of XXXX Shares held by the Trust by the United States District Court
for Northern District of Illinois, Eastern Division (the "Bankruptcy Court") as
provided in the Consolidated Plan of Reorganization dated March 14, 1989 (the
"Plan of Reorganization") and the consents, waivers or approvals from persons
party to specified contracts listed in Section 3.3 of the XXXX Schedule and will
not, subject to obtaining the aforesaid consents, waivers or approvals and
making the aforesaid filings, and except such as would not reasonably be
expected to have a XXXX
12
Material Adverse Effect, violate any law, statute, regulation, injunction,
order or decree of any governmental agency or authority or court, or conflict
with or result in a breach of or constitute a default under any of the terms
or provisions of any mortgage, note, bond or indenture or material obligation
to which XXXX or any of its subsidiaries is a party or by which it or any of
its or their properties may be bound. Subject to securing the consents,
waivers and approvals required under the agreements set forth in Section 3.3
of the XXXX Schedule, the execution and delivery of this Agreement by XXXX
and the consummation of the Merger will not give to others any interests or
rights, including rights of termination or cancellation, in or with respect
to any material property, asset, contract, agreement, license or other
commitment or instrument of XXXX or any of its subsidiaries, except as would
not reasonably be expected to have a XXXX Material Adverse Effect.
3.4. CONTRACTS AND COMMITMENTS. Neither XXXX nor any of its subsidiaries
is in breach or violation of or in default (i) under any of the terms or
provisions of any mortgages, leases, notes, bonds, indentures, commitments,
contracts, agreements, licenses or other instruments to which such corporation
is a party or by which it or any of its properties is bound and which is listed
in Section 3.4 of the XXXX Schedule or which singularly is or in the aggregate
are otherwise material to the business, properties, financial condition or
operations of such corporation, (ii) under any law, judgment or decree, or any
order, rule or regulation applicable to such corporation or to any of its
properties or (iii) in the payment of any of its obligations for borrowed funds,
and there exists no known condition or known event which, after notice or lapse
of time or both, would constitute a default in connection with any of the
foregoing, except any such breach, violation or default that would not
reasonably be expected to have a XXXX Material Adverse Effect. Section 3.4 of
the XXXX Schedule contains a correct and complete list of the following:
(i) each loan, credit agreement, guarantee, indenture, note, mortgage, security
agreement or similar document or instrument to which XXXX or any of its
subsidiaries is a party or by which any of XXXX'x or any of its subsidiaries'
assets or properties are bound; (ii) each lease of personal property to which
XXXX or any of its subsidiaries is a party or by which any of XXXX or its
subsidiaries are bound; and (iii) any other agreement, contract or commitment to
which XXXX or any of its subsidiaries is a party or by which any of XXXX'x or
any of its subsidiaries' assets or properties are bound which is a collective
bargaining agreement or which involves a future commitment by XXXX or any of its
subsidiaries in excess of $25,000 and which cannot be terminated without
liability on 90 days or less notice (the "XXXX Material Contracts"). XXXX has
delivered to PIROD a true and complete copy of each of the XXXX Material
Contracts. Each of the XXXX Material Contracts is a valid and binding
obligation of XXXX or its subsidiary, as applicable, enforceable in accordance
with its terms, and is in full force and effect, subject to bankruptcy,
reorganization, receivership and other laws affecting creditors' rights
generally.
3.5. SEC FILINGS; FINANCIAL STATEMENTS. XXXX has filed all forms,
reports, registrations, proxy statements, schedules and documents required to
be filed by it with the SEC since January 1, 1996 and has heretofore made
available to PIROD, in the form filed with the SEC (excluding any exhibits
thereto), (i) its Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (the "10-K"), (ii) its Quarterly Reports on Form 10-Q
13
for the periods ended March 31, 1998, June 30, 1998 and September 30, 1998
(the last such Report referred to as the "10-Q"), (iii) all proxy statements
relating to XXXX'x meetings of stockholders (whether annual or special) held
since January 1, 1996 and (iv) all other forms, reports, other registration
statements and schedules (other than the quarterly reports not referred to in
clause (ii) above and preliminary materials) filed by XXXX with the SEC since
January 1, 1996 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being referred to herein
collectively, as the "XXXX SEC Reports"). The XXXX SEC Reports and any
forms, reports and other documents filed by XXXX with the SEC after the date
of this Agreement (x) were prepared in accordance with the requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules
and regulations thereunder and (y) did not at the time they were filed
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 made therein, in the light of circumstances under which they were
made, not misleading. Except to the extent that the information contained in
the XXXX SEC Reports has been revised or superseded by a later filed XXXX SEC
Report, the XXXX SEC Reports do not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No subsidiary of
XXXX is required to file any form, report or other document with the SEC.
The financial statements contained in the 10-K and the 10-Q fairly present
the consolidated financial condition of XXXX and all its subsidiaries as at
the dates thereof and the consolidated results of operations and changes in
financial position for the periods indicated, all in conformity with
generally accepted accounting principles applied on a consistent basis
(except as otherwise stated therein or, in the case of unaudited financial
statements, as permitted by Form 10-Q). For the purposes of this Agreement,
all financial statements of XXXX shall be deemed to include any notes to such
financial statements.
3.6. ABSENCE OF LIABILITIES. Except for liabilities or obligations which
would not reasonably be expected to have a XXXX Material Adverse Effect, neither
XXXX nor any of its subsidiaries has any material liabilities or obligations,
either accrued, absolute, contingent or otherwise, which have not been (i)
reflected in XXXX'x Balance Sheet as of September 30, 1998, referred to in
Section 3.5 ("XXXX'x Balance Sheet"), (ii) specifically described in Section 3.6
of the XXXX Schedule, (iii) incurred in the ordinary course of XXXX'x business
since September 30, 1998, or (iv) incurred under or in connection with this
Agreement.
3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998,
except as disclosed in Section 3.7 of the XXXX Schedule, (i) neither XXXX nor
any of its subsidiaries has sustained any damage, destruction or loss by reason
of fire, flood, accident or other calamity (whether or not covered by insurance)
that would reasonably be expected to have a XXXX Material Adverse Effect; (ii)
there have been no changes in the condition (financial or otherwise), business,
net worth, assets, properties, obligations or liabilities (fixed or contingent)
of XXXX or any of its subsidiaries that would reasonably be expected to have a
XXXX Material Adverse Effect; (iii) neither XXXX nor any of its
14
subsidiaries has incurred any obligation for the payment of money extending
more than one year, except for operating leases entered into in the ordinary
course of business; (iv) neither XXXX nor any of its subsidiaries has paid
any obligation or liability (fixed or contingent) except current liabilities
included in XXXX'x Balance Sheet and current liabilities incurred since
September 30, 1998 in the ordinary course of business or pursuant to the
terms of this Agreement; (v) XXXX has not declared any other dividend or
other distribution on or with respect to any XXXX Shares; (vi) XXXX has not
purchased, redeemed or otherwise acquired for a consideration, directly or
indirectly, any XXXX Shares or other securities of XXXX; (vii) neither XXXX
nor any of its subsidiaries has disposed of, or agreed to dispose of, any
material property or asset, other than in the ordinary course of business and
for a consideration at least equal to the fair value of such property or
asset, nor has it leased to others, or agreed so to lease, any property or
asset except in the ordinary course of business and for a consideration at
least equal to the fair rental value of such property or asset; (viii)
neither XXXX nor any of its subsidiaries has made any expenditures or
commitments for the purchase, acquisition, construction or improvement of a
capital asset except in the ordinary course of business and in an aggregate
amount not exceeding $500,000; (ix) neither XXXX nor any of its subsidiaries
has amended its Certificate or Articles of Incorporation or By-Laws; (x)
neither XXXX nor any of its subsidiaries has (A) granted any severance or
termination pay to any director, officer or employee of XXXX or any
subsidiary, (B) entered into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of XXXX or any subsidiary, (C) increased
benefits payable under any existing severance or termination pay policies or
employment agreements, (D) increased compensation, bonus or other benefits
payable to directors, officers or employees of XXXX or any subsidiary or (E)
entered into any new, or amended or modified any existing, collective
bargaining agreement; (xi) XXXX has not effected any split, combination or
reclassification of any shares of its outstanding capital 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 its capital stock;
(xii) neither XXXX nor any of its subsidiaries has made any change in
accounting methods, principles or practices by XXXX or its subsidiaries
materially affecting the consolidated assets, liabilities or results of
operations of XXXX or its subsidiaries, except insofar as may be required by
a change in generally accepted accounting principles; and (xiii) except as
set forth above, neither XXXX nor any of its subsidiaries has entered into
any other transaction or contract other than in the ordinary course of
business.
3.8. TAX AND OTHER RETURNS. Except as set forth in Section 3.8 of the XXXX
Schedule (i) all material federal tax returns and tax reports required to be
filed by XXXX or any of its subsidiaries have been filed with the appropriate
governmental agencies where such returns and reports are required to be filed;
(ii) all material state and local tax returns and tax reports required to be
filed by XXXX or any of its subsidiaries in those states where either XXXX or
any of its subsidiaries have qualified to do business, and which relate to
income, profits, franchise or property taxes, have been filed with the
appropriate governmental agencies in such jurisdiction; (iii) all federal,
state, local and
15
foreign income, profits and franchise taxes (including interest and
penalties) shown due on the tax returns and tax reports referred to in (i)
and (ii) of this paragraph have been fully paid or adequately reflected as a
liability on XXXX'x Balance Sheet; (iv) no waivers of statutes of limitation
have been given or requested; and (v) there are no potential federal tax
deficiencies or state and local tax deficiencies with respect to the returns
and reports filed by XXXX and referred to in (i) and (ii) of this paragraph
which may arise from issues which have been raised or which have not yet been
raised but which reasonably might be expected to be raised by the Internal
Revenue Service or appropriate governmental agencies and reasonably might be
expected to have a XXXX Material Adverse Effect.
3.9. EMPLOYMENT ARRANGEMENTS. Except as disclosed in Section 3.9 of the
XXXX Schedule, neither XXXX nor any of its subsidiaries is a party to any
employment, commission or consultant contract, written or oral, with any present
or former officer, director or employee, or any collective bargaining agreement,
nor does XXXX or any of its subsidiaries have any XXXX Plans (as defined in
Section 3.17). Except as disclosed in Section 3.9 of the XXXX Schedule, since
September 30, 1998 there has been no change in any such plan or arrangement or
in compensation to any director or officer, or any change, either material in
amount or other than in the ordinary course of business, in compensation to any
other employee of XXXX or any of its subsidiaries.
3.10. PROPERTY. XXXX and each of its subsidiaries have good and
marketable title in fee simple to all of the real property respectively owned
by them, and good and marketable title to all of the other tangible
properties and assets respectively owned by them, free and clear of all
mortgages, liens, pledges, restrictions, charges or encumbrances of any
nature whatsoever, except (i) liens for taxes not yet delinquent; (ii) liens
being contested in good faith by appropriate proceedings; (iii) such
imperfections of title and encumbrances, if any, as do not materially detract
from the value of, or materially interfere with the present use of, such
property; and (iv) for those listed in Section 3.10 of the XXXX Schedule.
Neither XXXX nor any of its subsidiaries has received notice of violation of
any zoning regulation, ordinance or other law, order, regulation or
requirement relating to real property owned or leased by it which violation
would reasonably be expected to have a XXXX Material Adverse Effect.
3.11. PATENTS, TRADEMARKS, ETC. Section 3.11 of the XXXX Schedule
correctly lists all domestic and foreign letters patent, patent applications,
patent and know-how licenses, royalty agreements, trade names, trademark
registrations and applications, common law trademarks, copyrights and
copyright registrations and applications held by XXXX or any of its
subsidiaries. Unless otherwise indicated in the XXXX Schedule, XXXX or such
subsidiary owns the entire right, title and interest in and to the same. All
such letters patent, patent applications, patent and know-how licenses,
royalty agreements, trade names, trademark registrations and applications,
common law trademarks, copyrights, copyright registrations and applications
are subject to no pending or, to the best of the knowledge of XXXX or any of
its subsidiaries, threatened litigation or other adverse claims except as set
forth in Section 3.11 of the XXXX Schedule. Neither XXXX nor any of its
subsidiaries has received notice that the use by it of such patents,
trademarks, trade name
16
rights or copyrights infringe upon or conflict with any patent, trademark,
trade name right or copyright of others.
3.12. ABSENCE OF DEFAULTS BY OTHERS. No party with whom XXXX or any of
its subsidiaries has an agreement which is of material importance to the
business, properties, financial condition or operations of XXXX or any of its
subsidiaries is in default thereunder, except a default which would not
reasonably be expected to have a XXXX Material Adverse Effect.
3.13. LITIGATION. Except as disclosed in Section 3.13 of the XXXX
Schedule, neither XXXX nor any of its subsidiaries is a party to or
threatened with any litigation, governmental or other proceeding,
investigation, strike or other labor dispute or other controversy which might
affect the validity of this Agreement or which, individually or in the
aggregate, might reasonably be expected to have a XXXX Material Adverse
Effect, and there is no outstanding order, writ, injunction or decree of any
Governmental Entity against or affecting XXXX or any of its subsidiaries or a
material portion of their respective businesses, properties, assets or
goodwill.
3.14. DISCLOSURE DOCUMENTS.
3.14.1. Each document required to be filed by XXXX with the SEC
in connection with the transactions contemplated by this Agreement
will, when filed, comply as to form with the applicable requirements
of the Securities Act and the Securities Exchange Act of 1934 (the
"Exchange Act"), and none of the information supplied or to be
supplied by XXXX for inclusion in any such document filed by XXXX or
PIROD will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
3.14.2. At the time the XXXX Proxy Statement or any amendment or
supplement thereto is first mailed to the XXXX Shareholders and at the
time such shareholders vote on adoption of this Agreement, the XXXX
Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not
misleading.
3.14.3. The representations in this Section 3.14 shall not apply
to any information in such documents which is supplied by or on behalf
of PIROD.
3.15. BROKERS' AND FINDERS' FEES. Except as disclosed in Section 3.15
of the XXXX Schedule, no agent, broker, person or firm acting on behalf of
XXXX or under its authority has claimed or is or will be entitled to any
commission or broker's or finder's fee from XXXX in connection with the
transactions contemplated by this Agreement. True and
17
complete copies of any agreements regarding any such commission or fee have
been provided to PIROD.
3.16. INSURANCE. Section 3.16 of the XXXX Schedule correctly lists and
briefly describes all policies of fire, liability, workmen's compensation,
life, business interruption and other types of insurance held by XXXX or any
of its subsidiaries. All such insurance policies are in full force and
effect.
3.17. PENSION, RETIREMENT AND PROFIT SHARING PLANS. Section 3.17 of the
XXXX Schedule lists each pension, profit sharing, stock-bonus, thrift or
other retirement plan, employee stock ownership plan, deferred compensation,
stock purchase, performance share, bonus or other incentive plan, severance
plan, health or welfare plan or other similar plan, agreement, arrangement or
understanding, whether or not reduced to writing and whether or not such plan
is or is intended to be qualified under Section 401(a) of the Code,
including, without limitation, any employee welfare benefit plan or employee
pension benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") ("XXXX Plan"), maintained or
sponsored by XXXX or any of its subsidiaries. Each XXXX Plan is in full
force and effect and has been administered in all material respects in
accordance with its terms and is and has been, and each plan administrator
and fiduciary of a XXXX Plan is and has been, in compliance in all material
respects with all applicable requirements of ERISA (including the funding,
reporting and disclosure and prohibited transaction provisions thereof) and
other applicable laws, regulations and rulings. Each XXXX Plan intended to
qualify under Section 401(a) of the Code is so qualified. Except as set
forth in Section 3.17 of the XXXX Schedule, no XXXX Plan is a "defined
benefit plan" (within the meaning of Section 3(35) of ERISA) or a
"multi-employer plan" (within the meaning of Section 3(37) of ERISA), has
terminated or partially terminated and no complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any such
multi-employer plan has occurred. XXXX or one of its subsidiaries has made,
accrued or provided for all contributions required under each XXXX Plan.
3.18. ENVIRONMENTAL MATTERS.
Except as disclosed in Section 3.18 of the XXXX Schedule, to XXXX'x
knowledge and except such as could not reasonably be expected to have a XXXX
Material Adverse Effect:
3.18.1. XXXX and its current subsidiaries, and all properties
currently owned or leased by XXXX and its subsidiaries (collectively
"XXXX Real Estate"), are in compliance with all applicable
environmental and health and safety laws (collectively "Environmental
Laws"). Properties and subsidiaries formerly owned by XXXX were, as
of the date of sale or divestiture of those properties or
subsidiaries, in compliance with all Environmental Laws.
3.18.2. Neither XXXX nor any of its current subsidiaries has
received any written notice within the past five years that XXXX or
its current or
18
former subsidiaries has any liability, responsibility or obligation,
whether fixed, unliquidated, absolute or contingent, under any
Environmental Laws, or that they are subject to threatened or pending
claims, actions, suits, proceedings or investigations under such laws,
for fines or penalties, or for investigation, expense, removal or
response action to effect compliance with or discharge any obligation or
claim under such laws.
3.18.3. There is no past or continuing release or threat of
release, without an issued permit or permit application, of any
hazardous substance as defined in 42 U.S.C. Section 9601(14) or
petroleum, including crude oil or any fraction thereof (collectively,
"Hazardous Substance") into the environment, at or from the XXXX Real
Estate that necessitates reporting or response actions under
Environmental Law. There was no past release, without an issued
permit or permit application, of any Hazardous Substances into the
environment, at or from a facility formerly owned or operated by XXXX
or a former subsidiary of XXXX where the release occurred prior to the
time such facility or subsidiary was sold or divested by XXXX, that
necessitated reporting or response actions by PIROD or its former
subsidiary where such response action was not completed.
3.18.4. There have been no Hazardous Substances used or
generated by XXXX or any of its current subsidiaries, or former
subsidiaries prior to their sale or divestiture from XXXX, that have
been disposed of or come to rest at any site that has been included on
the National Priorities List, or any comparable state or local list.
3.18.5. There never has been any and there are no underground or
above-ground storage tanks ("USTs" or "ASTs") located on, and there
are no polychlorinated biphenyls ("PCBs"), PCB-containing equipment,
or hazardous waste as defined by the Resource Conservation and
Recovery Act ("RCRA") or comparable state or local laws, disposed on
the XXXX Real Estate. Prior to the sale or divestiture of such other
real property previously owned, leased or used by XXXX or any of its
former subsidiaries, there were no USTs or ASTs located on such
property or PCBs or hazardous waste disposed of on such properties
where such USTs, ASTs, PCBs or hazardous waste had not been removed in
accordance with Environmental Laws.
3.18.6. There currently are no Hazardous Substances in the soil
or groundwater at, or migrating from any XXXX Real Estate, the
concentration of which exceeds the most lenient of applicable federal
or state standards consistent with the future industrial use of the
XXXX Real Estate.
3.19. LABOR MATTERS. Except as set forth in Section 3.19 of the XXXX
Schedule, XXXX and each of its subsidiaries are, and for the past three years
have remained, in compliance with all currently applicable laws respecting
labor and employment practices, terms and conditions of employment and wages
and hours, and is not engaged in any
19
unfair labor practice, except where the failure to comply with which or
engagement in which, as the case may be, individually or in the aggregate,
has not had, and would not reasonably be expected to have, a XXXX Material
Adverse Effect. There is no unfair labor practice charge or complaint
pending or, to the knowledge of XXXX, threatened against XXXX before the
National Labor Relations Board. Except as otherwise set forth in Section
3.19 of the XXXX Schedule, there are no strikes, slowdowns, union
organizational or union decertification campaigns or other protected
concerted activity under the National Labor Relations Act or, to the
knowledge of XXXX, threats thereof, by or with respect to any employees of
XXXX.
3.20. COMPLIANCE WITH LAWS AND COURT ORDERS. Neither XXXX nor any of
its subsidiaries is in violation of, or has for the past three years
violated, and to the knowledge of XXXX none is under investigation with
respect to or has been threatened to be charged with or given notice of any
violation of, in each case, by any governmental agency or authority, any
applicable law, rule, regulation, judgment, injunction, order or decree,
except for violations that have not had, and would not reasonably be expected
to have, individually or in the aggregate, a XXXX Material Adverse Effect.
3.21. LICENSES AND PERMITS. Except as set forth on Section 3.21 of the
XXXX Schedule or except as has not had, and would not reasonably be expected
to have, individually or in the aggregate, a XXXX Material Adverse Effect,
(i) the Permits are valid and in full force and effect, (ii) neither XXXX or
any subsidiary is in default under, and no condition exists that with notice
or lapse of time or both would constitute a default under, the Permits and
(iii) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby. "Permits" for purposes of this Section 3.21 means each material
license, franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets or business of
XXXX and its subsidiaries.
4. REPRESENTATIONS AND WARRANTIES OF PIROD.
PIROD represents and warrants (except as set forth in the April 1998
Confidential Memorandum and in the PIROD Financial Statements (as defined below)
and in that certain schedule dated the date hereof (the "PIROD Schedule"), all
of which have been delivered to XXXX prior to the execution hereof) that:
4.1. ORGANIZATION, GOOD STANDING, ETC. PIROD and each of its subsidiaries
are corporations duly organized, validly existing and in good standing under the
laws of the respective states of their incorporation, have all requisite power
to own their properties and to carry on their businesses as now being conducted
and are duly qualified to do business and are in good standing in all other
jurisdictions in which qualification as a foreign corporation is required,
except for such failure to be qualified and in good standing, if any, which when
taken together with all other such failures of PIROD and its subsidiaries would
not in the aggregate have a PIROD Material Adverse Effect (as defined in Section
9.9). Each such corporation, state or country of incorporation and jurisdiction
is set forth in Section 4.1 of the PIROD Schedule. PIROD has heretofore made
available to XXXX a
20
complete and correct copy of the Certificate of Incorporation and the By-Laws
or equivalent organizational documents, each as amended to the date of this
Agreement, of PIROD and each of its subsidiaries. Such Certificates of
Incorporation, By-Laws and equivalent organizational documents are in full
force and effect. Neither PIROD nor any subsidiary is in violation of any
provision of its Certificate of Incorporation, By-Laws or equivalent
organizational documents, except for such violations that would not,
individually or in the aggregate, have a PIROD Material Adverse Effect.
4.2. AUTHORIZED SHARES, ABSENCE OF OPTIONS, WARRANTS, ETC. The authorized
capital stock of PIROD consists of 19,178,000 shares of Class A-1 Common Stock
of PiRod (the "Class A-1 Common"), 235,000 shares of Class A-2 Common Stock of
PiRod (the "Class A-2 Common"), 61,000 shares of Class A-3 Common Stock of PiRod
(the "Class A-3 Common"), 35,000 shares of Class A-4 Common Stock of PiRod (the
"Class A-4 Common"), 25,000 shares of Class A-5 Common Stock of PiRod (the
"Class A-5 Common"), 355,000 shares of Class A-6 Common Stock of PiRod (the
"Class A-6 Common"), 21,000 shares of Class A-7 Common Stock of PiRod (the
"Class A-7 Common"), and 90,000 shares of Class L Common Stock of PiRod (the
"Class L Common"). As of the date of this Agreement, 88,289 shares of Class A-1
Common, 232,099 shares of Class A-2 Common, 60,146 shares of Class A-3 Common,
28,420 shares of Class A-4 Common, 20,653 shares of Class A-5 Common, 351,497
shares of Class A-6 Common and 76,776 shares of Class L Common are issued and
outstanding. No PiRod Shares are held in treasury. All of the outstanding
PIROD Shares are, and all PIROD Shares issuable upon due exercise of outstanding
PIROD Options and PIROD Warrants will be, when issued in accordance with the
terms of the PIROD Options and PIROD Warrants, duly authorized, validly issued,
fully paid and nonassessable by PIROD. There are no voting trusts or other
agreements or understandings with respect to the voting of any such Shares known
to PIROD (other than the PIROD Shareholders Voting Agreement and the
Stockholders Agreement dated as of August 28, 1996 (the "PIROD Stockholders
Agreement"), a true and complete copy of which has been delivered to XXXX by
PIROD); and there are no outstanding options, warrants, calls, rights of
conversion or exchange or other rights, commitments or agreements of any
character relating to the authorized or issued PIROD Shares known to PIROD,
except for (i) as set forth in PIROD's Certificate of Incorporation, the
Stockholders Agreement and the PIROD Shareholders Voting Agreement and
(ii) exercise of rights of the holders of PIROD Options with respect to a
maximum of 12,250 shares of Class A-1 Common and of the holders of PIROD
Warrants with respect to a maximum of 20,028 shares of Class A-7 Common and
12,238 shares of Class L Common, which PIROD Options and PIROD Warrants (with
numbers and classes of PIROD Shares, exercise prices, holders and duration) are
set forth on Section 4.2 of the PIROD Schedule, PIROD is the owner of all
outstanding capital stock of each of its subsidiaries; no capital stock of any
of such subsidiaries is held in the treasury of any of such subsidiaries; there
are no other shares of capital stock of any class of any of such subsidiaries
reserved for issuance as of the date of this Agreement; there are no voting
trusts or other agreements or understandings with respect to the voting of any
of the equity securities of such subsidiaries; and there are no outstanding
options,
21
warrants, calls, rights of conversion or exchange or other rights,
commitments or agreements of any character relating to equity securities of
any of such subsidiaries. All such capital stock has been duly authorized
and validly issued and is fully paid and non-assessable. Section 4.2 of the
PIROD Schedule lists all stocks, bonds, debentures and other interests in or
securities of such subsidiaries and of other business enterprises owned by
PIROD or any of its subsidiaries.
4.3. EFFECT OF AGREEMENT. The execution, delivery and performance by
PIROD of this Agreement and the consummation by PIROD of the transactions
contemplated hereby are within PIROD's corporate powers and, except for any
required approval by the PIROD Shareholders by majority vote in connection
with the consummation of the Merger, have been duly authorized by all
necessary corporate and stockholder action. This Agreement constitutes a
valid and binding agreement of PIROD, enforceable against PIROD in accordance
with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar law affecting creditors'
rights generally and general principles of equity. The execution and
delivery of this Agreement by PIROD and the consummation of the Merger have
been duly authorized by the board of directors of PIROD, do not require the
consent, approval or authorization of or filing with any person or any
Governmental Entity other than the approval of PIROD Shareholders, the filing
of the Certificate of Merger contemplated by Section 1.2, the filings with
the SEC, the NASD, the FTC and Justice contemplated by Section 5.3.1, and the
consents, waivers or approvals from persons party to specified contracts
listed in Section 4.3 of the PIROD Schedule and will not, subject to
obtaining the aforesaid consents, waivers or approvals and making the
aforesaid filings, and except such as would not reasonably be expected to
have a PIROD Material Adverse Effect, violate any law, statute, regulation,
injunction, order or decree of any governmental agency or authority or court,
or conflict with or result in a breach of or constitute a default under any
of the terms or provisions of any mortgage, note, bond or indenture or
material obligation to which PIROD or any of its subsidiaries is a party or
by which it or any of its or their properties may be bound. Subject to
securing the consents, waivers and approvals required under the agreements
set forth in Section 4.3 of the PIROD Schedule, the execution and delivery of
this Agreement by PIROD and the consummation of the Merger will not give to
others any interests or rights, including rights of termination or
cancellation, in or with respect to any material property, asset, contract,
agreement, license or other commitment or instrument of PIROD or any of its
subsidiaries, except as would not reasonably be expected to have a PIROD
Material Adverse Effect.
4.4. CONTRACTS AND COMMITMENTS. Neither PIROD nor any of its
subsidiaries is in breach or violation of or in default (i) under any of the
terms or provisions of any mortgages, leases, notes, bonds, indentures,
commitments, contracts, agreements, licenses or other instruments to which
such corporation is a party or by which it or any of its properties is bound
and which is listed in Section 4.4 of the PIROD Schedule or which singularly
is or in the aggregate are otherwise material to the business, properties,
financial condition or operations of such corporation, (ii) under any law,
judgment or decree, or any order, rule or regulation applicable to such
corporation or to any of its properties or (iii) in
22
the payment of any of its obligations for borrowed funds, and there exists no
known condition or known event which, after notice or lapse of time or both,
would constitute a default in connection with any of the foregoing, except
any such breach, violation or default that would not reasonably be expected
to have a PIROD Material Adverse Effect. Section 4.4 of the PIROD Schedule
contains a correct and complete list of the following: (i) each loan, credit
agreement, guarantee, indenture, note, mortgage, security agreement or
similar document or instrument to which PIROD or any of its subsidiaries is a
party or by which any of PIROD's or any of its subsidiaries' assets or
properties are bound; (ii) each lease of personal property to which PIROD or
any of its subsidiaries is a party or by which any of PIROD or its
subsidiaries are bound; and (iii) any other agreement, contract or commitment
to which PIROD or any of its subsidiaries is a party or by which any of
PIROD's or any of its subsidiaries' assets or properties are bound which is a
collective bargaining agreement or which involves a future commitment by
PIROD or any of its subsidiaries in excess of $25,000 and which cannot be
terminated without liability on 90 days or less notice (the "PIROD Material
Contracts"). PIROD has delivered to XXXX a true and complete copy of each of
the PIROD Material Contracts. Each of the PIROD Material Contracts is a
valid and binding obligation of PIROD or its subsidiary, as applicable,
enforceable in accordance with its terms, and is in full force and effect,
subject to bankruptcy, reorganization, receivership and other laws affecting
creditors' rights generally.
4.5. FINANCIAL STATEMENTS. PIROD heretofore has delivered to XXXX a
true and complete copy of (i) PIROD's consolidated balance sheets of PIROD
and all its subsidiaries as of December 28, 1997 and December 29, 1996 and
the related statements of earnings and changes in financial position for the
period from July 24, 1996 to December 29, 1996 and the year ended December
31, 1997 as audited by PricewaterhouseCoopers and (ii) PIROD's unaudited
consolidated balance sheets and the related statements of earnings and
changes in financial position of PIROD and all its subsidiaries for the
three- and nine-month periods ended September 27, 1998 and 1997 (the "PIROD
Financial Statements"). The PIROD Financial Statements fairly present the
consolidated financial condition of PIROD and all its subsidiaries as at the
dates thereof and the consolidated results of operations and changes in
financial position for the periods indicated, all in conformity with
generally accepted accounting principles applied on a consistent basis
(except as otherwise stated therein). For the purposes of this Agreement,
all PIROD Financial Statements shall be deemed to include any notes to such
financial statements.
4.6. ABSENCE OF LIABILITIES. Except for liabilities or obligations
which would not reasonably be expected to have a PIROD Material Adverse
Effect, neither PIROD nor any of its subsidiaries has any material
liabilities or obligations, either accrued, absolute, contingent or
otherwise, which have not been (i) reflected in PIROD's Balance Sheet as of
September 27, 1998, referred to in Section 4.5 ("PIROD's Balance Sheet"),
(ii) specifically described in Section 4.6 of the PIROD Schedule, (iii)
incurred in the ordinary course of PIROD's business since September 27, 1998,
or (iv) incurred under or in connection with this Agreement.
23
4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 27, 1998,
except as disclosed in Section 4.7 of the PIROD Schedule, (i) neither PIROD
nor any of its subsidiaries has sustained any damage, destruction or loss by
reason of fire, flood, accident or other calamity (whether or not covered by
insurance) that would reasonably be expected to have a PIROD Material Adverse
Effect; (ii) there have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, obligations or
liabilities (fixed or contingent) of PIROD or any of its subsidiaries that
would reasonably be expected to have a PIROD Material Adverse Effect; (iii)
neither PIROD nor any of its subsidiaries has incurred any obligation for the
payment of money extending more than one year, except for operating leases
entered into in the ordinary course of business; (iv) neither PIROD nor any
of its subsidiaries has paid any obligation or liability (fixed or
contingent) except current liabilities included in PIROD's Balance Sheet and
current liabilities incurred since September 30, 1998 in the ordinary course
of business or pursuant to the terms of this Agreement; (v) PIROD has not
declared any other dividend or other distribution on or with respect to any
PIROD Shares; (vi) PIROD has not purchased, redeemed or otherwise acquired
for a consideration, directly or indirectly, any PIROD Shares or other
securities of PIROD; (vii) neither PIROD nor any of its subsidiaries has
disposed of, or agreed to dispose of, any material property or asset, other
than in the ordinary course of business and for a consideration at least
equal to the fair value of such property or asset, nor has it leased to
others, or agreed so to lease, any property or asset except in the ordinary
course of business and for a consideration at least equal to the fair rental
value of such property or asset; (viii) neither PIROD nor any of its
subsidiaries has made any expenditures or commitments for the purchase,
acquisition, construction or improvement of a capital asset except in the
ordinary course of business and in an aggregate amount not exceeding
$500,000; (ix) neither PIROD nor any of its subsidiaries has amended its
Certificate or Articles of Incorporation or By-Laws; (x) neither PIROD nor
any of its subsidiaries has (A) granted any severance or termination pay to
any director, officer or employee of PIROD or any subsidiary, (B) entered
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or
employee of PIROD or any subsidiary, (C) increased benefits payable under any
existing severance or termination pay policies or employment agreements, (D)
increased compensation, bonus or other benefits payable to directors,
officers or employees of PIROD or any subsidiary or (E) entered into any new,
or amended or modified any existing, collective bargaining agreement; (xi)
PIROD has not effected any split, combination or reclassification of any
shares of its outstanding capital 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 its capital stock; (xii) neither PIROD nor any of
its subsidiaries has made any change in accounting methods, principles or
practices by PIROD or its subsidiaries materially affecting the consolidated
assets, liabilities or results of operations of PIROD or its subsidiaries,
except insofar as may be required by a change in generally accepted
accounting principles; and (xiii) except as set forth above, neither PIROD
nor any of its subsidiaries has entered into any other transaction or
contract other than in the ordinary course of business.
24
4.8. TAX AND OTHER RETURNS. Except as set forth in Section 4.8 of the
PIROD Schedule (i) all material federal tax returns and tax reports required to
be filed by PIROD or any of its subsidiaries have been filed with the
appropriate governmental agencies where such returns and reports are required to
be filed; (ii) all material state and local tax returns and tax reports required
to be filed by PIROD or any of its subsidiaries in those states where either
PIROD or any of its subsidiaries have qualified to do business, and which relate
to income, profits, franchise or property taxes, have been filed with the
appropriate governmental agencies in such jurisdiction; (iii) all federal,
state, local and foreign income, profits and franchise taxes (including interest
and penalties) shown due on the tax returns and tax reports referred to in (i)
and (ii) of this paragraph have been fully paid or adequately reflected as a
liability on PIROD's Balance Sheet; (iv) no waivers of statutes of limitation
have been given or requested; and (v) there are no potential federal tax
deficiencies or state and local tax deficiencies with respect to the returns and
reports filed by PIROD and referred to in (i) and (ii) of this paragraph which
may arise from issues which have been raised or which have not yet been raised
but which reasonably might be expected to be raised by the Internal Revenue
Service or appropriate governmental agencies and reasonably might be expected to
have a PIROD Material Adverse Effect.
4.9. EMPLOYMENT ARRANGEMENTS. Except as disclosed in Section 4.9 of the
PIROD Schedule, neither PIROD nor any of its subsidiaries is a party to any
employment, commission or consultant contract, written or oral, with any present
or former officer, director or employee, or any collective bargaining agreement,
nor does PIROD or any of its subsidiaries have any PIROD Plans (as defined in
Section 4.17). Except as disclosed in Section 4.9 of the PIROD Schedule, since
September 27, 1998 there has been no change in any such plan or arrangement or
in compensation to any director or officer, or any change, either material in
amount or other than in the ordinary course of business, in compensation to any
other employee of PIROD or any of its subsidiaries.
4.10. PROPERTY. PIROD and each of its subsidiaries have good and
marketable title in fee simple to all of the real property respectively owned
by them, and good and marketable title to all of the other tangible
properties and assets respectively owned by them, free and clear of all
mortgages, liens, pledges, restrictions, charges or encumbrances of any
nature whatsoever, except (i) liens for taxes not yet delinquent; (ii) liens
being contested in good faith by appropriate proceedings; (iii) such
imperfections of title and encumbrances, if any, as do not materially detract
from the value of, or materially interfere with the present use of, such
property; and (iv) for those listed in Section 4.10 of the PIROD Schedule.
Neither PIROD nor any of its subsidiaries has received notice of violation of
any zoning regulation, ordinance or other law, order, regulation or
requirement relating to real property owned or leased by it which violation
would reasonably be expected to have a PIROD Material Adverse Effect.
4.11. PATENTS, TRADEMARKS, ETC. Section 4.11 of the PIROD Schedule
correctly lists all domestic and foreign letters patent, patent applications,
patent and know-how licenses, royalty agreements, trade names, trademark
registrations and applications, common law trademarks, copyrights and
copyright registrations and applications held by
25
PIROD or any of its subsidiaries. Unless otherwise indicated in the PIROD
Schedule, PIROD or such subsidiary owns the entire right, title and interest
in and to the same. All such letters patent, patent applications, patent and
know-how licenses, royalty agreements, trade names, trademark registrations
and applications, common law trademarks, copyrights, copyright registrations
and applications are subject to no pending or, to the best of the knowledge
of PIROD or any of its subsidiaries, threatened litigation or other adverse
claims except as set forth in Section 4.11 of the PIROD Schedule. Neither
PIROD nor any of its subsidiaries has received notice that the use by it of
such patents, trademarks, trade name rights or copyrights infringe upon or
conflict with any patent, trademark, trade name right or copyright of others.
4.12. ABSENCE OF DEFAULTS BY OTHERS. No party with whom PIROD or any of
its subsidiaries has an agreement which is of material importance to the
business, properties, financial condition or operations of PIROD or any of
its subsidiaries is in default thereunder, except a default which would not
reasonably be expected to have a PIROD Material Adverse Effect.
4.13. LITIGATION. Except as disclosed in Section 4.13 of the PIROD
Schedule, neither PIROD nor any of its subsidiaries is a party to or
threatened with any litigation, governmental or other proceeding,
investigation, strike or other labor dispute or other controversy which might
affect the validity of this Agreement or which, individually or in the
aggregate, might reasonably be expected to have a PIROD Material Adverse
Effect, and there is no outstanding order, writ, injunction or decree of any
Governmental Entity against or affecting PIROD or any of its subsidiaries or
a material portion of their respective businesses, properties, assets or
goodwill.
4.14. DISCLOSURE DOCUMENTS.
4.14.1. Each document required to be filed by PIROD with the SEC
in connection with the transactions contemplated by this Agreement
will, when filed, comply as to form with the applicable requirements
of the Securities Act and the Exchange Act, and none of the
information supplied or to be supplied by PIROD for inclusion in any
such document filed by PIROD or XXXX, including the XXXX Proxy
Statement, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.14.2. The representations in this Section 4.14 shall not apply
to any information in such documents which is supplied by or on behalf
of XXXX.
4.15. BROKERS' AND FINDERS' FEES. Except as disclosed in Section 4.15
of the PIROD Schedule, no agent, broker, person or firm acting on behalf of
PIROD or under its authority has claimed or is or will be entitled to any
commission or broker's or finder's fee from PIROD in connection with the
transactions contemplated by this Agreement. True
26
and complete copies of any agreements regarding any such commission or fee
have been provided to XXXX.
4.16. INSURANCE. Section 4.16 of the PIROD Schedule correctly lists and
briefly describes all policies of fire, liability, workmen's compensation,
life, business interruption and other types of insurance held by PIROD or any
of its subsidiaries. All such insurance policies are in full force and
effect.
4.17. PENSION, RETIREMENT AND PROFIT SHARING PLANS. Section 4.17 of the
PIROD Schedule lists each pension, profit sharing, stock-bonus, thrift or
other retirement plan, employee stock ownership plan, deferred compensation,
stock purchase, performance share, bonus or other incentive plan, severance
plan, health or welfare plan or other similar plan, agreement, arrangement or
understanding, whether or not reduced to writing and whether or not such plan
is or is intended to be qualified under Section 401(a) of the Code,
including, without limitation, any employee welfare benefit plan or employee
pension benefit plan within the meaning of ERISA ("PIROD Plan"), maintained
or sponsored by PIROD or any of its subsidiaries. Each PIROD Plan is in full
force and effect and has been administered in all material respects in
accordance with its terms and is and has been, and each plan administrator
and fiduciary of a PIROD Plan is and has been, in compliance in all material
respects with all applicable requirements of ERISA (including the funding,
reporting and disclosure and prohibited transaction provisions thereof) and
other applicable laws, regulations and rulings. Each PIROD Plan intended to
qualify under Section 401(a) of the Code is so qualified. Except as set
forth in Section 4.17 of the PIROD Schedule, no PIROD Plan is a "defined
benefit plan" (within the meaning of Section 3(35) of ERISA) or a
"multi-employer plan" (within the meaning of Section 3(37) of ERISA), has
terminated or partially terminated and no complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any such
multi-employer plan has occurred. PIROD or one of its subsidiaries has made,
accrued or provided for all contributions required under each PIROD Plan.
4.18. ENVIRONMENTAL MATTERS.
Except as disclosed in Section 4.18 of the PIROD Schedule, to PIROD's
knowledge and except such as could not reasonably be expected to have a PIROD
Material Adverse Effect:
4.18.1. PIROD and its current subsidiaries, and all properties
currently owned or leased by PIROD and its subsidiaries (collectively
"PIROD Real Estate"), are in compliance with all Environmental Laws.
Properties and subsidiaries formerly owned by PIROD were, as of the
date of sale or divestiture of those properties or subsidiaries, in
compliance with all Environmental Laws.
4.18.2. Neither PIROD nor any of its current subsidiaries has
received any written notice within the past five years that PIROD or
its current or former subsidiaries has any liability, responsibility
or obligation,
27
whether fixed, unliquidated, absolute or contingent, under any
Environmental Laws, or that they are subject to threatened or pending
claims, actions, suits, proceedings or investigations under such laws,
for fines or penalties, or for investigation, expense, removal or
response action to effect compliance with or discharge any obligation or
claim under such laws.
4.18.3. There is no past or continuing release or threat of
release, without an issued permit or permit application, of any
Hazardous Substance into the environment, at or from the PIROD Real
Estate that necessitates reporting or response actions under
Environmental Law. There was no past release, without an issued
permit or permit application, of any Hazardous Substances into the
environment, at or from a facility formerly owned or operated by PIROD
or a former subsidiary of PIROD where the release occurred prior to
the time such facility or subsidiary was sold or divested by PIROD,
that necessitated reporting or response actions by PIROD or its former
subsidiary where such response action was not completed.
4.18.4. There have been no Hazardous Substances used or
generated by PIROD or any of its current subsidiaries, or former
subsidiaries prior to their sale or divestiture from PIROD, that have
been disposed of or come to rest at any site that has been included on
the National Priorities List, or any comparable state or local list.
4.18.5. There never has been any and there are no underground or
above-ground USTs or ASTs located on, and there are no PCBs,
PCB-containing equipment, or hazardous waste as defined by RCRA or
comparable state or local laws, disposed on the PIROD Real Estate. Prior
to the sale or divestiture of such other real property previously owned,
leased or used by PIROD or any of its former subsidiaries, there were no
USTs or ASTs located on such property or PCBs or hazardous waste
disposed of on such properties where such USTs, ASTs, PCBs or hazardous
waste had not been removed in accordance with Environmental Laws.
4.18.6. There currently are no Hazardous Substances in the soil
or groundwater at, or migrating from any PIROD Real Estate, the
concentration of which exceeds the most lenient of applicable federal
or state standards consistent with the future industrial use of the
PIROD Real Estate.
4.19. FINANCING. PIROD has delivered to XXXX a true and correct copy of
a "highly confident" letter from X. X. Xxxxxx Securities Inc. and Xxxxxx
Guaranty Trust Company of New York (Exhibit A hereto) (the "Financing
Letter"), which letter has not been modified or withdrawn.
4.20. OWNERSHIP OF XXXX SHARES. None of PIROD or any direct or indirect
subsidiary of PIROD beneficially owns any XXXX Shares (other than pursuant to
the Trust Voting Agreement).
28
4.21. LABOR MATTERS. Except as set forth in Section 4.21 of the PIROD
Schedule, PIROD and each of its subsidiaries are, and for the past three
years have remained, in compliance with all currently applicable laws
respecting employment practices, terms and conditions of employment and wages
and hours, and is not engaged in any unfair labor practice, except where the
failure to comply with which or engagement in which, as the case may be,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a PIROD Material Adverse Effect. There is no unfair labor
practice charge or complaint pending or, to the knowledge of PIROD,
threatened against PIROD before the National Labor Relations Board. Except
as otherwise set forth in Section 4.21 of the PIROD Schedule, there are no
strikes, slowdowns, union organizational or union decertification campaigns
or other protected concerted activity under the National Labor Relations Act
or, to the knowledge of PIROD, threats thereof, by or with respect to any
employees of PIROD.
4.22. COMPLIANCE WITH LAWS AND COURT ORDERS. Neither PIROD nor any of
its subsidiaries is in violation of, or for the past three years has PIROD or
any of its subsidiaries violated, and to the knowledge of PIROD none is under
investigation with respect to or has been threatened to be charged with or
given notice of any violation of, in each case, by any governmental agency or
authority, any applicable law, rule, regulation, judgment, injunction, order
or decree, except for violations that have not had, and would not reasonably
be expected to have, individually or in the aggregate, a PIROD Material
Adverse Effect.
4.23. LICENSES AND PERMITS. Except as set forth on Section 4.23 of the
PIROD Schedule or except as has not had, and would not reasonably be expected
to have, individually or in the aggregate, a PIROD Material Adverse Effect,
(i) the Permits are valid and in full force and effect, (ii) neither PIROD or
any subsidiary is in default under, and no condition exists that with notice
or lapse of time or both would constitute a default under, the Permits and
(iii) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby. "Permits" for purposes of this Section 4.23 means each material
license, franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets or business of
PIROD and its subsidiaries.
5. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING DATE.
5.1. CONDUCT OF BUSINESS BY XXXX AND PIROD PENDING THE CLOSING DATE. From
the date hereof until the Closing Date, except as otherwise contemplated by this
Agreement or as may be consented to in writing by the other, each of XXXX and
PIROD on its behalf and on behalf of their subsidiaries:
5.1.1. shall conduct their businesses only in the ordinary
course, and shall use their commercially reasonable best efforts to
preserve substantially intact their business organizations, shall keep
available the services of their present officers and employees and to
preserve their present relationships with persons having significant
business relations therewith.
29
5.1.2. shall make no change in their Certificate or Articles of
Incorporation or By-Laws, except to the extent that any such change is
necessary in order for the parties to consummate the transactions
contemplated by this Agreement or to cause any conditions to the
Closing Date to be met.
5.1.3. shall make no purchase, redemption or other acquisition
of any outstanding XXXX or PIROD Shares or other securities of XXXX or
PIROD or any of their subsidiaries; and no option, warrant or other
right to acquire and no securities convertible into any XXXX or PIROD
Shares or any other equity securities of XXXX or PIROD or any of their
subsidiaries shall be granted or issued.
5.1.4. No dividend, distribution or payment shall be declared,
made or paid in respect of any XXXX or PIROD Shares or any other
equity securities of XXXX or PIROD.
5.1.5. Except as disclosed in the XXXX or PIROD Schedule or as
may be required by the provisions of contracts, agreements or XXXX or
PIROD Plans listed in the XXXX or PIROD Schedule, (i) no increase
shall be made in the compensation payable to directors, officers or
employees except in the ordinary course of business consistent with
past practices to employees other than executive officers; (ii) no
profit sharing, incentive, bonus, pension, retirement or similar
payments shall be made, except in the ordinary course of business
consistent with past practices; (iii) no existing contract or
agreement shall be amended, and no new contract or agreement entered
into, with respect to such compensation or payments; (iv) no new or
amended collective bargaining agreements shall be entered into; and
(v) no new or amended employment or severance agreements shall be
entered into.
5.1.6. No party or subsidiary shall (i) make any borrowings,
except in the ordinary course of business under bank lines of credit
for periods not to exceed ninety days (and successive refinancings of
such borrowings for like periods), or guarantee obligations of others;
(ii) make or commit to make any capital expenditures not already
committed to by such party or subsidiary or acquisitions of the stock
or assets of any other entities, in each case, exceeding $250,000
individually, or $500,000 in the aggregate; (iii) enter into any
merger or consolidation with any other person; or (iv) except as
disclosed in the XXXX or PIROD Schedule, make any sale or conveyance
of any of its assets, except in the ordinary course of business.
5.1.7. Each party and its subsidiaries shall use their
commercially reasonable best efforts to maintain in full force and
effect until the Closing Date the insurance policies listed in their
respective XXXX or PIROD Schedule and to obtain substitute insurance
for any policies not so
30
maintained, shall promptly advise the other of any fires, accidents or
other casualties occurring on or before the Closing Date which
singularly or in the aggregate materially affect the value of their
business and properties and shall, to the extent necessary, obtain
endorsements to such policies to provide that both parties shall have
the benefit of protection under such policies for casualties occurring
on or before the Closing Date as their interests may appear.
5.1.8. Each party shall, and shall direct its officers,
directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties that may be ongoing
with respect to a Takeover Proposal (as hereinafter defined). XXXX
and PIROD shall not, and shall not authorize or permit any of their
officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by them
to, directly or indirectly, (i) solicit, initiate or encourage any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal or
(ii) participate in any discussions or negotiations regarding any
Takeover Proposal; provided, however, that if, at any time prior to
the Effective Time, the board of directors of XXXX or PIROD determines
in good faith, after consultation with its financial and legal
advisers, that a Takeover Proposal that has not been solicited,
initiated or encouraged after the date hereof in violation of clause
(i) above may reasonably be expected to result in a Superior Proposal
(as defined in Section 8.1.3(iii)), XXXX or PIROD may (x) furnish
information with respect to itself and its subsidiaries to the third
party that has made such Takeover Proposal (and to any investment
banker, financial advisor, attorney, accountant or other
representative retained by such party) pursuant to a customary and
reasonable confidentiality agreement and (y) participate in
negotiations regarding such Takeover Proposal. For purposes of this
Agreement, "Takeover Proposal" means any bona fide written proposal
made by a third party to acquire, directly or indirectly, more than
50% of the voting power of the equity interests or of the assets of
XXXX or PIROD; provided, however, that a change in the terms of a
proposal submitted prior to the date hereof shall be deemed a new
Takeover Proposal. A party shall within 24 hours advise the other
orally and in writing of any request for information or of any
Takeover Proposal or any inquiry regarding the making of a Takeover
Proposal and shall keep the other party informed of the status of any
change to the terms of a Takeover Proposal. Nothing contained in this
Section 5.1.8 shall prohibit XXXX or PIROD from at any time taking and
disclosing to its shareholders a position or change thereof with
respect to the Merger or, pursuant to Rule 14e-2(a) under the Exchange
Act, with respect to a third party tender offer, or from making any
disclosure to its shareholders if, in the good faith judgment of its
board of directors, after consultation with outside counsel,
31
failure so to disclose would create a material risk of liability for
breach of its fiduciary duties to its shareholders under applicable law.
5.2. AGREEMENTS OF XXXX AND PIROD.
5.2.1. Each of XXXX and PIROD shall give to the other and to its
counsel, accountants and other representatives full access, during
normal business hours throughout the period prior to the Closing Date,
to all of the properties, books, contracts, commitments and records of
its and its subsidiaries and shall furnish all such information
concerning their business and properties as the other reasonably may
request; provided, however, that neither XXXX nor PIROD shall be
required to disclose information that would otherwise jeopardize
protections offered under the attorney-client privilege or the work
product doctrine or that could reasonably be expected to violate any
confidentiality obligations of either XXXX or PIROD currently in
effect, and, provided, further, that any investigation of the other or
any of its subsidiaries either before or after the date hereof,
including any review of the XXXX or PIROD Schedule, shall not affect
any representations, warranties, covenants and agreements hereunder.
Section 9.11 shall apply to such information.
5.2.2. Each of XXXX and PIROD shall supply the other with
accurate information as shall be required for inclusion in any
documents required to be filed with the SEC by the other party.
5.2.3. Each of XXXX and PIROD shall use its commercially
reasonable best efforts to consummate the financing of the
transactions contemplated hereby on the terms set forth in
Exhibit A hereto.
5.2.4. XXXX shall use its commercially reasonable best efforts
to have the registration statement contemplated by Section 1.10.4
hereof declared effective by the SEC as soon as reasonably
practicable.
5.3. REASONABLE EFFORTS; NOTIFICATION.
5.3.1. Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use its commercially reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable,
including but not limited to (i) cooperation in the preparation and
filing of the Proxy Statement and any other documents to be filed with
the SEC, any required filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx")
32
or with the NASD or other foreign filings and any amendments or
supplements to any thereof and (ii) using its commercially reasonable
best efforts to promptly make all required regulatory filings and
applications including, without limitation, responding promptly to
requests for further information and to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
Governmental Entities as are necessary for the consummation of the
transactions contemplated by this Agreement and to fulfill the
conditions to the Merger. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes
of this Agreement, the proper officers and directors of each party to
this Agreement shall use their commercially reasonable best efforts to
take all such necessary action.
5.3.2. XXXX and PIROD each shall keep the other apprised of the
status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by them or any of
their subsidiaries, from any Governmental Entity with respect to the
Merger or any of the other transactions contemplated by this
Agreement. The parties hereto will consult and cooperate with one
another, and consider in good faith the views of one another in
connection with, and shall provide each other the opportunity to
review and comment upon, any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted
by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other antitrust law.
5.3.3. Without limiting the generality of the undertakings pursuant
to this Section 5.3: (i) XXXX and PIROD agree that, if necessary to
prevent any Governmental Entity from taking steps to obtain, or from
issuing, any order, injunction, decree, judgment or ruling or the
taking of any other action that would (x) restrain, enjoin or
otherwise prohibit the Merger or any of the other transactions
contemplated by this Agreement or (y) cause any condition to the
Merger not to be satisfied, such party shall (A) offer to accept an
order to divest (and to enter into a consent decree or other agreement
giving effect thereto) such of XXXX'x or PIROD's assets and business,
and agree to hold separate such assets and business pending such
divestiture, and (B) enter into any supply, license, tolling, joint
venture or other agreement or take any other action, as may be
necessary to forestall such order, decree, ruling or action; provided,
however, that notwithstanding the foregoing provisions of this clause
(i), XXXX and PIROD shall not be required to take any such action that
would have a XXXX or PIROD Material Adverse Effect, or to waive any
material rights, and (ii) without limitation of clause (i) of this
Section 5.3.3, XXXX and PIROD each agree to contest and resist any
action seeking to have imposed any order, decree, judgment,
injunction, ruling or other order (whether temporary, preliminary or
33
permanent) (an "Order") that (x) would delay, restrain, enjoin or
otherwise prohibit consummation of the Merger or any of the other
transactions contemplated by this Agreement or (y) cause any condition
to the Merger not to be satisfied and, in the event that any such
temporary or preliminary Order is entered in any proceeding, to take
the steps contemplated by clause (i) of this Section 5.3.3 and to use
its commercially reasonable best efforts to take promptly any and all
other steps (including, the appeal thereof and the posting of a bond)
necessary to vacate, modify or suspend such Order so as to permit such
consummation as promptly as practicable after the date hereof.
5.4 At any time from the date hereof until the Closing Date, in the event
that PIROD notifies XXXX that it has been informed by any of the PIROD
Shareholders or any holder of PIROD Warrants that such holder has a Regulatory
Problem (as defined below), XXXX shall take all such actions as are reasonably
requested by PIROD in order to (a) establish a class of nonvoting common stock
of XXXX, which nonvoting common stock shall be identical in all respects to the
XXXX Shares, except that such common stock shall be nonvoting and shall be
convertible into XXXX Shares on such terms as are requested by PIROD in light of
regulatory considerations then prevailing, and (b) amend this Agreement, the
Certificate of Incorporation and other related agreements to effectuate and
reflect the foregoing. For purposes of this Agreement, a "Regulatory Problem"
means any set of facts or circumstances wherein it has been asserted by any
governmental regulatory agency (or such holder of PIROD Shares or PIROD Warrants
believes that there is a substantial risk of such assertion) that such holder is
not entitled to hold, or exercise any significant right with respect to, the
XXXX Shares.
6. CONDITIONS PRECEDENT TO THE CLOSING.
6.1. CONDITIONS TO THE OBLIGATIONS OF BOTH PARTIES. The respective
obligations of XXXX and PIROD to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approvals. The stockholders of XXXX and PIROD
shall have duly approved the transactions contemplated by this
Agreement.
(b) Certain Actions. There shall not have been any action
threatened or taken, or any statute, rule, regulation, judgment, order
or injunction promulgated, enacted, entered or enforced, by any
Governmental Entity, that could reasonably be expected to (i) make the
consummation of the Merger illegal or otherwise prohibited, or
(ii) prohibit or impose any material limitation on the Surviving
Corporation's ownership or operation of any material portion of the
assets or businesses of XXXX or PIROD.
34
(c) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or been
terminated.
(d) Bankruptcy Court Approval. The sale pursuant to this
Agreement of the XXXX Shares beneficially owned by the Trust shall
have been approved by the Bankruptcy Court as provided in the Plan of
Reorganization.
(e) Financing. The financing contemplated by Exhibit A hereto
shall have been consummated, not later than the Closing Date.
(f) SEC Effectiveness. The SEC shall have declared the
registration statement contemplated by Section 1.10.4 hereof
effective. On the Closing Date and at the Effective Time, no stop
order or similar restraining order shall have been entered by the SEC.
6.2. CONDITIONS TO THE OBLIGATIONS OF XXXX. The obligation of XXXX to
effect the Merger is further subject to the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of PIROD contained herein (without
giving effect to the materiality, PIROD Material Adverse Effect or
knowledge qualifications contained therein) shall be true and correct
when made and shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except to the extent that
any such representation and warranty had by its terms been made as of
a specific date, in which case such representation and warranty shall
have been true and correct as of such specific date), except, in all
instances, where the failure to be so true and correct shall not
result, individually or in the aggregate, in a PIROD Material Adverse
Effect; and XXXX shall have received a certificate signed on behalf of
PIROD by the chief executive officer and the chief financial officer
of PIROD to such effect.
(b) Performance of Obligations of PIROD. PIROD shall have
performed the obligations required to be performed by it under this
Agreement at or prior to the Closing Date, except for such failures to
perform as have not had or would not, individually or in the
aggregate, reasonably be expected to have a PIROD Material Adverse
Effect or materially adversely affect the ability of PIROD to
consummate the transactions contemplated hereby.
(c) PIROD Material Adverse Effect. There shall not have been a
PIROD Material Adverse Effect.
35
(d) Fairness Opinions. Neither of the fairness opinions of
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation to XXXX and the
Trust dated the date of this Agreement shall have been withdrawn.
(e) XXXX Tax Opinion. XXXX shall have received from its counsel
an opinion to the effect that the Merger will be a reorganization
within the meaning of Section 368(a) of the Code and that no gain or
loss will be recognized to either XXXX or PIROD for federal income tax
purposes as a result of the Merger.
(f) Solvency Opinion. XXXX shall have received a solvency
opinion within ten business days after the date of this Agreement,
which opinion will be confirmed at the Closing.
(g) Termination of the Management and Advisory Agreement. The
Management and Advisory Agreement dated August 28, 1996 by and between
PIROD, Inc., a Delaware corporation and wholly-owned subsidiary of
PIROD, and Xxxx Capital Partners V, L.P., a Delaware limited
partnership, shall have been terminated by mutual written consent of
the parties.
(h) Acknowledgment of Holders of PIROD Class L Warrants. Each
holder of a PIROD Class L Warrant shall have acknowledged in writing
that the number of XXXX Shares, together with the applicable exercise
price per share thereof, issuable pursuant to each XXXX Exchange
Warrant that such holder shall be entitled to receive pursuant to the
conversion of such PIROD Class L Warrant into the XXXX Exchange
Warrant upon consummation of the Merger is as set forth on Exhibit
1.8.4.
(i) Additional Fairness Opinions. If the Available Cash at the
Effective Time is less than $105.0 million, XXXX and the Trust shall
each have received a fairness opinion as of the date of the Effective
Time from Xxxxxxxxx, Lufkin and Xxxxxxxx Securities Corporation to the
effect that the consideration to be received and/or retained by the
holders of XXXX Shares (and, in the case of the Trust, the Trust)
pursuant to this Agreement is fair to such holders (and, if
applicable, the Trust) from a financial point of view.
6.3. CONDITIONS TO THE OBLIGATIONS OF PIROD. The obligation of PIROD to
effect the Merger is further subject to the following conditions.
(a) Accuracy of Representations and Warranties. The
representations and warranties of XXXX contained herein (without
giving effect to the materiality, XXXX Material Adverse Effect or
knowledge qualifications contained therein) shall be true and correct
when made and shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except to the extent that
any such representation and warranty had by its terms been made as of
a specific date, in which case
36
such representation and warranty shall have been true and correct as of
such specific date), except, in all instances, where the failure to be
so true and correct shall not result, individually or in the aggregate,
in a XXXX Material Adverse Effect; and PIROD shall have received a
certificate signed on behalf of XXXX by the chief executive officer and
the chief financial officer of XXXX to such effect.
(b) Performance of Obligations of XXXX. XXXX shall have
performed its obligations required to be performed by it under this
Agreement at or prior to the Closing Date, except for such failures to
perform as have not had or would not, individually or in the
aggregate, reasonably be expected to have a XXXX Material Adverse
Effect on or materially adversely affect the ability of XXXX to
consummate the transactions contemplated hereby.
(c) XXXX Material Adverse Effect. There shall not have been a
XXXX Material Adverse Effect.
(d) PIROD Tax Opinion. PIROD shall have received from its
counsel an opinion to the effect that the Merger will be a
reorganization within the meaning of Section 368(a) of the Code and
that no gain or loss will be recognized to a PIROD Shareholder who
exchanges his PIROD Shares for XXXX Shares in the Merger, except to
the extent of any cash received with respect to fractional shares.
7. AMENDMENT OF AGREEMENT; WAIVERS.
7.1. AMENDMENT. At any time, whether before or after submission to or
approval by the shareholders of XXXX and PIROD as provided herein, this
Agreement may be amended in writing to any extent determined by the appropriate
officers of the parties hereto not to be materially adverse to the interests of
their respective stockholders.
7.2. WAIVER. Any party hereto may waive in writing compliance by the
others with any of the covenants and conditions contained in this Agreement
(except such as may be imposed by law) to the extent such party believes such
action may not be materially adverse to the interests of its stockholders; such
waiver shall be evidenced by a certificate to such effect signed, in the case of
XXXX, by any one of its President and Vice Presidents, and in the case of PIROD,
by any one of its President and Vice Presidents.
37
8. TERMINATION.
8.1. TERMINATION. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval by shareholders of XXXX and PIROD:
8.1.1. by mutual written consent of the boards of directors of
XXXX and PIROD;
8.1.2. by XXXX or PIROD if any court of competent jurisdiction,
or any governmental body, regulatory or administrative agency or
commission having appropriate jurisdiction shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final
and non-appealable.
8.1.3. by XXXX or PIROD:
(a) if prior to the Closing Date, the board of directors of
XXXX or PIROD determines that a Takeover Proposal constitutes a
Superior Proposal. For purposes of this Agreement, a "Superior
Proposal" means any Takeover Proposal having terms which the
board of directors of XXXX or PIROD determines in its good faith
judgment (based, with respect to the consideration payable, on
the opinion of a financial advisor of nationally recognized
reputation) (x) to be more favorable to its shareholders from a
financial point of view (taking into account, among other things,
the type and amount of consideration to be received and risks of
non-consummation) than the Merger and (y) to be reasonably
capable of being completed (and for which financing has been
committed on customary terms); provided, however, that no
termination pursuant to this Section 8.1.3(iii) shall be
effective unless concurrently with such termination a termination
fee of $5.5 million is paid in cash by XXXX to PIROD, in the case
of a XXXX termination, or a termination fee of $2.0 million is
paid in cash by PIROD to XXXX, in the case of a PIROD
termination.
(b) if the Merger shall not have been consummated on or
before the later of (i) May 15, 1999 or (ii) 45 days after the
SEC has completed its review of the Proxy Statement (but in no
event later than July 15, 1999), provided that the right to
terminate this Agreement pursuant to this Section 8.1.3(b) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure to be
consummated by such time.
8.2. NOTICE AND EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, written notice thereof
shall
38
forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made, and this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, except for the provisions of
Sections 3.15, 4.15, Section 8.1.3(b), this Section 8.2 and Section 9. Nothing
contained in this Section 8.2 shall relieve any party from liability for any
breach of this Agreement. This Section 8 shall survive any termination of this
Agreement.
9. MISCELLANEOUS.
9.1. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 7.1 or an extension or waiver pursuant to Section
7.2 shall, in order to be effective, require in the case of XXXX or PIROD,
action by its board of directors or the duly authorized designee of its board of
directors.
9.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of XXXX and PIROD shall not be deemed waived or
otherwise affected by any investigation made by any party. Each representation
and warranty in this Agreement shall expire with, and be terminated and
extinguished by, the Merger. This Section 9.2 shall have no effect upon any
other obligation of the parties, whether to be performed before or after the
Merger.
9.3. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or on the second
succeeding business day after being mailed, postage prepaid, by registered or
certified mail to the appropriate party at its address below (or at such other
address for such party as shall be specified by notice in fact delivered):
(a) If to PIROD, to it at:
PiRod Holdings, Inc.
0000 Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxx
Chief Executive Officer
With copies to:
Xxxx Capital, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Principal
39
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Learner
(b) If to XXXX, to it at:
0000 Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
With copies to:
Xxxx, Xxxx & Xxxxx
Three First National Plaza
00 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Xxxx X. Xxxxx, Xx.
UNR Asbestos-Disease Claim Trust
000 Xxxxx Xxxxxxx Xxx
Xxxxx Xxxxxx, XX 00000
Xxxxxx, Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx Xxxxxxxx
9.4. EXPENSES. All legal, accounting and other costs and expenses incurred
in connection herewith and the transactions contemplated hereby shall be paid by
the Surviving Corporation if the Merger is consummated. If the Merger is not
consummated, each party shall pay the costs and expenses incurred by it other
than the costs incurred by PIROD to secure the Financing Letter attached hereto
as Exhibit A, which shall be split as follows: XXXX - 76% and PIROD - 24%;
provided, however, XXXX'x obligation hereunder to pay fees incurred by PIROD in
connection with the Financing Letter shall be limited to $100,000, and, provided
further, XXXX shall have no obligation to pay any portion of such fees in the
event that XXXX is obligated to pay a termination fee to PIROD under Section
8.1.3(a) hereof.
9.5. HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
9.6. GOVERNING LAW; JURISDICTION. The Agreement shall be construed, and
the rights of the parties hereto determined, in accordance with the internal
substantive laws of the State of Delaware without giving effect to principles of
conflicts, or choice of law of
40
the State of Delaware or of any other jurisdiction. Each of the parties
hereto (i) submits itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, and consents to service of process by notice as provided in this
Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other
than a federal or state court sitting in the State of Delaware. The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of
this Agreement in any federal court located in 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.
9.7. ASSIGNMENT. This Agreement shall not be assignable by any party
hereto except with the written consent of the other parties. Except for Section
9.8 hereof, nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereto and their successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
9.8. OFFICERS' AND DIRECTORS' INSURANCE; INDEMNIFICATION.
9.8.1. From and after the date hereof and for six years from the
Effective Time, the Surviving Corporation shall use its commercially
reasonable best efforts to cause to be maintained in effect XXXX'x
current directors' and officers' insurance and indemnification policy
or an equivalent policy or policies.
9.8.2. From and after the Closing Date and for six years after
the Effective Time, the Surviving Corporation shall not take any
action that would change or amend the provisions of any existing
indemnification agreements or the Certificate of Incorporation or
By-Laws of the Surviving Corporation set forth in Exhibits A and B hereto
relating to indemnification, advancement of expenses or limitation of
liability in any manner that would adversely affect the rights
thereunder of individuals who at or prior to the Effective Time were
directors, officers, employees, agents or other representatives of
XXXX, PIROD or any of their subsidiaries.
9.8.3. If the Surviving Corporation or any of its successors or
assigns (i) reorganizes or consolidates with or merges into any other
person and is not the resulting, continuing or surviving corporation
or entity of such consolidation or merger, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision
will be made so that the successors and assigns
41
of the Surviving Corporation assume the obligations set forth in this
Section 9.8.
9.9. XXXX AND PIROD MATERIAL ADVERSE EFFECT. As used herein, "XXXX
Material Adverse Effect" means any change in or effect on the business of XXXX
or its subsidiaries that is materially adverse to the business, assets, results
of operations or financial condition of XXXX and its subsidiaries, taken as a
whole, or materially impairs the ability of XXXX to consummate the Merger or the
other transactions contemplated by this Agreement; provided, however, that "XXXX
Material Adverse Effect" shall be deemed to exclude the impact of (i) changes in
generally accepted accounting principles; (ii) the public announcement of the
Merger and compliance with the provisions of this Agreement; (iii) any changes
resulting from any restructuring or other similar charges or write-offs taken by
XXXX with the consent of PIROD; (iv) the termination or failure to be
consummated or completed of any acquisition, joint venture, development project
or other transaction, which was not consummated or completed prior to the
execution and delivery of this Agreement; and (v) any change in general economic
conditions, in interest rates or in conditions affecting the telecommunications
industry generally. As used herein, "PIROD Material Adverse Effect" means any
change in or effect on the business of PIROD or its subsidiaries that is
materially adverse to the business, assets, results of operations or financial
condition of PIROD and its subsidiaries, taken as a whole, or materially impairs
the ability of PIROD to consummate the Merger or the other transactions
contemplated by this Agreement; provided, however, that "PIROD Material Adverse
Effect" shall be deemed to exclude the impact of (i) changes in generally
accepted accounting principles; (ii) the public announcement of the Merger and
compliance with the provisions of this Agreement; (iii) any changes resulting
from any restructuring or other similar charges or write-offs taken by PIROD
with the consent of XXXX; (iv) the termination or failure to be consummated or
completed of any acquisition, joint venture, development project or other
transaction, which was not consummated or completed prior to the execution and
delivery of this Agreement; and (v) any change in general economic conditions,
in interest rates or in conditions affecting the telecommunications industry
generally.
9.10. ENTIRE AGREEMENT. This Agreement and the Exhibits and XXXX and
PIROD Schedules attached hereto contain the entire Agreement of the parties with
respect to the Merger and other transactions contemplated herein, and supersede
all prior understandings and agreements of the parties with respect to the
subject matter hereof. Any reference to this Agreement shall be deemed to
include the Exhibits and XXXX and PIROD Schedules attached hereto.
9.11. CONFIDENTIALITY.
9.11.1. Except as may be reasonably necessary to carry out this
Agreement and the transactions contemplated by this Agreement, each of
XXXX and PIROD shall, and each shall require its subsidiaries,
officers, directors, employees and authorized representatives to, hold
in confidence prior to the Effective Time and for two years from any
termination of this
42
Agreement all data and information obtained by it from the other (unless
required to disclose such information by judicial or administrative
process, as otherwise required by law, or unless such information (i) is
or becomes generally available to the public other than as a result of
its disclosure, (ii) is independently acquired or developed by it or any
of their representatives without violating any confidentiality agreement
between it and the other, or (iii) is, or becomes, available to it from
a source other than the other party or its representatives, provided
that such source is not known by such disclosing party, any of its
subsidiaries of any of its representatives to be bound by a
confidentiality agreement with the other party or any of its
representatives or by any other legal, contractual or fiduciary duty not
to disclose such information) and shall not, and shall use commercially
reasonable best efforts to cause such subsidiaries, officers, directors,
employees and authorized representatives not to, disclose such
information to others without the prior written consent of the other
party.
9.11.2. If this Agreement is terminated, each of XXXX and PIROD
shall, if so requested by the other party, promptly return every
document furnished to its or its affiliates in connection with the
transactions contemplated by this Agreement and any copies of such
documents that may have been made and shall use its commercially
reasonable best efforts to cause the representatives to whom such
documents were furnished promptly to return such documents and any
copies of such documents, other than documents filed with the SEC or
otherwise publicly available.
9.12. KNOWLEDGE. "To the knowledge," "to the best knowledge," or any
similar phrase shall be deemed to refer to the knowledge of the chief
executive, financial, accounting and legal officers of a party (regardless of
title) and to exclude the assurance that such knowledge is based upon a
reasonable investigation, unless otherwise expressly provided.
43
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first above written.
XXXX Industries, Inc.
By /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Its President
PiRod Holdings, Inc.
By /s/ Xxxx Xxxxxx
-----------------------------
Its President
44
EXHIBIT 1.4.2
ELEVENTH AMENDED AND RESTATED
BY-LAWS
OF
XXXX INDUSTRIES, INC.
Effective as of December , 1998
ARTICLE I
OFFICES
SECTION 1. The registered office shall be established and
maintained at the office of The Prentice Hall Corporation System, Inc., in the
city of Dover, in the County of Kent, in the State of Delaware, and said
corporation shall be the registered agent of this corporation in charge thereof.
The corporation may have other offices, either within or without the State of
Delaware, at such place or places as the board of directors may from time to
time appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF HOLDERS OF THE CAPITAL STOCK AND WARRANTHOLDERS
SECTION 1. Except as expressly provided in these By-Laws, the
terms "Stockholder" or "Stockholders" shall collectively refer to the holder
or holders of (i) the corporation's capital stock (the "Holders of the
Capital Stock" or, when referring to the capital stock itself, the "Capital
Stock"), and (ii) the corporation's warrants (the "Warrantholders" or when
referring to the warrants themselves, the "Warrants") issued pursuant to the
Plan of Reorganization dated March 14, 1989 (the "Plan") as confirmed by
order of the United States Bankruptcy Court for the Northern District of
Illinois, Eastern Division. All meetings of the Stockholders for the
election of directors shall be held in Chicago, Illinois, at such place as
may be fixed from time to time by the board of directors, or at such place
either within or without the State of Delaware as shall be designated from
time to time by the board of directors and stated in the notice of the
meeting. Meetings of Stockholders for any other purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual meetings of Stockholders, commencing with the
year 1991, shall be held on the first Thursday after the third day in the month
of May if not a legal holiday, and if a legal holiday, then on the next business
day following, at 11:00 a.m., or at such other date and time as shall be
designated from time to time by the board of directors and stated in the notice
of the
meeting, at which meeting the Stockholders shall elect by plurality vote a board
of directors, and transact such other business as may properly be brought before
the meeting.
SECTION 3. For business properly to be brought before any meeting
of Stockholders by a Stockholder, the Stockholder must have given timely notice
thereof in proper written form to the secretary of the corporation. To be
timely, a Stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 30 days nor
more than 60 days prior to the date of the meeting; provided, however, that in
the event that less than 40 days notice or prior public disclosure of the date
of the meeting is given or made to Stockholders, for such notice by the
Stockholder to be timely, it must be so received prior to the date of the
meeting is given or made to Stockholders, for such notice by the Stockholder to
be timely, it must be so received prior to the date of the meeting and not later
than the close of business on the tenth day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
To be in proper written form, a Stockholder's notice to the secretary shall set
forth in writing as to each matter the Stockholder proposes to bring before the
meeting: (i) a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the meeting; (ii)
the name and address, as they appear on the corporation's books, of the
Stockholder proposing such business; (iii) the class and number of shares of
capital stock of the corporation which are owned by the Stockholder as of the
record date for the meeting; and (iv) any material interest of the Stockholder
in such business. The chairman of the meeting shall have the sole authority to
determine whether business was properly brought before the meeting in accordance
with the provisions of this Section 3 and, if the chairman of the meeting should
determine that any such business was not so properly brought, he or she shall so
declare to the meeting, and any such business not properly brought before the
meeting shall not be transacted.
SECTION 4. Written notice of the annual or any special meeting of
Stockholders stating the place, date and hour of the meeting shall be given to
each Stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting.
SECTION 5. The officers or agents who have charge of the stock
ledger, register for the Warrants or transfer book of the corporation shall
prepare and make, at least ten days before every meeting of Stockholders, a
complete list of the Stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each Stockholder and the number of
shares of Capital Stock and the number of shares purchasable upon the exercise
of the Warrants (collectively, the "Shares") registered in the name of each
Stockholder. Such list shall be open to the examination of any Stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any Stockholder
who is present.
SECTION 6. Special meetings of the Stockholders for any purpose or
purposes, unless otherwise prescribed by statute, by these By-Laws or by the
certificate of incorporation, may be called by the chairman of the board or by
the president and shall be called by the chairman of the board, president or
secretary at the request in writing of a majority of the board of directors, or
at the
2
request in writing of Stockholders owning a majority of the Shares of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. Business transacted at
any special meeting of Stockholders shall be limited to the purposes stated in
the notice.
SECTION 7. Written notice of a special meeting stating the place,
date and hour of the meeting, and the purpose or purposes for which the meeting
is called, shall be given not less than ten nor more than forty days before the
date of the meeting to each Stockholder entitled to vote at such meeting.
SECTION 8. The holders of a majority of the Shares issued and
outstanding and entitled to vote thereat, present in person, or represented
by proxy, shall constitute a quorum at all meetings of the Stockholders for
the transaction of business except as otherwise provided by statute, by these
By-Laws or by the certificate of incorporation. Abstentions shall be counted
as present in person or represented by proxy for purposes of determining the
existence of a quorum for purposes of this Section 8. If, however, such
quorum shall not be present or represented at any meeting of the
Stockholders, the Stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might
have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Stockholder of record entitled to vote at the
meeting.
SECTION 9. When a quorum is present at any meeting, a majority of
the votes cast shall decide any question (other than the election of directors,
which shall be determined by a plurality vote) brought before such meeting,
unless the question is one upon which by express provision of the statutes,
these By-Laws or of the certificate of incorporation, a different vote is
required in which case such express provision shall govern and control the
decision of such question. Abstentions shall not be included in calculating the
number of votes cast on, in favor of, or in opposition to any question.
SECTION 10. Unless otherwise specifically provided by statute,
these By-Laws or the certificate of incorporation, each Stockholder shall at
every meeting of the Stockholders be entitled to one vote for each Share held by
such Stockholder.
SECTION 11. Each Stockholder is entitled to vote at a meeting of
Stockholders or to express consent or dissent to corporate action in writing
without a meeting and may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
SECTION 12. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of Stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such Stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting for the action so taken, shall be signed by the holders of outstanding
Shares having not less
3
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of Stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those Stockholders who have not consented in writing.
SECTION 13. The board of directors, in advance of any Stockholders'
meeting, shall appoint one or more inspectors to act at the meeting or any
adjournment thereof and to make a written report thereof. In case any person
appointed fails to appear or act, the vacancy may be filled by appointment made
by the board of directors in advance of the meeting or at the meeting by the
persons presiding thereat. Each inspector, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall ascertain the number of Shares outstanding and
the voting power of each, determine the Shares represented at the meeting and
the validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period of record of the disposition of any challenges
made to any determination by the inspectors, and certify their determination of
the number of Shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212 (c)(2) of the Delaware General Corporation Law (the "DGCL"),
ballots and the regular books and records of the corporation, except that the
inspectors may consider other reliable information for the limited purpose of
reconciling proxies and ballots submitted by or on behalf of banks, brokers,
their nominees or similar persons which represent more votes than the holder of
a proxy is authorized by the record owner to cast or more votes than the
Stockholder holds of record. If the inspectors consider other reliable
information for the limited purpose permitted herein, the inspectors at the time
they make their certification pursuant to the paragraph above shall specify the
precise information considered by them, including the person or persons from
whom they obtained the information, when the information was obtained, the means
by which the information was obtained and the basis for the inspectors' belief
that such information is accurate and reliable.
The date and time of the opening and the closing of the polls for each
matter upon which the Stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or
changes thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery of the State of Delaware, upon application by
a Stockholder, shall determine otherwise.
4
ARTICLE III
DIRECTORS
SECTION 1. During the term of that certain Stockholders Agreement,
dated December 21, 1998 by and among the corporation and certain of its
Stockholders (the "Stockholders Agreement"), the authorized number of directors
shall be determined in accordance with the provisions of the Stockholders
Agreement. Following the termination of Article II of the Stockholders
Agreement, the authorized number of directors may be determined from time to
time by a vote of the majority of the then authorized number of directors;
provided, however, that such number shall not be less than three nor more than
11; and provided further, that such minimum and maximum may be increased or
decreased pursuant to resolution of the board adopted pursuant to the
certificate of incorporation. The directors shall be elected at annual meetings
of Stockholders and may be elected at any special meeting of Stockholders,
except as otherwise provided herein or in the Stockholders Agreement until the
termination of Article II thereof, and each director shall hold office until a
successor is elected and qualified or until that director's earlier resignation
or removal. Except as otherwise provided in the certificate of incorporation,
newly created directorships resulting from any increase in the number of
directors and any vacancies on the board of directors resulting from death,
resignation, disqualification, removal, or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
if less than a quorum of the board, or by a sole remaining director, provided,
however, that until the termination of Article II of the Stockholders Agreement,
such vacancies shall be filled in accordance with the Stockholders Agreement.
Any director elected in accordance with the preceding sentence shall hold office
until the next annual meeting of Stockholders. No person shall serve as a
director of this corporation after the annual Stockholders meeting next
following his or her 70th birthday. No decrease in the number of directors
constituting the board of directors shall shorten the term of any incumbent
director. Subject to the provisions of the Stockholders Agreement until the
termination of Article II thereof and Article XII hereof, if there are no
directors in office, then an election may be held in the manner provided by
statute.
SECTION 2. Except as otherwise provided in the Stockholders Agreement
until the termination of Article II thereof, nominations for any election of a
director may be made by the board of directors, a committee appointed by the
board of directors, or by any Stockholder entitled to vote generally in the
election of directors who complies with the procedures set forth in this Section
2 of Article III. All nominations by Stockholders must be made pursuant to
timely notice in proper written form to the secretary of the corporation. To be
timely, a Stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 30 days nor
more than 60 days prior to the date of the meeting; provided, however that in
the event that less than 40 days notice or prior public disclosure of the date
of the meeting is given to Stockholders, for such notice by the Stockholder to
be timely, it must be so received prior to the date of the meeting and not later
than the close of business on the tenth day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
To be in proper written form, such Stockholder's notice shall set forth in
writing (a) as to each person whom the Stockholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or
5
is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including, without limitation, such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected; and (b) as to the Stockholder giving the
notice (i) the name and address, as they appear on the corporation's books, of
such Stockholder and (ii) the class and number of shares of the corporation
which are beneficially owned by such Stockholder. At the request of the board
of directors, any person nominated by the board of directors, or a committee
appointed by the board of directors, for election as a director shall furnish to
the secretary of the corporation the information required to be set forth in a
Stockholder's notice of nomination which pertains to the nominee. Subject to
the terms of the Stockholders Agreement, the chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures described by this Section 2 of
Article III or the Stockholders Agreement, if applicable, and the defective
nomination shall thereupon be disregarded.
SECTION 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these By-Laws directed or required to be exercised or done
only by the Stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware or the State of Illinois.
SECTION 5. The board of directors shall hold regular meetings at such
times and places as may be designated from time to time by the chairman of the
board or, in his absence, the president; provided that the board shall meet at
least four times during each calendar year.
SECTION 6. Special meetings of the board of directors may be called
by the chairman of the board or by the president on two days notice to each
director, either personally or by mail or by telegram. Special meetings shall
be called by the chairman of the board or the president or secretary in like
manner and on like notice on the written request of two directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the board of directors need be specified in the notice or waiver of notice of
such meeting except as provided in Article IV of these By-Laws.
SECTION 7. At all meetings of the board of directors, a majority of
the entire board shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 8. Unless otherwise restricted by the certificate of
incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the board of directors, or
6
of any committee thereof, may be taken without a meeting, if all members of the
board or committee as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the board
or committee.
STANDING COMMITTEES OF DIRECTORS
SECTION 9. The corporation shall have the following Standing
Committees:
(a) An Executive Committee which shall have and may exercise all the
powers and authority of the board of directors during the intervals between
meetings of the board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it; provided that such executive committee shall
not have the power or authority to: (i) amend the certificate of incorporation;
(ii) adopt an agreement of merger or consolidation; (iii) recommend to the
Stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, or a dissolution of the corporation or a
revocation of a dissolution; (iv) amend the By-Laws of the corporation; or (v)
declare a dividend or to authorize the issuance of stock. The committee
chairman shall report to the board of directors at the next regularly held
meeting of the board the action taken by the committee at its meeting, which
action shall thereupon be confirmed and ratified by the board of directors. The
committee shall consist of as many members as the board of directors determines
from time to time appropriate, and shall include the chief executive officer and
the chairman of the board as members, and such other members as may be appointed
by the board of directors from time to time.
(b) A Compensation Committee which shall: (i) recommend annually to
the board of directors nominee for corporate officers and annual compensation
levels (salaries and bonuses) for corporate officers; (ii) recommend to the
board of directors changes in compensation plans such as bonuses, deferred
compensation, incentive compensation and stock option plans; (iii) recommend to
the board of directors changes in employee supplemental benefits (such as
pension plans, profit-sharing plans, health care and life insurance coverage);
(iv) recommend to the board of directors organizational changes in the board and
in corporate executive compensation; and (v) recommend to the board of directors
changes in corporate structure and organizational responsibilities. The
committee shall consist of not less than three members of the board of directors
who are not officers or employees of the corporation. The members of the
committee shall be selected by the board of directors from time to time.
(c) An Audit Committee which shall: (i) select and employ on behalf
of the corporation, subject to ratification of Stockholders, a firm of certified
public accountants whose duty shall be to audit the books and accounts of the
corporation and its subsidiaries and affiliated companies for the fiscal year in
which they are appointed; (ii) confer with the auditors regarding the scope of
the audit and other services and the cost thereof and report periodically to the
board of directors; and (iii) review with the auditors at the conclusion of the
audit and before publication of the audited financial statements, the findings
disclosed during the audit, including compliance with the corporation's conflict
of interest policies, the adequacy of internal controls, the effectiveness of
the internal auditing function, accounting policies and financial reporting, and
the contemplated form of the statements and opinion. The committee shall
consist of not less than three (3) members of the
7
board of directors who are not officers or employees of the corporation. The
members of the committee shall be selected by the board of directors from time
to time.
(d) Appointing Additional Committees. The board of directors may
from time to time establish other standing committees or other committees and
appoint the members thereof.
SECTION 10. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors.
SECTION 11. Directors may be paid such compensation for their
services, and such reimbursement for expenses for attendance at regular, special
and committee meetings, as the board of directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 12. The board of directors shall elect one of its members as
the chairman of the board. The chairman of the board, who shall not be
considered an officer of the corporation, shall preside at each meeting of the
board of directors or the Stockholders and shall perform such other duties as
may from time to time be assigned to him by the board of directors.
SECTION 13. A resignation of a director shall be effective upon
receipt by the chairman of the board of a signed written notice of such
resignation, or, should such notice contain a specified date of resignation, at
such specified date. No acceptance by the board of directors is required for
such resignation to be effective.
SECTION 14. The directors may only be removed from office by the
affirmative vote of the holders of at least a majority of the voting power of
all shares of the corporation entitled to vote generally in the election of
directors, voting together as a single class; provided, however, until the
termination of Article II of the Stockholders Agreement, the directors may only
be removed from office as set forth in the Stockholders Agreement.
ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statutes or of
the certificate of incorporation or of these By-Laws, notice is required to be
given to any director or Stockholder, such notice shall be in writing and shall
be given in person or by mail to such director or Stockholder. If mailed, such
notice shall be addressed to such director or Stockholder at his address as it
appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
8
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice president, a secretary and a
treasurer. The board of directors may also choose additional vice presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these By-Laws otherwise provide.
SECTION 2. The board of directors at its first meeting after each
annual meeting of Stockholders shall choose a president, one or more vice
presidents, a secretary and one or more assistant secretaries and a treasurer.
SECTION 3. The board of directors may appoint such other officers
and agents as it may deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
SECTION 4. The salaries of all officers of the corporation shall
be fixed by the board of directors.
SECTION 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the whole board of directors. Any vacancy occurring in any office
of the corporation shall be filled by the board of directors.
THE PRESIDENT
SECTION 6. The president shall be the chief executive officer and
the chief operating officer of the corporation, shall have the power to call
meetings of the board of directors and special meetings of Stockholders, shall
preside (in the absence of the chairman of the board or in the event of his
inability or refusal to act) at all meetings of the Stockholders and the board
of directors, and shall have general charge of the business of the corporation
and shall see to it that all orders and resolutions of the board of directors
are performed and carried into effect. All current reports and other day-to-day
activities in the ordinary course of the corporation's business shall be
channeled by other officers and divisional executives through or to the
president, except as otherwise provided by these By-Laws.
SECTION 7. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
president to some other officer or agent of the corporation. The president
shall vote all shares of capital stock of any other corporation standing in the
name of this corporation, except where the voting thereof shall be delegated by
the board of directors to some other officer or agent of the corporation, and he
shall employ required or appropriate executive, administrative or professional
personnel. In general, he shall perform all duties incident to the offices of
chief
9
executive officer, chief operating officer and president, and such other duties
as may be prescribed from time to time by the board of directors.
VICE PRESIDENT
SECTION 8. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
The board of directors, at its discretion, may designate any vice
president as senior vice president, executive vice president, or any other
designation as it may choose.
THE SECRETARY AND ASSISTANT SECRETARY
SECTION 9. The secretary shall attend all meetings of the board of
directors and all meetings of Stockholders and record all the proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
Stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors or president,
under whose supervision he shall be. He shall have custody of the corporate
seal of the corporation and he, or an assistant secretary, shall have authority
to affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
board of directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
SECTION 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER
AND THE ASSISTANT TREASURERS
SECTION 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuables in the name and to the credit of the corporation in such
depositaries as may be designated by the board of directors.
SECTION 12. The treasurer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements and shall render to the president and the board of directors when
the president or board of directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
10
SECTION 13. If required by the board of directors, the treasurer
shall give the corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession or
under his control belonging to the corporation.
SECTION 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
INTERESTED DIRECTORS AND OFFICERS
SECTION 1. No contract or transaction between the corporation and one
or more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board of directors or a committee thereof which authorized the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(a) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the board of directors or committee,
which in good faith authorizes the contract or transaction by a vote sufficient
for such purpose without counting the vote of the interested director or
directors; or
(b) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the Stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the Stockholders; or
(c) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified by the board of directors or the
Stockholders.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the board of directors or of a committee which authorizes the
contract or transaction.
ARTICLE VII
INDEMNIFICATION
SECTION 1. Right to Indemnification. Each person who was or is a
party or is threatened to be made a party to or is involved in or called as a
witness in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and any appeal
therefrom (hereinafter collectively a "proceeding"), by reason of the fact that
he, or a
11
person of whom he is the legal representative, is, was or had agreed to become a
director, officer, or Delegate (as defined hereinafter) of the corporation,
shall be indemnified and held harmless by the corporation, to the fullest extent
permitted under the DGCL as the same now exists or may hereafter be amended (but
in the case of any such amendment, only to the extent that such amendment
permits the corporation to provide broader indemnification rights than the DGCL
permitted the corporation to provide prior to such amendment), against all
expenses (including, but not limited to, attorneys' fees and expenses of
litigation) reasonably incurred, and all liabilities and losses (including, but
not limited, judgments, fines, excise taxes, ERISA penalties and amounts paid in
settlement) incurred by him in connection with such proceeding; provided that
except as explicitly provided herein, the corporation shall indemnify any such
person seeking indemnity in connection with a proceeding (or part thereof)
initiated by such person only if authorization for such proceeding (or part
thereof) initiated by such person was not denied by a majority of the board of
directors prior to the earlier of (i) 30 days after receipt of notice thereof
from such person or (ii) an Event, as defined hereinafter. For purposes of this
Article VII, a "Delegate" is any director or officer who is or was serving at
the request of the corporation or the board of directors as a director, officer,
trustee, fiduciary, partner, employee or agent of an entity or enterprise other
than the corporation (including, but not limited to, a partnership, joint
venture, trust, other corporation, or an employee benefit plan or trust); and an
"Event" shall be deemed to have occurred if (i) any "Person" (as that term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes (except in a transaction approved in advance by the board
of directors) the beneficial owner (as defined in Rule 13d-3 under such Act),
directly or indirectly, of securities of the corporation representing 25% or
more of the combined voting power of the corporation's then outstanding
securities, provided that the UNR Asbestos-Disease Claims Trust (as defined in
the Plan) holding securities of the corporation pursuant to the Plan shall not
be deemed a Person for purposes of this Article VII, or (ii) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the board of directors of the corporation cease for any reason to
constitute at least a majority thereof unless the election of each director who
was not a director at the beginning of the period was approved by either (x) a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period or (y) the UNR Asbestos-Disease Claims
Trust (as defined in the Plan).
SECTION 2. Expenses. Expenses, including attorneys' fees, incurred
by a person indemnified pursuant to Section 1 of this Article VII in defending
or otherwise being involved in a proceeding shall be paid by the corporation in
advance of the final disposition of such proceeding upon receipt of an
undertaking (the "Undertaking") by or on behalf of such person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation; provided that in connection with a proceeding
(or part thereof) initiated by such person except as provided in Section 3 of
this Article VII for proceedings to enforce a person's right to the advancing of
expenses for either a proceeding not initiated by such person or a proceeding
initiated by such person for which authorization was not denied, the corporation
shall pay said expenses in advance of final disposition only if authorization
for such proceeding (or part thereof) was not denied by a majority of the board
of directors of the corporation. A person to whom expenses are advanced
pursuant hereto shall not be obligated to repay pursuant to the Undertaking
until the final determination of any pending proceeding in a court of competent
jurisdiction, including appeals
12
therefrom, concerning the right of such person to be indemnified or the
obligations of such person to repay pursuant to the Undertaking.
SECTION 3. Protection of Rights. If a claim under Section 1 of this
Article VII is not promptly paid in full by the corporation after a written
claim has been received by the corporation or if expenses pursuant to Section 2
of this Article VII have not been promptly advanced after a written request for
such advancement accompanied by the Undertaking has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim or the advancement of
expenses. If successful, in whole or in part, in such suit such claimant shall
also be entitled to be paid the reasonable expense thereof. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required Undertaking has been tendered to the corporation)
that the claimant has not met the standards of conduct which make it permissible
under the DGCL for the corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the corporation. If
an Event has occurred, a claimant making a claim under Section 1 of this Article
VII or seeking to avoid repayment to the corporation pursuant to an Undertaking
shall have (i) the right, but not the obligation, to have a determination made
by independent legal counsel as to whether indemnification of the claimant is
proper because he has met the applicable standard of conduct required under the
DGCL, and (ii) the right to select as independent legal counsel for such
purposes any law firm designated for such purpose in a resolution adopted by a
majority of the board of directors prior to the Event and in full force and
effect immediately prior to the Event. If a determination has been made in
accordance with the preceding sentence, no determination inconsistent therewith
by other legal counsel, by the board of directors, or by Stockholders shall be
of any force or effect. Neither the failure of the corporation (including its
board of directors independent legal counsel, or its Stockholders) to have made
a determination, if required, prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct required under the DGCL, nor an actual
determination by the corporation (including its board of directors, independent
legal counsel, or its Stockholders) that the claimant had not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.
SECTION 4. Miscellaneous.
(a) Non-Exclusivity of Rights. The rights conferred on any person by
this Article VII shall not be deemed exclusive of any other right which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, By-Law, agreement, vote of Stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity at the request of the corporation while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person. The board of directors shall have the authority,
by resolution, to provide for such indemnification of employees or agents of the
corporation or others and for such other indemnification of directors, officers
or Delegates as it shall deem appropriate.
13
(b) Insurance. The corporation shall have power to purchase and
maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of the corporation, or any person who is or was serving at the
request of the corporation in any other capacity with the corporation, another
corporation, a partnership, a joint venture, trust or other enterprise against
any expenses, liabilities or losses, asserted against him or incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such expenses,
liabilities or losses under the DGCL.
(c) Contractual Nature. The provisions of this Article VII shall be
applicable to all proceedings commenced after its adoption, whether such arise
out of events, acts or omissions which occurred prior or subsequent to such
adoption, and shall continue as to a person who has ceased to be a director,
officer or Delegate and shall inure to the benefit of the heirs, executors and
administrators of such person. This Article VII shall be deemed to be a
contract between the corporation and each person who, at any time that this
Article VII is in effect, serves or agrees to serve in any capacity which
entitles him to indemnification hereunder and any repeal or other modification
of this Article VII or any repeal or modification of the DGCL or any other
applicable law shall not limit any rights of indemnification existing or arising
out of events, acts or omissions occurring prior to such repeal or modification
to enforce this Article VII with regard to acts, omissions or events arising
prior to such repeal or modification.
(d) Severability. If this Article VII or any portion hereof shall be
invalidated or held to be unenforceable on any ground by any court of competent
jurisdiction, the decision of which shall not have been reversed on appeal, such
invalidity or unenforceability shall not affect the other provisions hereof, and
this Article VII shall be construed in all respects as if such invalid or
unenforceable provisions had been omitted therefrom.
ARTICLE VIII
CERTIFICATE OF CAPITAL STOCK
SECTION 1. Every holder of shares of Capital Stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman of the board or the president or a vice president,
and by the treasurer or an assistant treasurer, or the secretary or an assistant
secretary, of the corporation, certifying the number of shares owned by him in
the corporation.
SECTION 2. Any or all of the signatures on the certificate may be
facsimile. In case the chairman of the board, any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
LOST CERTIFICATE
SECTION 3. The board of directors may direct a new certificate or
certificates of Capital Stock to be issued in place of any certificate or
certificates theretofore issued by the corporation, alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that
14
fact by the person claiming the certificate of Capital Stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the board of directors may, in its discretion and as condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the corporation a bond, in
such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
TRANSFER OF CAPITAL STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of
the corporation or a certificate for shares of Capital Stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books; provided, however, that such duty shall be subject
to Federal and state securities and other applicable laws, the certificate of
incorporation, and any legends and stop transfer instructions with respect to
such old certificate.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the
Stockholders entitled to notice of or to vote at any meeting of Stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of Shares or for the purpose of
any other lawful action, the board of directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. A
determination of Stockholders of record entitled to notice of or to vote at a
meeting of Stockholders shall apply to any adjournment of the meting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of Shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of Shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
Share or Shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
DIVISIONS
SECTION 1. The president may from time to time designate one or more
divisions of the corporation as the organizations through which the operations
of the corporation are to be
15
conducted, and may also from time to time prescribe the area of operations for
each division so designated.
SECTION 2. The president shall from time to time appoint individuals
to manage the operations of these divisions and these individuals shall be
designated by such titles as may be appropriate. These titles shall include the
name of the division and may include the word president, vice-president or
manager. Such individuals, however, irrespective of such titles, shall not be,
nor shall they be deemed to be, officers of the corporation. Such division
personnel shall be authorized to have general and active management of the
activities of their respective divisions, all subject to the right of the
president to (a) delegate any specific management power, (b) fix their
compensation, and (c) remove such personnel at any time without further prior
authorization of the board of directors.
ARTICLE X
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the Capital Stock of the corporation,
subject to any additional requirements of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the Capital Stock, subject to the provisions of the certificate of
incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
board of directors from time to time, in its absolute discretion, shall think
proper as a reserve or reserves to meeting contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the board of directors shall think conducive to the
interest of the corporation, and the board of directors may modify or abolish
any such reserve in the manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers, or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall end on December
31.
STOCKHOLDER RECORD
SECTION 5. The corporation shall keep at its principal place of
business in Illinois, or at the office of a transfer agent, an agent for the
Warrants (the "Warrant Agent") or a registrar in
16
Illinois, records of the Stockholders in the corporation, giving the names and
addresses of all Stockholders and the number of Shares held by each.
SEAL
SECTION 6. The corporate seal shall have inscribed thereon the name
of the corporation and the words "CORPORATE SEAL, DELAWARE." The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE XI
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or repealed and new
By-Laws may be adopted by the board of directors at any meeting thereof, or by
the Stockholders; provided, however, the alteration, amendment or repeal of any
provision of these By-Laws during the term of the Stockholders Agreement that
would cause these By-Laws to be inconsistent with, or in violation of, the
Stockholders Agreement may only be done by the Stockholders of the corporation.
Notwithstanding the foregoing, no provision of these By-Laws regarding or
affecting the Warrants or the rights of the Warrantholders can be in any way
altered, amended or repealed, nor can any new By-Law be added which would have
such effect, unless such alteration, amendment, repeal or addition is contained
in a written instrument signed by the corporation, and upon the approval of the
holders of not less than 51% of the Warrants, by the Warrant Agent. On the date
when the Warrants expire or upon the secretary's certification that all Warrants
have been exercised and no Warrants remain outstanding, all provisions in these
By-Laws regarding the Warrants shall be deemed repealed and no longer shall have
any force and effect.
ARTICLE XII
MISCELLANEOUS
SECTION 1. Emergency Directors. The board of directors, by
resolution, may provide for Emergency Directors and appoint or designate the
manner in which Emergency Directors shall be determined. To the extent provided
in said resolution and as provided by Section 110 of the Delaware General
Corporation Law, such Emergency Directors, together with any remaining directors
able to perform their duties, shall have and may exercise the powers of the
board of directors in the management of the business and affairs of the
corporation, and shall thereby be deemed to constitute the board of directors of
the corporation, during any interval commencing when the board of directors
shall be unable to function by reason of vacancies occurring due to death,
incapacity, or catastrophe or other similar emergency conditions and continuing
until such vacancies shall have been filled pursuant to the terms of the
Stockholder Agreement until the termination of Article II thereof, as a result
of which a quorum of the board of directors or a standing committee thereof
cannot readily be convened for action. Such Emergency Directors, including any
remaining directors able to perform their duties, shall, during the term they
are authorized to function as provided herein, have the power to appoint such
temporary officers to fill existing vacancies as the circumstances may require,
to remove officers as the circumstances may require, to authorize the seal of
the corporation to be affixed to all papers which may require it, and to take
any and all other
17
actions as may be required and permitted in conformity with the provisions of
Section 110 of the Delaware General Corporation Law. The Emergency Directors
shall consist of any available members of the board of directors and any other
persons in such order as named by the board of directors on any list as it may
compile from time to time for purposes of appointing such Emergency Directors.
If the board of directors shall have failed to compile any list for purposes of
appointing Emergency Directors, the Emergency Directors shall consist of (in the
order specified below) any available members of the board of directors, the
President, the Vice Presidents (in order of seniority), the Secretary, the
Treasurer, the Assistant Secretaries (in order of seniority), and the Assistant
Treasurers (in order of seniority) of the corporation. The chairman of the
Emergency Directors shall be the highest ranking available person on any list
compiled by the board of directors for purposes of appointing the Emergency
Directors, or, if the board of directors shall have failed to compile any such
list, the highest ranking available person of the following: the Chairman, the
Vice Chairman (or if there be more than one, in order of seniority), the most
senior member of the board of directors, the President, the most senior Vice
President, the Secretary, the Treasurer, the most senior Assistant Secretary,
and the most senior Assistant Treasurer.
SECTION 2. Meetings, Quorum and Vacancies. The Emergency Directors
shall meet as promptly as possible after the occurrence of the event herein
described which would activate their appointment and at such subsequent time or
times as it may designate until a board of directors has been duly elected by
the Stockholders and qualified. A meeting of the Emergency Directors may be
called by any Emergency Director, notice of which meeting need be given only to
such Emergency Directors as it is feasible to reach at the time. Such Emergency
Directors shall make their own rules of procedure except to the extent otherwise
provided by resolution of the board of directors. The Emergency Directors in
attendance at the meeting shall constitute a quorum.
SECTION 3. Powers of Chairman. During such times as the Emergency
Directors shall be required to function pursuant to the provisions hereof, the
chairman of said Emergency Directors shall function as, and have the powers of,
the chief executive officer of the corporation and shall preside at all meetings
of the Stockholders and the Emergency Directors. The chairman of the Emergency
Directors shall have and exercise, subject to the direction of the Emergency
Directors, general charge and supervision over the business and affairs of the
corporation.
SECTION 4. Other By-Law Provisions. To the extent not inconsistent
with the provisions of this Article XII or Section 110 of the Delaware General
Corporation law, all other provisions of these By-Laws shall remain in effect
during the interval in which the Emergency Directors shall be required to
function pursuant to the provisions hereof.
18
EXHIBIT 1.6.1
STOCKHOLDER NAME NUMBER OF XXXX SHARES
---------------- ---------------------
PH, Inc. 3,441,637
Xxxx Capital Fund V, L.P. 934,297
Xxxx Capital Fund V-B, L.P. 2,456,129
BCIP Associates 429,878
BCIP Trust Associates, L.P. 203,212
Xxxx Capital V Mezzanine Fund, L.P. 105,955
BCM Capital Partners, L.P. 76,998
---------
TOTAL 7,648,106
---------
---------
EXHIBIT 1.8.4
NUMBER OF WARRANTS FOR
WARRANTHOLDER NAME XXXX SHARES EXERCISE PRICE
------------------ ---------------------- ---------------
Xxxxxxx National Life 137,251 $100 in the aggregate
Insurance Company 74,668 $100 in the aggregate
BCIP Trust Associates, L.P. 2,515 $3.48 per share
Xxxx Capital V Mezzanine Fund, 147,116 $3.48 per share
L.P.
BCM Capital Partners, L.P. 106,913 $3.48 per share
PH, Inc. 209,913 $3.48 per share
-------
TOTAL 678,376
-------
-------
EXHIBIT 1.9
OPTIONHOLDER NAME NUMBER OF XXXX OPTIONS EXERCISE PRICE
----------------- ---------------------- --------------
Xxxxxxx Xxxxx 13,048 $0.54 per share
Xxxxxx Xxxxx 13,048 $0.54 per share
Xxxxxx Xxxxx 13,048 $0.54 per share
Xxx Xxxxxxx 6,524 $0.54 per share
------
TOTAL 45,668 8,372,163
------
------
LIST OF OMITTED SCHEDULES TO THE MERGER AGREEMENT*
Section 3.1 Corporate Structure
Section 3.2 Authorized Shares, Options and Warrants
Section 3.3 Consents, Waivers & Approvals
Section 3.4 Material Contracts
Section 3.6 Liabilities and Obligations
Section 3.7 Absence of Certain Changes or Events
Section 3.8 Tax and Other Returns
Section 3.9 Employment Arrangements
Section 3.10 Property Encumbrances
Section 3.11 Patents, Trademarks, etc.
Section 3.13 Litigation & Threatened Claims
Section 3.15 Brokers' Fees
Section 3.16 Insurance
Section 3.17 Employee Benefit Plans
Section 3.18 Environmental Matters
Section 3.19 Labor Matters
Section 3.21 Licenses and Permits
Section 4.1 Corporate Structure
Section 4.2 Authorized Shares, Options and Warrants
Section 4.3 Consents, Waivers & Approvals
Section 4.4 Material Contracts
Section 4.6 Liabilities and Obligations
Section 4.7 Absence of Certain Changes or Events
Section 4.8 Tax and Other Returns
Section 4.9 Employment Arrangements
Section 4.10 Property Encumbrances
Section 4.11 Patents, Trademarks, etc.
Section 4.13 Litigation & Threatened Claims
Section 4.15 Brokers' Fees
Section 4.16 Insurance
Section 4.17 Employee Benefit Plans
Section 4.18 Environmental Matters
Section 4.19 Labor Matters
Section 4.21 Licenses and Permits
-----------------------------
* The Company supplementally will furnish copies of any omitted schedule to
the Commission upon its request.
