Exhibit 1
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
Among
BASELL AF,
BIL ACQUISITION HOLDINGS LIMITED
and
LYONDELL CHEMICAL COMPANY
Dated as of July 16, 2007
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER
1.1 The Merger; Effective Time of the Merger..............................1
1.2 Closing...............................................................1
1.3 Effect of the Merger..................................................2
1.4 Certificate of Incorporation and Bylaws...............................2
1.5 Directors and Officers................................................2
1.6 Convertible Debentures................................................2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY AND
MERGER SUB; EXCHANGE OF CERTIFICATES
2.1 Effect of the Merger on Capital Stock..................................3
2.2 Appraisal Rights.......................................................4
2.3 Treatment of Company Options...........................................5
2.4 Treatment of Restricted Company Common Stock...........................5
2.5 Payment for Performance Units..........................................5
2.6 Payment for Securities.................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company..........................9
3.2 Representations and Warranties of Parent and Merger Sub...............28
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business by the Company Pending the Merger.................33
4.2 No Solicitation.......................................................38
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement........................................41
i
5.2 Access to Information.................................................42
5.3 Stockholders' Meeting and Board Recommendation........................43
5.4 Regulatory Approvals..................................................43
5.5 Employee Matters......................................................45
5.6 Indemnification; Directors' and Officers' Insurance...................47
5.7 Agreement to Defend...................................................49
5.8 Public Announcements..................................................49
5.9 Advice of Certain Matters; Control of Business........................50
5.10 Conveyance Taxes......................................................50
5.11 Investigation by Parent and Merger Sub; No Other Representations or
Warranties............................................................50
5.12 Financing.............................................................51
5.13 Reasonable Best Efforts; Notification.................................52
5.14 Rule 16b-3............................................................54
5.15 New Jersey Industrial Site Recovery Act...............................54
5.16 Tender Offer..........................................................55
5.17 Business of Parent....................................................56
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger............56
6.2 Additional Conditions to Obligations of Parent and Merger Sub.........57
6.3 Additional Conditions to Obligations of the Company...................58
ARTICLE VII
TERMINATION
7.1 Termination.............................................................
7.2 Notice of Termination; Effect of Termination..........................60
7.3 Expenses and Other Payments...........................................61
ARTICLE VIII
GENERAL PROVISIONS
8.1 Schedule Definitions...................................................62
8.2 Nonsurvival of Representations, Warranties and Agreements..............62
8.3 Notices................................................................62
8.4 Rules of Construction..................................................63
8.5 Counterparts...........................................................65
8.6 Entire Agreement; No Third Party Beneficiaries.........................65
8.7 Governing Law; Venue; Waiver of Jury Trial.............................65
8.8 No Remedy in Certain Circumstances.....................................66
8.9 Assignment...............................................................
ii
8.10 Affiliate Liability....................................................67
8.11 Specific Performance...................................................67
8.12 Joint Liability........................................................67
8.13 Amendment..............................................................67
8.14 Extension; Waiver......................................................67
iii
INDEX OF DEFINED TERMS
Definition Section
---------- -------
Adverse Recommendation Change..............................................37
Affiliate...................................................................8
Agreement...................................................................1
Alternate Financing........................................................50
Annual Report..............................................................33
Antitrust Authority........................................................42
Antitrust Laws.............................................................42
Antitrust Prohibition......................................................42
Appraisal Shares............................................................4
Book-Entry Shares...........................................................6
Business Day................................................................2
Cap Amount.................................................................47
Certificate of Merger.......................................................1
Certificates................................................................6
Closing.....................................................................1
Closing Date................................................................2
Code.......................................................................19
Company.....................................................................1
Company Affiliate..........................................................64
Company Bylaws.............................................................10
Company Certificate of Incorporation.......................................10
Company Common Stock........................................................3
Company Contracts..........................................................26
Company Convertible Notes...................................................2
Company Disclosure Letter...................................................9
Company Intellectual Property..............................................23
Company Material Adverse Effect............................................10
Company Permits............................................................16
Company Preferred Stock....................................................11
Company Required Vote......................................................39
Company SEC Documents......................................................14
Company Stock Option........................................................5
Company Stock Plans.........................................................5
Company Termination Fee....................................................58
Confidentiality Agreement..................................................40
Continuing Directors.......................................................53
Convertible Note Notice Date................................................3
Corporate Officers.........................................................34
Debt Commitment Letter.....................................................29
Debt Financing.............................................................49
iv
DGCL........................................................................1
Divestiture Action.........................................................42
Effective Time..............................................................1
Employee Benefit Plan......................................................19
Encumbrances...............................................................12
Environmental Laws.........................................................24
ERISA......................................................................19
ERISA Affiliate............................................................19
Exchange Act...............................................................13
Fin 48.....................................................................33
First Eligible Closing Date.................................................2
Foreign Benefit Plan.......................................................19
GAAP.......................................................................14
Governmental Entity........................................................13
Hazardous Materials........................................................24
Indemnified Liabilities....................................................46
Indemnified Persons........................................................45
Indenture...................................................................2
Intellectual Property......................................................23
Interim Period.............................................................53
ISRA.......................................................................52
knowledge..................................................................17
Letter of Transmittal.......................................................6
Marketing Period............................................................2
Material Leased Real Property..............................................26
Material Real Property Lease...............................................27
Merger......................................................................1
Merger Consideration........................................................3
Merger Sub..................................................................1
Minimum Condition..........................................................52
New Commitment Letter......................................................50
New Jersey Property........................................................52
Notice of Adverse Recommendation Change....................................37
Option Consideration........................................................5
Option Surrender Agreement..................................................5
Owned Real Property........................................................26
Parent......................................................................1
Parent Closing Option.......................................................2
Parent Disclosure Letter...................................................27
Parent Financial Statements................................................31
Parent Group...............................................................43
Parent Material Adverse Effect.............................................27
Paying Agent................................................................6
Payment Fund................................................................6
PBGC.......................................................................20
Performance Unit Consideration..............................................5
v
Performance Units...........................................................5
Permitted Encumbrances.....................................................24
Person......................................................................7
Premerger Notification Rules...............................................41
Proxy Statement............................................................13
Quarterly Report...........................................................33
Release....................................................................24
Representatives............................................................40
Right......................................................................12
Rights Agreement...........................................................12
Rights Agreement Amendment.................................................27
Xxxxxxxx-Xxxxx Act.........................................................14
SEC........................................................................14
Section 203................................................................26
Securities Act.............................................................14
Significant Subsidiary.....................................................10
Subsidiary.................................................................11
Superior Proposal..........................................................39
Surviving Corporation.......................................................2
Takeover Proposal..........................................................38
Tax Returns................................................................18
Taxes......................................................................18
Tender Offeror.............................................................52
Terminable Breach..........................................................57
Termination Date...........................................................57
Third Party................................................................39
Title IV Plan..............................................................20
Transaction Agreements.....................................................11
Transactions................................................................1
Voting Debt................................................................11
WARN Act...................................................................22
vi
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 16, 2007 (this
"Agreement"), among Basell AF, a Luxembourg company ("Parent"), BIL Acquisition
Holdings Limited, a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), and Lyondell Chemical Company, a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of the Company, the Parent
and Merger Sub have unanimously approved and declared advisable, this Agreement
and the merger of Merger Sub with and into the Company (the "Merger"), on the
terms and subject to the conditions provided for in this Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the other transactions contemplated by this Agreement (collectively,
the "Transactions") and also to prescribe various conditions to the Merger and
the other Transactions.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties to this Agreement agree as follows:
ARTICLE I
THE MERGER
-----------
1.1 The Merger; Effective Time of the Merger. Upon the terms and
subject to the conditions of this Agreement, at the Effective Time, Merger Sub
shall be merged with and into the Company in accordance with provisions of the
General Corporation Law of the State of Delaware (the "DGCL"). As soon as
practicable on the Closing Date, at the closing of the Merger (the "Closing"),
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger prepared and executed in accordance with the relevant
provisions of the DGCL (the "Certificate of Merger") with the Office of the
Secretary of State of the State of Delaware. The Merger shall become effective
upon the filing of the Certificate of Merger with the Office of the Secretary of
State of the State of Delaware (the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, or
such later time as agreed upon by Parent and the Company and specified in the
Certificate of Merger, the "Effective Time").
1.2 Closing. The Closing shall take place at 9:30 a.m., New York, New
York time, on a date that is two Business Days following the satisfaction or (to
the extent permitted by applicable law) waiver in accordance with this Agreement
of the last to occur of the conditions set forth in ARTICLE VI (other than any
such conditions which by their nature cannot be
1
satisfied until the Closing Date, which shall be required to be so satisfied or
(to the extent permitted by applicable law) waived in accordance with this
Agreement on the Closing Date (such date being, the "First Eligible Closing
Date") at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP in New York,
New York, or such other place as Parent and the Company may agree in writing.
Notwithstanding the foregoing, at the option of the Parent (the "Parent Closing
Option") the Closing may take place on a date that is the earlier of (a) a
Business Day on or after the First Eligible Closing Date during the Marketing
Period to be specified by Parent on no less than five Business Days notice to
the Company and (b) the final day of the Marketing Period. The "Closing Date"
shall mean the date on which the Closing occurs. "Business Day" shall mean a day
other than a day on which banks in the State of New York or the State of
Delaware are authorized or obligated to be closed. "Marketing Period" shall mean
the period commencing on the First Eligible Closing Date and ending on the
earlier to occur of (i) the 20th Business Day thereafter, and (ii) the last
Business Day prior to the Termination Date. If Parent elects to exercise the
Parent Closing Option, then from and after the First Eligible Closing Date, the
conditions in Section 6.2(a), Section 6.2(b), and Section 6.2(d) shall be deemed
to have been satisfied. If the Closing is scheduled to occur on a date other
than a Business Day, then the Closing shall occur on the immediately following
Business Day.
1.3 Effect of the Merger. At the Effective Time, Merger Sub shall be
merged with and into the Company and the separate existence of Merger Sub shall
cease and the Company shall continue its existence under the laws of the State
of Delaware as the surviving corporation (in such capacity, the Company is
sometimes referred to herein as the "Surviving Corporation"). The Merger shall
have the effects set forth in this Agreement and the applicable provisions of
the DGCL.
1.4 Certificate of Incorporation and Bylaws. At the Effective Time and
subject to Section 5.6(b), (a) the Certificate of Incorporation of the Surviving
Corporation shall be amended to read in its entirety in the form of Exhibit A
hereto, and, as so amended, such Certificate of Incorporation shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with its terms and applicable law and (b) the Bylaws of
Merger Sub shall be the Bylaws of the Surviving Corporation until thereafter
amended in accordance with their terms and applicable law, except that, at the
Effective Time, Article I of such Bylaws shall be amended to provide that the
corporate name of the Surviving Corporation is "Lyondell Chemical Company."
1.5 Directors and Officers. From and after the Effective Time, the
directors of Merger Sub shall be the directors of the Surviving Corporation, and
such directors shall serve until their successors have been duly elected or
appointed and qualified or until their death, resignation or removal in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Company, each to hold office until the
earlier of their resignation or removal.
1.6 Convertible Debentures. In accordance with the terms of the
Indenture, dated as of November 25, 2003 (as amended, the "Indenture"), between
Millennium America Inc, as issuer, and The Bank of New York, as trustee, with
respect to the Company's 4% Convertible Senior Debentures (the "Company
Convertible Notes"), the Board of Directors of the Company
2
shall, not less than two (2) Business Days prior to the date fifteen (15) days
prior to anticipated effective date of the Merger (such date, the "Convertible
Note Notice Date"), in accordance with the Indenture, publish a notice on the
Company's website or such other public medium as it may use at that time,
stating, among other things, (i) that the Company is about to merge with another
Person pursuant to which the Company Common Stock will be converted into cash
and (ii) that the Company Convertible Notes may be surrendered for conversion at
any time from and after the Convertible Note Notice Date and ending on and
including the date fifteen (15) days after the Effective Date. At the Effective
Time, Parent shall contribute to the Company an amount in cash necessary to
repurchase all such Company Convertible Notes.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY AND
------------------------------------------------------------
MERGER SUB; EXCHANGE OF CERTIFICATES
------------------------------------
2.1 Effect of the Merger on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any party or the
holder of any of the following securities:
(a) Capital Stock of Merger Sub. Each share of capital stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and shall represent one share of common stock, par value $0.01
per share, of the Surviving Corporation, so that, after the Effective Time,
Parent shall be the holder of all of the issued and outstanding shares of the
Surviving Corporation's common stock.
(b) Capital Stock of the Company.
(i) Subject to the other provisions of this ARTICLE II, each
share of common stock of the Company, par value $1.00 per share ("Company
Common Stock"), issued and outstanding immediately prior to the Effective
Time (excluding any shares of Company Common Stock described in clause (ii)
of this Section 2.1(b) and any Appraisal Shares), including for the
avoidance of doubt any shares of Company Common Stock outstanding
immediately prior to the Effective Time whose prior restrictions have
lapsed pursuant to Section 2.4 shall be converted into the right to receive
$48.00 in cash, without interest (the "Merger Consideration"). All such
shares of Company Common Stock, when so converted, shall cease to be
outstanding and shall automatically be canceled and cease to exist. Each
holder of a certificate previously representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
(ii) All shares of Company Common Stock held by the Company as
treasury shares or by Parent or Merger Sub or by any Subsidiary of Parent,
Merger Sub or the Company, in each case immediately prior to the Effective
Time, shall
3
automatically be canceled and cease to exist as of the Effective Time
without any conversion thereof, and no consideration shall be delivered or
deliverable therefor.
(c) Impact of Stock Splits, Etc. In the event of any change in the
number of shares of Company Common Stock, or securities convertible or
exchangeable into or exercisable for shares of Company Common Stock (including
Company Stock Options), issued and outstanding between the date of this
Agreement and the Effective Time by reason of any stock split, stock dividend,
subdivision, reclassification, recapitalization, combination, exchange of shares
or the like, the Merger Consideration to be paid for each share of Company
Common Stock, the Performance Unit Consideration to be paid for any Performance
Unit, or the Option Consideration to be paid for any Company Stock Option, as
the case may be, as provided in this Agreement shall be appropriately adjusted
to provide the holders of Company Common Stock the same economic effect as
contemplated by this Agreement prior to such action and, as so adjusted, shall,
from and after the date of such event, be the Merger Consideration, Performance
Unit Consideration or the Option Consideration, as the case may be, subject to
further adjustment in accordance with this Section 2.1(c).
2.2 Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time that are held by any record holder (excluding any
shares described in Section 2.1(b)(ii)) who is entitled to demand and properly
demands appraisal of such shares pursuant to, and who complies in all respects
with, the provisions of Section 262 of the DGCL (the "Appraisal Shares") shall
not be converted into the right to receive the Merger Consideration payable
pursuant to Section 2.1(b), but instead, at the Effective Time, the holders of
Appraisal Shares shall become entitled to payment of the fair value of such
shares in accordance with the provisions of Section 262 of the DGCL and at the
Effective Time, all Appraisal Shares shall no longer be outstanding and shall
automatically be canceled and cease to exist and the holder of such shares shall
cease to have any rights with respect thereto, except as set forth in this
Section 2.2. Notwithstanding the foregoing, if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to appraisal under
Section 262 of the DGCL or a court of competent jurisdiction shall determine
that such holder is not entitled to the relief provided by Section 262 of the
DGCL, then the right of such holder to be paid the fair value of such holder's
Appraisal Shares under Section 262 of the DGCL shall be forfeited and cease and
each of such holder's Appraisal Shares shall be deemed to have been converted at
the Effective Time into, and shall have become, the right to receive, without
interest thereon, the Merger Consideration. The Company shall deliver prompt
notice to Parent of any notice received by the Company of intent to demand and
of any demands received by the Company for appraisal of any shares of Company
Common Stock, attempted withdrawals of such demands and any other instruments
served pursuant to the DGCL that are received by the Company for appraisal of
any shares of Company Common Stock, and provide Parent with the opportunity to
participate in and control all negotiations and proceedings with respect to
demands for appraisal under the DGCL. Prior to the Effective Time, the Company
shall not, without the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do any
of the foregoing.
4
2.3 Treatment of Company Options. The Company agrees that it will take
such actions as are necessary to cause at the Effective Time each option for the
purchase of Company Common Stock then outstanding ("Company Stock Option"),
whether or not exercisable, under the Company's Amended and Restated 1999
Incentive Plan, the Company's Stock Option Plan for Non-Employee Directors, the
Millennium Chemicals Inc. Long-Term Stock Incentive Plan and the Millennium
Chemicals Inc. 2001 Omnibus Incentive Compensation Plan (together with the plans
listed in Section 2.4, the "Company Stock Plans"), to become fully exercisable
(if not then fully exercisable), and such options shall immediately thereafter
be cancelled and shall automatically cease to exist, and each holder of Company
Stock Options shall cease to have any rights with respect to such Company Stock
Option except the right to receive the following consideration upon delivery of
an option surrender agreement, which shall be in a form reasonably agreed to by
Parent and the Company prior to the Closing ("Option Surrender Agreement") in
accordance with Section 2.6(b)(i)(B): for each share of Company Common Stock
subject to such Company Stock Option, an amount in cash (without interest) equal
to the excess, if any, of (i) the Merger Consideration payable in respect of a
share of Company Common Stock over (ii) the per share exercise price of such
Company Stock Option (such amount in cash as described above being hereinafter
referred to as the "Option Consideration"). Parent and Merger Sub acknowledge
and agree that the actions described in the preceding sentence shall occur at
the Effective Time without any action on the part of Merger Sub, Parent or any
of their respective stockholders.
2.4 Treatment of Restricted Company Common Stock. Immediately prior to
the Effective Time, the restrictions applicable to each share of restricted
Company Common Stock (including Company Common Stock underlying restricted stock
units) issued or granted pursuant to the Company's Non-Employee Directors
Restricted Stock Plan, the Company's Amended and Restated 1999 Long-Term
Incentive Plan and the Company's 1995 Restricted Stock Plan shall immediately
lapse, and, at the Effective Time, each share of such Company Common Stock,
restricted stock units and phantom stock shall be converted into the right to
receive the Merger Consideration in accordance with the terms hereof.
2.5 Payment for Performance Units. Immediately prior to the Effective
Time, each outstanding grant of performance units or performance shares
("Performance Units") under the Company Stock Plans shall become fully vested
and payable according to the terms of the Company Stock Plan and applicable form
of award agreements and shall be converted into the right to receive from the
Surviving Corporation, for such Performance Unit, an amount (subject to any
withholding tax) in case equal to the sum of (i) the product of (A) the number
of shares of Company Common Stock which the holder thereof would have been
entitled to receive under the terms of the Performance Unit and (B) the Merger
Consideration and (ii) the cash portion, if any, payable with respect to such
Performance Unit (such amount in cash as described above being hereinafter
referred to as the "Performance Unit Consideration").
2.6 Payment for Securities.
(a) Paying Agent; Payment Fund. Prior to the Effective Time, Merger
Sub shall enter into an agreement with an entity designated by Parent and
reasonably acceptable to the Company to act as agent for the holders of Company
Common Stock and holders of the
5
Company Stock Options in connection with the Merger (the "Paying Agent") and to
receive the Merger Consideration, the Option Consideration and the Performance
Unit Consideration to which such holders shall become entitled pursuant to this
ARTICLE II. On the Closing Date and prior to the filing of the Certificate of
Merger, Parent shall deposit, or cause to be deposited, with the Paying Agent,
for the benefit of the holders of shares of Company Common Stock, the Company
Stock Options, and the Performance Units for payment in accordance with this
ARTICLE II through the Paying Agent, cash in an amount sufficient to permit
payment of the aggregate Merger Consideration payable pursuant to Section 2.1,
the aggregate Option Consideration payable pursuant to Section 2.3, and the
aggregate Performance Unit Consideration payable pursuant to Section 2.5 (the
"Payment Fund"). The Paying Agent shall, pursuant to irrevocable instructions,
deliver the Merger Consideration payable pursuant to Section 2.1, the Option
Consideration payable pursuant to Section 2.3, and the Performance Unit
Consideration payable pursuant to Section 2.5 in each case, out of the Payment
Fund. The Payment Fund shall be invested by the Paying Agent, as directed by
Parent, in short-term obligations of the United States of America with
maturities of no more than 30 days or guaranteed by the United States of America
and backed by the full faith and credit of the United States of America or in
commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors
Service, Inc. or Standard & Poor's Corporation, respectively; provided, however,
that any interest or other income resulting from the investment of the Payment
Fund shall be solely for the account of Parent or the Surviving Corporation. If
for any reason (including losses) the Payment Fund is inadequate to pay the
amounts to which holders of shares of Company Common Stock, Company Stock
Options and the Performance Units shall be entitled under Section 2.1, Section
2.3 and Section 2.5, respectively, Parent shall take all steps necessary to
enable or cause the Surviving Corporation promptly to deposit additional cash
with the Paying Agent sufficient to make all payments required under this
Agreement, and Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Payment Fund shall not be used for any other purpose.
The Surviving Corporation shall pay all charges and expenses of the Paying Agent
in connection with the exchange of shares for the Merger Consideration and the
cancellation of Company Stock Options for the Option Consideration and the
calculation and payment of the Performance Unit Consideration. Any interest or
other income resulting from Investment of the Payment Fund shall become part of
the Payment Fund.
(b) Payment Procedures.
(i) As soon as practicable after the Effective Time, Parent
shall cause the Paying Agent to deliver:
(A) to each record holder, as of immediately prior to the
Effective Time, of (1) an outstanding certificate or certificates which
immediately prior to the Effective Time represented shares of Company
Common Stock (the "Certificates") or (2) shares of Company Common Stock
represented by book-entry ("Book-Entry Shares"), a customary letter of
transmittal ("Letter of Transmittal") (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
6
Certificates to the Paying Agent or, in the case of Book-Entry Shares,
upon adherence to the procedures set forth in the Letter of
Transmittal, and which shall be in a customary form and agreed to by
Parent and the Company prior to the Closing) and instructions for use
in effecting the surrender of the Certificates or, in the case of
Book-Entry Shares, the surrender of such shares, for payment of the
Merger Consideration set forth in Section 2.1(b)(i);
(B) to each holder of a Company Stock Option as of the
Effective Time (1) an Option Surrender Agreement, and (2) instructions
for use in effecting the surrender of such Company Stock Option in
exchange for the Option Consideration; and
(C) to each holder of a Performance Unit as of the Effective
Time a notice setting forth such holders' rights pursuant to this
Agreement.
(ii) Upon surrender to the Paying Agent of a Certificate or
Book-Entry Shares, together with the Letter of Transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such
other customary documents as may be reasonably required by the Surviving
Corporation or the Paying Agent, the holder of such Certificate or
Book-Entry Shares shall be entitled to receive in exchange therefor the
Merger Consideration for each share formerly represented by such
Certificate or Book-Entry Shares and such Certificate or book-entry shall
then be canceled. No interest shall be paid or accrued for the benefit of
holders of the Certificates or Book-Entry Shares on the Merger
Consideration payable in respect of the Certificates or Book-Entry Shares.
If payment of the Merger Consideration is to be made to an individual,
partnership, limited liability company, corporation, joint stock company,
trust, estate, joint venture, Governmental Entity, association or
unincorporated organization, or any other form of business or professional
entity ("Person"), other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the Person requesting such payment
shall have paid any transfer and other Taxes required by reason of the
payment of the Merger Consideration to a Person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such Taxes either have been
paid or are not applicable. Until surrendered as contemplated by this
Section 2.6(b)(ii), each Certificate and each Book-Entry Share shall,
subject to Section 2.2, be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration as contemplated by this ARTICLE II.
(iii) Upon cancellation of a Company Stock Option, together
with the delivery of the Option Surrender Agreement, duly executed, and any
other documents reasonably required by the Surviving Corporation or the
Paying Agent, the holder of the Company Stock Option shall be entitled to
receive in exchange therefor the
amount of cash which such holder has the right to receive pursuant to the
provisions of Section 2.3.
(c) Termination of Rights.
(i) All Merger Consideration paid upon the surrender of and in
exchange for shares of Company Common Stock in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of all rights
pertaining to such Company Common Stock. After the close of business on the
date of the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates or
Book-Entry Shares (other than certificates evidencing shares described in
clause (ii) of Section 2.1(b)) are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged for the Merger
Consideration payable in respect of the shares of Company Common Stock
previously represented by such Certificates as provided in this ARTICLE II.
(ii) The cancellation of a Company Stock Option in exchange for
the Option Consideration shall be deemed a release of any and all rights
the holder had or may have had in respect of such Company Stock Option.
Prior to the Effective Time, the Company shall take all action necessary
(including causing the Board of Directors of the Company (or any committees
thereof) to take such actions as are allowed by the Company Stock Plan) to
ensure that, following the Effective Time, without any action required by
any holder of Company Options, (A) no participant in the Company Stock Plan
or any other plans, programs or arrangements of the Company shall have any
right thereunder to acquire or otherwise receive any capital stock of, or
other equity or similar interests in, the Company, the Surviving
Corporation or any Affiliate (as such term is defined in Rule 405 under the
Securities Act, an "Affiliate") thereof and (B) the Company Stock Options
may be cancelled in exchange for the Option Consideration pursuant to the
terms of this Agreement.
(iii) The payment of the Performance Unit Consideration shall
be deemed a release of any and all rights the holder had or may have had in
respect of such Performance Unit.
(d) Termination of Payment Fund. Any portion of the Payment Fund
(including any interest thereon) that remains undistributed to the former
stockholders or optionholders of the Company on the 365th day after the date on
which the Effective Time occurs shall be delivered to Parent or the Surviving
Corporation, upon demand by either Parent or the Surviving Corporation, and any
former common stockholders or optionholders of the Company who have not
theretofore received the Merger Consideration or Option Consideration
8
to which they are entitled under this ARTICLE II shall thereafter look only to
the Surviving Corporation and Parent for payment of their claim for such
amounts.
(e) No Liability. None of the Surviving Corporation, Parent, Merger
Sub or the Paying Agent shall be liable to any holder of Company Common Stock or
Company Stock Option for any amount of Merger Consideration or Option
Consideration, as applicable, delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificate,
Book-Entry Share or Company Stock Option has not been surrendered prior to the
time that is immediately prior to the time at which Merger Consideration or
Option Consideration in respect of such Certificate, Book-Entry Share or Company
Stock Option would otherwise escheat to or become the property of any
Governmental Entity, any such shares, cash, dividends or distributions in
respect of such Certificate, Book-Entry Share or Company Stock Option shall, to
the extent permitted by applicable law, become the property of Parent, free and
clear of all claims or interest of any Person previously entitled thereto.
(f) Lost, Stolen, or Destroyed Certificates. If any Certificate
(other than a Certificate evidencing shares described in clause (ii) of Section
2.1(b)) shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if reasonably required by Parent or the Surviving
Corporation, the posting by such Person of a bond in such reasonable amount as
Parent or the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
amount of Merger Consideration payable in respect of the number of shares of
Company Common Stock formerly represented by such Certificate pursuant to the
provisions of this ARTICLE II.
(g) Withholding Taxes. Notwithstanding anything in this Agreement
to the contrary, Parent, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock, Company Stock Options or Performance Units
pursuant to this Agreement any amount required (or reasonably believed to be
required) to be deducted and withheld with respect to the making of such payment
under applicable Tax laws. To the extent that amounts are so properly withheld
by the Paying Agent, the Surviving Corporation or Parent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock, Company Stock
Options or Performance Units, as applicable, in respect of which such deduction
and withholding was made by the Paying Agent, the Surviving Corporation or
Parent, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Representations and Warranties of the Company. Except as set forth
on the disclosure letter dated as of the date of this Agreement and delivered by
the Company to
9
Parent and Merger Sub on or prior to the date of this Agreement (the "Company
Disclosure Letter") and except as disclosed in the Company SEC Documents filed
with the SEC prior to the date hereof (other than disclosures in "Disclosure
Regarding Forward-Looking Statements" and "Risk Factors" sections of such
Company SEC Documents and only to the extent reasonably apparent in the Company
SEC Document that such disclosed item is an event, item or occurrence that
relates to the subject matter of, or would constitute a breach of a
representation or warranty set forth in this Section 3.1), the Company
represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate,
partnership or limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
each of the Company and its Subsidiaries is duly qualified and in good standing
to do business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure to qualify or be
in good standing would not be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect (as defined below). The Company has
heretofore made available to Parent (for purposes of Article III, items that
have been publicly filed by the Company pursuant to the SEC's "XXXXX system"
shall be deemed to have been furnished and made available) complete and correct
copies of its Amended and Restated Certificate of Incorporation (the "Company
Certificate of Incorporation"), and its Amended and Restated Bylaws (the
"Company Bylaws") as well as the similar organizational documents of each
Significant Subsidiary, in each case as of the date hereof. The respective
jurisdictions of incorporation or organization of each Significant Subsidiary of
the Company are identified on Schedule 3.1(a) of the Company Disclosure Letter.
The Company Certificate of Incorporation and Company Bylaws, and the charter and
bylaws (or equivalent organizational documents), each as amended to date, of
each of the Company's Subsidiaries are in full force and effect, and neither the
Board of Directors of the Company nor, to the knowledge of the Company, any
stockholder of the Company has taken any action to amend the Company Certificate
of Incorporation or the Company Bylaws in any respect. As used in this
Agreement: (i) "Significant Subsidiary" means Millennium Chemicals Inc.,
Equistar Chemicals, LP and Houston Refining LP; (ii) a "Company Material Adverse
Effect" means any occurrence, condition, change, event or development, or series
of any of the foregoing, that, individually or in the aggregate, (i) is or is
likely to be materially adverse to the properties, facilities, assets,
liabilities, financial condition, business or results of operations of the
Company and its Subsidiaries, taken as a whole (taking into account the effects
of any material disruption of production at a significant facility of the
Company for an extended period of time), or (ii) materially impairs, prevents or
delays the ability of the Company to consummate the transactions contemplated
hereby this Agreement or to perform its obligations hereunder; provided,
however, that in no event shall any of the following constitute a Company
Material Adverse Effect: (A) any occurrence, condition, change, event or effect
resulting from or relating to changes in general economic or financial market
conditions, including fluctuations in currency exchange rates; (B) any
occurrence, condition, change, event or effect that affects the chemical
industry or refining industry generally (including changes in commodity prices,
general market prices and
10
regulatory changes affecting the chemical industry or refining industry
generally), (C) the outbreak or escalation of hostilities involving the United
States, the declaration by the United States of a national emergency or war or
the occurrence of any natural disasters and acts of terrorism (but not any such
event resulting in any damage or destruction to or loss of the Company's or its
Subsidiaries' physical properties to the extent such change or effect would
otherwise constitute a Company Material Adverse Effect); (D) any changes
resulting from the consummation of the Transactions contemplated by, or the
announcement of the execution of this Agreement, (E) change in GAAP, or in the
interpretation thereof, as imposed upon the Company, its Subsidiaries or their
respective businesses, (F) any change in law or regulation, or in the
interpretation thereof, (G) the downgrade in rating of any debt securities of
the Company or any of its Subsidiaries by Standard & Poor's Rating Group,
Xxxxx'x Investor Services, Inc. or Fitch Ratings, (H) changes in the price or
trading volume of the Company's stock, (I) any legal proceedings made or brought
by any of the current or former stockholders of the Company (on their own behalf
or on behalf of the Company) arising out of or related to this Agreement or any
of the Transactions, (J) any failure by the Company to meet projections of
revenues or earnings for a period ending after the date of this Agreement or (K)
any occurrence, condition, change, event or effect resulting from compliance by
the Company and its Subsidiaries with the terms of this Agreement and each other
agreement to be executed and delivered in connection herewith and therewith
(collectively, the "Transaction Agreements"); except with respect to (A) - (C)
and (F), in the event, and only to the extent, that such occurrence, condition,
change, event or effect has had a disproportionate effect on the Company and its
Subsidiaries, taken as a whole, as compared to other Persons engaged in the
chemical industry or refining industry in the same geographic regions and
segments as the Company and its Subsidiaries and except with respect to (G), (H)
and (J), provided that nothing in any such clauses shall prevent a determination
that any underlying causes of such changes resulted in a Company Material
Adverse Effect. "Subsidiary" means, with respect to any party, any corporation,
partnership, limited liability company or other legal entity or organization,
whether incorporated or unincorporated, of which: (1) such party or any other
Subsidiary of such party is a general partner or a managing member or has
similar authority; or (2) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation, partnership, limited liability company or other legal entity or
organization is, directly or indirectly, owned or controlled by such party or by
any one or more of its Subsidiaries.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of the Company consists of (i) 500,000,000 shares of
Company Common Stock and (ii) 80,000,000 shares of preferred stock, par value
$0.01 per share ("Company Preferred Stock"). At the close of business on June
30, 2007, the following were issued and outstanding: (A) 253,448,132 shares of
Company Common Stock (excluding 739,186 treasury shares), (B) no shares of
Company Preferred Stock, (C) 4,271,839 Company Stock Options pursuant to the
Company Stock Plans, (D) 267,103 shares of restricted Company Common Stock
pursuant to the Company Stock Plans; (E) 2,460,851 performance units (at target)
issued pursuant to the Company Stock Plans, and (F) 2,625,752 shares
representing phantom stock and phantom stock option grants under the Company
Stock Plans. Other than the Company Convertible Notes, no Voting Debt (as
defined below) was issued and outstanding. The term "Voting Debt" means bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into
11
securities having the right to vote) on any matters on which stockholders of the
Company may vote. All outstanding shares of Company Common Stock and all shares
of stock of or interests in the Company's Subsidiaries are validly issued, fully
paid and non-assessable, to the extent such stock or interest can be fully paid
and non-assessable, and are not subject to preemptive or similar rights.
Schedule 3.1(b) of the Company Disclosure Letter lists, in the aggregate, as of
June 29, 2007, all outstanding options, restricted stock (including restricted
stock units) and phantom stock, warrants or other rights to subscribe for,
purchase or acquire from the Company or any of its Subsidiaries any capital
stock of the Company or securities convertible into or exchangeable or
exercisable for capital stock of the Company (and the exercise, conversion,
purchase, exchange or other similar price thereof). Except as set forth on
Schedule 3.1(b) of the Company Disclosure Letter, all outstanding shares of
capital stock of the Subsidiaries of the Company are owned by the Company, or a
direct or indirect wholly-owned Subsidiary of the Company and all such shares of
Company Subsidiaries are owned by the Company free and clear of all liens,
pledges, charges, encumbrances, claims, mortgages, deeds of trust, security
interests, restrictions, rights of first refusal, defects in title, or other
burdens, options or encumbrances of any kind ("Encumbrances") other than
Permitted Encumbrances. Except as set forth in this Section 3.1(b) and except
for the Company Convertible Notes, changes since June 30, 2007 resulting from
the exercise of stock options outstanding at such date, stock grants or other
awards granted in accordance with Section 4.1(b) and the Rights (the "Rights")
attached to each issued and outstanding share of Company Common Stock and
distributed pursuant to the Rights Agreement of the Company dated as of December
8, 1995, as amended (the "Rights Agreement") there are outstanding: (1) no
shares of capital stock, Voting Debt or other voting securities of the Company;
(2) no securities of the Company or any Subsidiary of the Company convertible
into or exchangeable or exercisable for shares of capital stock, Voting Debt or
other voting securities of the Company or any Subsidiary of the Company, and (3)
no options, restricted stock (including restricted stock units) and phantom
stock, warrants, calls, rights (including preemptive or similar rights),
commitments or agreements to which the Company or any Subsidiary of the Company
is a party or by which it is bound in any case obligating the Company or any
Subsidiary of the Company to issue, deliver, sell, purchase, redeem or acquire,
or cause to be issued, delivered, sold, purchased, redeemed or acquired,
additional shares of capital stock or any Voting Debt or other voting securities
of the Company or any Subsidiary of the Company (including rights of first
refusal), or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. Except as set forth on Schedule 3.1(b) of the Company Disclosure
Letter, there are not any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound relating to the voting of any shares of the capital stock of the Company.
The Company has no (x) material joint venture or other similar material equity
interests in any Person or (y) obligations, whether contingent or otherwise, to
consummate any material additional investment (in the form of a loan, capital
contribution or otherwise) in any Person other than its Subsidiaries and its
joint ventures listed on Schedule 3.1(b) of the Company Disclosure Letter.
(c) Authority; No Violations; Consents and Approvals.
12
(i) The Company has all requisite corporate power and authority
to execute and deliver this Agreement and, subject, with respect to
consummation of the Merger, to adoption of this Agreement by the
stockholders of the Company in accordance with the DGCL and the Company
Certificate of Incorporation and Company Bylaws, to consummate the
Transactions. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the Transactions have been duly and
validly authorized by all necessary corporate action on the part of the
Company, subject, with respect to consummation of the Merger, to adoption
of this Agreement by the stockholders of the Company in accordance with the
DGCL and the Company Certificate of Incorporation and Company Bylaws. As of
the date of this Agreement, the Board of Directors of the Company has
determined by unanimous vote of those directors present at the meeting that
the transactions contemplated hereby (including the Merger) are advisable
and in the best interests of the Company stockholders and have determined
to recommend that the Company stockholders adopt this Agreement. This
Agreement has been duly executed and delivered by the Company and, assuming
this Agreement constitutes the valid and binding obligation of Parent and
Merger Sub, constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not, and
the consummation of the Transactions will not, result in any violation of,
or default (with or without notice or lapse of time, or both) under, or
acceleration of any material obligation or the loss of a material benefit
under, give rise to any right of termination, cancellation or amendment of,
or result in the creation of any Encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under, any provision of
(A) the Company Certificate of Incorporation or Company Bylaws or any
provision of the comparable charter or organizational documents of any of
the Company's Subsidiaries, (B) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, permit, franchise or license
to which the Company or any of its Subsidiaries is a party or by which it
or any of its Subsidiaries or its or their respective properties or assets
are bound, or (C) assuming the consents, approvals, orders, authorizations,
registrations, filings or permits referred to in Section 3.1(c)(iii) are
duly and timely obtained or made and the adoption of this Agreement by the
stockholders of the Company has been obtained, any judgment, order, decree,
statute, law, ordinance, rule or regulation of any court, governmental,
regulatory or administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity")
applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets; other than, in the case of each of (A) and
(B), (1) any such violations, defaults, acceleration, losses, rights, or
Encumbrances that would not be reasonably likely to have a Company Material
Adverse Effect and (2) any such violations, defaults, acceleration, losses,
rights or Encumbrances resulting from the Debt Financing.
13
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from, any Governmental
Entity, is required to be obtained or made by the Company or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
Transactions, except for: (A) any such consents, approvals, orders,
authorizations, registrations, declarations, filings or permits required in
connection with the Debt Financing; (B) the filing with the SEC of (1) a
proxy statement in preliminary and definitive form relating to the meeting
of the stockholders of the Company to be held in connection with adoption
of this Agreement (the "Proxy Statement") and (2) such reports under
Section 13(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and such other compliance with the Exchange Act and the
rules and regulations thereunder, as may be required in --- connection with
this Agreement and the Transactions; (C) the filing of the Certificate of
Merger with the Office of the Secretary of State of the State of Delaware;
(D) filings required by the New York Stock Exchange, Inc.; (E) such filings
and approvals as may be required by any applicable state securities or
"blue sky" or takeover laws; (F) such filings and approvals as may be
required by any foreign premerger notification or competition, securities,
corporate or other law, rule or regulation; and (G) any such consent,
approval, order, authorization, registration, filing, or permit that the
failure to obtain or make would not be reasonably likely to have a Company
Material Adverse Effect.
(d) SEC Documents.
(i) The Company has made available to Parent a true and
complete copy of each report, statement, schedule, prospectus, registration
statement and definitive proxy statement filed by the Company with the
Securities and Exchange Commission (the "SEC") (the "Company SEC
Documents"). The Company SEC Documents, including all forms, reports and
documents filed by the Company with the SEC after the date hereof and prior
to the Effective Time, (i) were and, in the case of the Company SEC
Documents filed after the date hereof, will be, prepared in accordance with
the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002 and
the rules and regulations promulgated thereunder, or any successor statute,
rules or regulations thereto (the "Xxxxxxxx-Xxxxx Act"), as the case may
be, and the rules and regulations thereunder, and (ii) did not at the time
they were filed (if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), and in the case of such
forms, reports and documents filed by the Company after the date of this
Agreement, will not as of the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in such Company SEC Document or necessary in order to make the
statements in such Company SEC Document, in light of the circumstances
under which they were and will be made, not misleading. Except as set forth
in Schedule 3.1(d) of the Company Disclosure Letter, none of the
Subsidiaries of the Company is required to file any forms, reports,
schedules, statements or other documents with the SEC. To the knowledge of
the Company, none of the
14
Company SEC Documents is the subject of ongoing SEC review or outstanding
SEC comment.
(ii) Each of the consolidated financial statements contained in
the Company SEC Documents (including in each case all notes and schedules
thereto), including any Company SEC Documents filed after the date of this
Agreement, complied or will comply, as of its respective date, in all
material respects with all applicable accounting requirements and the rules
and regulations of the SEC with respect thereto, was or will be prepared in
accordance with accounting principles generally accepted in the United
States ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the
SEC) and fairly presented or will fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as
of their respective dates and the results of operations and the cash flows
of the Company and its consolidated Subsidiaries for the periods presented
therein, except that any unaudited interim financial statements do not
include all of the information and notes required by GAAP for complete
financial statements and are subject to normal and recurring year-end
adjustments.
(iii) The chief executive officer and chief financial officer
of the Company have made all certifications required by Sections 302 and
906 of the Xxxxxxxx-Xxxxx Act, and statements contained in such
certificates are complete and correct, and the Company is otherwise in
material compliance with all applicable provisions of the Xxxxxxxx-Xxxxx
Act.
(iv) The Company has disclosed, based on its most recent
evaluation, to the Company's auditors and the audit committee of the Board
of Directors of the Company (i) any significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting, which are reasonably likely to adversely affect in any material
respect the Company's ability to record, process, summarize and report its
consolidated financial information and; (ii) any fraud known to management,
whether or not material that involved management or other employees who
have a significant role in the Company's internal controls over financial
reporting. As of the date hereof, the Company has not received any
complaint or allegation in writing since January 1, 2005, regarding
accounting, internal accounting controls, or auditing matters, including
any such complaint regarding improper accounting or auditing matters. The
Company and its consolidated Subsidiaries have established and maintain
disclosure controls and procedures as defined in Rule13a-15(e) under the
Exchange Act; such disclosures controls and procedures are reasonably
designed to ensure that material information relating to the Company and
its consolidated Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of the Company's and its
consolidated Subsidiaries' filings with the SEC and other public disclosure
documents; and, as of the date hereof, to the knowledge of the Company the
Company has not identified any material weaknesses in the design or
operation of internal control over
15
financial reporting. As of the date of this Agreement, to the knowledge of
the Company, there is no reason to believe that its chief executive officer
and chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted
pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act when next due.
(e) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement will, at the date mailed to stockholders of the Company and at the
time of the meeting of such stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement in the form mailed to stockholders will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, except that no representation is made by
the Company with respect to statements made therein based on information
supplied by Parent or Merger Sub or their agents or representatives specifically
for inclusion or incorporation by reference therein.
(f) Absence of Certain Changes or Events.
(i) Since December 31, 2006 there (i) has not been any Company
Material Adverse Effect or any event, change, effect or development that,
individually or in the aggregate, would be reasonably likely to have a
Company Material Adverse Effect and (ii) except as specifically
contemplated or disclosed in this Agreement, neither the Company nor any of
its Subsidiaries has taken any action through the date of this Agreement
that, if taken during the period of this Agreement through the Effective
Time, would require the consent of Parent under Sections 4.1(d), (e), (f),
(g) or (l).
(ii) Since December 31, 2006, the Company and its Subsidiaries
have conducted their business in the ordinary course of business consistent
with past practice in all material respects.
(g) No Undisclosed Material Liabilities. There are no liabilities
of the Company or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, other
than: (i) liabilities adequately provided for on the balance sheet of the
Company dated as of March 31, 2007 (including the notes thereto) contained in
the Quarterly Report; (ii) liabilities incurred in the ordinary course of
business subsequent to March 31, 2007; (iii) liabilities for fees and expenses
incurred in connection with the Transactions; (iv) liabilities not required to
be presented on the face of an unaudited interim balance sheet prepared in
accordance with GAAP; (v) liabilities incurred as permitted under Section
4.1(l); and (vi) liabilities that, individually and in the aggregate, have not
had and would not reasonably be expected to have a Company Material Adverse
Effect.
16
(h) No Default. Neither the Company nor any of its Subsidiaries is
in default or violation (and no event has occurred nor is any condition present
which, with notice or the lapse of time or both, would constitute a default or
violation) of any term, condition or provision of (i) the Company Certificate of
Incorporation or Company Bylaws or the comparable charter or organizational
documents of any of the Company's Significant Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
permit, franchise or license to which the Company or any of its Subsidiaries is
now a party or by which the Company or any of its Subsidiaries or any of their
respective properties or assets is bound or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation of any Governmental Entity
applicable to the Company or any of its Subsidiaries, except in the case of (ii)
and (iii) for defaults or violations which would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
(i) Compliance with Applicable Laws. The Company and its
Subsidiaries hold all authorizations, permits, licenses, easements, variances,
exemptions, orders, franchises, and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
Permits"), and all such Company Permits are valid and in full force and effect,
except where the failure so to hold or the suspension or cancellation of, or the
failure to be valid or in full force and effect of, any of the Company Permits
would not be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so to
comply would not be reasonably likely to have, individually or in the aggregate,
a Company Material Adverse Effect. The businesses of the Company and its
Subsidiaries are not currently being conducted, and at no time during the past
three years have been conducted, in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations which would not be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect. No investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than those the outcome of which
would not be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect. For purposes of this Agreement, "knowledge" of
Parent means the actual knowledge after reasonable inquiry of the executive
officers of Parent (including partners, officers, associates and other employees
of any controlling stockholder of Parent who have worked on this Agreement and
the Transactions) and any other officer of Parent having primary responsibility
for the matter in question; and "knowledge" of the Company means the actual
knowledge after reasonable inquiry of the employees of the Company identified on
Schedule 3.1(i) of the Company Disclosure Letter.
(j) Litigation. As of the date of this Agreement, except for such
matters as would not be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect, there is no (A) suit, action,
investigation or proceeding pending, or, to the knowledge of the Company,
threatened against or affecting the property or any asset of the Company or any
of its Subsidiaries or (B) judgment, decree, injunction, ruling or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries. To the knowledge of the Company, as of the date hereof, no officer
or director of the Company is
17
a defendant in any material suit, claim, action, proceeding, arbitration or
mediation in connection with his or her status as an officer or director of the
Company or any Subsidiary of the Company.
(k) Taxes.
(i) All material Tax Returns required to be filed by or with
respect to the Company and each of its Subsidiaries have been timely filed
(taking into account any extension of time in which to file) and in the
manner prescribed by law in all material respects. All such Tax Returns are
in all material respects true, correct and complete, and all material Taxes
owed by the Company and its Subsidiaries, whether or not shown on any Tax
Return (including all withholding and payroll Taxes), have been paid. For
purposes of this Section 3.1(k), "material" shall mean "a material adverse
effect on the Tax position of the Company and its Subsidiaries taken as a
whole".
(ii) None of the Company or any of its Subsidiaries has
received a written notice of any claim by any Tax Authority in any
jurisdiction other than in which it has filed Tax Returns that the Company
or any of its Subsidiaries are or may be subject to taxation by that
jurisdiction for a material amount of tax.
(iii) As of the date of this Agreement, no adjustment
reasonably likely to have a material impact on the Company or its
Subsidiaries relating to any Tax Return has been proposed or formally
asserted by any Tax Authority against the Company or any of its
Subsidiaries.
(iv) There are no material liens or other encumbrances with
respect to Taxes upon any of the assets or properties of the Company or any
of its Subsidiaries, other than with respect to Taxes not yet due and
payable or being contested in good faith.
(v) Neither the Company nor any of its Subsidiaries is a party
to or bound by, or has any obligation under, any material Tax sharing
agreement or similar contract or arrangement with a person other than the
Company or another Subsidiary. Neither the Company nor any of its
Subsidiaries has been a member of an affiliated group filing a
consolidated, combined, or unitary income Tax Return (other than a group
the common parent of which was the Company) that would result in any
material liability (after taking into account third-party indemnities) for
the Taxes of any person (other than the Company and such Subsidiary) under
Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.
18
(vi) Neither the Company nor any of its Subsidiaries has agreed
to, or is required to, make any material adjustments under Section 481(a)
or Section 263A of the Code or any comparable provision under state or
foreign Tax laws by reason of a change in accounting method or otherwise
that would be effective for any period after the Closing Date.
(vii) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code in the two years prior to the date of this
Agreement or in a distribution which could otherwise constitute part of a
"plan" or "series of related transaction" (within the meaning of Section
355(e) of the Code) in conjunction with the Merger.
(viii) Neither the Company nor any of its Subsidiaries has
"participated" in a "listed transaction". The term "listed transaction is
defined in Section 1.6011-4 of the United States Treasury Regulations
promulgated under the Code.
(ix) To its knowledge, the Company is not, nor has it ever
been, a United States Real Property Holding Corporation within the meaning
of Section 897 of the Code.
(x) For purposes of this Agreement, "Taxes" means any taxes,
charges, levies, interest, penalties, additions to tax or other assessments
of any kind, including, but not limited to, income, corporate, capital,
excise, property, sales, use, turnover, value added and franchise taxes,
deductions, withholdings and custom duties, imposed by any Governmental
Entity, including any such amounts of another Person as a result of being a
member of a combined, consolidated, unitary, fiscal unity, affiliated or
similar tax group, by contract, as a transferee or otherwise; and "Tax
Returns" means any return, report, statement, information return or other
document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements
relating to any Taxes.
(l) Compensation; Benefits.
(i) Set forth on Schedule 3.1(l)(i) of the Company Disclosure
Letter is a list, as of the date hereof, of all Employee Benefit Plans and
"Foreign Benefit Plans" identified as such. "Foreign Benefit Plan" shall
mean any material pension or other similar employee benefit or retirement
plan, program, policy, arrangement or agreement (other than any plan,
program, policy, arrangement or agreement mandated under applicable law)
that are maintained or contributed to by the Company or its any of its
19
Subsidiaries with respect to current and former employees employed or
engaged in service to the Company or its Subsidiaries outside the United
States. "Employee Benefit Plan" means any material "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and whether or not subject to
ERISA, any material employment, termination or severance agreement covering
officers of the Company, and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, equity-based, severance, retention, change in control,
profit sharing, retirement, welfare, disability, death benefit,
hospitalization or insurance plan, and any other material plan, agreement,
or program providing compensation or benefits to any current or former
employee, director or independent contractor of the Company or any
Subsidiary of the Company or any other entity required to be aggregated
with the Company under Section 414 of the United States Internal Revenue
Code of 1986, as amended (the "Code"), or any trade or business, whether or
not incorporated that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA (an "ERISA
Affiliate") maintained, contributed to, or required to be contributed to by
the Company or any ERISA Affiliate. True, correct and complete copies of
each of the Employee Benefit Plans, any related trust agreements, insurance
contracts and other funding documents, in each case as of the date hereof,
have been furnished or made available to Parent or its representatives or
will be made available within 30 days of the date of this Agreement, along
with the most recent actuarial valuation reports and financial statements
or accounts, the most recent summary plan description and summary of
material modifications and, for Employee Benefit Plans and the Foreign
Benefit Plans intended to be qualified under Section 401(a) of the Code,
the most recent determination letter, if any.
(ii) Except for such failures that would not be reasonably
likely to have, individually or in the aggregate, a Company Material
Adverse Effect:
(A) Each Employee Benefit Plan has been maintained in
compliance with its terms and with all applicable laws, including, but
not limited to ERISA and the Code.
(B) As of the date of this Agreement, there are no
actions, suits or claims pending (other than routine claims for
benefits) or, to the knowledge of the Company, threatened against, or
with respect to, any of the Employee Benefit Plans and Foreign Benefit
Plans. Set forth on Schedule 3.1(l) of the Company Disclosure Letter is
a list, as of the date of this Agreement, of all Employee Benefit Plans
that the Company or any ERISA Affiliate participates in, contributes to
or is otherwise liable (other than for premiums to the Pension Benefit
Guaranty Corporation ("PBGC")) that are subject to Section 412 of the
Code, Section 302 of ERISA or Title IV of ERISA. No "reportable event"
within the meaning of Section 4043(c) of ERISA for which the 30-day
notice requirement has not been waived has occurred or is expected to
occur with respect
20
to any Employee Benefit Plan. No Employee Benefit Plan is a
"multiemployer plan" (within the meaning of Sections 3(37) of ERISA).
(C) All contributions required to be made to the Employee
Benefit Plans and Foreign Benefit Plans pursuant to their terms and
applicable law have been timely made.
(D) There are no unfunded benefit obligations under the
Employee Benefit Plans and Foreign Benefit Plans that have not been
properly accrued for in the Company's financial statements or disclosed
in the notes thereto in accordance with GAAP.
(E) The execution and delivery by the Company of this
Agreement does not, and the consummation of the Merger and compliance
with the terms hereof (whether alone or in combination with any other
event) will not, (1) entitle any current or former employee or director
or independent contractor of the Company or any Subsidiary of the
Company to severance pay, (2) except as expressly required by this
Agreement, accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger
any other material obligation pursuant to, any Employee Benefit Plan or
Foreign Benefit Plan, (3) result in any breach or violation of, or a
default under, any Employee Benefit Plan or Foreign Benefit Plan, or
(4) cause any amounts payable under any Employee Benefit Plan (whether
in cash, in property or in the form of benefits) to fail to be
deductible for federal income tax purposes by virtue of Sections 162(m)
or 280G of the Code.
(iii) No liability under Title IV or section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
the Company or any ERISA Affiliate of incurring any such liability, other
than liability for premiums due the PBGC (which premiums have been timely
paid when due). Insofar as the representation made in this section
3.1(l)(iii) applies to sections 4064, 4069 or 4204 of Title IV of ERISA, it
is made with respect to any Employee Benefit Plan that is subject to Title
IV of ERISA (a "Title IV Plan") to which the Company or any ERISA Affiliate
made, or was required to make, contributions during the five (5)-year
period ending on the last day of the most recent plan year ended prior to
the Closing Date.
(iv) The PBGC has not instituted proceedings to terminate any
Title IV Plan and no condition has existed prior to the date of this
Agreement that presents a material risk that such proceedings will be
instituted.
21
(v) Except as set forth on Schedule 3.1(l) of the Company
Disclosure Letter, with respect to each Title IV Plan, the present value of
accrued benefits under such plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such
plan's actuary with respect to such plan did not exceed, as of its latest
valuation date, the then current value of the assets of such plan allocable
to such accrued benefits.
(vi) Neither the Company, any ERISA Affiliate, or Employee
Benefit Plan, any trust created thereunder, nor any trustee, fiduciary or
administrator thereof has engaged in or had knowledge of a transaction in
connection with which the Company, any ERISA Affiliate, any Employee
Benefit Plan, or any such trust could be subject to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed
pursuant to section 4975 or 4976 of the Code.
(vii) Each Employee Benefit Plan intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified and the
trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code. Each Employee Benefit Plan intended to satisfy the
requirements of Section 501(c)(9) has satisfied such requirements.
(viii) Except as set forth on Schedule 3.1(l) of the Company
Disclosure Letter, no Employee Benefit Plan or Foreign Benefit Plan
provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees of the Company
or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law,
(ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or beneficiary
thereof).
(ix) None of the Company or any of its Subsidiaries has (i)
used the services or workers provided by third party contract labor
suppliers, temporary employees, "leased employees" (as that term is defined
in Section 414(n) of the Code), or individuals who have provided services
as independent contractors to an extent that would reasonably be expected
to result in the disqualification of any of the Employee Benefit Plans or
the imposition of penalties or excise taxes with respect to the Employee
Benefit Plans by the IRS, the Department of Labor, or the PBGC.
(x) Each Employee Benefit Plan that is a "nonqualified deferred
compensation plan" (as defined under Section 409A(d)(1) of the Code) has
been operated and administered in good faith compliance with Section 409A
of the Code from the period beginning January 1, 2005. There are no
agreements in place that would entitle any participant in any such plan to
reimbursement for any additional tax imposed by Section 409A of the Code.
22
(xi) With respect to the Foreign Benefit Plans, (i) the Foreign
Benefit Plans have been maintained in all material respects in accordance
with their terms and all applicable laws (including, but not limited to,
all tax laws, regulations and the European Union cross-border membership
rules), (ii) if intended to qualify for special Tax treatment, the Foreign
Benefit Plans meet the requirements for such treatment in all material
respects, (iii) if intended to be book-reserved, the Foreign Benefit Plans
are fully book reserved in all material respects based upon reasonable US
GAAP actuarial assumptions and methodology and fully reflect the financial
effects of all prior transactions in relation to the book reserved Foreign
Benefit Plans, except where failure to reserve would not be material, (iv)
if intended to be funded, the Foreign Benefit Plans are either fully funded
or any shortfall is fully recognized as a book reserve in all material
respects, based upon reasonable US GAAP actuarial assumptions and
methodology and fully reflect the financial effects of all prior
transactions in relation to the funded Foreign Benefit Plans, except where
failure to reserve would not be material, (v) there are no undisclosed
outstanding disputes with respect to any Foreign Benefit Plan and (vi) no
liability which could be material to the Company and its Subsidiaries,
taken as a whole, exists or reasonably could be imposed upon the assets of
the Company or any of its Subsidiaries by reason of such Foreign Benefit
Plans (including, but not limited to any post-sale liabilities relating to
any divestiture in the United Kingdom, including disputes and contribution
notices from the Pensions Regulator), other than to the extent reflected on
the financial statements.
(m) Labor Matters.
(i) The third and fourth sentences under the caption "Employee
Relations" in the Company's Annual Report on Form 10-K for the year ended
December 31, 2006 regarding labor unions are true and correct in all
material respects.
(ii) There are no pending, or to the knowledge of the Company,
threatened strikes, labor disputes, walkouts, slowdowns, work stoppages or
lockouts against or involving the Company or any of its Subsidiaries.
(iii) The Company and each of its Subsidiaries are, and during
the ninety-day period prior to the date of this Agreement, have been in
compliance with all notice and other requirements under the Workers'
Adjustment and Retraining Notification Act (the "WARN Act") and any similar
foreign, state or local law, ordinance or regulation of any Governmental
Entity relating to plant closings and layoffs. Schedule 3.1(m)(iii) of the
Company Disclosure Letter sets forth a true and complete chart, as of the
date of this Agreement, listing any and all plant closings and mass
layoffs, as such terms are defined under the WARN Act or any similar
foreign, state or local law, ordinance or regulation, by location, which
the Company or its Subsidiaries will implement or anticipate implementing
in the ninety days prior to the Closing Date, which chart shall be updated
by the Company through and until the Closing Date.
23
(iv) The Company and each of its Subsidiaries, as applicable
are in material compliance with Executive Order 11246.
(v) To the Company's knowledge, no officer of the Company or
its Subsidiaries is in any material respect in violation of any term of any
employment agreement, nondisclosure agreement, common law nondisclosure
obligation, fiduciary duty, noncompetition agreement, restrictive covenant
or other obligation to a former employer of any such employee relating (A)
to the right of any such employee to be employed by the Company or its
Subsidiaries or (B) to the knowledge or use of trade secrets or proprietary
information, except for such violations as would not have a Company
Material Adverse Effect.
(n) Intellectual Property. The Company and its Subsidiaries own or
have the sufficient right to use and after the consummation of the transactions
contemplated by this Agreement will have the sufficient right to use, pursuant
to a license or otherwise, all Intellectual Property necessary for the operation
of the businesses of each of the Company and its Subsidiaries as presently
conducted (collectively, the "Company Intellectual Property") free and clear of
all Encumbrances except for Permitted Encumbrances, except where the failure to
own or have the right to use such Intellectual Property would not be reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. To the knowledge of the Company, the operation of the business of each
of the Company and its Subsidiaries as presently conducted does not infringe
upon, violate, or misappropriate any Intellectual Property right of any other
Person, except for such matters that would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
"Intellectual Property" means all of the following whether arising under the
Laws of the United States or of any other jurisdiction: (a) patents, patent
applications (including patents issued thereon) and statutory invention
registrations, including reissues, divisions, continuations, continuations in
part, extensions and reexaminations thereof, and all rights therein provided by
international treaties or conventions, (b) trademarks, service marks, trade
names, service names, trade dress, logos and other identifiers of source,
including all goodwill associated therewith, and any and all common law rights,
and registrations and applications for registration thereof, all rights therein
provided by international treaties or conventions, and all renewals of any of
the foregoing, (c) Internet domain names, (d) copyrightable works, copyrights,
moral rights, mask work rights, in each case, whether or not registered, and
registrations and applications for registration thereof, and all rights therein
provided by international treaties or conventions, (e) confidential and trade
secret information, including confidential information regarding inventions,
processes, formulae, models, and methodologies.
(o) Personal Property. Except as would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect, the
Company and its Subsidiaries (A) have good, valid and marketable title to all of
the personal properties and assets, tangible and intangible, that they purport
to own, and valid leasehold interests in all of the personal properties and
assets, tangible and intangible (other than Intellectual Property), that they
purport to lease, in each case including the personal properties and assets
reflected in the
24
Company's consolidated balance sheet included in the Annual Report, but
excluding any personal property or assets that are no longer used or useful for
the conduct of the business of the Company and its Subsidiaries as presently
conducted or that have been disposed of in the ordinary course of business since
December 31, 2006. All such properties and assets are free and clear of all
Encumbrances, except for (i) routine statutory liens securing liabilities not
yet due and payable, or the validly or amount of which is being contested in
good faith (ii) minor Encumbrances that do not materially detract from the value
of the specific asset affected or the present use of such asset, (iii)
Encumbrances existing or expressly permitted pursuant to credit facilities or
long-term debt of the Company and its Subsidiaries existing as of the date of
this Agreement or refinancings or Encumbrances permitted under Section 4.1
hereof (collectively, "Permitted Encumbrances"); and (B) have such ownership or
such rights by license, lease or other agreement to all material equipment used
or necessary to conduct their respective businesses as currently conducted.
(p) Environmental Matters.
(i) As used in this Agreement:
(A) "Environmental Laws" means any and all laws, statutes,
regulations, rules, orders, ordinances, legally enforceable directives,
and rules of common law of any Governmental Entity pertaining to
protection of human safety and health (to the extent relating to
exposure to Hazardous Materials) or the environment (including, without
limitation, any natural resource damages or any generation,
manufacture, use, storage, treatment, disposal, release, threatened
release, discharge, or emission of Hazardous Materials into the indoor
or outdoor environment) in effect as of the date hereof;
(B) "Hazardous Materials" means any (1) chemical, product,
substance, waste, pollutant, physical agent, or contaminant that is
defined or listed as hazardous or toxic or that is otherwise regulated
under any Environmental Law; (2) asbestos or asbestos-containing
product containing materials, whether in a friable or non-friable
condition, lead-containing material polychlorinated, biphenyls,
naturally occurring radioactive materials or radon; and (3) any
petroleum hydrocarbons, petroleum products, petroleum substances, crude
oil, natural gas, and any components, fractions, gasoline additives or
derivatives thereof; and
(C) "Release" means any depositing, spilling, leaking,
pumping, pouring, placing, emitting, discarding, abandoning, emptying,
discharging, migrating, injecting, escaping, leaching, dumping, or
disposing.
25
(ii) Except for those matters that would not be reasonably
likely to have, individually or in the aggregate, a Company Material
Adverse Effect:
(A) The Company and its Subsidiaries and their respective
operations and assets are and, during the relevant time periods
specified under all applicable statutes of limitations, have been in
compliance with Environmental Laws, and there are no facts or
circumstances known to the Company which could reasonably be expected
to form the basis of any liability under Environmental Laws against the
Company, its Subsidiaries, or any person or entity whose liability the
Company or its Subsidiaries likely has retained or assumed;
(B) As of the date of this Agreement, the Company and its
Subsidiaries are not subject to any pending or, to the Company's
knowledge, threatened claims, actions, suits, investigations, inquiries
or proceedings under Environmental Laws; and
(C) There have been no Releases of Hazardous Materials at
any property currently or, to the knowledge of the Company, formerly
owned or operated by the Company, any of its Subsidiaries, or, to the
knowledge of the Company, by any predecessors of the Company or any
Subsidiary of the Company, which Releases are reasonably likely to
result in material liability to the Company or any of its Subsidiaries
under Environmental Law, and, as of the date of this Agreement, neither
the Company nor its Subsidiaries have received any notice asserting an
alleged liability or obligation under any Environmental Laws with
respect to the investigation, remediation, removal, or monitoring of
the Release of any Hazardous Materials or the threatened Release of any
Hazardous Materials at or from any property whether or not currently or
formerly owned or operated by the Company or any of its Subsidiaries.
(q) Insurance. The Company and each of its Subsidiaries is covered
by valid and currently effective insurance policies issued in favor of the
Company or any of its Subsidiaries that are customary in all material respects
for companies of similar size in the industry and locales in which the Company
and its Subsidiaries operate. Except as would not have a Company Material
Adverse Effect, all premiums payable under the insurance policies have been duly
paid to date. Except as would not have a Company Material Adverse Effect, no
written notice of cancellation or termination has been received with respect to
such insurance policy. There is no material claim by the Company or any of its
Subsidiaries pending, under any insurance policy and no material claim made
since January 1, 2006 has been denied.
(r) Opinion of Financial Advisors. The Board of Directors of the
Company has received the opinion of Deutsche Bank to the effect that, as of the
date of this
26
Agreement, the Merger Consideration to be received by the shareholders of
Company Common Stock is fair, from a financial point of view, to such holders.
(s) Vote Required. The affirmative vote (in person or by proxy) in
favor of the adoption of this Agreement of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve and adopt this Agreement and the Merger.
(t) Brokers. Except for the fees and expenses payable to Deutsche
Bank (which amounts have been disclosed to Parent prior to the date hereof), no
broker, investment banker, or other Person is entitled to any broker's, finder's
or other similar fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company.
(u) Certain Contracts and Arrangements. Schedule 3.1(u) of the
Company Disclosure Letter, together with the lists of exhibits contained in the
Company SEC Documents, sets forth a true and complete list, as of the date of
this Agreement, of: (i) each agreement to which the Company or any of its
Subsidiaries is a party (other than this Agreement) that is of a type that would
be required to be included as an exhibit to a Registration Statement on Form S-1
pursuant to Items 601(b)(2), (4), (9) or (10) of Regulation S-K of the SEC if
such a registration statement was filed by the Company on the date of this
Agreement; (ii) any agreement that contains covenants that limit the ability of
the Company or any of its Subsidiaries to compete in a material line of business
of the Company or any of its Subsidiaries, except for any such contract that may
be cancelled without any material penalty or other material liability to the
Company or any of its Subsidiaries upon notice of 60 days or less; (iii) any
contract or agreement relating to the borrowing of money or extension of credit
pursuant to which the Company or any of its Subsidiaries has a borrowing
capacity of more than $100 million or outstanding indebtedness of more than $100
million; (iv) interest rate or currency hedging agreements, in each case in
connection with which the aggregate actual or contingent obligations of the
Company and its Subsidiaries under such contract are greater than $30 million;
and (v) any contract entered into after January 1, 2007 or not yet consummated,
in each case for the acquisition or disposition, directly or indirectly (by
merger or otherwise), of businesses or capital stock or other equity interests
of another Person for aggregate consideration under such contract in excess of
$30 million, but excluding for purposes of this clause (vi) any supply or sales
contracts; (vii) any contract pursuant to which the Company or any of its
Subsidiaries is burdened from continuing indemnification or other contingent
payment obligations related to environmental matters, in each case, that would
reasonably be expected to result in payments in excess of $20 million in any
calendar year (collectively, the "Company Contracts"). Except as would not be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect, neither the Company nor any of its Subsidiaries is in breach or
default under any Company Contract nor, to the knowledge of the Company, is any
other party to any such Company Contract in breach or default thereunder.
27
(v) State Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition," "interested stockholder," "business combination",
anti-takeover or other similar statute, rule or regulation enacted under state
or federal laws in the United States (with the exception of Section 203 of the
DGCL ("Section 203")) applicable to the Company is applicable to this Agreement,
the Merger or any of the other Transactions. Assuming the accuracy of the
representations made in Section 3.2(h), the action of the Board of Directors of
the Company in approving this Agreement is sufficient to render inapplicable to
this Agreement, the Merger, and the other Transactions the restrictions on
"business combinations" (as defined in Section 203) as set forth in Section 203.
(w) Real Property. The Company and its Subsidiaries have good,
valid and defensible title to all material real property owned by the Company or
any of its Subsidiaries (collectively, the "Owned Real Property")and valid
leasehold estates in all material real property leased or subleased to the
Company or its Subsidiaries ("Material Leased Real Property") free and clear of
all Encumbrances, except Permitted Encumbrances, except as would not be
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect. Except as would not have a Company Material Adverse Effect, each
agreement under which the Company or any Subsidiary of the Company is the
tenant, subtenant, or occupant with respect to the Material Leased Real Property
(each, a "Material Real Property Lease") to the knowledge of the Company is in
full force and effect and is valid and enforceable against the parties thereto
in accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and neither the Company or any of its Subsidiaries, or to the
knowledge of the Company, any other party thereto, has received written notice
of any default under any Material Real Property Lease.
(x) Related Party Transactions. Neither the Company nor any of its
Significant Subsidiaries is a party to any transactions with related parties
requiring disclosure under Item 404 of Regulation S-K of the Securities and
Exchange Commission rules and regulations that either (i) have not previously
been disclosed in the Company SEC Documents or (ii) if not disclosed, are
materially different from related party transactions previously disclosed in the
Company SEC Documents.
(y) Rights Agreement. The Board of Directors of the Company has
amended the Rights Agreement (the "Rights Agreement Amendment") in accordance
with its terms to render it inapplicable to the Transactions. The Company has
delivered to Parent a true and correct copy of the Rights Agreement Amendment.
3.2 Representations and Warranties of Parent and Merger Sub. Except as
set forth on the disclosure letter dated as of the date of this Agreement and
delivered by Parent and Merger Sub to the Company on or prior to the date of
this Agreement (the "Parent Disclosure Letter"), Parent and Merger Sub jointly
and severally represent and warrant to the Company as follows:
28
(a) Organization, Standing and Power. Each of Parent and Merger Sub
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than where the failure to be duly organized, validly existing,
or so to qualify or be in good standing would not be reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect (as defined
below). Parent and Merger Sub each has heretofore made available to the Company
complete and correct copies of its principle organizational documents. "Parent
Material Adverse Effect" means any occurrence, circumstance, condition, change,
event or effect that prevents or materially delays or impairs or is reasonably
likely to prevent or materially delay or impair the ability of Parent and Merger
Sub to consummate the Transactions.
(b) Authority; No Violations, Consents and Approvals.
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the Transactions. The execution and delivery of this Agreement by Parent
and Merger Sub and the consummation by Parent and Merger Sub of the
Transactions have been duly authorized by all necessary corporate action on
the part of each of Parent and Merger Sub (other than the adoption of this
Agreement by Parent as sole stockholder of Merger Sub, which shall occur
immediately after the execution and delivery of this Agreement). This
Agreement has been duly executed and delivered by each of Parent and Merger
Sub, and, assuming this Agreement constitutes the valid and binding
obligation of the Company, constitutes a valid and binding obligation of
each of Parent and Merger Sub enforceable in accordance with its terms,
subject as to enforceability, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law). Parent, as the owner of all of the outstanding shares of capital
stock of Merger Sub, will immediately after the execution and delivery of
this Agreement adopt this Agreement in its capacity as sole stockholder of
Merger Sub.
(ii) The execution and delivery of this Agreement does not, and
the consummation of the Transactions will not result in any violation of,
or default (with or without notice or lapse of time, or both) under, or
acceleration of any material obligation or the loss of a material benefit
under, or result in the creation of any Encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under any
provision of (A) the principle organizational documents of Parent or Merger
Sub or any provision of the comparable charter or organizational documents
of any of their respective Subsidiaries, (B) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, permit,
franchise or license to which Parent or any of its Subsidiaries is a party
or by which Parent or Merger Sub or any of their respective
29
Subsidiaries or their respective properties or assets are bound or (C)
assuming the consents, approvals, orders, authorizations, registrations,
filings, or permits referred to in Section 3.2(b)(iii) are duly and timely
obtained or made, any judgment, order, decree, statute, law, ordinance,
rule or regulation of any Governmental Entity applicable to Parent or any
of its Subsidiaries or any of their respective properties or assets, other
than, in the case of clauses (B) and (C), any such violations, defaults,
acceleration, losses or Encumbrances that would not be reasonably likely to
have, individually or in the aggregate, a Parent Material Adverse Effect.
(iii) No consent, approval, order or authorization of, or
registration, or filing with, or permit from, any Governmental Entity is
required to be obtained or made by Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub or the consummation by Parent and Merger Sub of the
Transactions, including the Financing, except for: (A) the filing with the
SEC of such reports under Section 13(a) of the Exchange Act and such other
compliance with the Exchange Act and the rules and regulations thereunder
as may be required in connection with this Agreement and the Transactions;
(B) the filing of the Certificate of Merger with the Office of the
Secretary of State of the State of Delaware; (C) such filings and approvals
as may be required by any foreign premerger notification or competition,
securities, corporate or other law, rule or regulation of any Governmental
Entity; and (D) any such consent, approval, order, authorization,
registration, filing, or permit that the failure to obtain or would not be
reasonably likely to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement will, at the date mailed to stockholders of the Company or at the time
of the meeting of such stockholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to the Parent or its
Subsidiaries or Affiliates or other information supplied by the Parent for
inclusion therein, in the form mailed to stockholders will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
(d) Litigation. There are no suits, claim, actions, proceedings,
arbitrations or mediations pending or, to the knowledge of Parent, threatened
against Parent or Merger Sub, other than any such suits, claims, actions,
proceedings, arbitrations or mediations that would not reasonably be likely to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Neither Parent nor any of its Subsidiaries nor any of their respective
properties or assets is or are subject to any judgments, orders or decrees,
except for those judgments, orders or decrees that would reasonably be likely to
have, individually or in the aggregate, a Parent Material Adverse Effect.
30
(e) Financing. Parent and Merger Sub (i) will have at the Effective
Time sufficient immediately available funds available and the financial ability
to permit Parent and Merger Sub to pay the aggregate Merger Consideration, the
aggregate Option Consideration, any repayment or refinancing of debt of the
Company and any Subsidiary of the Company, account receivable facilities and
hedging agreements and the Company Convertible Notes necessary in connection
with or as a result of the Transactions and fees and expenses of Parent, Merger
Sub and their respective Representatives incurred in connection with the
Transactions and (ii) at the Effective Time, will have the resources and
capabilities (financial and otherwise) to perform its obligations hereunder.
True, correct and complete copies of the debt commitment letter dated the date
of this Agreement from Citigroup Global Markets Inc., Xxxxxxx Xxxxx
International, Xxxxxxx Sachs Credit Partners L.P., Xxxxxxx Xxxxx Xxxxxx Xxxxxx &
Xxxxx Incorporated and Xxxxxxx Xxxxx Capital Corporation (the "Debt Commitment
Letter"), subject to the terms and conditions set forth therein have been
provided to the Company. The Debt Commitment Letter has been fully executed and
delivered by Citigroup Global Markets Inc., Xxxxxxx Sachs International, Xxxxxxx
Xxxxx Credit Partners L.P., Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx Incorporated and
Xxxxxxx Xxxxx Capital Corporation and, when executed by Parent and Merger Sub,
which will occur immediately after the execution and delivery of this Agreement,
will be valid and enforceable against the parties thereto in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of whether
such enforceability is considered in a preceding in equity or at law). The
obligations of Citigroup Global Markets Inc., Xxxxxxx Sachs International,
Xxxxxxx Xxxxx Credit Partners L.P., Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx
Incorporated and Xxxxxxx Xxxxx Capital Corporation to fund the commitment under
the Debt Commitment Letter are not subject to any conditions other than as set
forth in the Debt Commitment Letter. As of the date of this Agreement, to the
knowledge of Parent, no event has occurred that (with or without notice, lapse
of time, or both) would constitute a breach or default under the Debt Commitment
Letter by Parent or Merger Sub. Parent has no knowledge of any facts or
circumstances that are reasonably likely to result in (i) any of the conditions
set forth in the Debt Commitment Letter not being satisfied or (ii) the funding
contemplated in the Debt Commitment Letter not being made available to Parent on
a timely basis in order to consummate the transactions contemplated by this
Agreement and any repayment or refinancing of debt, account receivable
facilities and hedging agreements and the Company Convertible Notes, necessary
in connection with the transactions contemplated by this Agreement.
(f) Solvency; Surviving Corporation After the Merger. Neither
Parent nor Merger Sub is entering into the transactions contemplated by this
Agreement with the actual intent to hinder, delay or defraud either present or
future creditors. Assuming that the representations and warranties of the
Company contained in this Agreement are true and correct in all material
respects, at and immediately after the Effective Time, and after giving effect
to the Merger and the other transactions contemplated hereby, the Surviving
Corporation (i) will be solvent (in that both the fair value of its assets will
not be less than the sum of its debts and that the present fair saleable value
of its assets will not be less than the amount required to pay its probable
liability on its debts as they become absolute and matured); (ii) will have
adequate capital and liquidity with which to engage in its business; and (iii)
will not have incurred debts beyond its ability to pay as they become absolute
and matured.
31
(g) Vote/Approval Required. No vote or consent of the holders of
any class or series of capital stock of Parent is necessary to approve this
Agreement or the Merger or the other Transactions. The vote or consent of Parent
as the sole stockholder of Merger Sub (which will be obtained immediately after
the execution and delivery of this Agreement) is the only vote or consent of the
holders of any class or series of capital stock of Merger Sub necessary to
approve and adopt this Agreement, the Merger or the other Transactions.
(h) Ownership of Company Common Stock. Except as set forth on
Schedule 3.2(h) of the Parent Disclosure Letter, neither Parent nor Merger Sub
"own" (within the meaning of Section 203) or have, within the last three years,
"owned" any shares of Company Common Stock.
(i) Business Conduct.
(i) Merger Sub was incorporated on July 13, 2007. Since its
inception, Merger Sub has not engaged in any activity, other than such
actions in connection with (A) its organization and (B) the preparation,
negotiation and execution of this Agreement and the Transactions. Merger
Sub has no operations, has not generated any revenues and has no
liabilities other than those incurred in connection with the foregoing and
in association with the Merger as provided in this Agreement.
(ii) There are no Contracts between Parent or Merger Sub, on
the one hand, and any member of the Company's management or directors, on
the other hand, as of the date hereof that relate in any way to the Company
or the Transactions.
(j) Financial Statements. Parent has made available to the Company
a true and correct copy of its consolidated financial statements, including all
notes and schedules thereto, for each fiscal quarter and year ended since August
1, 2005 (the "Parent Financial Statements"). The Parent Financial Statements
were prepared in accordance with International Financial Reporting Standards
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
financial position of Parent and its consolidated Subsidiaries as of their
respective dates and the results of operations and the cash flows of Parent and
its consolidated Subsidiaries for the periods presented therein, except that any
interim financial statements are subject to normal and recurring year-end
adjustments.
(k) Absence of Certain Changes or Events. From December 31, 2006
through the date of this Agreement, there has not been any Parent Material
Adverse Effect.
32
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER
------------------------------------------------------------
4.1 Conduct of Business by the Company Pending the Merger. Except as
(i) set forth on Schedule 4.1 of the Company Disclosure Letter, (ii) as
expressly contemplated or permitted by this Agreement, (iii) required by any
judgment, order, decree, statute, law, ordinance, rule or regulation of any
Governmental Entity or (iv) otherwise consented to by Parent in writing (which
consent shall not be unreasonably withheld, unreasonably delayed or unreasonably
conditioned): (1) the Company covenants and agrees that, prior to the Effective
Time, it shall, and shall cause each of its Subsidiaries to, (A) conduct its
businesses in the ordinary course, in substantially the same manner as
heretofore conducted, and (B) use reasonable best efforts to preserve intact its
present business organization and material Company Permits, retain the Company's
current officers, and preserve its relationships with its key customers,
suppliers and other Persons with which it has significant business dealings and
relations to the end that its goodwill, business and operations shall not be
impaired in any material respect at the Effective Time, and (2) without limiting
the generality of the foregoing, prior to the Effective Time:
(a) Dividends; Changes in Stock. The Company shall not, and shall
not permit any of its Subsidiaries to: (i) declare, set aside or pay any
dividends on, or make any other distribution in respect of any outstanding
capital stock of, or other equity interests in, the Company or its Subsidiaries,
except for (A) the declaration and payment of the Company's regular quarterly
cash dividends of $0.225 per share of Company Common Stock (B) dividends and
distributions by a direct or indirect Subsidiary of the Company to the Company,
a direct or indirect Subsidiary of the Company or any minority equityholder in a
direct or indirect Subsidiary of the Company (provided that any such dividends
or distributions paid to such minority equityholders are no greater on a pro
rata basis than those paid to the Company or a direct or indirect Subsidiary of
the Company, as the case may be); (ii) split, combine, reclassify or subdivide
any capital stock of, or other equity interests in, the Company or any of its
Subsidiaries; or (iii) repurchase, redeem or otherwise acquire, or offer to
repurchase, redeem or otherwise acquire, any capital stock of, or other equity
interests in, the Company, any capital stock or equity interest of a Subsidiary
or as contemplated by any existing director compensation plan, Employee Benefit
Plan or employment agreement of the Company in each case existing as of the date
hereof.
(b) Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, offer, issue, deliver, grant, convey, pledge,
transfer, dispose of, encumber or sell, or authorize or propose to offer, issue,
deliver, grant, convey, pledge, transfer, dispose of, encumber or sell, any
capital stock of, or other equity interests in, the Company or any of its
Subsidiaries or any securities convertible into, or any rights, warrants or
options to acquire, any such capital stock or equity interests, other than: (i)
the issuance of Company Common Stock (and corresponding Rights under the Rights
Agreement) upon the exercise of stock options granted under the Company Stock
Plan and outstanding on the date hereof, (ii) upon the expiration of any
restrictions on any restricted stock granted under the Company Stock
33
Plan and outstanding on the date hereof, and (iii) issuances by a wholly-owned
Subsidiary of the Company of such Subsidiary's capital stock or other equity
interests to the Company or any other wholly-owned Subsidiary of the Company.
(c) Governing Documents. The Company shall not amend or propose to
amend the Company Certificate of Incorporation or the Company Bylaws and shall
not permit any of its Subsidiaries to amend or propose to amend its certificate
of incorporation or bylaws or other similar organizational documents, provided
that the organizational documents of Subsidiaries may be amended in a way that
is not material.
(d) No Acquisitions. The Company shall not, and shall not permit
any of its Subsidiaries to, (i) merge, consolidate, combine or amalgamate with
any Person other than another wholly-owned Subsidiary of the Company, (ii)
acquire or agree to acquire (including by merging or consolidating with,
purchasing any equity interest in or a substantial portion of the assets of,
licensing, or by any other manner), any business or any corporation,
partnership, association or other business organization or division thereof,
other than acquisitions and licenses in the ordinary course of business or as to
which the purchase price (including assumed indebtedness for borrowed money) is
not in excess of $50 million individually, or (iii) make or authorize any loans,
advances or capital contributions to, or investments in, any Person other than
the Company or any wholly-owned Subsidiary of the Company or joint venture
investment of the Company or any of its Subsidiaries except for loans, advances
or capital contributions pursuant to and in accordance with the terms of
agreements or legal obligations, except in each case as existing as of the date
of this Agreement, in the ordinary course of business or not in excess of $50
million individually.
(e) No Dispositions. The Company shall not, and shall not permit
any of its Subsidiaries to, sell, pledge, transfer, lease, or encumber or
otherwise dispose of, or agree to sell, pledge, transfer, lease, or encumber or
otherwise dispose of (including disposition on account of lease termination),
any corporation, partnership, other business organization or division or any
material assets thereof or equity interests therein, in each case other than (i)
any sale, lease, license, or disposition in the ordinary course of business or
pursuant to agreements existing on the date hereof or dispositions set forth in
Schedule 4.1(e) of the Company Disclosure Letter, (ii) any sale, lease or
disposition for an amount below $15 million individually, and (iii) sales of
receivables under the accounts receivable facilities existing on the date of
this Agreement as the same may be amended or replaced in accordance with this
Agreement.
(f) No Dissolution, Etc. The Company shall not, and shall not
permit any of its Significant Subsidiaries to, authorize, recommend, propose or
announce an intention to adopt a plan of complete or partial liquidation or
dissolution or consummate a recapitalization or other reorganization.
(g) Accounting. The Company shall not, and shall not permit any of
its Subsidiaries to, change their accounting principles, methods or policies for
the preparation of
34
financial statements included in reports or registration statements filed with
the SEC that has or is reasonably likely to have a material effect on the
financial statements of the Company, except as required by GAAP or statutory
accounting requirements or similar principles in Non-U.S. jurisdictions or as
disclosed in the Company's annual report on Form 10-K for the year ended
December 31, 2006 that was filed with the SEC (the "Annual Report"") and in the
Company's quarterly report on Form 10-Q for the quarter ended March 31, 2007
that was filed with the SEC (the "Quarterly Report").
(h) Insurance. The Company shall, and shall cause its Subsidiaries
to maintain (with insurance companies substantially as financially responsible
as its existing insurers) insurance in at least such amounts and against at
least such risks and losses as are consistent in all material respects with the
Company's or the applicable Subsidiary of the Company's past practice and shall
not permit any material insurance policy naming the Company or any of its
Subsidiaries as beneficiary or a loss payee to be canceled or terminated other
than in the ordinary course of business.
(i) Tax Matters. The Company shall not, and shall not permit any of
its Subsidiaries to, (i) make or rescind any material express or deemed election
relating to Taxes (including any election for any joint venture, partnership,
limited liability company or other investment where the Company has the capacity
to make such binding election, but excluding any election that must be made
periodically and is made consistent with past practice) except for elections
made or changed in the ordinary course of business or as required by law, (ii)
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except where
the amount of such settlement or compromise does not exceed (a) the greater of
120% of the amount for such matter listed on the Company's Fin 48 Tax
Contingency Reserve Disclosure, dated March 31, 2007 ("Fin 48"), or (b) $2.5
million or (iii) change any of its methods of reporting income or deductions for
income tax purposes from those employed in the preparation of its income Tax
Returns that have been filed for prior taxable years except where such change
would not have a material adverse effect on the Tax position of the Company and
its Subsidiaries taken as a whole. During the period from the date hereof and
continuing until the Effective Time, the Company (x) shall keep Parent fully
informed of the status of its discussions with any Tax authority in respect of
any tax audit for which the balance on the Company's Fin 48 exceeds $2.5 million
and shall consult with Parent in respect of, and give Parent the opportunity to
participate in devising the strategy for dealing with such Tax authority in the
course of such audit, (y) shall not propose in writing any settlement or other
resolution to any audit other than as described in (ii) of this section 4.1(i)
without Parent's prior consent (which consent shall not be unreasonably withheld
or delayed), and (z) shall use reasonable efforts to keep Parent informed of all
settlements of matters for which the balance on the Company's Fin 48 disclosure
exceeds $1.0 million.
(j) Certain Employee Matters. The Company shall not, and shall not
permit any of its Subsidiaries to: (i) grant any increases in the compensation
payable or to become payable to any of its directors, officers or key employees
(the "Corporate Officers"), except increases made in the ordinary course of
business substantially consistent with past
35
practice, and provided that it shall not constitute an increase in compensation;
(ii) pay or agree to pay to any Corporate Officer, whether past or present, any
material pension, retirement allowance or other employee benefit not required by
any of the Company's existing Employee Benefit Plans or Foreign Benefit Plans;
(iii) enter into any new, or materially amend any existing, employment or
severance or termination agreement with any Corporate Officer of the Company or
any of its Subsidiaries; or (iv) except as otherwise done pursuant to an
acquisition permitted by Section 4.1(d), establish or become obligated under any
collective bargaining agreement or Employee Benefit Plan or Foreign Benefit Plan
which was not in existence or approved by the Board of Directors of the Company
prior to the date of this Agreement (other than any new collective bargaining
agreement, Employee Benefit Plan or Foreign Benefit Plans that replaces an
existing agreement or plan and contains terms that in the aggregate are not
materially less favorable to the Company than the agreement or plan being
replaced), or amend any such Employee Benefit Plan or Foreign Benefit Plan in
existence on the date of this Agreement if such amendment would be on terms that
are materially adverse to the Company.
(k) Related Party Agreements. The Company shall not enter into, or
amend, in any manner materially adverse to the Company or its Subsidiaries any
contract, agreement or commitment with any former or present director or officer
of the Company or any of its Subsidiaries, or with any Affiliate of any of the
foregoing Persons or any other Person covered under Item 404 of Regulation S-K
under the Securities Act.
(l) Indebtedness. The Company shall not, and shall not permit any
of its Subsidiaries to, (i) incur, create or assume any indebtedness for
borrowed money or guarantee any such indebtedness of another Person or issue or
sell any debt securities or rights to acquire any debt securities of the Company
or any of its Subsidiaries or guarantee any debt securities of another Person or
(ii) create any material Encumbrances on any material property or assets of the
Company or any of its Subsidiaries in connection with any indebtedness thereof,
other than Permitted Encumbrances. Notwithstanding the foregoing, the
immediately preceding sentence shall not restrict the (1) incurrence of
indebtedness for borrowed money and related guarantees (A) under existing credit
facilities, loans, debt or accounts receivable securitization facilities made in
the ordinary course of the Company's business, (B) for extensions, renewals or
refinancings of existing debt (including related premiums and expenses),
provided that such refinancing or extension is at prevailing market rates and on
terms not materially less favorable in the aggregate than the existing
indebtedness being refinanced, renewed or extended, (C) additional borrowings in
an amount not to exceed $50 million in the aggregate that, in each case, permit
prepayment of such indebtedness without penalty (other than LIBOR breakage
costs), (D) indebtedness for borrowed money related to working capital lines of
credit, letters of credit, overdraft facilities, hedging transactions, bank
guarantees, insurance premium financings, factoring transactions and other
ordinary course forms of indebtedness to the extent permitted by the Company's
existing credit facilities, (E) by the Company that is owed to any 90% or
greater-owned Subsidiary of the Company or by any Subsidiary of the Company that
is owed to the Company or another 90% or greater-owned Subsidiary of the
Company, and (F) any indebtedness incurred or assumed in connection with any
acquisition permitted by Section 4.1(d), or (2) the creation of any Encumbrances
securing any indebtedness permitted to be incurred by clause (1) above.
36
(m) Company Contracts. Except as permitted pursuant to Sections
4.1(d), (e), (j), or (l) the Company shall not, and shall not permit any of its
Subsidiaries to, enter into or amend or modify in any manner materially adverse
to the Company and its Subsidiaries taken as a whole any Company Contract,
except for renewal(s) on substantially similar terms of existing contracts or
replacements of existing contracts with new counterparties on substantially
similar terms to the existing contract being replaced.
(n) Capital Expenditures. The Company shall not, and shall not
permit its Subsidiaries to, authorize or make capital expenditures which are, in
the aggregate (i) less than 85% or (ii) greater than 125%, in each case of the
aggregate amount of capital expenditures scheduled to be made in the Company's
capital expenditure budget for the period indicated as set forth in Schedule
4.1(n) of the Company Disclosure Letter except for capital expenditures to
repair damage resulting from insured casualty events.
(o) Prepayment of Debt. Except pursuant to an acquisition permitted
by Section 4.1(d), the repayment of indebtedness under the existing revolving
credit and term loan facilities of the Company and its Subsidiaries, prepayments
not involving the payment of any premium and refinancings permitted under
Section 4.1(l), the Company shall not, and shall not permit its Subsidiaries to,
whether through a refinancing or otherwise voluntarily redeem, repurchase,
prepay, defease, cancel, or otherwise acquire, or modify in any material respect
the terms of, any indebtedness for borrowed money in excess of $75 million.
(p) Intellectual Property. The Company shall not, and shall not
permit any of its Subsidiaries, except in the ordinary conduct of the Company's
or such Subsidiaries' business, dispose of, grant, or permit to lapse any rights
to, any Intellectual Property, or dispose of or disclose to any Person, other
than representatives of Parent, any trade secret.
(q) Stockholder Meetings. Except as required by applicable law, the
Company shall not convene any regular or special meeting (or any adjournment or
postponement thereof) of its stockholders, other than at stockholder meetings
referenced in Section 5.3 hereto or a meeting called by a majority of the
Company's stockholders pursuant to the Company Certificate of Incorporation and
the Company Bylaws.
(r) Loan Forgiveness. The Company shall not forgive any loans to
any of its employees, officers or directors or any employees, officers or
directors of any of its Subsidiaries, or to any of its Affiliates (other than
Affiliates that are Subsidiaries).
(s) Settlement of Claims. Except as provided in Section 4.1(i), the
Company or any of its Subsidiaries shall not settle or compromise any pending or
threatened legal proceeding or pay, discharge or satisfy or agree to pay,
discharge or satisfy any liability, other than the settlement, compromise,
payment, discharge or satisfaction of legal proceedings and liabilities (i)
reflected or reserved against in full in the balance sheet included in the
37
Quarterly Report, (ii) covered by existing insurance policies or indemnities,
(iii) settled since the respective dates thereof in the ordinary course of
business consistent with past practice, or (iv) otherwise less than $25 million
individually.
(t) Agreements. The Company shall not, and shall not permit any of
its Subsidiaries to, agree to take, authorize or otherwise make any commitment
to do any action that is prohibited by this Section 4.1.
4.2 No Solicitation.
(a) The Company shall not, nor shall it authorize or permit any of
its Subsidiaries or any of their respective Representatives to, directly or
indirectly, (i) solicit, initiate or knowingly encourage, or take any other
action to knowingly facilitate, the making of any proposal that constitutes or
is reasonably likely to lead to a Takeover Proposal or (ii) enter into, continue
or otherwise participate in any discussions or negotiations regarding, or
furnish to any Person any confidential information with respect to, any Takeover
Proposal. The Company shall, and shall cause its Subsidiaries and direct its
Representatives to, immediately cease and cause to be terminated all then
existing discussions and negotiations with any Person conducted theretofore with
respect to any Takeover Proposal, and shall request the prompt return or
destruction of all confidential information previously furnished in connection
therewith. Notwithstanding the foregoing or anything else in this Agreement to
the contrary, at any time prior to obtaining the Company Required Vote, in
response to an unsolicited bona fide written Takeover Proposal, if the Board of
Directors of the Company determines in good faith, (x) after consultation with
its financial advisors and outside counsel, that such Takeover Proposal
constitutes, or could reasonably be expected to lead to, a Superior Proposal and
(y) after consultation with its outside counsel, that the failure to take such
action would be inconsistent with its fiduciary duties under applicable law, the
Company may (and may authorize and permit its Subsidiaries, directors, officers,
employees and Representatives to), subject to compliance with Section 4.2(c) (A)
furnish information with respect to the Company and its Subsidiaries to the
Person making such Takeover Proposal (and its Representatives) pursuant to a
customary confidentiality agreement containing confidentiality provisions
substantially similar to those set forth in the Confidentiality Agreement,
provided that all such material, non-public information has previously been
provided or made available to Parent or is provided to Parent prior to or
substantially concurrently with the time it is provided to such Person, and (B)
participate in discussions and negotiations with the Person making such Takeover
Proposal (and its Representatives) regarding such Takeover Proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i)(A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation or declaration of advisability by such Board of
Directors of the Company or any such committee of this Agreement or the Merger
or (B) recommend the approval or adoption of, or approve or adopt, or publicly
propose to recommend, approve or adopt, any Takeover Proposal (any action
described in this clause (i) being referred to as an "Adverse Recommendation
Change") or (ii)
38
approve or recommend, or publicly propose to approve or recommend, or cause or
permit the Company or any of its Subsidiaries to execute or enter into, any
letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement or other similar agreement related to any
Takeover Proposal, other than any confidentiality agreement referred to in
Section 4.2(a). Notwithstanding the foregoing or anything else in this Agreement
to the contrary, at any time prior to obtaining the Company Required Vote, the
Board of Directors of the Company or any committee thereof may in connection
with any Takeover Proposal, make an Adverse Recommendation Change if, after
consultation with its financial advisors and outside counsel, it determines in
good faith that the failure to take such action would be inconsistent with its
fiduciary duties under applicable law; provided, however, that the Board of
Directors of the Company or any committee thereof may only make an Adverse
Recommendation change pursuant to Section 4.2(b)(i)(B) or cause the Company to
terminate this Agreement pursuant to Section 7.1(d) if the Board of Directors of
the Company or any committee thereof first determines in good faith after
consultation with its financial advisors and outside counsel that such Takeover
Proposal constitutes a Superior Proposal; and further provided that the Board of
Directors of the Company or any committee thereof shall not make an Adverse
Recommendation Change until after the third Business Day following Parent's
receipt of written notice (a "Notice of Adverse Recommendation Change") from the
Company advising Parent that the Board of Directors of the Company intends to
take such action and specifying the reasons therefor, including the material
terms and conditions of any Superior Proposal that is the basis of the proposed
action by such Board of Directors of the Company or any committee thereof (it
being understood and agreed that (I) any material amendment to the financial
terms of such Superior Proposal shall require a new Notice of Adverse
Recommendation Change and a new three (3) Business Day period, (II) in
determining whether to make an Adverse Recommendation Change, the Board of
Directors of the Company or any committee thereof shall take into account any
changes to the financial terms of this Agreement proposed by Parent to the
Company in response to a Notice of Adverse Recommendation Change or otherwise,
and (III) no Notice of Adverse Recommendation Change shall be delivered to
Parent without providing Parent with forty-eight (48) hours prior notice
thereof, during which period Parent may deliver a written presentation to the
Board of Directors of the Company containing the analysis of Parent and its
financial advisors and outside counsel of such Takeover Proposal). No Adverse
Recommendation Change shall change the approval of the Board of Directors of the
Company for purposes of causing any share takeover statute to be inapplicable to
the transactions contemplated by this Agreement.
(c) In addition to the obligations of the Company set forth in
Section 4.2(a) and Section 4.2(b), the Company shall (i) promptly advise Parent
orally and in writing of the receipt of any bona fide Takeover Proposal or any
request for information or other inquiry that the Company reasonably believes
could lead to any Takeover Proposal in each case after the date of this
Agreement and (ii) provide the material terms and conditions of any such
Takeover Proposal or other inquiry (unless such Takeover Proposal is in written
form, in which case the Company shall give Parent a copy of all written
materials comprising or relating thereto) and the identity of the Person making
any such Takeover Proposal promptly (but in any event within 24 hours thereof).
The Company shall keep Parent reasonably informed of any material developments
with respect to any such Takeover Proposal, request for information or other
inquiry (including any material changes thereto).
39
(d) Nothing contained in this Section 4.2 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) or Item
1012(a) of Regulation M-A promulgated under the Exchange Act or (ii) making any
disclosure to its stockholders if the Board of Directors of the Company or any
committee thereof determines in good faith (after consultation with its outside
counsel) that the failure to take such action would be inconsistent with its
fiduciary duties under applicable law, it being understood, however, that this
clause (ii) shall not be deemed to permit the Board of Directors of the Company
to make an Adverse Recommendation Change or take any of the actions referred to
in clause (ii) of Section 4.2(b) except, in each case, to the extent permitted
by Section 4.2(b).
(e) Notwithstanding anything in this Agreement to the contrary, the
Company's Board of Directors or any committee thereof shall be permitted, at any
time prior to obtaining the Company Required Vote, other than in connection with
a Takeover Proposal, to make an Adverse Recommendation Change, but only if prior
to taking any such action, the Board of Directors of the Company (or any
committee thereof) determines in good faith (after consultation with outside
legal counsel) that failure to take such action would be inconsistent with its
fiduciary duties under applicable law and the Company has given three (3)
Business Day advance notice to Parent that the Company intends to take such
action.
(f) Notwithstanding anything in this Agreement to the contrary, any
factually accurate public statement by the Company that describes the Company's
receipt of a Takeover Proposal and the operation of this Agreement with respect
thereto, shall not be deemed to be a recommendation of such Takeover Proposal or
the withdrawal, amendment or modification of the recommendation of the Company's
Board of Directors in favor of the adoption of this Agreement and the Merger;
provided, however, that no such statement shall be issued without prior notice
to Parent and only when such statement is required to be issued under applicable
law (in the good faith judgment of the Company's Board of Directors in
consultation with its legal counsel).
(g) Any action pursuant to this Section 4.2(a), (b), (c), (d), (e),
(f) shall not constitute a breach of the Company's representations, warranties,
covenants or agreements contained in this Agreement.
(h) "Takeover Proposal" shall mean any inquiry, proposal or offer
from any Third Party relating to (a) any direct or indirect acquisition or
purchase, in a single transaction or a series of transactions, of (i) any assets
of the Company and its Subsidiaries, including capital stock of the Subsidiaries
of the Company that generated 15% or more of the Company's consolidated net
revenue or earnings before interest, taxes, depreciation and amortization for
the preceding twelve months, or (ii) 15% or more of the outstanding shares of
Company Common Stock, (b) any tender offer or exchange offer that, if
consummated, would result in any Third Party owning, directly or indirectly, 15%
or more of the outstanding shares of Company Common Stock or (c) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution,
binding share exchange or similar transaction involving
40
the Company pursuant to which any Third Party (or the shareholders of any Third
Party) would own, directly or indirectly, 15% or more of the voting capital
stock of the Company or of the surviving entity in a merger or the resulting
direct or indirect parent of the Company or such surviving entity, other than,
in each case, the transactions contemplated by this Agreement. "Company Required
Vote" shall mean the affirmative vote of the holders of a majority of the
outstanding shares in favor of adoption of this Agreement. "Superior Proposal"
shall mean any bona fide Takeover Proposal that if consummated would result in a
Third Party (or the shareholders of any Third Party) owning, directly or
indirectly, (a) more than 50% of the voting capital stock of the Company or of
the surviving entity in a merger or the resulting direct or indirect parent of
the Company or such surviving entity or (b) assets of the Company or any of its
Subsidiaries that generated 50% or more of the Company's consolidated net
revenue or earnings before interest, taxes, depreciation and amortization for
the preceding twelve months, and that, in either case, the Company's Board of
Directors or a committee thereof determines (after consultation with its
financial advisors and outside counsel and after taking into account all legal,
financial, regulatory, estimated timing of consummation and other aspects of
such proposal and the Third Party making such proposal that the Board of
Directors of the Company determines to be relevant) would, if consummated in
accordance with its terms, result in a transaction more favorable to the
Company's stockholders than the Merger. "Third Party" shall mean any Person or
group (as defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Merger Sub or any Affiliates thereof.
ARTICLE V
ADDITIONAL AGREEMENTS
-----------------------
5.1 Preparation of Proxy Statement.
(a) Each of the Company and Parent shall cooperate with each other
in the preparation of the Proxy Statement (including the preliminary Proxy
Statement) and any amendment or supplement to the preliminary Proxy Statement.
The Company shall promptly prepare and file with the SEC as promptly as
reasonably practicable a preliminary Proxy Statement (and in any event no later
than 30 days following the date of this Agreement); provided, however, that the
Company shall furnish such preliminary Proxy Statement to Parent and give Parent
and its legal counsel a reasonable opportunity to review such preliminary Proxy
Statement prior to filing with the SEC and shall cooperate with Parent with
respect to additions, deletions or changes suggested by Parent in connection
therewith. The Company shall promptly notify Parent of the receipt of any
comments of the SEC staff with respect to the preliminary Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent, as promptly as reasonably
practicable, copies of all written correspondence between the Company or any
representative of the Company and the SEC with respect to the Proxy Statement.
If comments are received from the SEC staff with respect to the preliminary
Proxy Statement, the Company shall use its reasonable best efforts to respond as
promptly as reasonably practicable to the comments of the SEC. The Company will
promptly supply Parent with copies of all correspondence between the Company or
any of its Representatives, on the one hand, and the SEC or members of its
staff, on the other hand, with
41
respect to the Proxy Statement or the Merger. The Company shall provide Parent
and its legal counsel with a reasonable opportunity to review any amendment or
supplement to each of the preliminary and the definitive Proxy Statement prior
to filing with the SEC and shall cooperate with Parent with respect to
additions, deletions or changes suggested by Parent in connection therewith.
Parent shall promptly provide the Company with such information as may be
required to be included in the Proxy Statement or as may be reasonably required
to respond to any comment of the SEC staff. After all the comments received from
the SEC have been cleared by the SEC staff and all information required to be
contained in the Proxy Statement has been included therein by the Company, the
Company shall promptly file the definitive Proxy Statement with the SEC and
cause the Proxy Statement to be mailed (including by electronic delivery if
permitted) as promptly as practicable, to its stockholders of record, as of the
record date established by the Board of Directors of the Company.
5.2 Access to Information. The Company shall, and shall cause each of
its Subsidiaries to, afford to Parent and its officers, directors, employees,
accountants, consultants, agents, legal counsel, financial advisors and other
representatives (collectively, the "Representatives"), during the period prior
to the earlier of the Effective Time and the termination of this Agreement
pursuant to the terms of Section 7.1 of this Agreement, reasonable access, at
reasonable times upon reasonable prior notice, to the officers, key employees,
agents, properties, offices and other facilities of the Company and its
Subsidiaries and to their books, records, contracts and documents and shall, and
shall cause each of its Subsidiaries to, furnish reasonably promptly to the
Parent and its Representatives such information concerning the Company's and its
Subsidiaries' business, properties, contracts, records and personnel as may be
reasonably requested, from time to time, by or on behalf of the Parent;
provided, that any such access pursuant to this Section 5.2 shall be coordinated
through one of the individuals listed on Schedule 5.2 of the Company Disclosure
Letter. Parent and its Representatives shall conduct any such activities in such
a manner as not to interfere unreasonably with the business or operations of the
Company or its Subsidiaries or otherwise cause any unreasonable interference
with the prompt and timely discharge by the employees of the Company and its
Subsidiaries of their normal duties. Notwithstanding the foregoing provisions of
this Section 5.2, the Company shall not be required to, or to cause any of its
Subsidiaries to, grant access or furnish information to Parent or any of its
Representatives to the extent that such information is subject to an
attorney/client or attorney work product privilege or that such access or the
furnishing of such information is prohibited by law or an existing contract or
agreement, provided, however, that the parties shall use reasonable best efforts
to make appropriate substitute arrangements to permit reasonable disclosure
under such circumstances. Notwithstanding the foregoing, Parent shall not have
access to personnel records of the Company or any of its Subsidiaries relating
to individual performance or evaluation records, medical histories or other
information that in the Company's good faith opinion on the advice of outside
counsel the disclosure of which could subject the Company or any of its
Subsidiaries to risk of liability. Parent agrees that it will not, and will
cause its Representatives not to, use any information obtained pursuant to this
Section 5.2 for any purpose unrelated to the consummation of the Transactions.
The Confidentiality Agreement dated as of July 12, 2007 between Parent and the
Company (the "Confidentiality Agreement") shall survive the execution and
delivery of this Agreement and, subject to Section 7.2, shall apply to all
information furnished thereunder or hereunder.
42
5.3 Stockholders' Meeting and Board Recommendation. The Company shall
call, hold and convene a meeting of its stockholders to consider the adoption of
this Agreement, to be held as promptly as reasonably practicable after the
mailing of the Proxy Statement to the Company's stockholders (and in any event
no later than 45 days after the mailing of the Proxy Statement), and the
Company's obligation to call, hold, and convene such meeting in accordance with
this Section 5.3 shall not be affected by the withdrawal, amendment, or
modification of the recommendation by the Board of Directors of the Company that
the stockholders of the Company vote in favor of adoption of this Agreement,
unless the Agreement is terminated pursuant to ARTICLE VII. Subject to Section
4.2(b) and (e), (i) the Board of Directors of the Company shall recommend that
the stockholders of the Company vote in favor of the adoption of this Agreement
at the Company's stockholders' meeting and the Board of Directors of the Company
shall use its reasonable best efforts to solicit from stockholders of the
Company proxies in favor of the adoption of this Agreement and (ii) the Proxy
Statement shall include a statement to the effect that the Board of Directors of
the Company has recommended that the Company's stockholders vote in favor of
adoption of this Agreement at the Company's stockholders' meeting.
Notwithstanding anything to the contrary contained in this Agreement, the
Company may adjourn or postpone the Company's stockholders' meeting to the
extent necessary to ensure that any required supplement or amendment to the
Proxy Statement is provided to the Company's stockholders or, if as of the time
for which the Company's stockholders' meeting is originally scheduled (as set
forth in the Proxy Statement) there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct business at such meeting; provided that no adjournment may
be to a date on or after three (3) Business Days prior to the date set forth in
Section 7.1(b)(ii).
5.4 Regulatory Approvals.
(a) Except for the filings and notifications made pursuant to the
Premerger Notification Rules (as defined below) or other applicable Antitrust
Laws (as defined below) to which Section 5.4(b), and not this Section 5.4(a),
shall apply, promptly following the execution of this Agreement, the parties
shall proceed to prepare and file with the appropriate Governmental Entities all
authorizations, consents, notifications, certifications, registrations,
declarations and filings that are necessary in order to consummate the
transactions contemplated by this Agreement and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such matters.
(b) As promptly as reasonably practicable, but in no event later
than 60 calendar days (assuming the parties to this Agreement have received from
the other party all the information required to make all of their premerger
notification filings), following the execution of this Agreement the parties
shall make all premerger notification filings pursuant to the pre-merger
notification rules (the "Premerger Notification Rules"). Each of Parent and the
Company shall (i) cooperate fully with each other and shall furnish to the other
such necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of any filings under any Premerger
Notification Rules; (ii) keep the other party reasonably informed of any
communication received by such party from, or given by such party
43
to any Antitrust Authority, and of any communication received or given in
connection with any proceeding by a private party, in each case regarding the
Merger and in a manner that protects attorney-client or attorney work product
privilege; and (iii) permit the other party to review and incorporate the other
party's reasonable comments in any communication given by it to any Antitrust
Authority or in connection with any proceeding by a private party related to
Antitrust Laws with any other Person, in each case regarding the Merger and in a
manner that protects attorney-client or attorney work product privilege. Unless
otherwise agreed and without limiting the obligations stated in this Section
5.4(b), Parent and the Company shall each use its reasonable best efforts to
ensure the prompt expiration of any applicable waiting period under any
Premerger Notification Rules or approval by the relevant Antitrust Authority.
Further, without limiting the obligations stated in this Section 5.4(b), Parent
and the Company shall each use its reasonable best efforts to respond to and
comply with any request for information regarding the Merger or filings under
any Premerger Notification Rules from any Governmental Entity charged with
enforcing, applying, administering, or investigating any statute, law,
ordinance, rule or regulation designed to prohibit, restrict or regulate actions
for the purpose or effect of monopolization, restraining trade or abusing a
dominant position (collectively, "Antitrust Laws"), including the European
Commission or any other competition authority of any jurisdiction ("Antitrust
Authority"). Parent shall be entitled to direct any proceedings or negotiations
with any Antitrust Authority or other Person relating to the foregoing Merger or
filings under any Premerger Notification Rules, provided that it shall afford
the Company a reasonable opportunity to participate therein. Neither party shall
initiate any meeting or discussion with any Governmental Entity with respect to
any filings, applications, investigation, or other inquiry regarding the Merger
or filings under any Premerger Notification Rules without giving the other party
reasonable prior notice of the meeting or discussion and, to the extent
permitted by the relevant Governmental Entity, the opportunity to attend and
participate (which, at the request of either party, shall be limited to outside
antitrust counsel only); provided, however, that the Company shall not initiate
any offer to any Governmental Entity with respect to any proposed Divestiture
Action. Notwithstanding anything herein to the contrary, Parent shall take any
and all action necessary, including but not limited to (i) selling or otherwise
disposing of, or holding separate and agreeing to sell or otherwise dispose of,
assets, categories of assets or businesses of the Company or Parent or their
respective Subsidiaries; (ii) terminating existing relationships, contractual
rights or obligations of the Company or Parent or their respective Subsidiaries;
(iii) terminating any venture or other arrangement; (iv) creating any
relationship, contractual rights or obligations of the Company or Parent or
their respective Subsidiaries or (v) effectuating any other change or
restructuring of the Company or Parent or their respective Subsidiaries (and, in
each case, shall enter into agreements or stipulate to the entry of an order or
decree or file appropriate applications with any Antitrust Authority in
connection with any of the foregoing and in the case of actions by or with
respect to the Company or its Subsidiaries or its or their businesses or assets,
by consenting to such action by the Company and provided that any such action
may, at the discretion of the Parent, be conditioned upon consummation of the
Merger) (each a "Divestiture Action") to ensure that no Governmental Entity
enters any order, decision, judgment, decree, ruling, injunction (preliminary or
permanent), or establishes any law, rule, regulation or other action
preliminarily or permanently restraining, enjoining or prohibiting the
consummation of the Merger, ("Antitrust Prohibition") and to ensure that no
Antitrust Authority with the authority to clear, authorize or otherwise approve
the consummation of the Merger, fails to do so by the Termination Date. In
44
the event that any action is threatened or instituted challenging the Merger as
violative of any Premerger Notification Rule or other Antitrust Law, Parent
shall take all action necessary, including but not limited to any Divestiture
Action, to avoid or resolve such action. In the event that any permanent or
preliminary injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement
unlawful or that would restrain, enjoin or otherwise prevent or materially delay
the consummation of the transactions contemplated by this Agreement, Parent
shall take promptly any and all steps necessary to vacate, modify or suspend
such injunction or order so as to permit such consummation prior to the
Termination Date. The parties shall take reasonable efforts to share information
protected from disclosure under the attorney-client privilege, work product
doctrine, joint defense privilege or any other privilege pursuant to this
section so as to preserve any applicable privilege.
(c) Parent and Merger Sub and any of their respective Affiliates
shall not take any action with the intention to, or that could reasonably be
expected to, hinder or delay the obtaining of clearance or any necessary
approval of any Antitrust Authority under an Premerger Notification Rule or
Antitrust Law or the expiration of the required waiting period under the
Premerger Notification Rules or any other Antitrust Laws, except as may be
necessary, in its good faith judgment, to resist or reduce the scope of a
Divestiture Action but in no event shall any delay caused by any such action
extend beyond the Termination Date.
(d) If any Divestiture Action agreed to by Parent requires action
by or with respect to the Company or its Subsidiaries or its or their businesses
or assets, and such action would constitute a breach of this Agreement, the
Parent hereby agrees to consent to the taking of such action by the Company and
any such action may, at the discretion of the Company, be conditioned upon
consummation of the Merger.
(e) Notwithstanding anything else contained herein, the provisions
of this Section 5.4 shall not be construed to require either party to undertake
any efforts, or to take or consent to any action, if such efforts, action or
consent would be reasonably likely to result in a material adverse effect on the
business, operations, financial condition or results of operations of the
combined business of Parent and the Company after giving effect to the
consummation of the transactions contemplated hereby.
5.5 Employee Matters.
(a) Parent or the Surviving Corporation shall take such action as
may be necessary so that on and after the Effective Time through the period
ending December 31, 2008, employees of the Company and its Subsidiaries, other
than current elected executive officers of the Company (approximately 20
individuals), who are not covered by any collective bargaining agreement or
labor contract who remain employed after the Closing by Parent, its
Subsidiaries, Affiliates or the Surviving Corporation (the "Parent Group"), are
provided compensation opportunities (including, but not limited to, base salary,
base wages, annual and long-term incentive compensation and phantom stock and
phantom option awards) and benefits
45
opportunities (including, but not limited to, pension and welfare benefits and
vacation pay but excluding equity compensation) which are, in the aggregate,
materially no less favorable than the compensation and benefits (including the
target value of phantom options, phantom restricted stock and performance units)
made available by the Company and its Subsidiaries to its employees immediately
prior to the Effective Time. To the extent not duplicative of benefits, for
purposes of eligibility to participate, calculation of benefits and vesting in
all benefits provided by the Parent Group to officers and employees of the
Company and its Subsidiaries, such officers and employees will be credited with
their years of benefits eligibility service with the Company and its
Subsidiaries and any predecessors thereof to the extent such service with a
predecessor was so recognized under analogous Employee Benefit Plans (including,
but not limited to vacation pay plans) of the Company and its Subsidiaries prior
to the Effective Time. The eligibility of any such officer or employee of the
Company and its Subsidiaries to participate in any welfare benefit plan or
program of the Parent Group shall not be subject to any exclusions for any
pre-existing conditions if such individual had met the participation
requirements of similar benefit plans and programs of the Company and its
Subsidiaries prior to the Effective Time. Amounts paid before the Effective Time
by such officers and employees of the Company and its Subsidiaries under any
health plans of the Company or its Subsidiaries shall, after the Effective Time,
be taken into account in applying deductible and out-of-pocket limits applicable
under the health plans of the Parent Group to the same extent as if such amounts
had, when paid, been paid under such health plans of the Parent Group. Nothing
contained in this Section 5.5 shall create any rights in any officer or employee
of the Company or any of its Subsidiaries in respect of continued employment for
any specified period of any nature or kind whatsoever or, except as set forth in
this Agreement, limit Parent's or the Surviving Corporation's power to amend or
terminate any particular Employee Benefit Plan or Foreign Benefit Plan or
require (and the Company shall take no action that would require) the Parent or
Surviving Corporation to continue any particular Employee Benefit Plan or
Foreign Benefit Plan. To the extent that an agreement with a labor union, works
council or a similar entity obligates the Company to require a purchaser or
merger partner to assume the terms of that agreement, Parent agrees to cause the
Surviving Corporation to recognize the entity that is a party to such an
agreement as the exclusive bargaining representative of the covered employees
and to cause the Surviving Corporation to adopt the terms of that agreement and
any related and current memorandums of agreement between the Company and such
entity.
(b) Except as necessary to comply with applicable law, for a period
ending on the later of (i) twelve months from the Effective Time or (ii)
December 31, 2008, Parent Group shall not terminate or otherwise amend the
severance plans described in Schedule 5.5(b) of the Company Disclosure Letter in
a manner adverse to any officer or employee of the Company or any of its
Subsidiaries covered by such plans immediately prior to the Effective Time.
Notwithstanding the foregoing, Parent Group shall not, with respect to employees
of the Company and its Subsidiaries who remain Employed after the signing by the
Parent Group, terminate or permit the Surviving Corporation or its Subsidiaries
to terminate or otherwise amend any severance plan at a time, or in a manner,
not permitted under the terms of that plan.
(c) Parent or the Surviving Corporation shall take such action as
may be necessary so that on or immediately after the Effective Time, the
benefits payable under the
46
Lyondell Chemical Company Supplementary Executive Retirement Plan, the Lyondell
Chemical Company Executive Deferral Plan, the Lyondell Chemical Company Director
Deferral Plan and the Lyondell Chemical Company Retirement Plan for Non-Employee
Directors are paid in accordance with plan terms. Parent or the Surviving
Corporation shall take such action as may be necessary so that the benefits
payable in cash under outstanding performance unit awards, phantom option awards
and phantom restricted stock awards under the terms of (i) the Lyondell Chemical
Company Non-Executive Incentive Plan will be paid in full on or immediately
after the Effective Time in accordance with their terms, and (ii) the Millennium
Chemicals Inc. Non-Executive Incentive Plan, the Equistar Chemicals L.P. 2001
Incentive Plan, the Equistar Chemicals, L.P. Non-Executive Incentive Plan and
the Houston Refining L.P. Non-Executive Incentive Plan (the "Subsidiary
Incentive Plans") will be paid in full on the later of January 15, 2008 or
thirty days after the Effective Time, in each case with such payments under the
Lyondell Chemical Company Non-Executive Incentive Plan and the Subsidiary
Incentive Plans to be based on the methodology described in Sections 2.3, 2.4
and 2.5 and it is expressly understood and agreed that the Subsidiary Incentive
Plans will be amended prior to the Effective Time to reflect these obligations
and as necessary to comply with section 409A of the Code; provided that, such
amendments do not cause a material increase in the cost to the Company of
providing benefits under such plans. Parent or the Surviving Corporation shall
cause the Company and its Subsidiaries to pay annual incentive bonuses for the
2007 calendar year, in accordance with the terms of the bonus plans or programs
presently in effect, based on the actual achievement of the approved performance
criteria for 2007, provided all such annual incentive bonuses for the 2007
calendar year have not been made by the Company prior to the Closing. In
furtherance of the provisions set forth in Section 5.5(a) above, Parent or the
Surviving Corporation shall cause the Company and its Subsidiaries to administer
the annual cash bonus awards under the existing administrative guidelines for
annual cash bonus awards in all material respects so that annual cash bonuses
payable in 2008 with respect to the 2007 performance year shall be determined on
the basis of financial performance achieved by the Company and its Subsidiaries
and shall not be affected in any way by any expenses or balance sheet changes on
or after the Effective Time resulting from or related to the Merger.
5.6 Indemnification; Directors' and Officers' Insurance.
(a) Without limiting any other rights that any Indemnified Person
(as defined below) may have pursuant to any employment agreement or
indemnification agreement in effect on the date hereof, from and after the
Effective Time through the six year anniversary of the Effective Time, the
Surviving Corporation shall indemnify, defend and hold harmless (and Parent
shall cause the Surviving Corporation to indemnify, defend and hold harmless)
each Person who is now, or has been at any time prior to the date of this
Agreement or who becomes prior to the Effective Time, a director or officer of
the Company or any of its Subsidiaries or who acts as a fiduciary under any
Employee Benefit Plan of the Company or any of its Subsidiaries in their
capacity as such and not as stockholder or optionholder of the Company or its
Subsidiaries (the "Indemnified Persons") against all losses, claims, damages,
costs, fines, penalties, expenses (including attorneys' and other professionals'
fees and expenses), liabilities or judgments or amounts that are paid in
settlement (with the approval of the indemnifying party), of or incurred in
connection with any threatened or actual claim, action, suit, proceeding or
investigation to which such Indemnified Person is a party based, in whole or in
part, on or arising, in whole or in
47
part, out of the fact that such Person is or was a director or officer of the
Company or any of its Subsidiaries, a fiduciary under any Employee Benefit Plan
of the Company or any of its Subsidiaries or is or was serving at the request of
the Company or any of its Subsidiaries as a director, officer, employee or agent
of another corporation, partnership, limited liability company, joint venture,
employee benefit plan, trust or other enterprise or by reason of anything done
or not done by such Person in any such capacity, pertaining to any act or
omission occurring or existing prior to, the Effective Time and whether asserted
or claimed prior to, at or after the Effective Time ("Indemnified Liabilities"),
including all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to, this Agreement or the
Transactions, in each case to the fullest extent permitted under applicable law
(and the Surviving Corporation shall pay reasonable expenses incurred in defense
of any claim in connection therewith in advance of the final disposition of any
such claim, action, suit, proceeding or investigation to each Indemnified Person
to the fullest extent permitted under applicable law; provided that any person
to whom expenses are advanced provides an undertaking to repay such advances if
it is ultimately determined that such person is not entitled to
indemnification). Without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Indemnified
Persons (whether asserted before or after the Effective Time), (i) the
Indemnified Persons may retain the Company's regularly engaged legal counsel or
other counsel satisfactory to them, and Parent and the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Persons as promptly as statements therefor are received, and (ii) Parent and the
Surviving Corporation shall cooperate in the defense of any such matter,
provided that neither Parent nor the Surviving Corporation shall be liable for
any settlement effected without its prior written consent. Any Indemnified
Person wishing to claim indemnification under this Section 5.6, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify the
Surviving Corporation (but the failure so to notify shall not relieve a party
from any obligations that it may have under this Section 5.6 except to the
extent such failure materially prejudices such party's position with respect to
such claims) and, if required by law, shall deliver to the Surviving Corporation
an undertaking to repay any amounts advanced to it if it shall ultimately be
determined that such Indemnified Person is not entitled to indemnification, but
without any requirement for the posting of a bond or any other terms or
conditions other than those expressly set forth herein; provided further, that
Parent shall not be obligated pursuant to this Section 5.6(a) to pay the fees
and disbursements of more than one counsel for all Indemnified Persons in any
single action, unless, in the good faith judgment of any of the Indemnified
Persons, there is or may be a conflict of interests between two or more of such
Indemnified Persons, in which case there may be separate counsel for each
similarly situated group.
(b) Parent and the Surviving Corporation shall not amend, repeal or
otherwise modify the Certificate of Incorporation or Bylaws of the Surviving
Corporation in any manner that would adversely affect (or manage the Surviving
Corporation or its Subsidiaries, with the intent to adversely affect) the rights
thereunder or under the Company Certificate of Incorporation or Company Bylaws
of any Indemnified Person to indemnification, exculpation and advancement except
to the extent required by law. Parent shall, and shall cause the Surviving
Corporation to, fulfill and honor any indemnification or exculpation agreements
between the Company and any of its directors, officers or employees existing
immediately prior to the Effective Time.
48
(c) Parent and the Surviving Corporation shall indemnify any
Indemnified Person against all reasonable costs and expenses (including
reasonable attorneys' fees and expenses), relating to the enforcement of such
Indemnified Person's rights under this Section 5.6 or under any charter, bylaw
or contract, provided that such Indemnified Party is successful in enforcing
such claim.
(d) Parent agrees that immediately prior to the Effective Time, the
Company will cause to be put in place, and Parent shall fully prepay immediately
prior to the Effective Time, "tail" insurance policies with a claims period of
at least six years from the Effective Time from an insurance carrier with the
same or better credit rating as the Company's current insurance carrier with
respect to directors' and officers' liability insurance in an amount and scope
at least as favorable as the Company's existing policies with respect to
matters, acts or omissions existing or occurring at or prior to the Effective
Time; provided, that in no event shall Parent be required to spend more than
200% (the "Cap Amount") of the last annual premium paid by the Company prior to
the date hereof (the amount of such premium being set forth in Schedule 3.1(q)
of the Company Disclosure Letter) per policy year of coverage under such tail
policy; provided, further that if the cost per policy year of such insurance
exceeds the Cap Amount, Parent shall purchase as much coverage per policy year
as reasonably obtainable for the Cap Amount.
(e) In the event that Parent or the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any other Person, then, in each such case, proper
provisions shall be made so that such other Person shall assume the obligations
set forth in this Section 5.6(e) in addition to the Surviving Corporation
remaining liable for such obligations. The provisions of this Section 5.6(e) are
intended to be for the benefit of, and shall be enforceable by, the parties
hereto and each Person entitled to indemnification or insurance coverage or
expense advancement pursuant to this Section 5.6(e), and his heirs and
representatives.
(f) Parent will ensure (including providing funding, if necessary)
that the obligations of the Surviving Corporation in this Section 5.6 are
fulfilled.
5.7 Agreement to Defend. In the event any claim, action, suit,
investigation or other legal or administrative proceeding by any Governmental
Entity or other Person is commenced that questions the validity or legality of
the Transactions or seeks damages in connection therewith, the parties hereto
agree to cooperate and use their reasonable best efforts to defend against and
respond thereto. The Company shall give Parent reasonable opportunity to
participate in the defense or settlement of any stockholder litigation against
the Company and its directors relating to any Transaction, provided, that no
such settlement shall be agreed to without Parent's consent, which shall not be
unreasonably withheld, conditioned or delayed.
5.8 Public Announcements. The parties hereto will consult with each
other before issuing, and will provide each other reasonable opportunity to
review and comment upon,
49
any press release or otherwise making any written public statements with respect
to this Agreement, the Merger or the other Transactions, and shall not issue any
such press release or make any such written public statement prior to such
consultation, except as Parent, Merger Sub or the Company may be required by
applicable law, court order or by obligations pursuant to any listing agreement
with any national securities exchange (in which case such party will, to the
extent practicable, promptly inform the other parties hereto in writing in
advance of such compelled disclosure).
5.9 Advice of Certain Matters; Control of Business. Subject to
compliance with all applicable laws, the Company and Parent, as the case may be,
shall confer on a regular basis with each other, report on operational matters
and shall promptly advise each other orally and in writing of any change or
event having, or which would be reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect or Parent Material Adverse
Effect, as the case may be. The Company and Parent shall promptly provide each
other (or their respective counsel) copies of all filings made by such party or
its Subsidiaries with the SEC or any other Governmental Entity in connection
with this Agreement and the Transactions. Prior to the Effective Time, the
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of the Company's operations.
5.10 Conveyance Taxes. The Company and Parent will (a) cooperate in the
preparation, execution and filing of all Tax Returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees and any similar Taxes which become
payable in connection with the Transactions, (b) cooperate in the preparation,
execution and filing of all applications or other documents regarding any
applicable exemptions to any such Tax or fee, and (c) each pay any such Tax or
fee which becomes payable by it on or before the due date therefor.
5.11 Investigation by Parent and Merger Sub; No Other Representations
or Warranties.
(a) Each of Parent and Merger Sub acknowledges and agrees that it
has made its own inquiry and investigation into, and, based on the information
provided by the Company, has formed an independent judgment concerning, the
Company and its Subsidiaries and their businesses and operations, and Parent and
Merger Sub have requested such documents and information from the Company as
each such party considers material in determining whether to enter into this
Agreement and to consummate the transactions contemplated in this Agreement.
Each of Parent and Merger Sub acknowledges and agrees that it has had an
opportunity to ask all questions of and receive answers from the Company with
respect to any matter such party considers material in determining whether to
enter into this Agreement and to consummate the transactions contemplated in
this Agreement.
(b) Each of Parent and Merger Sub agrees that, except for the
representations and warranties made by the Company that are expressly set forth
in Section 3.1 of this Agreement (as modified by the Company Disclosure Letter
or as disclosed in the
50
Company SEC Documents) and in any certificate provided pursuant to Section
6.2(c), neither the Company nor any other Person has made or shall be deemed to
have made any representation or warranty of any kind. Without limiting the
generality of the foregoing, each of Parent and Merger Sub agrees that neither
the Company, any holder of the Company's securities nor any of their respective
Affiliates or Representatives, makes or has made any representation or warranty
to Parent, Merger Sub or any of their representatives or Affiliates with respect
to:
(i) any projections, forecasts or other estimates, plans or
budgets of future revenues, expenses or expenditures, future results of
operations (or any component thereof), future cash flows (or any component
thereof) or future financial condition (or any component thereof) of the
Company or any of its Subsidiaries or the future business, operations or
affairs of the Company or any of its Subsidiaries heretofore or hereafter
delivered to or made available to Parent, Merger Sub or their respective
representatives or Affiliates; or
(ii) any other information, statement or documents heretofore
or hereafter delivered to or made available to Parent, Merger Sub or their
respective representatives or Affiliates, except to the extent and as
expressly covered by a representation and warranty made by the Company and
contained in Section 3.1 of this Agreement.
5.12 Financing.
(a) Parent shall use its reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to arrange and consummate the financing necessary to
consummate the Transactions (the "Debt Financing") on the terms and conditions
described in the Debt Commitment Letter, including using reasonable best efforts
to (i) satisfy on a timely basis all terms, covenants and conditions set forth
in the Debt Commitment Letter; (ii) enter into definitive agreements with
respect thereto on the terms and conditions contemplated by the Debt Commitment
Letter; (iii) enforce its rights under the Debt Commitment Letter; and (iv)
consummate the Debt Financing at or prior to the Effective Time. Parent will
furnish correct and complete copies of all such definitive agreements to the
Company promptly upon their execution.
(b) Parent shall keep the Company informed with respect to all
material activity concerning the status of the Debt Financing contemplated by
the Debt Commitment Letter and shall give the Company prompt notice of any
material adverse change with respect to such Debt Financing. Without limiting
the foregoing, Parent agrees to notify the Company promptly, and in any event
within two Business Days, if at any time (i) any Debt Commitment Letter shall
expire or be terminated for any reason, (ii) any financing source that is a
party to any Debt Commitment Letter notifies Parent that such source no longer
intends to provide financing to Parent on the terms set forth therein, or (iii)
for any reason Parent no longer believes in good faith that it will be able to
obtain all or any portion of the Financing contemplated by the Debt Commitment
Letter on the terms described therein. Parent shall not,
51
and shall not permit any of its Affiliates to, without the prior written consent
of the Company, take or fail to take any action or enter into any transaction,
including any merger, acquisition, joint venture, disposition, lease, contract
or debt or equity financing, that could reasonably be expected to breach or make
untrue any representation or warranty contained in the Commitment Letters or
otherwise impair, delay or prevent consummation of the Financing contemplated by
any of the Debt Commitment Letter. Parent shall not amend or alter, or agree to
amend or alter, any Debt Commitment Letter in any manner that would prevent or
materially impair or delay the consummation of Transactions without the prior
written consent of the Company.
(c) If any portion of the Debt Financing becomes unavailable on the
terms and conditions contemplated in the Debt Commitment Letter or any Debt
Commitment Letter shall be terminated or modified in a manner materially adverse
to Parent for any reason, Parent shall use its reasonable best efforts to
arrange to obtain alternative financing from alternative sources in an amount
sufficient to consummate the Transactions ("Alternate Financing") and to obtain,
and, if obtained, will provide the Company with a copy of, a new financing
commitment that provides for at least the same amount of financing as such Debt
Commitment Letter as originally issued and on terms and conditions (including
termination rights and funding conditions) no less favorable in the aggregate to
Parent or Merger Sub than those included in such Debt Commitment Letter (the
"New Commitment Letter"). To the extent applicable, Parent shall use its
reasonable best efforts to take, or cause to be taken, all things necessary,
proper or advisable to arrange promptly and consummate the Alternate Financing
on the terms and conditions described in any New Commitment Letter, including
using reasonable best efforts to (i) satisfy on a timely basis all terms,
covenants and conditions set forth in the New Commitment Letter; (ii) enter into
definitive agreements with respect thereto on the terms and conditions
contemplated by the New Commitment Letter; (iii) enforce its rights under the
New Commitment Letter; and (iv) consummate the Alternate Financing at or prior
to the Closing.
5.13 Reasonable Best Efforts; Notification.
(a) Except to the extent that the parties' obligations are
specifically set forth elsewhere in this ARTICLE V, upon the terms and subject
to the conditions set forth in this Agreement (including Section 4.2), each of
the parties shall use reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other Transactions.
(b) The Company shall use commercially reasonable efforts in
connection with the Debt Financing to (provided that none of the following shall
unreasonably interfere with the operation of the Company):
(i) provide to Parent all cooperation reasonably requested by
Parent that is reasonably necessary and customary;
52
(ii) participate in customary meetings, presentations, road
shows, due diligence sessions and drafting sessions and sessions with
rating agencies;
(iii) assist Parent with the preparation of materials for
rating agency presentations and offering documents (including private
placement memoranda, bank information memoranda, prospectuses and similar
documents) necessary and customary in connection with the Debt Financing;
(iv) assist Parent with the preparation of an offering
memorandum, including the "Business" section, the "Risk Factors" section
and the "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" section, in accordance with customary practices for
an offering under Rule 144A under the Securities Act;
(v) furnish Parent with financial and other pertinent
information regarding the Company as may be reasonably requested by Parent
to consummate the Debt Financing, including all financial statements and
financial data of the type and form customarily included in private
placements under Rule 144A under the Securities Act and the financial data
required by Item 3-01 of Regulation S-X under the Securities Act;
(vi) assist Parent in procuring accountants' comfort letters
and consents, payoff letters, lien releases, legal opinions, surveys and
title insurance as reasonably requested by Parent;
(vii) provide and execute customary officer's certificates and
other similar documents as may be reasonably requested by Parent so long as
no such document is effective until the occurrence of the Effective Date;
(viii) cooperate with the marketing efforts of Parent and its
financing sources for any Debt Financing to be raised by Parent to complete
the transactions contemplated hereby, and
(ix) take all corporate actions, subject to the occurrence of
the Effective Time, reasonably requested by Parent in connection with the
consummation of the Debt Financing.
(c) All non-public or otherwise confidential information regarding
the Company obtained by Parent pursuant to this paragraph shall be kept
confidential in accordance with the Confidentiality Agreement.
53
(d) Parent shall, promptly upon request by the Company, reimburse
the Company for all out-of-pocket costs and third-party expenses incurred by the
Company and its Subsidiaries and their respective representatives in connection
with the cooperation set forth in this Section 5.13. Nothing contained in
Section 5.13(b) shall require the Company or any of its Subsidiaries to pay any
commitment or other similar fee or incur any other liability in connection with
the Debt Financing prior to the Effective Time. Parent shall indemnify and hold
harmless the Company and its Subsidiaries and their respective officers,
directors and other representatives for and against any and all losses or
damages suffered or incurred by them in connection with the arrangement of the
Debt Financing and any information utilized in connection therewith except with
respect to information supplied by the Company specifically for inclusion or
incorporation by reference therein.
(e) The Company shall give prompt notice to Parent, and Parent or
Merger Sub shall give prompt notice to the Company, upon becoming aware (i) that
any representation or warranty made by it in this Agreement has become untrue or
inaccurate in any material respect, (ii) of any condition, event or circumstance
that will result in any of the conditions in Section 6.2(a) or 6.3(a) not being
met, or (iii) of the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
(f) Parent and its Affiliates shall not (i) amend or otherwise
change any of its or Merger Sub's organization documents, or (ii) enter into any
transaction or take any action, that in the case of clause (i) or (ii) could
reasonably be expected to have a Parent Material Adverse Effect.
5.14 Rule 16b-3. Prior to the Effective Time, the Company may take such
actions as may be necessary to cause dispositions of equity securities of the
Company (including derivative securities) pursuant to the transactions
contemplated by this Agreement by any officer or director of the Company who is
subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3
promulgated under the Exchange Act in accordance with the procedures set forth
in such Rule 16b-3.
5.15 New Jersey Industrial Site Recovery Act.
(a) Prior to and after the Closing Date, to the extent that the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. ("ISRA") is
applicable to the Company's denatured alcohol manufacturing facility in Newark,
New Jersey (the "New Jersey Property"), the Company shall be responsible for
taking all necessary actions to comply with the requirements of ISRA with
respect to the transaction as contemplated hereby, including, but not limited
to, submitting all necessary forms and conducting any required investigation and
remediation, and shall bear all of the costs and expenses associated with such
compliance.
54
(b) The Company shall provide Parent with advance copies of all
correspondence and documents to be filed in connection with ISRA and shall
cooperate with Parent with respect to any reasonable comments suggested by
Parents to such filings.
5.16 Tender Offer.
(a) Notwithstanding anything to the contrary in this Agreement, the
Confidentiality Agreement or otherwise, in the event that Parent determines, in
its reasonable, good faith judgment that doing so will increase the likelihood
of the consummation of the transactions contemplated hereby, Parent shall have
the right to commence, or to cause Merger Sub or another one of its affiliates
(such entity, the "Tender Offeror") to commence, at any time after the date
hereof, a cash tender offer for any and all of the issued and outstanding shares
of the Company Common Stock at a purchase price per share, net to the holders
thereof, equal to the Merger Consideration, provided, that (i) it shall be a
condition to the obligation of the Tender Offeror to accept for payment and pay
for shares of Company Common Stock tendered in the tender offer that there shall
have been validly tendered and not withdrawn prior to the expiration date of the
tender offer that number of shares of Company Common Stock which, when added to
any shares of Company Common Stock owned by Parent and Merger Sub, represents
90% or greater of the issued and outstanding shares of Company Common Stock
(such condition, the "Minimum Condition"), (ii) except for the Minimum
Condition, the obligation of the Tender Offeror to accept for payment and pay
for shares of Company Common Stock tendered in the tender offer shall not be
more conditional than the obligation of Parent and Merger Sub to consummate the
Merger, (iii) Parent, Merger Sub and/or the Tender Offeror shall be obligated to
consummate (x) the Merger or (y) a merger providing for cash consideration at
least equal to the Merger Consideration and which shall otherwise be on terms
and conditions no less favorable to the holders of shares of Company Common
Stock than the Merger, (iv) the tender offer shall comply with all applicable
laws, including the Exchange Act, Sections 14(d) and 14(e) thereof and the
rules, regulations and schedules promulgated thereunder, and (v) the Tender
Offeror shall not be required to accept for payment or pay for any validly
tendered shares if, at the expiration date of the tender offer the conditions
set forth in Section 6.1 (other than Section 6.1(a)) and Section 6.2 of this
Agreement shall not have been satisfied or waived. The expiration date of the
tender offer shall not be earlier than 60 calendar days after the date hereof;
provided, however, that if a Third Party commences a tender offer for 50% of
more of the outstanding shares of Company Common Stock, the tender offer by the
Tender Offeror may expire one (1) Business Day prior to the initial expiration
date of such other tender offer. The parties hereto shall (a) negotiate in good
faith and as expeditiously as practicable any and all amendments, modifications
or waivers of this Agreement and the Confidentiality Agreement necessary or
appropriate to implement this Section 5.16, (b) make any and all amendments or
modifications to the Proxy Statement, (c) make any and all filings with or
submissions to (and/or make any and all amendments or modifications to existing
filings or submissions), and seek any and all consents, authorizations and
permits from, any Governmental Entity necessary or appropriate in light of the
tender offer, including under any Antitrust Law, other applicable law or
otherwise, and (d) otherwise take any and all actions necessary or appropriate
to implement this Section 5.16 and to ensure the Merger and the tender offer
comply with all applicable laws and are consummated. For avoidance of doubt, the
Company acknowledges that the representations and warranties set forth in
Sections 3.1(v) and 3.1(y) apply to the tender offer described in this
55
Section 5.16. In the event that the Tender Offeror shall acquire in the
aggregate a number of the outstanding shares of Company Common Stock, pursuant
to the tender offer or otherwise, sufficient to enable Parent, Merger Sub or the
Company to cause the Merger to become effective pursuant to Section 253 of the
DGCL without a meeting of stockholders of the Company, Parent shall take all
necessary and appropriate action to cause the Merger to become effective
pursuant to Section 253 of the DGCL as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with and subject to the DGCL. For avoidance of doubt, in such event consummation
of the Merger shall not be subject to any of the conditions set forth in Article
VI hereof. Parent shall amend or alter the Debt Commitment Letter or enter into
new debt commitment letter(s) that would enable the Tender Offeror to finance
the tender offer and the Merger in order to effect the tender offer in
accordance with the provisions in this Section 5.16; provided that any such
financing shall be on terms no less favorable in the aggregate to Parent or
Merger Sub than those included in such Debt Commitment Letter and reasonably
satisfactory to the Company.
(b) Notwithstanding Section 1.5 hereof or any other provision
hereof, upon the completion of the tender offer and until the Effective Time
(the "Interim Period"), the Board of Directors of the Company shall have at
least three directors who are directors of the Company on the date of this
Agreement (the "Continuing Directors"); and provided further that, in such
event, if the number of Continuing Directors shall be reduced below three for
any reason whatsoever, the remaining Continuing Directors or Director shall
designate a person or persons to fill any such vacancy who shall be deemed to be
a Continuing Director. During the Interim Period, the approval of a majority of
the Continuing Directors then serving shall be required to (i) authorize any
agreement between the Company and any of its Subsidiaries, on the one hand, and
Parent, Merger Sub or any of their Affiliates on the other hand, (ii) amend or
terminate this Agreement on behalf of the Company, (iii) exercise or waive any
of the Company's rights or remedies hereunder, (iv) waive or extend the time for
performance of Parent's or Merger Sub's obligations hereunder, (v) amend the
Company's or any of its Subsidiaries' charter or bylaws, if such action would
adversely affect the holders of shares of Company Common Stock, or (vi) take any
other action by the Company in connection with this Agreement or the
transactions contemplated hereby required to be taken by the Company's Board of
Directors.
5.17 Business of Parent5.18 . From the date of this Agreement until the
Effective Time, (i) Parent will continue to engage in business in same general
type as now conducted by Parent, (ii) Parent will not consolidate or merge with
or into any other Person, and (iii) Parent will not sell or otherwise dispose of
all or substantially all of its assets to any other Person or Persons.
ARTICLE VI
CONDITIONS PRECEDENT
--------------------
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction at or prior to
56
the Closing Date of the following conditions, any or all of which may be waived
jointly by the parties hereto, in whole or in part, to the extent permitted by
applicable law:
(a) Stockholder Approval. This Agreement shall have been adopted by
the requisite vote of the stockholders of the Company in accordance with the
DGCL, the Company Certification of Incorporation and the Company Bylaws.
(b) Approvals. The waiting periods and approvals applicable to the
consummation of the Merger pursuant to the rules of the antitrust authorities of
the jurisdictions described in Schedule 6.1(b) shall have expired, been
terminated or been obtained, as applicable. All other consents, approvals,
permits and authorizations required to be obtained prior to the Effective Time
from any Governmental Entity, including any Antitrust Authority other than as
set forth in Schedule 6.1(b) under the Premerger Notifications Rules, shall have
been obtained, and any applicable waiting period shall have expired or been
terminated, except where the failure to comply would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect or a
material adverse effect on the business operations, financial condition or
results of operations of the combined business of Parent and the Company after
giving effect to the consummation of the transactions contemplated hereby.
(c) No Injunctions or Restraints. No Governmental Entity having
jurisdiction over any party hereto shall have issued any order, decree, ruling,
injunction or other action that is in effect (whether temporary, preliminary or
permanent) restraining, enjoining or otherwise prohibiting the consummation of
the Merger and no law or regulation shall have been adopted that makes
consummation of the Merger illegal or otherwise prohibited, including any
Antitrust Prohibition.
6.2 Additional Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction at or prior to the Closing Date of the following conditions, any or
all of which may be waived exclusively by Parent, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties of the Company.
(i) Each of the representations and warranties of the Company
set forth in this Agreement (other than the representations and warranties
contained in the second, fifth and seventh sentences of Section 3.1(b))
shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except that, in
each case, representations and warranties that speak as of a specified date
shall have been true and correct only on such date) except for such
failures to be true and correct (when taken together and disregarding all
qualifications and exceptions contained therein as to materiality or
Company Material Adverse Effect) that would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
57
(ii) The representations and warranties of the Company
contained in the second, fifth and seventh sentences of Section 3.1(b)
shall be true and correct as of the date of this Agreement and as of the
Closing Date, subject only to de minimis breaches.
(b) Performance of Obligations of the Company. The Company shall
have performed, or complied with, in all material respects all obligations
required to be performed or complied with by it under this Agreement at or prior
to the Closing Date.
(c) Compliance Certificate. Parent shall have received a
certificate of the Company signed by its Chief Executive Officer or Chief
Financial Officer, dated the Closing Date, confirming that the conditions in
Sections 6.2(a), (b), and (d) have been satisfied (it being agreed that in the
event Parent shall elect to exercise the Parent Closing Option in accordance
with Section 1.2, Parent shall have received such certificate dated as of the
First Eligible Closing Date).
(d) Absence of Company Material Adverse Effect. There shall not
have occurred after the date of this Agreement a Company Material Adverse
Effect.
6.3 Additional Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Closing Date of the following conditions, any or all of which may be
waived exclusively by the Company in whole or in part to the extent permitted by
applicable law:
(a) Representations and Warranties of Parent and Merger Sub.
(i) Each of the representations and warranties of Parent and
Merger Sub set forth in this Agreement (other than the representations and
warranties contained in Section 3.2(f)) shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except that, in each case, representations and
warranties that speak as of a specified date shall have been true and
correct only on such date) except for such failures to be true and correct
(when taken together and disregarding qualifications and exceptions
contained therein as to materiality or Parent Material Adverse Effect) that
would not be reasonably likely to have, individually or in the aggregate, a
Parent Material Adverse Effect.
(ii) The representations and warranties of Parent and Merger
Sub contained in Section 3.2(f) shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date except that those representations and warranties which address
matters only as of a particular date shall be true and correct as of such
date.
58
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub each shall have performed or complied with in all material respects
all obligations required to be performed by them under this Agreement at or
prior to the Closing Date.
(c) Payment Fund. Parent shall have deposited in the Payment Fund
cash in an amount sufficient to permit payment of the aggregate Merger
Consideration payable pursuant to Section 2.1, the aggregate Option
Consideration payable pursuant to Section 2.3 and the aggregate Performance Unit
Consideration pursuant to Section 2.5.
(d) Compliance Certificate. The Company shall have received a
certificate of Parent signed by its Chief Executive Officer or Chief Financial
Officer, dated the Closing Date, confirming that the conditions in Section
6.3(a), (b) and (c) have been satisfied.
ARTICLE VII
TERMINATION
------------
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
adoption of this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Company and Parent in each
case duly authorized by the Board of Directors (or a committee thereof);
(b) by either the Company or Parent:
(i) if:
(A) any Governmental Entity having jurisdiction over any
party hereto shall have issued any order, decree, ruling or injunction
or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger and such order,
decree, ruling or injunction or other action shall have become final
and nonappealable or if there shall be adopted any law or regulation
that makes consummation of the Merger illegal or otherwise prohibited;
provided, however, that the party seeking to terminate this Agreement
pursuant to this Section 7.1(b)(i)(A) shall have used all commercially
reasonable efforts to remove such order or reverse such action; or
(B) the adoption of this Agreement by the stockholders of
the Company shall not have been obtained upon a vote held at a duly
held meeting of the stockholders of the Company, or at any adjournment
thereof;
59
(ii) if the Merger shall not have been consummated on or before
5:00 p.m. New York time on February 15, 2008 (such date being, the
"Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(ii) shall not be available to any party
whose failure to fulfill any material covenant or agreement under this
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date; or
(iii) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth
in Section 6.2(a) or (b) or Section 6.3(a) or (b), as applicable, if it
were to be continuing as of the Closing Date and (B) cannot be or has not
been cured by the earlier of (x) 30 days after the giving of written notice
to the breaching party of such breach and the basis for such notice, and
(y) the Termination Date (a "Terminable Breach"); provided that the
terminating party is not then in Terminable Breach of any representation,
warranty, covenant or other agreement contained in this Agreement;
(c) by Parent within 15 Business Days thereafter if (i) the Board
of Directors of the Company or any committee thereof shall have publicly
withdrawn, modified or changed, in any manner that is adverse to Parent, its
approval or recommendation to the stockholders of the Company with respect to
this Agreement and the Merger, (ii) a tender or exchange offer that would
constitute a Takeover Proposal is commenced by a Third Party and the Board of
Directors or a committee thereof fails to recommend against acceptance of such
tender or exchange offer within 10 Business Days after the commencement thereof
(it being understood and agreed that any "stop, look and listen" communication
by the Board of Directors of the Company to the stockholders of the Company
pursuant to Rule 14d-9(f) of the Exchange Act, or any substantially similar
communication to the stockholders of the Company, shall not be deemed to
constitute a withdrawal, modification or change of its recommendation of this
Agreement or the Merger), or (iii) the Board of Directors of the Company or any
committee thereof publicly approves or recommends any Superior Proposal or
approves any letter of intent, agreement in principle, acquisition agreement or
similar agreement relating to any Superior Proposal (other than a permitted
confidentiality agreement); and
(d) by the Company if the Board of Directors of the Company or any
committee thereof has received a Takeover Proposal that constitutes a Superior
Proposal and made an Adverse Recommendation Change; provided that the Company
may not effect such termination unless the Company has contemporaneously with
such termination tendered payment to Parent of the Company Termination Fee.
7.2 Notice of Termination; Effect of Termination.
(a) A terminating party shall provide written notice of termination
to the other party specifying with particularity the reason for such
termination, and any termination shall be effective immediately upon delivery of
such written notice to the other party.
60
(b) In the event of termination of this Agreement by any party
hereto as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto
except with respect to this Section 7.2, the fifth and sixth sentences of
Section 5.2, Section , and ARTICLE VIII; provided, however, that notwithstanding
anything to the contrary herein, no such termination shall relieve any party
from liability for any damages (including, in the case of the Company, damages
based on the consideration that would have otherwise been payable to
stockholders of the Company) for intentional breach of any obligation hereunder,
or fraud.
7.3 Expenses and Other Payments.
(a) Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the Transactions, whether or
not the Merger shall be consummated.
(b) If (i) Parent terminates this Agreement pursuant to Section
7.1(c) or (ii) the Company terminates this Agreement pursuant to Section 7.1(d),
then the Company shall pay Parent a fee of $385 million (the "Company
Termination Fee") in cash by wire transfer of immediately available funds to an
account of an entity to be designated by Parent. If the fee shall be payable
pursuant to clause (i) of the immediately proceeding sentence, the fee shall be
paid no later than three (3) Business Days after notice of termination of this
Agreement, and if the fee shall be payable pursuant to clause (ii) of the
immediately preceding sentence, the fee shall be paid on the date of termination
of this Agreement.
(c) If (i) either Parent or the Company terminates this Agreement
pursuant to clause (B) of Section 7.1(b)(i), (ii) at the time of the
stockholders' meeting there shall have been publicly announced or disclosed a
bona fide Takeover Proposal (provided that any reference in the definition of
Takeover Proposal to 15% shall be deemed to be a reference to 40% for the
purposes of this clause (ii)) that shall have not been withdrawn at least five
(5) Business Days prior to the date of the vote taken at the stockholders
meeting and (iii) within 12 months after the date of such stockholders' meeting,
the Company enters into an agreement with respect to a Takeover Proposal, then
subject to and at the closing or consummation of such Takeover Proposal the
Company shall pay Parent the Company Termination Fee in cash by wire transfer of
immediately available funds to an account designated by Parent.
(d) In no event shall Parent be entitled to receive more than one
payment of the Company Termination Fee.
(e) The parties acknowledge and agree that the agreements contained
in this Section 7.3 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the parties would not enter
into this Agreement. If the Company fails to promptly pay the amount due by it
to Parent pursuant to this Section 7.3, and, in order to
61
obtain such payment, Parent commences a suit that results in judgment for Parent
for such amount, the Company shall pay Parent its reasonable costs and expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
such suit, together with interest on such amount from the date such payment was
required to be paid pursuant to the terms of this Agreement until the date of
payment at the prime rate of the lead bank under the Company's revolving credit
agreement in effect on the date such payment was required to be made.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 Schedule Definitions. All capitalized terms in the Company
Disclosure Letter and the Parent Disclosure Letter shall have the meanings
ascribed to them herein except as otherwise defined therein.
8.2 Nonsurvival of Representations, Warranties and Agreements. The
representations, warranties, and covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall terminate and be of
no further force and effect as of the Effective Time; provided, however, that
this Section 8.2 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time.
8.3 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, sent by facsimile
transmission, sent by overnight mail via a reputable overnight carrier, or sent
by certified or registered mail, postage prepaid, and shall be deemed to be
given and received (a) when so delivered personally, (b) upon receipt of an
appropriate electronic answerback or confirmation when so delivered by facsimile
transmission (to such number specified below or another number or numbers as
such Person may subsequently designate by notice given hereunder) (provided that
any notice received by facsimile transmission at the addressee's location on any
day after 5:00 p.m. (addressee's local time) shall be deemed to have been
received at 9:00 a.m. (addressee's local time) on the next Business Day), or (c)
two Business Days after the date of mailing to the address below or to such
other address or addresses as such Person may hereafter designate by notice
given hereunder:
(i) if to Parent or Merger Sub, to:
Basell AF
Hoeksteen 66
2132 MS Hoofddorp
Facsimile: x00 0 00 0000 000
Attention: General Counsel
and:
62
Access Industries
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000 0000
Attention: Xxxxxx Xxxxxx
with a required copy to (which copy shall not constitute notice):
Skadden, Arps, Slate, Xxxxxxx & Xxxx (UK) LLP
00 Xxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx X00 0XX
Facsimile: x00 000 000 0000
Attention: Xxxxx Xxxxxxx
(ii) if to the Company, to:
Lyondell Chemical Company
One Houston Center
0000 XxXxxxxx Xxxxxx
Xxxxx 000, Xxxxxxx, Xxxxx
Facsimile: (000) 000 0000
Attention: Xxxxx X. Xxxxxx, General Counsel
with a required copy to (which copy shall not constitute notice):
Xxxxx Xxxxx, L.L.P.
One Shell Plaza
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000 0000
Attention: Xxxxxxx X. Xxxxxx
8.4 Rules of Construction.
(a) Each of the parties hereto acknowledges that it has been
represented by counsel of its choice throughout all negotiations that have
preceded the execution of this Agreement and that it has executed the same with
the advice of said independent counsel. Each party and its counsel cooperated in
the drafting and preparation of this Agreement and the documents referred to
herein, and any and all drafts relating thereto exchanged between the parties
shall be deemed the work product of the parties and may not be construed against
any party by reason of its preparation. Accordingly, any rule of law or any
legal decision that would require interpretation of any ambiguities in this
Agreement against any party that drafted it is of no application and is hereby
expressly waived.
63
(b) The inclusion of any information in the Company Disclosure
Letter or Parent Disclosure Letter shall not be deemed an admission or
acknowledgment, in and of itself and solely by virtue of the inclusion of such
information in the Company Disclosure Letter or Parent Disclosure Letter, as
applicable, that such information is required to be listed in the Company
Disclosure Letter or Parent Disclosure Letter, as applicable, or that such
information is material to the Company and its Subsidiaries taken as a whole,
Parent or Merger Sub, as the case may be. The headings, if any, of the
individual sections of each of the Parent Disclosure Letter and Company
Disclosure Letter are inserted for convenience only and shall not be deemed to
constitute a part thereof or a part of this Agreement. The Company Disclosure
Letter and Parent Disclosure Letter are arranged in sections corresponding to
those contained in Section 3.1 and Section 3.2 merely for convenience, and the
disclosure of (i) an item in one section of the Company Disclosure Letter or
Parent Disclosure Letter as an exception to a particular representation or
warranty and (ii) disclosures made in the Company SEC Documents shall in each
case be deemed adequately disclosed as an exception with respect to all other
representations or warranties to the extent that the relevance of such item to
such other representations or warranties is reasonably apparent on its face from
such item, notwithstanding the presence or absence of an appropriate section of
the Company Disclosure Letter or Parent Disclosure Letter with respect to such
other representations or warranties or an appropriate cross reference thereto.
(c) The specification of any dollar amount in the representations
and warranties or otherwise in this Agreement or in the Company Disclosure
Letter or Parent Disclosure Letter is not intended and shall not be deemed to be
an admission or acknowledgment of the materiality of such amounts or items, nor
shall the same be used in any dispute or controversy between the parties to
determine whether any obligation, item or matter (whether or not described
herein or included in any schedule) is or is not material for purposes of this
Agreement.
(d) All references in this Agreement to Exhibits, Schedules,
Articles, Sections, subsections and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any Articles, Sections, subsections or other
subdivisions of this Agreement are for convenience only, do not constitute any
part of such Articles, Sections, subsections or other subdivisions, and shall be
disregarded in construing the language contained therein. The words "this
Agreement," "herein," "hereby," "hereunder" and "hereof" and words of similar
import, refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The words "this Section," "this subsection" and
words of similar import, refer only to the Sections or subsections hereof in
which such words occur. The word "including" (in its various forms) means
"including, without limitation." Pronouns in masculine, feminine or neuter
genders shall be construed to state and include any other gender and words,
terms and titles (including terms defined herein) in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
expressly requires. Unless the context otherwise requires, all defined terms
contained herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms. Unless the context otherwise requires,
all references to a specific time shall refer to Houston, Texas time.
64
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, including via facsimile transmission, all of which shall be
considered one and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
8.6 Entire Agreement; No Third Party Beneficiaries. This Agreement
(together with the Confidentiality Agreement and any other documents and
instruments executed pursuant hereto) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. Except for the (i) rights
of holders of Company Common Stock to enforce their rights to receive Merger
Consideration in accordance with ARTICLE II upon consummation of the Merger in
the event the Merger is consummated, and (ii) Indemnified Persons, who are
intended to be third party beneficiaries of Section 5.6, and who shall have the
right to enforce such provisions directly, nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person other than the parties
hereto any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
8.7 Governing Law; Venue; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
(b) Parent hereby irrevocably designates, appoints and empowers The
Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as
its designee, appointee and agent to receive, accept and acknowledge for and on
its behalf, and its properties, assets and revenues, service for any and all
legal process, summons, notices and documents which may be served in any such
action, suit or proceeding which may be made on such designee, appointee and
agent in accordance with legal procedures prescribed for such courts, with
respect to any suit, action or proceeding in connection with or arising out of
this Agreement.
(c) THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, IF THE COURT OF CHANCERY OF
THE STATE OF DELAWARE OR THE DELAWARE SUPREME COURT DETERMINES THAT,
NOTWITHSTANDING SECTION 111 OF THE DGCL, THE COURT OF CHANCERY DOES NOT HAVE OR
SHOULD NOT EXERCISE SUBJECT MATTER JURISDICTION OVER SUCH MATTER, THE SUPERIOR
COURT OF THE STATE OF DELAWARE) AND THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA LOCATED IN THE STATE OF DELAWARE SOLELY IN CONNECTION WITH ANY DISPUTE
THAT ARISES IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS
OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS AGREEMENT OR IN RESPECT
OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR
65
INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IT IS NOT SUBJECT
THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT
THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS,
AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH
ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY BY SUCH A
DELAWARE STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY
SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT
MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN
CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN
SECTION 8.3 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID
AND SUFFICIENT SERVICE THEREOF.
(d) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III)
SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER
AND CERTIFICATIONS IN THIS SECTION 8.7.
8.8 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof to be null, void or unenforceable, or order any party to take any
action inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way be
affected or impaired thereby, unless the foregoing inconsistent action or the
failure to take an action constitutes a material breach of this Agreement or
makes this Agreement impossible to perform, in which case this Agreement shall
terminate.
8.9 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties except that, prior to the mailing of the Proxy Statement to the
Company's stockholders, Merger Sub may assign, in its sole discretion, any or
all of its rights, interest and obligations under this Agreement to Parent or
66
to any direct or indirect wholly-owned Subsidiary of Parent, but (x) no such
assignment shall relieve Parent or Merger Sub of any of its obligations under
this Agreement and (y) no such assignment shall be made that could reasonably be
expected to have a Parent Material Adverse Effect or to cause a material delay
in the satisfaction of the conditions set forth in Sections 6.1 and 6.2(d).
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. Any purported assignment in violation of this Section
8.9 shall be void.
8.10 Affiliate Liability. Each of the following is herein referred to
as a "Company Affiliate") (a) any direct or indirect holder of equity interests
or securities in the Company (whether limited or general partners, members,
stockholders or otherwise), and (b) any director, officer, employee,
representative or agent of (i) the Company or (ii) any Person who controls the
Company. No Company Affiliate shall have any liability or obligation to Parent
or Merger Sub of any nature whatsoever in connection with or under this
Agreement or the transactions contemplated hereby or thereby (other than claims
arising out of fraud), and Parent and Merger Sub hereby waive and release all
claims of any such liability and obligation.
8.11 Specific Performance. 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 its specific terms or were otherwise breached. Each
party agrees that, in the event of any breach or threatened breach by any other
party of any covenant or obligation contained in this Agreement, the
non-breaching party shall be entitled (in addition to any other remedy that may
be available to it, including monetary damages) to seek and obtain (a) a decree
or order of specific performance to enforce the observance and performance of
such covenant or obligation, and (b) an injunction restraining such breach or
threatened breach. Each party further agrees that no other party hereto or any
other Person shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 8.11, and each party hereto irrevocably waives any right it
may have to require the obtaining, furnishing or posting of any such bond or
similar instrument.
8.12 Joint Liability. Each representation, warranty, covenant and
agreement made by Parent or Merger Sub in this Agreement shall be deemed a
representation, warranty, covenant and agreement made by Parent and Merger Sub
jointly and all liability and obligations relating thereto shall be deemed a
joint liability and obligation of Parent and Merger Sub.
8.13 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors at any time
before or after adoption of this Agreement by the stockholders of the Company,
but, after any such adoption, no amendment shall be made which by law would
require the further approval by such stockholders without first obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.14 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed: (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (c) waive compliance
with
67
any of the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
68
IN WITNESS WHEREOF, each party has caused this Agreement to be signed by its
respective officer thereunto duly authorized, all as of the date first written
above.
BASELL AF
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
BIL ACQUISITION HOLDINGS LIMITED
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
LYONDELL CHEMICAL COMPANY
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Name: Xxx X. Xxxxx
Title: Chief Executive Officer
