EXHIBIT 4.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
TEMPLE-INLAND INC.,
TEMPLE-INLAND ACQUISITION CORPORATION
and
XXXXXXX CONTAINER CORPORATION
Dated as of January 21, 2002
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TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER ..................................................... 3
Section 1.1 The Offer ................................... 3
Section 1.2 The Notes Tender Offers ..................... 4
Section 1.3 Company Action .............................. 7
Section 1.4 Directors ................................... 9
ARTICLE II
THE MERGER .................................................... 11
Section 2.1 The Merger .................................. 11
Section 2.2 Closing .................................... 11
Section 2.3 Effective Time ............................. 11
Section 2.4 Effects of the Merger ....................... 11
Section 2.5 Certificate of Incorporation and By-Laws .... 12
Section 2.6 Directors ................................... 12
Section 2.7 Officers .................................... 12
ARTICLE III
CONVERSION OF SECURITIES ..................................... 12
Section 3.1 Effect on Capital Stock .................... 12
Section 3.2 Exchange of Certificates .................... 13
Section 3.3 Dissenting Shares ........................... 15
Section 3.4 Company Options ............................. 15
Section 3.5 Company Warrants ............................ 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................. 17
Section 4.1 Organization, Standing and Corporate Power .. 17
Section 4.2 Subsidiaries ................................ 18
Section 4.3 Capital Structure ........................... 18
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Section 4.4 Authority; Noncontravention; Filings and
Consents ............................................... 19
Section 4.5 Vote Required .......................................... 21
Section 4.6 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities ................................ 21
Section 4.7 Information Supplied ................................... 22
Section 4.8 Books and Records ...................................... 23
Section 4.9 Inventory .............................................. 23
Section 4.10 Absence of Certain Changes or Events ................... 23
Section 4.11 Litigation ............................................. 24
Section 4.12 Employee Benefit Plans; ERISA .......................... 24
Section 4.13 Taxes .................................................. 30
Section 4.14 State Takeover Statutes; Rights Agreement .............. 34
Section 4.15 Brokers; Schedule of Fees and Expenses ................. 34
Section 4.16 Permits; Compliance with Laws .......................... 35
Section 4.17 Environmental Matters .................................. 35
Section 4.18 Contracts; Debt Instruments ............................ 37
Section 4.19 Title to Properties .................................... 39
Section 4.20 Labor and Employment Difficulties....................... 39
Section 4.21 Opinions of Financial Advisors.......................... 40
Section 4.22 Interests of Officers and Directors..................... 40
Section 4.23 Intellectual Property................................... 40
Section 4.24 Insurance............................................... 43
Section 4.25 Customers and Suppliers................................. 43
Section 4.26 Regulation as a Utility................................. 44
Section 4.27 Qualifying Facility..................................... 44
Section 4.28 Modification of Employment Arrangements................. 44
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY.................................................... 44
Section 5.1 Organization, Standing and Corporate Power.............. 45
Section 5.2 Authority; Noncontravention; Filings and Consents....... 45
Section 5.3 Information Supplied.................................... 46
Section 5.4 Brokers................................................. 47
Section 5.5 No Prior Activities; Assets of Merger Subsidiary........ 47
Section 5.6 Sufficient Funds........................................ 47
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ARTICLE VI
COVENANTS OF THE COMPANY ................................................ 48
Section 6.1 Conduct of Business .................................... 48
Section 6.2 State Takeover Statutes ................................ 52
Section 6.3 Access to Information .................................. 52
Section 6.4 No Solicitation by the Company ......................... 53
Section 6.5 Litigation ............................................. 55
Section 6.6 Rights Agreement ....................................... 55
ARTICLE VII
COVENANTS OF PARENT AND MERGER SUBSIDIARY ............................... 55
Section 7.1 Indemnification ........................................ 55
Section 7.2 Obligations of Merger Subsidiary ....................... 56
Section 7.3 Employees .............................................. 57
ARTICLE VIII
ADDITIONAL AGREEMENTS ................................................... 59
Section 8.1 Stockholder Approval; Preparation of Company Proxy
Statement .............................................. 59
Section 8.2 HSR Act Filings; Reasonable Efforts; Notification ...... 61
Section 8.3 Public Announcements ................................... 63
Section 8.4 Confidentiality ........................................ 64
ARTICLE IX
CONDITIONS PRECEDENT .................................................... 64
Section 9.1 Conditions to Each Party's Obligation to Effect the
Merger ................................................ 64
ARTICLE X
TERMINATION ............................................................ 65
Section 10.1 Termination ............................................ 65
Section 10.2 Effect of Termination .................................. 66
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ARTICLE XI
GENERAL PROVISIONS ....................................................... 67
Section 11.1 Fees and Expenses ...................................... 67
Section 11.2 Amendment and Modification ............................ 68
Section 11.3 Extension; Waiver ...................................... 68
Section 11.4 Nonsurvival of Representations and Warranties .......... 68
Section 11.5 Notices ................................................ 68
Section 11.6 Interpretation ......................................... 69
Section 11.7 Counterparts ........................................... 70
Section 11.8 Entire Agreement; No Third-Party Beneficiaries ......... 70
Section 11.9 Governing Law .......................................... 70
Section 11.10 Assignment ............................................. 70
Section 11.11 Enforcement ............................................ 70
Section 11.12 Severability ........................................... 71
Annex I .................................................................... I-1
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LIST OF DEFINED TERMS
9-3/4% Senior Notes ......................................................... 1
9-3/4% Senior Notes Tender Offer ............................................ 1
9-3/8% Senior Notes ......................................................... 1
9-3/8% Senior Notes Tender Offer ............................................ 1
Acquisition Proposal ........................................................ 55
Agreement ................................................................... 1
Antitrust Laws .............................................................. 61
Appointment Date ............................................................ 48
Balance Sheet ............................................................... 23
Benefit Plans .............................................................. 25
Certificate of Merger ....................................................... 11
Certificates ................................................................ 13
Closing ..................................................................... 11
Closing Date ................................................................ 11
Code ........................................................................ 25
Company ..................................................................... 1
Company Board ............................................................... 2
Company Class B Stock ....................................................... 18
Company Common Stock ........................................................ 1
Company Disclosure Schedule ................................................. 18
Company Intellectual Property ............................................... 40
Company Material Adverse Effect ............................................. 17
Company Preferred Stock ..................................................... 18
Company Proxy Statement ..................................................... 21
Company SEC Documents ....................................................... 21
Company Stockholder Vote .................................................... 19
Company Stockholders Meeting ................................................ 60
Company Warrant ............................................................. 16
Confidentiality Agreement ................................................... 64
Consents .................................................................... 20
D&O Insurance ............................................................... 56
DGCL ........................................................................ 2
Effective Time .............................................................. 11
Environmental Claim ......................................................... 36
Environmental Law ........................................................... 36
ERISA ....................................................................... 25
ERISA Affiliate ............................................................. 24
ERISA Plans ................................................................. 25
Exchange Act ................................................................ 4
Exchange Fund ............................................................... 13
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Fully Diluted Shares ........................................................ 3
GAAP ........................................................................ 22
Governmental Entity ......................................................... 20
Hazardous Substance ......................................................... 36
HSR Act ..................................................................... 21
Indemnified Parties ......................................................... 56
Indentures .................................................................. 5
Independent Directors ....................................................... 10
License Agreements .......................................................... 41
Liens ....................................................................... 18
Merger ...................................................................... 11
Merger Consideration ........................................................ 13
Merger Subsidiary ........................................................... 1
Minimum Condition ........................................................... 3
Minimum Note Condition ...................................................... 5
Noteholders ................................................................. 6
Notes ....................................................................... 1
Notes Offer to Purchase ..................................................... 5
Notes Tender Offers ......................................................... 1
Notes Tender Offers Documents ............................................... 6
Offer ....................................................................... 1
Offer Documents ............................................................. 4
Option Plans ............................................................... 16
Order ....................................................................... 62
Parent ...................................................................... 1
Parent Material Adverse Effect .............................................. 45
Paying Agent ................................................................ 13
PBGC ........................................................................ 26
Permits ..................................................................... 35
Proposed Amendments ......................................................... 7
Recommendations ............................................................. 8
Rights ..................................................................... 18
Rights Agreement ............................................................ 18
Schedule 14D-9 ............................................................. 8
SEC ........................................................................ 4
Securities Act .............................................................. 21
Senior Notes ................................................................ 1
Senior Subordinated Notes .................................................. 1
Senior Subordinated Notes Tender Offer ...................................... 1
Shares ..................................................................... 1
Software .................................................................... 41
Stock Option Agreement ...................................................... 2
Stockholders ................................................................ 2
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Stockholders Agreement ..................................................... 2
Subsidiary ................................................................. 17
Superior Proposal .......................................................... 55
Supplemental Indentures .................................................... 6
Surviving Corporation ...................................................... 11
Tax Returns ................................................................ 30
Termination Fee ............................................................ 67
Trade Secrets .............................................................. 40
Trademarks ................................................................. 40
Trustee .................................................................... 16
WARN Act ................................................................... 40
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 21, 2002, is by and among Temple-Inland Inc., a Delaware corporation
("Parent"), Temple-Inland Acquisition Corporation, a Delaware corporation and an
indirect, wholly-owned subsidiary of Parent ("Merger Subsidiary"), and Xxxxxxx
Container Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of each of Parent, Merger
Subsidiary and the Company have unanimously approved the acquisition of the
Company by Parent and Merger Subsidiary;
WHEREAS, in furtherance of such acquisition, it is proposed that
Merger Subsidiary shall make a cash tender offer (the "Offer") to acquire all of
the issued and outstanding shares of Class A Common Stock, par value $.0001 per
share (the "Company Common Stock"), of the Company (the "Shares"), including the
associated Rights (defined below in Section 4.3), in accordance with the terms
provided in this Agreement;
WHEREAS, in furtherance of such acquisition, it is proposed that
simultaneously with the commencement of the Offer, Parent or its designee shall
make (i) a tender offer (the "9-3/8% Senior Notes Tender Offer") for all of the
$200 million aggregate principal amount at maturity of the Company's
outstanding 9-3/8% Senior Notes due 2007 (the "9-3/8% Senior Notes"); (ii) a
tender offer (the "9-3/4% Senior Notes Tender Offer") for all of the $225
million aggregate principal amount at maturity of the Company's outstanding
9-3/4% Senior Notes due 2007 (the "9-3/4% Senior Notes," and, together with the
9-3/8% Senior Notes, the "Senior Notes"), and (iii) a tender offer (the "Senior
Subordinated Notes Tender Offer," and, together with the 9-3/8% Senior Notes
Tender Offer and the 9-3/4% Senior Notes Tender Offer, the "Notes Tender
Offers") for all of the $250 million aggregate principal amount at maturity of
the Company's outstanding 9- 7/8% Senior Subordinated Notes due 2008 (the
"Senior Subordinated Notes," and, together with the Senior Notes, the "Notes");
WHEREAS, consummation of the Offer is expressly conditioned upon
consummation of each of the Notes Tender Offers;
WHEREAS, in furtherance of such acquisition, the Board of each of
Parent, Merger Subsidiary and the Company have approved this Agreement and the
Merger (as defined in Section 2.1) following the Offer in accordance with the
General Corporation Law of the State of Delaware (the "DGCL") and upon the terms
and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Company
Board"), following the unanimous recommendation of the Independent Special
Committee of the Company Board established to review the Offer and the Merger,
has determined that the consideration to be paid for each Share in connection
with the Offer and the Merger is fair to the holders of such Shares and has
resolved to recommend that the holders of such Shares accept the Offer and
approve this Agreement and each of the transactions contemplated by this
Agreement upon the terms and subject to the conditions set forth herein;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Subsidiary to enter into this Agreement, Parent and certain stockholders
of the Company (collectively, the "Stockholders") are entering into an
agreement, dated as of the date hereof (the "Stockholders Agreement") pursuant
to which the Stockholders will agree to tender all of their Shares in the Offer
and to take certain other actions in furtherance of the transactions
contemplated by this Agreement upon the terms and subject to the conditions set
forth in the Stockholders Agreement; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Subsidiary to enter into this Agreement, the Company, is entering into a
Stock Option Agreement, dated as of the date hereof (the "Stock Option
Agreement"), with Parent and Merger Subsidiary pursuant to which the Company is
granting to Merger Subsidiary an option to purchase Shares upon the terms and
subject to the conditions set forth in the Stock Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Subsidiary and the Company
hereby agree as follows:
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ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that (i) this Agreement shall
not have been terminated in accordance with Section 10.1 and (ii) none of the
events set forth in Annex I hereto shall have occurred or be existing and not
have been waived, Merger Subsidiary shall, not later than five business days
from the first public announcement of the execution of this Agreement, commence
the Offer. Each Share (including the associated Right) accepted by Merger
Subsidiary in accordance with the Offer shall be purchased for $1.17, net to the
seller in cash, without interest. The Offer shall be subject to the conditions
(i) that there shall be validly tendered in accordance with the terms of the
Offer prior to the expiration date of the Offer and not withdrawn a number of
Shares which, together with the Shares then owned by Parent and Merger
Subsidiary, represents at least two thirds of the total number of outstanding
Shares, assuming the exercise of all outstanding warrants, options, rights and
convertible securities (if any) (other than the Rights, Parent's option to
acquire Company Common Stock pursuant to the Stock Option Agreement, to the
extent not then exercised and options cancelled pursuant to Section 3.4(a)
hereof) and the issuance of all Shares that the Company is obligated to issue
pursuant thereto (such total number of outstanding Shares being hereinafter
referred to as the "Fully Diluted Shares") (the "Minimum Stock Condition"), (ii)
that Parent shall have simultaneously accepted for payment Notes in each of the
Notes Tender Offers, and (iii) that the other conditions set forth in Annex I
hereto shall have been satisfied or waived. Parent and Merger Subsidiary
expressly reserve the right to waive the conditions to the Offer and to make any
change in the terms or conditions of the Offer; provided that, without the
written consent of the Company, no change may be made which changes the form or
amount of consideration to be paid (other than by adding consideration), imposes
conditions to the Offer in addition to those set forth in Annex I or changes or
waives the Minimum Stock Condition or amends any other term of the Offer in a
manner materially adverse to the holders of Shares. If on the initial scheduled
expiration date of the Offer, which shall be no earlier than 20 business days
after the date the Offer is commenced, all conditions to the Offer shall not
have been satisfied or waived, Merger Subsidiary may, from time to time, in its
sole discretion, extend the expiration date; provided that without the prior
written consent of the Company, Merger Subsidiary may not extend the Offer
beyond March 15, 2002 (except that Parent may extend the expiration date of the
Offer after March 15, 2002 as required to comply with any rule, regulation or
interpretation of the SEC). Subject to the terms and conditions of the Offer,
Parent shall cause Merger Subsidiary to accept for payment and pay for, as
promptly as practicable after the expiration of the Offer, all Shares validly
tendered and not withdrawn pursuant to the Offer. In addition,
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Merger Subsidiary may extend the Offer after the acceptance of Shares thereunder
for a further period of time by means of a subsequent offering period under Rule
14d-11 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of not more than 20 business days to meet the objective (which
is not a condition to the Offer) that there be validly tendered, in accordance
with the terms of the Offer, prior to the expiration date of the Offer (as so
extended) and not withdrawn a number of Shares, which together with Shares then
owned by Parent and Merger Subsidiary, represents at least 90% of the Fully
Diluted Shares.
(b) As soon as practicable after the date of this Agreement, and
not later than five business days from the first public announcement of the
execution of this Agreement, Parent shall, and Parent shall cause Merger
Subsidiary to, file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto and any other filings pursuant to which the Offer will be
made, the "Offer Documents"). Parent, Merger Subsidiary and the Company each
agree promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect. Parent and Merger Subsidiary agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC. In addition, Parent and
Merger Subsidiary agree to provide the Company and its counsel with any
comments, whether written or oral, that Parent or Merger Subsidiary or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments or other
communications.
Section 1.2 The Notes Tender Offers. (a) Provided that this
Agreement shall not have been terminated in accordance with Section 10.1 and
none of the events or circumstances set forth in Annex I hereto shall have
occurred and be existing and not have been waived, Parent agrees that it or its
designee will commence the Notes Tender Offers as promptly as reasonably
practicable after the date hereof, but in no event later than five business days
after the first public announcement of the execution hereof. The aggregate
consideration payable to each holder of Notes pursuant to the Notes Tender
Offers shall be an amount in cash set forth in the Offer to Purchase and Consent
Solicitation Statement made by Parent in connection with the Notes Tender Offers
attached as Exhibit A hereto as amended from time to time (the "Notes Offer to
Purchase"). In connection with the Notes Tender Offers, Parent intends to
solicit consents to amend, eliminate or waive certain sections of the Indenture
relating to the 9-3/8% Senior
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Notes, dated as of February 23, 1998 among the Company, the guarantors party
thereto and State Street Bank and Trust Company, as trustee, the Indenture
relating to the 9-3/4% Senior Notes, dated as of June 12, 1997 among the
Company, the guarantors party thereto and State Street Bank and Trust Company,
successor in interest to Fleet National Bank, as trustee, and the Indenture
relating to the Senior Subordinated Notes, dated as of February 23, 1998 among
the Company, the guarantors party thereto and JPMorgan Chase Bank, successor in
interest to Chase Bank of Texas, National Association, as trustee (collectively,
the "Indentures"), as set forth in the Notes Offer to Purchase. Parent's
obligation to accept for payment and pay for the Notes and related consents
tendered pursuant to the Notes Tender Offers shall be subject to the conditions
that (i) the aggregate principal amount of each series of Notes validly tendered
and not withdrawn prior to the expiration of the Notes Tender Offers, combined
with the Notes already owned by Parent, Merger Subsidiary and their affiliates,
constitutes at least 90% of the aggregate principal amount of each of the 9-3/8%
Senior Notes, the 9-3/4% Senior Notes and the Senior Subordinated Notes
outstanding at the expiration of the Notes Tender Offer with respect to each of
such series of Notes (the "Minimum Note Condition"), (ii) Parent receives
consents from at least a majority of the outstanding principal amount of each
series of the Notes, and (iii) the other conditions set forth in Annex I hereto
shall have been satisfied or waived (including, without limitation, the Minimum
Stock Condition). Parent expressly reserves the right to waive any such
condition (including without limitation the Minimum Note Condition), to increase
the price payable for each Note and related consent tendered in the Notes Tender
Offers, and to make any other changes in the terms and conditions of the Notes
Tender Offers; provided, however, that Parent agrees that no change may be made
without the consent of the Company which decreases the price payable for each
Note and related consent tendered in the Notes Tender Offers, which increases
the Minimum Note Condition, which eliminates the Minimum Stock Condition, which
amends or eliminates any section of the Indentures, that, by the terms thereof,
requires the approval of the holders of 100% of the outstanding principal amount
of the Notes, which otherwise modifies or amends the conditions to the Notes
Tender Offers or any other term of the Notes Tender Offers in a manner that is
materially adverse to the tendering holders of the Notes, which imposes
conditions to the Notes Tender Offers in addition to those set forth in Annex I
hereto, or which extends the expiration date of the Notes Tender Offers beyond
March 15, 2002 (except that Parent may extend the expiration date of the Notes
Tender Offers after March 15, 2002 as required to comply with any rule,
regulation or interpretation of the SEC or to coincide with the termination date
of the Offer); provided, however, that Parent expressly reserves the right, in
its sole discretion, to reduce the minimum percentage of any series of Notes to
be purchased in the Notes Tender Offers. The Notes Tender Offers shall provide
that any tender of Notes under the Notes Tender Offers shall also constitute a
consent to the amendments to the Indentures. Subject to the
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terms and conditions of the Notes Tender Offers (including, without limitation,
the Minimum Note Condition), Parent agrees to accept for payment and to pay for,
as promptly as practicable after expiration of the Notes Tender Offers, all
Notes and related consents validly tendered and not withdrawn.
(b) Parent agrees to disseminate to the record holders of the
Notes, and to the extent disclosed to Parent by the Company, the beneficial
owners of the Notes (collectively, the "Noteholders"), the Notes Tender Offers
pursuant to the terms of the Notes Offer to Purchase, together with related
letters of transmittal and similar ancillary agreements (such documents,
together with all supplements and amendments thereto, being referred to herein
collectively as the "Notes Tender Offers Documents"), which shall have been
provided to the Company and its counsel a reasonable time prior to dissemination
to holders of the Notes and to which the Company shall not have reasonably
objected. Parent and the Company agree to correct promptly any information
provided by any of them for use in the Notes Tender Offers Documents which shall
have become false or misleading, and Parent further agrees to take all steps
necessary to cause the Notes Tender Offers Documents as so corrected to be
disseminated to holders of Notes, in each case as and to the extent required by
applicable Federal securities laws.
(c) At such time as Parent receives consents from at least a
majority of each series of the outstanding principal amount of the Notes, the
Company agrees to execute, and to cause the guarantors party to the Indentures
to execute, and will use all reasonable efforts to cause the trustees under the
Indentures to execute, supplemental indentures (the "Supplemental Indentures")
in order to give effect to the amendments of the Indentures contemplated in the
Notes Tender Offers Documents; provided, however, that notwithstanding the fact
that the Supplemental Indentures will become effective upon such execution, the
proposed amendments set forth therein (the "Proposed Amendments") will not
become operative unless and until the Minimum Note Condition is satisfied or
waived and all other conditions to the Notes Tender Offers set forth on Annex I
have been satisfied or waived by Parent and Parent accepts all Notes (and
related consents) validly tendered for purchase and payment pursuant to the
Notes Tender Offers. In such event, the parties hereto agree that the Proposed
Amendments will be deemed operative as of immediately prior to such acceptance
for payment, and Parent will thereafter be obligated to make all payments for
the Notes (and related consents) so tendered.
(d) The Company agrees to promptly furnish Parent with mailing
labels containing the names and addresses of all record holders of Notes and
security position listings of the Notes held in depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position
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listings of Noteholders. The Company agrees to furnish Parent with such
additional information, including, without limitation, updated listings and
computer files of Noteholders, mailing labels and security position listings,
and such other assistance as Parent or its agents may reasonably request.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Notes Tender Offers Documents and any other
documents necessary to consummate the transactions contemplated thereby, Parent
shall hold in confidence the information contained in such labels, listings and
files, shall use such information only in connection with the Notes Tender
Offers and, if this Agreement shall be terminated in accordance with Section
10.1, shall deliver to or cause to be delivered to the Company all copies of
such information, labels, listings and files then in its possession or in the
possession of its agents or representatives.
Section 1.3 Company Action. (a) The Company hereby approves of
and consents to the Offer and the Notes Tender Offers and represents that the
Company Board, following the unanimous recommendation of the Independent Special
Committee of the Company Board established to review the Offer, has unanimously
(i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are advisable and are fair to and in the
best interest of the Company's stockholders, (ii) approved and adopted this
Agreement, including the Offer, the Merger, the Stock Option Agreement and the
Stockholders Agreement and the transactions contemplated hereby and thereby,
which approval constitutes approval under Section 203 of the DGCL such that the
Offer, the Merger, this Agreement, the Stock Option Agreement and the
Stockholders Agreement and the other transactions contemplated hereby and
thereby are not and shall not be subject to any restriction of Section 203 of
the DGCL, and (iii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares to Merger Subsidiary thereunder and
approve and adopt this Agreement and the Merger (the recommendations referred to
in this clause (iii) are collectively referred to in this Agreement as the
"Recommendations"). The Company further represents that Deutsche Banc Alex.
Xxxxx and Xxxxxxxxxx Inc. have rendered to the Company Board their opinions that
the consideration to be received by the Company's stockholders pursuant to this
Agreement is fair to such stockholders from a financial point of view. The
Company has been advised that all of its directors and executive officers
presently intend to tender their Shares pursuant to the Offer.
(b) As soon as practicable on the day that the Offer is
commenced, the Company will file with the SEC and disseminate to holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto, the "Schedule 14D-9") which shall
contain, except as provided in Section 6.4, the Recommendations. At the time the
Offer Documents are first mailed to
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the stockholders of the Company, the Company shall mail or cause to be mailed to
the stockholders of the Company such Schedule 14D-9 together with such Offer
Documents. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be disseminated to holders of the Shares, as and to the extent
required by applicable Federal securities laws. Each of the Company, on the one
hand, and Parent and Merger Subsidiary, on the other hand, agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material respect
and the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable Federal
securities laws. Parent and its counsel shall be given the opportunity to review
the Schedule 14D-9 before it is filed with the SEC. In addition, the Company
agrees to provide Parent, Merger Subsidiary and their counsel with any comments,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company shall promptly
furnish Merger Subsidiary with mailing labels containing the names and addresses
of all record holders of Shares and with security position listings of Shares
held in stock depositories, each as of a recent date, together with all other
available listings and computer files containing names, addresses and security
position listings of record holders and non-objecting beneficial owners of
Shares. The Company shall furnish Merger Subsidiary with such additional
information, including, without limitation, updated listings and computer files
of stockholders, mailing labels and security position listings, and such other
assistance as Parent, Merger Subsidiary or their agents may reasonably require
in communicating the Offer to the record and beneficial holders of Shares.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Merger Subsidiary shall hold
in confidence the information contained in such labels, listings and files,
shall use such information solely in connection with the Offer and the Merger,
and, if this Agreement is terminated, will upon the request of the Company
deliver or cause to be delivered to the Company all copies of such information,
labels, listings and files then in their possession or in the possession of
their agents or representatives.
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Section 1.4 Directors. (a) Promptly upon the purchase of and
payment for Shares by Merger Subsidiary or any of its affiliates pursuant to the
Offer as a result of which Parent or Merger Subsidiary beneficially own at least
a majority of the outstanding Shares, Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company Board
that equals the product of (i) the total number of directors on the Company
Board (giving effect to the election of any additional directors pursuant to
this Section 1.4) and (ii) the percentage that the number of Shares owned by
Parent or Merger Subsidiary (including Shares accepted for payment) bears to the
total number of Shares outstanding. In furtherance thereof, the Company shall,
upon request of the Parent, use its best efforts promptly either to increase the
size of its Board or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be so
elected or appointed to the Company's Board, and the Company shall take all
actions available to the Company to cause such designees of Parent to be so
elected and, subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, shall cause Parent's designees to be so elected. At such
time, the Company shall, if requested by Parent, also take all action necessary
to cause persons designated by Parent to constitute the same percentage (rounded
up to the next whole number) as is on (i) each committee of the Company Board,
(ii) each board of directors (or similar body) of each Subsidiary of the Company
and (iii) each committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required pursuant
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under Section 1.4(a), including mailing to
stockholders the information required by such Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary to enable Parent's
designees to be elected or appointed to the Company Board immediately after the
purchase of and payment for any Shares by Parent or any of its Subsidiaries (as
defined in Section 4.1) as a result of which Parent and its Subsidiaries
beneficially own at least a majority of then outstanding Shares. Parent or
Merger Subsidiary will supply the Company all information with respect to either
of them and their nominees, officers, directors and affiliates required to be
disclosed by such Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The provisions of this Section 1.4 are in addition to and shall not
limit any rights which Merger Subsidiary, Parent or any of their affiliates may
have as a holder or beneficial owner of Shares as a matter of law with respect
to the election of directors or otherwise.
(c) In the event that Parent's designees are elected or appointed
to the Company Board, until the Effective Time, the Company Board shall have at
least two directors who are directors on the date hereof and are not employees
of the Company
9
("Independent Directors"), provided that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there be only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Independent Directors for purposes of this
Agreement or, if no Independent Director then remains, the other directors shall
designate two persons to fill such vacancies who shall not be stockholders,
affiliates, associates or employees of Parent, Merger Subsidiary or the Company,
and such persons shall be deemed to be Independent Directors for purposes of
this Agreement. Notwithstanding anything in this Agreement to the contrary, in
the event that Parent's designees constitute a majority of the directors on the
Company Board, the affirmative vote of a majority of the Independent Directors
shall be required after the acceptance for payment of Shares pursuant to the
Offer and prior to the Effective Time, to (a) amend or terminate this Agreement
by the Company, (b) cause the Company to extend or waive the time for the
performance of any of the obligations or other acts of Parent or Merger
Subsidiary under this Agreement, (c) waive any of the Company's rights
hereunder, or (d) take any other action under or in connection with this
Agreement if such action materially and adversely affects holders of Shares
other than Parent or Merger Subsidiary; provided, that if, notwithstanding
reasonable efforts set forth above to ensure that at least two directors are
Independent Directors, there shall be no such directors, such actions (except
for any amendment, modification or waiver of Sections 2.3 or 8.1 hereof) may be
effected by unanimous vote of the entire Company Board.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the relevant
provisions of the DGCL, Merger Subsidiary shall be merged with and into the
Company (the "Merger") at the Effective Time (hereinafter defined). Following
the Merger, the separate corporate existence of Merger Subsidiary shall cease
and the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Merger Subsidiary in accordance with the DGCL.
Section 2.2 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Section 9.1, at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 0000 Xxx Xxxx Xxxxxx, X.X., Xxxxxxxxxx X.X. 00000, unless
another date or place is agreed to
10
in writing by the parties hereto (such date upon which the Closing occurs, the
"Closing Date").
Section 2.3 Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article IX (and subject to
no other condition set forth herein or otherwise), the parties shall use their
best efforts to consummate the Merger, including without limitation (if
required) voting all Shares held by such parties in favor of the Merger and
filing a certificate of merger or other appropriate documents (the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as Parent and the
Company shall agree and specify in the Certificate of Merger (the time the
Merger becomes effective, the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 2.5 Certificate of Incorporation and By-Laws. (a) The
Certificate of Incorporation of Merger Subsidiary, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(b) The By-Laws of Merger Subsidiary as in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until changed
or amended as provided therein or by applicable law.
Section 2.6 Directors. The directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their successors are
duly elected and qualified.
Section 2.7 Officers. The officers of Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their successors are
duly elected and qualified.
11
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Merger
Subsidiary:
(a) Capital Stock of Merger Subsidiary. Each issued and
outstanding share of the capital stock of Merger Subsidiary shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock that is owned by the Company or by any Subsidiary
of the Company and each share of Company Common Stock that is owned by Parent,
Merger Subsidiary or any other Subsidiary of Parent shall automatically be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled in
accordance with Section 3.1(b) or shares as to which appraisal rights have been
exercised in accordance with Section 3.3) shall be converted into the right to
receive $1.17, net to the seller in cash (the "Merger Consideration"), without
interest. As of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
Section 3.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
to act as agent for the holders of the Shares in connection with the Merger to
receive in trust the Merger Consideration to which holders of the Shares shall
become entitled pursuant to Section 3.1(c) (the "Paying Agent"). At the
Effective Time, Parent shall deposit with the Paying Agent, for the benefit of
the holders of shares of Company Common Stock, for payment in accordance with
this Article III, the aggregate Merger Consideration to be paid pursuant to
Section 3.1(c) (collectively, the "Exchange Fund") for the outstanding shares of
12
Company Common Stock. For purposes of determining the amount of Merger
Consideration to be deposited by Parent in the Exchange Fund, Parent shall
assume that no holder of Shares will perfect such holder's right to appraisal of
such holder's Shares.
(b) Exchange Procedure. As soon as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger Consideration
pursuant to Section 3.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration into which the shares of Company Common Stock shall have
been converted pursuant to Section 3.1, and the Certificate so surrendered shall
be canceled. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company, payment may be
made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. At any time after the Effective Time, each Certificate shall be
deemed to represent only the right to receive, without interest, upon surrender
the Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 3.1.
(c) No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender of Certificates in accordance with
the terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article III.
13
(d) Termination of Exchange Fund; No Liability. Any portion of
the Exchange Fund which remains undistributed to the holders of the Certificates
for one year after the Effective Time shall be delivered to Parent, upon demand,
and any holders of the Certificates who have not theretofore complied with this
Article III shall thereafter look only to Parent for payment of their claim for
Merger Consideration. None of Parent, Merger Subsidiary, the Company or the
Paying Agent shall be liable to any person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to one year after the Effective Time (or
immediately prior to such date on which any amounts payable pursuant to this
Article III would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.4(c)), any such amounts shall, to
the extent permitted by applicable escheat law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto. Any portion of the Merger Consideration deposited
in the Exchange Fund pursuant to this Section 3.2 in consideration of Shares for
which appraisal rights, if any, have been perfected shall be returned to Parent,
upon demand.
(e) Investment of Exchange Fund. The Paying Agent shall invest
any cash in the Exchange Fund, as directed by Parent; provided that such
investments shall be in obligations of or guaranteed by the United States of
America or of any agency thereof and backed by the full faith and credit of the
United States of America or in commercial paper obligations rated A-1 or P-1 or
better by Standard & Poor's Ratings Group or Xxxxx'x Investor Service, Inc.,
respectively. Any interest and other income resulting from such investments
shall be paid to Parent.
(f) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall issue in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect thereto.
Section 3.3 Dissenting Shares. Notwithstanding Section 3.1(c),
Shares outstanding immediately prior to the Effective Time and held by a holder
who has demanded appraisal for such Shares in accordance with the DGCL shall not
be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his right to appraisal.
If after the Effective Time such holder
14
fails to perfect or withdraws or loses his right to appraisal, such Shares shall
be treated as if they had been converted as of the Effective Time into a right
to receive the Merger Consideration. The Company shall give Parent prompt notice
of any demands received by the Company for appraisal of Shares, and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
Section 3.4 Company Options.
(a) Stock Options. Prior to consummation of the Offer, the
Company shall take all necessary action to: (i) terminate, effective not later
than the Effective Time, the Xxxxxxx Container Corporation Employee Stock
Purchase Plan and all of the stock option plans listed in Section 4.12(a) of the
Company Disclosure Schedule (as defined in Section 4.2) (the "Option Plans"),
(ii) cancel, effective not later than the Effective Time, each option to
purchase shares of Company Common Stock granted under the Xxxxxxx Container
Corporation 1997 Long-Term Equity Incentive Plan and the Xxxxxxx Container
Corporation Outside Director Stock Option Plan, that is outstanding and
unexercised as of such time, (iii) cancel, effective not later than the
Effective Time, each option to purchase shares of Company Common Stock granted
under all Option Plans held by any of the individuals listed in Section 3.4(a)
of the Company Disclosure Schedule that is outstanding and unexercised as of
such time, (iv) use its commercially reasonable efforts to obtain consents of
the individual holders to cancel, effective not later than the Effective Time,
each outstanding option to purchase shares of Company Common Stock granted under
any Option Plans that is outstanding and unexercised as of such time and that is
not otherwise canceled pursuant to the foregoing clauses (ii) and (iii) (it
being understood that the failure of the Company to obtain the consent of any
such holder, after a good faith effort, shall not be deemed a breach of this
clause (iv)).
(b) Compliance with Section 16. Prior to the Effective Time, the
Company shall take all action reasonably necessary to approve the disposition of
the Company Options and other awards in accordance with this Section 3.4 so as
to exempt such dispositions under Rule 16b-3 of the Exchange Act. By adopting
and approving this Agreement, the Board of Directors of the Company shall be
deemed to have approved and authorized each and every arrangement with respect
to the Option Plans and other plans, programs, agreements or arrangements as may
be deemed necessary or appropriate to give effect to the provisions of this
Section 3.4.
15
Section 3.5 Company Warrants. As of the Effective Time, the
unexercised Company Redeemable Exchangeable Warrants (each a "Company Warrant")
shall be exercisable (subject to the terms and conditions of the Warrant
Agreement between the Company and The Bank of New York, as successor trustee to
Xxxxxx Trust and Savings Bank (the "Trustee"), dated November 2, 1992) only for
such Merger Consideration as is paid and issued to the Trustee, designated
pursuant to the Trust Agreement between the Company and Xxxxxx Trust and Savings
Bank, in exchange for the shares of Company Common Stock held by such Trustee
immediately theretofore obtainable upon exercise of such Company Warrants.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule attached hereto (the
"Company Disclosure Schedule"), which disclosure schedule shall make a specific
reference to the particular Section of this Agreement to which exception is
being taken, the Company hereby represents and warrants to Parent and Merger
Subsidiary, as of the date hereof unless otherwise indicated, as follows:
Section 4.1 Organization, Standing and Corporate Power. Each of
the Company and each of its Subsidiaries (as defined below) is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate or other power and authority, as the case may be, to carry on its
business as now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed and in good standing (individually or in the aggregate)
would not have, or be reasonably likely to have, a material adverse effect on
the condition (financial or otherwise), business, assets, liabilities, prospects
or results of operations of the Company and its Subsidiaries taken as a whole,
excluding effects from general economic conditions, general securities market
conditions, conditions affecting the Company's industry generally, or the
announcement of this Agreement or the transactions contemplated hereby (a
"Company Material Adverse Effect"). The Company has delivered or made available
to Parent complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificates of Incorporation and By-Laws or other comparable
charter or organizational documents of its Subsidiaries, in each case as amended
to the date of this Agreement. For purposes of this
16
Agreement, a "Subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person; and a "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure
Schedule contains a true and accurate list of each Subsidiary of the Company and
its respective jurisdiction of incorporation or organization, the outstanding
capital of each such Subsidiary and the jurisdictions in which each such
Subsidiary is qualified to do business. All the outstanding shares of capital
stock of, or other equity interests in, each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable and are owned
by the Company, by another Subsidiary of the Company or by the Company and
another such Subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock). Except for the capital stock of, or other equity interests
in, its Subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any person.
Section 4.3 Capital Structure. The authorized capital stock of
the Company consists of 25,000,000 shares of Preferred Stock, par value $0.01
per share (the "Company Preferred Stock"), 125,000,000 shares of Company Common
Stock and 15,000,000 shares of Class B Common Stock, par value $.0001 per share
(the "Company Class B Stock"). As of January 16, 2002, (i) no shares of Company
Preferred Stock were issued and outstanding, (ii) 56,007,310 shares of Company
Common Stock were issued and outstanding, including associated Preferred Share
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of June 12, 1995 (the "Rights Agreement"), between the Company and Xxxxxx Trust
and Savings Bank, as Rights Agent, (iii) no shares of Company Class B Stock were
issued and outstanding, (iv) 1,147,484 shares of Company Common Stock were held
by the Company in its treasury or by any of the Company's Subsidiaries, (v)
2,152,836 shares of Company Common Stock were reserved for issuance pursuant to
the Option Plans (of which 1,729,066 were issuable upon the exercise of
outstanding Company Options), (vi) 230,479 shares of Company Common Stock were
issuable upon the exercise of outstanding Company Warrants, which are included
in the outstanding shares of Company Common Stock set forth in clause (ii)
above, and (vii) 1,957,000 shares were restricted shares of Common Stock, which
are
17
included in the outstanding shares of Company Common Stock set forth in clause
(ii) above. Except as set forth above and except for the Company Preferred Stock
issuable upon exercise of the Rights and the Company Common Stock issuable upon
exercise of the Stock Option Agreement, as of the date of this Agreement, no
shares of capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company are, and all shares which may be issued pursuant to the Option
Plans, the Stock Option Agreement and the Company Warrants will be, when issued
in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth above, there are no outstanding bonds, debentures, notes or
other indebtedness or securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements or undertakings of any kind to which the Company or any
of its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, or
undertaking. There are no outstanding rights, commitments, agreements, or
undertakings of any kind obligating the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or other
voting securities of the Company or any of its Subsidiaries or any securities of
the type described in the two immediately preceding sentences. There are no
voting trusts or other agreements or understandings to which the Company or any
of its Subsidiaries is a party with respect to the voting of the capital stock
of the Company or any of its Subsidiaries. Except as provided by Section
3.4(a), following the Effective Time, no holder of Company Options or Company
Warrants will have any right to receive shares of common stock of the Surviving
Corporation upon exercise of Company Options or Company Warrants. The Company
has delivered or made available to Parent complete and correct copies of the
Option Plans, all forms of Company Options and all warrant agreements relating
to the Company Warrants. Section 4.3 of the Company Disclosure Schedule sets
forth a complete and accurate list of all Company Options and Company Warrants
outstanding as of the date of this Agreement, and the respective exercise price
of each outstanding Company Option and Company Warrant.
18
Section 4.4 Authority; Noncontravention; Filings and Consents.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement and, subject to the requisite approval of
this Agreement by the holders of the outstanding shares of Company Common Stock
(the "Company Stockholder Vote") with respect to the Merger, to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the Merger
if required under the DGCL, to approval of this Agreement by the Company
Stockholder Vote. This Agreement has been duly executed and delivered by the
Company and, assuming that this Agreement constitutes a legal, valid and binding
obligation of Parent and Merger Subsidiary, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws, now or hereafter in effect, relating to or affecting
creditors' rights and remedies and to general principles of equity.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any of its
Subsidiaries under, (i) the Certificate of Incorporation or By-Laws of the
Company or the comparable charter or organizational documents of any of its
Subsidiaries in each case as amended to the date of this Agreement, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
paragraph (c) below, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a Company Material Adverse
Effect, (y) impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
19
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with or exemption by (collectively,
"Consents") any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) any additional
filings required by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and any applicable filings
under similar foreign antitrust or competition laws and regulations, (ii) the
filing with the SEC of (A) the Schedule 14D-9, (B) if required, a proxy
statement relating to the Company Stockholders Meeting (defined below in Section
8.1(b)) (as amended or supplemented from time to time, the "Company Proxy
Statement"), and (C) such reports under the Exchange Act and the Securities Act
(as defined in Section 4.6), as may be required in connection with this
Agreement, the Stock Option Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby, (iii) such filings as may be
required under state securities or "blue sky" laws, (iv) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be made or obtained individually or in the aggregate would not (x) have a
Company Material Adverse Effect, (y) impair the Company's ability to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
Section 4.5 Vote Required. The affirmative vote of the holders of
66-2/3 percent of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve the Merger.
No vote of any class or series of the Company's capital stock is necessary to
approve any of the transactions contemplated by this Agreement other than the
Merger.
Section 4.6 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities. The Company has filed and has heretofore made available
to Parent, true and complete copies of, all required reports, schedules, forms,
statements and other documents with the SEC since September 30, 1999 (the
"Company SEC Documents"). As of their respective dates, (i) the Company SEC
Documents complied, and all similar documents filed prior to the Closing Date
will comply, in all material respects with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated
20
thereunder applicable to such Company SEC Documents, and (ii) none of the
Company SEC Documents when filed contained, nor will any similar document filed
after the date of this Agreement contain, any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the Company's Subsidiaries
is required to file any forms, reports or other documents with the SEC. The
financial statements of the Company included in the Company SEC Documents
(including any similar documents filed after the date of this Agreement) as of
their respective dates comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal and recurring
year-end audit adjustments). Except as reflected in the financial statements of
the Company included in the Company SEC Documents, neither the Company nor any
of its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which are required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto other than any liabilities and obligations
(i) incurred since September 30, 2000 in the ordinary course of business, (ii)
pursuant to this Agreement and the transactions contemplated hereby or (iii)
which, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect.
Section 4.7 Information Supplied. Neither the Schedule 14D-9, nor
any of the information supplied or to be supplied by the Company or its
Subsidiaries or representatives for inclusion or incorporation by reference in
the Offer Documents will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first published,
sent or given to stockholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Company Proxy Statement will not, at the time
the Company Proxy Statement is first mailed to the Company's stockholders or, at
the time of the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not
21
misleading. The Schedule 14D-9 and the Company Proxy Statement will comply as to
form in all material respects with the requirements of all applicable laws,
including the Exchange Act and the rules and regulations thereunder. No
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Merger Subsidiary specifically for inclusion or incorporation by
reference therein.
Section 4.8 Books and Records. The books of account, minute
books, stock record books and other records of the Company and its Subsidiaries
are complete and correct in all material respects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act, including an adequate system of internal controls.
Section 4.9 Inventory. All of the inventories of the Company and
each of its Subsidiaries, whether reflected in the audited balance sheet of the
Company and its consolidated subsidiaries included in the audited financial
statements most recently filed by the Company with the SEC (the "Balance Sheet")
or otherwise, consist of a quality and quantity usable and salable in the
ordinary and usual course of business, except for items of obsolete materials
and materials of below-standard quality, all of which have been written off or
written down on the Balance Sheet to fair market value or for which adequate
reserves have been provided therein. All inventories not written off have been
priced at the lower of average cost or market. The quantities of each type of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable and warranted in the present circumstances of the
Company and each of its Subsidiaries. All work in process and finished goods
inventory is free of any defect or other deficiency.
Section 4.10 Absence of Certain Changes or Events. Since
September 30, 2000, except as disclosed in the Company SEC Documents filed prior
to the date hereof, (i) the Company and each of its Subsidiaries has conducted
its respective business only in the ordinary and usual course, (ii) there has
not occurred any event or change (including the incurrence of any liabilities of
any nature, whether or not accrued, contingent or otherwise) having or
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect, and (iii) the Company has not taken any action which would have
been prohibited under Section 6.1 if such Section applied to the period between
September 30, 2001 and the date of execution of this Agreement. The Company was
never in breach under the Agreement and Plan of Merger, dated September 27,
2001, among Parent, Merger Subsidiary and the Company, and would not have been
in breach of any provisions of such agreement on the date hereof had such
agreement not been terminated.
22
Section 4.11 Litigation. Except as disclosed in the Company SEC
Documents or in Section 4.11 of the Company Disclosure Schedule, there is no
suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries that, individually or
in the aggregate, could reasonably be expected to (i) have a Company Material
Adverse Effect, (ii) impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its Subsidiaries having,
or which, insofar as reasonably can be foreseen, in the future would have, any
such effect. Neither the Company nor any of its Subsidiaries is in default under
or in violation of, nor is there any valid basis for any claim of default under
or violation of, any material contract, commitment or restriction to which it is
a party or by which it is bound. The settlement agreement relating to the mass
toxic tort and insurance coverage litigation arising from the accident involving
the explosion of a rail car at Bogalusa, Louisiana in 1995 (the "Settlement
Agreement") is set forth in Section 4.11 of the Company Disclosure Schedule and
validly executed by all of the parties thereto and is in full force and effect
with respect to each of the parties thereto.
Section 4.12 Employee Benefit Plans; ERISA.
(a) As of September 27, 2001, Section 4.12(a) of the Company
Disclosure Schedule contains a true and complete list of each employment, bonus,
deferred compensation, incentive compensation, restricted stock, option,
performance unit, phantom stock, dental, health, accident, life, accidental
death and dismemberment, fringe, cafeteria, scholarship, flexible spending
arrangement or reimbursement, group legal services, long term care, dependent
care, vacation, paid time off, sick leave, educational assistance, wellness,
employee assistance program, adoption assistance, vision, voluntary employees
beneficiary association, other insurance, stock purchase, stock option, stock
appreciation right or other stock-based incentive, severance, change-in-control,
or termination pay, hospitalization or other medical, disability, life or other
insurance, supple- mental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by the Company or any of its
Subsidiaries, or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company or any of its Subsidiaries
would be deemed a "single employer" within the meaning of Section 4001(b)(1) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for
the
23
benefit of any current or former employee or director of the Company, or any of
its Subsidiaries or any ERISA Affiliate, whether formal or informal and whether
legally binding or not (the "Benefit Plans"), and the Company has advised Parent
of the dates of original adoption and any amendments to any Benefit Plans
adopted or amended since January 1, 2000 in the event that such Benefit Plans
contain "change-in-control" or provisions of similar effect that will be
triggered by the consummation of the Offer or the Merger. Section 4.12(a) of the
Company Disclosure Schedule identifies each of the Benefit Plans that is an
"employee welfare benefit plan," or "employee pension benefit plan" as such
terms are defined in Sections 3(1) and 3(2) of ERISA (such plans being
hereinafter referred to collectively as the "ERISA Plans"). None of the Benefit
Plans was entered into, adopted or amended in anticipation of or otherwise in
contemplation of the transactions contemplated by this Agreement or any other
transaction or potential transaction that had been specifically identified at
the time of any such adoption or amendment.
(b) As of September 27, 2001 with respect to each of the Benefit
Plans, the Company had delivered to the Parent true and complete copies of each
of the following documents, as applicable:
(i) the Benefit Plans (including all amendments thereto) for
each written Benefit Plan or a written description of any Benefit Plan that is
not otherwise in writing;
(ii) the annual report or Internal Revenue Service Form 5500
Series, if required under ERISA or the Internal Revenue Code of 1986, as
amended, (the "Code"), with respect to each ERISA Plan for the last three Plan
years ending prior to the date of this Agreement for which such a report was
filed;
(iii) the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three Plan years ending prior to the
date of this Agreement;
(iv) the most recent Summary Plan Description, together with
all Summary of Material Modifications issued with respect to such Summary Plan
Description, if required under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
(v) if the Benefit Plan is funded through a trust or any
other funding vehicle, the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any;
24
(vi) all contracts relating to the Benefit Plans with respect
to which the Company, any of its Subsidiaries or any ERISA Affiliate may have
any liability, including insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the
Internal Revenue Service with respect to each Benefit Plan that is intended to
be qualified under Section 401(a) of the Code.
(c) No liability under Title IV of ERISA has been incurred by the
Company, any of its Subsidiaries or any ERISA Affiliate since the effective date
of ERISA that has not been satisfied in full, and to the knowledge of the
Company no condition exists that presents a material risk to the Company, or any
of its Subsidiaries or any ERISA Affiliate of incurring any liability under such
Title, other than liability for premiums due to the Pension Benefit Guaranty
Corporation ("PBGC"), which payments have been or will be made when due. Insofar
as the representation made in this Section 4.12(c) applies to Section 4064, 4069
or 4204 of ERISA, it is made with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which the Company, any
Subsidiary or any ERISA Affiliate made, or was required to make, contributions
during the six-year period ending on the last day of the most recent plan year
ended before the date of this Agreement. The PBGC has not instituted proceedings
to terminate any Benefit Plan and, to the knowledge of the Company, no condition
exists that presents a material risk that such proceedings will be instituted.
(d) With respect to each of the ERISA Plans that is subject to
Title IV of ERISA, the present value of projected benefit obligations under such
Plan, as determined by the Plan's actuary based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Plan allocable to such
projected benefit obligations.
(e) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, nor to the
Company's knowledge, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
the Company, any of its Subsidiaries or any ERISA Affiliate could be subject to
any material liability for either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B
of the Code.
25
(f) All contributions and premiums required to be paid under the
terms of each of the ERISA Plans and Section 302 of ERISA and Section 412 of the
Code, have, to the extent due, been paid in full or properly recorded on the
financial statements or records of the Company or its Subsidiaries. No Benefit
Plan or any trust established thereunder has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived.
(g) As of September 27, 2001 and except as set forth in Section
4.12(g) of the Company Disclosure Schedule, no Plan is a "multiemployer plan,"
as such term is defined in Section 3(37) of ERISA, nor is any Benefit Plan
described in Section 4063(a) of ERISA. Neither the Company, any Subsidiary nor
any ERISA Affiliate has made or suffered a "complete withdrawal" or "partial
withdrawal", as such terms are respectively defined in Sections 4203 and 4205 of
ERISA (or any liability arising therefrom has been satisfied in full).
(h) Each of the Benefit Plans has been operated and administered
in all material respects in accordance with its terms and applicable laws,
including but not limited to ERISA and the Code.
(i) The Company has applied for and received a currently
effective determination letter from the Internal Revenue Service stating that
each of the ERISA Plans that is intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and to the knowledge of the Company
no event has occurred since the date of such letter which would affect such
qualified status.
(j) Any Benefit Plan that is intended to satisfy the requirements
of Section 501(c)(9) of the Code has so satisfied such requirements.
(k) As of September 27, 2001 and except as disclosed in Section
4.12(k) of the Company Disclosure Schedule, no amounts payable (individually or
collectively and whether in cash, Company Common Stock or other property) under
any of the Benefit Plans or any other contract, agreement or arrangement with
respect to which the Company or any of its Subsidiaries may have any liability
could fail to be deductible for federal income tax purposes by virtue of Section
162(m) or Section 280G of the Code.
(l) As of September 27, 2001 and except as set forth in Section
4.12(l) of the Company Disclosure Schedule, no Benefit Plan provides benefits,
including without limitation death or medical benefits (whether or not insured),
with respect to current or former employees after retirement or other
termination of service (other than
26
(i) coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, or (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company or its Subsidiaries).
(m) As of the date hereof and except as disclosed in Section
4.12(m) of the Company Disclosure Schedule, the consummation of any of the
transactions contemplated by this Agreement (including without limitation the
commencement or completion of the Offer or the Company Stockholders Meeting (as
defined in Section 8.1(b))) will not, either alone or in combination with any
other event, (i) entitle any current or former employee, officer, director or
consultant of the Company, any of its Subsidiaries or any ERISA Affiliate to
severance pay or any other similar termination payment, or (ii) accelerate the
time of payment or vesting, or increase the amount of, or otherwise enhance, any
benefit due to or otherwise cause a requirement for any payment to any such
employee, officer, director or consultant. As of the date hereof, the aggregate
sum of the payment obligations of the Company disclosed in Attachment 4.12(m)(i)
of the Company Disclosure Schedule, following the amendments to such benefits
mandated by the final sentence of Section 7.3(b), will not exceed $39 million
(other than the accelerated vesting of the restricted stock). As of the date
hereof, other than the Company's Supplemental Executive Retirement Plan,
Management Incentive Plan, the phantom stock grants and the agreements to be
amended pursuant to Section 7.3(b), no other Benefit Plan provides for benefits
that become payable solely by reason of the consummation of the Offer.
(n) There are no pending or, to the Company's knowledge,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefits).
(o) Except as disclosed in Section 4.12(o) of the Company
Disclosure Schedule or as expressly permitted by this Agreement, since September
30, 2000, there has not been (i) any acceleration, amendment or change of the
period of exercisability or vesting of any Company Options or restricted stock,
stock bonus or other awards under the Option Plans or other equity-based plans
(including any discretionary acceleration of the exercise periods or vesting by
the Company Board or any committee thereof or any other persons administering an
Option Plan or other equity-based plan) or authorization of cash payments in
exchange for any Company Options, restricted stock, stock bonus or other awards
granted under any of such Option Plans or other equity-based plans or (ii) any
adoption or amendment by the Company or any of its Subsidiaries of any
collective bargaining agreement or Benefit Plan. None of the Company, any of its
Subsidiaries nor
27
any ERISA Affiliate has any formal plan or commitment, whether legally binding
or not, to create any additional Plan or modify or change any existing Plan that
would affect any current or former employee or director of the Company, any of
its Subsidiaries or any ERISA Affiliate.
(p) Except with respect to changes required by law, there has
been no adoption of, amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Subsidiaries relating to,
or change in employee participation or coverage under, any Benefit Plan which
would increase materially the expense of maintaining such Benefit Plan above the
level of the expense incurred in respect thereof for the fiscal year ended on
September 30, 2000.
(q) Neither the Company nor any ERISA Affiliate is a party to any
agreement or understanding, whether written or unwritten, with the PBGC, the
Internal Revenue Service, the Department of Labor or the Health Financing
Administration.
(r) To the knowledge of the Company, no representations or
communications, oral or written, with respect to the participation, eligibility
for benefits, vesting, benefit accrual or coverage under any Benefit Plan have
been made to employees, directors or agents (or any of their representatives or
beneficiaries) of the Company which are not in accordance with the terms and
conditions of the Benefit Plans.
(s) No "leased employee," as that term is defined in Section
414(n) of the Code, performs services for the Company or any ERISA Affiliate.
Neither the Company nor any ERISA Affiliate has used the services or workers
provided by third party contract labor suppliers, temporary employees, "leased
employees," or individuals who have provided services as independent contractors
who have become eligible to participate in the Benefit Plans or used the
services of individuals to an extent that would reasonably be expected to result
in the disqualification of any of the Benefit Plans or the imposition of
penalties or excise taxes with respect to the Benefit Plans by the Internal
Revenue Service, the Department of Labor, the PBGC, or any other Governmental
Entity.
Section 4.13 Taxes. As used in this Agreement, "tax" or "taxes"
shall include all Federal, state, local and foreign income, property, sales,
excise and other taxes, tariffs or governmental charges or assessments of any
nature whatsoever as well as any interest, penalties and additions thereto.
Except as set forth in Section 4.13 of the Company Disclosure Schedule:
28
(a) The Company and each of its Subsidiaries have duly filed all
tax returns, statements, reports and forms required to be filed with any taxing
authority (collectively, the "Tax Returns") excluding only such Tax Returns as
to which any failure to file does not have a Company Material Adverse Effect on
the Company and its Subsidiaries and have duly paid or caused to be duly paid in
full or made provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of all taxes (as
hereinafter defined) for all periods or portions thereof ending through the date
hereof. All such Tax Returns are correct and complete and accurately reflect all
liability for taxes for the periods covered thereby. All taxes owed and due by
the Company and all of its Subsidiaries relating to operations on or prior to
September 30, 2001 (whether or not shown on any Tax Return) have been paid or
have been adequately reflected on the financial statements. Except as set forth
on Section 4.13(a) of the Company Disclosure Schedule, since September 30, 2001,
the Company had not incurred liability for any taxes other than in the ordinary
course of business. Neither the Company nor any of its Subsidiaries has received
written notice of any claim made by a governmental authority in a jurisdiction
where neither the Company nor any of its Subsidiaries file Tax Returns, that the
Company is or may be subject to taxation by that jurisdiction.
(b) The Company and each of its subsidiaries has withheld and
timely paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) The Federal income Tax Returns of the Company and its
Subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of Federal income taxes for
such periods have expired) for all periods through and including September 30,
1997, and no material deficiencies were asserted as a result of such
examinations that have not been resolved or fully paid. The Company has provided
Parent with correct and complete copies of its Federal income tax returns for
taxable years ending September 30, 1996 through September 30, 2000, and
examination reports, and statements of deficiencies with respect to Federal
income taxes, if any, assessed against or agreed to by the Company and any of
its Subsidiaries with respect to Federal income taxes for taxable years ending
September 30, 1996 through September 30, 2000.
(d) As of September 27, 2001, except as set forth on Section
4.13(d) of the Company Disclosure Schedule, no Federal, state, local or foreign
audits, examinations or other administrative proceedings had been commenced or,
to the Company's knowledge, were pending with regard to any taxes or Tax Returns
of the Company or of
29
any of its Subsidiaries. As of September 27, 2001, except as set forth on
Section 4.13(d) of the Company Disclosure Schedule, no written notification had
been received by the Company or by any of its Subsidiaries that such an audit,
examination or other proceeding was pending or threatened with respect to any
taxes due from or with respect to or attributable to the Company or any of its
Subsidiaries or any Tax Return filed by or with respect to the Company or any
Company Subsidiary. There is no dispute or claim concerning any tax liability of
the Company, or any of its Subsidiaries either claimed or raised by any taxing
authority in writing.
(e) As of September 27, 2001, except as set forth on Section
4.13(e) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries had waived any statute of limitations in respect of taxes or agreed
to any extension of time with respect to a tax assessment or deficiency.
(f) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any Company
Subsidiary.
(g) Neither the Company nor any of its Subsidiaries is a party to
any material tax sharing, tax indemnity or other agreement or arrangement with
any entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(h) None of the Company or any of its Subsidiaries has been a
member of any affiliated group within the meaning of Section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
state, local or foreign law (other than a group the common parent of which is
the Company), or has any liability for taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign law as a transferee or successor,
by contract or otherwise.
(i) As of September 30, 2001, the Company had (i) regular net
operating loss carryforwards in the amount of approximately $676 million for
Federal income tax purposes, (ii) alternative minimum tax net operating loss
carryforwards in the amount of approximately $448 million for Federal income tax
purposes, and (iii) alternative minimum tax credits of approximately $5 million.
30
(j) As of September 27, 2001, Section 4.13(j) of the Company
Disclosure Schedule sets forth the net operating loss carryforwards of the
Company and each Subsidiary in each state in which the Company and/or each
Subsidiary files an income or franchise tax return.
(k) As of the date hereof, none of the net operating loss
carryovers, capital loss carryovers, or tax credits of any kind of the Company
or any Subsidiary were subject to any limitation on its use under Section 382,
383 or 1502 of the Code, or any provision of any regulation (whether final or
temporary) promulgated under such Code provisions.
(l) The Company has maintained records and made the required
determinations contemplated by the regulations (final and temporary) promulgated
under Section 382 of the Code with respect to testing dates, owner shifts, and
the determination of whether or not an ownership change has occurred. Except as
disclosed on Section 4.13(l) of the Company Disclosure Schedule, no ownership
change within the meaning of Code Section 382 had occurred with respect to the
Company or any Subsidiary.
(m) As of September 27, 2001, the Company had properly computed
any restructuring reductions due to bankruptcy to its regular and alternative
minimum tax net operating loss carry forwards in accordance with Sections 108
and 382(l)(5) of the Code and the regulations promulgated thereunder.
(n) As of September 30, 2000 the aggregate adjusted tax basis of
the assets of the Company and its Subsidiaries (including only those
Subsidiaries which are corporations included in the Company consolidated Federal
income tax return), excluding (i) stock of members of the affiliated group of
which the Company is the parent corporation, (ii) intercompany advances and
indebtedness among such members or between any such member and any entity
treated as a partnership for Federal income tax purposes, and (iii) the effect
of any indebtedness or liability on the tax basis of any equity interest in any
entity treated as a partnership for Federal income tax purposes, exceeded $500
million for regular Federal income tax purposes. As of September 27, 2001,
Section 4.13(n) of the Company Disclosure Schedule sets forth the aggregate
adjusted tax basis of the assets of the Company and including its Subsidiaries
as of the close of the Company's fiscal 2000 taxable year for regular Federal
income tax purposes.
(o) As of September 30, 2000, the aggregate adjusted tax basis of
the assets of the Company and its Subsidiaries (including only those
Subsidiaries which are corporations included in the Company consolidated Federal
income tax return), excluding
31
(i) stock of members of the affiliated group of which the Company is the parent
corporation, (ii) intercompany advances and indebtedness among such members or
between any such member and any entity treated as a partnership for Federal
income tax purposes, and (iii) the effect of any indebtedness or liability on
the tax basis of any equity interest in any entity treated as a partnership for
Federal income tax purposes, exceeded $700 million for Federal alternative
minimum tax purposes. As of September 27, 2001, Section 4.13(o) of the Company
Disclosure Schedule sets forth the aggregate adjusted tax basis of the assets of
the Company and including its Subsidiaries as of the close of the Company's
fiscal 2000 taxable year for Federal alternative minimum tax purposes.
(p) The Company is the parent corporation of an affiliated group
of corporations filing a consolidated Federal income tax return.
(q) For Federal and state income tax purposes, the Company uses a
taxable year ending September 30.
(r) Each partnership (or entity treated as a partnership for
Federal income tax purposes) in which the Company or any Subsidiary (including
only those Subsidiaries which are corporations included in the Company
consolidated Federal income tax return) is a partner has an election under
Section 754 of the Code in effect.
Section 4.14 State Takeover Statutes; Rights Agreement. (a) The
Company Board has approved this Agreement, the Stock Option Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger, and such approval
constitutes approval of this Agreement, the Stock Option Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger by the Company Board
under the provisions of Section 203 of the DGCL and represents all the action
necessary to ensure that such Section 203 does not apply to Parent or Merger
Subsidiary in connection with the transactions contemplated hereby and thereby,
including the Offer, the Merger and the option to purchase Shares pursuant to
the Company Stock Option. To the knowledge of the Company, no other "fair
price", "control share acquisition", "moratorium" or other anti-takeover statute
or similar statute or regulation, applies or purports to apply to this
Agreement, the Stock Option Agreement or the Stockholders Agreement or the
transactions contemplated hereby and thereby, including the Offer and the
Merger.
(b) The Company has amended the Rights Agreement to provide that
neither Parent nor any of its affiliates will become an Acquiring Person
(defined in the
32
Rights Agreement), that no Distribution Date, Shares Acquisition Date or a
Trigger Event (each defined in the Rights Agreement) will occur, and that the
Rights will not separate from the underlying shares of Company Common Stock or
give the holders thereof the right to acquire securities of any party hereto, in
each case as a result of the execution, delivery or performance of this
Agreement, the Stock Option Agreement or the Stockholders Agreement or the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement, the Stock Option Agreement or the Stockholders Agreement.
Section 4.15 Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Deutsche Banc
Alex. Xxxxx Inc., Xxxxxxxxxx Inc. and Mesirow Financial, Inc., the fees of which
will be in an aggregate amount not exceeding $10.2 million (and a copy of whose
engagement letters and a calculation of the fees that would be due thereunder
have been provided to Parent), is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement, the Stock Option Agreement or the Stockholders
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries. No such engagement letters obligate the Company to continue to
use the services or pay fees or expenses in connection with any future
transaction.
Section 4.16 Permits; Compliance with Laws. Each of the Company
and its Subsidiaries has in effect all material Federal, state, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for it
to own, lease or operate its properties and assets and to carry on its business
as now conducted, and there has occurred no default under any such Permit,
except for the absence of Permits and for defaults under Permits which absence
or defaults, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect. The Company and its Subsidiaries have
been, and are, in compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees or orders of any Governmental Entity, and
neither the Company nor any of its Subsidiaries has received any notice from any
Governmental Entity or any other person that either the Company or any of its
Subsidiaries is in violation of, or has violated, any applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees or orders, except such
failures to comply or violations as, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
33
Section 4.17 Environmental Matters. The Company is in compliance
in all material respects with applicable Environmental Laws (as defined below),
including, without limitation, holding all material permits and authorizations
required pursuant to such laws for the ownership and operation of its business
as currently conducted and compliance in all material respects with the terms
thereof, and has no knowledge of any facts or circumstances that would prevent,
interfere with, or materially increase the cost of maintaining such compliance
in the future. Neither the Company nor any of its Subsidiaries has (i) placed,
held, located, released, transported or disposed of any Hazardous Substance
(defined below) on, under, from or at any of the Company's or any of its
Subsidiaries' properties or any other properties, other than in a manner that
would not require remediation pursuant to applicable Environmental Law, (ii) any
knowledge of the presence of any Hazardous Substances that have been released
into the environment on, under or at any of the Company's or any of its
Subsidiaries' properties other than that which would not require remediation
pursuant to applicable Environmental Law, or (iii) received any written notice
(A) of any material violation of any applicable Environmental Law that has not
been resolved, (B) of the institution or pendency of any material suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation, (C) requiring the response to or
remediation of a release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties, (D)
alleging non-compliance by the Company or any of its Subsidiaries with the
terms of any permit required under any Environmental Law in any manner
reasonably likely to require material expenditures or to result in material
liability or (E) demanding payment of a material amount for response to or
remediation of a release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties. There
are no past or present facts or circumstances that could reasonably be expected
to form the basis of any Environmental Claim against the Company or any of its
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law, except where such
Environmental Claim, if made, would not have a Company Material Adverse Effect.
All material permits and other governmental authorizations currently held or
required to be held by the Company and its Subsidiaries as of September 27, 2001
pursuant to any Environmental Laws are identified in Section 4.17 of the Company
Disclosure Schedule. The Company has provided to Parent all material
assessments, reports, data, results of investigations or audits, and other
material information that is in the possession of or reasonably available to the
Company regarding environmental matters pertaining to or the environmental
condition of the business of the Company and its Subsidiaries, or the compliance
(or noncompliance) by the Company or any of its Subsidiaries with any
Environmental Laws. For purposes of this Agreement, the term "Environmental Law"
means all federal, state, local and foreign laws
34
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances as enacted and in effect on or prior to the
date hereof; "Hazardous Substance" shall mean any chemical, pollutant,
contaminant, waste, petroleum or petroleum product and any material defined as
toxic or hazardous or otherwise regulated under any applicable Environmental
Law; and "Environmental Claim" shall mean any claim, action, investigation or
notice by any person or entity alleging potential liability for investigatory,
cleanup or governmental response costs, or natural resources or property
damages, or personal injuries, attorney's fees or penalties relating to (i) the
presence, or release into the environment, of any Hazardous Substance at any
location whether or not owned or operated by the Company or any of its
Subsidiaries, now or in the past, or (ii) any violation, or alleged violation,
of any Environmental Law.
Section 4.18 Contracts; Debt Instruments. (a) As of September 27,
2001 and except as otherwise disclosed in Section 4.18(a)(i) through (v) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or subject to:
(i) any union contract;
(ii) any employment, consulting, severance, termination, or
indemnification agreement, contract or arrangement providing for future
payments, written or oral, with any current or former officer or director which
(1) exceeds $100,000 per annum or (2) requires aggregate annual payments or
total payments over the life of such agreement, contract or arrangement to such
current or former officer, consultant, director or employee in excess of
$100,000 or $500,000, respectively, and is not terminable by it or its
Subsidiary on 30 days' notice or less without penalty or obligation to make
payments related to such termination;
(iii) any joint venture contract or similar arrangement or
any other agreement not in the ordinary course of business which has involved or
is expected to involve a sharing of revenues of $100,000 per annum or more with
other persons;
(iv) any lease for real or personal property in which the
amount of payments which the Company is required to make on an annual basis
exceeds $100,000;
35
(v) to the knowledge of the Company, any material agreement,
contract, policy, license, Permit, document, instrument, arrangement or
commitment involving revenues to the Company in excess of $500,000 which has not
been terminated or performed in its entirety and not renewed which may be, by
its terms, terminated by reason of the execution of this Agreement, the Stock
Option Agreement or the Stockholders Agreement or the consummation of the Offer,
the Merger or the Notes Tender Offers or the other transactions contemplated by
this Agreement, the Stock Option Agreement, the Stockholders Agreement or the
documents pursuant to which the Notes Tender Offers will be made; or
(vi) any agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment that provides for an express
non-competition covenant with any person or in any geographic area and which
limits in any material respect the ability of the Company to compete in its
current business lines.
(b) All contracts, policies, agreements, leases, licenses,
Permits, documents, instruments, arrangements and other commitments listed in
Section 4.18(a)(i) through (v) and Section 4.18(c) of the Company Disclosure
Schedule or otherwise disclosed in the Company SEC Documents are valid and
binding agreements of the Company or a Subsidiary of the Company and are in full
force and effect, and neither the Company, any of its Subsidiaries nor, to the
knowledge of the Company, any other party thereto, is in default in any material
respect under the terms of any such contract, plan, arrangement, agreement,
lease, license, Permit, instrument or other commitment.
(c) Set forth in Section 4.18(c) of the Company Disclosure
Schedule is (A) a list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its Subsidiaries in an aggregate principal
amount in excess of $1 million is outstanding or may be incurred and (B) the
respective principal amounts currently outstanding thereunder. For purposes of
this Section 4.18(c), "indebtedness" shall mean, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person upon which interest charges are
customarily paid, (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(E) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (F) all capitalized lease obligations of such
person, (G) all
36
obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof), (I) all letters of
credit issued for the account of such person (excluding letters of credit issued
for the benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such person to
purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(K) all guarantees and arrangements having the economic effect of a guarantee of
such person of any indebtedness of any other person; and, except as set forth in
Section 4.18(c) of the Company Disclosure Schedule, none of the agreements,
instruments or obligations set forth in (A) through (K) above are affected by
the consummation of the Offer or the Merger, or the other transactions
contemplated hereby.
Section 4.19 Title to Properties. (a) Each of the Company and its
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its tangible properties and assets, except for such assets that are no
longer used or useful in the conduct of its business, free and clear of all
Liens, except for defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with the ability of the Company and its Subsidiaries to
conduct their business as currently conducted.
(b) Each of the Company and its Subsidiaries has complied in all
material respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect. Each
of the Company and each of its subsidiaries enjoys peaceful and undisturbed
possession under all such leases.
Section 4.20 Labor and Employment Difficulties. As of September
27, 2001 and except as set forth in Section 4.20 of the Company Disclosure
Schedule, (a) the Company and all of its Subsidiaries are in material compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and are not engaged in any
unfair labor practice; (b) within the past twelve months there has been no
unfair labor practice charge or complaint filed against the Company or any of
its Subsidiaries, and there is no such charge or complaint presently pending
before the National Labor Relations Board or any state labor relations agency;
(c) there is no labor strike, dispute, slowdown or stoppage actually pending or,
to the knowledge of the Company and its Subsidiaries, threatened against the
Company or any of its Subsidiaries; (d) to the knowledge of the Company and its
Subsidiaries, no representation question exists respecting any employees of the
Company or any of its Subsidiaries;
37
(e) no material grievance or arbitration proceeding arising out of or under any
collective bargaining agreements is pending; (f) there are no pending employment
lawsuits, no pending administrative charges of employment discrimination before
the Equal Employment Opportunity Commission or any state fair employment
practices agency, and, to the knowledge of the Company, no such threatened
lawsuits or charges; (g) there are no pending actions or investigations against
the Company or its subsidiaries by the U.S. Department of Labor, or any state
labor relations agency, and, to the knowledge of the Company, no such actions or
investigations are threatened; (h) in the past twelve months, neither the
Company nor any of its Subsidiaries has experienced any work stoppage; and (i)
in the past twelve months, the Company and its Subsidiaries have not effectuated
a "plant closing", "mass layoff" or "employment loss" in violation of the Worker
Adjustment and Retraining Notification Act of 0000 (xxx "XXXX Xxx").
Section 4.21 Opinions of Financial Advisors. The Company has
received the opinions of Deutsche Banc Alex. Xxxxx Inc. and Rothschild Inc.,
dated the date hereof, signed, accurate and complete copies of which have been
or promptly will be provided to Parent, to the effect that, as of such date, the
consideration to be received by the Company's stockholders pursuant to this
Agreement is fair to the Company's stockholders from a financial point of
view. The Company has been authorized by Deutsche Banc Alex. Xxxxx Inc. and
Rothschild Inc. to permit the inclusion of such opinions in their entirety in
the Offer Documents, the Schedule 14D-9 and the Company Proxy Statement, so long
as such inclusion is in form and substance reasonably satisfactory to each of
Deutsche Banc Alex. Xxxxx Inc. and Rothschild Inc., as applicable, and its
counsel.
Section 4.22 Interests of Officers and Directors. Except as
described in the Company SEC Documents, none of the Company's or its
Subsidiaries' officers or directors has any material direct or indirect interest
in any property, real or personal, tangible or intangible, used in or pertaining
to the business of the Company or that of its Subsidiaries, or any supplier,
distributor or customer of the Company or any of its Subsidiaries.
Section 4.23 Intellectual Property. For purposes of this Section
4.23, "Company Intellectual Property" means all the (i) trademarks, service
marks, trade names, Internet domain names, designs, logos, slogans, and general
intangibles of like nature, together with all goodwill, registrations and
applications related to the foregoing (collectively, "Trademarks"), (ii) patents
(including any registrations, continuations, continuations in part, renewals and
applications for any of the foregoing), (iii) copyrights (including any
registrations and applications for any of the foregoing), (iv) Software and (v)
technology, trade secrets and other confidential information, know-how,
inventions, proprietary
38
processes, formulae, algorithms, models, and methodologies (collectively, "Trade
Secrets") held for use or used in the conduct of the Company's and each of its
Subsidiaries' business as currently conducted or contemplated to be conducted.
For purposes of this Section 4.23, "Software" means any and all (i) computer
programs, including any and all software implementation of algorithms, models
and methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, and (iii) all
documentation, including user manuals and training materials, relating to any of
the foregoing and the content and information contained on any website. The
Company Intellectual Property is subsisting, in full force and effect, has not
been cancelled, expired or abandoned, and is valid and enforceable.
(a) As of September 27, 2001, Section 4.23(a) of the Company
Disclosure Schedule sets forth a complete and accurate list of all of the
following that are owned by the Company or any of its Subsidiaries: (i) patents
and patent applications, (ii) trademark and service xxxx registrations
(including Internet domain name registrations), trademark and service xxxx
applications and material unregistered trademarks, tradenames and service marks,
(iii) copyright registrations, copyright applications and material unregistered
copyrights and (iv) Software (other than readily-available commercial software
having an acquisition price of less than $25,000).
(b) As of September 27, 2001, Section 4.23(b) of the Company
Disclosure Schedule sets forth a complete and accurate list of all agreements
(whether oral or written, and whether between the Company, any of its
Subsidiaries and third parties or inter-corporate) to which the Company or any
of its Subsidiaries is a party or otherwise bound, (i) granting or obtaining any
right to use or practice any rights under any Company Intellectual Property
(other than licenses for readily available commercial software programs having
an acquisition price of less than $25,000), or (ii) restricting the Company's or
any of its Subsidiaries' rights to use any Company Intellectual Property,
including license agreements, development agreements, distribution agreements,
settlement agreements, consent to use agreements, and covenants not to xxx
(collectively, the "License Agreements"). The License Agreements are valid and
binding obligations of the Company, and, to the knowledge of the Company, all
other parties thereto, enforceable in accordance with their terms, and there
exists no event or condition which will result in a violation or breach of, or
constitute (with or without due notice of lapse of time or both) a default by
any party under any such License Agreement. Neither the Company nor any of its
Subsidiaries have licensed or sublicensed its rights in any Company Intellectual
Property other than pursuant to the License Agreements. No royalties, honoraria
or other fees are payable by the Company or any of its Subsidiaries to any third
parties for the use of or right to use any Company Intellectual Property except
pursuant to the License Agreements.
39
(c) Except as set forth on Section 4.23(c) of the Company
Disclosure Schedule, the Company or one of its Subsidiaries owns or possesses
adequate, valid and enforceable licenses or other rights to use, free and clear
of all Liens, all Company Intellectual Property.
(d) Except as set forth in Section 4.23(d) of the Company
Disclosure Schedule, the Company's and its Subsidiaries' ownership, licenses or
rights in the Company Intellectual Property (including without limitation its
ownership, licenses or rights in Intellectual Property pursuant to the Trademark
License Agreement, dated July 7, 1992, between the Company and Mid-America Group
Ltd.) will not be affected by the consummation of the Offer or the Merger. The
consummation of the Offer or the Merger will not result in the loss or
impairment of the Company or any of its Subsidiaries' right to own, use or bring
any action for the infringement of, any of the Company Intellectual Property,
nor will it require the Consent of any Governmental Entity or third party in
respect of any such Company Intellectual Property.
(e) To the knowledge of the Company, the conduct of the Company
and any of its Subsidiaries' business as currently conducted or planned to be
conducted does not conflict with or infringe on (either directly or indirectly
such as through contributory infringement or inducement to infringe) any
intellectual property rights owned or controlled by any third party. There is no
pending or, to the knowledge of the Company, threatened claim, suit, arbitration
or other adversarial proceeding before any court, agency, arbitral tribunal or
registration authority in any jurisdiction involving the Company Intellectual
Property or alleging that the activities or the conduct of the Company's or any
Company Subsidiary's businesses infringe upon, violate or constitute the
unauthorized use of the intellectual property rights of any third party or
challenging the Company or any of its Subsidiaries' ownership, use, validity,
enforceability or registrability of any Company Intellectual Property, except
for claims, suits, arbitrations or proceedings that individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect. There are no settlements, forebearances to xxx, consents, judgments, or
orders or similar obligations other than the License Agreements which (i)
restrict the Company's or any of its Subsidiaries' right to use any Company
Intellectual Property, (ii) restrict the Company's or any of its Subsidiaries'
businesses in order to accommodate a third party's intellectual property rights
or (iii) permit third parties to use any Company Intellectual Property owned or
controlled by the Company or any of its Subsidiaries.
(f) To the knowledge of the Company, no third party is using
40
misappropriating, infringing, diluting or violating any of the Company
Intellectual Property, and no such claims, suits, arbitrations or other
adversarial proceedings have been brought or threatened against any third party
by the Company or any of its Subsidiaries.
(g) The Company and each of its Subsidiaries take reasonable
measures to protect the confidentiality of Trade Secrets, including requiring
their employees and other parties having access thereto to execute written
non-disclosure agreements. To the knowledge of the Company, no Trade Secret has
been disclosed or authorized to be disclosed to any third party other than
pursuant to a non-disclosure agreement that adequately protects the Company and
its applicable Subsidiary's proprietary interests in and to such Trade Secrets.
To the knowledge of the Company, no party to any non-disclosure agreement
relating to its Trade Secrets is in breach or default thereof.
Section 4.24 Insurance. The Company and its Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks as is reasonably prudent, and each has maintained in full
force and effect public liability insurance, insurance against claims for
personal injury or death or property damage occurring in connection with the
activities of the Company and its Subsidiaries or any properties owned, occupied
or controlled by the Company or any of its Subsidiaries, in such amount as
reasonably deemed necessary by the Company or any of its Subsidiaries.
Section 4.25 Customers and Suppliers. Since June 30, 2001, there
has been no termination, cancellation or material curtailment of the business
relationship of the Company or any of its Subsidiaries with any customer or
supplier or group of affiliated customers or suppliers which individually or in
the aggregate would result in a Company Material Adverse Effect nor any written
notice of intent to so terminate, cancel or materially curtail (and would have
such an effect).
Section 4.26 Regulation as a Utility. Except as set forth in
Section 4.26 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to regulation as a "holding company," electric
utility," "public utility," "public utility holding company," or "public service
company" (or similar designations) by the United States, any state of the United
States, any foreign country or any municipality or any political subdivision of
the foregoing.
41
Section 4.27 Qualifying Facility. Each of (i) the approximately
50 megawatt project owned and operated by the Company or one of its Subsidiaries
and located at Antioch, California and (ii) the approximately 75 megawatt
project owned and operated by the Company or one of its Subsidiaries and located
at Bogalusa, Louisiana, meets all requirements for a "qualifying facility" under
the Public Utility Regulatory Policies Act of 1978, as amended, the Federal
Energy Regulatory Commission regulations implemented thereunder and all
administrative and judicial precedents relating thereto, including all
applicable requirements as to project size (in megawatts), fuel-type, operating
and efficiency standards, ownership and useful thermal output. None of the
Company or any of its Subsidiaries owns any other electrical generating
facilities.
Section 4.28 Modification of Employment Arrangements. Each of the
individuals listed in Section 7.3(b)(v) to the Company Disclosure Schedule, has
agreed, pursuant to a letter agreement in the form attached hereto as Exhibit B
to which the Parent is a beneficiary, to enter into an agreement prior to the
consummation of the Offer, but expressly conditioned upon the consummation of
the Offer, to modify his rights under certain employment arrangements and
severance agreements and the Company's Supplemental Executive Retirement Plan
and Supplemental Retirement Plan in accordance with Section 7.3(b); provided
that he has been notified by Parent that all conditions to the consummation to
the Offer will likely be satisfied or waived at the Expiration Date of the
Offer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally hereby
represent and warrant to the Company as follows:
Section 5.1 Organization, Standing and Corporate Power. Each of
Parent and Merger Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Parent and Merger Subsidiary is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed and in good
standing (individually
42
or in the aggregate) would not have, or be reasonably expected to have, a
material adverse effect on the condition (financial or otherwise), business,
assets, liabilities, prospects or results of operations of Parent and its
Subsidiaries taken as a whole, excluding effects from general economic
conditions, general securities market conditions, conditions affecting Parent's
industry generally or the announcement of this Agreement or the transactions
contemplated hereby (a "Parent Material Adverse Effect"). Parent has delivered
or made available to the Company complete and correct copies of its and Merger
Subsidiary's Certificate of Incorporation and By-Laws, in each case as amended
to the date of this Agreement.
Section 5.2 Authority; Noncontravention; Filings and Consents.
(a) Each of Parent and Merger Subsidiary has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Merger Subsidiary and the consummation
by Parent and Merger Subsidiary of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of each of Parent and Merger Subsidiary. This Agreement has been duly
executed and delivered by each of Parent and Merger Subsidiary and, assuming
that this Agreement constitutes a legal, valid and binding obligation of the
Company, constitutes a legal, valid and binding obligation of each of Parent and
Merger Subsidiary, enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws, now or hereafter in effect, relating to or affecting creditors' rights and
remedies and to general principles of equity.
(b) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries under, (i) the Certificate of Incorporation or By-Laws of Parent or
Merger Subsidiary, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in paragraph (c) below, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger
Subsidiary or any other subsidiary of Parent or their respective properties or
43
assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (x) have a Parent Material Adverse Effect, (y) impair the
ability of Parent and Merger Subsidiary to perform their respective obligations
under this Agreement or (z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement.
(c) No Consent by any Governmental Entity is required by or with
respect to Parent or Merger Subsidiary in connection with the execution and
delivery by Parent and Merger Subsidiary of this Agreement or the consummation
by Parent or Merger Subsidiary of the transactions contemplated by this
Agreement, except for (i) any additional filings required under the HSR Act and
any applicable filings under similar foreign antitrust or competition laws and
regulations, (ii) the filing with the SEC of (A) the Offer Documents, and (B)
such reports under the Exchange Act as may be required in connection with this
Agreement, the Stock Option Agreement, the Stockholders Agreement and the
transactions contemplated hereby and thereby, (iii) such filings as may be
required under state securities or "blue sky" laws, (iv) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be made or obtained individually or in the aggregate would not (x) have a Parent
Material Adverse Effect, (y) impair the Parent's or Merger Subsidiary's ability
to perform its obligations under this Agreement or (z) prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
Section 5.3 Information Supplied. Neither the Offer Documents nor
any of the information supplied or to be supplied by Parent or its Subsidiaries
or representatives for inclusion or incorporation by reference in the Schedule
14D-9 or the Company Proxy Statement will, at the respective times any such
documents or any amendments or supplements thereto are filed with the SEC, are
first published, sent or given to stockholders or become effective under the
Securities Act or, in the case of the Company Proxy Statement, at the time of
the Company Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Offer Documents will comply as to
form in all material respects with the requirements of all applicable laws,
including the Exchange Act and the rules and regulations thereunder. No
representation or warranty is made by Parent or Merger Subsidiary with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference therein.
44
Section 5.4 Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxxx Xxxxx Xxxxxx Inc., the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement or the Stockholders Agreement based
upon arrangements made by or on behalf of Parent or Merger Subsidiary.
Section 5.5 No Prior Activities; Assets of Merger Subsidiary.
Merger Subsidiary was formed solely for the purpose of the Merger and engaging
in the transactions contemplated hereby. As of the date hereof and the Effective
Time, except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated hereby and
activities, agreements or arrangements in connection with the transactions
contemplated hereby, Merger Subsidiary has not and will not have (i) incurred,
directly or indirectly through any of its subsidiaries or affiliates, any
obligations or liabilities, (ii) engaged in any business or activities of any
type or kind whatsoever or (iii) entered into any agreements or arrangements
with any person.
Section 5.6 Sufficient Funds. Either Parent or Merger Subsidiary
has available, or has obtained commitment letters (copies of which have
heretofore been provided to the Company) from financial institutions to borrow,
sufficient funds to pay the Merger Consideration, to purchase the Notes pursuant
to the Notes Tender Offers and to pay all fees and expenses related to the
Merger.
Section 5.7 No Vote Required. No vote of any class or series of
Parent's or Merger Subsidiary's capital stock is necessary to approve this
Agreement, the Offer, the Notes Tender Offers, the Merger or the other
transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Conduct of Business. The Company covenants and agrees
that prior to the earlier of (i) the Effective Time and (ii) the time the
directors designated by the Parent have been elected to, and shall constitute a
majority of, the Company Board pursuant to Section 1.4 hereof (the "Appointment
Date"), except (i) as expressly provided in this Agreement, (ii) as set forth in
Section 6.1 of the Company Disclosure Schedule, or (iii) as agreed in writing by
Parent, after the date hereof:
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(a) the Company shall, and shall cause its Subsidiaries to, carry
on their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, distributors and others having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the Effective
Time;
(b) neither the Company nor any of its Subsidiaries shall (i)
amend its Certificate of Incorporation or By-laws or similar organizational
document, (ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Company Common
Stock (1) upon the exercise of Company Options outstanding on the date of this
Agreement, (2) upon the exercise of Company Warrants outstanding on the date of
this Agreement or (3) pursuant to the Rights Agreement), (iii) declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, (iv) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, or (v) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(c) neither the Company nor any of its Subsidiaries shall (i)
incur or modify any indebtedness or other liability, other than in the ordinary
and usual course of business and consistent with past practice; or (ii) modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(d) neither the Company nor any of its Subsidiaries shall (i)
incur or assume any indebtedness (either long-term or short-term), except
indebtedness under the Company's revolving credit facilities that when added to
all other outstanding indebtedness of the Company (as shown on Exhibit C, which
shall be updated and delivered to the Parent from time to time pursuant to a
request of the Parent) shall not exceed $985 million at any time prior to the
Appointment Date, provided, that in no event shall any such indebtedness be used
to purchase or repay any of the Notes (other than scheduled interest payments
thereon); (ii) modify the terms of any indebtedness or other liability unless
agreed to in writing by Parent (which agreement shall not be unreasonably
withheld or delayed);
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(iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person, except as described in Section 6.1(d) of the Company Disclosure Schedule
and which are in the ordinary course of business and consistent with past
practice; (iv) make any loans, advances or capital contributions to, or
investments in, any other person (other than to or in wholly owned Subsidiaries
of the Company), except in the ordinary course of business and consistent with
past practice to employees for reasonable Company related expenses (e.g.,
reasonable travel advances and moving expenses); or (v) enter into any material
commitment or transaction (including, but not limited to, any capital
expenditure or purchase, sale or lease of assets or real estate), except capital
expenditures no greater than $10 million in the aggregate between September 30,
2001 and March 15, 2002 and except for sales of inventory in the ordinary course
of business and consistent with past practice;
(e) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
assets other than in the ordinary and usual course of business and consistent
with past practice;
(f) except as shall be required by any applicable employment
agreement or collective bargaining agreement in effect on the date hereof and
set forth in Section 6.1(f) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries shall make any change in the compensation
payable or to become payable to any of its officers, directors, employees,
agents or consultants (other than normal recurring increases in wages to
employees who are not officers or directors or affiliates in the ordinary course
of business consistent with past practice) or to persons providing management
services, or enter into or amend any employment, severance, consulting,
termination or other agreement or employee benefit plan or make any loans to any
of its officers, directors, employees (except as permitted in Section 6.1(d)),
affiliates, agents or consultants or make any change in its existing borrowing
or lending arrangements for or on behalf of any of such persons pursuant to an
employee benefit plan or otherwise;
(g) neither the Company nor any of its Subsidiaries shall (i) pay
or make any accrual or arrangement for payment of any pension, retirement
allowance or other employee benefit pursuant to any existing plan, agreement or
arrangement to any officer, director, employee or affiliate or pay or agree to
pay or make any accrual or arrangement for payment to any officers, directors,
employees or affiliates of the Company of any amount relating to unused vacation
days, except payments and accruals made in the ordinary course of business
consistent with past practice; (ii) adopt or pay, grant, issue, accelerate or
accrue salary or other payments or benefits pursuant to any pension, profit-
47
sharing, bonus, extra compensation, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any director,
officer, employee, agent or consultant, whether past or present (for the
avoidance of doubt, nothing in this Section 6.1(g)(ii) shall prevent the Company
from making ordinary payments of salary and fulfilling contractual obligations
existing on the date hereof); or (iii) amend in any material respect any such
existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(h) neither the Company nor any of its Subsidiaries shall permit
any insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except policies providing
coverage for losses not in excess of $100,000;
(i) neither the Company nor any of its Subsidiaries shall enter
into any contract or transaction relating to the purchase of assets other than
in the ordinary course of business consistent with prior practices;
(j) neither the Company nor any of its Subsidiaries shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
subsidiaries;
(k) neither the Company nor any of its Subsidiaries will adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries will (i)
change any of the accounting methods used by it unless required by GAAP, the
Code or Regulation S-X promulgated under the Exchange Act or (ii) make any
material election relating to taxes, change any material election relating to
taxes already made, adopt any material accounting method relating to taxes,
change any material accounting method relating to taxes unless required by GAAP
or the Code, enter into any closing agreement relating to taxes, settle any
claim or assessment relating to taxes or consent to any claim or assessment
relating to taxes or any waiver of the statute of limitations for any such claim
or assessment;
48
(m) neither the Company nor any of its Subsidiaries will take, or
agree to commit to take, any action that would or is reasonably likely to result
in any of the conditions to the Offer set forth in Annex I or any of the
conditions to the Merger set forth in Article IX not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company, Parent, Merger Subsidiary or the
holders of Shares to consummate the Offer or the Merger in accordance with the
terms hereof or materially delay such consummation;
(n) neither the Company nor any of its Subsidiaries will plan,
announce, implement or effect any material reduction in labor force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or its
Subsidiaries;
(o) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing; and
(p) the Company shall take all reasonable actions to obtain
judicial approval of the Settlement Agreement.
Section 6.2 State Takeover Statutes. The Company and the Company
Board shall (i) take all reasonable actions necessary to ensure that no "fair
price", "control share acquisition", "moratorium" or other anti-takeover
statute, or similar statute or regulation, is or becomes applicable to this
Agreement, the Stock Option Agreement or the Stockholders Agreement, or the
Offer, the Merger or any of the other transactions contemplated hereby or
thereby and (ii) if any "fair price", "control share acquisition", "moratorium"
or other anti-takeover statute, or similar statute or regulation, becomes
applicable to this Agreement, the Stock Option Agreement or the Stockholders
Agreement, or the Offer, the Merger or any other transaction contemplated hereby
or thereby, take all action necessary to ensure that the Offer, the Merger and
the other transactions contemplated hereby and thereby, may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other transactions contemplated hereby and thereby.
Section 6.3 Access to Information. Subject to applicable law and
upon reasonable request, the Company shall, and shall cause each of its
Subsidiaries to, afford to Parent and to Parent's officers, employees,
accountants, counsel, financial advisers and other representatives, full access
during normal business hours during the period prior to
49
the Effective Time to all their respective properties, books, contracts,
commitments, personnel (including for the purpose of interviewing such personnel
in connection with the integration process) and records and their accountants'
work papers and, during such period, the Company shall, and shall cause each of
its Subsidiaries to, furnish promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of Federal or state securities laws, (ii) a
copy of each material tax return, report and information statement filed by it
during such period, and (iii) all other information concerning its business,
assets, properties and personnel as Parent may reasonably request; provided that
no investigation pursuant to this Section 6.3 shall affect any representation or
warranty given by the Company to Parent hereunder. Any investigation pursuant to
this Section 6.3 shall be conducted in such a manner as not to interfere
unreasonably with the conduct of the business of the Company. Unless otherwise
required by law and until the Effective Time, Parent will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement. Following the execution of this Agreement,
Parent and the Company shall cooperate with each other and make all reasonable
efforts to minimize any disruption to the business which may result from the
announcement of the transactions contemplated hereby.
Section 6.4 No Solicitation by the Company.
(a) Neither the Company nor any of its Subsidiaries or affiliates
shall (and the Company shall cause the officers, directors, employees,
representatives and agents of the Company, each of its Subsidiaries and each
affiliate of the Company, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any person or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal (defined below in Section
6.4(c)), except that nothing contained in this Section 6.4 or any other
provision hereof shall prohibit the Company or the Company Board from (i) taking
and disclosing to the Company's stockholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company
stockholders as, in the good faith judgment of the Board, after receiving advice
from outside counsel, is required under applicable law, provided that the
Company may not, except as permitted by Section 6.4(b), withdraw or modify, or
propose to withdraw or modify, the Recommendations or its position with respect
to the Offer or the Merger or approve or recommend, or propose to approve or
recommend any Acquisition Proposal, or enter into any agreement with respect to
any Acquisition Proposal. Upon execution of this Agreement, the Company will
immediately cease any
50
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the time of acceptance of Shares for payment pursuant to the Offer, the
Company may furnish information concerning its business, properties or assets to
any corporation, partnership, person or other entity or group pursuant to
appropriate confidentiality agreements, and may negotiate and participate in
discussions and negotiations with such entity or group concerning an Acquisition
Proposal if:
(x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company Board relating to
any such transaction which the Company Board determines in good faith,
represents a superior transaction to the transactions contemplated
hereby and which is not subject to the receipt of any necessary
financing; and
(y) in the opinion of the Company Board such action is
required to discharge the Company Board's fiduciary duties under
applicable law, determined only after receipt of
(i) advice from the Company's investment banking
firm that the Acquisition Proposal is superior, from a financial
point of view, to the Offer and the Merger (which advice may
include analysis of the enterprise value if the Company's Board
has been advised by independent legal counsel that its fiduciary
duties requires them to do so), and
(ii) advice from independent legal counsel to the
Company that the failure to provide such information or access or
to engage in such discussions or negotiations would cause the
Company Board to violate its fiduciary duties under applicable
law.
The Company will promptly, but in any event within one business day, notify
Parent of the existence of any proposal, discussion, negotiation or inquiry
received by the Company, and the Company will promptly, but in any event within
one business day, communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will immediately provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent.
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(b) Except as set forth below in this subsection (b), neither the
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Merger Subsidiary, the
Recommendations or the approval by the Company Board or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, prior
to the time of acceptance for payment of Shares pursuant to the Offer, the
Company Board may withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger, approve or recommend a Superior Proposal
(as defined in Section 6.4(c)), or enter into an agreement with respect to a
Superior Proposal, in each case at any time after the fifth business day
following Parent's receipt of written notice from the Company advising Parent
that the Company Board has received a Superior Proposal which it intends to
accept, specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal, but only if the Company
shall have caused its financial and legal advisors to negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms.
(c) As used herein, "Acquisition Proposal" shall mean any
proposal or offer to acquire all or a substantial part of the business or
properties of the Company or any of its Subsidiaries or 15% or more of any
capital stock of the Company or any of its Subsidiaries, whether by merger,
tender offer, exchange offer, sale of assets or similar transactions involving
the Company or any Subsidiary, division or operating or principal business unit
of the Company. "Superior Proposal" shall mean an Acquisition Proposal which
satisfies both subsection (x) and subsection (y) of Section 6.4(a).
Section 6.5 Litigation. The Company shall give Parent the
opportunity to participate (at Parent's own cost) in the defense of any
litigation against the Company and/or its directors relating to the transactions
contemplated by this Agreement, the Stock Option Agreement and the Stockholders
Agreement.
Section 6.6 Rights Agreement. Except as expressly required by
this Agreement, the Company shall not, without the prior consent of Parent,
amend the Rights Agreement or take any other action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Rights
or any action to facilitate an Acquisition Proposal.
52
ARTICLE VII
COVENANTS OF PARENT AND MERGER SUBSIDIARY
Section 7.1 Indemnification. From and after the Effective Time,
the Surviving Corporation will indemnify and hold harmless (including
advancement of expenses) the current and former directors and officers of the
Company and its wholly-owned Subsidiaries and Xxxxxxx Container de Mexico, S.A.
de C.V. (the "Indemnified Parties") in respect of claims made within six years
following the Effective Time for acts or omissions occurring on or prior to the
Effective Time to the extent provided in the Company's Certificate of
Incorporation, By-Laws and indemnity agreements in effect on the date hereof;
provided that such indemnification shall be subject to any limitation imposed
from time to time under applicable law. Parent will cause to be maintained for a
period of not less than four years from the Effective Time, at Parent's election
either (i) the Company's current directors' and officers' insurance and
indemnification policy to the extent that it provides coverage for events
occurring prior to the Effective Time (the "D&O Insurance") for all Indemnified
Parties, (ii) a new policy providing substantially similar coverage, or (iii) a
"tail" policy on the Company's existing D&O Insurance, so long as the annual
premium therefor would not be in excess of 150% of the amount per annum the
Company paid in its last full fiscal year, which amount has been disclosed to
Parent, on terms and conditions substantially similar to the existing D&O
Insurance. If the existing D&O Insurance cannot be maintained, expires or is
terminated or canceled during such four-year period, Parent will use reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained for the
remainder of such period for an annualized premium not in excess 150% of the
amount per annum the Company paid in its last full fiscal year, on terms and
conditions substantially similar to the existing D&O Insurance. This Section 7.1
shall survive the consummation of the Merger at the Effective Time, is intended
to benefit the Company and the Indemnified Parties, shall be binding on all
successors and assigns of the Surviving Corporation and shall be enforceable by
the Indemnified Parties. This Section 7.1 shall not limit or otherwise adversely
affect any rights any Indemnified Party may have under any agreement with the
Company or under the Company's Certificate of Incorporation or By-Laws. If
Parent, Merger Subsidiary or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person or shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Parent, Merger Subsidiary or
the Surviving Corporation, as the case may be, honor the indemnification
obligations set forth in this Section 7.1.
53
Section 7.2 Obligations of Merger Subsidiary. Parent will take
all action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement (including ensuring that Merger Subsidiary will at the
appropriate times have sufficient funds to consummate the Offer and the Merger)
and to consummate the Offer, the Notes Tender Offers and the Merger on the terms
and conditions set forth in this Agreement.
Section 7.3 Employees.
(a) During the period commencing on the Effective Time and ending
on the first anniversary thereof, Parent shall cause the Surviving Corporation
to provide employees of the Company and the Company's Subsidiaries who were
employees of the Company or the Company's subsidiaries immediately before the
Effective Time with employee benefits that are substantially no less favorable
in the aggregate than either those currently provided by the Company and the
Company's Subsidiaries to such employees as of the date of this Agreement or
those provided from time to time by Parent and its Subsidiaries to their other
similarly situated employees; provided, however, that, during such one-year
period, the benefit provided to any such employee under any tax-qualified
defined benefit pension plan in which the employee participates shall be no less
than that determined under the formula in effect under the Xxxxxxx Container
Retirement Plan as in effect on the date hereof taking into account both (i) the
years of service recognized for such employee under such Retirement Plan as of
the Closing Date and (ii) such employee's service with Parent, the Surviving
Corporation, or any Subsidiary of Parent after the Closing Date during such
one-year period; provided, further, that nothing in this Section 7.3 shall
restrict Parent's or the Surviving Corporation's ability to change any Benefit
Plans in the future.
(b) To the extent that any benefit would become payable in
respect of consummation of the Offer under any Benefit Plan required to be
disclosed in Section 4.12(m) of the Company Disclosure Schedule, the Company
shall, prior to any initial acceptance for payment of Shares in the Offer, take
all actions necessary: (i) to the extent it may unilaterally do so, to amend all
such Benefit Plans to provide that any benefit that would have been required to
be paid in respect of the Offer will instead become payable in respect of the
Merger; (ii) to the extent not amended under the preceding clause (i), to amend
all Benefit Plans with respect to each individual listed on Section 7.3(b)(ii)
of the Company Disclosure Schedule such that any benefit that would have been
required to be paid in respect of the Offer will instead become payable in
respect of the Merger; (iii) to amend the Company's Supplemental Executive
Retirement Plan and the phantom stock grants to the extent such Benefit Plans
apply to any individuals not listed on Section 7.3(b)(ii) of the Company
Disclosure Schedule, such that any benefit that would have been
54
required to be paid in respect of the Offer will instead become payable in
respect of the Merger, but, with respect to the Supplemental Executive
Retirement Plan, providing such individuals with a payment for the time value of
money in respect of the period between the Offer and the Merger using a discount
rate based on U.S. treasuries with the most comparable maturities such that no
benefit under that plan has been reduced (provided that nothing in this
Agreement shall prohibit the Company from continuing to make periodic payments
under and in accordance with the Supplemental Executive Retirement Plan to any
individual listed on Section 7.3(b)(iii) of the Company Disclosure Schedule who
is receiving such periodic payments as of the date of this Agreement until such
time as such individual's benefit is paid out in full by reason of the
consummation of the Merger); and (iv) to use commercially reasonable efforts to
obtain the consent of each affected individual to amend the Company's Management
Incentive Plan and each Severance Compensation Agreement (as amended) with
respect to such individual, to the extent it applies to any individuals not
listed on Section 7.3(b)(ii) of the Company Disclosure Schedule, such that any
benefit that would have been required to be paid in respect of the Offer will
instead become payable in respect of the Merger (it being understood that the
failure to obtain the consent of any such beneficiary, after a good faith
effort, shall not be deemed a breach of this clause (iv)). After the Appointment
Date and prior to the Effective Date, Parent agrees not to, and to cause the
Company not to, terminate the employment of any of the individuals listed in
Section 7.3(b)(iv) of the Company Disclosure Schedule or any individual who
consents to the amendments described in clause (iv) above. In addition, the
Company shall (and shall cause the individuals listed on Section 7.3(b)(v) of
the Company Disclosure Schedule to agree prior to consummation of the Offer (it
being understood that the failure of any such individual to execute such
agreement shall not be construed as a willful breach by the Company of this
covenant so long as the Company has made good faith efforts to satisfy this
covenant)) to enter into an agreement to (i) modify such individuals' rights
under certain employment arrangements and severance agreements of, and the
Company's Supplemental Executive Retirement Plan and Supplemental Retirement
Plan with respect to, each individual listed on Section 7.3(b)(v) of the Company
Disclosure Schedule, to reduce, in the amounts set forth in Section 7.3(b)(v)
and by an aggregate amount of at least $16,895,606, the benefits that they would
be entitled to receive under such agreements and plans in respect of the Merger
or in respect of the Merger in connection with another event (as such agreements
or plans are amended in accordance with this Section 7.3(b)) without causing any
other benefit available to such individual to be increased, and (ii) make
payable at the consummation of the Merger all obligations (as if the employment
of all such individuals listed on Section 7.3(b)(v) of the Company Disclosure
Schedule who are employees of the Company is terminated at such time) under such
agreements and plans, as amended in accordance with this Section 7.3(b),
provided that the aggregate amount of such payments does not exceed $23.3
million.
55
(c) From and after the Effective Time, Surviving Corporation and
its wholly-owned Subsidiaries, as applicable, shall honor each Benefit Plan that
provides for severance (including without limitation change of control and
termination agreements) in accordance with its terms (as amended in accordance
with subsection (b) above, if applicable); provided that nothing in this
subsection (c) shall prevent Parent or the Surviving Corporation from causing
such Benefit Plan to be amended or terminated in accordance with its terms.
(d) For purposes of any employee benefit plan or arrangement
maintained by Parent, the Surviving Corporation or any Subsidiary of Parent,
Parent shall recognize (or cause to be recognized) service with the Company and
the Company's Subsidiaries and any predecessor entities (and any other service
credited by the Company under similar benefit plans) for purposes of vesting and
eligibility to participate; provided that the retirement benefit shall be
calculated as provided in Section 7.3(a) hereof.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Stockholder Approval; Preparation of Company Proxy
Statement. (a) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to Section
253 of the DGCL, the Company shall, as promptly as practicable following the
acceptance of Shares pursuant to the Offer, prepare and file with the SEC the
Company Proxy Statement. No filing of, or amendment or supplement to, or
correspondence to the SEC will be made by the Company without providing the
Parent with a reasonable opportunity to review and comment thereon. The Company
will advise Parent, promptly after it receives notice thereof, of any request by
the SEC for the amendment of the Company Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Company Stockholders Meeting any information relating to the
Company or Parent, or any of their respective affiliates, officers or directors,
should be discovered by the Company or Parent which should be set forth in an
amendment or supplement to the Company Proxy Statement, so that it would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such information
shall promptly notify the other parties hereto and an appropriate amendment
56
or supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the stockholders of the
Company.
(b) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to Section
253 of the DGCL, the Company shall as promptly as practicable following the
acceptance of Shares pursuant to the Offer duly call, give notice of, convene
and hold a meeting of its stockholders (the "Company Stockholders Meeting") for
the purpose of considering and taking action upon this Agreement and the Merger.
Once the Company Stockholders Meeting has been called and noticed, the Company
shall not postpone or adjourn the Company Stockholders Meeting (other than for
the absence of a quorum) without the consent of Parent. Subject to the Company's
right, pursuant to Section 6.4(b) hereof, to withdraw or modify the
Recommendations, the Company Board shall include in the Company Proxy Statement
a copy of the Recommendations as such Recommendations pertain to the Merger and
this Agreement. Notwithstanding the foregoing, the Company Board shall submit
this Agreement and the Merger for approval to the Company's stockholders whether
or not the Company Board determines in accordance with Section 6.4(b) after the
date hereof that this Agreement and the Merger are no longer advisable and
recommends that the stockholders of the Company reject it. The Company shall use
its best efforts to solicit from stockholders of the Company proxies in favor of
this Agreement and the Merger and shall take all other actions necessary or
advisable to secure the vote or consent of stockholders required by the DGCL to
effect the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b) above, in
the event that Merger Subsidiary shall acquire at least 90% of the outstanding
Shares in the Offer, the parties hereto shall take all necessary actions to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
Section 8.2 HSR Act Filings; Reasonable Efforts; Notification.
(a) To the extent any additional filings are required under the HSR Act or any
other Antitrust Laws (as defined in Section 8.2(b)), each of Parent and the
Company shall (i) promptly make or cause to be made the filings required of such
party or any of its Subsidiaries under the HSR Act and any other Antitrust Laws
with respect to the Offer, the Merger and the other transactions contemplated by
this Agreement, the Stock Option Agreement and the Stockholders Agreement, (ii)
comply at the earliest practicable date with any request under the HSR Act or
such other Antitrust Laws for additional information, documents, or other
material received by such party or any of its Subsidiaries from the Federal
Trade Commission or the Department of Justice or any other Governmental Entity
in respect of such
57
filings, the Offer, the Merger or such other transactions, and (iii) cooperate
with the other party in connection with any such filing and in connection with
resolving any investigation or other inquiry of any such agency or other
Governmental Entity under any Antitrust Laws with respect to any such filing,
the Offer, the Merger or such other transactions. Each party shall promptly
inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings, the Offer, the Merger or such other transactions. Neither
party shall participate in any meeting with any Governmental Entity in respect
of any such filings, investigation, or other inquiry without giving the other
party notice of the meeting and, to the extent permitted by such Governmental
Entity, the opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the Offer, the Merger or any other
transactions provided for in this Agreement, the Stock Option Agreement or the
Stockholders Agreement under the HSR Act, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and any
other Federal, state or foreign statutes, rules, regulations, orders, decrees or
other form of law that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of competition
(collectively, "Antitrust Laws"). In connection therewith, if any administrative
or judicial action or proceeding is instituted (or threatened to be instituted)
challenging the Offer, the Merger or any other transactions provided for in this
Agreement or the Stockholders Agreement as violative of any Antitrust Law, and,
if by mutual agreement, Parent and the Company decide that litigation is in
their best interests, each of Parent and the Company shall cooperate and use all
reasonable efforts vigorously to contest and resist any such action or
proceeding and to have vacated, lifted, reversed, or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or permanent
(each an "Order"), that is in effect and that prohibits, prevents, or restricts
consummation of the Offer, the Merger or any such other transactions. Each of
Parent and the Company shall use all reasonable efforts to take such action as
may be required to cause the expiration of the notice periods under the HSR Act
or other Antitrust Laws with respect to the Offer, the Merger and such other
transactions as promptly as possible after the execution of this Agreement.
(c) Each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Notes Tender Offers, the Merger, and the
other transactions contemplated by this Agreement
58
and the Stockholders Agreement, including (i) the obtaining of all other
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all other necessary registrations and
filings (including other filings with Governmental Entities, if any), (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the preparation of the Offer Documents, the Schedule 14D-9 and, if
necessary, the Company Proxy Statement, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement and the Stockholders
Agreement.
(d) Notwithstanding anything to the contrary in Section 8.2(a),
(b) or (c), (i) neither Parent nor any of its Subsidiaries shall be required to
divest any of their respective businesses, product lines or assets, (ii) neither
Parent nor any of its Subsidiaries shall be required to take or agree to take
any other action or agree to any limitation that could reasonably be expected to
have a Parent Material Adverse Effect, (iii) neither the Company nor its
Subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that could reasonably be expected to have a Company Material
Adverse Effect, (iv) no party shall be required to agree to the imposition of or
to comply with, any condition, obligation or restriction on Parent or any of its
Subsidiaries or on the Surviving Corporation or any of its Subsidiaries of the
type referred to in subclause (iii) or (iv) of clause (a) of Annex I, and (v)
neither Parent nor Merger Subsidiary shall be required to waive any of the
conditions to the Offer set forth in Annex I and none of the Parent, Merger
Subsidiary or the Company shall be required to waive any of the conditions to
the Merger set forth in Article IX.
(e) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect or (ii) the failure by it to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions
59
contemplated by this Agreement, the Stock Option Agreement or the Stockholders
Agreement;
(ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement, the
Stock Option Agreement or the Stockholders Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting it or any of its Subsidiaries
which, if pending on the date of this Agreement would have been required to have
been disclosed pursuant to Article IV or which relate to the consummation of the
transactions contemplated by this Agreement, the Stock Option Agreement or the
Stockholders Agreement.
Section 8.3 Public Announcements. Parent and Merger Subsidiary,
on the one hand, and the Company, on the other hand, will consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Offer, the Notes
Tender Offers and the Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement will be a joint press release acceptable to Parent and the
Company.
Section 8.4 Confidentiality. Until the termination of this
Agreement, each of Parent and the Company agree to, and will cause its
Representatives (defined in the Confidentiality Agreement, dated January 19,
2000 (the "Confidentiality Agreement"), between Parent and the Company) to
continue to be bound by the terms of the Confidentiality Agreement (as if such
agreement were still in full force and effect).
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ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or, to the extent permitted by applicable law,
waiver on or prior to the Closing Date of each of the following conditions:
(a) Stockholder Approval. If required by the DGCL, this Agreement
and the Merger shall have been approved and adopted by the Company Stockholder
Vote.
(b) Purchase of Shares in the Offer. Merger Subsidiary shall have
accepted for payment and purchased all Shares validly tendered and not withdrawn
pursuant to the Offer.
(c) HSR Approval. The applicable waiting period under the HSR Act
and any applicable foreign antitrust or competition laws and regulations shall
have expired or been terminated.
(d) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in effect
preventing or prohibiting consummation of the Merger.
ARTICLE X
TERMINATION
Section 10.1 Termination. The transactions contemplated by this
Agreement may be terminated or abandoned at any time prior to the Effective
Time, whether before or after stockholder approval thereof:
(a) Subject to Section 1.4(c), by the mutual written consent of
Parent and the Company;
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have been terminated or expired
without any Shares being purchased pursuant thereto or (y) Merger Subsidiary
shall not have accepted for payment any Shares pursuant to the Offer by March
15, 2002; provided, however, that the right to terminate this Agreement under
this Section 10.1(b)(i) shall not
61
be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of Merger
Subsidiary to purchase the Shares pursuant to the Offer on or prior to such
date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the acceptance for payment
of, or payment for, Shares pursuant to the Offer or the Merger and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) By the Company:
(i) in connection with entering into a definitive agreement
as permitted by Section 6.4(b), provided the Company has complied with all
provisions thereof, including the notice provisions therein, and that the
Company makes simultaneous payment to Parent of funds as required by Section
11.1(b); or
(ii) if Parent or Merger Subsidiary shall have breached in
any material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach cannot
be or has not been cured, in all material respects, within 10 days after the
giving of written notice of such breach to Parent or Merger Subsidiary, as
applicable.
(d) By Parent:
(i) if, prior to the purchase of Shares by Merger Subsidiary
pursuant to the Offer, the Company Board shall have withdrawn, modified or
changed in a manner adverse to Parent or Merger Subsidiary the Recommendations
or its approval of the Offer, this Agreement or the Merger or shall have
recommended an Acquisition Proposal or shall have executed an agreement in
principle or definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent, Merger
Subsidiary or their affiliates; or
(ii) if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached any representation, warranty, covenant or
other agreement contained in this Agreement which would give rise to the failure
of a condition set forth in paragraph (f) or (g) of Annex I hereto; or
62
(iii) the Offer is not commenced within 5 business days after
the first public announcement of this Agreement because of the failure of any of
the conditions set forth in Annex I being satisfied.
Section 10.2 Effect of Termination. In the event of the
termination or abandonment of the transactions by any party hereto pursuant to
the terms of this Agreement, written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which
such termination or abandonment of the transactions is made, and there shall be
no liability on the part of the Parent, Merger Subsidiary or the Company except
(A) for fraud or willful breach of this Agreement prior to such termination or
abandonment of the transactions and (B) as set forth in Section 11.1.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Fees and Expenses.
(a) Except as specifically provided to the contrary in this
Agreement, including Section 11.1(b), all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions shall be
paid by the party incurring such expenses.
(b) In the event that:
(i) the Company shall terminate or abandon the transactions
pursuant to Section 10.1(c)(i); or
(ii) (x) either the Company or Parent terminates or abandons
the transactions pursuant to Section 10.1(b)(i) and prior thereto there shall
have been publicly announced another Acquisition Proposal; or (y) Parent shall
terminate or abandon the transactions pursuant to Section 10.1(d)(i) or (ii);
then the Company shall pay to Parent an amount equal to $20 million (the
"Termination Fee") plus an amount equal to Parent's actual and reasonably
documented out-of-pocket fees and expenses incurred by Parent and Merger
Subsidiary in connection with the Offer, the Notes Tender Offers, the Merger,
this Agreement and the consummation of the transactions contemplated hereby up
to a maximum amount of $2.5 million in the aggregate (the "Expense
Reimbursement"). The Termination Fee and Expense Reimbursement shall be paid in
same day funds concurrently with the execution of an agreement referred to in
63
subsection (i) above or in the case of clause (ii) above no later than the date
of consummation of any Acquisition Proposal within 12 months of the termination
of this Agreement; provided, however, if an Acquisition Proposal is not
consummated within 12 months of the termination of this Agreement, no such
payments required by clause (ii) above shall be required to be paid.
Notwithstanding anything herein to the contrary, no Termination Fee or Expense
Reimbursement shall be payable if Parent or Merger Subsidiary was in material
breach of its representations, warranties or obligations under this Agreement at
the time its right to terminate this Agreement accrued.
Section 11.2 Amendment and Modification. Subject to applicable
law and Section 1.4(c), this Agreement may be amended, modified and supplemented
in any and all respects, whether before or after any vote of the stockholders of
the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 1.4(c)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 11.3 Extension; Waiver. Subject to Section 1.4(c), at any
time prior to the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 11.2, waive compliance with any of the agreements or
conditions contained in this Agreement. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by each of the
parties hereto. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 11.4 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 11.4 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
64
Section 11.5 Notices. All notices, requests and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) or by telecopy (with copies by overnight courier) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Merger Subsidiary, to
Temple-Inland Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: M. Xxxxxxx Xxxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
(b) if to the Company, to
Xxxxxxx Container Corporation
000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, P.C.
Xxxx X. Xxxxxxxxxx
Fax: 000-000-0000
65
Section 11.6 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". References herein to the "knowledge
of the Company" shall mean the knowledge of the executive officers of the
Company after reasonable inquiry.
Section 11.7 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 11.8 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the Stock Option Agreement, the Stockholders Agreement and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) except as
provided in Section 7.1 are not intended to confer upon any person other than
the parties hereto and thereto any rights or remedies hereunder.
Section 11.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 11.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties; any instrument purporting to
make such assignment shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 11.11 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in
66
any court of the United States located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of Delaware.
Section 11.12 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
67
IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
TEMPLE-INLAND INC.
By:
------------------------------------
Name:
Title:
TEMPLE-INLAND ACQUISITION
CORPORATION
By:
------------------------------------
Name:
Title:
XXXXXXX CONTAINER CORPORATION
By:
------------------------------------
Name:
Title:
Annex I
Certain Conditions of the Offer. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) Merger Subsidiary's
rights to extend and amend the Offer at any time in its sole discretion (subject
to the provisions of the Agreement), Merger Subsidiary shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger
Subsidiary's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any Shares
not then paid for, if (i) any applicable waiting period under the HSR Act or any
applicable foreign antitrust or competition laws has not expired or terminated,
(ii) the Minimum Stock Condition has not been satisfied, (iii) the Minimum Note
Condition has not been satisfied, or (iv) at any time on or after the date of
the Agreement and before the acceptance for payment of Shares, any of the
following events shall occur and be continuing:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (i) seeking to prohibit or impose any
material limitations on Parent's or Merger Subsidiary's ownership or operation
(or that of any of their respective Subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to compel
Parent or Merger Subsidiary or their respective Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Parent or Merger Subsidiary of any
Shares under the Offer or pursuant to the Stock Option Agreement or the
Stockholders Agreement or the acquisition by Parent or Merger Subsidiary of any
Notes pursuant to the Notes Tender Offers, seeking to restrain or prohibit the
making or consummation of the Offer, the Merger, the Notes Tender Offers or the
performance of any of the other transactions contemplated by the Merger
Agreement, the Stock Option Agreement, the Stockholders Agreement or the
agreements and documents governing the Notes Tender Offers, or seeking to obtain
from the Company, Parent or Merger Subsidiary any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, (iii) seeking to
impose material limitations on the ability of Merger Subsidiary, or rendering
Merger Subsidiary unable, to accept for payment, pay for or purchase some or all
of the Shares pursuant to the Offer and the Merger or some or all of the Notes
pursuant to the Notes Tender Offers, (iv) seeking to impose material limitations
on the ability of Merger Subsidiary or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders or to exercise full rights of ownership of the Notes, or
(v) which otherwise is reasonably likely to have a Company Material Adverse
Effect; or
I-1
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any Governmental
Entity, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange, American Stock Exchange or in the Nasdaq National Market, for a period
in excess of three hours (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index for a period of
less than two days and suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any United States or foreign governmental
authority on the extension of credit by banks or other financial institutions,
(v) a change in general financial bank or capital market conditions which
materially or adversely affects the ability of financial institutions in the
United States to extend credit or syndicate loans, or (vi) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(d) there shall have occurred a Company Material Adverse Effect,
and in considering whether a Company Material Adverse Effect has occurred,
Parent or Merger Subsidiary may consider any items that would or should have
been included in a Section of the Company Disclosure Schedule had the related
representation and warranty been given as of the date of the Merger Agreement
and as of the date of expiration of the Offer and not as of some other date
(regardless of whether such items were disclosed to Parent, Merger Subsidiary or
publicly (in an SEC filing or otherwise) subsequent to such other date); or
(e) the Company Board or any committee thereof (i) shall have
withdrawn, modified or changed in a manner adverse to Parent or Merger
Subsidiary its approval or recommendation of the Offer, the Merger Agreement or
the Merger, (ii) shall have recommended the approval or acceptance of an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Merger Subsidiary or their affiliates, or (iii) shall
have executed an agreement in principle or definitive agreement relating to an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Merger Subsidiary or their affiliates; or
I-2
(f) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each case as
of the date of the Merger Agreement and as of the date of the expiration of the
Offer (without regard in each case to any other date for which any of the
representations and warranties are explicitly made), such that the aggregate
effect of all such breaches of representations and warranties shall have had or
is reasonably likely to have a Company Material Adverse Effect and such breach
has not been cured within 10 days after Parent gives written notice thereof to
the Company or the representations and warranties set forth in Sections 4.12(m)
and 4.15 and the last sentence of Section 4.11 of the Merger Agreement shall not
be true and correct; or
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement and such breach has not been cured within 10 days
after Parent gives written notice thereof to the Company; or
(h) all consents necessary to the consummation of the Notes
Tender Offers, the Offer or the Merger including, without limitation, consents
from parties to loans, contracts, leases or other agreements shall not have been
obtained, other than consents the failure of which to obtain would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole;
or
(i) the Merger Agreement shall have been terminated in accordance
with its terms; or
(j) the Company shall not have delivered documents satisfactory
to the Parent evidencing that the Company's obligations in respect of (i) the
benefits disclosed in Attachment 4.12(m)(i) of the Company Disclosure Schedule,
following the amendments to such benefits required by the final sentence of
Section 7.3(b), do not exceed $39 million and (ii) broker's and advisory fees as
referred to in Section 4.15 do not exceed $10.2 million; or
(k) Parent shall have determined by delivery of written notice to
the Company within ten days of the date hereof that the 60-Day Notice of Intent
to Xxx Under California Health and Safety Code sent by the Citizens for
Responsible Business on December 27, 2001, Inc. to the Company's former
California East mill and Antioch boxplant, referenced on Section 4.17 of the
Company Disclosure Schedule, could reasonably result in a potential liability
(whether by an adverse judgement, civil fines, settlement, remediation or
retooling in lieu of
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providing any public notice or as part of a settlement or an adverse judgement,
any combination thereof or otherwise, including follow-on suits) in an amount in
excess of $5 million;
which in the sole judgment of Parent or Merger Subsidiary, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Merger Subsidiary) giving rise to such condition makes it inadvisable to proceed
with the Notes Tender Offers or the Offer and/or with such acceptance for
payment of or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary, may be waived by Parent or Merger Subsidiary, in whole or in part,
at any time and from time to time in the sole discretion of Parent or Merger
Subsidiary. The failure by Parent or Merger Subsidiary at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
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