EXHIBIT 1.1
AGREEMENT AND PLAN OF MERGER
among
RES Holding Corporation
RES Acquisition Corporation
and
Republic Engineered Steels, Inc.
Dated as of July 23, 1998
NYFS10...:\79\69579\0012\2027\AGR6018A.30M
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
1.1 The Offer.......................................... 1
1.2 Company Actions.................................... 4
1.3 Stockholder Lists.................................. 5
1.4 Directors.......................................... 6
1.5 Redemption of Special Preferred Stock.............. 7
ARTICLE II
THE MERGER
2.1 The Merger......................................... 7
2.2 Closing; Effective Time of Merger. ................ 7
2.3 Effects of the Merger.............................. 8
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock............................ 9
3.2 Payment for Shares................................. 10
3.3 Stock Transfer Books............................... 12
3.4 Stock Option Plans................................. 12
3.5 Dissenting Shares.................................. 13
3.6 Withholding Rights................................. 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the
Company.................................................. 14
4.2 Representations and Warranties of Parent and
Sub...................................................... 23
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company........................... 26
5.2 Covenants of Parent................................ 33
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Page
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of a Proxy Statement; Company
Stockholders Meeting; Merger Without a
Company Stockholders Meeting....................... 34
6.2 Access to Information.............................. 35
6.3 Brokers or Finders................................. 35
6.4 Indemnification; Directors' and Officers'
Insurance.......................................... 36
6.5 Consents, Approvals and Filings.................... 38
6.6 Conduct of Business of Sub......................... 40
6.7 Publicity.......................................... 40
6.8 Continuation of Employee Benefits.................. 40
6.9 Amendment of ESOP................................ 41
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to
Effect the Merger.................................. 41
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination........................................ 42
8.2 Fees and Expenses.................................. 44
8.3 Effect of Termination.............................. 45
8.4 Amendment.......................................... 46
8.5 Extension; Waiver.................................. 46
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties
and Agreements..................................... 46
9.2 Notices............................................ 47
9.3 Interpretation..................................... 48
9.4 Counterparts....................................... 48
9.5 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership................. 48
9.6 Governing Law...................................... 48
9.7 Assignment......................................... 48
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Glossary of Defined Terms
Term: Page:
Acquisition Proposal......................................29
Agreement..................................................1
Certificate of Merger......................................8
Certificates..............................................10
Closing Date...............................................8
Code......................................................21
Company....................................................1
Company Common Stock.......................................1
Company Disclosure Schedule...............................14
Company SEC Documents.....................................19
Company Voting Debt.......................................15
Confidentiality Agreement.................................35
Constituent Corporations...................................7
Continuing Director........................................6
Control Date...............................................6
DGCL.......................................................4
Dissenting Shares.........................................13
Effective Time.............................................8
Environmental Claim.......................................23
Environmental Laws........................................23
ERISA.....................................................22
Exchange Act...............................................2
Financing Commitments.....................................26
GAAP......................................................19
Gains Taxes...............................................16
Governmental Entity.......................................31
HSR Act...................................................16
Indemnified Liabilities...................................36
Indemnified Parties.......................................36
IRS.......................................................21
Material Adverse Effect...................................14
Merger.....................................................1
Merger Consideration.......................................9
Notice of Superior Proposal...............................30
Offer......................................................2
Offer Consideration........................................2
Offer Documents............................................3
Option Consideration......................................13
Options...................................................12
Order.....................................................39
Paying Agent..............................................10
Payment Fund..............................................10
Proxy Statement...........................................34
Representatives...........................................28
Schedule 14D-1.............................................3
Schedule 14D-9.............................................5
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Term: Page:
SEC........................................................3
Securities Act............................................18
Shares.....................................................1
Stock Option Plan.........................................12
Sub........................................................1
Subsidiary.................................................9
Superior Proposal.........................................30
Surviving Corporation......................................7
Transactions..............................................38
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 23, 1998 (the
"Agreement"), is made and entered into by and among RES Holding Corporation, a
Delaware corporation ("Parent"), RES Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), and Republic
Engineered Steels, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent, by means of the
merger (the "Merger") of Sub with and into the Company, upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Sub will commence a cash
tender offer to purchase all of the outstanding shares of common stock, par
value $.01 per share, of the Company ("Shares" or "Company Common Stock"), upon
the terms and subject to the conditions set forth in this Agreement and the
Offer Documents (as defined in Section 1.1(b)), and the Board of Directors of
the Company has approved the terms of the Offer (as defined in Section 1.1(a))
to be set forth in the Offer Documents and agreed to recommend to the
stockholders of the Company that they accept the Offer and tender their Company
Common Stock pursuant thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the
consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided this Agreement shall not have been terminated in
accordance with Section 8.1, as promptly as practicable (but in no event later
than five business days following the public announcement of the execution of
this Agreement), Sub will commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to
purchase (the "Offer") all the outstanding Shares at a price of $7.25 per Share,
net to the seller in cash (the "Offer Consideration"). The obligation to
consummate the Offer and to accept for payment and to pay for the Shares
tendered pursuant to the Offer will be subject only to those conditions set
forth in Exhibit A attached hereto. The Company agrees that no Shares held by
the Company or any of its Subsidiaries (as defined in Section 3.1) will be
tendered to Sub pursuant to the Offer. Sub expressly reserves the right, in its
sole discretion, to waive any condition set forth in Exhibit A, other than the
Minimum Condition and the ESOP Condition (each as defined in Exhibit A), and to
make any other changes in the terms and conditions of the Offer, provided that
Sub will not, without the prior written consent of the Company, (i) decrease or
change the form of the consideration payable in the Offer, (ii) decrease the
number of Shares sought pursuant to the Offer, (iii) impose additional
conditions to the Offer, (iv) modify the conditions to the Offer as set forth in
Exhibit A in a manner adverse to the holders of the Shares, (v) waive the
Minimum Condition or the ESOP Condition or (vi) make any other change in the
terms of the Offer adverse to the holders of the Shares. The Offer will
initially provide that the Offer will expire 20 business days after (and
inclusive of) the date it is commenced. Sub agrees that, subject to the terms
and conditions of the Offer and this Agreement, it will accept for payment and
pay for all Shares validly tendered and not withdrawn pursuant to the Offer as
soon as it is permitted to do so under applicable law, provided that Sub shall
have the right in its sole discretion to extend the Offer from time to time for
up to an aggregate of 15 business days, notwithstanding the prior satisfaction
of the conditions set forth in Exhibit A, in the event that at least 75% of the
Company's outstanding Shares have been validly tendered and not withdrawn
pursuant to the Offer. If, subject to the succeeding sentence, the Minimum
Condition or the ESOP Condition is not satisfied or if the conditions set forth
in paragraphs B, C or E of Exhibit A are not satisfied or, to the extent
permitted by this Agreement, waived by Sub as of the scheduled expiration date,
Sub shall have the right in its sole discretion to extend the Offer from time to
time until the earlier of the
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consummation of the Offer or the termination of this Agreement. If the Minimum
Condition, the ESOP Condition or the HSR Condition (as defined in Exhibit A) or
the conditions set forth in paragraphs A, F or G of Exhibit A are not satisfied
or, to the extent permitted by this Agreement, waived by Sub as of the scheduled
expiration date, Sub will, unless it is manifestly apparent that such condition
will not be satisfied prior to the termination of this Agreement, or Sub and the
Company shall otherwise agree in writing, extend the Offer from time to time
until the earlier of the consummation of the Offer or the termination of this
Agreement.
(b) On the date of commencement of the Offer, Parent and Sub will
file or cause to be filed with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments,
the "Schedule 14D-1") with respect to the Offer, which will contain the Offer to
purchase and related letter of transmittal and other ancillary documents and
agreements pursuant to which the Offer will be made (collectively, with any
supplements or amendments, the "Offer Documents"). Parent and Sub will
disseminate the Offer Documents to the holders of the Shares. Each of Parent,
Sub and the Company agrees to correct promptly any information provided by it
for use in the Offer Documents that becomes false or misleading in any material
respect, and Parent and Sub will take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to the
holders of the Shares, in each case as and to the extent required by law. The
Company and its counsel will have a reasonable opportunity to review and comment
on the Offer Documents prior to the filing of the Offer Documents with the SEC.
Parent and Sub will provide the Company and its counsel with any comments that
may be received from the SEC or its staff with respect to the Offer Documents
promptly after receipt. Parent and Sub agree that the Offer Documents will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations under the Exchange Act. Parent and Sub further
agree that none of the information in the Offer Documents or any related
schedule required to be filed with the SEC or in any related amendment will, on
the date of filing with the SEC or on the date first published, sent or given to
holders of the Shares, as the case may be, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein, in
light of the circumstances under which they are made, not misleading (but
excluding statements made in any of the foregoing documents
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based on information supplied by the Company specifically for inclusion
therein). Parent and Sub agree that none of the information supplied by Parent
or Sub or any of their affiliates specifically for inclusion in the Schedule
14D-9 (as defined in Section 1.2(a)) or any related amendment will, at the date
of filing with the SEC, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
1.2 Company Actions. The Company hereby approves of and consents to
the Offer and represents and warrants that, subject to the terms and conditions
set forth in this Agreement, (a) its Board of Directors (at a meeting duly
called and held) has (i) determined that the Offer and Merger (as defined in
Section 2.1) are fair to and in the best interests of the stockholders of the
Company, (ii) resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement by stockholders of the Company, (iii) taken all
necessary steps to render Section 203 of the Delaware General Corporation Law,
as amended (the "DGCL"), inapplicable to the Merger and (iv) resolved to elect
not to be subject, to the extent permitted by law, to any state takeover law
other than Section 203 of the DGCL that may purport to be applicable to the
Offer, the Merger or the transaction contemplated by this Agreement, (b) Lazard
Freres & Co. LLC, the Company's investment banker, has delivered to the Board of
Directors of the Company its written opinion to the effect that, based upon and
subject to the matters set forth therein and as of the date thereof, the
consideration to be paid to the Company's stockholders in the Offer and Merger
is fair, from a financial point of view, to those stockholders, and such opinion
has not been withdrawn or modified and (c) each of the Administrative Committee
(the "Administrative Committee") of the employee common stock ownership plan of
the Company (the "ESOP") and the Trustee (the "Trustee") of the ESOP Trust (the
"ESOP Trust") has advised the Company that, as of the date hereof, it has
conducted such review of the terms of the Offer and the Merger as it deems
appropriate and has determined that, if the Offer were consummated on the date
hereof at the price and on the terms set forth in this Agreement on the date
hereof, and subject to their satisfaction with the information to be set forth
in the Offer Documents, the Administrative Committee would follow the proper
directions of the ESOP participants, and the Trustee would follow the proper
directions of the Administrative Committee, as the case may be, to tender
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Shares owned by the ESOP Trust. The Company has been authorized by Lazard Freres
& Co. LLC to permit the inclusion of such firm's fairness opinion (and, subject
to such firm's approval, a reference thereto) in the Offer Documents and in the
Schedule 14D-9 referred to below and the Proxy Statement, as defined in Section
6.1(a). Contemporaneously with the commencement of the Offer, the Company will,
subject to the terms and conditions set forth in this Agreement, file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") containing the recommendations of its Board of Directors in favor of the
Offer and Merger and will permit the inclusion in the Offer Documents of such
recommendations, in each case subject to the provisions of Section 5.1(e). The
Company, Parent and Sub will promptly correct any information provided by them
for use in the Schedule 14D-9 that becomes false or misleading in any material
respect, and the Company will 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 law. Parent and its
counsel will have a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its filing with the SEC. The Company agrees to provide Parent and
its counsel with any comments that may be received from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt. The Company agrees
that the Schedule 14D-9 will comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations under
the Exchange Act. The Company further agrees that neither the Schedule 14D-9,
nor any related amendments nor any information supplied by the Company
specifically for inclusion in the Offer Documents (but excluding statements made
in any of the foregoing documents based on information supplied by Parent or Sub
or any of their affiliates specifically for inclusion therein) will, at the
respective times the Schedule 14D-9 or Offer Documents are filed with the SEC or
are first published, sent or given to stockholders, as the case may be, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
1.3 Stockholder Lists. In connection with the Offer, the Company
will promptly furnish Sub with mailing labels, security position listings and
any available listing or computer file containing the names and addresses of the
record holders of the Shares as of a recent date and will
5
furnish Sub with such information and assistance as Sub or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the 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 and Merger, Parent and Sub and their
affiliates and associates will hold in confidence such listings and other
information, will use such listings and other information only in connection
with the Offer and Merger and, if this Agreement is terminated in accordance
with its terms, will, upon request, deliver to the Company all copies of all
such listings and other information (and extracts or summaries of such
information) then in their or their agents' or advisors' possession.
1.4 Directors.
(a) Upon the purchase by Sub pursuant to the Offer of a number of
Shares that represents a majority of the outstanding Shares on a fully-diluted
basis, and from time to time thereafter until the Effective Time (as defined in
Section 2.2), the parties will, subject to the provisions of Section 14(f) of
the Exchange Act and Rule 14f-1 under the Exchange Act, promptly use all
reasonable efforts to cause the persons identified on Exhibit B attached hereto
to comprise a majority of the Board of Directors of the Company.
The date on which such persons first comprise a majority of the
Company's Board of Directors is referred to as the "Control Date."
(b) From and after the Control Date and prior to the Effective Time,
for so long as there is at least one director who is designated as a "Continuing
Director" in the list of directors set forth in subsection (a) above (each a
"Continuing Director" and, collectively, the "Continuing Directors"), all other
directors will abstain from acting upon, and the approval of a majority of the
Continuing Directors will be required to authorize, any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors of the Company, any extension of time for the performance
of any obligation or other act of Parent or Sub under this Agreement and any
waiver of compliance with any provision of this Agreement for the benefit of the
Company.
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1.5 Redemption of Special Preferred Stock. Immediately following the
consummation of the Offer and satisfaction of the ESOP Condition, the Company
will give due notice that the outstanding share of Special Preferred Stock will
be redeemed at an aggregate redemption price of $1,500 within 30 days (but not
less than 20 days) after the giving of such notice. Concurrently with the giving
of such notice, the Company will (i) deposit the redemption price for the share
of Special Preferred Stock to be redeemed with a bank or trust company,
designated in the notice of such redemption, having an office in Cleveland,
Ohio, in Canton, Ohio, or in Wilmington, Delaware, having combined capital,
surplus and undivided profits aggregating at least $50,000,000, in trust for
payment to the holder of the share of Special Preferred Stock to be redeemed,
and (ii) deliver irrevocable written instructions authorizing the depositary to
apply such deposit solely to the redemption of the share of Special Preferred
Stock to be redeemed.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, in accordance with the DGCL, the Merger will be
effected and pursuant thereto Sub will be merged with and into the Company at
the Effective Time. At the Effective Time, the separate corporate existence of
Sub will cease and the Company will continue as the surviving corporation and as
a direct wholly-owned subsidiary of Parent (Sub and the Company are sometimes
hereinafter referred to as "Constituent Corporations" and, after giving effect
to the Merger and as the context requires, the Company is sometimes hereinafter
referred to as the "Surviving Corporation"). At the election of Parent, any
direct or indirect wholly owned Delaware subsidiary of Parent may be substituted
for Sub as a Constituent Corporation in the Merger. In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
such substitution.
2.2 Closing; Effective Time of Merger. Unless this Agreement shall
have been terminated and the transaction herein contemplated shall have been
abandoned pursuant to Section 8.1, and subject to the satisfaction or waiver of
the conditions set forth in Article VII, the parties hereto will cause the
Merger to be consummated by
7
filing a certificate of merger, or, if the provisions of Section 253 of the DGCL
are applicable, a certificate of ownership and merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware, as provided in
the DGCL as early as possible on the Closing Date. The "Closing Date" will mean
the second business day after satisfaction and/or waiver of all of the
conditions set forth in Article VII, at the offices of Weil, Gotshal & ▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date, time or
place is agreed to in writing by the parties hereto. The Merger will become
effective upon the filing of the Certificate of Merger or at such later time as
is provided in the Certificate of Merger as the Company and Sub will agree (the
"Effective Time").
2.3 Effects of the Merger.
(a) The Merger will have the effects as set forth in the applicable
provisions of the DGCL.
(b) The directors of Sub and the officers of the Company immediately
prior to the Effective Time will, from and after the Effective Time, be the
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) At the Effective Time, the certificate of incorporation and
by-laws of the Company, as in effect immediately prior to the Effective Time,
will be the certificate of incorporation and by-laws, respectively, of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable law; provided, however, that the certificate of incorporation
(other than Article First thereof) and the by-laws of the Surviving Corporation
will be amended at the Effective Time to read in its entirety as the certificate
of incorporation (other than Article First thereof) and by-laws, respectively,
of Sub, as in effect immediately prior to the Effective Time.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
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3.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of Company
Common Stock, shares of Special Preferred Stock, par value $.01 per share, of
the Company (the "Special Preferred Stock") or any holder of shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time will 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 immediately prior to the Effective Time is
owned by the Company, Parent, Sub or any Subsidiary of Parent will be canceled
and retired and will cease to exist and no consideration will be delivered or
deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (excluding
Shares to be cancelled in accordance with Section 3.1(b) and Dissenting Shares
(as defined in Section 3.5)) will be converted into the right to receive the per
share amount actually paid in the Offer, payable to the holder thereof in cash,
without any interest thereon (such amount is herein referred to as the "Merger
Consideration"), upon surrender and exchange of the Certificate (as defined in
Section 3.2(b)) representing such share of Company Common Stock.
(d) Holders of Certificates. All such shares of Company Common
Stock, when converted as provided in Section 3.1(c), will no longer be
outstanding and will automatically be cancelled and retired and will cease to
exist, and each certificate previously evidencing such shares of Company Common
Stock will thereafter represent only the right to receive the Merger
Consideration, without any interest thereon. The holders of certificates
previously evidencing shares of Company Common Stock outstanding immediately
prior to the Effective Time will cease to have any rights with respect to the
Company Common Stock, except as otherwise provided herein or by law.
(e) Subsidiary Defined. As used in this
Agreement, the word "Subsidiary," with respect to any party,
9
means any corporation, limited liability company, partnership, joint venture or
other organization, whether incorporated or unincorporated, of which: (i) such
party or any other Subsidiary of such party is a general partner; (ii) voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation, partnership, joint venture or other
organization is held by such party or by any one or more of its Subsidiaries, or
by such party and any one or more of its Subsidiaries; or (iii) at least 25% of
the equity, other securities or other interests is, directly or indirectly,
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and any one or more of its Subsidiaries.
3.2 Payment for Shares.
(a) Paying Agent. Prior to the Effective Time, Parent will appoint a
United States bank or trust company reasonably acceptable to the Company to act
as paying agent (the "Paying Agent") for the payment of the Merger
Consideration, and Parent will cause Sub to deposit with the Paying Agent in a
separate fund established for the benefit of the holders of shares of Company
Common Stock, for payment in accordance with this Article III, through the
Paying Agent (the "Payment Fund"), immediately available funds in an amount
necessary to make the payment pursuant to Section 3.1(c) to such holders. The
Paying Agent, pursuant to irrevocable instructions, will pay the Merger
Consideration out of the Payment Fund.
If for any reason (including losses) the Payment Fund is inadequate
to pay the amount to which holders of shares of Company Common Stock will be
entitled under Section 3.1(c), Parent will take all steps necessary to enable or
cause Sub to deposit in trust additional cash with the Paying Agent sufficient
to make all payments required under this Agreement, and Parent and the Surviving
Corporation will in any event be liable for payment thereof. The Payment Fund
will not be used for any purpose except as expressly provided in this Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation will instruct the Paying Agent to mail
to each holder of record (other than Parent or any Subsidiary of Parent) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (A) a
form of
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letter of transmittal (which will specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon proper delivery
of the Certificates to the Paying Agent, and will be in such form and have such
other provisions as the Surviving Corporation reasonably may specify) and (B)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of 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 customary documents as may be required pursuant to such
instructions, the holder of such Certificate will be entitled to receive in
respect thereof cash in an amount equal to the product of (1) the number of
shares of Company Common Stock represented by such Certificate and (2) the
Merger Consideration, and the Certificate so surrendered will forthwith be
cancelled. No interest will be paid or accrued on the Merger Consideration
payable upon the surrender of any Certificate. If payment is to be made to a
person other than the person in whose name the surrendered Certificate is
registered, it will be a condition of payment that the Certificate so
surrendered will be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment will pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the surrendered Certificate or established to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.2(b)(i), each
Certificate (other than Certificates representing Shares owned by Parent or any
Subsidiary of Parent) will be deemed at any time after the Effective Time to
represent for all purposes only the right to receive the Merger Consideration.
(ii) Upon surrender of the certificate representing the share
of Special Preferred Stock outstanding as of the date of this Agreement for
cancellation to the Surviving Corporation together with such customary documents
as may be required by the Surviving Corporation, the holder of such certificate
will be entitled to receive in respect thereof cash in an amount equal to
$1,500.00, and the certificate so surrendered will forthwith be cancelled. No
interest will be paid or accrued on the consideration payable upon the surrender
of such certificate. Until surrendered in accordance with the provisions of this
Section 3.2(b)(ii), the certificate representing the outstanding share of
Special Preferred Stock will be deemed at any time after the Effective Time to
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represent for all purposes only the right to receive a cash payment in an amount
equal to $1,500.00.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 270 days after the Effective Time will be delivered to the Surviving
Corporation, and any holders of Company Common Stock who have not theretofore
complied with this Article III and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time will thereafter look
only to the Surviving Corporation for payment of the Merger Consideration to
which they are entitled. All interest accrued in respect of the Payment Fund
will inure to the benefit of and be paid to the Surviving Corporation.
(d) No Liability. None of Parent, the Company or the Surviving
Corporation will be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Company Common
Stock shall not have been surrendered prior to seven years after the Effective
Time (or immediately prior to such earlier date on which any Merger
Consideration payable to the holder thereof pursuant to this Article 3 would
otherwise escheat to or become the property of any governmental entity), any
such Merger Consideration shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interests of any person previously entitled thereto.
3.3 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company will be closed and there will be no further registration of
transfers of shares of Company Common Stock thereafter. On or after the
Effective Time, any certificates presented to the Paying Agent or Parent for any
reason, except notation thereon that a stockholder has elected to exercise his
rights to appraisal pursuant to the DGCL, will be converted into the
consideration as provided in this Article III.
3.4 Stock Option Plans. Prior to the Effective Time, Parent will
cause Sub to pay or, to the extent funds for such purpose are provided by Parent
to the Company, the Company will pay each holder of a then outstanding option to
purchase Shares (including under the Company's 1995 Stock Option Plan (the
"Stock Option Plan")), whether or not then exercisable or vested (collectively,
the "Options"), in
12
cancellation and settlement thereof, for each Share subject to such Option, an
amount in cash equal to the excess, if any, of the Merger Consideration over the
per Share exercise price therefor (such amount being hereinafter referred to as,
the "Option Consideration"); provided, however, that with respect to any person
subject to Section 16 of the Exchange Act, any such amount will be paid by Sub
or the Surviving Corporation as soon as practicable after the first date payment
can be made without liability to such persons under Section 16(b) of the
Exchange Act. Upon payment of the Option Consideration, the Option will be
cancelled. The payment to the holder entitled thereto of the Option
Consideration will be deemed a release of any and all rights the holder had or
may have had in respect of such Option.
3.5 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by stockholders who
have not voted in favor of the Merger or consented thereto in writing and who
properly demand appraisal for such shares in accordance with Section 262 of the
DGCL (collectively, the "Dissenting Shares") will not be converted into or
represent the right to receive the consideration provided for in Section 3.1.
Such stockholders instead will be entitled to receive payment of the appraised
value of such shares of Company Common Stock held by them in accordance with the
provisions of Section 262 of the DGCL, except that all Dissenting Shares held by
stockholders who will have failed to perfect or who effectively will have
withdrawn or otherwise lost their rights to appraisal of such shares of Company
Common Stock under Section 262 of the DGCL will thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the consideration provided
for in Section 3.1 upon surrender in the manner provided in Section 3.2, of the
certificate or certificates that, immediately prior to the Effective Time,
evidenced such shares of Company Common Stock.
3.6 Withholding Rights. Parent and Sub will be entitled to deduct
and withhold, or cause to be deducted or withheld, from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock or Options such amounts as are required to be deducted and withheld
with respect to the making of such payment under the Code (as defined in Section
4.1(i)), or any provision of applicable state, local or foreign tax law. To the
extent that amounts are so withheld, such withheld
13
amounts will be treated for all purposes of this Agreement as having been paid
to such holders in respect of which such deduction and withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has the
corporate power to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a
foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation, ownership
or leasing of its properties, makes such qualification necessary, other than in
jurisdictions where the failure so to qualify would not in the aggregate have a
Material Adverse Effect (as defined below) with respect to the Company. The
Company has heretofore made available to Parent complete and correct copies of
its and its Subsidiaries' respective Certificates of Incorporation and By-laws.
All Subsidiaries of the Company and their respective jurisdictions of
incorporation or organization are identified on Schedule 4.1(a) of the
disclosure letter dated the date of this Agreement and delivered by the Company
to Parent and Sub prior to the execution of this Agreement (the "Company
Disclosure Schedule"). As used in this Agreement: a "Material Adverse Effect"
means, with respect to any party, any events, changes or effects which,
individually or in the aggregate, would have a material adverse effect on the
business, operations, assets, liabilities, properties, results of operations or
financial condition of such party and its Subsidiaries, taken as a whole.
(b) Capital Structure. The authorized capital stock of the Company
consists of (i) 27,000,000 shares of Common Stock, $.01 par value, of which, as
of the date hereof, 19,706,578 Shares were issued and outstanding, all of which
were validly issued, fully paid and non-assessable and free of preemptive
rights, and 1,764,000 Shares are
14
reserved for issuance pursuant to outstanding Options, (ii) 6,000,000 shares of
Preferred Stock, $.01 par value, of which, as of the date hereof, no shares were
issued and outstanding and (iii) 1 share of Special Preferred Stock, of which,
as of the date hereof, 1 share was issued and outstanding. Except as set forth
on Schedule 4.1(b) of the Company Disclosure Schedule, as of the date hereof,
all outstanding shares of capital stock of the Company's Subsidiaries are owned
by the Company or a direct or indirect wholly-owned Subsidiary of the Company,
free and clear of all liens, charges, encumbrances, claims and options of any
nature. Except as set forth above and on Schedule 4.1(b) of the Company
Disclosure Schedule (which sets forth a true and correct list of the following,
including holders thereof and exercise prices therefor), there are not as of the
date hereof any outstanding or authorized capital stock equivalents or equity
equivalents of the Company or any options, warrants, calls, rights (including
preemptive rights), commitments or any other agreements of any character which
the Company or any of its Subsidiaries is a party to, or may be bound by,
requiring it to issue, transfer, sell, purchase, redeem or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock or equity
equivalents of the Company or any of its Subsidiaries. There is no Company
Voting Debt outstanding. For purposes of this Agreement, "Company Voting Debt"
means bonds, debentures, notes or other instruments or evidence of indebtedness
having the right to vote (or convertible into, or exercisable or exchangeable
for, securities having the right to vote) on any matters on which the Company
stockholders may vote. The Company does not hold any capital stock or other
equity interest, directly or indirectly, in any person other than the
Subsidiaries.
(c) Authority. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to the next
sentence, to consummate the transaction contemplated hereby. This Agreement, the
Offer, the Merger and the consummation by the Company of the transaction
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company or its stockholders are necessary to authorize this Agreement or to
consummate the transaction contemplated hereby, other than the approval of this
Agreement and the Merger by (i) the holders of a majority of the Company Common
Stock if required by the DGCL, and (ii) the holder of the Special
15
Preferred Stock as long as a "Trigger Event" (as defined in the Company's
Restated Certificate of Incorporation) has not occurred. This Agreement has been
duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding agreement of Parent and Sub,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except that the enforcement hereof may
be limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (B) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(d) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement nor the consummation by the Company of the
transaction contemplated hereby will: (i) conflict with or result in any breach
of any provision of the respective Certificate of Incorporation or By-Laws of
the Company or any of its Subsidiaries; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) in connection with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (B) the filing of the Certificate of Merger pursuant to
the DGCL and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is authorized to do business,
(C) in connection with any state or local tax which is attributable to a change
in the beneficial ownership of real property owned by the Company or its
Subsidiaries (collectively, the "Gains Taxes"), (D) as may be required by any
applicable state securities or "blue sky" laws or state takeover laws, (E) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Offer or the Merger or the transaction contemplated by
this Agreement, or (F) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not have
a Material Adverse Effect on the Company; (iii) except as set forth in Schedule
4.1(d) of the Company Disclosure Schedule, result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, consent or acceleration
or lien or other charge or encumbrance) under, or cause any payment to be
required to be made or any securities or rights of the Company to be issued
pursuant
16
to, any of the terms, conditions or provisions of any note, license, agreement,
plan or other instrument or obligation to which the Company or any of its
Subsidiaries or any of their assets may be bound, except for such violations,
breaches and defaults (or rights of termination, cancellation or acceleration or
lien or other charge or encumbrance) as to which requisite, waivers or consents
have been obtained or which, in the aggregate, would not have a Material Adverse
Effect on the Company; or (iv) assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in this Section 4.1(d) are
duly and timely obtained or made and, with respect to the Merger, the approval
of this Agreement by the Company's stockholders has been obtained to the extent
required by the DGCL, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or any of its Subsidiaries or to any of
their respective assets.
(e) Compliance. Neither the Company nor any of its Subsidiaries is
in default or violation of (i) any law, statute, rule, regulation, order,
judgment, decree, governmental approval, permit or franchise applicable to the
Company or any of its Subsidiaries or by which its or any of their respective
properties are bound or affected or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of its or their respective properties are bound or
affected ("Contracts"), except in the case of both (i) and (ii) for such
defaults and violations which would not, individually or in the aggregate, have
a Material Adverse Effect on the Company or materially delay consummation of the
transaction contemplated hereby. To the Company's knowledge, the other parties
to such Contracts are not in default thereunder and such Contracts are valid and
binding obligations of the other parties thereto in accordance with their terms,
except for such defaults and failures which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(f) Properties. The Company or one of its Subsidiaries has good,
valid, and in the case of Owned Properties (as defined below), marketable fee
title to: (i) all of the real property and interests in real property owned by
the Company or its Subsidiaries indicated in the most recent financial
statements included in the Company SEC Documents as defined in clause (i) of
Section 4.1(h), except for properties sold or otherwise disposed of in the
ordinary
17
course of business (the "Owned Properties"), and (ii) leasehold estates in all
leased real properties indicated in the most recent financial statements
included in the Company SEC documents, except leasehold interests terminated in
the ordinary course of business (the "Leased Properties"); the Owned Properties
and Leased Properties being sometimes referred to herein as the "Real
Properties"), in each case free and clear of all mortgages, liens, security
interests, easements, covenants, rights-of-way and other similar restrictions
and encumbrances ("Encumbrances"), except for (x) Encumbrances which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, (y) those Encumbrances set forth in Schedule 4.1(f) of the Company
Disclosure Schedule or the Company SEC Documents and (z) Encumbrances for Taxes
(as hereinafter defined) which are being contested in good faith by appropriate
proceedings.
(g) Intellectual Property. Except to the extent the failure of any
of the following would not, in the aggregate, have a Material Adverse Effect on
the Company: (i) the Company and each of its Subsidiaries owns and/or is
licensed to use (in each case, free and clear of any liens, claims or similar
encumbrances) all patents, trademarks, trade names, copyrights, technology,
know-how and processes used in or necessary for the conduct of its business as
currently conducted; (ii) the use of such patents, trademarks, trade names,
service marks, copyrights, technology, know-how and processes by the Company and
its Subsidiaries and their agents does not infringe on the rights of any person;
(iii) to the knowledge of the Company, no person is infringing on any right of
the Company or any of its Subsidiaries with respect to any such patents,
trademarks, service marks, trade names, copyrights, technology, know-how or
processes; and (iv) there are no agreements, written or oral, which in any
material respect limit or otherwise relate to any rights of the Company or its
Subsidiaries to use any of their intellectual property.
(h) SEC Reports; Financial Statements. (i) The Company has filed all
forms, reports and documents required to be filed by it with the SEC since July
1, 1996 pursuant to the federal securities laws and the SEC rules and
regulations thereunder, all of which, except as set forth on Schedule 4.1(h) of
the Company Disclosure Schedule, as of their respective dates, complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act and the rules and
regulations promulgated thereunder
18
(collectively, the "Company SEC Documents") and, including any financial
statements or schedules included therein, did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) The consolidated balance sheets and the related consolidated
statements of income (loss), shareholders' equity (deficiency) and cash flows
(including the related notes thereto) of the Company included in the Company SEC
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods (except as
otherwise noted therein), and present fairly the consolidated financial position
of the Company and its consolidated Subsidiaries as of their respective dates,
and the consolidated results of their operations and their cash flows for the
periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
(iii) As of March 31, 1998, neither the Company nor any of its
Subsidiaries had any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due that are required to be
recorded or reflected on a consolidated balance sheet of the Company under
generally accepted accounting principles, except (i) as specifically reflected
or reserved against or disclosed in the financial statements of the Company
included in the Company SEC Documents filed prior to the date of this Agreement
or (ii) described in Schedule 4.1(h) of the Company Disclosure Schedule.
(i) Litigation. There are no actions, claims, suits, proceedings or
governmental investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries that would have a
Material Adverse Effect on the Company, 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 any such effect.
(j) Offer Documents. None of the information supplied by the Company
in writing for inclusion in the Offer Documents or provided by the Company in
the Schedule
19
14D-9 will, at the respective times that the Offer Documents and the Schedule
14D-9 or any amendments or supplements thereto are filed with the SEC and are
first published or sent or given to holders of Shares, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(k) Taxes. The Company and its Subsidiaries have timely filed all
Federal, state, local and foreign Tax Returns that any of them is required to
file ("Tax Returns") other than those Tax Returns the failure of which to have
timely filed or to file would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company and its Subsidiaries have
paid all Taxes (shown due on such filed returns). The Company has delivered or
made available to Parent true and complete copies of the Company's and its
Subsidiaries' Federal, state, local and foreign income tax returns for each of
the three years ended June 30, 1995 through 1997. Except as set forth in
Schedule 4.1(k) of the Company Disclosure Schedule, no audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Return of the Company or its Subsidiaries as to which
any taxing authority has asserted in writing claims which would have a Material
Adverse Effect on the Company or, as of the date of this Agreement, which, if
adversely determined, would have a Material Adverse Effect on the Company.
Except as set forth in Schedule 4.1(k) of the Company Disclosure Schedule, as of
the date of this Agreement, the Company and its Subsidiaries have not received
any notice or deficiency or assessment from any taxing authority with respect to
liabilities for income and other material Taxes which have not been fully paid
or finally settled. "Tax Returns" means any return, declaration, report or
similar statement required to be filed with respect to any Taxes (including any
attached schedules), including any information return, claim or refund, amended
return and declaration of estimated Tax. "Tax" or "Taxes" means all Untied
States federal, state, local or foreign income, profits, estimated, gross
receipts, windfall profits, sales, use, license, excise, emergency excise,
franchise, capital gains, capital stock, employment, withholding, transfer,
stamp, payroll, goods and services, value added, alternative or add-on minimum
tax, or any other tax, custom, duty or governmental fee, or other like
assessment or charge of any kind whatsoever, together with any interest,
penalties, fines, related liabilities or
20
additions to tax that may become payable in respect thereof imposed by any
taxing authority.
(l) Employee Benefit Plans; Labor Matters. (i) Schedule 4.1(l) of
the Company Disclosure Schedule contains a true and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including
multiemployer plans within the meaning of ERISA section 3(37)), stock purchase,
stock option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive or deferred compensation plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA, under which any employee or former employee of the Company or any of its
Subsidiaries has any present or future right to benefits with respect to which
the Company or any of its Subsidiaries has any present or future liability. All
such plans, agreements, programs, policies and arrangements are collectively
referred to herein as the "Company Plans".
(ii) With respect to each Company Plan, the Company has delivered or
made available to Parent a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (A) any related trust agreement or other funding instrument; (B) the
most recent determination letter, if applicable (C) any summary plan description
and other written communication by the Company or any of its Subsidiaries to
their employees concerning the extent of the benefits provided under a Company
Plan; and (D) the most recent (1) Form 5500 and attached schedules, (2) audited
financial statements, (3) actuarial valuation reports and (4) attorney's
response to an auditor's request for information.
(iii) Except as set forth in Schedule 4.1(l) of the Company
Disclosure Schedule (A) each Company Plan intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), has
received a favorable determination letter from the Internal Revenue Service (the
"IRS") that it is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
Company Plan; (B) each Company Plan has been operated in all material respects
in accordance with its terms and the requirements of applicable law; (C) neither
the Company nor any of its ERISA Affiliates has incurred any direct or indirect
liability under, arising out of or by
21
operation of Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), in connection with the termination of, or withdrawal from,
any Company Plan or other retirement plan or arrangement, and no fact or event
exists that could reasonably be expected to give rise to any liability. Except
as set forth in Schedule 4.1(l) of the Company Disclosure Schedule or the
Company SEC Documents, the aggregate projected benefit obligations of each
Company Plan subject to Title IV of ERISA (as of the date of the most recent
actuarial valuation prepared for such Company Plan) do not exceed the fair
market value of the assets of such Company Plan (as of the date of such
valuation).
(iv) For purposes of this Agreement, "ERISA Affiliate" shall be any
organization which is a member of a controlled group of organizations within the
meaning of Code sections 414(b), (c), (m) or (o).
(v) Other than the Company's Employee Stock Ownership Plan (the
"ESOP"), there is no employee benefit plan or arrangement established by or
jointly with the Company that owns of record any of the issued and outstanding
Shares.
(m) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents filed prior to the date of this Agreement, as set forth on
Schedule 4.1(m) of the Company Disclosure Schedule or as expressly contemplated
by this Agreement, since March 31, 1998, (i) the business of the Company and its
Subsidiaries has been carried on only in the ordinary and usual course (ii)
there has not been any condition, event or occurrence that individually or in
the aggregate, has resulted or would reasonably be expected to result in a
Material Adverse Effect on the Company and (iii) neither the Company nor any of
its Subsidiaries has taken any action which, had it been taken following the
date hereof and prior to the Control Date, would have required the consent of
Parent pursuant to Section 5.1 of this Agreement.
(n) Opinion of Investment Banker. The Company has received the
written opinion of Lazard Freres & Co. LLC dated the date hereof, to the effect
that, based upon and subject to the matters set forth therein and as of such
date, the consideration to be received by the holders of Company Common Stock in
the Offer and the Merger is fair from a financial point of view to such holders.
22
(o) Environmental Matters. As of the date of this Agreement, except
as disclosed on Schedule 4.1(o) of the Company Disclosure Schedule, (i) the
Company and each of its Subsidiaries is in compliance with all applicable
federal, state and local laws and regulations relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), except for non compliance that, in the aggregate, would
not have a Material Adverse Effect on the Company and, to the knowledge of the
Company, there is no condition that would reasonably be expected to prevent or
interfere with such compliance with Environmental Laws in the future and (ii)
neither the Company nor any of its Subsidiaries has received written notice of,
or, to the knowledge of the Company, is the subject of, any action, proceeding,
cause of action, claim, investigation, demand or notice by any person or entity
alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim"), except for liabilities and non-compliances that in the
aggregate would not have a Material Adverse Effect on the Company; (iii) except
as would not in the aggregate have a Material Adverse Effect on the Company,
materials that are regulated pursuant to Environmental Laws or that could
reasonably be expected to result in liability under Environmental Laws have not
been generated, transported, treated, stored, disposed of, arranged to be
disposed of, released or threatened to be released at, on, from or under any of
the properties or facilities currently or, to the knowledge of the Company,
formerly owned, leased or otherwise used by the Company or any of its
Subsidiaries, in violation of, or in a manner or to a location that would
reasonably be expected to give rise to liability to the Company or its
Subsidiaries under any Environmental Laws; and (iv) neither the Company nor any
of its Subsidiaries has contractually assumed any material liabilities or
obligations under any Environmental Laws that could reasonably be expected to
have a Material Adverse Effect on the Company.
4.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation, duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization, has the power to own, lease
and operate its properties and to carry on its business as now being conducted,
and is duly qualified to do
23
business as a foreign entity and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation, ownership
or leasing of its properties, makes such qualification necessary, other than in
jurisdictions where the failure so to qualify would not in the aggregate have a
Material Adverse Effect with respect to Parent. Parent and Sub have heretofore
made available to the Company complete and correct copies of their respective
charter documents. Parent does not own any capital stock of any person other
than the capital stock of Sub.
(b) Authority. Each of Parent and Sub has the requisite power and
authority to execute and deliver this Agreement and to consummate the
transaction contemplated hereby. This Agreement and the consummation by each of
Parent and Sub of the transaction contemplated hereby have been duly and validly
authorized by the respective managers and Board of Directors of each of Parent
and Sub and no other proceedings on the part of either Parent or Sub are
necessary to authorize this Agreement or to consummate the transaction
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Sub and, assuming this Agreement constitutes the
valid and binding agreement of the Company, constitutes the valid and binding
agreement of each of Parent and Sub, enforceable against Parent and Sub in
accordance with its terms, except that the enforcement hereof may be limited by
(A) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(c) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement nor the consummation by Parent and Sub of the
transaction contemplated hereby will: (i) conflict with or result in any breach
of any provision of the respective charter documents of either Parent or Sub,
(ii) require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, except (A) in
connection with the applicable requirements of the HSR Act, (B) the filing of
the Certificate of Merger pursuant to the DGCL and appropriate documents with
the relevant authorities of other states in which Parent and Sub are authorized
to do business, (C) in connection with any Gains Taxes, (D) as may be required
by any applicable state securities or "blue sky" laws or state takeover laws,
(E) such filings and consents as may be required under any
24
Environmental Law pertaining to any notification, disclosure or required
approval triggered by the Offer or the Merger or the transaction contemplated by
this Agreement, (F) such filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any foreign country in which
Parent or Sub conducts any business or owns assets, or (G) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not in the aggregate have a Material Adverse Effect on
Parent; (iii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or lien or other charge or
encumbrance) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which Parent or Sub or
any of their assets may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite, waivers or consents have
been obtained or which, in the aggregate, would not have a Material Adverse
Effect on Parent; or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.2(c) are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or Sub or to any of their
respective assets. Neither Parent nor Sub nor any of their respective affiliates
or associates is, at the date hereof, an "interested stockholder" (as such term
is defined in Section 203 of the DGCL) of the Company.
(d) Offer Documents. None of the information supplied or to be
supplied by Parent in writing for inclusion in the Offer Documents or provided
by Parent in the Schedule 14D-9 will, at the respective times that the Offer
Documents and the Schedule 14D-9 or any amendments or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transaction contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transaction contemplated thereby.
25
(f) Financing. (i) Parent owns all of the outstanding capital stock
of Sub. At all times prior to the Effective Time, no person other than Parent
has owned, or will own, any of the outstanding capital stock of Sub. Sub has not
incurred, and prior to the Effective Time will not incur, directly or through
any Subsidiary, any liabilities or obligations for borrowed money or otherwise,
except incidental liabilities or obligations not for borrowed money incurred in
connection with its organization and except in connection with the Merger.
(ii) Parent has received written executed commitments
(collectively, the "Financing Commitments") (true and complete copies of which
have been delivered to the Company prior to the execution of this Agreement)
from financial institutions and investors to provide, subject to the terms and
conditions of such commitments, debt and equity financing sufficient, together
with other funds available to Parent, to effect the Offer and the Merger and the
transaction contemplated hereby and to pay all related fees and expenses.
Subject to the terms and conditions of this Agreement and the receipt of funds
pursuant to the Financing Commitments, Parent agrees to contribute to the equity
of Sub to the extent necessary to enable Sub to satisfy its obligations to
purchase the Shares pursuant to the Offer and to effect the Merger.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date of
this Agreement and continuing until the Control Date, the Company agrees as to
the Company and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement, or to the extent that Parent otherwise consents in
advance in writing):
(a) Ordinary Course. Each of the Company and its Subsidiaries will
carry on its businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted except that the Company
may continue its efforts to sell the assets of the Stainless and Specialty
Business of the Company, and the Company and each of its Subsidiaries shall
endeavor to preserve substantially intact the business organization of the
Company and its Subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its
26
Subsidiaries and to preserve the present relationships of the Company and its
Subsidiaries with customers, suppliers and other persons with which the Company
or any of its Subsidiaries has significant business relations.
(b) Dividends; Changes in Stock. The Company will not, nor will it
permit any of its Subsidiaries to: (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock, other than dividends
paid to the Company; (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock; or (iii)
repurchase, redeem or otherwise acquire, or permit any Subsidiary to purchase or
otherwise acquire, any shares of its capital stock or such other securities,
except as required by the terms of its securities outstanding or any employee
benefit plan in effect on the date hereof.
(c) Issuance of Securities. The Company will not, nor will it permit
any of its Subsidiaries to, (i) issue or grant any options, warrants or rights
to purchase shares of Company Common Stock or other equity securities of the
Company or its Subsidiaries, (ii) amend the terms of or reprice any Option or
amend the terms of the Stock Option Plan, or (iii) issue, deliver or sell, or
authorize or propose to issue, deliver or sell, any shares of its capital stock
of any class or series or other equity securities, any debt securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such securities, other than the issuance of Shares upon the exercise of Options
that are outstanding on the date hereof.
(d) Governing Documents. The Company will not, and will not permit
any of its Subsidiaries to, amend or propose to amend its Restated Certificate
of Incorporation or By-laws or equivalent organizational documents.
(e) No Solicitation. (i) The Company will not directly or indirectly
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or for the purpose of obtaining an Acquisition Proposal, and the
Company will not permit any of its
27
Subsidiaries to take, and will use reasonable efforts to prevent the officers,
directors, employees, advisors, representatives, agents and affiliates of the
Company or any of its Subsidiaries (including any investment bankers, attorney
or accountant retained by the Company or any of its Subsidiaries) (such
officers, directors, employees, representatives, advisors, agents, affiliates,
investment bankers, attorneys and accountants being referred to herein,
collectively as "Representatives") from taking, any such action; provided,
however, that nothing contained in this Section 5.1(e) will prohibit the Board
of Directors of the Company from:
(A) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes a written, bona fide
Acquisition Proposal that was not solicited after the date of this Agreement if,
and only to the extent that, (i) the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), and after
consultation with a nationally recognized investment banking firm, determines in
good faith by majority vote that (A) such Acquisition Proposal would, if
consummated, constitute a Superior Proposal, and (B) such action is necessary
for the Board of Directors of the Company to comply with its fiduciary duties to
stockholders under applicable law and (ii) prior to taking such action, the
Company (x) provides prior notice to Parent to the effect that it is taking such
action and (y) receives from such person or entity an executed confidentiality
agreement in reasonably customary form. The Company will promptly notify Parent
and Sub if it is prepared to provide access to the properties, books or records
of the Company or any of its Subsidiaries to any person who has made an
Acquisition Proposal. The Company shall promptly (and in any event within one
business day, and prior to taking any of the foregoing actions) advise Parent
following the receipt by it of any Acquisition Proposal or any inquiry or
request relating thereto and the substance thereof (including the identity of
the person making such Acquisition Proposal, a description of all material terms
thereof and a copy of any written proposal), and, if the Board of Directors in
good faith believes it is consistent with its fiduciary duties, advise Parent of
any developments with respect to such Acquisition Proposal, inquiry or request
promptly upon the occurrence thereof, including the Company's entering into
discussions or negotiations with respect thereto. The Board of Directors of the
Company shall not, in connection with any of the
28
actions described in this Section 5.1(e), take any action to cause any state
takeover statute or other similar state law to become applicable to the Offer or
the Merger or inapplicable to any Acquisition Proposal (until such time as this
Agreement has been terminated in accordance with the requirements of Section
8.1). The Company agrees immediately to cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Parent and its affiliates with respect to
any of the foregoing;
(B) failing to make or reaffirm, withdrawing, adversely
modifying or taking a public position materially inconsistent with its
recommendation referred to in Article I hereof (which may include making any
statement required by Rule 14e-2 under the Exchange Act) if there exists an
Acquisition Proposal and the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent counsel), and after
consultation with a nationally recognized investment banking firm, determines in
good faith by majority vote that (A) such Acquisition Proposal would, if
consummated, constitute a Superior Proposal, and (B) that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law; or
(C) making a "stop-look-and-listen" communication with respect
to an Acquisition Proposal, of the nature contemplated in, and otherwise in
compliance with, Rule 14d-9 under the Exchange Act as a result of receiving an
Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal" means
any of the following (other than the transaction among the Company, Parent and
Sub contemplated hereunder) involving the Company or any of its Subsidiaries:
(i) any proposed merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (ii) any proposed sale,
lease, exchange, mortgage, pledge, transfer or other disposition of assets that
comprise more than 20% (computed based on the fair market value of such assets
as determined by the Board of Directors of the Company in good faith) of the
assets of the Company and its Subsidiaries, on a consolidated basis, in a single
transaction or series of transactions; (iii) any proposed tender offer, exchange
offer or other equity investment for more than 20% of the outstanding shares of
29
capital stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(ii) Except as set forth in this Section 5.1(e)(ii), the Board
of Directors of the Company will not approve or recommend or permit the Company
to enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines in
good faith that it is necessary to do so in order to comply with its fiduciary
duties to stockholders under applicable law, the Board of Directors of the
Company may approve or recommend a Superior Proposal (as defined below) or cause
the Company to enter into an agreement with respect to a Superior Proposal, but
in each case only if (i) the Company provides written notice to Parent (a
"Notice of Superior Proposal") three business days prior to the time it intends
to cause the Company to enter into such an agreement advising Parent that the
Board of Directors of the Company has received a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal, (ii) at the end of such three business day
period, the Company's Board of Directors continues to believe that such
Acquisition Proposal constitutes a Superior Proposal, including taking into
account any adjustment to the terms and conditions of the transaction
contemplated hereby proposed by Parent in response to such Acquisition Proposal,
and (iii) the Company terminates this Agreement in accordance with the
requirements of Section 8.1(g) prior to taking any of the foregoing actions. For
purposes of this Agreement, a "Superior Proposal" means any bona fide
Acquisition Proposal not directly or indirectly initiated, solicited, encouraged
or knowingly facilitated by the Company after the date of the Agreement which
the Board of Directors of the Company determines in good faith judgment (based
on the advice of an investment banker of nationally recognized reputation),
taking into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, (i) would, if consummated, result
in a transaction that is more favorable to the Company's stockholders (in their
capacity as stockholders), from a financial point of view, than the transaction
contemplated by this Agreement and (ii) is reasonably
30
capable of being completed; provided, that for purposes of this definition, the
term Acquisition Proposal shall have the meaning assigned to such term in
Section 5.1(e)(i) except that each reference to 20% in the definition of
"Acquisition Proposal" shall be deemed to be a reference to 70% and "Acquisition
Proposal" shall only be deemed to refer to a transaction involving the Company
or, with respect to assets (including the shares of any Subsidiary of the
Company), the assets of the Company and its Subsidiaries taken as a whole (and
not any of its Subsidiaries alone).
(f) Acquisitions/Dispositions. Except as set forth on Schedule
5.1(f) of the Company Disclosure Schedule and other than the transaction
contemplated hereby, the Company will not, nor will it permit any of its
Subsidiaries to, make any acquisition, by means of merger, consolidation or
otherwise, or any disposition (including sale/leaseback transactions or similar
arrangements) of assets or securities, other than acquisitions of supplies and
raw materials and sales of inventory and worn-out or obsolete equipment and
other transactions in the ordinary course of business.
(g) Governmental Filings. The Company will promptly provide Parent
(or its counsel) with copies of all filings made by the Company with (i) the SEC
and (ii) other state or federal court, administrative agency or commission or
other governmental authority or instrumentality (a "Governmental Entity") in
connection with this Agreement and the transaction contemplated hereby in the
case of this clause (ii).
(h) No Dissolution, Etc. Other than pursuant to this Agreement, the
Company will not authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or reorganization of the Company or any of its
Subsidiaries.
(i) Other Actions. Except as expressly permitted by the terms of
this Agreement, the Company will not take or agree or commit to take, nor will
it knowingly permit any of its Subsidiaries to take or agree or commit to take,
any action that would reasonably be expected to result in any of the Company's
representations or warranties hereunder being untrue in any material respect or
in any of the Company's covenants hereunder or any of the conditions to the
Offer and the Merger not being satisfied.
31
(j) Certain Employee Matters. The Company and its Subsidiaries will
not (without the prior written consent of Parent): (i) grant any material
increases in the compensation of any of its directors or officers or in the
payment of any severance due to such directors or officers; (ii) pay or agree to
pay any pension, retirement allowance or other benefit not required or
contemplated to be paid prior to the Effective Time by any of the Company Plans
as in effect on the date hereof to any such director or officer, whether past or
present; (iii) enter into any new, or materially amend any existing, employment
or severance or termination agreement with any such director or officer; or (iv)
except as may be required to comply with applicable law, become obligated under
any new plan which if in effect on the date hereof would be a Company Plan, or
amend or modify any Company Plan.
(k) Indebtedness. Except as set forth on Schedule 5.1(k) of the
Company Disclosure Schedule and other than ordinary course borrowing pursuant to
lines of credit or facilities existing on the date of this Agreement, the
Company will not, nor will the Company permit any of its Subsidiaries to assume
or incur any indebtedness for borrowed money or guarantee any such indebtedness
or guarantee any debt securities of others or, except for ordinary course leases
of computer equipment, enter into any lease (whether such lease is an operating
or capital lease), or create any mortgages, liens, security interests or other
encumbrances on the property of the Company or any of its Subsidiaries in
connection with any indebtedness thereof.
(l) Accounting. The Company and its Subsidiaries will not take any
action, other than as required by the SEC, GAAP or applicable law, with respect
to accounting policies, procedures and practices.
(m) Certain Changes. The Company will not, and will not permit any
of its Subsidiaries to: (i) except for the ESOP Amendment (as defined in Section
6.9), enter into or amend any contract, agreement, commitment or arrangement
other than in the ordinary course of business consistent with past practice;
(ii) except as set forth in Schedule 5.1(m) of the Company Disclosure Schedule,
authorize or make any single capital expenditure (or series of related capital
expenditures) which is in excess of $5,000,000 or, in the case of the Company's
electric arc furnace project, $10,000,000; (iii) except as set forth in Schedule
5.1(m) of the Company Disclosure Schedule, make or change any tax election, file
any amended Tax Return, or settle or
32
compromise any material federal, state, local or foreign Tax liability; (iv)
settle or compromise any pending suit, action or claim for an amount in excess
of $300,000 or which relates to the transaction contemplated hereby; or (v) pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of liabilities in the ordinary course of business and
consistent with past practice.
(n) Cooperation. The Company will cooperate with Parent (i) in
identifying, making and obtaining the filings, consents, approvals,
authorizations and permits referred to in Section 4.1(d) and (ii) as reasonably
requested in any syndication of the financing contemplated by the Financing
Commitments.
5.2 Covenants of Parent.
(a) In connection with the financing necessary to pay for shares in
the Offer and the Merger, Parent will not permit either Sub or the Surviving
Corporation to assume or incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities of such party or guarantee any debt securities of
others or create any mortgages, liens, security interests or other encumbrances
on the property of Sub or Surviving Corporation in connection with any
indebtedness thereof, or enter into any "keep well" or other agreement or
arrangement to maintain the financial condition of another person; provided,
however, that this restriction shall not apply to any financing that is both (i)
completed at the earliest of (A) three months after the Effective Time, (B) six
months after the Control Date provided that the Effective Time shall theretofore
have occurred or (C) the combination of Parent or the Surviving Corporation and
Bar Technologies, Inc. or one of its Subsidiaries under a common parent company
or by merger and (ii) in respect of which the Board of Directors of the
Surviving Corporation, the Administrative Committee and the Trustee receive a
solvency opinion from a reputable appraiser or investment bank; and provided,
further, that this restriction shall not thereafter apply to any subsequent
refinancing.
(b) Parent will, to the extent required by the relevant
documentation, cause the Surviving Corporation to expressly assume the due and
punctual payment under, and the performance of every agreement and covenant of
the Company
33
under, (i) the Loan Agreement, dated as of June 1, 1996, between the Ohio Water
Development Authority (the "Authority") and the Company, (ii) the Loan
Agreement, dated as of October 1, 1994, between the Authority and the Company,
(iii) the Indenture, dated as of December 15, 1993, between the Company, as
Issuer, and Bankers Trust Company, as Trustee, pursuant to which the Company's
9-7/8% First Mortgage Notes Due 2001 were issued (as amended or supplemented
from time to time, the "Indenture"), and (iv) the Second Amended and Restated
Revolving Credit Agreement, dated as of April 25, 1997, by and among the
Company, BankBoston, N.A. and the lending institutions listed on Schedule I
thereto and BankBoston, N.A., as Agent with BancBoston Securities, Inc., as
Arranger (the "Revolving Credit Facility").
(c) Parent will cooperate and provide reasonable assistance to the
Company in its endeavors pursuant to Section 5.1(a).
(d) Parent will, or cause Sub to, supply the Administrative
Committee with a sufficient number of copies of the Offer Documents to deliver
to the ESOP participants so that the Administrative Committee may request and
receive instructions from ESOP participants concerning the manner in which the
Administrative Committee should direct the Trustee to respond to the Offer with
respect to Shares owned by the ESOP Trust.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of a Proxy Statement; Company
Stockholders Meeting; Merger Without a Company Stockholders
Meeting.
(a) Subject to Section 6.1(c) below, the Company will, promptly
following the acceptance for payment of and payment for shares of the Company
Common Stock by Sub in the Offer, prepare and file its proxy or information
statement relating to the Merger (the "Proxy Statement") with the SEC. The
Company will use all reasonable best efforts to respond to all SEC comments with
respect to the Proxy Statement and to cause the Proxy Statement to be mailed to
the Company's stockholders at the earliest practicable date.
(b) Subject to Section 6.1(c) below, the Company will, promptly
following the acceptance for payment of and
34
payment for shares of the Company Common Stock by Sub in the Offer, duly call,
give notice of, convene and hold a meeting of the Company's stockholders for the
purpose of approving this Agreement (or instead take such action by written
consent if permitted by applicable law). At such stockholders meeting (or
pursuant to such written consent), Parent will cause all of the shares of
Company Common Stock then owned by Parent and Sub to be voted in favor of the
Merger.
(c) Notwithstanding the foregoing subparagraphs (a) and (b), in the
event that Parent and Sub immediately following the purchase of Shares in the
Offer own 90% or more of the outstanding shares of Company Common Stock, the
parties hereto agree that they will take all necessary and appropriate action to
cause the Merger to become effective promptly after the expiration of the Offer
without a meeting of stockholders of the Company in accordance with Section 253
of the DGCL.
6.2 Access to Information. Upon reasonable notice, each of the
Company or Parent, as the case may be, will (and will cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party (including, in the case of Parent and
Sub, the persons that have executed Financing Commitments and, in the case of
the Company, the Administrative Committee and the Trustee and their respective
employees, accountants, counsel and other representatives), access, during
normal business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
such party will (and will cause each of its Subsidiaries to) furnish promptly to
the other party, (a) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to SEC
requirements and (b) all other information concerning its business, properties
and personnel as such other party may reasonably request. The Confidentiality
Agreement, dated as of April 29, 1998, between Bar Technologies, Inc.,
Blackstone Capital Partners II Merchant Banking Fund L.P., Birmingham Steel
Corporation and the Company (the "Confidentiality Agreement") will apply with
respect to information furnished thereunder or hereunder and any other
activities contemplated thereby.
6.3 Brokers or Finders. The Company represents, as to itself,
its Subsidiaries and its affiliates, that no
35
agent, broker, investment banker, financial advisor or other firm or person is
or will be entitled to any broker's or finders fee or any other commission or
similar fee in connection with the transaction contemplated by this Agreement,
except for (i) Lazard Freres & Co. LLC, whose fees and expenses will be paid by
the Company in accordance with the Company's agreement with such firm (a copy of
which has been made available to Parent prior to the date of this Agreement),
(ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, whose fees and expenses incurred in connection with
the proposed sale of the Company's specialty business will be paid by the
Company in accordance with the Company's agreement with such firm (a copy of
which has been made available to Parent prior to the date of this Agreement) and
(iii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney in connection with its advice to the Trustee of and
the Administrative Committee for the ESOP in connection with the Offer and the
Merger (a copy of which has been made available to Parent prior to the date of
this Agreement).
6.4 Indemnification; Directors' and Officers'
Insurance.
(a) The Company will, and from and after the Effective Time, the
Surviving Corporation will, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer, director, employee or agent of the Company or
any of its Subsidiaries (the "Indemnified Parties") against all losses, claims,
damages, costs, expenses (including reasonable attorneys' fees and expenses),
liabilities or judgments or amounts of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based on or arising out
of the fact that such person is or was (i) serving in such person's capacity as
a director, officer, employee or agent of the Company or any of its
Subsidiaries, or a person serving at the request of the Company or any of its
Subsidiaries as a trustee of a trust or (ii) serving in such person's capacity
as a trustee or member of an administrative committee, or in any other Company
fiduciary capacity with respect to any employee benefit or stock plan maintained
or sponsored by the Company or any of its Subsidiaries, whether pertaining to
any matter existing or occurring at or prior to the Effective Time or any acts
or omissions occurring or existing at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based on, or arising out
of, or pertaining to this Agreement or the transaction
36
contemplated hereby, in each case to the fullest extent a corporation is
permitted under the DGCL to indemnify such persons (and the Company and the
Surviving Corporation, as the case may be, will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the fullest extent permitted by law, subject to delivery of the undertaking
described below). Without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Indemnified
Party (whether arising before or after the Effective Time), (i) such Indemnified
Party may retain the Company's regularly engaged independent legal counsel or,
in the event that a conflict of interest precludes using such counsel in the
reasonable judgment of the Indemnified Party, counsel satisfactory to it and
reasonably satisfactory to the Company (and reasonably satisfactory to the
Surviving Corporation after the Effective Time) and the Company (or after the
Effective Time, the Surviving Corporation) will pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (ii) the Company (or after the Effective Time, the
Surviving Corporation) will use all reasonable best efforts to assist in the
vigorous defense of any such matter, provided that neither the Company nor the
Surviving Corporation will be liable for any settlement effected without its
prior written consent which consent will not unreasonably be withheld. Any
Indemnified Party, upon learning of any such claim, action, suit, proceeding or
investigation, will notify the Company (or after the Effective Time, the
Surviving Corporation) promptly (but the failure so to notify will not relieve a
party from any liability which it may have under this Section 6.4 except to the
extent such failure materially prejudices such party's position with respect to
such claims), and will deliver to the Company (or after the Effective Time, the
Surviving Corporation) the undertaking contemplated by Section 145(e) of the
DGCL. The Indemnified Parties as a group may retain only one law firm (and one
local counsel) to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties
in which case such additional counsel reasonably acceptable to the Company as
may be required (as will be reasonably determined by the Indemnified Parties and
the Company or the Surviving Corporation, as the case may be) may be retained by
the Indemnified Parties at the cost and expense of the Company (or Surviving
Corporation). Furthermore, the provisions with respect to indemnification set
forth in the certificate
37
of incorporation of the Surviving Corporation will not be amended following the
Effective Time if such amendment would materially and adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors, officers, employees or agents of the Company in respect of
actions or omissions occurring at or prior to the Effective Time.
(b) The Surviving Corporation will cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company and its Subsidiaries providing coverage for a period of six years
after the Effective Time with respect to matters arising before and acts or
omissions occurring or existing at or prior to the Effective Time, including the
transaction contemplated by this Agreement; provided that in no event shall the
Surviving Corporation be required to expend an amount prorated over the number
of years covered in excess of 150% of the annual premiums currently paid by the
Company for such insurance; and provided further, that if the premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
(c) The provisions of this Section 6.4 are intended to be for the
benefit of, and will be enforceable by, each Indemnified Party, his heirs and
his personal representatives and will be binding on all successors and assigns
of Parent, Sub, the Company and the Surviving Corporation.
6.5 Consents, Approvals and Filings.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto will (i) make promptly its respective filings, and thereafter
make any other required submissions, under the HSR Act, the Securities Act and
the Exchange Act, with respect to the Offer and the Merger and the transaction
contemplated herein (together, the "Transactions") and (ii) use all reasonable
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable to satisfy the
conditions to the Offer and the Merger and to consummate and make effective the
Transactions. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and
38
directors of each party to this Agreement will use all reasonable efforts to
take all such action.
(b) Parent hereby agrees that it will, and it will cause each of its
affiliates to, use all reasonable efforts to obtain any government clearances
required for completion of the Offer and the Merger (including through
compliance with the HSR Act), to respond to any government requests for
information, and to contest and resist any action, including any legislative,
administrative or judicial action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) (an "Order") that restricts, prevents or prohibits the
consummation of the Merger, including by vigorously pursuing all available
avenues of administrative and judicial appeal. Parent also hereby agrees to
take, and to use all reasonable efforts to cause each of its affiliates to take,
any and all of the following actions to the extent necessary to obtain the
approval of any governmental entity with jurisdiction over the enforcement of
any applicable laws regarding the Offer and the Merger: entering into
negotiations; providing information; substantially complying with any second
request for information pursuant to the HSR Act; entering into and performing
agreements or submitting to judicial or administrative orders and selling or
otherwise disposing of, or holding separate (through the establishment of a
trust or otherwise) particular assets or categories of assets, or businesses of
Parent, Company or any of their affiliates; provided, however, that
notwithstanding the foregoing and anything else contained in this Agreement,
neither Parent nor any of its affiliates is required to take any such action
with respect to any assets or product lines that would have a Material Adverse
Effect on the Surviving Corporation and Bar Technologies, Inc., taken as a
whole. The parties hereto will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or in behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law.
(c) Parent will take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to obtain, prior
to the expiration date of the Offer, one or more commitment letters, reasonably
satisfactory to the Company, to provide
39
all of the financing required by the Surviving Corporation to repurchase any of
the Company's 9-7/8% First Mortgage Notes Due 2001, issued, authenticated and
delivered under the Indenture that may be tendered to the Surviving Corporation
as a result of the offer required to be made by the Surviving Corporation to
repurchase such securities as a consequence of the consummation of the Offer and
to refinance any indebtedness existing under the Company's Revolving Credit
Facility or to waive any event of default under such Revolving Credit Facility
resulting from the transaction contemplated hereby. Prior to the Control Date,
the Company shall consult with Parent with respect to any action taken by the
Company in connection with such offer to repurchase such Mortgage Notes Due
2001, and the Company will not file or otherwise publicly release any
documentation, nor make any public announcement, with respect thereto without
the consent of Parent as to the form and substance thereof, such consent not to
be unreasonably withheld.
6.6 Conduct of Business of Sub. During the period of time from the
date of this Agreement to the Effective Time, Sub will not engage in any
activities of any nature except as provided in or contemplated by this
Agreement.
6.7 Publicity. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to the
Offer and the Merger and will not issue any such press release or make any such
public announcement prior to such consultation and agreement (such agreement not
to be unreasonably withheld), except as may be required by applicable law, in
which case the party proposing to issue such press release or make such public
announcement will use reasonable best efforts to consult in good faith with the
other party before issuing any such press release or making any such public
announcement.
6.8 Continuation of Employee Benefits.
(a) Until at least the second anniversary of the Effective Time, (i)
Parent will maintain or cause to be maintained employee benefits and programs
for retirees (other than former members of the USWA (as defined in Exhibit A),
officers and salaried employees of the Company and each of its Subsidiaries that
are no less favorable in the aggregate than those existing on the date hereof
and (ii) Parent will cause the Surviving Corporation to assume the obligations
of the Company under the provisions of (x)
40
the Change of Control Agreements, as set forth on Schedule 6.8 of the Company
Disclosure Schedule (the "Change of Control Agreements"), with Parent, Sub and
the Company agreeing that for purposes of such Change of Control Agreements, at
not later than the consummation of the Offer, (i) a Change of Control shall have
occurred, (ii) Good Reason, as such term is defined therein, shall have occurred
for a period of six months following the consummation of the Offer and (iii)
such Change of Control Agreements will be fully funded in accordance with the
terms thereof, (y) the Severance Agreements, as set forth on Schedule 6.8 of the
Company Disclosure Schedule (the "Severance Agreements"), and (z) the retention
policies of the Company, as described on Schedule 6.8 of the Company Disclosure
Schedule (the "Company Retention Policies"). For purposes of eligibility to
participate in and vesting in all benefits provided to retirees, directors,
officers and salaried employees, the retirees, directors, officers and salaried
employees of the Company and its Subsidiaries will be credited with their years
of service with prior employers to the extent service with prior employers is
taken into account under plans of the Company.
(b) This Section 6.8 is intended to be for the benefit of, and will
be enforceable by, each officer and salaried employee, in each of their
capacities as a third party beneficiary hereunder, and will be binding on all
successors and assigns of Parent, Sub, the Company and the Surviving
Corporation.
6.9 Amendment of ESOP. Following the consummation of the Offer, the
Company will promptly adopt, subject to the approval of the USWA, in accordance
with the ESOP's amendment provisions, an amendment to the ESOP to provide that
the ESOP (i) will be converted to a profit-sharing plan that is not required to
invest in or distribute employer securities and (ii) will, subject to the
requirements of the Code, permit in-service distributions, in connection with
the transactions contemplated herein, in cash or direct rollovers to eligible
retirement plans (as defined in the Code) (the "ESOP Amendment").
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party
41
to effect the Merger will be subject to the satisfaction prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. Unless the Merger is consummated pursuant
to Section 253 of the DGCL, this Agreement will have been approved and adopted
by the affirmative vote of the stockholders of the Company by the requisite vote
in accordance with applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act will have been terminated or will
have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger will be in effect; provided, however, that prior to
invoking this condition, each party will use all reasonable efforts to have any
such order, injunction or other restraint or prohibition vacated.
(d) Statutes. No statute, rule, executive order, injunction, decree
or regulation will have been enacted, entered, enforced, or promulgated by any
Governmental Entity which prohibits or restricts the consummation of the Merger,
or makes such consummation illegal.
(e) Payment for Shares. Sub will have accepted for payment and paid
for the shares of Company Common Stock duly tendered in the Offer; provided,
however, that this condition will be deemed to have been satisfied if Sub fails
to accept for payment and pay for Shares pursuant to the Offer in violation of
this Agreement or the terms and conditions of the Offer.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Boards of Directors of Parent
and the Company, respectively, subject, in the case of the Company, to Section
1.4(b);
42
(b) by Parent or the Company, if, without any material breach by
such terminating party of its obligations under this Agreement causing or
resulting in such delay, the purchase of Shares pursuant to the Offer will not
have occurred on or before October 30, 1998; provided, however, that Parent may
extend the October 30, 1998 date for 45 calendar days if Parent is then actively
negotiating with the Department of Justice or the Federal Trade Commission
regarding satisfaction of the HSR Condition and/or the condition set forth in
paragraph A of Exhibit A and certifies to the Company that, to its knowledge,
all other conditions to the Offer are satisfied or capable of prompt
satisfaction as of the date of such verification; but provided further such
certification shall be without prejudice to the requirement that such condition
remain satisfied;
(c) by Parent or the Company, if the Offer expires or is terminated
or withdrawn pursuant to its terms without any Shares being purchased in
accordance with Section 1.1(a); provided, however, that Parent may not terminate
this Agreement pursuant to this Section 8.1(c), if Parent's termination of, or
Sub's failure to accept for payment or pay for any Shares tendered pursuant to,
the Offer is in violation of the terms of the Offer or this Agreement;
(d) by Parent or the Company, if any Governmental Entity of
competent jurisdiction will have (i) issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting the
purchase of Shares pursuant to the Offer or the Merger and such order, decree,
ruling or action will have been final and nonappealable or (ii) failed to issue
an order, decree or ruling or to take any other action which is necessary to
fulfill the conditions set forth in Exhibit A and Section 7.1, as applicable,
and such denial of a request to issue such order, decree or ruling or to take
such other action shall have become final and nonappealable; provided, however,
that the party seeking to terminate this Agreement will have complied with its
obligations under this Agreement to attempt to remove or lift, or to obtain, as
applicable, such order, decree or ruling;
(e) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1, unless the failure to commence the Offer shall be
due to the failure of the Company to perform in any material respect any of its
43
obligations under this Agreement then required to be performed;
(f) by Parent, if the Board of Directors of the Company shall have
(i) withdrawn, modified or changed its recommendation or approval in respect of
this Agreement or the Offer in a manner adverse to Parent, (ii) approved or
recommended any proposal other than by Parent or Sub in respect of an
Acquisition Proposal, (iii) failed to include in the Proxy Statement the
recommendation referred to in clause (i), or (iv) resolved to do any of the
foregoing;
(g) by the Company prior to consummation of the Offer, if (i) the
Board of Directors of the Company shall have determined that an Acquisition
Proposal constitutes a Superior Proposal in accordance with the requirements of
Section 5.1 (e), (ii) the Company shall have delivered to Parent a written
notice of the determination by the Company's Board of Directors to terminate
this Agreement pursuant to this Section 8.1(g) and (iii) simultaneously with
such termination the Company shall enter into a definitive acquisition, merger
or similar agreement to effect such Acquisition Proposal and shall make payment
of the full amount required by Section 8.2(a); or
(h) prior to the consummation of the Offer, by the Company or Parent
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein), if
there shall have been a material breach of any of the covenants or agreements or
any of the representations or warranties set forth in this Agreement on the part
of the other party, which breach is not cured within ten business days following
written notice given by the terminating party to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the date on
which the Offer expires.
8.2 Fees and Expenses.
(a) (i) If Parent terminates this Agreement pursuant to Section
8.1(f), (ii) if the Company terminates this Agreement pursuant to Section
8.1(g), or (iii) if (A) Parent or the Company terminates this Agreement pursuant
to Section 8.1(b) or Section 8.1(c) as a result of failure to meet the Minimum
Condition or the ESOP Condition or Parent terminates this Agreement pursuant to
Section 8.1(h), and (B) at any time prior to such termination an Acquisition
Proposal (except that the reference to 20% in the definition
44
of Acquisition Proposal shall for the purpose of this Section 8.2(a) be 50%)
shall have been publicly disclosed, in the case of a termination pursuant to
Section 8.1(b) or Section 8.1(c), or communicated to the Company in the case of
a termination pursuant to Section 8.1(h), and (C) within 12 months after such
termination the Company enters into an agreement with respect to, or
consummates, a transaction contemplated by such Acquisition Proposal, then in
each case the Company will pay to Blackstone Management Partners L.P.,
simultaneously with such termination in the case of clause (ii) above, within
two business days following such termination in the case of clause (i) above,
and simultaneously with the earlier of entry into any agreement for or the
consummation of such transaction in the case of clause (iii) above, a fee, in
cash of $4,250,000; provided, however, that the Company in no event shall be
obligated to pay more than one such fee with respect to all such terminations
and transactions.
(b) Upon payment of any fee pursuant to subparagraph (a) above, the
party paying such fee will be fully released and discharged from any liability
or obligation resulting from or under this Agreement, except that the
obligations under Confidentiality Agreement shall survive such payment.
(c) The Surviving Corporation will be responsible for any transfer,
sales, or similar taxes resulting from the Merger, except as expressly provided
herein.
(d) Whether or not the Offer or Merger is consummated and except as
otherwise provided in this Section 8.2, all costs and expenses incurred in
connection with this Agreement will be paid by the party incurring the expense.
8.3 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement will forthwith become void and there will be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or stockholders except (i) with respect to
Section 8.2 and this Section 8.3 and (ii) that no such termination will relieve
any party from liability for a willful breach hereof. In addition, in the event
that this Agreement is validly terminated, Parent and Sub agree that,
immediately following such termination Parent and Sub will terminate the Offer
and not purchase any Shares pursuant to the Offer or otherwise, and Parent
further agrees that following such termination,
45
it will continue to be bound by all of the terms and conditions contained in
the Confidentiality Agreement.
8.4 Amendment. Subject to applicable law, this Agreement may be
amended, modified or supplemented only by written agreement of Parent, Sub and
the Company at any time prior to the Effective Time with respect to any of the
terms contained herein; provided, however, that, after the consummation of the
Offer, no term or condition contained in this Agreement will be amended or
modified if such change will have an adverse effect on the holders of the
Company Common Stock (including by reducing the amount of or changing the form
of the Merger Consideration).
8.5 Extension; Waiver. Subject to the provisions of Article I
hereof, at any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed: (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto; and (iii) waive compliance with any of the
agreements or conditions contained herein; provided, however, that, after the
consummation of the Offer, no term or condition contained in this Agreement will
be amended, modified or waived if such change will have an adverse effect on the
holders of the Company Common Stock. Any agreement on the part of a party hereto
to any such extension or waiver will be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder will not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement will survive the acceptance for payment of,
and the payment for, the Shares by Sub in the Offer or the expiration of the
Offer. None of the covenants and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement will survive the Effective Time,
except for the covenants and agreements contained in Article III, Section 6.4
and Section 6.8 hereof and any other
46
covenant or agreement herein that expressly contemplates performance after the
Effective Date. The Confidentiality Agreement will survive the execution and
delivery of this Agreement, and the provisions of the Confidentiality Agreement
will apply to all information and material delivered by any party hereunder.
9.2 Notices. Any notice or communication required or permitted
hereunder will be in writing and either delivered personally or telecopied or
sent by certified or registered mail, postage prepaid, and will be deemed to be
given, dated and received when so delivered personally or telecopied or, if
mailed, five business days after the date of mailing to the following address or
telecopy number, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
c/o The Blackstone Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Republic Engineered Steels, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Legal Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
47
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 Interpretation. When a reference is made in this Agreement to
Articles, Sections or Exhibits, such reference will be to an Article or Section
of this Agreement unless otherwise indicated. The table of contents, glossary of
defined terms and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "include", "includes" or "including" are used
in this Agreement, they will be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement will mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The meaning of defined terms
apply to the plural as well as the singular form and vice versa.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement, the Confidentiality Agreement and any other documents
and instruments referred to herein 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, except as provided in
Sections 5.2(d), 6.4, 6.8 and 8.2, is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
9.6 Governing Law. This Agreement will be governed and construed in
accordance with the law of the State of Delaware.
9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
48
the other parties, except as provided in Section 2.1. 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.
[Remainder of page intentionally left blank]
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
RES HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
RES ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
REPUBLIC ENGINEERED STEELS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and
Chief Executive Officer
50
EXHIBIT A
---------
The capitalized terms used in this Exhibit A will have the
respective meanings given to such terms in the Agreement and Plan of Merger,
dated as of July 23, 1998 (the "Merger Agreement"), by and among RES Holdings
Corporation, a Delaware corporation ("Parent"), RES Acquisition Corporation, a
Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and Republic
Engineered Steels, Inc., a Delaware corporation (the "Company"), to which this
Exhibit A is attached.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub will 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 Sub's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and, subject to the provisions of the
Merger Agreement, may amend or terminate the Offer (whether or not any Shares
have theretofore been purchased or paid for), if (i) there have not been validly
tendered and not withdrawn prior to the time the Offer will otherwise expire a
number of Shares which constitutes a majority of the voting power (determined on
a fully-diluted basis), on the date of purchase of all the securities of the
Company entitled to vote generally in the election of directors or in a merger
(without giving effect to any voting rights of the Special Preferred Stock) (the
"Minimum Condition"); (ii) the employee common stock ownership plan of the
Company (the "ESOP") has not validly tendered and not withdrawn prior to the
time the Offer will otherwise expire a number of Shares such that immediately
following the purchase of Shares pursuant to the Offer the ESOP would hold less
than 25% of the Shares then outstanding (or such fewer number of Shares as is
necessary to eliminate the voting rights of the Special Preferred Stock and
cause such Special Preferred Stock to be immediately redeemable at the Company's
option) (the "ESOP Condition"); (iii) any waiting periods under the HSR Act
applicable to the purchase of Shares in the Offer and the Merger will not have
expired or been terminated prior to the expiration of the Offer (the "HSR
Condition"); or (iv) at any time on or after the date of the Merger Agreement
and before acceptance for payment
A-1
of, or payment for, such Shares any of the following events will have occurred:
(A) any Governmental Entity will have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
interpretation, judgement, injunction or other order which (i) is in effect and
which materially restricts, prevents or prohibits consummation of the Offer, the
Merger or any transaction contemplated by the Agreement; provided, however, that
such effect has not resulted from Parent or Sub breaching its obligations in the
Merger Agreement to cause any such decree, judgment, injunction or other order
to be vacated or lifted or to oppose any such action or proceeding; or which
(ii) notwithstanding that Parent has complied fully its obligations in the
Merger Agreement, makes materially more costly the making of the Offer, the
acceptance for payment of, payment for, or ownership, directly or indirectly, of
some or all of the Shares or of the Company (including by reason of imposing a
material liability on the Company, Parent or Sub or materially encumbering any
of their respective assets), the consummation of the transaction contemplated by
the Merger Agreement or materially delays the Merger, or which (iii)
notwithstanding that Parent has complied fully with Section 6.5 of the Merger
Agreement, materially limits the ownership or operation by the Company, any of
its Subsidiaries, Parent or any of its affiliates of all or any material portion
of the business or assets of the Company or any of its Subsidiaries, or compels
Parent or any of its affiliates to sell, dispose of or hold separate (through
the establishment of a trust or otherwise) all or any material portion of the
business or assets of the Company, its Subsidiaries or any other such person, as
a result of the transaction contemplated by the Merger Agreement; or which (iv)
notwithstanding that Parent has complied fully with Section 6.5 of the Merger
Agreement, imposes or confirms limitations on the ability of Sub, Parent or any
of its affiliates effectively to acquire or hold or to exercise full rights of
ownership of the Shares, including without limitation the right to vote any
Shares acquired or owned by Sub, Parent or any of its affiliates on all matters
properly presented to the shareholders of the Company, including without
limitation, the adoption and approval of the Merger Agreement and the Merger or
the right to vote any shares of capital stock of any subsidiary directly or
indirectly owned by the Company; or (v) any Governmental Entity shall have
instituted or threatened in writing to institute any action or proceeding which
could reasonably be expected to have or result in any of the foregoing effects.
A-2
(B) the representations and warranties of the Company contained in
the Merger Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) will not be true and
correct in all respects as of the date of consummation of the Offer as though
made on and as of such date except (1) for changes specifically permitted by the
Merger Agreement, (2) that those representations and warranties which address
matters only as of a particular date will remain true and correct as of such
date, and (3) for breaches or inaccuracies which, individually or in the
aggregate, would not (a) have a Material Adverse Effect on the Company or (b)
materially adversely affect the ability of the parties to the Merger Agreement
to consummate the transaction contemplated thereby;
(C) the obligations of the Company contained in the Merger Agreement
to be performed at or prior to the consummation of the Offer will not have been
performed or complied with in all material respects by the Company prior to the
consummation of the Offer;
(D) the Merger Agreement will have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent of the
Company;
(E) (i) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of more
than 20% of the outstanding Shares has been acquired by any corporation
(including the Company or any of its Subsidiaries or affiliates), partnership,
person or other entity or group (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent or any of its affiliates or the ESOP, or (ii) (A) the
Board of Directors of the Company shall have withdrawn or modified in a manner
adverse to Sub the approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Acquisition Proposal or any
other acquisition of Shares other than the Offer and the Merger or (B) any such
corporation, partnership, person or other entity or group shall have entered
into a definitive agreement or an agreement in principle with the Company with
respect to an Acquisition Proposal;
(F) Parent fails to receive funds pursuant to the Financing
Commitments; or
A-3
(G) members of the United Steelworkers of America ("USWA") have not
ratified the Settlement Agreement and new Collective Bargaining Agreement
submitted for their ratification by the USWA in connection with the transaction
contemplated by the Merger Agreement in the manner determined to be appropriate
by the USWA for such ratification.
A-4
EXHIBIT B
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B-1