EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY, LLC
BUCYRUS ACQUISITION CORP.
and
BUCYRUS INTERNATIONAL, INC.
dated as of
August 21, 1997
TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer................................... 2
Section 1.2 Company Actions............................. 5
Section 1.3 Directors................................... 7
Section 1.4 The Merger.................................. 9
Section 1.5 Effective Time.............................. 9
Section 1.6 Closing..................................... 9
Section 1.7 Directors and Officers of the
Surviving Corporation. 9
Section 1.8 Effect of the Merger........................ 10
Section 1.9 Subsequent Actions.......................... 10
Section 1.10 Certificate of Incorporation; By-Laws....... 10
Section 1.11 Stockholders' Meeting....................... 11
Section 1.12 Merger Without Meeting of Stockholders...... 12
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Securities.................... 12
Section 2.2 Dissenting Shares........................... 13
Section 2.3 Surrender of Shares; Stock Transfer Books... 14
Section 2.4 Stock Plans................................. 16
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1 Organization................................ 16
Section 3.2 Capitalization.............................. 17
Section 3.3 Authorization; Validity of Agreement;
Company Action............................ 20
Section 3.4 Consents and Approvals; No Violations....... 20
Section 3.5 SEC Reports and Financial Statements........ 21
Section 3.6 Absence of Certain Changes.................. 22
Section 3.7 No Undisclosed Liabilities.................. 23
Section 3.8 Litigation.................................. 23
Section 3.9 Employee Benefits; ERISA.................... 23
Section 3.10 Taxes....................................... 29
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Section 3.11 Contracts................................... 32
Section 3.12 Real Property............................... 33
Section 3.14 Labor Matters............................... 36
Section 3.15 Compliance with Laws........................ 38
Section 3.16 Environmental Matters....................... 38
Section 3.17 Product Liability........................... 40
Section 3.18 Information in Disclosure Documents......... 40
Section 3.19 Information in Proxy Statement.............. 41
Section 3.20 Potential Conflict of Interest.............. 41
Section 3.21 Opinion of Financial Advisor................ 42
Section 3.22 Insurance................................... 42
Section 3.23 Suppliers and Customers..................... 42
Section 3.24 Accounts Receivable; Inventory.............. 43
Section 3.25 Title and Condition of Properties........... 43
Section 3.26 ▇▇▇▇▇▇ Acquisition.......................... 44
Section 3.27 Full Disclosure............................. 44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Section 4.1 Organization................................ 45
Section 4.2 Authorization; Validity of Agreement;
Necessary Action.......................... 45
Section 4.3 Consents and Approvals; No Violations....... 45
Section 4.4 Information in Proxy Statement.............. 46
Section 4.5 Financing................................... 46
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Acquisition Proposals....................... 47
Section 5.2 Interim Operations of the Company........... 48
Section 5.3 No Solicitation............................. 52
ARTICLE VI
ADDITIONAL AGREEMENTS................... 54
Section 6.1 Proxy Statement............................. 54
Section 6.2 Meeting of Stockholders of the Company...... 54
Section 6.3 Additional Agreements....................... 54
Section 6.4 Notification of Certain Matters............. 55
Section 6.5 Access; Confidentiality..................... 55
Section 6.6 Consents and Approvals...................... 56
Section 6.7 Company's Brokers or Finders................ 57
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Section 6.8 Purchaser's Brokers or Finders.............. 57
Section 6.9 Publicity................................... 57
Section 6.10 Directors' and Officers' Insurance
and Indemnification....................... 58
Section 6.11 Purchaser Compliance........................ 60
Section 6.12 Reasonable Best Efforts..................... 60
Section 6.13 Rights Plan................................. 61
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to
Effect the Merger......................... 62
ARTICLE VIII
TERMINATION
Section 8.1 Termination................................. 63
Section 8.2 Effect of Termination....................... 65
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification.................. 66
Section 9.2 Non-survival of Representations
and Warranties............................ 66
Section 9.3 Expenses.................................... 66
Section 9.4 Notices..................................... 66
Section 9.5 Interpretation.............................. 67
Section 9.6 Counterparts................................ 68
Section 9.7 Entire Agreement; No Third Party
Beneficiaries............................. 68
Section 9.8 Severability................................ 68
Section 9.9 Governing Law............................... 68
Section 9.10 Assignment.................................. 68
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Index of Defined Terms
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Defined Term Section No.
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Appointment Date.......................... 5.2
Average Premium........................... 6.9(b)
Board of Directors........................ Recitals
Certificates.............................. 2.3(b)
Closing................................... 1.6
Closing Date.............................. 1.6
Commitment Letters........................ 4.5
Common Stock.............................. 3.2(a)
Company................................... Recitals
Company Agreements........................ 3.4
Company Balance Sheet..................... 3.24
Company Disclosure Schedule............... 3.1(a)
Company Material Adverse Effect........... 3.1(a)
Company SEC Documents..................... 3.5
Computer Software......................... 3.13(a)
Confidentiality Agreement................. 5.3(b)
D&O Insurance............................. 6.9(b)
Debt Financing............................ 4.5
Disclosure Documents...................... 3.18
Dissenting Shares......................... 2.2(a)
Effective Time............................ 1.5
Encumbrances.............................. 3.2(b)
Environmental Claim....................... 3.16(c)
Environmental Laws........................ 3.16(a)
Equity Commitments........................ 4.5
ERISA Affiliate........................... 3.9(a)
ERISA Plans............................... 3.9(a)
Exchange Act.............................. 1.1(a)
Exchange Agent............................ 2.3(a)
Financial Statements...................... 3.5
Foreign Plans............................. 3.9(a)
GAAP...................................... 3.5
Governmental Entity....................... 3.4
HSR Act................................... 3.4
Indebtedness.............................. 3.2(c)
Indemnified Party......................... 6.9(a)
Independent Directors..................... 1.3(c)
Intellectual Property..................... 3.13(d)
JNL Option................................ Recitals
Major Stockholders........................ Recitals
▇▇▇▇▇▇ Acquisition........................ 3.26
▇▇▇▇▇▇ Agreement.......................... 3.26
▇▇▇▇▇▇ Parent............................. 3.26
▇▇▇▇▇▇ ▇▇▇▇▇▇▇............................ 3.26
Materials of Environmental Concern........ 3.16(a)
Merger.................................... 1.4
Merger Consideration...................... 2.1(a)
Minimum Condition......................... 1.1(a)
Notes..................................... 4.5
Offer..................................... Recitals
Offer Documents........................... 1.1(b)
Offer Price............................... Recitals
Offer to Purchase......................... 1.1(a)
Options................................... 2.4(a)
Parent.................................... Recitals
PBGC...................................... 3.9(c)
Person.................................... 9.5
Plans..................................... 3.9(a)
Proxy Statement........................... 1.11(a)(ii)
Purchaser................................. Recitals
Real Property............................. 3.12
SARs...................................... 2.4(a)
Schedule 14D-9............................ 1.2(b)
Schedule 14D-l............................ 1.1(b)
SEC....................................... 1.1(b)
Secured Notes............................. 6.12(d)
Secured Notes Indenture................... 6.12(d)
Secured Notes Indenture Trustee........... 6.12(d)
Securities Act............................ 3.5
Shares.................................... Recitals
SPD....................................... 3.9(b)(iv)
Special Meeting........................... 1.11(a)(i)
Stock Plans............................... 2.4(a)
Stockholder Agreement..................... Recitals
Subsequent Disposition.................... 6.13
Subsidiary................................ 3.1(a)
Superior Proposal......................... 5.3(b)
Surviving Corporation..................... 1.4
Takeover Proposal......................... 5.1
Takeover Proposal Interest................ 5.1
Tax Return................................ 3.10(d)
Taxes..................................... 3.10(d)
Termination Fee........................... 8.2(b)
Transactions.............................. 1.2(a)
Treasury Regulations...................... 3.10(b)
WARN Act.................................. 3.14(b)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of August 21, 1997, by and among American Industrial
Partners Acquisition Company, LLC, a Delaware limited liability company
("Parent"), Bucyrus Acquisition Corp., a Delaware corporation and a wholly
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owned subsidiary of Parent (the "Purchaser"), and Bucyrus International, Inc., a
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Delaware corporation (the "Company").
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WHEREAS, the Board of Directors of each of Parent, the Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the Purchaser
will make a cash tender offer (the "Offer") to acquire any and all shares (the
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"Shares") of the issued and outstanding common stock, $.01 par value, of the
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Company for $18 per share, net to the seller in cash (such price, or any such
higher price per Share as may be paid in the Offer, being referred to herein as
the "Offer Price"); and
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WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of the Company, Parent and the Purchaser have each approved the Merger
(as defined hereinafter) following the Offer in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law") and upon the terms
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and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board of
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Directors") has determined that the consideration to be paid for each Share in
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the Offer and the Merger is fair to the holders of such Shares and has resolved
to recommend that the holders of such Shares accept the Offer and approve this
Agreement and each of the transactions contemplated hereby upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement
and incurring the obligations set forth herein, ▇▇▇▇▇▇▇ National Life Insurance
Company, a Michigan corporation (the "Stockholder"), which together with PPM
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America, Inc., a Delaware corporation, shares voting power and dispositive power
with respect to 4,228,382 Shares, concurrently herewith, the Stockholder is
entering into a Stockholder Agreement (the "Stockholder Agreement"), dated as of
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the date hereof, with Parent and Purchaser, in the form attached hereto as
Exhibit A, pursuant to which the Stockholder has agreed, among other things, to
tender the Shares held by it in the Offer, and to grant Parent a proxy with
respect to the voting of such Shares in favor of the Merger and to grant Parent
an option (the "JNL Option") with respect to such Shares upon the terms and
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subject to the conditions set forth therein; and
WHEREAS, the Company, Parent and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
shall have occurred and be existing, as promptly as practicable (but in no event
later than five business days after the public announcement of the execution of
this Agreement), the Purchaser shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the
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Offer at the Offer Price, subject to there being validly tendered and not
withdrawn prior to the expiration of the Offer, that number of Shares which
represents at least 51% of the Shares then outstanding on a fully diluted basis
(after
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giving effect to the conversion or exercise of all outstanding options,
warrants and other rights and securities exercisable or convertible into
Shares) the "Minimum Condition") and to the other conditions set forth in Annex
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I hereto, and shall consummate the Offer in accordance with its terms. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex I hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
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Agreement, the Minimum Condition and the other conditions set forth in Annex I
hereto. The Purchaser shall not amend or waive the Minimum Condition and shall
not decrease the Offer Price or decrease the number of Shares sought, or amend
any other condition of the Offer in any manner adverse to the holders of the
Shares without the written consent of the Company; provided, however, that if
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on the initial scheduled expiration date of the Offer, which shall be twenty
(20) business days after the date the Offer is commenced, all conditions to the
Offer shall not have been satisfied or waived, the Purchaser may, from time to
time, in its sole discretion, extend the expiration date. The Purchaser shall,
on the terms and subject to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and pay for Shares tendered as soon as it is
legally permitted to do so under applicable law; provided, however, that if,
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immediately prior to the initial expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer equal
less than 90% of the outstanding Shares, the Purchaser may extend the Offer for
a period not to exceed ten (10) business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
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to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-l"). The Schedule 14D-1 will include,
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as exhibits, the Offer to Purchase and a form of letter of transmittal and
summary advertisement (which
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documents, together with any amendments and supplements thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "Offer Documents").
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The Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws and Section 552.07 of the Wisconsin
Statutes, if applicable, and, on the date filed with the SEC and on the date
first published, mailed or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Parent or Purchaser
with respect to information furnished by the Company to the Parent or Purchaser,
in writing, expressly for inclusion in the Offer Documents. The information
supplied by the Company to the Parent or Purchaser, in writing, expressly for
inclusion in the Offer Documents and by the Parent or Purchaser to the Company,
in writing, expressly for inclusion in the Schedule 14D-9 (as hereinafter
defined) will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) Parent and the Purchaser will take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and the Purchaser and the Company agrees to
promptly (i) correct any information provided by it for use in the Schedule 14D-
1 or the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect and (ii) to supplement the
information provided by it specifically for use in the Schedule 14D-1 or the
Offer Documents to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Parent and the Purchaser further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and to be disseminated to holders of the
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Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the reasonable
opportunity to review the Schedule 14D-1 before it is filed with the SEC. In
addition, Parent and the Purchaser will provide the Company and its counsel, in
writing, with any comments, whether written or oral, Parent, the Purchaser or
their counsel may receive from time to time from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
Section 1.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors, at a meeting duly called
and held on August 19, 1997 at which a majority of the Directors was present, by
unanimous action of the Board of Directors: (i) duly approved this Agreement,
the Stockholder Agreement and the transactions contemplated hereby and thereby,
including the Offer, the Merger, the JNL Option and the purchase of Shares
by the Purchaser or its designee pursuant to the exercise of the JNL Option
(collectively, the "Transactions"), (ii) resolved to recommend that the
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stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve this Agreement and the transactions contemplated hereby,
including the Merger; and (iii) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the stockholders of the Company.
(b) As soon as practicable on the date the Offer is commenced, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any and all amendments or supplements thereto and
including the exhibits thereto, the "Schedule 14D-9"). The Schedule 14D-9 will
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comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, mailed or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
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except that no representation is made by the Company with respect to information
furnished by Parent or the Purchaser, in writing, expressly for inclusion in
the Schedule 14D-9. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. The Company shall mail, or cause to be mailed, such
Schedule 14D-9 to the stockholders of the Company at the same time the Offer
Documents are first mailed to the stockholders of the Company together with such
Offer Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors described in Section 1.2(a) hereof,
subject to the terms of this Agreement. The Company agrees promptly to correct
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect (and each of Parent and the Purchaser, with
respect to written information supplied by it specifically for use in the
Schedule 14D-9, shall promptly notify the Company of any required corrections of
such information and cooperate with the Company with respect to correcting such
information) and to supplement the information contained in the Schedule 14D-9
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Purchaser and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide the Purchaser and its
counsel, in writing, with any comments, whether written or oral, that the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
or other communications.
(c) In connection with the Offer, the Company will promptly furnish
or cause to be furnished to the Purchaser mailing labels containing the names
and addresses of all record holders of Shares and security position listings of
Shares held in stock depositories, each as of a recent date, and shall promptly
furnish the
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Purchaser with such additional information (including, but not limited to,
updated lists of stockholders and their addresses, mailing labels and security
position listing) and such other information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares.
Section 1.3 Directors.
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(a) Promptly upon the purchase of any Shares by the Purchaser
pursuant to the Offer, and from time to time thereafter as Shares are acquired
by the Purchaser, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares beneficially
owned by the Purchaser or any affiliate of the Purchaser bears to the total
number of Shares then outstanding. In furtherance thereof, the Board of
Directors has resolved as part of its approval of this Agreement to promptly
increase the size of the Board of Directors upon the request of Parent, and upon
the request of Parent, the Company shall promptly increase the size of the Board
of Directors or use its best efforts to secure the resignations of such number
of its incumbent directors as is necessary to enable Parent's designees to be
elected to the Board of Directors in accordance with the terms of this Section
1.3, and shall take all actions available to the Company to cause Parent's
designees to be so elected. At such time, the Company shall, if requested by
Parent, take all actions available to it to cause persons designated by Parent
to constitute at least the same percentage (rounded up to the next whole number)
as is on the Board of Directors of (i) each committee of the Board of Directors,
(ii) each board of directors (or similar body) of each Subsidiary (as defined in
Section 3.1 hereof) of the Company and (iii) each committee (or similar body) of
each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order
to fulfill its obligations under Section 1.3(a) hereof, and
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shall include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under Section 1.3(a). Parent or the Purchaser shall supply the
Company and be solely responsible for any information with respect to either of
them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 1.3(b) are in
addition to and shall not limit any rights which the Purchaser, Parent or any of
their affiliates may have as a holder or beneficial owner of Shares as a matter
of law with respect to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Board of
Directors, subject to the other terms of this Agreement, until the Effective
Time (as defined in Section 1.5 hereof), the Board of Directors shall have at
least one director who is a director on the date hereof and who is neither an
officer of the Company nor a designee, stockholder, affiliate or associate
(within the meaning of the federal securities laws) of Parent (one or more of
such directors, the "Independent Directors"), provided that, if no Independent
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Directors remain, the other directors shall designate one person to fill one of
the vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of the Purchaser and such person shall be
deemed to be an Independent Director for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event that
Parent's designees are elected to the Company's Board of Directors, after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time (as hereinafter defined), the affirmative vote of a majority of
the Independent Directors shall be required to (i) amend or terminate this
Agreement on behalf of the Company, (ii) exercise or waive any of the Company's
rights, benefits or remedies hereunder, (iii) extend the time for performance
of the Purchaser's obligations hereunder or (iv) take any other action by the
Company under or in connection with this Agreement required to be taken by the
Board of Directors.
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Section 1.4 The Merger. Upon the terms and subject to the conditions
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of this Agreement and Delaware Law, at the Effective Time, the Purchaser shall
be merged with and into the Company (the "Merger"), the separate corporate
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existence of the Purchaser shall cease, and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after the
Merger hereinafter sometimes is referred to as the "Surviving Corporation."
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Section 1.5 Effective Time. The parties hereto shall cause a
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Certificate of Merger to be executed and filed on the Closing Date (as defined
in Section 1.6 hereof) (or on such other date as Parent and the Company may
agree) with the Secretary of State of Delaware in such form as required by, and
executed in accordance with the relevant provisions of the Delaware Law. The
Merger shall become effective on the date on which the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or such time as
is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "Effective Time."
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Section 1.6 Closing. The closing of the Merger (the "Closing") shall
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take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article VII hereof (the "Closing Date"), at the
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offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another date or place is agreed to
in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation.
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The directors of the Purchaser immediately before the Effective Time shall, be
the initial directors of the Surviving Corporation, and the officers of the
Company immediately before the Effective Time will be the initial officers of
the Surviving Corporation in each case until their successors are duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Certificate of Incorporation and the By-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
Board of Directors or in any office of
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the Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
Section 1.8 Effect of the Merger. At the Effective Time, the effect
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of the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and the Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.9 Subsequent Actions. If, at any time after the Effective
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Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or the Purchaser acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or the Purchaser, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.10 Certificate of Incorporation; By-Laws.
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(a) Unless otherwise determined by the Purchaser before the
Effective Time, at the Effective Time the Certificate of Incorporation of the
Purchaser, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation.
10
(b) The By-Laws of the Purchaser, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
Section 1.11 Stockholders' Meeting.
---------------------
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") as promptly as practicable
---------------
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
best efforts, subject to the terms of this Agreement, including Section
5.3(b) (x) to obtain and furnish the information required to be included by
the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment
or supplement thereto (the "Proxy Statement") to be mailed to its
---------------
stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) subject to the terms of this Agreement including Section
5.3(b), include in the Proxy Statement the recommendation of the Board of
Directors that stockholders of the Company vote in favor of the approval
of the Merger and the adoption of this Agreement.
11
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other Subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.12 Merger Without Meeting of Stock holders.
---------------------------------------
Notwithstanding Section 1.11 hereof, in the event that Parent, the Purchaser and
any other Subsidiary of Parent shall acquire in the aggregate at least 90% of
the outstanding Shares, pursuant to the Offer or otherwise, the parties hereto
shall, at the request of Parent and subject to Article VII hereof, take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of stockholders of
the Company, in accordance with Section 253 of Delaware Law.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Securities. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of Parent, the
Purchaser, the Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be cancelled pursuant to Section 2.1(b)
and any Dissenting Shares (as defined in Section 2.2(a)) shall be cancelled
and extinguished and be converted into the right to receive the Offer Price in
cash payable to the holder thereof, without interest (the "Merger
------
Consideration"), upon surrender of the certificate formerly representing such
Share in the manner provided in Section 2.3 hereof. All such Shares, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.3 hereof, without
interest.
12
(b) Each Share held in the treasury of the Company and each Share
owned by the Purchaser or any direct or indirect wholly owned subsidiary of the
Purchaser immediately before the Effective Time shall be cancelled and
extinguished and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately before the Effective Time shall
thereafter represent one validly issued, fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
Section 2.2 Dissenting Shares.
-----------------
(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with Delaware Law (including but not
limited to Section 262 thereof) and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal ("Dissenting
----------
Shares"), shall not be converted into or represent a right to receive cash
pursuant to Section 2.1, but the holder thereof shall be entitled to only such
rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of Section 2.2(a), if any holder
of Shares who demands appraisal of his Shares under Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration as
provided in Section 2.1(a), without interest thereon, upon surrender of the
certificate or certificates representing such Shares pursuant to Section 2.3
hereof.
(c) The Company shall give the Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with
13
respect to demands for appraisal under Delaware Law. The Company shall not
voluntarily make any payment with respect to any demands for appraisal and shall
not, except with the prior written consent of the Purchaser, settle or offer to
settle any such demands.
Section 2.3 Surrender of Shares; Stock Transfer Books.
-----------------------------------------
(a) Before the Effective Time, the Purchaser shall designate a bank
or trust company reasonably acceptable to the Company to act as agent for the
holders of Shares in connection with the Merger (the "Exchange Agent") to
--------------
receive the funds necessary to make the payments contemplated by Section
2.1(a). At the Effective Time, the Purchaser shall deposit, or cause to be
deposited, in trust with the Exchange Agent for the benefit of holders of
Shares the aggregate consideration to which such holders shall be entitled at
the Effective Time pursuant to Section 2.1(a).
(b) Each holder of a certificate or certificates representing any
Shares cancelled upon the Merger, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
------------
pursuant to Section 2.1(a) may thereafter surrender such Certificate or
Certificates to the Exchange Agent, as agent for such holder, to effect the
surrender of such Certificate or Certificates on such holder's behalf for a
period ending six months after the Effective Time. The Purchaser agrees that
promptly after the Effective Time it shall cause the distribution to holders of
record of Shares as of the Effective Time of appropriate materials to facilitate
such surrender. Upon the surrender of Certificates, the Purchaser shall cause
the Exchange Agent to pay the holder of such certificates in exchange therefor
cash in an amount equal to the Merger Consideration multiplied by the number of
Shares represented by such Certificate. Until so surrendered, each Certificate
(other than Certificates representing Dissenting Shares and Certificates
representing Shares held by the Purchaser or in the treasury of the Company)
shall represent solely the right to receive the aggregate Merger Consideration,
relating thereto.
(c) If payment of the Merger Consideration in respect of cancelled
Shares is to be made to a Person
14
other than the Person in whose name a surrendered Certificate or instrument is
registered, it shall be a condition to such payment that the Certificate or
instrument so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and other taxes required by reason of such payment in a name
other than that of the registered holder of the Certificate or instrument
surrendered or shall have established to the satisfaction of the Purchaser or
the Exchange Agent that such tax either has been paid or is not applicable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
shares of any shares of capital stock thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates evidencing
ownership of the Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged for cash as provided in this Article II. No interest shall accrue
or be paid on any cash payable upon the surrender of a Certificate or
Certificates which immediately before the Effective Time represented outstanding
Shares.
(e) Promptly following the date which is six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing neither the Surviving Corporation nor the Exchange Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
15
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) The Merger Consideration paid in the Merger shall be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 2.3(c), stock transfer taxes
payable by such holder.
Section 2.4 Stock Plans. (a) At or immediately prior to the
-----------
Effective Time, (i) each then outstanding option to purchase Shares (the
"Options") and each outstanding Stock Appreciation Right (the "SARs") granted
------- ----
under the Company's Non-Employee Directors' Stock Option Plan, the 1996
Employees' Stock Incentive Plan and any other stock-based incentive plan or
arrangement of the Company (collectively, the "Stock Plans"), whether or not
-----------
then exercisable or vested, shall be cancelled and (ii) in consideration of such
cancellation, the holders of such Options and SARs shall receive for each Share
subject to such Option or SAR an amount (subject to any applicable withholding
tax) in cash equal to the product of (A) the excess, if any, of the Offer Price
over the per Share exercise price of such Option or the per Share base price of
such SAR, as applicable, and (B) the number of Shares subject to such Option or
SAR.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser
follows:
Section 3.1 Organization. (a) Each of the Company and its
------------
Subsidiaries (as defined below) is a corporation, partnership or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power or other and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority, and governmental approvals would
not,
16
individually or in the aggregate, have a Company Material Adverse Effect (as
defined below). As used in this Agreement, the term "Subsidiary" shall mean,
----------
with respect to any party, any foreign or domestic corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner (excluding such
partnerships where such party or any Subsidiary of such party do not have a
majority of the voting interest in such partnership) or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries. As
used in this Agreement, "Company Material Adverse Effect" means any change in or
-------------------------------
effect on the business of the Company or its Subsidiaries, taken as a whole,
that is or could reasonably be expected to be materially adverse to (i) the
business, operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets, liabilities or
prospects of the Company or its subsidiaries, taken as a whole, or (ii) the
ability of the Company to consummate any of the transactions or to perform its
obligations under this Agreement. The Disclosure Schedule delivered to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
---------------------------
sets forth a complete list of the Company's domestic and foreign Subsidiaries.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not individually
or in the aggregate have a Company Material Adverse Effect. Except as disclosed
in Section 3.1 of the Company Disclosure Schedule, the Company does not own any
equity interest in any corporation or other entity.
Section 3.2 Capitalization. (a) The authorized capital stock of
--------------
the Company consists of 20,000,000 shares of common stock, par value $.01 per
share (the
17
"Common Stock"). As of the date hereof, (i) 10,534,574 Shares are issued and
------------
outstanding, (ii) no Shares are issued and held in the treasury of the Company,
and (iii) a total of 1,060,000 Shares are reserved under the Stock Plans in
respect of outstanding and future awards, of which (A) 34,000 Shares are
reserved for issuance pursuant to outstanding Options and 26,000 Shares are
reserved for issuance pursuant to future awards, in each case under the
Company's Non-Employee Directors' Stock Option Plan, and (B) 542,000 Shares are
reserved for issuance pursuant to outstanding Options, 300,000 Shares have been
issued as Restricted Stock (of which 266,667 such Shares are non-vested as of
the date hereof), 50,000 Shares are reserved in respect of outstanding SARs, no
Shares are reserved for issuance in respect of Performance Shares and 108,000
Shares are reserved for issuance in connection with future awards, in each case
under the Company's 1996 Employees' Stock Incentive Plan. Section 3.2(a) of the
Company Disclosure Schedule discloses the number of shares subject to each
outstanding Option and the exercise price thereof and (ii) the number of Shares
covered by each outstanding SAR and the base price thereof (iii) the number of
shares of non-vested restricted stock and (iv) the number of non-vested
Performance Shares. All the outstanding shares of the Company's capital stock
are, and all Shares which may be issued pursuant to the exercise of outstanding
Options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable. Except as disclosed
in this Section 3.2 or as set forth on Section 3.2(a) of the Company Disclosure
Schedule, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (iii)
except as disclosed in Section 3.2(a) of the Compa-
18
ny Disclosure Schedule, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Shares, or the capital stock of the Company or of any Subsidiary or
affiliate of the Company or to provide funds to make any investment (in the form
of a loan, capital contribution or otherwise) in any Subsidiary or any other
entity.
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by the Company, directly or indirectly, and
all such shares have been validly issued and are fully paid and nonassessable
and are owned by either the Company or one of its Subsidiaries free and clear of
all liens, charges, security interests, options, claims, mortgages, pledges, or
other encumbrances and restrictions of any nature whatsoever ("Encumbrances").
------------
(c) Except as disclosed in Section 3.2(c) of the Company Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
(d) Other than as set forth on Section 3.2(d) of the Company
Disclosure Schedule, there is no outstanding Indebtedness (as hereinafter
defined) of the Company or any of its Subsidiaries. Except as identified in
Section 3.2(d) of the Company Disclosure Schedule, no Indebtedness of the
Company or its Subsidiaries contains any restriction upon (i) the prepayment of
such Indebtedness, (ii) the incurrence of Indebtedness by the Company or its
Subsidiaries, respectively, or (iii) the ability of the Company or its
Subsidiaries to grant any liens on its properties or assets. For purposes of
this Agreement, "Indebtedness" shall include (i) all indebtedness for borrowed
------------
money or for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), (ii) any other indebtedness
which is evidenced by a note, bond, debenture or similar instrument, (iii) all
obligations under financing leases, (iv) all obligations in respect of
acceptances issued or created, (v) all liabilities se-
19
cured by any lien on any property, and (vi) all guarantee obligations.
Section 3.3 Authorization; Validity of Agreement; Company Action.
----------------------------------------------------
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been duly and validly authorized by its Board of Directors
and no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the Transactions, except that consummation of the Merger
may require approval of the Company's stockholders as contemplated by Section
1.11 hereof. This Agreement has been duly executed and delivered by the Company
and, assuming due and valid authorization, execution and delivery hereof by
Parent and the Purchaser, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(b) The provisions of Section 203 of Delaware Law are not applicable
to this Agreement, the Stockholder Agreement or the other Transactions,
including the Merger and the purchase of Shares in the Offer or pursuant to the
exercise of the JNL Option. The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock is the only vote of the holders of any
class or series of the Company's capital stock which may be necessary to approve
this Agreement and the other Transactions, including the Merger. As of the
date of this Agreement, the number of holders of record of Common Stock in the
State of Wisconsin is less than 20% of the total number of holders of Common
Stock.
Section 3.4 Consents and Approvals; No Violations. Except as
-------------------------------------
disclosed in Section 3.4 of the Company Disclosure Schedule and for filings,
permits, authoriza-
20
tions, consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), none of the execution,
-------
delivery or performance of this Agreement by the Company, the consummation by
the Company of the Transactions or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation, the By-laws or similar
organizational documents of the Company or any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental Entity"),
-------------------
(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, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound (the "Company Agreements") or (iv) violate any
------------------
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its Subsidiaries or any of their properties or assets, except in
the case of clause (ii), (iii) or (iv) where failure to obtain such permits,
authorizations, consents or approvals or to make such filings, or where such
violations, breaches or defaults which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 3.5 SEC Reports and Financial Statements. The Company has
------------------------------------
filed with the SEC, and has heretofore made available to Parent, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since December 14, 1994 under the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act") (as such documents
--------------
have been amended since the time of their filing, collectively, the "Company SEC
-----------
Documents"). As of their respective dates, or if amended, as of the date of the
---------
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein (a) did not contain any
untrue
21
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 and (b) except as
disclosed in Section 3.5 of the Company Disclosure Schedule complied in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations of
the SEC thereunder. None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC. Each of the consolidated
financial statements included in the Company SEC Documents (the "Financial
---------
Statements") (i) has been prepared from, and is in accordance with, the books
----------
and records of the Company and its consolidated Subsidiaries, (ii) complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, (iii) has been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
----
(except as may be indicated therein or in the notes thereto) and (iv) fairly
presents the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6 Absence of Certain Changes. Except to the extent
--------------------------
disclosed in Section 3.6 of the Company Disclosure Schedule or in the Company
SEC Documents filed prior to the date hereof, since December 31, 1996, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course. From December 31, 1996 through the date of this
Agreement there has not occurred any event, change or effect (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) having, individually or in the aggregate, a Company Material
Adverse Effect, any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
equity interests of the Company or any of its Subsidiaries or any change in
accounting principles or methods, except insofar as may be required by GAAP.
Since December 31, 1996 neither the Company nor any of its Subsidiaries has
22
taken any of the actions prohibited by Section 5.2 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in
--------------------------
the Financial Statements and (b) for liabilities and obligations (i) incurred in
the ordinary course of business and consistent with past practice since December
31, 1996, (ii) pursuant to the terms of this Agreement, (iii) as disclosed in
Section 3.7 of the Company Disclosure Schedule, or (iv) as disclosed in Section
3.8 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that would have a Company Material
Adverse Effect or would be required to be reflected or reserved against on a
consolidated balance sheet of the Company and its Subsidiaries (including the
notes thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1996. Section 3.7 of the Company Disclosure Schedule sets forth the amount
of principal and unpaid interest outstanding as of July 31, 1997 under each
instrument evidencing indebtedness of the Company and its Subsidiaries which
will accelerate or become due or result in a right of redemption or repurchase
on the part of the holder of such indebtedness (with or without due notice or
lapse of time) as a result of this Agreement, the Merger or the other
transactions contemplated hereby or thereby.
Section 3.8 Litigation. Except as disclosed in Section 3.8 of the
----------
Company Disclosure Schedule or in the Company SEC Documents, there is no suit,
claim, action, proceeding, including, without limitation, arbitration or
grievance proceeding or alternative dispute resolution proceeding, or
investigation pending or, to the knowledge of the Company, threatened against or
affecting, the Company or any of its Subsidiaries before any Governmental Entity
that, either individually or in the aggregate, would have a Company Material
Adverse Effect.
Section 3.9 Employee Benefits; ERISA.
------------------------
(a) Except as disclosed in the Company SEC Documents, Schedule 3.9
contains a true and complete list
23
of each material employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, termination or similar pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company or any of its Subsidiaries, or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
---------------
together with the Company or any of its Subsidiaries would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA, for the benefit of
any current or former employee or director of the Company, or any of its
Subsidiaries or any ERISA Affiliate (the "Plans"). Schedule 3.9(a) identifies
-----
each of the Plans that is an "employee welfare benefit plan," or "employee
pension benefit plan" as such terms are defined in Sections 3(1) and 3(2) of
ERISA (such plans being hereinafter referred to collectively as the "ERISA
-----
Plans"). Schedule 3.9 (a) also identifies each of the Plans that is maintained
-----
outside the jurisdiction of the United States (such plans being hereinafter
referred to collectively as the "Foreign Plans"). None of the Company, any of
-------------
its Subsidiaries nor any ERISA Affiliate has any formal plan or commitment,
whether legally binding or not, to create any additional Plan or modify or
change any existing Plan that would affect any current or former employee or
director of the Company, any of its Subsidiaries or any ERISA Affiliate.
(b) With respect to each of the Plans, the Company has heretofore
delivered to the Purchaser true and complete copies of each of the following
documents, as applicable:
(i) a copy of the Plan documents (including all amendments thereto)
for each written Plan or a written description of any Plan that is not
otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service Form
5500 Series, if required under ERISA, with respect to each ERISA Plan for the
last three
24
Plan years ending prior to the date of this Agreement for which such a report
was filed;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three Plan years ending prior to the
date of this Agreement;
(iv) a copy of the most recent Summary Plan Description ("SPD"),
---
together with all Summaries of Material Modification issued with respect to
such SPD, if re quired under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
(v) if the Plan is funded through a trust or any other funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any;
(vi) all contracts relating to the Plans with respect to which the
Company, any of its Subsidiaries or any ERISA Affiliate may have any material
liability, including insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the IRS
with respect to each Plan that is intended to be qualified under Section 401(a)
of the Code.
(c) No liability under Title IV of ERISA has been incurred by the
Company, any of its Subsidiaries or any ERISA Affiliate since the Effective Date
of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, or any of its Subsidiaries or any ERISA
Affiliate of incurring any liability under such Title, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC"), which payments
----
have been or will be made when due. To the extent this representation applies
to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only with
respect to the ERISA Plans but also with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which the
Company, any of its Subsidiaries or any ERISA Affiliate
25
made, or was required to make, contributions during the past six years.
(d) The PBGC has not instituted proceedings pursuant to Section 4042
of ERISA to terminate any of the ERISA Plans subject to Title IV of ERISA, and
no condition exists that presents a material risk that such proceedings will be
instituted by the PBGC.
(e) With respect to each of the ERISA Plans that is subject to Title
IV of ERISA, the present value of accumulated benefit obligations under such
Plan, as determined by the Plan's actuary based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Plan allocable to such
accumulated benefit obligations.
(f) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, nor to the
Company's knowledge, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
the Company, any of its Subsidiaries or any ERISA Affiliate could be subject to
any material liability for either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975(a) or (b), 4976
or 4980B of the Code.
(g) All contributions and premiums which the Company, any of its
Subsidiaries or any ERISA Affiliate is required to pay under the terms of each
of the ERISA Plans and Section 412 of the Code, have, to the extent due, been
paid in full or properly recorded on the financial statements or records of the
Company or its Subsidiaries, and none of the ERISA Plans or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the ERISA
Plans ended prior to the date of this Agreement. No lien has been imposed under
Section 412(n) of the Code or Section 302(f) of ERISA on the assets of the
Company, any of its Subsidiaries or any ERISA Affiliate, and no event or
circumstance has occurred that is reason-
26
ably likely to result in the imposition of any such lien on any such assets on
account of any ERISA Plan.
(h) With respect to any ERISA Plan that is a "multiemployer plan," as
such term is defined in Section 3(37) of ERISA, (i) neither the Company, any of
its Subsidiaries nor any ERISA Affiliate has, since September 26, 1980, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, (ii) no event has
occurred that presents a material risk of a complete or partial withdrawal,
(iii) neither the Company, each of its Subsidiaries nor any ERISA Affiliate has
any contingent liability under Section 4204 of ERISA, (iv) no circumstances
exist that present a material risk that any such multi-employer plan will go
into reorganization, and (v) the aggregate withdrawal liability of the Company,
each of its Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by the Company, each of its Subsidiaries and all of its ERISA
Affiliates had occurred under each such multiemployer plan on the date hereof,
would be zero.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code and, to the Company's knowledge, the laws of each
jurisdiction in which any of the Foreign Plans are maintained, to the extent
such laws are applicable to the Foreign Plans.
(j) Each of the ERISA Plans that is intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified. The Company has
applied for and received a currently effective determination letter from the IRS
stating that it is so qualified, and no event has occurred which would affect
such qualified status.
(k) Any fund established under an ERISA Plan that is intended to
satisfy the requirements of section 501(c)(9) of the Code has so satisfied such
requirements.
(l) To the Company's knowledge based on the advice of its independent
accountants, except as disclosed in Section 3.9(l) of the Company Disclosure
Schedule, no amounts payable under any of the Plans or any
27
other contract, agreement or arrangement with respect to which the Company or
any of its Subsidiaries may have any liability could fail to be deductible for
federal income tax purposes by virtue of Section 162(m) or Section 280G of the
Code.
(m) Except as set forth in Section 3.9(m) of the Company Disclosure
Schedule, no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of the Company, its Subsidiaries or any ERISA Affiliate after
retirement or other termination of service (other than (i) coverage mandated by
applicable laws, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of the Company, any
of its Subsidiaries or an ERISA Affiliate, or (iv) benefits, the full direct
cost of which is borne by the current or former employee (or beneficiary
thereof)).
(n) Except as set forth in Section 3.9(n) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee, officer, director, agent
or consultant of the Company, any of its Subsidiaries or any ERISA Affiliate to
severance pay, unemployment compensation or any other similar termination
payment, or (ii) accelerate the time of payment or vesting, or increase the
amount of or otherwise enhance any benefit due any such employee, officer,
director agent or consultant.
(o) There are no pending or, to the Company's knowledge, threatened
or anticipated claims by or on behalf of any Plan by any employee or beneficiary
under any such Plan or otherwise involving any such Plan (other than routine
claims for benefits).
(p) With respect to the Foreign Plans to the Company's knowledge,
except as set forth in Schedule 3.9(p):
(i) All contributions to, and payments from, the Foreign Plans which
have been required to be made in accordance with the terms of any such plan,
and,
28
where applicable, the law of the jurisdiction in which such plan is maintained,
have been timely made. All such contributions to the Foreign Plans, and all
payments under the Foreign Plans, for any period ending before the Closing Date
that have not been made as of the date hereof are properly accrued and reflected
on the financial statements of the Subsidiary maintaining such plan.
(ii) All material reports, returns and similar documents with respect
to any Foreign Plan required to be filed with any government agency or
distributed to any Foreign Plan participant have been duly and timely filed or
distributed.
(iii) Each of the Foreign Plans has obtained from the government or
governments having jurisdiction with respect to such plan any required
determination that such plans are in compliance with the laws and regulations
of such government.
(iv) Each of the Foreign Plans has been administered at all times, in
all material respects, in accordance with its terms.
(v) The assets of each of the Foreign Plans (which is an employee
pension benefit plan as defined in Section 3(2) of ERISA and is funded through a
trust, insurance contract or similar funding medium) are at least equal to the
liabilities of such plans (as determined in accordance with the most recent
actuarial valuation available with resect to such plans).
(vi) Purchaser will incur no material liability with respect to any
Foreign Plan solely as a result of the consummation of the transactions
contemplated by this Agreement.
Section 3.10 Taxes. (a) Except as set forth in Section 3.10 of the
-----
Company Disclosure Schedule:
(i) the Company and its Subsidiaries have (x) duly filed (or there
have been filed on their behalf) with the appropriate governmental authorities
all Tax Returns (as hereinafter defined) required to be filed by them on or
prior to the date hereof, and such Tax Returns are true, correct and complete in
all material respects, and (y) duly paid in full or made provision in accordance
29
with GAAP (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes (as hereinafter defined) for all periods ending
through the date hereof;
(ii) there are no liens for Taxes upon any property or assets of the
Company or any Subsidiary thereof, except for liens for Taxes not yet due;
(iii) neither the Company nor any of its Subsidiaries has made any
change in accounting methods, received a ruling from any taxing authority or
signed an agreement likely to have a Company Material Adverse Effect;
(iv) the Company and its Subsidiaries have complied in all respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under any
foreign laws) and have, within the time and the manner prescribed by law,
withheld and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under applicable laws;
(v) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or its Subsidiaries and
neither the Company nor its Subsidiaries has received a written notice of any
pending audits or proceedings;
(vi) the Tax Returns of the Company and its Subsidiaries have been
made available to Parent for all taxable periods in respect of which the
statutory period of limitations for the assessment of Taxes have not expired,
and no material deficiencies either in re spect of such Returns or any other
Returns in respect of which the statutory period of limitations for the
assessment of Taxes has expired has been asserted by any appli cable Taxing
Authority which have not been resolved and fully paid;
(vii) there are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any
30
Taxes or deficiencies against the Company or any of its Subsidiaries, and no
power of attorney granted by either the Company or any of its Subsidiaries with
respect to any Taxes is currently in force;
(viii) neither the Company nor any of its Subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes;
(ix) to the Company's knowledge based on the advice of its
independent accountants, neither the Company nor its Subsidiaries is a party to
any agreement, contract or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code;
(x) neither the Company nor any of its Subsidiaries has, with regard
to any assets or property held, acquired or to be acquired by any of them, filed
a consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any of its Subsidiaries;
(xi) to the Company's knowledge based on the advice of its
independent accountants, the deductibility of compensation paid by the Company
and/or its Subsidiaries will not be limited by Section 162(m) of the Code; and
(xii) all transactions that could give rise to an understatement of
the federal income tax liability of the Company or any of its Subsidiaries
within the meaning of Section 6662(d) of the Code are adequately disclosed on
Tax Returns in accordance with Section 6662(d)(2)(B) of the Code if there is or
was no substantial authority for the treatment giving rise to such
understatement.
(b) Except as disclosed in Section 3.10(b) of the Company Disclosure
Schedule, no excess loss accounts or deferred intercompany gains as defined in
the consolidated return regulations promulgated under the Code (the "Treasury
--------
Regulations") exist with respect to the Company of the Subsidiaries.
-----------
31
(c) The Federal income tax net operating loss carryovers available to
the Company and its Subsidiaries, and their expiration dates, are set forth in
Section 3.10(c) of the Disclosure Schedule. Except as set forth in Section
3.10(c) of the Disclosure Schedule, as of the date of this Agreement, the net
operating loss and credit carryovers are not subject to limitations imposed by
Sections 382, 383 or 384 of the Code (or any predecessor thereto) or otherwise
(including Sections 1.1502-21 and 1502-22 of the Treasury Regulations).
(d) "Taxes" shall mean any and all taxes, charges, fees, levies or
-----
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including, without
limitation, any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)), whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such amounts. "Tax Return" shall
----------
mean any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including, without limitation, information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
Section 3.11 Contracts. Each Company Agreement is valid, binding
---------
and enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a Company
Material Adverse Effect, and there are no defaults thereunder, except those
defaults that would not have a Company Material Adverse Effect. Section 3.11 of
the Company Disclosure Schedule sets forth a true and complete list of (i) all
material Company Agreements entered into by the Company or any of its
Subsidiaries
32
since December 31, 1996 and all amendments to any Company Agreements included as
an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and (ii) all non-competition agreements imposing restrictions
on the ability of the Company or any of its Subsidiaries to conduct business in
any jurisdiction or territory.
Section 3.12 Real Property. (a) Section 3.12 of the Company
-------------
Disclosure Schedule sets forth a complete list of all real property owned by the
Company or its Subsidiaries (the "Real Property"). Except as set forth in
-------------
Section 3.12 of the Company Disclosure Schedule, the Company or its Subsidiaries
has good and marketable title to the Real Property, free and clear of all
Encumbrances, other than Encumbrances that do not in the aggregate materially
detract from the value or interfere with the use or operation of the Real
Property subject thereto. There are no proceedings, claims, disputes or
conditions affecting any Real Property that might curtail or interfere with in
any material respect the use of such property, nor is an action of eminent
domain pending or to the knowledge of the Company, threatened for all or any
portion of the Real Property. Except as disclosed in Section 3.12 of the
Company Disclosure Schedule, the Company is not a party to any lease, assignment
or similar arrangement under which the Company is a lessor, assignor or
otherwise makes available for use by any third party any portion of the Real
Property.
(b) The Company has not received any notice of or other writing
referring to any requirements or recommendations by any insurance company that
has issued a policy covering any part of the Real Property or by any board of
fire underwriters or other body exercising similar functions, requiring or
recommending any repairs or work to be done one any part of the Real Property.
Except as would not materially detract from the value or interfere with the use
or operation of the Real Property subject thereto, the plumbing, electrical,
heating, air conditioning, ventilating and all other structural or material
mechanical systems in the buildings upon the Real Property are in good working
order and working condition, so as to be adequate for the operation of the
business of the Company as heretofore conducted, and the roof, basement and
foundation walls of all buildings on the Real Property are free of leaks and
other material
33
defects, except for any matter otherwise covered by this sentence which does not
have, individually or in the aggregate, a Company Material Adverse Effect.
(c) The Company has obtained all appropriate licenses, permits,
easements and rights of way, including proofs of dedication, required to use and
operate the Real Property in the manner in which the Real Property is currently
being used and operated, except for such licenses, permits or rights of way the
failure of which to have obtained does not have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) The Company has not received notification that the Company is in
violation of any applicable building, zoning, anti-pollution, health or other
law, ordinance or regulation in respect of the Real Property or structures or
their operations thereon and no such violation exists, except for such
violations that do not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 3.13 Intellectual Property. (a) Except as disclosed in
---------------------
Section 3.13 of the Company Disclosure Schedule, there are no trademarks, trade
names, service marks, logos, copyrights, or registrations or applications for
registration of any of the foregoing, patents or applications therefor, or
computer software programs which are owned by the Company or any of its
Subsidiaries or used in the operation of the business of the Company or any of
its Subsidiaries as currently conducted (collectively, the "Intellectual
------------
Property") that are material to the conduct of the business of the Company or
--------
any of its Subsidiaries as currently conducted.
(b) Except as set forth in Section 3.13 of the Company Disclosure
Schedule or as disclosed in the Company SEC Documents, as of the date hereof,
to the Company's knowledge, there are no pending or threatened claims of which
the Company or any of its Subsidiaries have been given written notice, by any
person challenging the ownership or use by the Company or any of its
Subsidiaries of any material Intellectual Property, which, if such claim were
resolved adversely to the Company, would have a Company Material Adverse Effect.
The Company and its Subsidiaries have such ownership of, or such rights by
license, lease or other agreement to, the Intellectual
34
Property as are necessary for the operation of their respective businesses as
currently conducted, except as set forth in Section 3.13 of the Company
Disclosure Schedule or otherwise where the failure to have such right would not
have a Company Material Adverse Effect.
(c) To the knowledge of the Company, the Company and its Subsidiaries
have such title or such rights by license, lease or other agreement to the
computer software programs which are owned, licensed, leased or otherwise used
by the Company and its Subsidiaries and which are material to the conduct of
their businesses as currently conducted, as are necessary to permit the conduct
of their businesses as currently conducted, except as set forth in Section 3.13
of the Company Disclosure Schedule or otherwise where the failure to have such
right would not have a Company Material Adverse Effect.
(d) All patents, registrations and applications for Intellectual
Property set forth in Section 3.13 of the Company Disclosure Schedule (i) are
valid, subsisting, in proper form and enforceable, and have been duly
maintained, including the submission of all necessary filings and fees in
accordance with the legal and administrative requirements of the appropriate
jurisdictions and (ii) have not lapsed, expired or been abandoned, and no
patent, registration or application therefor is the subject of any opposition,
interference, cancellation proceeding or other legal or governmental proceeding
before any governmental, registration or other authority in any jurisdiction.
(e) Except as set forth on Section 3.13 of the Company Disclosure
Schedule, all consents, filings, and authorizations by or with governmental
authorities or third parties necessary with respect to the consummation of the
transactions contemplated hereby as they may affect the Intellectual Property
have been obtained.
(f) Neither the Company nor any of its Subsidiaries has entered into
any material consent, indemnification, forbearance to ▇▇▇, settlement agreement
or cross-licensing arrangement with any person relating to the Intellectual
Property or the intellectual property of any third party other than as may be
contained in the
35
license agreements listed in Section 3.13 of the Disclosure Schedule.
(g) Except as set forth on Section 3.13 of the Company Disclosure
Schedule, the Company and its Subsidiaries is not, nor will it be as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property.
(h) No former or present employees, officers or directors of the
Company or any of its Subsidiaries hold any right, title or interest directly or
indirectly, in whole or in part, in or to any Intellectual Property.
Section 3.14 Labor Matters. (a) Except as set forth in Section
-------- -------------
3.14 of the Company Disclosure Schedule, (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
and during the past five years there has not been any such action (ii) neither
the Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company or any of its Subsidiaries, (iii) none of
the employees of the Company or any of its Subsidiaries is represented by any
labor organization and the Company does not have any knowledge of any union
organizing activities among the employees of the Company or any of its
Subsidiaries within the past five years, nor does any question concerning
representation exist concerning such employees, (iv) there are no material
written personnel policies, rules or procedures applicable to employees of the
Company or any of its Subsidiaries, other than those set forth on Section 3.14
of the Company Disclosure Schedule, true and correct copies of which have
heretofore been delivered to Parent, (v) the Company and each of its
Subsidiaries is in compliance, in all material respects, with all applicable
laws respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other similar laws of
36
any jurisdiction, (vi) there is no unfair labor practice or similar charge or
complaint against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency, (vii) there is no grievance arising out
of any collective bargaining or similar agreement or other grievance procedure
relating to any employee of the Company of any of its Subsidiaries, (viii) to
the knowledge of the Company, no charges with respect to or relating to the
Company or any of its Subsidiaries are pending before the Equal Employment
Opportunity Commission or any other federal, state, local or foreign agency
responsible for the prevention of unlawful employment practices, (ix) neither
the Company nor any of its Subsidiaries has received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws to conduct an investigation with respect to or relating to
the Company or any of its Subsidiaries and no such investigation is in progress,
and (x) there are no complaints, lawsuits or other proceedings pending or, to
the knowledge of the Company, threatened in any forum by or on behalf of any
present or former employee of the Company or any of its Subsidiaries, any
applicant for employment or classes of the foregoing alleging breach of any
express or implied contract or employment, any laws governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship.
(b) Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), (i) the Company has not effectuated a "plant
--------
closing," (as defined in the WARN Act) affecting any site of employment or one
or more facilities or operating units within any site of employment or facility
of the Company, (ii) there has not occurred a "mass layoff" (as defined in the
WARN Act) affecting any site of employment or facility of the Company or any of
its Subsidiaries; nor has the Company or any of its Subsidiaries been affected
by any transaction or engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state, local or foreign law or
regulation, and (iii) none of the employees of the Company or any of its
Subsidiaries has suffered an "employment loss" (as defined in the WARN Act)
during the ninety (90) day period prior to the date of this Agreement.
37
(c) As used in the Section 3.14, the representations made with
respect to the Subsidiaries other than Minserco, Inc. and Boonville Mining
Services, Inc. are made only to the Company's knowledge.
Section 3.15 Compliance with Laws. The Company and its Subsidiaries
--------------------
have complied in a timely manner and in all material respects with all laws,
rules and regulations, ordinances, judgments, decrees, orders, writs and
injunctions of all United States federal, state, local, foreign governments and
agencies thereof which affect the business, properties or assets of the Company
and its Subsidiaries, and no notice, charge, claim, action or assertion has been
received by the Company or any of its Subsidiaries or has been filed, commenced
or, to the Company's knowledge, threatened against the Company or any of its
Subsidiaries alleging any violation of any of the foregoing. All licenses,
permits and approvals required under such laws, rules and regulations are in
full force and effect except where the failure to be in full force and effect
would not have a Company Material Adverse Effect.
Section 3.16 Environmental Matters. (a) Except as set forth in
---------------------
Section 3.16(a) of the Company Disclosure Schedule, each of the Company and its
Subsidiaries is in compliance with all federal, state, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata, and natural resources (together
"Environmental Laws" and including, without limitation, laws and regulations
-------------------
relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances or wastes,
petroleum and petroleum products, polychlorinated biphenyls (PCBs), or asbestos
or asbestos-containing materials ("Materials of Environmental Concern")), or
----------------------------------
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern
except for such noncompliance that would not have a Company Material Adverse
Effect. Such compliance includes, but is not limited to, the possession by the
Company and each of its Subsidiaries of all permits and other governmental
authorizations required under all applicable Environmental Laws, and compliance
with the
38
terms and conditions thereof. All material permits and other governmental
authorizations currently held by the Company and each of its Subsidiaries
pursuant to the Environmental Laws are identified in Section 3.16(a) of the
Company Disclosure Schedule.
(b) Except as set forth in Section 3.16(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Company or any of
its Subsidiaries is not in compliance with any Environmental Laws, and there are
no circumstances that may prevent or interfere, to the knowledge of the Company,
with such compliance in the future. The Company has provided to Parent all
information that is in the possession of or reasonably available to the Company
regarding environmental matters pertaining to or the environmental condition of
the business of the Company and its Subsidiaries, or the compliance (or
noncompliance) by the Company and its Subsidiaries with any Environmental Laws.
(c) Except as set forth in Section 3.16(c) of the Company Disclosure
Schedule, there is no claim, action, cause of action, investigation or notice
(written or oral) (together, "Environmental Claim") by any person or entity
-------------------
alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, person injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its Subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or threatened against the
Company or any of its Subsidiaries, or against any person or entity whose
liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(d) Except as set forth in Section 3.16(d) of the Company Disclosure
Schedule, there are no past or present actions, activities, conditions, events,
incidents, or circumstances, to the knowledge of the
39
Company, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that could form
the basis of any Environmental Claim against the Company or any of its
Subsidiaries or, to Company's knowledge, against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law, except, in
either case, where the same would not have a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing, to
the Company's knowledge: (i) all on-site and off-site locations where the
Company or any of its Subsidiaries has (previously or currently) stored,
disposed or arranged for the disposal of Materials of Environmental Concern are
identified in Section 3.16(e) of the Company Disclosure Schedule, (ii) all
underground storage tanks, and the capacity and contents of such tanks, located
on any property owned, leased, operated or controlled by Seller are identified
in Section 3.16(e) of the Company Disclosure Schedule, (iii) except as set forth
in Section 3.16(e) of the Company Disclosure Schedule and except as to matters
that would not have a Company Material Adverse Effect, there is no asbestos
contained in or forming part of any building, building component, structure or
office space owned, leased, operated or controlled by the Company or any of its
Subsidiaries, and (iv) except as set forth in Section 3.16(e) of the Company
Disclosure Schedule and except as to matters that would not have a Company
Material Adverse Effect, no PCBs or PCB-containing items are used or stored at
any property owned, leased, operated or controlled leased by the Company and its
Subsidiaries.
Section 3.17 Product Liability. Except as described in Section 3.17
-----------------
of the Company Disclosure Schedule, there are not presently pending, or to the
knowledge of the Company, threatened any civil, criminal or administrative
actions, suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or alleged defect
in design, manufacture, materials or workmanship, including any failure to warn
or alleged breach of express or implied warranty or representation, relating to
any product manufactured, distributed or sold by or on behalf of the Company and
its Subsidiaries.
40
Section 3.18 Information in Disclosure Documents. None of the
-----------------------------------
written information supplied or to be supplied by the Company for the purpose of
inclusion or incorporation by reference in any syndication and other materials
to be delivered to potential financing sources in connection with the
Transactions or otherwise in connection with the Debt Financing (as hereinafter
defined) (the "Disclosure Documents") will, at the date delivered, contain any
--------------------
untrue statement of 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.
Section 3.19 Information in Proxy Statement. The Proxy Statement, if
------------------------------
any (or any amendment thereof or supplement thereto), will, at the date mailed
to Company stockholders and at the time of the meeting of Company stockholders
to be held in connection with the Merger, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or the Purchaser for
inclusion in the Proxy Statement. The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 3.20 Potential Conflict of Interest. Except as set forth in
------------------------------
Section 3.20 of the Company Disclosure Schedule or in the Company SEC Documents
filed prior to the date hereof, since December 31, 1996, there have been no
transactions, agreements, arrangements or understandings between the Company or
its Subsidiaries, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act. Except as set forth in Section 3.20 of the Company
Disclosure Schedule or in the SEC Reports filed prior to the date hereof, no
officer of the Company or any of its Subsidiaries owns, directly or indirectly,
any interest in (excepting not more than 1% stock holdings for investment
purposes in securities of publicly held and traded companies) or is an officer,
director, employee or consultant of any person which is a competitor, lessor,
41
lessee, customer or supplier of the Company; and no officer or director of the
Company or any of its Subsidiaries (i) owns, directly or indirectly, in whole
or in part, any Intellectual Property which the Company or any of its
Subsidiaries is using or the use of which is necessary for the business of the
Company or its Subsidiaries; (ii) has any claim, charge, action or cause of
action against the Company or any of its Subsidiaries, except for claims for
accrued vacation pay, accrued benefits under the Plans and similar matters and
agreements existing on the date hereof; (iii) has made, on behalf of the
Company or any of its Subsidiaries, any payment or commitment to pay any
commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any other Person of
which any officer or director of the Company or any of its Subsidiaries, or, to
the Company's knowledge, a relative of any of the foregoing, is a partner or
stockholder (except stock holdings solely for investment purposes in securities
of publicly held and traded companies); or (iv) owes any money to the Company or
any of its Subsidiaries.
Section 3.21 Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of ▇▇▇▇▇▇▇▇▇ & Company, Inc., dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, a copy of which opinion has been delivered to Parent
and the Purchaser.
Section 3.22 Insurance. The Company and each of its Subsidiaries
---------
have policies of insurance and bonds of the type and in amounts customarily
carried by persons conducting businesses or owning assets similar to those of
the Company and its Subsidiaries. There is no material claim pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
Subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
42
Section 3.23 Suppliers and Customers. Since December 31, 1996, no
-----------------------
material licensor, vendor, supplier, licensee or customer of the Company or any
of its Subsidiaries has cancelled or otherwise modified its relationship with
the Company or its Subsidiaries and, to the Company's knowledge, (i) no such
person has any intention to do so, and (ii) the consummation of the transactions
contemplated hereby will not adversely affect any of such relationships.
Section 3.24 Accounts Receivable; Inventory. Subject to any reserves
------------------------------
set forth in the consolidated balance sheet of the Company included in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 as
filed with the SEC prior to the date of this Agreement (the "Company Balance
---------------
Sheet"), the accounts receivable shown in the Company Balance Sheet arose in the
-----
ordinary course of business; were not, as of the date of the Company Balance
Sheet, subject to any material discount, contingency, claim of offset or
recoupment or counterclaim; and represented, as of the date of the Company
Balance Sheet, bona fide claims against debtors for sales, leases, licenses and
other charges. All accounts receivable of the Company and its Subsidiaries
arising after the date of the Company Balance Sheet through the date of this
Agreement arose in the ordinary course of business and, as of the date of this
Agreement, are not subject to any material discount, contingency, claim of
offset or recoupment or counterclaim, except for normal reserves consistent with
past practice. The amount carried for doubtful accounts and allowances
disclosed in the Company Balance Sheet is believed by the Company as of the date
of this Agreement to be sufficient to provide for any losses which may be
sustained or realization of the accounts receivable shown in the Company Balance
Sheet. As of the date of the Company Balance Sheet, the inventories shown on
the Company Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were acquired in the ordinary course of business and, as of
the date of this Agreement, have been replenished in all material respects in
the ordinary course of business consistent with past practices. All such
inventories are valued on the Company Balance Sheet in accordance with GAAP
applied on a basis consistent with the Company's past practices, and provision
has been made or reserves
43
have been established on the Company Balance Sheet, in each case in an amount
believed by the Company as of the date of this Agreement to be adequate, for all
slow-moving, obsolete or unusable inventories.
Section 3.25 Title and Condition of Properties. The Company and its
---------------------------------
Subsidiaries own good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Company Balance Sheet or
acquired after June 30, 1997, except for (A) assets which have been disposed of
to nonaffiliated third parties since June 30, 1997 in the ordinary course of
business, (B) Encumbrances reflected in the Balance Sheet, (C) Encumbrances or
imperfections of title which are not, individually or in the aggregate, material
in character, amount or extent and which do not materially detract from the
value or materially interfere with the present or presently contemplated use of
the assets subject thereto or affected thereby, and (D) Liens for current Taxes
not yet due and payable. All of the machinery, equipment and other tangible
personal property and assets owned or used by the Company or its Subsidiaries
are in good condition and repair, except for ordinary wear and tear not caused
by neglect, and are usable in the ordinary course of business, except for any
matter otherwise covered by this sentence which does not have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 3.26 ▇▇▇▇▇▇ Acquisition. To the Company's knowledge, The
------------------
representations and warranties of the ▇▇▇▇▇▇ Power Shovel Company, ▇▇▇▇▇▇ Power
Shovel Pty. Ltd., INTOOL International B.V., and Global-GIX Canada Inc.
(collectively, the "▇▇▇▇▇▇ ▇▇▇▇▇▇▇") and Global Industrial Technologies, Inc.
--------------
("▇▇▇▇▇▇ Parent") as set forth in that certain Asset Purchase Agreement, dated
---------------
as of July 21, 1997 by and among the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Parent and the
Company, Bucyrus (Australia) Proprietary Ltd., Bucyrus (Africa) (Proprietary)
Limited and Bucyrus Canada Limited (the "▇▇▇▇▇▇ Agreement") are true and correct
----------------
in all material respects. The purchase by the Company of certain assets of the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Parent pursuant to the ▇▇▇▇▇▇ Agreement shall be
referred to herein as the "▇▇▇▇▇▇ Acquisition."
------------------
Section 3.27 Full Disclosure. The Company has not knowingly failed
---------------
to disclose to Parent any facts
44
material to the Company's business, results of operations, assets, liabilities,
financial condition or prospects. No representation or warranty by the Company
in this Agreement and no statement by the Company in any document referred to
herein (including the Schedules and Exhibits hereto), contains any untrue
statements of a material fact or omits to state any material fact necessary, in
order to make the statement made herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser, jointly and severally, represent and
warrant to the Company as follows:
Section 4.1 Organization. Parent is a limited liability company duly
------------
organized, validly existing and in good standing under the laws of Delaware and
the Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
------------------------------------------------------
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and the consummation of the Merger and of the Transactions have been
duly and validly authorized by the members of parent and by the Board of
Directors the Purchaser and by Parent as the sole shareholder of the Purchaser
and no other corporate action on the part of Parent or the Purchaser is
necessary to authorize the execution and delivery by Parent and the Purchaser of
this Agreement and the consummation of the Transactions. This Agreement has been
duly executed and delivered by Parent and the Purchaser and, assuming due and
valid authorization, execution and delivery hereof by the Company, is a valid
and binding obligation of each of Parent and the Purchaser enforceable against
each of them in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights
45
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for
-------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by Parent or
the Purchaser, the consummation by Parent or the Purchaser of the Transactions
or compliance by Parent or the Purchaser with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Certificate of
Formation of Parent or the Certificate of Incorporation or By-Laws of the
Purchaser, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, (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) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent, or any of its Subsidiaries or the Purchaser is a
party or by which any of them or any of their respective properties or assets
may be bound, or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Parent, any of its Subsidiaries or any of their
properties or assets, except in the case of clause (ii), (iii) or (iv) such
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent and Purchaser
to consummate the Transactions.
Section 4.4 Information in Proxy Statement. None of the information
------------------------------
supplied by Parent or the Purchaser in writing specifically for inclusion or
incorporation by reference in the Proxy Statement (or any amendment thereof or
supplement thereto) will, at the date mailed to stockholders and at the time of
the meeting of stockholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein
46
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.5 Financing. In order to finance the Transactions, Parent
---------
and the Purchaser have obtained commitments for equity financing in an amount
equal to $143,000,000 (the "Equity Commitments"), with no conditions attached
------------------
to such commitments other than satisfac tion of the conditions to the
obligations of Parent and the Purchaser set forth in this Agreement. The
Company has obtained a "highly confident" letter from Salomon Brothers Inc. as
initial purchaser of $150,000,000 in aggregate principal Senior Subordinated
Notes Due 2007 of the Company (the "Notes") and a commitment letter from Bank
-----
One, Milwaukee, National Association. (The letters referred to in the
immediately preceding sentence are hereinafter referred to collectively, as the
"Commitment Letters" and the financing described therein as the "Debt
------------------ ----
Financing"). The Equity Commitments and the Debt Financing are sufficient to
consummate the Transactions.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Acquisition Proposals. The Company will notify the
---------------------
Purchaser immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated or
continued with the Company or its officers, directors, employees, investment
bankers, attorneys, accountants or other agents, in each case in connection with
any Takeover Proposal (as defined below) or the possibility or consideration of
making a Takeover Proposal ("Takeover Proposal Interest") indicating, in
--------------------------
connection with such notice, the name of the Person indicating such Takeover
Proposal Interest and the terms and conditions of any proposals or offers. The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations, if any, with any parties
conducted heretofore with respect to any Takeover Proposal Interest. The Company
agrees that it shall keep Parent informed, on a current basis, of the status and
terms of any Takeover Proposal Interest. As used in this Agreement, "Takeover
--------
Proposal"
--------
47
shall mean any tender or exchange offer involving the Company, any proposal for
a merger, consolidation or other business combination involving the Company, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale), any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company or any proposal
or offer with respect to any other transaction similar to any of the foregoing
with respect to the Company other than the ▇▇▇▇▇▇ Acquisition or pursuant to the
transactions to be effected pursuant to this Agreement.
Section 5.2 Interim Operations of the Company. The Company covenants
---------------------------------
and agrees that, except (i) as expressly contemplated by this Agreement,
including without limitation Section 5.3(b), (ii) as set forth in Section 5.2 of
the Company Disclosure Schedule, (iii) as set forth in the term sheet describing
the terms of the bridge loan by and between the Company and PPM American Special
Investments Fund, L.P., which term sheet is attached as Exhibit A to Section
5.2 of the Company Disclosure Schedule (but subject to Parent's prior written
approval, which approval shall not be unreasonably withheld, of any definitive
documentation with respect thereto), (iv) for the consummation of the ▇▇▇▇▇▇
Acquisition pursuant to and in accordance with the terms of the ▇▇▇▇▇▇
Agreement, or (v) as agreed in writing by Parent, after the date hereof, and
prior to the time the designees of Parent have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 hereof (the "Appointment Date"):
----------------
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use its best efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of the Warrant or Options or other rights to purchase shares of Common
Stock
48
pursuant to the Option Plans outstanding on the date hereof, issue, sell,
transfer or pledge or agree to sell, transfer or pledge any treasury stock of
the Company or any capital stock of any of its Subsidiaries beneficially owned
by it, (ii) amend its Articles of Incorporation or By-laws or similar
organizational documents; or (iii) split, combine or reclassify the outstanding
Shares or any outstanding capital stock of any of the Subsidiaries of the
Company;
(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire (or stock appreciation rights with respect to), any shares of
capital stock of any class of the Company or its Subsidiaries, other than Shares
reserved for issuance on the date hereof pursuant to the exercise of Options or
with respect to SARs outstanding on the date hereof; (iii) transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any assets, other than
in the ordinary and usual course of business and consistent with past practice,
or incur or modify any indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(d) make any change in the compensation payable or to become payable
to any of its officers, directors, employees, agents or consultants (other than
general increases in wages to employees who are not officers or directors or
affiliates in the ordinary course consistent with past practice), or to Persons
providing management services, enter into or amend any employment, severance,
consulting, termination or other agreement or employee benefit plan or make any
loans to any of its officers, directors, employees, affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such Persons pursuant to an employee benefit plan or
otherwise;
49
(e) pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit pursuant to any existing
plan, agreement or arrangement to any officer, director, employee or affiliate
or pay or agree to pay or make any accrual or arrangement for payment to any
officers, directors, employees or affiliates of the Company of any amount
relating to unused vacation days, except payments and accruals made in the
ordinary course consistent with past practice or as required under the terms of
the Plans; adopt or pay, grant, issue, accelerate or accrue salary or other
payments or benefits pursuant to any pension, profit-sharing, bonus, extra
compensation, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right or other stock-based incentive, group insurance,
severance pay, retirement or other employee benefit plan, agreement or
arrangement, or any employment or consulting agreement with or for the benefit
of any director, officer, employee, agent or consultant, whether past or present
except for payments and accruals made in the ordinary course of business and
consistent with past practice or as required under the terms of the Plans; or
amend in any material respect any such existing plan, agreement or arrangement
in a manner inconsistent with the foregoing;
(f) the Company shall not modify, amend or terminate any of the
material Company Agreements or waive, release or assign any material rights on
claims, except in the ordinary course of business and consistent with past
practice or as required under the terms of the Plans;
(g) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent except in the ordinary course
of business and consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with past
practice; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of
50
any other person, except in the ordinary course of business and consistent with
past practice; (iii) make any loans, advances or capital contributions to, or
investments in, any other person except in the ordinary course of business and
consistent with past practice; or (iv) enter into any material commitment or
transaction (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets or real estate) except in the ordinary
course of business and consistent with past practice;
(i) neither the Company nor any of its Subsidiaries shall (i) change
any of the accounting methods used by it unless required by GAAP or (ii) make
any material Tax election or change any material Tax election already made,
adopt any material Tax accounting method, change any material Tax accounting
method unless required by applicable law, enter into any material closing
agreement, settle any material Tax claim or assessment or consent to any
material Tax claim or assessment or any waiver of the statute of limitations for
any such claim or assessment; and
(j) neither the Company nor any of its Subsidiaries shall 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 any such claims, liabilities or obligations, in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of the Company;
(k) neither the Company nor any of its Subsidiaries shall adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries shall take, or
agree to commit to take, any action that would or is reasonably likely to result
in any of the conditions to the Merger set forth in Article VII or any of the
conditions to the Offer set forth in Annex I not being satisfied, or would make
many representation or warranty of the Company contained herein inaccurate in
51
any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger in
accordance with the terms hereof or materially delay such consummation; and
(m) the Company shall not enter into an agreement, contract,
commitment or arrangement to do any of the foregoing, or to authorize,
recommend, propose or announce an intention to do any of the foregoing.
Section 5.3 No Solicitation. (a) The Company will not, and will use
---------------
its best efforts to ensure that its officers, directors, employees, investment
bankers, attorneys, accountants and other agents do not, directly or indirectly:
(i) initiate, solicit or encourage, or take any action to facilitate the making
of, any offer or proposal which constitutes or is reasonably likely to lead to
any Takeover Proposal, (ii) enter into any agreement with respect to any
Takeover Proposal, or (iii) in the event of an unsolicited written Takeover
Proposal for the Company engage in negotiations or discussions with, or provide
any information or data to, any Person (other than Parent, any of its affiliates
or representatives and except for information which has been previously publicly
disseminated by the Company) relating to any Takeover Proposal; provided
--------
however, that nothing contained in this Section 5.3 or any other provision
-------
hereof shall prohibit the Company or the Company's Board of Directors from (i)
taking and disclosing to the Company's stockholders a position with respect to
a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act or (ii) making such disclosure to the
Company's stockholders as, the Board of Directors may determine in good faith is
required under applicable law after receipt of a written opinion from outside
legal counsel to the Company that such disclosure is required under applicable
law and that the failure to make such disclosure would likely cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to terms substantially
similar to those contained in the Confidentiality Agreement, dated July 1, 1997
entered into be-
52
tween American Industrial Partners and the Company (the "Confidentiality
---------------
Agreement") and may negotiate and participate in discussions and negotiations
---------
with such Person concerning a Takeover Proposal if (x) such entity or group has
on an unsolicited basis submitted a bona fide written proposal to the Company
relating to any such transaction which the Board of Directors determines in good
faith, after receiving advice from Jefferies & Co. or another nationally
recognized investment banking firm, represents a superior transaction to the
Offer and the Merger and (y) in the opinion of the Board of Directors of the
Company, only after receipt of a written opinion from outside legal counsel to
the Company to such effect, the failure to provide such information or access or
to engage in such discussions or negotiations would likely cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under,
or otherwise violate or subject the Board of Directors to liability under
applicable law (a Takeover Proposal which satisfies clauses (x) and (y) being
referred to herein as a "Superior Proposal"). The Company shall promptly, and
-----------------
in any event within one business day following any determination by the Board of
Directors that a Takeover Proposal is a Superior Proposal, notify Parent of such
determination of the same and prior to providing any such party with any
material non-public information. The Company shall promptly provide to Parent
any material non-public information regarding the Company provided to any other
party which was not previously provided to Parent. At any time after two
business days following notification to Parent of the Company's intent to do so
(which notification shall include the identity of the bidder and the material
terms and conditions of the proposal) and if the Company has otherwise complied
with the terms of this Section 5.3(b), the Board of Directors may terminate this
Agreement pursuant to clause (ii) of Section 8.1(f) and enter into an agreement
with respect to a Superior Proposal, provided that the Company shall,
--------
concurrently with entering into such agreement, pay or cause to be paid to
Parent the Termination Fee (as defined in Section 8.2(b) hereof), plus any
amount payable at the time for reimbursement of expenses pursuant to Section
8.2(b) hereof.
(c) Except as set forth in Sections 5.3(b) and 6.1, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to
53
Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Proxy Statement. As promptly as practicable after the
---------------
consummation of the Offer and if required by the Exchange Act, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders, the
Proxy Statement. The Proxy Statement shall contain the recommendation of the
Board of Directors in favor of the Merger, unless the Board of Directors
determines in good faith, after receipt of a written opinion from outside legal
counsel to the Company to such effect, that inclusion of such recommendation in
the Proxy Statement would likely cause the Board of Directors to violate its
fiduciary duties to the Company's stockholders under, or otherwise violate or
subject the Board of Directors to liability under applicable law.
Section 6.2 Meeting of Stockholders of the Company. At the Special
--------------------------------------
Meeting, if any, the Company shall use its best efforts to solicit from
stockholders of the Company proxies in favor of the Merger and shall take all
other action necessary or, in the reasonable opinion of the Purchaser, advisable
to secure any vote or consent of stockholders required by Delaware Law to effect
the Merger. The Purchaser agrees that it shall vote, or cause to be voted, in
favor of the Merger all Shares directly or indirectly beneficially owned by it.
Section 6.3 Additional Agreements. Subject to the terms and
---------------------
conditions as herein provided, the Company, Parent and Purchaser will each
comply in all material respects with all applicable laws and with all
applicable rules and regulations of any governmental authority to achieve the
satisfaction of the Minimum Condition and all conditions set forth in Annex I
attached hereto and Arti-
54
cle VII hereof, and to consummate and make effective the Merger and the other
transactions contemplated hereby. Each of the parties hereto agrees to use all
reasonable efforts to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings, and to use
all reasonable efforts to take, or cause to be taken, all other actions and to
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the Company, Parent and the
Purchaser shall use all reasonable efforts to take, or cause to be taken, all
such necessary actions.
Section 6.4 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to the Purchaser and the Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence of any event whose occurrence,
or non-occurrence would be likely to cause either (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (B) any
condition set forth in Annex I to be unsatisfied in any material respect at any
time from the date hereof to the date the Purchaser purchases Shares pursuant to
the Offer and (ii) any material failure of the Company, the Purchaser, or
Parent, as the case may be, or any officer, director, employee or agent thereof,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
-------- -------
notice pursuant to this Section 6.4 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 6.5 Access; Confidentiality. (a) From the date hereof to
-----------------------
the Effective Time, upon reasonable notice, the Company shall (and shall cause
each of its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financing sources and other representatives of Parent, access, during
normal business hours during the period prior to the Appointment Date, to all
its properties, books, contracts, commitments and records and, during such
period, the Company shall (and
55
shall cause each of its Subsidiaries to) furnish promptly to the Parent (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Access shall include
the right to conduct such environmental studies and tests as Parent, in its
reasonable discretion, shall deem appropriate. After the Appointment Date, the
Company shall provide Parent and such persons as Parent shall designate with all
such information, at such time as Parent shall request. Unless otherwise
required by law and until the Appointment Date, Parent and Purchaser will hold
any such information which is non-public in confidence in accordance with, and
will otherwise abide by, the provisions of the Confidentiality Agreement. No
investigation pursuant to this Section 6.5(a) shall affect any representation
or warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel,
agents and other representatives shall cooperate with the Purchaser by providing
information about the Company which is necessary for the Purchaser and its
accountants, agents, counsel and other representatives to prepare the Disclosure
Documents and such other documents and other reasonable requests with respect to
such documents. Notwithstanding the penultimate sentence of Section 6.5(a),
the Purchaser may disclose, or cause its representatives to disclose, and at
the request of the Purchaser, the Company shall and shall cause its Subsidiaries
to, disclose information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the transactions
contemplated by this Agreement in the Disclosure Documents and to prospective
financing sources in connection with the Transactions.
Section 6.6 Consents and Approvals. (a) Each of the Company, Parent
----------------------
and the Purchaser will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on it with respect to this
Agreement and the Transactions (which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish
56
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with this Agreement and
the Transactions. Each of the Company, Parent and the Purchaser will, and will
cause its Subsidiaries to, take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, the Purchaser,
the Company or any of their Subsidiaries in connection with the Transactions or
the taking of any action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
Section 6.7 Company's Brokers or Finders. The Company represents, as
----------------------------
to itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the Company
or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for Jefferies & Company, Inc., whose fees
are set forth in the engagement letter attached as Section 6.7 of the Company
Disclosure Schedule.
Section 6.8 Purchaser's Brokers or Finders. Each of the Purchaser
------------------------------
and Parent represents, as to itself and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finder's fee or any other commission or similar fee
from either Purchaser or Parent in connection with any of the transactions
contemplated by this Agreement.
57
Section 6.9 Publicity. The initial press release with respect to
---------
the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions without the prior
consultation of the other party, except as such party believes, after receiving
the advice of outside counsel and after informing all other parties thereto, may
be required by law or by any listing agreement with a national securities
exchange or trading market. Information included in Disclosure Documents shall
not be deemed to constitute public disclosure for purposes of this Agreement.
Section 6.10 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
(a) In the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, addition, suit, proceeding or investigation by or in
the right of the Company or any of its Subsidiaries, in which any of the present
or former officers or directors (the "Indemnified Parties") of the Company or
-------------------
any of its Subsidiaries is, or is threatened to be, made a party by reason of
the fact that he or she is or was, prior to the Effective Time, a director or
officer of the Company or any of its subsidiaries or is or was, prior to the
Effective Time, serving as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise at the
request of the Company or any of its Subsidiaries, whether such claim arises
before or after the Effective Time, the Company shall indemnify and hold
harmless, and after the Effective Time the Surviving Corporation, jointly and
severally, shall indemnify and hold harmless, as and to the full extent
permitted by applicable law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such claim, action, suit proceeding or investigation. In
the event of any such claim, action, suit proceeding or investigation (whether
arising before or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them (which counsel
58
shall be reasonably satisfactory to the Company or the Surviving Corporation),
and the Company, or the Surviving Corporation after the Effective Time, shall
pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received and (ii) the Company and
the Surviving Corporation will use their respective reasonable efforts to assist
in the vigorous defense of any such matter; provided, that neither the Company
nor the Surviving Corporation shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided further that the Surviving Corporation shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict of interest on any significant issue between
the positions of any two or more Indemnified Parties, or any similar impediment
to the joint representation of multiple Indemnified Parties by a single law
firm.
(b) Until the Effective Time the Company shall keep in effect Section
7.7 of its By-Laws, and thereafter for a period of six years the Surviving
Corporation shall keep in effect in its By-Laws a provision which provides or
indemnification of the Indemnified Parties to the extent permitted by Delaware
Law.
(c) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
-------------
period of not less than six years after the Effective Time; provided, that the
--------
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or
officers; provided, further, if the existing D&O Insurance expires, is
-------- -------
terminated or cancelled during such period, Parent or the Surviving Corporation
will use all reason able efforts to obtain substantially similar D&O Insurance;
provided, further, however, that in no event shall Parent be required to pay
aggregate premiums for insurance under this Section 6.10(c) in excess of 150%
of the
59
average of the aggregate premiums paid by the Company in 1995, 1996 and 1997
(through the date hereof) on an annualized basis for such purpose (the "Average
-------
Premium"), which true and correct amounts are set forth in Section 6.10(c) of
-------
the Company Disclosure Schedule; and provided, further, that if the Parent or
the Surviving Corporation is unable to obtain the amount of insurance required
by this Section 6.10(c) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of 150% of the Average Premium.
Section 6.11 Purchaser Compliance. Parent shall cause the Purchaser
--------------------
to comply with all of its obligations under or related to this Agreement.
Section 6.12 Reasonable Best Efforts. (a) Prior to the Closing, upon
-----------------------
the terms and subject to the conditions of this Agreement, the Purchaser and the
Company, agree to use their respective reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under any applicable laws to consummate and make effective
the transactions contemplated by this Agreement as promptly as practicable
including, but not limited to (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or waivers by
any third party or Governmental Entity, (ii) the preparation of any Disclosure
Documents requested by the Purchaser and (iii) the satisfaction of the other
parties' conditions to Closing. In addition, no party hereto shall take any
action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult with the
other parties hereto with respect to, provide any necessary information with
respect to and provide the other (or its counsel) copies of, all filings made by
such party with any Governmental Authority or any other information supplied by
such party to a Governmental Entity in connection with this Agree-
60
ment and the transactions contemplated by this Agreement. Each party hereto
shall promptly inform the other of any communication from any Governmental
Entity regarding any of the transactions contemplated by this Agreement. If any
party hereto or affiliate thereof receives a request for additional information
or documentary material from any such Government Entity with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. To the extent that transfers of permits or Environmental
Permits are required as a result of execution of this Agreement or consummation
of the transactions contemplated hereby, the Company shall use its best efforts
to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require the Purchaser to defend against any litigation brought by any
Governmental Entity seeking to prevent the consummation of the transactions
contemplated hereby.
(d) The Company agrees to use its reasonable best efforts to assist
the Purchaser in connection with obtaining any financing in connection with the
consummation of the Transactions, including the Debt Financing. Without
limiting the generality of the foregoing, the Company shall (i) promptly prepare
all reasonably requested financial statements required to be included in the
Disclosure Documents and (ii) take all action reasonably requested by Parent
that is necessary or appropriate to effect the satisfaction and discharge of the
indenture, dated December 14, 1994 (the "Secured Notes Indenture"), between
-----------------------
Bucyrus-Erie Company (predecessor to the Company) and ▇▇▇▇▇▇ Trust and Savings
Bank, as Trustee (the "Secured Notes Indenture Trustee"), relating to the
-------------------------------
Company's 10.5% Secured Notes due December 14, 1999 (the "Secured Notes")
-------------
pursuant to Sections 401(1)(B)(iii), 401(2) and 401(3) of the Secured Notes
Indenture and to cause the filing of UCC-3 termination statements covering the
collateral securing the Secured Notes, in each case, effective upon the purchase
of any Shares pursuant to the Offer.
Section 6.13 Rights Plan. In the event that at anytime following the
-----------
date hereof, the Company adopts
61
a stockholder rights plan, the Company shall provide an exception with respect
to definitions of "acquiring person" and/or "triggering event" and terms of
similar import contained within such plan with respect to any shares of Common
Stock that may be acquired pursuant to the exercise of the JNL Option, and the
subsequent disposition of any such shares to a third party (a "Subsequent
----------
Disposition"), such that any rights that may be issued under such plan are not
-----------
modified or changed as a result of any such acquisition or disposition of shares
of Common Stock.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) Stockholder Approval. The Merger and this Agreement shall have
--------------------
been approved and adopted by the requisite vote of the holders of the Shares, if
required by Delaware Law;
(b) Statutes; Court Orders. No statute, rule or regulation shall
----------------------
have been enacted or promulgated by any governmental authority which prohibits
the consummation of the Merger; and there shall be no order or in junction of a
court of competent jurisdiction in effect precluding consummation of the Merger;
and
(c) Purchase of Shares in Offer. The Purchaser shall have made, or
---------------------------
caused to be made, the Offer and shall have purchased, or caused to be
purchased, the Shares pursuant to the Offer; provided, that this condition
--------
shall be deemed to have been satisfied with respect to the obligation of Parent
and the Purchaser to effect the Merger if the Purchaser fails to accept for
payment or pay for Shares pursuant to the Offer in violation of the terms of the
Offer or of this Agreement; and
62
(d) HSR Approval. The applicable waiting period under the HSR Act
------------
shall have expired or been terminated.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval:
(a) By mutual written consent of the Parent and the Board of
Directors of the Company; or
(b) By Parent if the Offer shall have expired or been terminated
without any Shares being purchased thereunder by the Purchaser as a result of
the occurrence of any of the events set forth in Annex I; or
(c) By either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement; or
(d) By Parent if, without any material breach by Parent or the
Purchaser of its obligations under this Agreement, the purchase of Shares
pursuant to the Offer shall not have occurred on or before February 20, 1998; or
(e) By the Company if, without any material breach by the Company of
its obligations under this Agreement, the purchase of Shares pursuant to the
Offer shall not have occurred on or before February 20, 1998; or
(f) By the Company (i) if there shall be a material breach of any of
Parent or the Purchaser's representations, warranties or covenants hereunder,
which breach cannot be or has not been cured within thirty days
63
of the receipt of written notice thereof or (ii) to allow the Company to enter
into an agreement in accordance with Section 5.3(b) with respect to a Superior
Proposal; provided that it has complied with all provisions thereof, including
--------
the notice provision therein, and that it makes simultaneous payment of the
Termination Fee, plus any amounts then due as a reimbursement of expenses; or
(g) By Parent, if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached in any material respect (without
reference to any materiality qualification contained therein) any
representation, warranty or covenant or other agreement contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Annex I hereto and (ii) cannot be or has not
been cured within thirty days of the receipt of written notice thereof; or
(h) By Parent, at any time prior to the purchase of the Shares
pursuant to the Offer, if (i) the Board of Directors of the Company shall
withdraw, modify, or change its recommendation or approval in respect of this
Agreement or the Offer in a manner adverse to the Purchaser, (ii) the Board of
Directors of the Company shall have recommended any proposal other than by
Parent or the Purchaser in respect of a Takeover Proposal, (iii) the Company
shall have exercised a right with respect to Takeover Proposal referenced in
Section 5.3(b) and shall, directly or through its representatives, continue
discussions with any third party concerning a Takeover Proposal for more than
ten business days after the date of receipt of such Takeover Proposal, (iv) a
Takeover Proposal that is publicly disclosed shall have been commenced, publicly
proposed or communicated to the Company which contains a proposal as to price
(without regard to whether such proposal specifies a specific price or a range
of potential prices) and the Company shall not have rejected such proposal
within ten business days of its receipt or, if sooner, the date its existence
first becomes publicly disclosed, or (v) any Person or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Parent or the Purchaser or
any of their respective subsidiaries or affiliates shall have become the
beneficial owner of more than 15% of the outstanding Shares (either on a primary
or a fully diluted basis); provided, however, that this provision shall not
-------- -------
apply to any Person that owns more
64
than 15% of the outstanding Shares on the date hereof; provided, further, that
-------- -------
such Person does not further increase its beneficial Ownership beyond the number
of Shares such Person beneficially owns on the date hereof.
Section 8.2 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement as provided in
Section 8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forth with become null and void
and there shall be no liability on the part of Parent, the Purchaser or the
Company, except (i) as set forth in Sections 6.5(a) and 9.3 hereof and (ii)
nothing herein shall relieve any party from liability for any breach of this
Agreement; provided, however, the obligation of the Company under Section 6.13
-------- -------
shall survive the termination of this Agreement but only until immediately after
the occurrence of one (1) Subsequent Disposition.
(b) If (i) Parent shall have terminated this Agreement pursuant to
Section 8.1(h), (ii) Parent shall have terminated this Agreement pursuant to
Section 8.1(g) and following the date hereof but prior to such termination
there shall have been a Takeover Proposal Interest or (iii) the Company shall
have terminated this Agreement pursuant to Section 8.1(f)(ii), then in any such
case the Company shall pay simultaneously with such termination if pursuant to
Section 8.1(f)(ii) and promptly, but in no event later than two business days
after the date of such termination or event if pursuant to Section 8.1(h) or
8.1(g), to Parent a termination fee (the "Termination Fee") of $7,000,000 plus
---------------
an amount, not in excess of $1,500,000, equal to the Purchaser's actual and
reasonably documented out-of-pocket expenses incurred by Parent and the
Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the transactions contemplated hereby, which amount shall be pay
able by wire transfer to such account as Parent may designate in writing to the
Company. Upon payment of the Termination Fee the Company shall have no further
obligation to Parent or the Purchaser, under this Agreement or otherwise, by
reason of the termination of this Agreement or, if this Agreement is terminated
by Parent pursuant to Section 8.1, by reason of any breach of this Agreement or
65
any representation, warranty or covenant herein by the Company.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable law,
--------------------------
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors or equivalent governing bodies, at any
time prior to the Effective Time with respect to any of the terms contained
herein; provided however, that after the approval of this Agreement by the
-------- -------
shareholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
Section 9.2 Non-survival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 9.3 Expenses. Except as expressly set forth in Section
--------
8.2(b), all fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees, costs and expenses.
Section 9.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service, such as Federal Express, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
66
(a) if to Parent or the Purchaser, to:
c/o American Industrial Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to the Company, to:
Bucyrus International Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 500
South Milwaukee, Wisconsin 53172
Attention: ▇.▇. ▇▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ S.C.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.5 Interpretation. When a reference is made in this
--------------
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation."
67
As used in this Agreement, the term "affiliates" shall have the meaning set
forth in Rule 12b-2 of the Exchange Act. As used in this Agreement, the term
"Person" shall mean a natural person, partnership, corporation, limited
-------
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or
organization.
Section 9.6 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof (including the
letter of intent, dated July 30, 1997, between American Industrial Partners
Capital Fund II, L.P.), and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
Section 9.8 Severability. Any term or provision of this Agreement
------------
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court asking such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
68
Section 9.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 9.10 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. 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.
69
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY,
LLC
By__________________________
Name:
Title:
BUCYRUS ACQUISITION CORP.
By______________________________
Name:
Title:
BUCYRUS INTERNATIONAL, INC.
By______________________________
Name:
Title:
70
ANNEX I
Certain Conditions of the Offer. Notwithstanding any other
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provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as to
any Shares not then paid for, if (i) Parent shall have failed to receive, and
have immediately available to it, the Debt Financing in the full amounts and on
the terms and in accordance with the conditions set forth in the Commitment
Letters (the "Financing Condition"), (ii) any applicable waiting period under
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the HSR Act has not expired or terminated, (iii) the Minimum Condition has not
been satisfied, or (iv) at any time on or after the date of this Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events shall have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
the Purchaser or their respective Subsidiaries and affiliates to dispose of or
hold separate any material portion of the business or assets of the Company or
Parent and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the
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Company, Parent or the Purchaser any damages that are material in relation to
the Company and its Subsidiaries taken as a whole, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's shareholders, or (v) which otherwise is reasonably likely to have a
Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under HSR Act, that is reason ably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ Stock Market for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any United States governmental authority on the
extension of credit generally by banks or other financial institutions, or (v)
a change in general financial, bank or capital market conditions which
materially and adversely affects the ability of financial institutions in the
United States to extend credit or syndicate loans or (vi) in the case of any of
the foregoing existing at the time
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of the commencement of the Offer, a material acceleration or worsening thereof;
(d) since December 31, 1996, there shall have occurred any change (or
any development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any change) that constitutes a Company Material Adverse
Effect;
(e) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the Company
shall have entered into any agreement with respect to any Superior Proposal in
accordance with Section 5.3(b) of this Agreement;
(f) the representations and warranties of the Company set forth in
this Agreement shall not be true and correct, in any material respect (without
reference to any material qualification contained therein) in each case (i) as
of the date referred to in any representation or warranty which addresses
matters as of a particular date, or (ii) as to all other representations and
warranties, as of the date of this Agreement and as of the scheduled expiration
of the Offer (provided that for purposes of this paragraph (f), other than the
representation and warranty of the Company set forth in Section 3.26 of this
Agreement, the representations and warranties of the Company set forth in this
Agreement shall not be deemed to have been made with respect to the Business of
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (as the term "Business" is defined in the ▇▇▇▇▇▇ Agreement)
or any of the assets acquired or liabilities assumed thereunder;
(g) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under this Agreement;
(h) the Purchaser shall have failed to receive a certificate executed
by the President or a Vice President of the Company, dated as of the scheduled
expiration of the Offer, to the effect that the conditions set forth in
paragraphs (f) and (g) of this Annex I have not occurred;
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(i) all consents, permits and approvals of Governmental Authorities
and other Persons listed in Section 3.4 of the Company Disclosure Schedule and
identified with an asterisk shall not have been obtained with no material
adverse conditions attached and no material expense imposed on the Company or
any of its Subsidiaries;
(j) the transactions contemplated under the ▇▇▇▇▇▇ Agreement shall
not have been consummated pursuant to and substantially in accordance with the
terms set forth in the ▇▇▇▇▇▇ Agreement;
(k) there shall have occurred any change (or any development that,
insofar as reasonably can be foreseen, is or could reasonably be expected to
result in any change) that is materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), results of operations, assets, liabilities or prospects of the
Business of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (as the term "Business" is defined in the ▇▇▇▇▇▇
Agreement);
(l) the Secured Notes Indenture shall not have been fully satisfied
and discharged pursuant to the terms thereof, and all collateral securing the
Secured Notes shall not have been released (unless the Secured Notes Indenture
Trustee has delivered to the Company a written agreement providing for the
release of such collateral), subject only to the receipt by the Secured Notes
Indenture Trustee of funds (pursuant to the Debt Financing) sufficient to
effect the redemption of the Secured Notes;
(m) JNL shall not have waived the right to at least 30 days prior
notice of redemption provided by Section 1105 of the Secured Notes Indenture,
pursuant to Section 106 of the Secured Notes Indenture (unless JNL shall have
entered into a binding agreement with the Company to sell all of the Secured
Notes held by JNL to the Company, at no more than par, at a time designated by
the Company and acceptable to the Purchaser);
(n) any Person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent or the Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act)
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of more than 15% of the outstanding Shares (either on a primary or a fully
diluted basis); provided, however, that this provision shall not apply to any
Person that beneficially owns more than 15% of the outstanding Shares on the
date hereof; provided, further, that such Person does not further increase its
beneficial ownership beyond the number of Shares such Person beneficially owns
on the date hereof; or
(o) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser) and may be waived by Parent or the Purchaser in whole
or in part at any time and from time to time in the sole discretion of Parent or
the Purchaser, subject in each case to the terms of this Agreement. The failure
by Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
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