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AGREEMENT AND PLAN OF MERGER
by and among
TEMPLE-INLAND INC.,
TEMPLE-INLAND ACQUISITION CORPORATION
and
▇▇▇▇▇▇▇ CONTAINER CORPORATION
Dated as of September 27, 2001
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER............................................................3
Section 1.1 The Offer.........................................3
Section 1.2 The Notes Tender Offers...........................4
Section 1.3 Company Action....................................7
Section 1.4 Directors.........................................9
ARTICLE II
THE MERGER..........................................................11
Section 2.1 The Merger.......................................11
Section 2.2 Closing..........................................11
Section 2.3 Effective Time...................................11
Section 2.4 Effects of the Merger............................11
Section 2.5 Certificate of Incorporation and By-Laws.........12
Section 2.6 Directors........................................12
Section 2.7 Officers.........................................12
ARTICLE III
CONVERSION OF SECURITIES............................................12
Section 3.1 Effect on Capital Stock..........................12
Section 3.2 Exchange of Certificates.........................13
Section 3.3 Dissenting Shares................................15
Section 3.4 Company Options..................................15
Section 3.5 Company Warrants.................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................17
Section 4.1 Organization, Standing and Corporate Power.......17
Section 4.2 Subsidiaries.....................................18
Section 4.3 Capital Structure................................18
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Section 4.4 Authority; Noncontravention; Filings and
Consents.........................................19
Section 4.5 Vote Required....................................21
Section 4.6 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities..........................21
Section 4.7 Information Supplied.............................22
Section 4.8 Books and Records................................23
Section 4.9 Inventory........................................23
Section 4.10 Absence of Certain Changes or Events.............23
Section 4.11 Litigation.......................................24
Section 4.12 Employee Benefit Plans; ERISA....................24
Section 4.13 Taxes............................................30
Section 4.14 State Takeover Statutes; Rights Agreement........34
Section 4.15 Brokers; Schedule of Fees and Expenses...........34
Section 4.16 Permits; Compliance with Laws....................35
Section 4.17 Environmental Matters............................35
Section 4.18 Contracts; Debt Instruments......................37
Section 4.19 Title to Properties..............................39
Section 4.20 Labor and Employment Difficulties................39
Section 4.21 Opinions of Financial Advisors...................40
Section 4.22 Interests of Officers and Directors..............40
Section 4.23 Intellectual Property............................40
Section 4.24 Insurance........................................43
Section 4.25 Customers and Suppliers..........................43
Section 4.26 Regulation as a Utility..........................43
Section 4.27 Qualifying Facility..............................44
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY...............................................44
Section 5.1 Organization, Standing and Corporate Power.......44
Section 5.2 Authority; Noncontravention; Filings and
Consents.........................................45
Section 5.3 Information Supplied.............................46
Section 5.4 Brokers..........................................47
Section 5.5 No Prior Activities; Assets of Merger
Subsidiary.......................................47
Section 5.6 Sufficient Funds.................................47
Section 5.7 No Vote Required.................................47
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ARTICLE VI
COVENANTS OF THE COMPANY............................................47
Section 6.1 Conduct of Business..............................47
Section 6.2 State Takeover Statutes..........................51
Section 6.3 Access to Information............................52
Section 6.4 No Solicitation by the Company...................52
Section 6.5 Litigation.......................................55
Section 6.6 Rights Agreement.................................55
Section 6.7 Certain Obligations of the Company...............55
ARTICLE VII
COVENANTS OF PARENT AND MERGER SUBSIDIARY...........................55
Section 7.1 Indemnification..................................55
Section 7.2 Obligations of Merger Subsidiary.................56
Section 7.3 Employees........................................56
ARTICLE VIII
ADDITIONAL AGREEMENTS...............................................59
Section 8.1 Stockholder Approval; Preparation of Company
Proxy Statement..................................59
Section 8.2 HSR Act Filings; Reasonable Efforts;
Notification.....................................60
Section 8.3 Public Announcements.............................63
Section 8.4 Confidentiality..................................63
ARTICLE IX
CONDITIONS PRECEDENT................................................63
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger.......................................63
ARTICLE X
TERMINATION.........................................................64
Section 10.1 Termination......................................64
Section 10.2 Effect of Termination............................66
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ARTICLE XI
GENERAL PROVISIONS..................................................66
Section 11.1 Fees and Expenses................................66
Section 11.2 Amendment and Modification.......................67
Section 11.3 Extension; Waiver................................67
Section 11.4 Nonsurvival of Representations and Warranties....67
Section 11.5 Notices..........................................68
Section 11.6 Interpretation...................................69
Section 11.7 Counterparts.....................................69
Section 11.8 Entire Agreement; No Third-Party Beneficiaries...69
Section 11.9 Governing Law....................................69
Section 11.10 Assignment.......................................69
Section 11.11 Enforcement......................................70
Section 11.12 Severability.....................................70
Annex I ..................................................................I-1
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LIST OF DEFINED TERMS
9-3/4% Senior Notes..........................................................1
9-3/4% Senior Notes Tender Offer.............................................1
9-3/8% Senior Notes..........................................................1
9-3/8% Senior Notes Tender Offer.............................................1
Acquisition Proposal........................................................54
Agreement....................................................................1
Antitrust Laws..............................................................61
Appointment Date............................................................47
Balance Sheet...............................................................23
Benefit Plans...............................................................25
Certificate of Merger.......................................................11
Certificates................................................................13
Closing.....................................................................11
Closing Date................................................................11
Code........................................................................25
Company......................................................................1
Company Board................................................................2
Company Class B Stock.......................................................18
Company Common Stock.........................................................1
Company Disclosure Schedule.................................................17
Company Intellectual Property...............................................40
Company Material Adverse Effect.............................................17
Company Preferred Stock.....................................................18
Company Proxy Statement.....................................................21
Company SEC Documents.......................................................21
Company Stockholder Vote....................................................19
Company Stockholders Meeting................................................59
Company Warrant.............................................................16
Confidentiality Agreement...................................................63
Consents....................................................................20
D&O Insurance...............................................................56
DGCL.........................................................................2
Effective Time..............................................................11
Environmental Claim.........................................................36
Environmental Law ..........................................................36
ERISA.......................................................................25
ERISA Affiliate.............................................................24
ERISA Plans.................................................................25
Exchange Act.................................................................4
Exchange Fund...............................................................13
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Fully Diluted Shares.........................................................3
GAAP........................................................................22
Governmental Entity.........................................................20
Hazardous Substance.........................................................36
HSR Act.....................................................................21
Indemnified Parties.........................................................55
Indentures...................................................................5
Independent Directors.......................................................10
License Agreements..........................................................41
Liens.......................................................................18
Merger......................................................................11
Merger Consideration........................................................13
Merger Subsidiary............................................................1
Minimum Condition............................................................3
Minimum Note Condition.......................................................5
Noteholders..................................................................6
Notes........................................................................1
Notes Offer to Purchase......................................................5
Notes Tender Offers..........................................................1
Notes Tender Offers Documents................................................6
Offer........................................................................1
Offer Documents..............................................................4
Option Plans................................................................16
Order.......................................................................61
Parent.......................................................................1
Parent Material Adverse Effect..............................................44
Paying Agent................................................................13
PBGC........................................................................26
Permits.....................................................................35
Proposed Amendments..........................................................6
Recommendations..............................................................7
Rights......................................................................18
Rights Agreement............................................................18
Schedule 14D-9...............................................................8
SEC..........................................................................4
Securities Act..............................................................21
Senior Notes.................................................................1
Senior Subordinated Notes....................................................1
Senior Subordinated Notes Tender Offer.......................................1
Shares.......................................................................1
Software....................................................................40
Stock Option Agreement.......................................................2
▇▇▇▇▇▇▇▇▇▇▇▇.................................................................▇
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Stockholders Agreement.......................................................2
Subsidiary..................................................................17
Superior Proposal...........................................................55
Supplemental Indentures......................................................6
Surviving Corporation.......................................................11
Tax Returns.................................................................30
Termination Fee.............................................................66
Trade Secrets...............................................................40
Trademarks..................................................................40
Trustee.....................................................................16
WARN Act....................................................................40
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of September 27, 2001, is by and among Temple-Inland Inc., a
Delaware
corporation ("Parent"), Temple-Inland Acquisition Corporation, a
Delaware
corporation and an indirect, wholly-owned subsidiary of Parent ("Merger
Subsidiary"), and ▇▇▇▇▇▇▇ Container Corporation, a
Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, the Board of Directors of each of Parent, Merger
Subsidiary and the Company have unanimously approved the acquisition of the
Company by Parent and Merger Subsidiary;
WHEREAS, in furtherance of such acquisition, it is proposed
that Merger Subsidiary shall make a cash tender offer (the "Offer") to acquire
all of the issued and outstanding shares of Class A Common Stock, par value
$.0001 per share (the "Company Common Stock"), of the Company (the "Shares"),
including the associated Rights (defined below in Section 4.3), in accordance
with the terms provided in this Agreement;
WHEREAS, in furtherance of such acquisition, it is proposed
that simultaneously with the commencement of the Offer, Parent or its designee
shall make (i) a tender offer (the "9-3/8% Senior Notes Tender Offer") for all
of the $200 million aggregate principal amount at maturity of the Company's
outstanding 9-3/8% Senior Notes due 2007 (the "9-3/8% Senior Notes"); (ii) a
tender offer (the "9-3/4% Senior Notes Tender Offer") for all of the $225
million aggregate principal amount at maturity of the Company's outstanding
9-3/4% Senior Notes due 2007 (the "9-3/4% Senior Notes," and, together with the
9-3/8% Senior Notes, the "Senior Notes"), and (iii) a tender offer (the "Senior
Subordinated Notes Tender Offer," and, together with the 9-3/8% Senior Notes
Tender Offer and the 9-3/4% Senior Notes Tender Offer, the "Notes Tender
Offers") for all of the $250 million aggregate principal amount at maturity of
the Company's outstanding 9-7/8% Senior Subordinated Notes due 2008 (the "Senior
Subordinated Notes," and, together with the Senior Notes, the "Notes");
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WHEREAS, consummation of the Offer is expressly conditioned
upon consummation of each of the Notes Tender Offers;
WHEREAS, in furtherance of such acquisition, the Board of each
of Parent, Merger Subsidiary and the Company have approved this Agreement and
the Merger (as defined in Section 2.1) following the Offer in accordance with
the General Corporation Law of the State of
Delaware (the "DGCL") and upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Company
Board") has determined that the consideration to be paid for each Share in
connection with the Offer and the Merger is fair to the holders of such Shares
and has resolved to recommend that the holders of such Shares accept the Offer
and approve this Agreement and each of the transactions contemplated by this
Agreement upon the terms and subject to the conditions set forth herein;
WHEREAS, simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to the willingness of Parent
and Merger Subsidiary to enter into this Agreement, Parent and certain
stockholders of the Company (collectively, the "Stockholders") are entering into
an agreement, dated as of the date hereof (the "Stockholders Agreement")
pursuant to which the Stockholders will agree to tender all of their Shares in
the Offer and to take certain other actions in furtherance of the transactions
contemplated by this Agreement upon the terms and subject to the conditions set
forth in the Stockholders Agreement; and
WHEREAS, simultaneously with the execution and delivery of
this Agreement and as a condition and inducement to the willingness of Parent
and Merger Subsidiary to enter into this Agreement, the Company, is entering
into a Stock Option Agreement, dated as of the date hereof (the "Stock Option
Agreement"), with Parent and Merger Subsidiary pursuant to which the Company is
granting to Merger Subsidiary an option to purchase Shares upon the terms and
subject to the conditions set forth in the Stock Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
and intending to be legally bound hereby, Parent, Merger Subsidiary and the
Company hereby agree as follows:
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ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that (i) this Agreement
shall not have been terminated in accordance with Section 10.1 and (ii) none of
the events set forth in Annex I hereto shall have occurred or be existing and
not have been waived, Merger Subsidiary shall, not later than five business days
from the first public announcement of the execution of this Agreement, commence
the Offer. Each Share (including the associated Right) accepted by Merger
Subsidiary in accordance with the Offer shall be purchased for $1.80, net to the
seller in cash, without interest. The Offer shall be subject to the conditions
(i) that there shall be validly tendered in accordance with the terms of the
Offer prior to the expiration date of the Offer and not withdrawn a number of
Shares which, together with the Shares then owned by Parent and Merger
Subsidiary, represents at least two-thirds of the total number of outstanding
Shares, assuming the exercise of all outstanding warrants, options, rights and
convertible securities (if any) (other than the Rights, Parent's option to
acquire Company Common Stock pursuant to the Stock Option Agreement, to the
extent not then exercised and options cancelled pursuant to Section 3.4(a)
hereof) and the issuance of all Shares that the Company is obligated to issue
pursuant thereto (such total number of outstanding Shares being hereinafter
referred to as the "Fully Diluted Shares") (the "Minimum Stock Condition"), (ii)
that Parent shall have simultaneously accepted for payment Notes in each of the
Notes Tender Offers, and (iii) that the other conditions set forth in Annex I
hereto shall have been satisfied or waived. Parent and Merger Subsidiary
expressly reserve the right to waive the conditions to the Offer and to make any
change in the terms or conditions of the Offer; provided that, without the
written consent of the Company, no change may be made which changes the form or
amount of consideration to be paid (other than by adding consideration), imposes
conditions to the Offer in addition to those set forth in Annex I or changes or
waives the Minimum Stock Condition or amends any other term of the Offer in a
manner materially adverse to the holders of Shares. If on the initial scheduled
expiration date of the Offer, which shall be no earlier than 20 business days
after the date the Offer is commenced, all conditions to the Offer shall not
have been satisfied or waived, Merger Subsidiary may, from time to time, in its
sole discretion, extend the expiration date; provided that without the prior
written consent of the Company, Merger Subsidiary may not extend the Offer
beyond December 28, 2001 (except that Parent may extend the expiration date of
the Offer after December 28, 2001 as required to comply with any rule,
regulation or interpretation of the SEC). Subject to the terms and conditions
of the Offer, Parent shall
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cause Merger Subsidiary to accept for payment and pay for, as promptly as
practicable after the expiration of the Offer, all Shares validly tendered and
not withdrawn pursuant to the Offer. In addition, Merger Subsidiary may extend
the Offer after the acceptance of Shares thereunder for a further period of time
by means of a subsequent offering period under Rule 14d-11 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of not
more than 20 business days to meet the objective (which is not a condition to
the Offer) that there be validly tendered, in accordance with the terms of the
Offer, prior to the expiration date of the Offer (as so extended) and not
withdrawn a number of Shares, which together with Shares then owned by Parent
and Merger Subsidiary, represents at least 90% of the Fully Diluted Shares.
(b) As soon as practicable after the date of this Agreement,
and not later than five business days from the first public announcement of the
execution of this Agreement, Parent shall, and Parent shall cause Merger
Subsidiary to, file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto and any other filings pursuant to which the Offer will be
made, the "Offer Documents"). Parent, Merger Subsidiary and the Company each
agree promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect. Parent and Merger Subsidiary agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC. In addition, Parent and
Merger Subsidiary agree to provide the Company and its counsel with any
comments, whether written or oral, that Parent or Merger Subsidiary or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments or other
communications.
Section 1.2 The Notes Tender Offers. (a) Provided that this
Agreement shall not have been terminated in accordance with Section 10.1 and
none of the events or circumstances set forth in Annex I hereto shall have
occurred and be existing and not have been waived, Parent agrees that it or its
designee will commence the Notes Tender Offers as promptly as reasonably
practicable after the date hereof, but in no event later than five business days
after the first public announcement of the execution hereof. The aggregate
consideration payable to each holder of
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Notes pursuant to the Notes Tender Offers shall be an amount in cash set forth
in the Offer to Purchase and Consent Solicitation Statement made by Parent in
connection with the Notes Tender Offers attached as Exhibit A hereto as amended
from time to time (the "Notes Offer to Purchase"). In connection with the Notes
Tender Offers, Parent intends to solicit consents to amend, eliminate or waive
certain sections of the Indenture relating to the 9-3/8% Senior Notes, dated as
of February 23, 1998 among the Company, the guarantors party thereto and State
Street Bank and Trust Company, as trustee, the Indenture relating to the 9-3/4%
Senior Notes, dated as of June 12, 1997 among the Company, the guarantors party
thereto and Fleet National Bank, as trustee, and the Indenture relating to the
Senior Subordinated Notes, dated as of February 23, 1998 among the Company, the
guarantors party thereto and Chase Bank of Texas, National Association, as
trustee (collectively, the "Indentures"), as set forth in the Notes Offer to
Purchase. Parent's obligation to accept for payment and pay for the Notes and
related consents tendered pursuant to the Notes Tender Offers shall be subject
to the conditions that (i) the aggregate principal amount of each series of
Notes validly tendered and not withdrawn prior to the expiration of the Notes
Tender Offers, combined with the Notes already owned by Parent, Merger
Subsidiary and their affiliates, constitutes at least 90% of the aggregate
principal amount of each of the 9-3/8% Senior Notes, the 9-3/4% Senior Notes and
the Senior Subordinated Notes outstanding at the expiration of the Notes Tender
Offer with respect to each of such series of Notes (the "Minimum Note
Condition"), (ii) Parent receives consents from at least a majority of the
outstanding principal amount of each series of the Notes, and (iii) the other
conditions set forth in Annex I hereto shall have been satisfied or waived
(including, without limitation, the Minimum Stock Condition). Parent expressly
reserves the right to waive any such condition (including without limitation the
Minimum Note Condition), to increase the price payable for each Note and related
consent tendered in the Notes Tender Offers, and to make any other changes in
the terms and conditions of the Notes Tender Offers; provided, however, that
Parent agrees that no change may be made without the consent of the Company
which decreases the price payable for each Note and related consent tendered in
the Notes Tender Offers, which increases the Minimum Note Condition, which
eliminates the Minimum Stock Condition, which amends or eliminates any section
of the Indentures, that, by the terms thereof, requires the approval of the
holders of 100% of the outstanding principal amount of the Notes, which
otherwise modifies or amends the conditions to the Notes Tender Offers or any
other term of the Notes Tender Offers in a manner that is materially adverse to
the tendering holders of the Notes, which imposes conditions to the Notes Tender
Offers in addition to those set forth in Annex I hereto, or which extends the
expiration date of the Notes Tender Offers beyond December 28, 2001 (except that
Parent may extend the expiration date of the
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Notes Tender Offers after December 28, 2001 as required to comply with any rule,
regulation or interpretation of the SEC or to coincide with the termination date
of the Offer); provided, however, that Parent expressly reserves the right, in
its sole discretion, to reduce the minimum percentage of any series of Notes to
be purchased in the Notes Tender Offers. The Notes Tender Offers shall provide
that any tender of Notes under the Notes Tender Offers shall also constitute a
consent to the amendments to the Indentures. Subject to the terms and
conditions of the Notes Tender Offers (including, without limitation, the
Minimum Note Condition), Parent agrees to accept for payment and to pay for, as
promptly as practicable after expiration of the Notes Tender Offers, all Notes
and related consents validly tendered and not withdrawn.
(b) Parent agrees to disseminate to the record holders of the
Notes, and to the extent disclosed to Parent by the Company, the beneficial
owners of the Notes (collectively, the "Noteholders"), the Notes Tender Offers
pursuant to the terms of the Notes Offer to Purchase, together with related
letters of transmittal and similar ancillary agreements (such documents,
together with all supplements and amendments thereto, being referred to herein
collectively as the "Notes Tender Offers Documents"), which shall have been
provided to the Company and its counsel a reasonable time prior to dissemination
to holders of the Notes and to which the Company shall not have reasonably
objected. Parent and the Company agree to correct promptly any information
provided by any of them for use in the Notes Tender Offers Documents which shall
have become false or misleading, and Parent further agrees to take all steps
necessary to cause the Notes Tender Offers Documents as so corrected to be
disseminated to holders of Notes, in each case as and to the extent required by
applicable Federal securities laws.
(c) At such time as Parent receives Consents from at least a
majority of each series of the outstanding principal amount of the Notes, the
Company agrees to execute, and to cause the guarantors party to the Indentures
to execute, and will use all reasonable efforts to cause the trustees under the
Indentures to execute, supplemental indentures (the "Supplemental Indentures")
in order to give effect to the amendments of the Indentures contemplated in the
Notes Tender Offers Documents; provided, however, that notwithstanding the fact
that the Supplemental Indentures will become effective upon such execution, the
proposed amendments set forth therein (the "Proposed Amendments") will not
become operative unless and until the Minimum Note Condition is satisfied or
waived and all other conditions to the Notes Tender Offers set forth on Annex I
have been satisfied or waived by Parent and Parent accepts all Notes (and
related Consents) validly tendered for purchase and
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payment pursuant to the Notes Tender Offers. In such event, the parties hereto
agree that the Proposed Amendments will be deemed operative as of immediately
prior to such acceptance for payment, and Parent will thereafter be obligated to
make all payments for the Notes (and related Consents) so tendered.
(d) The Company agrees to promptly furnish Parent with mailing
labels containing the names and addresses of all record holders of Notes and
security position listings of the Notes held in depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of Noteholders. The
Company agrees to furnish Parent with such additional information, including,
without limitation, updated listings and computer files of Noteholders, mailing
labels and security position listings, and such other assistance as Parent or
its agents may reasonably request. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Notes Tender
Offers Documents and any other documents necessary to consummate the
transactions contemplated thereby, Parent shall hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Notes Tender Offers and, if this
Agreement shall be terminated in accordance with Section 10.1, shall deliver to
or cause to be delivered to the Company all copies of such information, labels,
listings and files then in its possession or in the possession of its agents or
representatives.
Section 1.3 Company Action. (a) The Company hereby approves of
and consents to the Offer and the Notes Tender Offers and represents that the
Company Board has unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are
advisable and are fair to and in the best interest of the Company's
stockholders, (ii) approved and adopted this Agreement, including the Offer, the
Merger, the Stock Option Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby, which approval constitutes
approval under Section 203 of the DGCL such that the Offer, the Merger, this
Agreement, the Stock Option Agreement and the Stockholders Agreement and the
other transactions contemplated hereby and thereby are not and shall not be
subject to any restriction of Section 203 of the DGCL, and (iii) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares to Merger Subsidiary thereunder and approve and adopt this Agreement and
the Merger (the recommendations referred to in this clause (iii) are
collectively referred to in this Agreement as the "Recommendations"). The
Company further represents that Deutsche Banc Alex. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Inc.
have rendered to the Company Board their opinions that the consideration to be
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received by the Company's stockholders pursuant to this Agreement is fair to
such stockholders from a financial point of view. The Company has been advised
that all of its directors and executive officers presently intend to tender
their Shares pursuant to the Offer.
(b) As soon as practicable on the day that the Offer is
commenced, the Company will file with the SEC and disseminate to holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto, the "Schedule 14D-9") which shall
contain, except as provided in Section 6.4, the Recommendations. At the time the
Offer Documents are first mailed to the stockholders of the Company, the Company
shall mail or cause to be mailed to the stockholders of the Company such
Schedule 14D-9 together with such Offer Documents. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be disseminated to
holders of the Shares, as and to the extent required by applicable Federal
securities laws. Each of the Company, on the one hand, and Parent and Merger
Subsidiary, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable Federal securities laws.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, Merger Subsidiary and their counsel with any comments, whether
written or oral, that the Company or its counsel may receive from time to time
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments or other communications.
(c) In connection with the Offer, the Company shall promptly
furnish Merger Subsidiary with mailing labels containing the names and addresses
of all record holders of Shares and with security position listings of Shares
held in stock depositories, each as of a recent date, together with all other
available listings and computer files containing names, addresses and security
position listings of record holders and non-objecting beneficial owners of
Shares. The Company shall furnish Merger Subsidiary with such additional
information, including, without limitation, updated listings and computer files
of stockholders, mailing labels and security position listings, and such other
assistance as Parent, Merger Subsidiary or their agents may reasonably require
in communicating the Offer to the record and beneficial holders of Shares.
Subject to the requirements of applicable law, and except for
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such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Merger
Subsidiary shall hold in confidence the information contained in such labels,
listings and files, shall use such information solely in connection with the
Offer and the Merger, and, if this Agreement is terminated, will upon the
request of the Company deliver or cause to be delivered to the Company all
copies of such information, labels, listings and files then in their possession
or in the possession of their agents or representatives.
Section 1.4 Directors. (a) Promptly upon the purchase of and
payment for Shares by Merger Subsidiary or any of its affiliates pursuant to the
Offer as a result of which Parent or Merger Subsidiary beneficially own at least
a majority of the outstanding Shares, Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company Board
that equals the product of (i) the total number of directors on the Company
Board (giving effect to the election of any additional directors pursuant to
this Section 1.4) and (ii) the percentage that the number of Shares owned by
Parent or Merger Subsidiary (including Shares accepted for payment) bears to
the total number of Shares outstanding. In furtherance thereof, the Company
shall, upon request of the Parent, use its best efforts promptly either to
increase the size of its Board or to secure the resignations of such number of
its incumbent directors, or both, as is necessary to enable such designees of
Parent to be so elected or appointed to the Company's Board, and the Company
shall take all actions available to the Company to cause such designees of
Parent to be so elected and, subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, shall cause Parent's designees to be so
elected. At such time, the Company shall, if requested by Parent, also take all
action necessary to cause persons designated by Parent to constitute the same
percentage (rounded up to the next whole number) as is on (i) each committee of
the Company Board, (ii) each board of directors (or similar body) of each
Subsidiary of the Company and (iii) each committee (or similar body) of each
such board.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under Section 1.4(a), including
mailing to stockholders the information required by such Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to enable
Parent's designees to be elected or appointed to the Company Board immediately
after the purchase of and payment for any Shares by Parent or any of its
Subsidiaries (as defined in Section 4.1) as a result of which Parent and its
Subsidiaries beneficially own at least a majority of then
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outstanding Shares. Parent or Merger Subsidiary will supply the Company all
information with respect to either of them and their nominees, officers,
directors and affiliates required to be disclosed by such Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The provisions of this
Section 1.4 are in addition to and shall not limit any rights which Merger
Subsidiary, Parent or any of their affiliates may have as a holder or beneficial
owner of Shares as a matter of law with respect to the election of directors or
otherwise.
(c) In the event that Parent's designees are elected or
appointed to the Company Board, until the Effective Time, the Company Board
shall have at least two directors who are directors on the date hereof and are
not employees of the Company ("Independent Directors"), provided that, in such
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever, any remaining Independent Directors (or Independent Director,
if there be only one remaining) shall be entitled to designate persons to fill
such vacancies who shall be deemed to be Independent Directors for purposes of
this Agreement or, if no Independent Director then remains, the other directors
shall designate two persons to fill such vacancies who shall not be
stockholders, affiliates, associates or employees of Parent, Merger Subsidiary
or the Company, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees constitute a majority of the
directors on the Company Board, the affirmative vote of a majority of the
Independent Directors shall be required after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, to (a) amend or
terminate this Agreement by the Company, (b) cause the Company to extend or
waive the time for the performance of any of the obligations or other acts of
Parent or Merger Subsidiary under this Agreement, (c) waive any of the Company's
rights hereunder, or (d) take any other action under or in connection with this
Agreement if such action materially and adversely affects holders of Shares
other than Parent or Merger Subsidiary; provided, that if, notwithstanding
reasonable efforts set forth above to ensure that at least two directors are
Independent Directors, there shall be no such directors, such actions (except
for any amendment, modification or waiver of Sections 2.3 or 8.1 hereof) may be
effected by unanimous vote of the entire Company Board.
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ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the relevant
provisions of the DGCL, Merger Subsidiary shall be merged with and into the
Company (the "Merger") at the Effective Time (hereinafter defined). Following
the Merger, the separate corporate existence of Merger Subsidiary shall cease
and the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Merger Subsidiary in accordance with the DGCL.
Section 2.2 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Section 9.1, at the offices of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, unless
another date or place is agreed to in writing by the parties hereto (such date
upon which the Closing occurs, the "Closing Date").
Section 2.3 Effective Time. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Article IX (and
subject to no other condition set forth herein or otherwise), the parties shall
use their best efforts to consummate the Merger, including without limitation
(if required) voting all Shares held by such parties in favor of the Merger and
filing a certificate of merger or other appropriate documents (the "Certificate
of Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the
Delaware Secretary of State, or at such other time as Parent and the
Company shall agree and specify in the Certificate of Merger (the time the
Merger becomes effective, the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the ▇▇▇▇.
▇▇
▇▇
Section 2.5 Certificate of Incorporation and By-Laws. (a) The
Certificate of Incorporation of Merger Subsidiary, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
(b) The By-Laws of Merger Subsidiary as in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until changed
or amended as provided therein or by applicable law.
Section 2.6 Directors. The directors of Merger Subsidiary at
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their death, resignation or removal or until their successors are
duly elected and qualified.
Section 2.7 Officers. The officers of Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their successors are
duly elected and qualified.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Effect on Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Merger
Subsidiary:
(a) Capital Stock of Merger Subsidiary. Each issued and
outstanding share of the capital stock of Merger Subsidiary shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock that is owned by the Company or by any
Subsidiary of the Company and each share of Company Common Stock that is owned
by Parent, Merger Subsidiary or any other Subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
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(c) Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled in
accordance with Section 3.1(b) or shares as to which appraisal rights have been
exercised in accordance with Section 3.3) shall be converted into the right to
receive $1.80, net to the seller in cash (the "Merger Consideration"), without
interest. As of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
Section 3.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust
company to act as agent for the holders of the Shares in connection with the
Merger to receive in trust the Merger Consideration to which holders of the
Shares shall become entitled pursuant to Section 3.1(c) (the "Paying Agent"). At
the Effective Time, Parent shall deposit with the Paying Agent, for the benefit
of the holders of shares of Company Common Stock, for payment in accordance with
this Article III, the aggregate Merger Consideration to be paid pursuant to
Section 3.1(c) (collectively, the "Exchange Fund") for the outstanding shares of
Company Common Stock. For purposes of determining the amount of Merger
Consideration to be deposited by Parent in the Exchange Fund, Parent shall
assume that no holder of Shares will perfect such holder's right to appraisal of
such holder's Shares.
(b) Exchange Procedure. As soon as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger Consideration
pursuant to Section 3.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor
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the Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 3.1, and the Certificate so surrendered
shall be canceled. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, payment
may be made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. At any time after the Effective Time, each Certificate shall be
deemed to represent only the right to receive, without interest, upon surrender
the Merger Consideration into which the shares of Company Common Stock shall
have been converted pursuant to Section 3.1.
(c) No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender of Certificates in accordance with
the terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article III.
(d) Termination of Exchange Fund; No Liability. Any portion of
the Exchange Fund which remains undistributed to the holders of the Certificates
for one year after the Effective Time shall be delivered to Parent, upon demand,
and any holders of the Certificates who have not theretofore complied with this
Article III shall thereafter look only to Parent for payment of their claim for
Merger Consideration. None of Parent, Merger Subsidiary, the Company or the
Paying Agent shall be liable to any person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to one year after the Effective Time (or
immediately prior to such date on which any amounts payable pursuant to this
Article III would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.4(c)), any such amounts shall, to
the extent permitted by applicable escheat law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto. Any portion of the Merger Consideration deposited
in the
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Exchange Fund pursuant to this Section 3.2 in consideration of Shares for which
appraisal rights, if any, have been perfected shall be returned to Parent, upon
demand.
(e) Investment of Exchange Fund. The Paying Agent shall invest
any cash in the Exchange Fund, as directed by Parent; provided that such
investments shall be in obligations of or guaranteed by the United States of
America or of any agency thereof and backed by the full faith and credit of the
United States of America or in commercial paper obligations rated A-1 or P-1 or
better by Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investor Service, Inc.,
respectively. Any interest and other income resulting from such investments
shall be paid to Parent.
(f) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
Section 3.3 Dissenting Shares. Notwithstanding Section 3.1(c),
Shares outstanding immediately prior to the Effective Time and held by a holder
who has demanded appraisal for such Shares in accordance with the DGCL shall not
be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his right to appraisal.
If after the Effective Time such holder fails to perfect or withdraws or loses
his right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
Section 3.4 Company Options.
(a) Stock Options. Prior to consummation of the Offer, the
Company shall take all necessary action to: (i) terminate, effective not later
than the Effective Time, the ▇▇▇▇▇▇▇ Container Corporation Employee Stock
Purchase Plan
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and all of the stock option plans listed in Section 4.12(a) of the Company
Disclosure Schedule (as defined in Section 4.2) (the "Option Plans"), (ii)
cancel, effective not later than the Effective Time, each option to purchase
shares of Company Common Stock granted under the ▇▇▇▇▇▇▇ Container Corporation
1997 Long-Term Equity Incentive Plan and the ▇▇▇▇▇▇▇ Container Corporation
Outside Director Stock Option Plan, that is outstanding and unexercised as of
such time, (iii) cancel, effective not later than the Effective Time, each
option to purchase shares of Company Common Stock granted under all Option Plans
held by any of the individuals listed in Section 3.4(a) of the Company
Disclosure Schedule that is outstanding and unexercised as of such time, (iv)
use its commercially reasonable efforts to obtain consents of the individual
holders to cancel, effective not later than the Effective Time, each outstanding
option to purchase shares of Company Common Stock granted under any Option Plans
that is outstanding and unexercised as of such time and that is not otherwise
canceled pursuant to the foregoing clauses (ii) and (iii) (it being under stood
that the failure of the Company to obtain the consent of any such holder, after
a good faith effort, shall not be deemed a breach of this clause (iv)).
(b) Compliance with Section 16. Prior to the Effective Time,
the Company shall take all action reasonably necessary to approve the
disposition of the Company Options and other awards in accordance with this
Section 3.4 so as to exempt such dispositions under Rule 16b-3 of the Exchange
Act. By adopting and approving this Agreement, the Board of Directors of the
Company shall be deemed to have approved and authorized each and every
arrangement with respect to the Option Plans and other plans, programs,
agreements or arrangements as may be deemed necessary or appropriate to give
effect to the provisions of this Section 3.4.
Section 3.5 Company Warrants. As of the Effective Time, the
unexercised Company Redeemable Exchangeable Warrants (each a "Company Warrant")
shall be exercisable (subject to the terms and conditions of the Warrant
Agreement between the Company and The Bank of New York, as successor trustee to
▇▇▇▇▇▇ Trust and Savings Bank (the "Trustee"), dated November 2, 1992) only for
such Merger Consideration as is paid and issued to the Trustee, designated
pursuant to the Trust Agreement between the Company and ▇▇▇▇▇▇ Trust and Savings
Bank, in exchange for the shares of Company Common Stock held by such Trustee
immediately theretofore obtainable upon exercise of such Company Warrants.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule attached hereto (the
"Company Disclosure Schedule"), which disclosure schedule shall make a specific
reference to the particular Section of this Agreement to which exception is
being taken, the Company hereby represents and warrants to Parent and Merger
Subsidiary as follows:
Section 4.1 Organization, Standing and Corporate Power. Each
of the Company and each of its Subsidiaries (as defined below) is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other power and authority, as the case may be, to carry
on its business as now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed and in good standing (individually or in the aggregate)
would not have, or be reasonably likely to have, a material adverse effect on
the condition (financial or otherwise), business, assets, liabilities, prospects
or results of operations of the Company and its Subsidiaries taken as a whole,
excluding effects from general economic conditions, general securities market
conditions, conditions affecting the Company's industry generally, or the
announcement of this Agreement or the transactions contemplated hereby (a
"Company Material Adverse Effect"). The Company has delivered or made available
to Parent complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificates of Incorporation and By-Laws or other comparable
charter or organizational documents of its Subsidiaries, in each case as
amended to the date of this Agreement. For purposes of this Agreement, a
"Subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person;
and a "person" means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity.
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Section 4.2 Subsidiaries. Section 4.2 of the Company
Disclosure Schedule contains a true and accurate list of each Subsidiary of the
Company and its respective jurisdiction of incorporation or organization, the
outstanding capital of each such Subsidiary and the jurisdictions in which each
such Subsidiary is qualified to do business. All the outstanding shares of
capital stock of, or other equity interests in, each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable and are owned
by the Company, by another Subsidiary of the Company or by the Company and
another such Subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock). Except for the capital stock of, or other equity interests
in, its Subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any person.
Section 4.3 Capital Structure. The authorized capital stock of
the Company consists of 25,000,000 shares of Preferred Stock, par value $0.01
per share (the "Company Preferred Stock"), 125,000,000 shares of Company Common
Stock and 15,000,000 shares of Class B Common Stock, par value $.0001 per share
(the "Company Class B Stock"). As of September 26, 2001, (i) no shares of
Company Preferred Stock were issued and outstanding, (ii) 55,971,493 shares of
Company Common Stock were issued and outstanding, including associated Preferred
Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of June 12, 1995 (the "Rights Agreement"), between the Company and
▇▇▇▇▇▇ Trust and Savings Bank, as Rights Agent, (iii) no shares of Company Class
B Stock were issued and outstanding, (iv) 1,199,301 shares of Company Common
Stock were held by the Company in its treasury or by any of the Company's
Subsidiaries, (v) 2,260,836 shares of Company Common Stock were reserved for
issuance pursuant to the Option Plans (of which 1,854,403 were issuable upon the
exercise of outstanding Company Options), (vi) 827,135 shares of Company Common
Stock were issuable upon the exercise of outstanding Company Warrants, which are
included in the outstanding shares of Company Common Stock set forth in clause
(ii) above, and (vii) 2,130,500 shares were restricted shares of Common Stock,
which are included in the outstanding shares of Company Common Stock set forth
in clause (ii) above. Except as set forth above and except for the Company
Preferred Stock issuable upon exercise of the Rights and the Company Common
Stock issuable upon exercise of the Stock Option Agreement, as of the date of
this Agreement, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are, and all
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shares which may be issued pursuant to the Option Plans, the Stock Option
Agreement and the Company Warrants will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth above,
there are no outstanding bonds, debentures, notes or other indebtedness or
securities of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or of any of its Subsidiaries or obligating the Company or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, or undertaking. There are
no outstanding rights, commitments, agreements, or undertakings of any kind
obligating the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock or other voting securities of the
Company or any of its Subsidiaries or any securities of the type described in
the two immediately preceding sentences. There are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the Company or any of
its Subsidiaries. Except as provided by Section 3.4(a), following the Effective
Time, no holder of Company Options or Company Warrants will have any right to
receive shares of common stock of the Surviving Corporation upon exercise of
Company Options or Company Warrants. The Company has delivered or made available
to Parent complete and correct copies of the Option Plans, all forms of Company
Options and all warrant agreements relating to the Company Warrants. Section 4.3
of the Company Disclosure Schedule sets forth a complete and accurate list of
all Company Options and Company Warrants outstanding as of the date of this
Agreement, and the respective exercise price of each outstanding Company Option
and Company Warrant.
Section 4.4 Authority; Noncontravention; Filings and Consents.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to the requisite
approval of this Agreement by the holders of the outstanding shares of Company
Common Stock (the "Company Stockholder Vote") with respect to the Merger, to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this
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Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the Merger
if required under the DGCL, to approval of this Agreement by the Company Stock
holder Vote. This Agreement has been duly executed and delivered by the Company
and, assuming that this Agreement constitutes a legal, valid and binding
obligation of Parent and Merger Subsidiary, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws, now or hereafter in effect, relating to or affecting
creditors' rights and remedies and to general principles of equity.
(b) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries under, (i) the Certificate of Incorporation or
By-Laws of the Company or the comparable charter or organizational documents of
any of its Subsidiaries in each case as amended to the date of this Agreement,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to the Company or any of its Subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other matters referred
to in paragraph (c) below, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a Company Material Adverse
Effect, (y) impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with or exemption by (collectively,
"Consents") any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any of its
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Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
by this Agreement, except for (i) the filing of a premerger notification and
report form by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and any applicable filings under
similar foreign antitrust or competition laws and regulations, (ii) the filing
with the SEC of (A) the Schedule 14D-9, (B) if required, a proxy statement
relating to the Company Stockholders Meeting (defined below in Section 8.1(b))
(as amended or supplemented from time to time, the "Company Proxy Statement"),
and (C) such reports under the Exchange Act and the Securities Act (as defined
in Section 4.6), as may be required in connection with this Agreement, the Stock
Option Agreement and the Stockholders Agreement and the transactions
contemplated hereby and thereby, (iii) such filings as may be required under
state securities or "blue sky" laws, (iv) the filing of the Certificate of
Merger with the
Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, and (v) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made or
obtained individually or in the aggregate would not (x) have a Company Material
Adverse Effect, (y) impair the Company's ability to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
Section 4.5 Vote Required. The affirmative vote of the holders
of 66-2/3 percent of the outstanding Shares is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve the
Merger. No vote of any class or series of the Company's capital stock is
necessary to approve any of the transactions contemplated by this Agreement
other than the Merger.
Section 4.6 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities. The Company has filed and has heretofore made available
to Parent, true and complete copies of, all required reports, schedules, forms,
statements and other documents with the SEC since September 30, 1999 (the
"Company SEC Documents"). As of their respective dates, (i) the Company SEC
Documents complied, and all similar documents filed prior to the Closing Date
will comply, in all material respects with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and (ii) none of the Company SEC
Documents when filed contained, nor will any similar document filed after the
date of this Agreement contain, any untrue
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statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC. The financial statements of the Company included in the Company
SEC Documents (including any similar documents filed after the date of this
Agreement) as of their respective dates comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal and recurring
year-end audit adjustments). Except as reflected in the financial statements of
the Company included in the Company SEC Documents, neither the Company nor any
of its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which are required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto other than any liabilities and obligations
(i) incurred since September 30, 2000 in the ordinary course of business, (ii)
pursuant to this Agreement and the transactions contemplated hereby or (iii)
which, individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect.
Section 4.7 Information Supplied. Neither the Schedule 14D-9,
nor any of the information supplied or to be supplied by the Company or its
Subsidiaries or representatives for inclusion or incorporation by reference in
the Offer Documents will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first published,
sent or given to stockholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Company Proxy Statement will not, at the time
the Company Proxy Statement is first mailed to the Company's stockholders or, at
the time of the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9 and
the Company Proxy Statement will comply
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as to form in all material respects with the requirements of all applicable
laws, including the Exchange Act and the rules and regulations thereunder. No
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Merger Subsidiary specifically for inclusion or incorporation by
reference therein.
Section 4.8 Books and Records. The books of account, minute
books, stock record books and other records of the Company and its Subsidiaries
are complete and correct in all material respects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act, including an adequate system of internal controls.
Section 4.9 Inventory. All of the inventories of the Company
and each of its Subsidiaries, whether reflected in the audited balance sheet of
the Company and its consolidated subsidiaries included in the audited financial
statements most recently filed by the Company with the SEC (the "Balance Sheet")
or other wise, consist of a quality and quantity usable and salable in the
ordinary and usual course of business, except for items of obsolete materials
and materials of below- standard quality, all of which have been written off or
written down on the Balance Sheet to fair market value or for which adequate
reserves have been provided therein. All inventories not written off have been
priced at the lower of average cost or market. The quantities of each type of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable and warranted in the present circumstances of the
Company and each of its Subsidiaries. All work in process and finished goods
inventory is free of any defect or other deficiency.
Section 4.10 Absence of Certain Changes or Events. Since
September 30, 2000, except as disclosed in the Company SEC Documents filed
prior to the date hereof, (i) the Company and each of its Subsidiaries has
conducted its respective business only in the ordinary and usual course, (ii)
there has not occurred any event or change (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having or reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect, and (iii) the Company has not taken any action which
would have been prohibited under Section 6.1 if such section applied to the
period between September 30, 2000 and the date of execution of this Agreement.
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Section 4.11 Litigation. Except as disclosed in the Company
SEC Documents or in Section 4.11 of the Company Disclosure Schedule, there is no
suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries that, individually or
in the aggregate, could reasonably be expected to (i) have a Company Material
Adverse Effect, (ii) impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its Subsidiaries having,
or which, insofar as reasonably can be foreseen, in the future would have, any
such effect. Neither the Company nor any of its Subsidiaries is in default under
or in violation of, nor is there any valid basis for any claim of default under
or violation of, any material contract, commitment or restriction to which it is
a party or by which it is bound. The settlement agreement relating to the mass
toxic tort and insurance coverage litigation arising from the accident involving
the explosion of a rail car at Bogalusa, Louisiana in 1995 (the "Settlement
Agreement") is set forth in Section 4.11 of the Company Disclosure Schedule and
validly executed by all of the parties thereto and is in full force and effect
with respect to each of the parties thereto.
Section 4.12 Employee Benefit Plans; ERISA.
(a) Section 4.12(a) of the Company Disclosure Schedule
contains a true and complete list of each employment, bonus, deferred
compensation, incentive compensation, restricted stock, option, performance
unit, phantom stock, dental, health, accident, life, accidental death and
dismemberment, fringe, cafeteria, scholarship, flexible spending arrangement or
reimbursement, group legal services, long term care, dependent care, vacation,
paid time off, sick leave, educational assistance, wellness, employee assistance
program, adoption assistance, vision, voluntary employees beneficiary
association, other insurance, stock purchase, stock option, stock appreciation
right or other stock-based incentive, severance, change-in-control, or
termination pay, hospitalization or other medical, disability, life or other
insurance, 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
the Employee Retirement Income
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Security Act of 1974, as amended ("ERISA"), for the benefit of any current or
former employee or director of the Company, or any of its Subsidiaries or any
ERISA Affiliate, whether formal or informal and whether legally binding or not
(the "Benefit Plans"), and the Company has advised Parent of the dates of
original adoption and any amendments to any Benefit Plans adopted or amended
since January 1, 2000 in the event that such Benefit Plans contain
"change-in-control" or provisions of similar effect that will be triggered by
the consummation of the Offer or the Merger. Section 4.12(a) of the Company
Disclosure Schedule identifies each of the Benefit Plans that is an "employee
welfare benefit plan," or "employee pension benefit plan" as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). None of the Benefit Plans was
entered into, adopted or amended in anticipation of or otherwise in
contemplation of the transactions contemplated by this Agreement or any other
transaction or potential transaction that had been specifically identified at
the time of any such adoption or amendment.
(b) With respect to each of the Benefit Plans, the Company has
heretofore delivered to the Parent true and complete copies of each of the
following documents, as applicable:
(i) the Benefit Plans (including all amendments
thereto) for each written Benefit Plan or a written description of any Benefit
Plan that is not otherwise in writing;
(ii) the annual report or Internal Revenue Service
Form 5500 Series, if required under ERISA or the Internal Revenue Code of 1986,
as amended, (the "Code"), with respect to each ERISA Plan for the last three
Plan years ending prior to the date of this Agreement for which such a report
was filed;
(iii) the actuarial report, if required under ERISA,
with respect to each ERISA Plan for the last three Plan years ending prior to
the date of this Agreement;
(iv) the most recent Summary Plan Description,
together with all Summary of Material Modifications issued with respect to such
Summary Plan Description, if required under ERISA, with respect to each ERISA
Plan, and all other material employee communications relating to each ERISA
Plan;
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(v) if the Benefit Plan is funded through a trust or
any other funding vehicle, the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any;
(vi) all contracts relating to the Benefit Plans with
respect to which the Company, any of its Subsidiaries or any ERISA Affiliate may
have any liability, including insurance contracts, investment management
agreements, subscription and participation agreements and record keeping
agreements; and
(vii) the most recent determination letter received
from the Internal Revenue Service with respect to each Benefit Plan that is
intended to be qualified under Section 401(a) of the Code.
(c) No liability under Title IV of ERISA has been incurred by
the Company, any of its Subsidiaries or any ERISA Affiliate since the effective
date of ERISA that has not been satisfied in full, and to the knowledge of the
Company no condition exists that presents a material risk to the Company, or any
of its Subsidiaries or any ERISA Affiliate of incurring any liability under
such Title, other than liability for premiums due to the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will be made when
due. Insofar as the representation made in this Section 4.12(c) applies to
Section 4064, 4069 or 4204 of ERISA, it is made with respect to any employee
benefit plan, program, agreement or arrangement subject to Title IV of ERISA to
which the Company, any Subsidiary or any ERISA Affiliate made, or was required
to make, contributions during the six-year period ending on the last day of the
most recent plan year ended before the date of this Agreement. The PBGC has not
instituted proceedings to terminate any Benefit Plan and, to the knowledge of
the Company, no condition exists that presents a material risk that such
proceedings will be instituted.
(d) With respect to each of the ERISA Plans that is subject to
Title IV of ERISA, the present value of projected benefit obligations under such
Plan, as determined by the Plan's actuary based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Plan allocable to such
projected benefit obligations.
(e) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, nor to the
Company's
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knowledge, any trustee or administrator thereof has engaged in a transaction or
has taken or failed to take any action in connection with which the Company, any
of its Subsidiaries or any ERISA Affiliate could be subject to any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B of the Code.
(f) All contributions and premiums required to be paid under
the terms of each of the ERISA Plans and Section 302 of ERISA and Section 412 of
the Code, have, to the extent due, been paid in full or properly recorded on the
financial statements or records of the Company or its Subsidiaries. No Benefit
Plan or any trust established thereunder has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived.
(g) Except as set forth in Section 4.12(g) of the Company
Disclosure Schedule, no Plan is a "multiemployer plan," as such term is defined
in Section 3(37) of ERISA, nor is any Benefit Plan described in Section 4063(a)
of ERISA. Neither the Company, any Subsidiary nor any ERISA Affiliate has made
or suffered a "complete withdrawal" or "partial withdrawal", as such terms are
respectively defined in Sections 4203 and 4205 of ERISA (or any liability
arising therefrom has been satisfied in full).
(h) Each of the Benefit Plans has been operated and
administered in all material respects in accordance with its terms and
applicable laws, including but not limited to ERISA and the Code.
(i) The Company has applied for and received a currently
effective determination letter from the Internal Revenue Service stating that
each of the ERISA Plans that is intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and to the knowledge of the Company
no event has occurred since the date of such letter which would affect such
qualified status.
(j) Any Benefit Plan that is intended to satisfy the
requirements of Section 501(c)(9) of the Code has so satisfied such
requirements.
(k) Except as disclosed in Section 4.12(k) of the Company
Disclosure Schedule, no amounts payable (individually or collectively and
whether in cash, Company Common Stock or other property) under any of the
Benefit Plans or any other contract, agreement or arrangement with respect to
which the Company or
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any of its Subsidiaries may have any liability could fail to be deductible
for federal income tax purposes by virtue of Section 162(m) or Section 280G of
the Code.
(l) Except as set forth in Section 4.12(l) of the Company
Disclosure Schedule, no Benefit Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees after retirement or other termination of service
(other than (i) coverage mandated by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, or (iii) deferred compensation benefits accrued as liabilities
on the books of the Company or its Subsidiaries).
(m) Except as disclosed in Section 4.12(m) of the Company
Disclosure Schedule, the consummation of any of the transactions contemplated by
this Agreement (including without limitation the commencement or completion of
the Offer or the Company Stockholders Meeting (as defined in Section 8.1(b)))
will not, either alone or in combination with any other event, (i) entitle any
current or former employee, officer, director or consultant of the Company, any
of its Subsidiaries or any ERISA Affiliate to severance pay or any other
similar termination payment, or (ii) accelerate the time of payment or vesting,
or increase the amount of, or otherwise enhance, any benefit due to or otherwise
cause a requirement for any payment to any such employee, officer, director or
consultant. The aggregate sum of the payment obligations of the Company
disclosed in Attachment 4.12(m)(i) of the Company Disclosure Schedule will not
exceed $56 million (other than the accelerated vesting of the restricted
stock). Other than the Company's Supplemental Executive Retirement Plan,
Management Incentive Plan, the phantom stock grants and the agreements to be
amended pursuant to Section 7.3(b), no other Benefit Plan provides for benefits
that become payable solely by reason of the consummation of the Offer.
(n) There are no pending or, to the Company's knowledge,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefits).
(o) Except as disclosed in Section 4.12(o) of the Company
Disclosure Schedule or as expressly permitted by this Agreement, since September
30, 2000, there has not been (i) any acceleration, amendment or change of the
period
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of exercisability or vesting of any Company Options or restricted stock, stock
bonus or other awards under the Option Plans or other equity-based plans
(including any discretionary acceleration of the exercise periods or vesting by
the Company Board or any committee thereof or any other persons administering an
Option Plan or other equity-based plan) or authorization of cash payments in
exchange for any Company Options, restricted stock, stock bonus or other awards
granted under any of such Option Plans or other equity-based plans or (ii) any
adoption or amendment by the Company or any of its Subsidiaries of any
collective bargaining agreement or Benefit Plan. None of the Company, any of its
Subsidiaries nor any ERISA Affiliate has any formal plan or commitment, whether
legally binding or not, to create any additional Plan or modify or change any
existing Plan that would affect any current or former employee or director of
the Company, any of its Subsidiaries or any ERISA Affiliate.
(p) Except with respect to changes required by law, there has
been no adoption of, amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Subsidiaries relating to,
or change in employee participation or coverage under, any Benefit Plan which
would increase materially the expense of maintaining such Benefit Plan above the
level of the expense incurred in respect thereof for the fiscal year ended on
September 30, 2000.
(q) Neither the Company nor any ERISA Affiliate is a party to
any agreement or understanding, whether written or unwritten, with the PBGC, the
Internal Revenue Service, the Department of Labor or the Health Financing
Administration.
(r) To the knowledge of the Company, no representations or
communications, oral or written, with respect to the participation, eligibility
for benefits, vesting, benefit accrual or coverage under any Benefit Plan have
been made to employees, directors or agents (or any of their representatives or
beneficiaries) of the Company which are not in accordance with the terms and
conditions of the Benefit Plans.
(s) No "leased employee," as that term is defined in Section
414(n) of the Code, performs services for the Company or any ERISA Affiliate.
Neither the Company nor any ERISA Affiliate has used the services or workers
provided by third party contract labor suppliers, temporary employees, "leased
employees," or individuals who have provided services as independent contractors
who have become eligible to participate in the Benefit Plans or used the
services of individuals to an extent that would reasonably be expected to result
in the
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disqualification of any of the Benefit Plans or the imposition of penalties or
excise taxes with respect to the Benefit Plans by the Internal Revenue Service,
the Department of Labor, the PBGC, or any other Governmental Entity.
Section 4.13 Taxes. As used in this Agreement, "tax" or
"taxes" shall include all Federal, state, local and foreign income, property,
sales, excise and other taxes, tariffs or governmental charges or assessments of
any nature whatsoever as well as any interest, penalties and additions thereto.
Except as set forth in Section 4.13 of the Company Disclosure Schedule:
(a) The Company and each of its Subsidiaries have duly filed
all tax returns, statements, reports and forms required to be filed with any
taxing authority (collectively, the "Tax Returns") excluding only such Tax
Returns as to which any failure to file does not have a Company Material Adverse
Effect on the Company and its Subsidiaries and have duly paid or caused to be
duly paid in full or made provision in accordance with GAAP (or there has been
paid or provision has been made on their behalf) for the payment of all taxes
(as hereinafter defined) for all periods or portions thereof ending through the
date hereof. All such Tax Returns are correct and complete and accurately
reflect all liability for taxes for the periods covered thereby. All taxes owed
and due by the Company and all of its Subsidiaries relating to operations on or
prior to September 30, 2000 (whether or not shown on any Tax Return) have been
paid or have been adequately reflected on the financial statements. Since
September 30, 2000, the Company has not incurred liability for any taxes other
than in the ordinary course of business. Neither the Company nor any of its
Subsidiaries has received written notice of any claim made by a governmental
authority in a jurisdiction where neither the Company nor any of its
Subsidiaries file Tax Returns, that the Company is or may be subject to taxation
by that jurisdiction.
(b) The Company and each of its subsidiaries has withheld and
timely paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor, stock-
holder, or other third party.
(c) The Federal income Tax Returns of the Company and its
Subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of Federal income taxes for
such periods have expired) for all periods through and including September 30,
1997, and no material deficiencies were asserted as a result of such
examinations that have not
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been resolved or fully paid. The Company has provided Parent with correct and
complete copies of its Federal income tax returns for taxable years ending
September 30, 1996 through September 30, 2000, and examination reports, and
statements of deficiencies with respect to Federal income taxes, if any,
assessed against or agreed to by the Company and any of its Subsidiaries with
respect to Federal income taxes for taxable years ending September 30, 1996
through September 30, 2000.
(d) No Federal, state, local or foreign audits, examinations
or other administrative proceedings have been commenced or, to the Company's
knowledge, are pending with regard to any taxes or Tax Returns of the Company or
of any of its Subsidiaries. No written notification has been received by the
Company or by any of its Subsidiaries that such an audit, examination or other
proceeding is pending or threatened with respect to any taxes due from or with
respect to or attributable to the Company or any of its Subsidiaries or any Tax
Return filed by or with respect to the Company or any Company Subsidiary. There
is no dispute or claim concerning any tax liability of the Company, or any of
its Subsidiaries either claimed or raised by any taxing authority in writing.
(e) Neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of taxes or agreed to any extension of
time with respect to a tax assessment or deficiency.
(f) Neither the Company nor any of its Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any Company
Subsidiary.
(g) Neither the Company nor any of its Subsidiaries is a party
to any material tax sharing, tax indemnity or other agreement or arrangement
with any entity not included in the Company's consolidated financial statements
most recently filed by the Company with the SEC.
(h) None of the Company or any of its Subsidiaries has been a
member of any affiliated group within the meaning of Section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
state, local or foreign law (other than a group the common parent of which is
the Company), or has any liability for taxes of any person (other than the
Company and its Subsidiaries)
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under Treasury Regulation Section 1.1502-6 or any similar provision of state,
local or foreign law as a transferee or successor, by contract or otherwise.
(i) As of September 30, 2000, the Company had (i) regular net
operating loss carryforwards in the amount of approximately $650 million for
Federal income tax purposes, (ii) alternative minimum tax net operating loss
carryforwards in the amount of approximately $409 million for Federal income tax
purposes, and (iii) alternative minimum tax credits of approximately $5 million.
(j) Section 4.13(j) of the Company Disclosure Schedule sets
forth the net operating loss carryforwards of the Company and each Subsidiary in
each state in which the Company and/or each Subsidiary files an income or
franchise tax return.
(k) As of the date hereof, none of the net operating loss
carryovers, capital loss carryovers, or tax credits of any kind of the Company
or any Subsidiary is subject to any limitation on its use under Section 382, 383
or 1502 of the Code, or any provision of any regulation (whether final or
temporary) promulgated under such Code provisions.
(l) The Company has maintained records and made the required
determinations contemplated by the regulations (final and temporary) promulgated
under Section 382 of the Code with respect to testing dates, owner shifts, and
the determination of whether or not an ownership change has occurred. Except as
disclosed on Section 4.13(l) of the Company Disclosure Schedule, as of the date
hereof, no ownership change within the meaning of Code Section 382 has occurred
with respect to the Company or any Subsidiary.
(m) As of the date hereof, the Company has properly computed
any restructuring reductions due to bankruptcy to its regular and alternative
minimum tax net operating loss carry forwards in accordance with Sections 108
and 382(l)(5) of the Code and the regulations promulgated thereunder.
(n) As of the close of the Company's most recent taxable year
for Federal income tax purposes, the aggregate adjusted tax basis of the assets
of the Company and its Subsidiaries (including only those Subsidiaries which are
corporations included in the Company consolidated Federal income tax return),
excluding (i) stock of members of the affiliated group of which the Company is
the parent corporation, (ii) intercompany advances and indebtedness among such
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members or between any such member and any entity treated as a partnership for
Federal income tax purposes, and (iii) the effect of any indebtedness or
liability on the tax basis of any equity interest in any entity treated as a
partnership for Federal income tax purposes, exceeded $500 million for regular
Federal income tax purposes. Section 4.13(n) of the Company Disclosure Schedule
sets forth the aggregate adjusted tax basis of the assets of the Company and
including its Subsidiaries as of the close of the Company's most recent taxable
year for regular Federal income tax purposes.
(o) As of the close of the Company's most recent taxable year
for Federal income tax purposes, the aggregate adjusted tax basis of the assets
of the Company and its Subsidiaries (including only those Subsidiaries which are
corporations included in the Company consolidated Federal income tax return),
excluding (i) stock of members of the affiliated group of which the Company is
the parent corporation, (ii) intercompany advances and indebtedness among such
members or between any such member and any entity treated as a partnership for
Federal income tax purposes, and (iii) the effect of any indebtedness or
liability on the tax basis of any equity interest in any entity treated as a
partnership for Federal income tax purposes, exceeded $700 million for Federal
alternative minimum tax purposes. Section 4.13(o) of the Company Disclosure
Schedule sets forth the aggregate adjusted tax basis of the assets of the
Company and including its Subsidiaries as of the close of the Company's most
recent taxable year for Federal alternative minimum tax purposes.
(p) The Company is the parent corporation of an affiliated
group of corporations filing a consolidated Federal income tax return.
(q) For Federal and state income tax purposes, the Company
uses a taxable year ending September 30.
(r) Each partnership (or entity treated as a partnership for
Federal income tax purposes) in which the Company or any Subsidiary (including
only those Subsidiaries which are corporations included in the Company
consolidated Federal income tax return) is a partner has an election under
Section 754 of the Code in effect.
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Section 4.14 State Takeover Statutes; Rights Agreement. (a)
The Company Board has approved this Agreement, the Stock Option Agreement and
the Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger, and such approval
constitutes approval of this Agreement, the Stock Option Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby, including the Offer and the Merger by the Company Board
under the provisions of Section 203 of the DGCL and represents all the action
necessary to ensure that such Section 203 does not apply to Parent or Merger
Subsidiary in connection with the transactions contemplated hereby and thereby,
including the Offer, the Merger and the option to purchase Shares pursuant to
the Company Stock Option. To the knowledge of the Company, no other "fair
price", "control share acquisition", "moratorium" or other anti-takeover statute
or similar statute or regulation, applies or purports to apply to this
Agreement, the Stock Option Agreement or the Stockholders Agreement or the
transactions contemplated hereby and thereby, including the Offer and the
Merger.
(b) The Company has amended the Rights Agreement to provide
that neither Parent nor any of its affiliates will become an Acquiring Person
(defined in the Rights Agreement), that no Distribution Date, Shares Acquisition
Date or a Trigger Event (each defined in the Rights Agreement) will occur, and
that the Rights will not separate from the underlying shares of Company Common
Stock or give the holders thereof the right to acquire securities of any party
hereto, in each case as a result of the execution, delivery or performance of
this Agreement, the Stock Option Agreement or the Stockholders Agreement or the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement, the Stock Option Agreement or the Stockholders Agreement.
Section 4.15 Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than
Deutsche Banc Alex. ▇▇▇▇▇ Inc. and Rothschild Inc. the fees of which will be in
an aggregate amount of less than $10 million (and a copy of whose engagement
letter and a calculation of the fees that would be due thereunder has been
provided to Parent), is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement, the Stock Option Agreement or the Stockholders
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries. No such engagement letter obligates the Company to continue to
use the services or pay fees or expenses in connection with any future
transaction.
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Section 4.16 Permits; Compliance with Laws. Each of the
Company and its Subsidiaries has in effect all material Federal, state, local
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for it
to own, lease or operate its properties and assets and to carry on its business
as now conducted, and there has occurred no default under any such Permit,
except for the absence of Permits and for defaults under Permits which absence
or defaults, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse Effect. The Company and its Subsidiaries have
been, and are, in compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees or orders of any Governmental Entity,
and neither the Company nor any of its Subsidiaries has received any notice from
any Governmental Entity or any other person that either the Company or any of
its Subsidiaries is in violation of, or has violated, any applicable statutes,
laws, ordinances, regulations, rules, judgments, decrees or orders, except such
failures to comply or violations as, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
Section 4.17 Environmental Matters. The Company is in
compliance in all material respects with applicable Environmental Laws (as
defined below), including, without limitation, holding all material permits and
authorizations required pursuant to such laws for the ownership and operation of
its business as currently conducted and compliance in all material respects with
the terms thereof, and has no knowledge of any facts or circumstances that would
prevent, interfere with, or materially increase the cost of maintaining such
compliance in the future. Neither the Company nor any of its Subsidiaries has
(i) placed, held, located, released, transported or disposed of any Hazardous
Substance (defined below) on, under, from or at any of the Company's or any of
its Subsidiaries' properties or any other properties, other than in a manner
that would not require remediation pursuant to applicable Environmental Law,
(ii) any knowledge of the presence of any Hazardous Substances that have been
released into the environment on, under or at any of the Company's or any of its
Subsidiaries' properties other than that which would not require remediation
pursuant to applicable Environmental Law, or (iii) received any written notice
(A) of any material violation of any applicable Environmental Law that has not
been resolved, (B) of the institution or pendency of any material suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation, (C) requiring the response to or
remediation of a release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties,
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(D) alleging non-compliance by the Company or any of its Subsidiaries with the
terms of any permit required under any Environmental Law in any manner
reasonably likely to require material expenditures or to result in material
liability or (E) demanding payment of a material amount for response to or
remediation of a release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties. There
are no past or present facts or circumstances that could reasonably be expected
to form the basis of any Environmental Claim against the Company or any of its
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law, except where such
Environmental Claim, if made, would not have a Company Material Adverse Effect.
All material permits and other governmental authorizations currently held or
required to be held by the Company and its Subsidiaries pursuant to any
Environmental Laws are identified in Section 4.17 of the Company Disclosure
Schedule. The Company has provided to Parent all material assessments, reports,
data, results of investigations or audits, and other material information that
is in the possession of or reasonably available to the Company regarding
environmental matters pertaining to or the environmental condition of the
business of the Company and its Subsidiaries, or the compliance (or
noncompliance) by the Company or any of its Subsidiaries with any Environmental
Laws. For purposes of this Agreement, the term "Environmental Law" means all
federal, state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Substances, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances as enacted and
in effect on or prior to the date hereof; "Hazardous Substance" shall mean any
chemical, pollutant, contaminant, waste, petroleum or petroleum product and any
material defined as toxic or hazardous or otherwise regulated under any
applicable Environmental Law; and "Environmental Claim" shall mean any claim,
action, investigation or notice by any person or entity alleging potential
liability for investigatory, cleanup or governmental response costs, or natural
resources or property damages, or personal injuries, attorney's fees or
penalties relating to (i) the presence, or release into the environment, of any
Hazardous Substance at any location whether or not owned or operated by the
Company or any of its Subsidiaries, now or in the past, or (ii) any violation,
or alleged violation, of any Environmental Law.
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Section 4.18 Contracts; Debt Instruments. (a) Except as
otherwise disclosed in Section 4.18(a)(i) through (v) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or
subject to:
(i) any union contract;
(ii) any employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement providing for
future payments, written or oral, with any current or former officer or director
which (1) exceeds $100,000 per annum or (2) requires aggregate annual payments
or total payments over the life of such agreement, contract or arrangement to
such current or former officer, consultant, director or employee in excess of
$100,000 or $500,000, respectively, and is not terminable by it or its
Subsidiary on 30 days' notice or less without penalty or obligation to make
payments related to such termination;
(iii) any joint venture contract or similar
arrangement or any other agreement not in the ordinary course of business which
has involved or is expected to involve a sharing of revenues of $100,000 per
annum or more with other persons;
(iv) any lease for real or personal property in which
the amount of payments which the Company is required to make on an annual basis
exceeds $100,000;
(v) to the knowledge of the Company, any material
agreement, contract, policy, license, Permit, document, instrument, arrangement
or commitment involving revenues to the Company in excess of $500,000 which has
not been terminated or performed in its entirety and not renewed which may be,
by its terms, terminated by reason of the execution of this Agreement, the Stock
Option Agreement or the Stockholders Agreement or the consummation of the Offer,
the Merger or the Notes Tender Offers or the other transactions contemplated by
this Agreement, the Stock Option Agreement, the Stockholders Agreement or the
documents pursuant to which the Notes Tender Offers will be made; or
(vi) any agreement, contract, policy, license,
Permit, document, instrument, arrangement or commitment that provides for an
express non-competition covenant with any person or in any geographic area and
which limits in any material respect the ability of the Company to compete in
its current business lines.
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(b) All contracts, policies, agreements, leases, licenses,
Permits, documents, instruments, arrangements and other commitments listed in
Section 4.18(a)(i) through (v) and Section 4.18(c) of the Company Disclosure
Schedule or otherwise disclosed in the Company SEC Documents are valid and
binding agreements of the Company or a Subsidiary of the Company and are in
full force and effect, and neither the Company, any of its Subsidiaries nor, to
the knowledge of the Company, any other party thereto, is in default in any
material respect under the terms of any such contract, plan, arrangement,
agreement, lease, license, Permit, instrument or other commitment.
(c) Set forth in Section 4.18(c) of the Company Disclosure
Schedule is (A) a list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its Subsidiaries in an aggregate principal
amount in excess of $1 million is outstanding or may be incurred and (B) the
respective principal amounts currently outstanding thereunder. For purposes of
this Section 4.18(c), "indebtedness" shall mean, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person upon which interest charges are
customarily paid, (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(E) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (F) all capitalized lease obligations of such
person, (G) all obligations of others secured by any Lien on property or assets
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed, (H) all obligations of such person under interest rate or
currency swap transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course of business), (J) all obligations of
such person to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar securities or
property, and (K) all guarantees and arrangements having the economic effect of
a guarantee of such person of any indebtedness of any other person; and, except
as set forth in Section 4.18(c) of the Company Disclosure Schedule, none of the
agreements, instruments or obligations set forth in (A) through
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(K) above are affected by the consummation of the Offer or the Merger, or the
other transactions contemplated hereby.
Section 4.19 Title to Properties. (a) Each of the Company and
its Subsidiaries has good and marketable title to, or valid leasehold interests
in, all its tangible properties and assets, except for such assets that are no
longer used or useful in the conduct of its business, free and clear of all
Liens, except for defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with the ability of the Company and its Subsidiaries to
conduct their business as currently conducted.
(b) Each of the Company and its Subsidiaries has complied in
all material respects with the terms of all leases to which it is a party and
under which it is in occupancy, and all such leases are in full force and
effect. Each of the Company and each of its subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
Section 4.20 Labor and Employment Difficulties. Except as set
forth in Section 4.20 of the Company Disclosure Schedule, (a) the Company and
all of its Subsidiaries are in material compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice; (b) within the past twelve months there has been no unfair labor
practice charge or complaint filed against the Company or any of its
Subsidiaries, and there is no such charge or complaint presently pending before
the National Labor Relations Board or any state labor relations agency; (c)
there is no labor strike, dispute, slowdown or stoppage actually pending or, to
the knowledge of the Company and its Subsidiaries, threatened against the
Company or any of its Subsidiaries; (d) to the knowledge of the Company and its
Subsidiaries, no representation question exists respecting any employees of the
Company or any of its Subsidiaries; (e) no material grievance or arbitration
proceeding arising out of or under any collective bargaining agreements is
pending; (f) there are no pending employment lawsuits, no pending administrative
charges of employment discrimination before the Equal Employment Opportunity
Commission or any state fair employment practices agency, and, to the knowledge
of the Company, no such threatened lawsuits or charges; (g) there are no pending
actions or investigations against the Company or its subsidiaries by the U.S.
Department of Labor, or any state labor relations agency, and, to the knowledge
of the Company, no such actions or investigations are threatened; (h) in the
past twelve months, neither the Company nor any of its Subsidiaries has
experienced any work
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stoppage; and (i) in the past twelve months, the Company and its Subsidiaries
have not effectuated a "plant closing", "mass layoff" or "employment loss" in
violation of the Worker Adjustment and Retraining Notification Act of ▇▇▇▇ (▇▇▇
"▇▇▇▇ ▇▇▇").
Section 4.21 Opinions of Financial Advisors. The Company has
received the opinions of Deutsche Banc Alex. ▇▇▇▇▇ Inc. and Rothschild Inc.,
dated the date hereof, signed, accurate and complete copies of which have been
or promptly will be provided to Parent, to the effect that, as of such date, the
consideration to be received by the Company's stockholders pursuant to this
Agreement is fair to the Company's stockholders from a financial point of view.
The Company has been authorized by Deutsche Banc Alex. ▇▇▇▇▇ Inc. and Rothschild
Inc. to permit the inclusion of such opinions in their entirety in the Offer
Documents, the Schedule 14D-9 and the Company Proxy Statement so long as such
inclusion is in form and substance reasonably satisfactory to each of Deutsche
Banc Alex. ▇▇▇▇▇ Inc. and Rothschild Inc., as applicable, and its counsel.
Section 4.22 Interests of Officers and Directors. Except as
described in the Company SEC Documents, none of the Company's or its
Subsidiaries' officers or directors has any material direct or indirect interest
in any property, real or personal, tangible or intangible, used in or pertaining
to the business of the Company or that of its Subsidiaries, or any supplier,
distributor or customer of the Company or any of its Subsidiaries.
Section 4.23 Intellectual Property. For purposes of this
Section 4.23, "Company Intellectual Property" means all the (i) trademarks,
service marks, trade names, Internet domain names, designs, logos, slogans, and
general intangibles of like nature, together with all goodwill, registrations
and applications related to the foregoing (collectively, "Trademarks"), (ii)
patents (including any registrations, continuations, continuations in part,
renewals and applications for any of the foregoing), (iii) copyrights (including
any registrations and applications for any of the foregoing), (iv) Software and
(v) technology, trade secrets and other confidential information, know-how,
inventions, proprietary processes, formulae, algorithms, models, and
methodologies (collectively, "Trade Secrets") held for use or used in the
conduct of the Company's and each of its Subsidiaries' business as currently
conducted or contemplated to be conducted. For purposes of this Section 4.23,
"Software" means any and all (i) computer programs, including any and all
software implementation of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, and (iii) all documentation, including user
manuals and training
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materials, relating to any of the foregoing and the content and information
contained on any website. The Company Intellectual Property is subsisting, in
full force and effect, has not been cancelled, expired or abandoned, and is
valid and enforceable.
(a) Section 4.23(a) of the Company Disclosure Schedule sets
forth a complete and accurate list of all of the following that are owned by the
Company or any of its Subsidiaries: (i) patents and patent applications, (ii)
trademark and service ▇▇▇▇ registrations (including Internet domain name
registrations), trademark and service ▇▇▇▇ applications and material
unregistered trademarks, tradenames and service marks, (iii) copyright
registrations, copyright applications and material unregistered copyrights and
(iv) Software (other than readily-available commercial software having an
acquisition price of less than $25,000).
(b) Section 4.23(b) of the Company Disclosure Schedule sets
forth a complete and accurate list of all agreements (whether oral or written,
and whether between the Company, any of its Subsidiaries and third parties or
intercorporate) to which the Company or any of its Subsidiaries is a party or
otherwise bound, (i) granting or obtaining any right to use or practice any
rights under any Company Intellectual Property (other than licenses for readily
available commercial software programs having an acquisition price of less than
$25,000), or (ii) restricting the Company's or any of its Subsidiaries' rights
to use any Company Intellectual Property, including license agreements,
development agreements, distribution agreements, settlement agreements, consent
to use agreements, and covenants not to ▇▇▇ (collectively, the "License
Agreements"). The License Agreements are valid and binding obligations of the
Company, and, to the knowledge of the Company, all other parties thereto,
enforceable in accordance with their terms, and there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice of lapse of time or both) a default by any party under any
such License Agreement. Neither the Company nor any of its Subsidiaries have
licensed or sublicensed its rights in any Company Intellectual Property other
than pursuant to the License Agreements. No royalties, honoraria or other fees
are payable by the Company or any of its Subsidiaries to any third parties for
the use of or right to use any Company Intellectual Property except pursuant to
the License Agreements.
(c) Except as set forth on Section 4.23(c) of the Company
Disclosure Schedule, the Company or one of its Subsidiaries owns or possesses
adequate, valid and enforceable licenses or other rights to use, free and clear
of all Liens, all Company Intellectual Property.
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(d) Except as set forth in Section 4.23(d) of the Company
Disclosure Schedule, the Company's and its Subsidiaries' ownership, licenses or
rights in the Company Intellectual Property (including without limitation its
ownership, licenses or rights in Intellectual Property pursuant to the Trademark
License Agreement, dated July 7, 1992, between the Company and Mid-America
Group Ltd.) will not be affected by the consummation of the Offer or the Merger.
The consummation of the Offer or the Merger will not result in the loss or
impairment of the Company or any of its Subsidiaries' right to own, use or bring
any action for the infringement of, any of the Company Intellectual Property,
nor will it require the Consent of any Governmental Entity or third party in
respect of any such Company Intellectual Property.
(e) To the knowledge of the Company, the conduct of the
Company and any of its Subsidiaries' business as currently conducted or planned
to be conducted does not conflict with or infringe on (either directly or
indirectly such as through contributory infringement or inducement to infringe)
any intellectual property rights owned or controlled by any third party. There
is no pending or, to the knowledge of the Company, threatened claim, suit,
arbitration or other adversarial proceeding before any court, agency, arbitral
tribunal or registration authority in any jurisdiction involving the Company
Intellectual Property or alleging that the activities or the conduct of the
Company's or any Company Subsidiary's businesses infringe upon, violate or
constitute the unauthorized use of the intellectual property rights of any third
party or challenging the Company or any of its Subsidiaries' ownership, use,
validity, enforceability or registrability of any Company Intellectual Property,
except for claims, suits, arbitrations or proceedings that individually or in
the aggregate would not reasonably be expected to have a Company Material
Adverse Effect. There are no settlements, forebearances to ▇▇▇, consents,
judgments, or orders or similar obligations other than the License Agreements
which (i) restrict the Company's or any of its Subsidiaries' right to use any
Company Intellectual Property, (ii) restrict the Company's or any of its
Subsidiaries' businesses in order to accommodate a third party's intellectual
property rights or (iii) permit third parties to use any Company Intellectual
Property owned or controlled by the Company or any of its Subsidiaries.
(f) To the knowledge of the Company, no third party is using
misappropriating, infringing, diluting or violating any of the Company
Intellectual Property, and no such claims, suits, arbitrations or other
adversarial proceedings have been brought or threatened against any third party
by the Company or any of its Subsidiaries.
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(g) The Company and each of its Subsidiaries take reasonable
measures to protect the confidentiality of Trade Secrets, including requiring
their employees and other parties having access thereto to execute written
non-disclosure agreements. To the knowledge of the Company, no Trade Secret has
been disclosed or authorized to be disclosed to any third party other than
pursuant to a non-disclosure agreement that adequately protects the Company and
its applicable Subsidiary's proprietary interests in and to such Trade Secrets.
To the knowledge of the Company, no party to any non-disclosure agreement
relating to its Trade Secrets is in breach or default thereof.
Section 4.24 Insurance. The Company and its Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks as is reasonably prudent, and each has maintained in full
force and effect public liability insurance, insurance against claims for
personal injury or death or property damage occurring in connection with the
activities of the Company and its Subsidiaries or any properties owned, occupied
or controlled by the Company or any of its Subsidiaries, in such amount as
reasonably deemed necessary by the Company or any of its Subsidiaries.
Section 4.25 Customers and Suppliers. Since June 30, 2001,
there has been no termination, cancellation or material curtailment of the
business relationship of the Company or any of its Subsidiaries with any
customer or supplier or group of affiliated customers or suppliers which
individually or in the aggregate would result in a Company Material Adverse
Effect nor any written notice of intent to so terminate, cancel or materially
curtail (and would have such an effect).
Section 4.26 Regulation as a Utility. Except as set forth in
Section 4.26 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to regulation as a "holding company," electric
utility," "public utility," "public utility holding company," or "public service
company" (or similar designations) by the United States, any state of the United
States, any foreign country or any municipality or any political subdivision of
the foregoing.
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Section 4.27 Qualifying Facility. Each of (i) the
approximately 50 megawatt project owned and operated by the Company or one of
its Subsidiaries and located at Antioch, California and (ii) the approximately
75 megawatt project owned and operated by the Company or one of its Subsidiaries
and located at Bogalusa, Louisiana, meets all requirements for a "qualifying
facility" under the Public Utility Regulatory Policies Act of 1978, as amended,
the Federal Energy Regulatory Commission regulations implemented thereunder and
all administrative and judicial precedents relating thereto, including all
applicable requirements as to project size (in megawatts), fuel-type, operating
and efficiency standards, ownership and useful thermal output. None of the
Company or any of its Subsidiaries owns any other electrical generating
facilities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally hereby
represent and warrant to the Company as follows:
Section 5.1 Organization, Standing and Corporate Power. Each
of Parent and Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Merger Subsidiary is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed and in good
standing (individually or in the aggregate) would not have, or be reasonably
expected to have, a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities, prospects or results of operations of
Parent and its Subsidiaries taken as a whole, excluding effects from general
economic conditions, general securities market conditions, conditions affecting
Parent's industry generally or the announcement of this Agreement or the
transactions contemplated hereby (a "Parent Material Adverse Effect"). Parent
has delivered or made available to the Company complete and correct copies of
its and Merger Subsidiary's Certificate of Incorporation and By-Laws, in each
case as amended to the date of this Agreement.
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Section 5.2 Authority; Noncontravention; Filings and Consents.
(a) Each of Parent and Merger Subsidiary has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Merger Subsidiary and the consummation
by Parent and Merger Subsidiary of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of each of Parent and Merger Subsidiary. This Agreement has been duly
executed and delivered by each of Parent and Merger Subsidiary and, assuming
that this Agreement constitutes a legal, valid and binding obligation of the
Company, constitutes a legal, valid and binding obligation of each of Parent and
Merger Subsidiary, enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws, now or hereafter in effect, relating to or affecting creditors'
rights and remedies and to general principles of equity.
(b) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Parent or
any of its Subsidiaries under, (i) the Certificate of Incorporation or By-Laws
of Parent or Merger Subsidiary, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in paragraph (c) below, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger
Subsidiary or any other subsidiary of Parent or their respective properties or
assets, other than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (x) have a Parent Material Adverse Effect, (y) impair the
ability of Parent and Merger Subsidiary to perform their respective obligations
under this Agreement or (z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement.
(c) No Consent by any Governmental Entity is required by or
with
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respect to Parent or Merger Subsidiary in connection with the execution and
delivery by Parent and Merger Subsidiary of this Agreement or the consummation
by Parent or Merger Subsidiary of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger notification and report form
by Parent under the HSR Act and any applicable filings under similar foreign
antitrust or competition laws and regulations, (ii) the filing with the SEC of
(A) the Offer Documents, and (B) such reports under the Exchange Act as may be
required in connection with this Agreement, the Stock Option Agreement, the
Stockholders Agreement and the transactions contemplated hereby and thereby,
(iii) such filings as may be required under state securities or "blue sky" laws,
(iv) the filing of the Certificate of Merger with the
Delaware Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be made or obtained individually or in the aggregate would
not (x) have a Parent Material Adverse Effect, (y) impair the Parent's or Merger
Subsidiary's ability to perform its obligations under this Agreement or (z)
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
Section 5.3 Information Supplied. Neither the Offer Documents
nor any of the information supplied or to be supplied by Parent or its
Subsidiaries or representatives for inclusion or incorporation by reference in
the Schedule 14D-9 or the Company Proxy Statement will, at the respective times
any such documents or any amendments or supplements thereto are filed with the
SEC, are first published, sent or given to stockholders or become effective
under the Securities Act or, in the case of the Company Proxy Statement, at the
time of the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of all
applicable laws, including the Exchange Act and the rules and regulations
thereunder. No representation or warranty is made by Parent or Merger Subsidiary
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
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Section 5.4 Brokers. No broker, investment banker, financial
advisor or other person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement or the Stockholders Agreement based
upon arrangements made by or on behalf of Parent or Merger Subsidiary.
Section 5.5 No Prior Activities; Assets of Merger Subsidiary.
Merger Subsidiary was formed solely for the purpose of the Merger and engaging
in the transactions contemplated hereby. As of the date hereof and the Effective
Time, except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated hereby and
activities, agreements or arrangements in connection with the transactions
contemplated hereby, Merger Subsidiary has not and will not have (i) incurred,
directly or indirectly through any of its subsidiaries or affiliates, any
obligations or liabilities, (ii) engaged in any business or activities of any
type or kind whatsoever or (iii) entered into any agreements or arrangements
with any person.
Section 5.6 Sufficient Funds. Either Parent or Merger
Subsidiary has available, or has obtained commitment letters (copies of which
have heretofore been provided to the Company) from financial institutions to
borrow, sufficient funds to pay the Merger Consideration, to purchase the Notes
pursuant to the Notes Tender Offers and to pay all fees and expenses related to
the Merger.
Section 5.7 No Vote Required. No vote of any class or series
of Parent's or Merger Subsidiary's capital stock is necessary to approve this
Agreement, the Offer, the Notes Tender Offers, the Merger or the other
transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Conduct of Business. The Company covenants and
agrees that prior to the earlier of (i) the Effective Time and (ii) the time the
directors designated by the Parent have been elected to, and shall constitute a
majority of, the Company Board pursuant to Section 1.4 hereof (the "Appointment
Date"), except (i) as expressly provided in this Agreement, (ii) as set forth in
Section 6.1 of the Company Disclosure Schedule, or (iii) as agreed in writing by
Parent, after the date hereof:
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(a) the Company shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, distributors and others having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the Effective
Time;
(b) neither the Company nor any of its Subsidiaries shall (i)
amend its Certificate of Incorporation or By-laws or similar organizational
document, (ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Company Common
Stock (1) upon the exercise of Company Options outstanding on the date of this
Agreement, (2) upon the exercise of Company Warrants outstanding on the date of
this Agreement or (3) pursuant to the Rights Agreement), (iii) declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, (iv) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, or (v) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(c) neither the Company nor any of its Subsidiaries shall (i)
incur or modify any indebtedness or other liability, other than in the ordinary
and usual course of business and consistent with past practice; or (ii) modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(d) neither the Company nor any of its Subsidiaries shall (i)
incur or assume any indebtedness (either long-term or short-term), except
indebtedness under the Company's revolving credit facilities that when added to
all other outstanding indebtedness of the Company (as shown on Exhibit B, which
shall be updated and delivered to the Parent from time to time pursuant to a
request of the Parent) shall not exceed $985 million at any time prior to the
Appointment Date,
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provided, that in no event shall any such indebtedness be used to purchase or
repay any of the Notes (other than scheduled interest payments thereon); (ii)
modify the terms of any indebtedness or other liability unless agreed to in
writing by Parent (which agreement shall not be unreasonably withheld or
delayed); (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other person, except as described in Section 6.1(d) of the Company
Disclosure Schedule and which are in the ordinary course of business and
consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other person (other than to or in
wholly owned Subsidiaries of the Company), except in the ordinary course of
business and consistent with past practice to employees for reasonable Company
related expenses (e.g., reasonable travel advances and moving expenses); or (v)
enter into any material commitment or transaction (including, but not limited
to, any capital expenditure or purchase, sale or lease of assets or real
estate), except capital expenditures no greater than $7 million in the aggregate
between September 1, 2001 and December 31, 2001 and except for sales of
inventory in the ordinary course of business and consistent with past practice;
(e) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
assets other than in the ordinary and usual course of business and consistent
with past practice;
(f) except as shall be required by any applicable employment
agreement or collective bargaining agreement in effect on the date hereof and
set forth in Section 6.1(f) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries shall make any change in the compensation
payable or to become payable to any of its officers, directors, employees,
agents or consultants (other than normal recurring increases in wages to
employees who are not officers or directors or affiliates in the ordinary course
of business consistent with past practice) or to persons providing management
services, or enter into or amend any employment, severance, consulting,
termination or other agreement or employee benefit plan or make any loans to any
of its officers, directors, employees (except as permitted in Section 6.1(d)),
affiliates, agents or consultants or make any change in its existing borrowing
or lending arrangements for or on behalf of any of such persons pursuant to an
employee benefit plan or otherwise;
(g) neither the Company nor any of its Subsidiaries shall (i)
pay or make any accrual or arrangement for payment of any pension, retirement
allowance or other employee benefit pursuant to any existing plan, agreement or
arrangement to
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any officer, director, employee or affiliate or pay or agree to pay or make any
accrual or arrangement for payment to any officers, directors, employees or
affiliates of the Company of any amount relating to unused vacation days, except
payments and accruals made in the ordinary course of business consistent with
past practice; (ii) adopt or pay, grant, issue, accelerate or accrue salary or
other payments or benefits pursuant to any pension, profit-sharing, bonus, extra
compensation, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or other
employee benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any director, officer, employee, agent or
consultant, whether past or present (for the avoidance of doubt, nothing in this
Section 6.1(g)(ii) shall prevent the Company from making ordinary payments of
salary and fulfilling contractual obligations existing on the date hereof); or
(iii) amend in any material respect any such existing plan, agreement or
arrangement in a manner inconsistent with the foregoing;
(h) neither the Company nor any of its Subsidiaries shall
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except policies
providing coverage for losses not in excess of $100,000;
(i) neither the Company nor any of its Subsidiaries shall
enter into any contract or transaction relating to the purchase of assets other
than in the ordinary course of business consistent with prior practices;
(j) neither the Company nor any of its Subsidiaries shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
subsidiaries;
(k) neither the Company nor any of its Subsidiaries will adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
of its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries will (i)
change any of the accounting methods used by it unless required by GAAP, the
Code or
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Regulation S-X promulgated under the Exchange Act or (ii) make any material
election relating to taxes, change any material election relating to taxes
already made, adopt any material accounting method relating to taxes, change any
material accounting method relating to taxes unless required by GAAP or the
Code, enter into any closing agreement relating to taxes, settle any claim or
assessment relating to taxes or consent to any claim or assessment relating to
taxes or any waiver of the statute of limitations for any such claim or
assessment;
(m) neither the Company nor any of its Subsidiaries will take,
or agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Offer set forth in Annex I or any of the
conditions to the Merger set forth in Article IX not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company, Parent, Merger Subsidiary or the
holders of Shares to consummate the Offer or the Merger in accordance with the
terms hereof or materially delay such consummation;
(n) neither the Company nor any of its Subsidiaries will plan,
announce, implement or effect any material reduction in labor force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or its
Subsidiaries;
(o) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing; and
(p) the Company shall take all reasonable actions to obtain
judicial approval of the Settlement Agreement.
Section 6.2 State Takeover Statutes. The Company and the
Company Board shall (i) take all reasonable actions necessary to ensure that no
"fair price", "control share acquisition", "moratorium" or other anti-takeover
statute, or similar statute or regulation, is or becomes applicable to this
Agreement, the Stock Option Agreement or the Stockholders Agreement, or the
Offer, the Merger or any of the other transactions contemplated hereby or
thereby and (ii) if any "fair price", "control share acquisition", "moratorium"
or other anti-takeover statute, or similar statute or regulation, becomes
applicable to this Agreement, the Stock Option
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Agreement or the Stockholders Agreement, or the Offer, the Merger or any other
transaction contemplated hereby or thereby, take all action necessary to ensure
that the Offer, the Merger and the other transactions contemplated hereby and
thereby, may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise to minimize the effect of such statute or regulation on the
Offer, the Merger and the other transactions contemplated hereby and thereby.
Section 6.3 Access to Information. Subject to applicable law
and upon reasonable request, the Company shall, and shall cause each of its
Subsidiaries to, afford to Parent and to Parent's officers, employees,
accountants, counsel, financial advisers and other representatives, full access
during normal business hours during the period prior to the Effective Time to
all their respective properties, books, contracts, commitments, personnel
(including for the purpose of interviewing such personnel in connection with the
integration process) and records and their accountants' work papers and, during
such period, the Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws, (ii) a copy of each material
tax return, report and information statement filed by it during such period, and
(iii) all other information concerning its business, assets, properties and
personnel as Parent may reasonably request; provided that no investigation
pursuant to this Section 6.3 shall affect any representation or warranty given
by the Company to Parent hereunder. Any investigation pursuant to this Section
6.3 shall be conducted in such a manner as not to interfere unreasonably with
the conduct of the business of the Company. Unless otherwise required by law and
until the Effective Time, Parent will hold any such information which is
nonpublic in confidence in accordance with the provisions of the Confidentiality
Agreement. Following the execution of this Agreement, Parent and the Company
shall cooperate with each other and make all reasonable efforts to minimize any
disruption to the business which may result from the announcement of the
transactions contemplated hereby.
Section 6.4 No Solicitation by the Company.
(a) Neither the Company nor any of its Subsidiaries or
affiliates shall (and the Company shall cause the officers, directors,
employees, representatives and agents of the Company, each of its Subsidiaries
and each affiliate of the Company, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any person or group (other than
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Parent, any of its affiliates or representatives) concerning any Acquisition
Proposal (defined below in Section 6.4(c)), except that nothing contained in
this Section 6.4 or any other provision hereof shall prohibit the Company or the
Company Board from (i) taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company stockholders as, in the good faith judgment of the
Board, after receiving advice from outside counsel, is required under applicable
law, provided that the Company may not, except as permitted by Section 6.4(b),
withdraw or modify, or propose to withdraw or modify, the Recommendations or its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal. Upon execution of this
Agreement, the Company will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, prior to the time of
acceptance of Shares for payment pursuant to the Offer, the Company may furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal
if:
(x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company Board relating
to any such transaction which the Company Board determines in good
faith, represents a superior transaction to the transactions
contemplated hereby and which is not subject to the receipt of any
necessary financing; and
(y) in the opinion of the Company Board such action
is required to discharge the Company Board's fiduciary duties under
applicable law, determined only after receipt of
(i) advice from the Company's investment
banking firm that the Acquisition Proposal is superior, from a
financial point of view, to the Offer and the Merger (which
advice may include analysis of the enterprise value if the
Company's Board has been advised by independent legal counsel
that its fiduciary duties requires them to do so), and
(ii) advice from independent legal counsel to
the
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Company that the failure to provide such information or access
or to engage in such discussions or negotiations would cause
the Company Board to violate its fiduciary duties under
applicable law.
The Company will promptly, but in any event within one business day, notify
Parent of the existence of any proposal, discussion, negotiation or inquiry
received by the Company, and the Company will promptly, but in any event within
one business day, communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will immediately provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent.
(b) Except as set forth below in this subsection (b), neither
the Company Board nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Merger
Subsidiary, the Recommendations or the approval by the Company Board or any such
committee of the Offer, this Agreement or the Merger, (ii) approve or recommend
or propose to approve or recommend, any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the time of acceptance for payment of Shares pursuant to the
Offer, the Company Board may withdraw or modify its approval or recommendation
of the Offer, this Agreement or the Merger, approve or recommend a Superior
Proposal (as defined in Section 6.4(c)), or enter into an agreement with respect
to a Superior Proposal, in each case at any time after the fifth business day
following Parent's receipt of written notice from the Company advising Parent
that the Company Board has received a Superior Proposal which it intends to
accept, specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal, but only if the Company
shall have caused its financial and legal advisors to negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms.
(c) As used herein, "Acquisition Proposal" shall mean any
proposal or offer to acquire all or a substantial part of the business or
properties of the Company or any of its Subsidiaries or 15% or more of any
capital stock of the Company or any of its Subsidiaries, whether by merger,
tender offer, exchange offer,
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sale of assets or similar transactions involving the Company or any Subsidiary,
division or operating or principal business unit of the Company. "Superior
Proposal" shall mean an Acquisition Proposal which satisfies both subsection (x)
and subsection (y) of Section 6.4(a).
Section 6.5 Litigation. The Company shall give Parent the
opportunity to participate (at Parent's own cost) in the defense of any
litigation against the Company and/or its directors relating to the transactions
contemplated by this Agreement, the Stock Option Agreement and the Stockholders
Agreement.
Section 6.6 Rights Agreement. Except as expressly required by
this Agreement, the Company shall not, without the prior consent of Parent,
amend the Rights Agreement or take any other action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Rights
or any action to facilitate an Acquisition Proposal.
Section 6.7 Certain Obligations of the Company. The Company
shall have delivered documents satisfactory to the Parent evidencing that the
Company's obligations in respect of (i) the benefits disclosed in Attachment
4.12(m)(i) of the Company Disclosure Schedule do not exceed $56 million and (ii)
broker's or advisory fees as referred to in Section 4.15 do not exceed $10
million.
ARTICLE VII
COVENANTS OF PARENT AND MERGER SUBSIDIARY
Section 7.1 Indemnification. From and after the Effective
Time, the Surviving Corporation will indemnify and hold harmless (including
advancement of expenses) the current and former directors and officers of the
Company and its wholly-owned Subsidiaries and ▇▇▇▇▇▇▇ Container de Mexico, S.A.
de C.V. (the "Indemnified Parties") in respect of claims made within six years
following the Effective Time for acts or omissions occurring on or prior to the
Effective Time to the extent provided in the Company's Certificate of
Incorporation, By-Laws and indemnity agreements in effect on the date hereof;
provided that such indemnification shall be subject to any limitation imposed
from time to time under applicable law. Parent will cause to be maintained for a
period of not less than four years from the Effective Time, at Parent's election
either (i) the Company's current directors' and officers' insurance and
indemnification policy to the extent that it
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provides coverage for events occurring prior to the Effective Time (the "D&O
Insurance") for all Indemnified Parties, (ii) a new policy providing
substantially similar coverage, or (iii) a "tail" policy on the Company's
existing D&O Insurance, so long as the annual premium therefor would not be in
excess of 150% of the amount per annum the Company paid in its last full fiscal
year, which amount has been disclosed to Parent, on terms and conditions
substantially similar to the existing D&O Insurance. If the existing D&O
Insurance cannot be maintained, expires or is terminated or canceled during such
four-year period, Parent will use reasonable efforts to cause to be obtained as
much D&O Insurance as can be obtained for the remainder of such period for an
annualized premium not in excess 150% of the amount per annum the Company paid
in its last full fiscal year, on terms and conditions substantially similar to
the existing D&O Insurance. This Section 7.1 shall survive the consummation of
the Merger at the Effective Time, is intended to benefit the Company and the
Indemnified Parties, shall be binding on all successors and assigns of the
Surviving Corporation and shall be enforceable by the Indemnified Parties. This
Section 7.1 shall not limit or otherwise adversely affect any rights any
Indemnified Party may have under any agreement with the Company or under the
Company's Certificate of Incorporation or By-Laws. If Parent, Merger Subsidiary
or the Surviving Corporation or any of their respective successors or assigns
(i) consolidates with or merges into any other person or shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all its properties and assets to any Person,
then, and in each case, proper provision shall be made so that the successors
and assigns of Parent, Merger Subsidiary or the Surviving Corporation, as the
case may be, honor the indemnification obligations set forth in this Section
7.1.
Section 7.2 Obligations of Merger Subsidiary. Parent will take
all action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement (including ensuring that Merger Subsidiary will at the
appropriate times have sufficient funds to consummate the Offer and the Merger)
and to consummate the Offer, the Notes Tender Offers and the Merger on the terms
and conditions set forth in this Agreement.
Section 7.3 Employees.
(a) During the period commencing on the Effective Time and
ending on the first anniversary thereof, Parent shall cause the Surviving
Corporation to provide employees of the Company and the Company's Subsidiaries
who were employees of the Company or the Company's subsidiaries immediately
before the
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Effective Time with employee benefits that are substantially no less favorable
in the aggregate than either those currently provided by the Company and the
Company's Subsidiaries to such employees as of the date of this Agreement or
those provided from time to time by Parent and its Subsidiaries to their other
similarly situated employees; provided, however, that, during such one-year
period, the benefit provided to any such employee under any tax-qualified
defined benefit pension plan in which the employee participates shall be no less
than that determined under the formula in effect under the ▇▇▇▇▇▇▇ Container
Retirement Plan as in effect on the date hereof taking into account both (i) the
years of service recognized for such employee under such Retirement Plan as of
the Closing Date and (ii) such employee's service with Parent, the Surviving
Corporation, or any Subsidiary of Parent after the Closing Date during such
one-year period; provided, further, that nothing in this Section 7.3 shall
restrict Parent's or the Surviving Corporation's ability to change any Benefit
Plans in the future.
(b) To the extent that any benefit would become payable in
respect of consummation of the Offer under any Benefit Plan required to be
disclosed in Section 4.12(m) of the Company Disclosure Schedule, the Company
shall, prior to the initial expiration of the Offer, take all actions necessary:
(i) to the extent it may unilaterally do so, to amend all such Benefit Plans to
provide that any benefit that would have been required to be paid in respect of
the Offer will instead become payable in respect of the Merger; (ii) to the
extent not amended under the preceding clause (i), to amend all Benefit Plans
with respect to each individual listed on Section 7.3(b)(ii) of the Company
Disclosure Schedule such that any benefit that would have been required to be
paid in respect of the Offer will instead become payable in respect of the
Merger; (iii) to amend the Company's Supplemental Executive Retirement Plan and
the phantom stock grants to the extent such Benefit Plans apply to any
individuals not listed on Section 7.3(b)(ii) of the Company Disclosure Schedule,
such that any benefit that would have been required to be paid in respect of the
Offer will instead become payable in respect of the Merger, but, with respect to
the Supplemental Executive Retirement Plan, providing such individuals with a
payment for the time value of money in respect of the period between the Offer
and the Merger using a discount rate based on U.S. treasuries with the most
comparable maturities such that no benefit under that plan has been reduced
(provided that nothing in this Agreement shall prohibit the Company from
continuing to make periodic payments under and in accordance with the
Supplemental Executive Retirement Plan to any individual listed on Section
7.3(b)(iii) of the Company Disclosure Schedule who is receiving such periodic
payments as of the date of this Agreement until such time as such individual's
benefit is paid out in full by reason of
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the consummation of the Merger); and (iv) to use commercially reasonable efforts
to obtain the consent of each affected individual to amend the Company's
Management Incentive Plan and each Severance Compensation Agreement (as amended)
with respect to such individual, to the extent it applies to any individuals not
listed on Section 7.3(b)(ii) of the Company Disclosure Schedule, such that any
benefit that would have been required to be paid in respect of the Offer will
instead become payable in respect of the Merger (it being understood that the
failure to obtain the consent of any such beneficiary, after a good faith
effort, shall not be deemed a breach of this clause (iv)). After the Appointment
Date and prior to the Effective Date, Parent agrees not to, and to cause the
Company not to, terminate the employment of any of the individuals listed in
Section 7.3(b)(iv) of the Company Disclosure Schedule or any individual who
consents to the amendments described in clause (iv) above.
(c) From and after the Effective Time, Surviving Corporation
and its wholly-owned Subsidiaries, as applicable, shall honor each Benefit Plan
that provides for severance (including without limitation change of control and
termination agreements) in accordance with its terms (as amended in accordance
with subsection (b) above, if applicable); provided that nothing in this
subsection (c) shall prevent Parent or the Surviving Corporation from causing
such Benefit Plan to be amended or terminated in accordance with its terms.
(d) For purposes of any employee benefit plan or arrangement
maintained by Parent, the Surviving Corporation or any Subsidiary of Parent,
Parent shall recognize (or cause to be recognized) service with the Company and
the Company's Subsidiaries and any predecessor entities (and any other service
credited by the Company under similar benefit plans) for purposes of vesting and
eligibility to participate; provided that the retirement benefit shall be
calculated as provided in Section 7.3(a) hereof.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Stockholder Approval; Preparation of Company Proxy
Statement. (a) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to Section
253 of the DGCL, the Company shall, as promptly as practicable following the
acceptance of Shares pursuant to the Offer, prepare and file with the SEC the
Company Proxy Statement. No filing of, or amendment or supplement to, or
correspondence to the SEC will be made by the Company without providing the
Parent with a reasonable opportunity to review and comment thereon. The Company
will advise Parent, promptly after it receives notice thereof, of any request by
the SEC for the amendment of the Company Proxy Statement or comments thereon
and responses thereto or requests by the SEC for additional information. If at
any time prior to the Company Stockholders Meeting any information relating to
the Company or Parent, or any of their respective affiliates, officers or
directors, should be discovered by the Company or Parent which should be set
forth in an amendment or supplement to the Company Proxy Statement, so that it
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company.
(b) If approval of the Company's stockholders is required by
applicable law in order to consummate the Merger other than pursuant to Section
253 of the DGCL, the Company shall as promptly as practicable following the
acceptance of Shares pursuant to the Offer duly call, give notice of, convene
and hold a meeting of its stockholders (the "Company Stockholders Meeting") for
the purpose of considering and taking action upon this Agreement and the Merger.
Once the Company Stockholders Meeting has been called and noticed, the Company
shall not postpone or adjourn the Company Stockholders Meeting (other than for
the absence of a quorum) without the consent of Parent. Subject to the Company's
right, pursuant to Section 6.4(b) hereof, to withdraw or modify the
Recommendations, the Company Board shall include in the Company Proxy Statement
a copy of the Recommendations as such Recommendations pertain to the Merger and
this Agreement. Notwithstanding the foregoing, the Company Board shall submit
this Agreement and the Merger for approval to the Company's stockholders
whether or not the Company Board determines in accordance with Section 6.4(b)
after the date hereof that this Agreement and the Merger are no longer advisable
and recommends that the stockholders of the Company reject it. The Company shall
use its best
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efforts to solicit from stockholders of the Company proxies in favor of this
Agreement and the Merger and shall take all other actions necessary or advisable
to secure the vote or consent of stockholders required by the DGCL to effect the
Merger.
(c) Notwithstanding the foregoing clauses (a) and (b) above,
in the event that Merger Subsidiary shall acquire at least 90% of the
outstanding Shares in the Offer, the parties hereto shall take all necessary
actions to cause the Merger to become effective, as soon as practicable after
the expiration of the Offer, without a meeting of stockholders of the Company,
in accordance with Section 253 of the DGCL.
Section 8.2 HSR Act Filings; Reasonable Efforts; Notification.
(a) Each of Parent and the Company shall (i) promptly (but in no event later
than five business days after the date of the first public announcement of this
Agreement) make or cause to be made the filings required of such party or any of
its Subsidiaries under the HSR Act and any other Antitrust Laws (as defined in
Section 8.2(b)) with respect to the Offer, the Merger and the other transactions
contemplated by this Agreement, the Stock Option Agreement and the Stockholders
Agreement, (ii) comply at the earliest practicable date with any request under
the HSR Act or such other Antitrust Laws for additional information, documents,
or other material received by such party or any of its Subsidiaries from the
Federal Trade Commission or the Department of Justice or any other Governmental
Entity in respect of such filings, the Offer, the Merger or such other
transactions, and (iii) cooperate with the other party in connection with any
such filing and in connection with resolving any investigation or other inquiry
of any such agency or other Governmental Entity under any Antitrust Laws with
respect to any such filing, the Offer, the Merger or such other transactions.
Each party shall promptly inform the other party of any communication with, and
any proposed understanding, undertaking, or agreement with, any Governmental
Entity regarding any such filings, the Offer, the Merger or such other
transactions. Neither party shall participate in any meeting with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party notice of the meeting and, to the extent
permitted by such Governmental Entity, the opportunity to attend and
participate.
(b) Each of Parent and the Company shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the Offer, the Merger or any other
transactions provided for in this Agreement, the Stock Option Agreement or the
Stockholders Agreement under
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the HSR Act, the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the
Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging the Offer, the Merger or
any other transactions provided for in this Agreement or the Stockholders
Agreement as violative of any Antitrust Law, and, if by mutual agreement, Parent
and the Company decide that litigation is in their best interests, each of
Parent and the Company shall cooperate and use all reasonable efforts vigorously
to contest and resist any such action or proceeding and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each an "Order"), that is in effect and
that prohibits, prevents, or restricts consummation of the Offer, the Merger or
any such other transactions. Each of Parent and the Company shall use all
reasonable efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws with
respect to the Offer, the Merger and such other transactions as promptly as
possible after the execution of this Agreement.
(c) Each of the parties agrees to use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Notes Tender Offers, the Merger, and the
other transactions contemplated by this Agreement and the Stockholders
Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Offer Documents, the Schedule 14D-9 and, if necessary, the Company Proxy
Statement, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement and the Stockholders Agreement.
(d) Notwithstanding anything to the contrary in Section
8.2(a), (b) or (c), (i) neither Parent nor any of its Subsidiaries shall be
required to divest any of their respective businesses, product lines or assets,
(ii) neither Parent nor any of its Subsidiaries shall be required to take or
agree to take any other action or agree to any
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limitation that could reasonably be expected to have a Parent Material Adverse
Effect, (iii) neither the Company nor its Subsidiaries shall be required to
divest any of their respective businesses, product lines or assets, or to take
or agree to take any other action or agree to any limitation that could
reasonably be expected to have a Company Material Adverse Effect, (iv) no party
shall be required to agree to the imposition of or to comply with, any
condition, obligation or restriction on Parent or any of its Subsidiaries or on
the Surviving Corporation or any of its Subsidiaries of the type referred to in
subclause (iii) or (iv) of clause (a) of Annex I, and (v) neither Parent nor
Merger Subsidiary shall be required to waive any of the conditions to the Offer
set forth in Annex I and none of the Parent, Merger Subsidiary or the Company
shall be required to waive any of the conditions to the Merger set forth in
Article IX.
(e) The Company shall give prompt notice to Parent, and Parent
or Merger Subsidiary shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent
or Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement, the Stock Option Agreement
or the Stockholders Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by this
Agreement, the Stock Option Agreement or the Stockholders Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting it or any of its Subsidiaries
which, if pending on the date of this Agreement would have been required to have
been disclosed pursuant to Article IV or which relate to the consummation of the
transactions contemplated by this Agreement, the Stock Option Agreement or the
Stockholders Agreement.
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Section 8.3 Public Announcements. Parent and Merger
Subsidiary, on the one hand, and the Company, on the other hand, will consult
with each other before issuing, and provide each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, including the Offer, the Notes
Tender Offers and the Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement will be a joint press release accept able to Parent and the
Company.
Section 8.4 Confidentiality. Each of Parent and the Company
will hold, and will cause its Representatives (defined in the Confidentiality
Agreement, dated January 19, 2000 (the "Confidentiality Agreement"), between
Parent and the Company) to hold, any Confidential Information (as defined in the
Confidentiality Agreement) in confidence in accordance with the terms of the
relevant Confidentiality Agreement.
ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or, to the extent permitted by applicable law,
waiver on or prior to the Closing Date of each of the following conditions:
(a) Stockholder Approval. If required by the DGCL, this
Agreement and the Merger shall have been approved and adopted by the Company
Stockholder Vote.
(b) Purchase of Shares in the Offer. Merger Subsidiary shall
have accepted for payment and purchased all Shares validly tendered and not
withdrawn pursuant to the Offer.
(c) HSR Approval. The applicable waiting period under the ▇▇▇
▇▇
▇▇
Act and any applicable foreign antitrust or competition laws and regulations
shall have expired or been terminated.
(d) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in effect
preventing or prohibiting consummation of the Merger.
ARTICLE X
TERMINATION
Section 10.1 Termination. The transactions contemplated by
this Agreement may be terminated or abandoned at any time prior to the Effective
Time, whether before or after stockholder approval thereof:
(a) Subject to Section 1.4(c), by the mutual written consent
of Parent and the Company;
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have been terminated or
expired without any Shares being purchased pursuant thereto or (y) Merger
Subsidiary shall not have accepted for payment any Shares pursuant to the Offer
by December 28, 2001; provided, however, that the right to terminate this
Agreement under this Section 10.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of Merger Subsidiary to purchase the Shares
pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order, decree, ruling
or other action the parties hereto shall use their reasonable efforts to lift),
which permanently restrains, enjoins or otherwise prohibits the acceptance for
payment of, or payment for, Shares pursuant to the Offer or the Merger and such
order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company:
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(i) in connection with entering into a definitive
agreement as permitted by Section 6.4(b), provided the Company has complied with
all provisions thereof, including the notice provisions therein, and that the
Company makes simultaneous payment to Parent of funds as required by Section
11.1(b); or
(ii) if Parent or Merger Subsidiary shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement, which
breach cannot be or has not been cured, in all material respects, within 10 days
after the giving of written notice of such breach to Parent or Merger
Subsidiary, as applicable.
(d) By Parent:
(i) if, prior to the purchase of Shares by Merger
Subsidiary pursuant to the Offer, the Company Board shall have withdrawn,
modified or changed in a manner adverse to Parent or Merger Subsidiary the
Recommendations or its approval of the Offer, this Agreement or the Merger or
shall have recommended an Acquisition Proposal or shall have executed an
agreement in principle or definitive agreement relating to an Acquisition
Proposal or similar business combination with a person or entity other than
Parent, Merger Subsidiary or their affiliates; or
(ii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in this Agreement which would give rise to
the failure of a condition set forth in paragraph (f) or (g) of Annex I hereto;
or
(iii) the Offer is not commenced within 5 business
days after the first public announcement of this Agreement because of the
failure of any of the conditions set forth in Annex I being satisfied; or
(iv) there is a failure to satisfy the condition set
forth in clause (j) of Annex I within 20 business days following commencement of
the Offer.
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Section 10.2 Effect of Termination. In the event of the
termination or abandonment of the transactions by any party hereto pursuant to
the terms of this Agreement, written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which
such termination or abandonment of the transactions is made, and there shall be
no liability on the part of the Parent, Merger Subsidiary or the Company except
(A) for fraud or willful breach of this Agreement prior to such termination or
abandonment of the transactions and (B) as set forth in Section 11.1.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Fees and Expenses.
(a) Except as specifically provided to the contrary in this
Agreement, including Section 11.1(b), all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions shall be
paid by the party incurring such expenses.
(b) In the event that:
(i) the Company shall terminate or abandon the
transactions pursuant to Section 10.1(c)(i); or
(ii) (x) either the Company or Parent terminates or
abandons the transactions pursuant to Section 10.1(b)(i) and prior thereto there
shall have been publicly announced another Acquisition Proposal; or (y) Parent
shall terminate or abandon the transactions pursuant to Section 10.1(d)(i) or
(ii);
then the Company shall pay to Parent an amount equal to $20 million (the
"Termination Fee") plus an amount equal to Parent's actual and reasonably
documented out-of-pocket fees and expenses incurred by Parent and Merger
Subsidiary in connection with the Offer, the Notes Tender Offers, the Merger,
this Agreement and the consummation of the transactions contemplated hereby up
to a maximum amount of $2.5 million in the aggregate (the "Expense
Reimbursement"). The Termination Fee and Expense Reimbursement shall be paid in
same day funds concurrently with the execution of an agreement referred to in
subsection (i) above or in the case of clause (ii) above no later than the date
of consummation of any
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Acquisition Proposal within 12 months of the termination of this Agreement;
provided, however, if an Acquisition Proposal is not consummated within 12
months of the termination of this Agreement, no such payments required by clause
(ii) above shall be required to be paid. Notwithstanding anything herein to the
contrary, no Termination Fee or Expense Reimbursement shall be payable if Parent
or Merger Subsidiary was in material breach of its representations, warranties
or obligations under this Agreement at the time its right to terminate this
Agreement accrued.
Section 11.2 Amendment and Modification. Subject to applicable
law and Section 1.4(c), this Agreement may be amended, modified and supplemented
in any and all respects, whether before or after any vote of the stockholders of
the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 1.4(c)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 11.3 Extension; Waiver. Subject to Section 1.4(c), at
any time prior to the Effective Time, the parties may (a) extend the time for
the performance of any of the obligations or other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 11.2, waive compliance with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
each of the parties hereto. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
Section 11.4 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 11.4 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
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Section 11.5 Notices. All notices, requests and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) or by telecopy (with copies by overnight courier) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Merger Subsidiary, to
Temple-Inland Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Company, to
▇▇▇▇▇▇▇ Container Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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Section 11.6 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". References herein to the "knowledge
of the Company" shall mean the knowledge of the executive officers of the
Company after reasonable inquiry.
Section 11.7 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 11.8 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the Stock Option Agreement, the Stockholders Agreement and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) except as
provided in Section 7.1 are not intended to confer upon any person other than
the parties hereto and thereto any rights or remedies hereunder.
Section 11.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware without
giving effect to the principles of conflicts of law thereof.
Section 11.10 Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties; any instrument purporting to
make such assignment shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
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Section 11.11 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of
Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 11.12 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
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IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
TEMPLE-INLAND INC.
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and Chief
Administrative Officer
TEMPLE-INLAND ACQUISITION
CORPORATION
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ CONTAINER CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman
80
Annex I
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) Merger
Subsidiary's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Agreement), Merger Subsidiary shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Merger Subsidiary's obligation to pay for or return tendered Shares promptly
after termination or withdrawal of the Offer), pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any tendered Shares, and may terminate or amend the Offer as to any
Shares not then paid for, if (i) any applicable waiting period under the HSR Act
has not expired or terminated, (ii) the Minimum Stock Condition has not been
satisfied, (iii) the Minimum Note Condition has not been satisfied, or (iv) at
any time on or after the date of the Agreement and before the acceptance for
payment of Shares, any of the following events shall occur and be continuing:
(a) there shall be threatened or pending any suit,
action or proceeding by any Governmental Entity (i) seeking to prohibit or
impose any material limitations on Parent's or Merger Subsidiary's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of all
or a material portion of their or the Company's businesses or assets, or to
compel Parent or Merger Subsidiary or their respective Subsidiaries and
affiliates to dispose of or hold separate any material portion of the business
or assets of the Company or Parent and their respective Subsidiaries, in each
case taken as a whole, (ii) challenging the acquisition by Parent or Merger
Subsidiary of any Shares under the Offer or pursuant to the Stock Option
Agreement or the Stockholders Agreement or the acquisition by Parent or Merger
Subsidiary of any Notes pursuant to the Notes Tender Offers, seeking to restrain
or prohibit the making or consummation of the Offer, the Merger, the Notes
Tender Offers or the performance of any of the other transactions contemplated
by the
Merger Agreement, the Stock Option Agreement, the Stockholders Agreement
or the agreements and documents governing the Notes Tender Offers, or seeking to
obtain from the Company, Parent or Merger Subsidiary any damages that are
material in relation to the Company and its Subsidiaries taken as a whole, (iii)
seeking to impose material limitations on the ability of Merger Subsidiary, or
rendering Merger Subsidiary unable, to accept for payment, pay for or purchase
some or all of the Shares pursuant to the Offer and the Merger or some or all of
the Notes pursuant to the Notes Tender Offers, (iv) seeking to impose material
limitations on the ability of Merger Subsidiary or Parent effectively to
exercise full rights of ownership of the Shares, including,
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without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders or to exercise full rights of
ownership of the Notes, or (v) which otherwise is reasonably likely to have a
Company Material Adverse Effect; or
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above; or
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange, American Stock Exchange or in the Nasdaq National Market,
for a period in excess of three hours (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index for a
period of less than two days and suspensions or limitations resulting solely
from physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iii) a commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any United States or foreign
governmental authority on the extension of credit by banks or other financial
institutions, (v) a change in general financial bank or capital market
conditions which materially or adversely affects the ability of financial
institutions in the United States to extend credit or syndicate loans, or (vi)
in the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof; or
(d) there shall have occurred a Company Material
Adverse Effect; or
(e) the Company Board or any committee thereof (i)
shall have withdrawn, modified or changed in a manner adverse to Parent or
Merger Subsidiary its approval or recommendation of the Offer, the
Merger
Agreement or the Merger, (ii) shall have recommended the approval or acceptance
of an Acquisition Proposal from, or similar business combination with, a person
or entity other than Parent, Merger Subsidiary or their affiliates, or (iii)
shall have executed an agreement in principle or definitive agreement relating
to an Acquisition Proposal from, or similar business combination with, a person
or entity other than Parent, Merger Subsidiary or their affiliates; or
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(f) any of the representations and warranties of the
Company set forth in the
Merger Agreement that are qualified as to materiality
shall not be true and correct and any such representations and warranties that
are not so qualified shall not be true and correct in any material respect, in
each case as of the date of the
Merger Agreement and as of the scheduled
expiration of the Offer, such that the aggregate effect of all such breaches of
representations and warranties shall have had or is reasonably likely to have a
Company Material Adverse Effect and such breach has not been cured within 10
days after Parent gives written notice thereof to the Company or the
representations and warranties set forth in Sections 4.12(m) and 4.15 and the
last sentence of Section 4.11 of the
Merger Agreement shall not be true and
correct; or
(g) the Company shall have failed to perform in any
material respect any material obligation or to comply in any material respect
with any agreement or covenant of the Company to be performed or complied with
by it under the
Merger Agreement and such breach has not been cured within 10
days after Parent gives written notice thereof to the Company; or
(h) all consents necessary to the consummation of the
Notes Tender Offers, the Offer or the Merger including, without limitation,
consents from parties to loans, contracts, leases or other agreements shall not
have been obtained, other than consents the failure of which to obtain would not
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole; or
(i) the
Merger Agreement shall have been terminated
in accordance with its terms; or
(j) in the 20 business days following commencement of
the Offer, the environmental due diligence conducted by Parent shall have
discovered a condition or conditions at one or more of the Company's converting
facilities or the Company's ▇▇▇▇▇ located in Pine Bluff, Arkansas, Bogalusa,
Louisiana and Antioch, California (in the case of the Pine Bluff and Bogalusa
▇▇▇▇▇, such due diligence investigation is to be conducted in accordance with
the procedures set forth on Exhibit C attached hereto) that in the reasonable
judgment of Parent will require remediation or other expenditures in an
aggregate amount in excess of $5 million, with respect to the converting
facilities and the Pine Bluff and Bogalusa ▇▇▇▇▇, and in excess of $10 million,
with respect to the Antioch mill;
which in the sole judgment of Parent or Merger Subsidiary, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Merger Subsidiary)
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giving rise to such condition makes it inadvisable to proceed with the Notes
Tender Offers or the Offer and/or with such acceptance for payment of or payment
for Shares.
The foregoing conditions are for the sole benefit of Parent
and Merger Subsidiary, may be waived by Parent or Merger Subsidiary, in whole or
in part, at any time and from time to time in the sole discretion of Parent or
Merger Subsidiary. The failure by Parent or Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
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