EXHIBIT 5
__________________________________________________________
AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION
Between
RED DOG ACQUISITION, CORP.
and
▇▇▇▇▇▇ INTERNATIONAL, INC.
Dated as of April 18, 1999
__________________________________________________________
TABLE OF CONTENTS Page
ARTICLE I THE MERGER 2
SECTION 1.1 The Merger 2
SECTION 1.2 Closing; Effective Time 2
SECTION 1.3 Effects of the Merger 2
SECTION 1.4 Certificate of Incorporation; By-Laws 3
SECTION 1.5 Directors and Officers 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS 3
SECTION 2.1 Effect on Capital Stock 3
SECTION 2.2 Treatment of Employee Options 4
SECTION 2.3 Appraisal Rights 5
SECTION 2.4 Company Common Stock Elections 5
SECTION 2.5 Proration 7
SECTION 2.6 Exchange of Certificates 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 12
SECTION 3.1 Organization and Qualification; Subsidiaries 12
SECTION 3.2 Certificate of Incorporation and By-laws 13
SECTION 3.3 Capitalization 13
SECTION 3.4 Authority Relative to This Agreement 14
SECTION 3.5 No Conflict; Required Filings and Consents 15
SECTION 3.6 Compliance 16
SECTION 3.7 SEC Filings; Financial Statements; Liabilities 16
SECTION 3.8 Absence of Certain Changes or Events 17
SECTION 3.9 Absence of Litigation 17
SECTION 3.10 Employee Benefit Plans 18
SECTION 3.11 Tax Matters 20
SECTION 3.12 Form S-4; Proxy Statement 21
SECTION 3.13 Labor Matters 22
SECTION 3.14 Properties 22
SECTION 3.15 Environmental Matters 23
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SECTION 3.16 Intellectual Property 25
SECTION 3.17 Year 2000 25
SECTION 3.18 Opinion of Financial Advisor 26
SECTION 3.19 Brokers 26
SECTION 3.20 Takeover Statutes; Rights Plans 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF NEWCO 26
SECTION 4.1 Corporate Organization 26
SECTION 4.2 Authority Relative to This Agreement 26
SECTION 4.3 No Conflict; Required Filings and Consents 27
SECTION 4.4 Form S-4; Proxy Statement 28
SECTION 4.5 Brokers 29
SECTION 4.6 Financing 29
SECTION 4.7 Operations of Newco 29
SECTION 4.8 Ownership of Company Common Stock. 30
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER 30
SECTION 5.1 Conduct of Business of the Company Pending the Merger 30
ARTICLE VI ADDITIONAL AGREEMENTS 33
SECTION 6.1 Stockholders Meeting 33
SECTION 6.2 Form S-4 and Proxy Statement 33
SECTION 6.3 Resignation of Directors 34
SECTION 6.4 Access to Information; Confidentiality 34
SECTION 6.5 No Solicitation of Transactions 35
SECTION 6.6 Employment and Employee Benefits Matters 37
SECTION 6.7 Directors' and Officers' Indemnification and Insurance 38
SECTION 6.8 Further Action; Efforts 39
SECTION 6.9 Public Announcements 43
SECTION 6.10 Listing 43
SECTION 6.11 Letter as to Solvency 43
SECTION 6.12 Affiliates 44
SECTION 6.13 Third Party Standstill Agreements; Tortious Interference 44
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ARTICLE VII CONDITIONS OF MERGER 44
SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger44
SECTION 7.2 Conditions to Obligations of Newco 45
SECTION 7.3 Conditions to Obligations of the Company 46
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 47
SECTION 8.1 Termination 47
SECTION 8.2 Effect of Termination 49
SECTION 8.3 Fees and Expenses 50
SECTION 8.4 Amendment 50
SECTION 8.5 Waiver 50
ARTICLE IX GENERAL PROVISIONS 51
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements 51
SECTION 9.2 Notices 51
SECTION 9.3 Certain Definitions 52
SECTION 9.4 Severability 54
SECTION 9.5 Entire Agreement; Assignment 54
SECTION 9.6 Parties in Interest 54
SECTION 9.7 Governing Law 54
SECTION 9.8 Headings 54
SECTION 9.9 Counterparts 55
SECTION 9.10 Specific Performance; Jurisdiction 55
Exhibit A - Certificate of Incorporation of the Company
Exhibit B - By-laws of the Company
Exhibit C - Form of Company Affiliate Letter
-iii-
INDEX OF PRINCIPAL TERMS
Affected Employees 37
Agreement 1
Bank Commitment Letter 29
Cash Election Price 4
Cash Proration Factor 8
Certificate of Incorporation 3
Certificate of Merger 2
Certificates 9
Closing 2
Closing Date 2
Code 18
Company 1
Company Affiliated Group 20
Company Class A Common Stock 1
Company Class B Common Stock 1
Company Common Stock 1
Company Plans 18
Company Preferred Stock 13
Company Securities 14
Company's Benefits Protection Trust 20
Confidentiality Agreement 35
Contribution Amount 29
Controlled Group 18
Costs 38
Debt Financings 29
DGCL 2
Disclosure Schedule 12
Dissenting Shares 5
DOJ 40
Effective Time 2
Electing Shares 4
Election Date 6
Employee Option 5
Employment Agreements 18
ERISA 18
Exchange Act 6
Exchange Agent 6
Exchange Fund 11
Financial Advisor 26
Financings 29
Form 10-K 16
Form of Election 6
Form S-4 15
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FTC 40
Governmental Entity 15
HSR Act 15
Indemnified Parties 38
Intellectual Property 25
Listing 43
Management Agreements 1
Material Adverse Effect 12
Merger 1
Merger Consideration 3
New Certificates 9
New Employment Agreements 1
Newco 1
Non-Cash Election 6
Non-Cash Election Number 7
Non-Cash Election Shares 1
Non-Cash Proration Factor 8
NYSE 6
Parent 1
Parent Commitment Letter 29
Policies 38
Principal Stockholder 1
Proxy Statement 21
Rabbi Trust 20
Real Properties 22
Representatives 35
Rule 145 1
SEC 1
SEC Reports 16
Securities 1
Securities Act 15
Senior Notes 41
Severance Plans 18
Shares 1
Stockholder Agreement 1
Stockholders Meeting 33
Subsidiary 53
Superior Proposal 36
Surviving Corporation 2
Takeover Proposal 36
Tax Return 21
Taxes 21
Termination Date 48
Termination Fee 50
The ▇▇▇▇▇▇, Inc. Executive Life Insurance Plan 20
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AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION
AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION,
dated as of April 18, 1999 (this "Agreement"), between RED DOG
ACQUISITION, CORP., a Delaware corporation ("Newco"), and a
wholly-owned subsidiary of ▇▇▇▇▇▇ BROTHERS MERCHANT BANKING
PARTNERS II L.P., a Delaware limited partnership ("Parent"), and
▇▇▇▇▇▇ INTERNATIONAL, INC., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of the
Company and Newco have determined that the merger (the "Merger")
of Newco with and into the Company, upon the terms and subject to
the conditions set forth in this Agreement, would be fair to and
in the best interests of their respective stockholders, and such
Boards of Directors have declared advisable and approved this
Agreement and the transactions contemplated hereby, including the
Merger, pursuant to which each share of (i) Class A Common Stock,
par value $0.01 per share, of the Company (the "Company Class A
Common Stock") and (ii) Class B Common Stock, par value $0.01 per
share, of the Company (the "Company Class B Common Stock" and,
together with the Company Class A Common Stock, the "Shares" or
"Company Common Stock") issued and outstanding immediately prior
to the Effective Time (as defined below) (other than (A) shares
of Company Common Stock owned, directly or indirectly, by the
Company or Newco and (B) Dissenting Shares (as defined below))
will, at the election of the holder thereof and subject to the
terms hereof, be converted into either (I) the right to receive
Common Stock, par value $0.01 per share, of the Surviving
Corporation (the "Non-Cash Election Shares") or (II) the right to
receive cash;
WHEREAS, simultaneously with the execution and delivery
of this Agreement, Newco and The ▇▇▇▇▇▇ Holding Company, L.P.
(the "Principal Stockholder") are entering into an agreement (the
"Stockholder Agreement") pursuant to which the Principal
Stockholder will agree to take specified actions in connection
with the Merger;
WHEREAS, simultaneously with the execution and delivery
of this Agreement, the Company and certain executives of the
Company are entering into several Employment Agreements
(collectively, the "New Employment Agreements" and, together with
the Employee Shareholders Agreement and the Option Agreements
related thereto, the "Management Agreements");
WHEREAS, it is intended that the Merger be recorded as
a recapitalization for financial reporting purposes; and
WHEREAS, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in
2
connection with the Merger and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION I.1 The Merger. Upon the terms and subject to
the conditions of this Agreement and in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"), at
the Effective Time, Newco shall be merged with and into the
Company. As a result of the Merger, the separate corporate
existence of Newco shall cease and the Company shall continue as
the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION I.2 Closing; Effective Time. Subject to the
provisions of Article VII, the closing of the Merger (the
"Closing") shall take place in New York City at the offices of
Cravath, Swaine & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
as soon as practicable, but in no event later than the second
business day after the satisfaction or waiver of the conditions
set forth in Article VII (excluding conditions that, by their
terms, cannot be satisfied until the Closing), or at such other
place or at such other date as Newco and the Company may mutually
agree. The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date". At the Closing,
the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, in such form as
required by and executed in accordance with the relevant
provisions of the DGCL (the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware, or such later time as is specified in the Certificate
of Merger and as is agreed to by the parties hereto, being the
"Effective Time") and shall make all other filings or recordings
required under the DGCL in connection with the Merger.
SECTION I.3 Effects of the Merger. The Merger shall
have the effects set forth in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time, all the property, rights,
privileges, immunities, powers and franchises of the Company and
Newco shall vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and Newco shall become the
debts, liabilities and duties of the Surviving Corporation.
3
SECTION I.4 Certificate of Incorporation; By-Laws.
(a) At the Effective Time and without any further action on the
part of the Company and Newco, the Restated Certificate of
Incorporation of the Company (as amended, the "Certificate of
Incorporation") as in effect immediately prior to the Effective
Time shall be amended so as to read in its entirety in the form
set forth in Exhibit A hereto and, as so amended, shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided therein and under the DGCL.
(b) At the Effective Time and without any further
action on the part of the Company and Newco, the by-laws of the
Company as in effect immediately prior to the Effective Time
shall be amended so as to read in their entirety in the form set
forth in Exhibit B
hereto and, as so amended, shall be the by-laws of the Surviving
Corporation until thereafter amended in accordance with their
terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
SECTION I.5 Directors and Officers. The directors of
Newco and/or any individuals designated by Newco immediately
prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and by-laws of the Surviving
Corporation, and the officers of the Company and/or any
individuals designated by Newco immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION II.1 Effect on Capital Stock. At the
Effective Time, by virtue of the Merger and without any action on
the part of Newco, the Company or the holders of any of the
following securities:
(a) Conversion of Company Common Stock. Except as
otherwise provided herein and subject to Section 2.5, each share
of Company Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares canceled pursuant to
Section 2.1(b) and Dissenting Shares) shall be converted into the
following (the "Merger Consideration"):
(i) for each such share of Company Common Stock
with respect to which an election to receive common stock in
4
the Surviving Corporation has been effectively made and not
revoked or lost, pursuant to Sections 2.4(c), (d) and (e)
(the "Electing Shares"), the right to receive, subject to
Section 2.6(e), two fully paid and non-assessable Non-Cash
Election Shares; and
(ii) for each such share of Company Common Stock
(other than Electing Shares), the right to receive in cash
from the Company following the Merger an amount equal to
$30.00, without interest, less any required withholding
taxes (the "Cash Election Price").
(b) Cancellation of Certain Stock. Each share of
Company Common Stock held in the treasury of the Company and each
share of Company Common Stock owned by the Company or Newco, in
each case immediately prior to the Effective Time, shall be
canceled and retired without any conversion thereof and no
payment of cash and/or Non-Cash Election Shares or any other
distribution shall be made with respect thereto. Each share of
the Company Common Stock held by any direct or indirect
Subsidiary (as defined below) of the Company or Parent (other
than Newco) immediately prior to the Effective Time shall be
converted into and become two Non-Cash Election Shares.
(c) Common Stock of Newco. Each share of common stock
of Newco issued and outstanding immediately prior to the
Effective Time shall be converted into and become a number of
Non-Cash Election Shares equal to the quotient of (i) (x) the
quotient of the Contribution Amount divided by 30 (y) multiplied
by two divided by (ii) the number of shares of common stock of
Newco outstanding immediately prior to the Effective Time.
(d) Cancellation of Company Common Stock. As of the
Effective Time, all shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than
shares to be cancelled or converted under Section 2.1(b)) shall
no longer be outstanding and shall automatically be canceled and
shall cease to exist, and each holder of a Certificate (as
defined below) representing any such shares of Company Common
Stock shall, to the extent such Certificate represents such
shares, cease to have any rights with respect thereto, except the
right to receive the Merger Consideration and any cash in lieu of
fractional shares to be issued or paid in consideration therefor
upon surrender of such Certificate in accordance with Section 2.6
or, in the case of Dissenting Shares, the rights accorded under
Section 262 of the DGCL.
SECTION II.2 Treatment of Employee Options. The
Company shall take all action necessary so that, immediately
prior to the Effective Time, each outstanding employee stock
5
option (an "Employee Option"), whether or not then exercisable,
shall be canceled (provided that any such Employee Options shall
be canceled by the Company only to the extent permitted and
otherwise the Company shall use its reasonable best efforts to
cancel any such Employee Options), and the holder thereof shall
be entitled to receive at the Effective Time from the Company or
as soon as practicable thereafter from the Surviving Corporation
in consideration for such cancellation an amount in cash equal to
the product of (i) the number of Shares previously subject to
such Employee Option and (ii) the excess, if any, of the Cash
Election Price per Share over the exercise price per Share
previously subject to such Employee Option, less any required
withholding taxes.
SECTION II.3 Appraisal Rights. (a) Notwithstanding
anything in this Agreement to the contrary, shares of Company
Common Stock that are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders of the
Company who have not voted in favor of or consented to the Merger
and who are entitled to demand and have delivered a written
demand for appraisal of such shares of Company Common Stock in
the time and manner provided in Section 262 of the DGCL and shall
not fail to perfect or shall not effectively withdraw or lose
their rights to appraisal and payment under the DGCL (the
"Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration, but the holders thereof shall
be entitled to receive the consideration as shall be determined
pursuant to Section 262 of the DGCL; provided that if any such
stockholder of the Company shall fail to perfect or shall
effectively withdraw or lose his, her or its right to appraisal
and payment under the DGCL, such holder's shares of Company
Common Stock shall thereupon be treated as shares that are not
Electing Shares and shall be deemed to have been converted, at
the Effective Time, into the right to receive the Merger
Consideration set forth in Section 2.1(a)(ii).
(b) The Company shall give Newco (i) notice of any
demands for appraisal pursuant to Section 262 of the DGCL
received by the Company, withdrawals of such demands and any
other instruments served pursuant to the DGCL and received by the
Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL.
The Company shall not, except with the prior written consent of
Newco or as otherwise required by applicable law, make any
payment with respect to any such demands for appraisal or offer
to settle or settle any such demands.
SECTION II.4 Company Common Stock Elections. (a) Each
person who, on or prior to the Election Date (as defined below),
is a record holder of shares of Company Common Stock shall be
entitled, with respect to all or any portion of such person's
6
shares, to make an unconditional election (a "Non-Cash Election")
on or prior to such Election Date to receive Non-Cash Election
Shares, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as
defined below), Newco shall appoint a bank or trust company as
may be approved by the Company (which approval shall not be
unreasonably withheld or delayed) to act as exchange and paying
agent (the "Exchange Agent") for the payment of the Merger
Consideration.
(c) Newco shall, subject to applicable requirements of
the United States federal securities laws, prepare a form of
election (the "Form of Election") which Form of Election shall be
subject to the approval of the Company (which approval shall not
be unreasonably withheld or delayed) to be mailed by the Company
with the Proxy Statement to the record holders of Company Common
Stock as of the record date for the Stockholders Meeting (as
defined below), which Form of Election shall be used by each
record holder of shares of Company Common Stock who wishes to
elect to receive Non-Cash Election Shares for any or all shares
of Company Common Stock held by such holder, subject to the
provisions of Section 2.5. The Company shall use its reasonable
best efforts to make the Form of Election and the Proxy Statement
available to all persons who become holders of Company Common
Stock during the period between such record date and the Election
Date referred to below. Any such holder's election to receive
Non-Cash Election Shares shall have been properly made only if
the Exchange Agent shall have received at its designated office,
by 5:00 p.m., New York City time, on the business day that is
five business days prior to the date of the Stockholders Meeting
(the "Election Date"), a Form of Election properly completed and
signed and accompanied by Certificates representing the shares of
Company Common Stock to which such Form of Election relates, duly
endorsed in blank or otherwise in form acceptable for transfer on
the books of the Company (or by an appropriate guarantee of
delivery of such Certificates as set forth in such Form of
Election from a firm which is an "eligible guarantor institution"
(as defined in Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")); provided that such
Certificates are in fact delivered to the Exchange Agent within
seven New York Stock Exchange, Inc. ("NYSE") trading days after
the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the
stockholder of the Company submitting it to the Exchange Agent
only by written notice received by the Exchange Agent prior to
5:00 p.m, New York City time, on the Election Date (unless Newco
and the Company determine not less than two business days prior
to the Election Date that the Closing Date is not likely to occur
7
within five business days following the date of the Stockholders
Meeting, in which case any Form of Election will remain revocable
until a subsequent date which shall be a date prior to the
Closing Date determined by Newco and the Company and, in such a
case, the Company shall provide notice to the stockholders of the
Company of such date in such manner as it may reasonably
determine). In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in
writing by Newco and the Company that this Agreement has been
terminated. If a Form of Election is revoked, the Certificate or
Certificates (or guarantees of delivery, as appropriate) for the
shares of Company Common Stock to which such Form of Election
relates shall be promptly returned by the Exchange Agent to the
stockholder of the Company submitting the same.
(e) The determination of the Exchange Agent (or the
mutual determination of the Company and Newco in the event that
the Exchange Agent declines to make any such determination) shall
be binding as to whether or not elections to receive Non-Cash
Election Shares have been properly made or revoked pursuant to
this Section 2.4 with respect to shares of Company Common Stock
and as to when elections and revocations were received by it. If
the Exchange Agent reasonably determines in good faith that any
election to receive Non-Cash Election Shares was not properly
made with respect to shares of Company Common Stock, such shares
shall be treated by the Exchange Agent as shares which were not
Electing Shares at the Effective Time, and such shares shall be
converted in the Merger into the right to receive cash pursuant
to Section 2.1(a)(ii), subject to proration as provided in
Section 2.5. The Exchange Agent (or the Company and Newco by
mutual agreement in the event that the Exchange Agent declines to
make any such determination) shall also make all computations as
to the allocation and the proration contemplated by Section 2.5,
and any such computation shall be conclusive and binding on the
stockholders of the Company. The Exchange Agent may, with the
mutual written agreement of the Company and Newco, make such
rules as are consistent with this Section 2.4 for the
implementation of the elections provided for herein and as shall
be necessary or desirable fully to effect such elections.
SECTION II.5 Proration. (a) Notwithstanding anything
in this Agreement to the contrary, the aggregate number of shares
of Company Common Stock to be converted into the right to receive
Non-Cash Election Shares at the Effective Time (the "Non-Cash
Election Number") shall be equal to 1,483,333 (excluding for this
purpose any shares of Company Common Stock to be canceled or
converted pursuant to Section 2.1(b)).
(b) If the number of Electing Shares exceeds the
Non-Cash Election Number, each Electing Share shall be converted
8
into the right to receive Non-Cash Election Shares or cash in
accordance with the terms of Section 2.1(a) in the following
manner:
(i) a proration factor (the "Non-Cash
Proration Factor") shall be determined by dividing the
Non-Cash Election Number by the total number of Electing
Shares;
(ii) the number of Electing Shares covered by
each Non-Cash Election to be converted into the right to
receive Non-Cash Election Shares shall be determined by
multiplying the Non-Cash Proration Factor by the total
number of Electing Shares covered by such Non-Cash Election;
and
(iii) all Electing Shares, other than those
shares converted into the right to receive Non-Cash Election
Shares in accordance with Section 2.5(b)(ii), shall be
converted into the right to receive cash (on a consistent
basis among stockholders of the Company who made the
election referred to in Section 2.1(a)(i), pro rata to the
number of shares of Company Common Stock as to which they
made such election) as if such shares were not Electing
Shares in accordance with the terms of Section 2.1(a)(ii).
(c) If the number of Electing Shares is less than the
Non-Cash Election Number:
(i) all Electing Shares shall be converted
into the right to receive Non-Cash Election Shares in
accordance with the terms of Section 2.1(a)(i);
(ii) additional shares of Company Common
Stock (other than Electing Shares, Dissenting Shares and
Shares canceled pursuant to Section 2.1(b)) shall be
converted into the right to receive Non-Cash Election Shares
in accordance with the terms of Section 2.1(a)(i) in the
following manner:
(A) a proration factor (the "Cash Proration
Factor") shall be determined by dividing (I) the
difference between the Non-Cash Election Number and the
number of Electing Shares by (II) the total number of
Shares outstanding at the Effective Time (other than
Electing Shares, Dissenting Shares and Shares canceled
pursuant to Section 2.1(b)); and
(B) the number of shares of Company Common
Stock in addition to Electing Shares to be converted
into the right to receive Non-Cash Election Shares
shall be determined by multiplying the Cash Proration
Factor by the total number of Shares outstanding at the
9
Effective Time (other than Electing Shares, Dissenting
Shares and Shares canceled pursuant to Section 2.1(b)); and
(iii) shares of Company Common Stock subject
to clause (ii) of this paragraph (c) shall be converted into
the right to receive Non-Cash Election Shares in accordance
with Section 2.1(a)(i) (on a consistent basis among
stockholders of the Company who held shares of Company
Common Stock as to which they did not make the election
referred to in Section 2.1(a)(i), pro rata to the number of
shares as to which they did not make such election).
SECTION II.6 Exchange of Certificates. (a) Exchange
Agent. As of or as soon as reasonably practicable after the
Effective Time, the Company shall deposit with the Exchange
Agent, for the benefit of the stockholders of the Company, for
exchange in accordance with this Article II, the Merger
Consideration.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, each holder of an
outstanding certificate or certificates which immediately prior
thereto represented shares of Company Common Stock (the
"Certificates") shall, upon surrender to the Exchange Agent of
such Certificate or Certificates and acceptance thereof by the
Exchange Agent, be entitled to a new certificate or new
certificates (the "New Certificates") representing the number of
full Non-Cash Election Shares, cash and cash payable in lieu of
fractional shares, in each case, if any, to be received by the
holder thereof pursuant to this Agreement. The Exchange Agent
shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose
to effect an orderly exchange thereof in accordance with normal
exchange practices. After the Effective Time, there shall be no
further transfer on the records of the Company or its transfer
agent of Certificates and, if Certificates are presented to the
Company for transfer, they shall be canceled against delivery of
the Merger Consideration. If any New Certificate for Non-Cash
Election Shares is to be issued in, or if cash is to be remitted
to, a name other than that in which the Certificate surrendered
for exchange is registered, it shall be a condition of such
exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form
for transfer, and that the person requesting such exchange shall
pay to the Company or its transfer agent any transfer or other
taxes required by reason of the issuance of New Certificates for
such Non-Cash Election Shares in a name other than that of the
registered holder of the Certificate surrendered, or establish to
the satisfaction of the Company or its transfer agent that such
tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.6(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the
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right to receive upon such surrender the Merger Consideration as
contemplated by Section 2.1.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Non-Cash
Election Shares with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with
respect to the Non-Cash Election Shares to be received in respect
thereof and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.6(e), in each case
until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the
holder of the New Certificate or New Certificates representing
whole Non-Cash Election Shares issued in connection therewith,
without interest, (i) at the time of such surrender, the amount
of any cash payable in lieu of a fractional Non-Cash Election
Share to which such holder is entitled pursuant to Section 2.6(e)
and the proportionate amount of any dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to such whole Non-Cash Election
Shares, and (ii) at the appropriate payment date, the
proportionate amount of any dividends or other distributions with
a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable
with respect to such whole Non-Cash Election Shares.
(d) No Further Ownership Rights in Shares. The Merger
Consideration paid upon the surrender for exchange of
Certificates in accordance with the terms of Article I and this
Article II (including any cash paid pursuant to Section 2.6(e))
shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Company
Common Stock so exchanged.
(e) No Fractional Shares. (i) No New Certificates or
scrip representing fractional Non-Cash Election Shares shall be
issued in connection with the Merger and such fractional share
interests shall not entitle the owner thereof to vote or to any
rights of a stockholder of the Company after the Merger, and
(ii) notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a
fraction of a Non-Cash Election Share (after taking into account
all shares of Company Common Stock delivered by such holder)
shall receive, in lieu thereof, a cash payment (without interest)
determined by multiplying the fractional share interest to which
such holder would otherwise be entitled by the Cash Election
Price.
(f) Termination of Exchange Fund. Any portion of the
Merger Consideration deposited with the Exchange Agent pursuant
11
to this Section 2.6 (the "Exchange Fund") which remains
undistributed to the holders of the Certificates for twelve
months after the Effective Time shall be delivered to the
Surviving Corporation, upon demand, and any holders of
Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Company and only as
general creditors thereof for payment of their claim for cash, if
any, Non-Cash Election Shares, if any, any cash in lieu of
fractional Non-Cash Election Shares and any dividends or
distributions with respect to Non-Cash Election Shares to which
such holders may be entitled, subject to escheat and similar
abandoned property laws.
(g) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund as directed
by the Company; provided that such investments shall be in
obligations of or guaranteed by the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by
▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with
capital exceeding $1 billion. Any net profit resulting from, or
interest or income produced by, such investments shall be payable
to the Surviving Corporation. If for any reason (including
losses) the Exchange Fund is inadequate to pay the amount to
which stockholders of the Company shall be entitled to receive
hereunder, the Company shall in any event be liable for payment
therefor.
(h) No Liability. None of Newco, the Company or the
Exchange Agent shall be liable to any holder of Company Common
Stock in respect of Non-Cash Election Shares (or dividends or
distributions with respect thereof) or any cash from the Exchange
Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate
has not been surrendered prior to five years after the Effective
Time (or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise
escheat to or become the property of any public official), any
such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled
thereto.
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Newco
that, except as disclosed in the SEC Reports (as defined below)
filed, and publicly available, prior to the date hereof or as set
forth on the Disclosure Schedule delivered by the Company to
Newco prior to the execution of this Agreement (the "Disclosure
Schedule") (provided that the listing of an item in one section
of the Disclosure Schedule shall be deemed to be a listing in
each section of the Disclosure Schedule and to apply to any other
representation and warranty of the Company in this Agreement to
the extent that is reasonably apparent from a reading of such
disclosure item that it would also qualify or apply to such other
section or representation and warranty) or except as specifically
contemplated by this Agreement, the Stockholder Agreement or the
Management Agreements:
SECTION III.1 Organization and Qualification;
Subsidiaries. The Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being
conducted. The Company and each of its Subsidiaries is duly
qualified or licensed to do business, and is in good standing, in
each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for any such
failure to be so qualified or licensed or in good standing which,
individually or in the aggregate, would not have or would not
reasonably be likely to have a Material Adverse Effect (as
defined below). When used in connection with the Company or any
of its Subsidiaries, the term "Material Adverse Effect" means any
change or effect that would be materially adverse to the
business, properties, assets, liabilities, financial condition or
results of operations of the Company and its Subsidiaries, taken
as a whole, or to the ability of the Company to perform its
obligations under this Agreement or to consummate the Merger and
the other transactions contemplated hereby, other than any change
or effect resulting from (i) changes in general economic
conditions, (ii) the performance of this Agreement and compliance
with the covenants set forth herein or (iii) general changes or
developments in the industries in which the Company and its
Subsidiaries operate. Section 3.1 of the Disclosure Schedule
contains a true and accurate list of all the Subsidiaries of the
Company. Except for its interests in its Subsidiaries, the
Company does not own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest
or other equity interest in any person.
13
SECTION III.2 Certificate of Incorporation and By-
laws. The Company has heretofore furnished to Newco a complete
and correct copy of the Certificate of Incorporation and the by-
laws of the Company and has made available or, upon request of
Newco, will make available to Newco true and complete copies of
the comparable charter and organizational documents of each
Subsidiary of the Company, in each case, as currently in effect.
Such Certificate of Incorporation and by-laws and such other
documents are in full force and effect and no other
organizational documents are applicable to or binding upon the
Company or its Subsidiaries and neither the Company nor any
Subsidiary is in violation of any provisions of its Certificate
of Incorporation, by-laws or such other documents, as the case
may be, except for, with respect to any Subsidiary of the Company
(other than ▇▇▇▇▇▇, Inc.) (i) any such failure to be in full
force or effect, (ii) any such other organizational document or
(iii) any such violation, in each case for clauses (i), (ii) and
(iii), which, individually or in the aggregate, would not have or
would not reasonably be likely to have a Material Adverse Effect.
SECTION III.3 Capitalization. The authorized capital
stock of the Company consists of (i) 60,000,000 shares of Company
Class A Common Stock, (ii) 14,000,000 shares of Company Class B
Common Stock and (iii) 4,456,855 shares of Preferred Stock, par
value $0.01 per share (the "Company Preferred Stock"), of the
Company. As of the date hereof, (i) 25,591,113 shares of Company
Class A Common Stock (excluding shares held in the treasury of
the Company) and 11,472,071 shares of Company Class B Common
Stock were issued and outstanding, all of which were validly
issued, fully paid and nonassessable and were issued free of
preemptive (or similar) rights, (ii) 1,846,635 shares of Company
Class A Common Stock were held in the treasury of the Company,
(iii) no shares of Preferred Stock were issued and outstanding
and (iv) an aggregate of 4,177,586 shares of Company Class A
Common Stock were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of
outstanding Employee Options issued pursuant to the Company Plans
(as defined in Section 3.10) and the dividend reinvestment plan
of the Company. Except (i) as set forth above, (ii) as a result
of the exercise of Employee Options, (iii) as a result of or in
connection with the dividend reinvestment plan of the Company or
(iv) as a result of or in connection with the conversion of
Class B Common Stock into Class A Common Stock, (A) there are not
outstanding or authorized any (I) shares of capital stock or
other voting securities of the Company, (II) securities of the
Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, (III) options,
securities or other rights to acquire from the Company, or
obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for
14
capital stock or voting securities of the Company or (IV) equity
equivalents, including phantom stock rights and stock
appreciation rights, interests in the ownership or earnings of
the Company or other similar rights (collectively, "Company
Securities"), (B) there are no outstanding obligations of the
Company to repurchase, redeem or otherwise acquire any Company
Securities, and (C) there are no other options, calls, warrants
or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries to which the Company or any of
its Subsidiaries is a party. Each of the outstanding shares of
capital stock of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and,
except for directors' qualifying shares, all such shares are
owned by the Company or another wholly-owned Subsidiary of the
Company and are owned free and clear of all security interests,
liens, claims, pledges, agreements, limitations in voting rights,
charges or other encumbrances of any nature whatsoever.
SECTION III.4 Authority Relative to This Agreement.
The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than, with
respect to the Merger, the adoption of this Agreement by the
holders of a majority in voting power of the outstanding shares
of Company Common Stock voting together as a single class and the
filing with the Secretary of State of the State of Delaware of
the Certificate of Merger as required by the DGCL). The Board of
Directors of the Company at a meeting duly called and held has
unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are
advisable and fair to and in the best interests of the holders of
the Shares, (ii) approved this Agreement and the transactions
contemplated hereby, including the Merger, and (iii) recommended
that the stockholders of the Company adopt this Agreement. This
Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and
delivery hereof by Newco, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. The only vote of the stockholders of the
Company required to adopt this Agreement is the affirmative vote
15
by the holders of a majority in voting power of the outstanding
Shares voting together as a single class.
SECTION III.5 No Conflict; Required Filings and
Consents. (a) The execution and delivery of this Agreement by
the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) conflict
with or violate the Certificate of Incorporation or by-laws of
the Company, (ii) assuming that all consents, approvals and
authorizations contemplated by subsection (b) below have been
obtained and all filings described in such subsection have been
made, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its
Subsidiaries or by which its or any of their respective
properties are bound or (iii) result in any breach or violation
of or constitute a default (or an event which with notice or
lapse of time or both would become a default) or result in the
loss of a material benefit under, or give rise to any right of
termination, cancellation, material amendment or material
acceleration of, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit or other instrument or
obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or its
or any of their respective properties are bound, except, in the
case of clauses (ii) and (iii), for any such conflict, violation,
breach, default or other occurrence which, individually or in the
aggregate, would not have or would not be reasonably likely to
have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by
the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not require any
consent, approval, authorization or permit of, action by, filing
with or notification to, any Federal, state, local or foreign
court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality
("Governmental Entity"), except for (i) compliance with and
filings under, to the extent required, the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act
and the rules and regulations promulgated thereunder, the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and state securities, takeover and Blue Sky laws,
(ii) the filing of the registration statement on Form S-4,
including the Proxy Statement, with the SEC by the Company in
connection with the issuance of Non-Cash Election Shares in
connection with the Merger (the "Form S-4"), (iii) the filing
with the Secretary of State of the State of Delaware of the
Certificate of Merger as required by the DGCL, (iv) compliance
with and filings under, to the extent required, the applicable
requirements of the Department of Defense and the Bureau of
Alcohol, Tobacco and Firearms, which requirements are not
applicable prior to the Effective Time, (v) compliance with and
filings under, to the extent required, the applicable
16
requirements of the Investment Canada Act and the Canada
Competition Act, (vi) compliance with and filings under, to the
extent required, the applicable requirements with the Brazilian
Antitrust Authority; (vii) compliance with and filings under, to
the extent required, the applicable requirements of the NYSE or
the Nasdaq Stock Market, as the case may be, and (viii) any such
consent, approval, authorization, permit, action, filing or
notification the failure of which to make or obtain, individually
or in the aggregate, would not have or would not reasonably be
likely to have a Material Adverse Effect
SECTION III.6 Compliance. Neither the Company nor any
of its Subsidiaries is in violation of any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which its or any of their respective
properties are bound, except for any such violation which,
individually or in the aggregate, would not have or would not
reasonably be likely to have a Material Adverse Effect. The
Company and its Subsidiaries have all permits, licenses,
authorizations, exemptions, orders, consents, approvals and
franchises from all Governmental Entities required to conduct
their respective businesses as now being conducted, except for
any such permit, license, authorization, exemption, order,
consent, approval or franchise the absence of which, individually
or in the aggregate, would not have or would not reasonably be
likely to have a Material Adverse Effect.
SECTION III.7 SEC Filings; Financial Statements;
Liabilities. (a) The Company has filed all forms, reports,
statements and documents required to be filed with the SEC since
January 1, 1998, in each case including all exhibits and
schedules thereto and documents incorporated by reference therein
(collectively, the "SEC Reports"), each of which, as finally
amended, has complied as to form in all material respects with
the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated
thereunder, each as in effect on the date so filed. None of the
SEC Reports contained, when filed, as finally amended, any untrue
statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) Each of the audited consolidated financial
statements of the Company (including any related notes thereto)
for the fiscal years ended December 31, 1997 and December 31,
1998 included in its Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 as filed with the SEC (the "Form
10-K") complies as to form in all material respects with
applicable accounting requirements and the published rules and
17
regulations of the SEC with respect thereto and has been prepared
in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto) and fairly
presents in all material respects the consolidated financial
position of the Company and its Subsidiaries at the respective
dates thereof and the consolidated results of operations, cash
flows and changes in stockholders' equity for the periods
indicated.
(c) Except (i) as set forth or reflected in the
consolidated financial statements (including the notes thereto)
of the Company included in the Form 10-K, (ii) for liabilities or
obligations incurred in the ordinary course of business
consistent with past practice or (iii) for liabilities or
obligations incurred in connection with the transactions
contemplated by this Agreement, since December 31, 1998, neither
the Company nor any of its Subsidiaries have incurred any
liabilities or obligations (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a
consolidated balance sheet of the Company prepared in accordance
with generally accepted accounting principles as of December 31,
1998 consistently applied, except for any such liabilities or
obligations which, individually or in the aggregate, would have
not or would not reasonably be likely to have a Material Adverse
Effect.
SECTION III.8 Absence of Certain Changes or Events.
Since December 31, 1998, except as specifically contemplated by
this Agreement, the Company and its Subsidiaries have conducted
their business in the ordinary course and, since such date, there
has not been (i) any change, event or occurrence which has had or
would reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect or (ii) as of the date
hereof, any action which, if it had been taken or occurred after
the execution of this Agreement, would have required the consent
of Newco pursuant to the second sentence of Section 5.1 of this
Agreement.
SECTION III.9 Absence of Litigation. There are no
suits, claims, actions, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries, other than any such suit, claim,
action, proceeding or investigation which, individually or in the
aggregate, would not have or would not reasonably be likely to
have a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries nor any of their respective properties is or are
subject to any order, writ, judgment, injunction, decree or award
having, or which would have or would reasonably be likely to
have, individually or in the aggregate, a Material Adverse
Effect.
SECTION III.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Disclosure Schedule contains a true
18
and complete list of (i) each "employee benefit plan" (within the
meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), each stock option,
stock purchase, compensation, deferred compensation and each
other employee plan, program, agreement or arrangement (including
all director benefit plans, and all severance guidelines and
practices ("Severance Plans"))and each vacation or sick pay
policy, and fringe benefit plan (collectively, the "Company
Plans") and (ii) each compensation or employment agreement
(collectively, the "Employment Agreements") in existence as of
the date hereof for any employees (and former employees) and
directors (and former directors) of the Company and its
Subsidiaries (in each case, other than the New Employment
Agreements).
(b) Each Company Plan which is intended to be
qualified within the meaning of Code (as defined below)
section 401(a) has received a favorable determination letter as
to its qualification (a copy of which has been made available to
Newco). With respect to each Company Plan, the Company has
delivered to Newco a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof
and, to the extent applicable, (i) any related trust agreement or
other funding instrument, (ii) the most recent determination
letter, (iii) any summary plan description and other written
communications by the Company or any of its Subsidiaries to their
employees concerning the extent of the benefits provided under a
Company Plan and (iv) for the most recent year (A) the Form 5500
and attached schedules, (B) audited financial statements and
(C) actuarial valuation reports.
(c) Except as would not have or would not reasonably
be likely to have a Material Adverse Effect, (i) each Company
Plan has been established and administered in all material
respects in accordance with its terms and in compliance with the
applicable provisions of ERISA, the Internal Revenue Code
of 1986, as amended (the "Code"), and other applicable laws,
rules and regulations, (ii) nothing has occurred, whether by
action or failure to act, that would cause the loss of
qualification of any Company Plan that has received a favorable
determination letter, (iii) no event has occurred and no
condition exists that would subject the Company or any of its
Subsidiaries, either directly or by reason of their affiliation
with any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c),
(m) or (o)), to any tax, fine, lien or penalty imposed by ERISA,
the Code or other applicable laws, rules and regulations,
(iv) for each Company Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the
matters covered by the most recent Form 5500 since the date
thereof,(v) no "reportable event" (as such term is defined in
ERISA section 4043) with respect to which notice has not been
19
waived, and no "prohibited transaction" (as such term is defined
in ERISA section 406 and Code section 4975) that is not exempt or
"accumulated funding deficiency" (as such term is defined in
ERISA section 302 and Code section 412 (whether or not waived))
has occurred with respect to any Company Plan, (vi) there has
been no termination of any Company Plan which has caused any
liability under Title IV of ERISA and (vii) all contributions to,
and payments from, each Company Plan have been timely made.
(d) Except as would not have or would not reasonably
be likely to have a Material Adverse Effect, neither the Company
nor any of its Subsidiaries or any member of their Controlled
Group contributes or has any liability to any multiemployer plan
(within the meaning of ERISA section 4001(a)(3)) and none of the
Company, any of its Subsidiaries or any member of their
Controlled Group has incurred any withdrawal liability under
Title IV of ERISA.
(e) With respect to each Company Plan, except as would
not have or would not reasonably be likely to have a Material
Adverse Effect, no actions, suits, or claims (other than routine
claims for benefits in the ordinary course) are pending or, to
the knowledge of the Company, threatened.
(f) Except as would not have or would not reasonably
be likely to have a Material Adverse Effect, the information
supplied to the plan actuary by the Company and any Subsidiary of
the Company for use in preparing the most recent actuarial
reports or valuations was complete and accurate in all material
respects and the Company has no reason to believe that the
conclusions expressed in those reports or valuations are
incorrect.
(g) The list of employee welfare benefit plans (within
the meaning of section 3(1) of ERISA) set forth in
Section 3.10(g) of the Disclosure Schedule discloses whether each
welfare plan is (i) unfunded, (ii) funded through a "welfare
benefit fund," as such term is defined in section 419(e) of the
Code, or other funding mechanism, or (iii) insured.
(h) Except as would not have or would not reasonably
be likely to have a Material Adverse Effect, no compensation
payable by the Company or any of its Subsidiaries to any of their
employees under any existing contract, Company Plan or other
employment arrangement or understanding (including by reason of
any of the transactions contemplated by this Agreement) would be
subject to disallowance under section 162(m) of the Code.
(i) Other than payments that may be made to the
persons listed in Section 3.10(e) of the Disclosure Schedule (the
"Primary Company Executives"), any amount that could be received
(whether in cash or property or the vesting of property) as a
20
result of the Merger by any employee, officer or director of the
Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in the proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Company
Plan currently in effect would not be characterized as an "excess
parachute payment" (as defined in Section 280G(b)(1) of the
Code).
(j) No employee of the Company or any of its
Subsidiaries will be entitled to any additional benefits in any
material amount or any acceleration of the time of payment or
vesting of any benefits in any material amount under any Company
Plan as a result of the performance of this Agreement.
(k) Based on the assumptions incorporated in the
information made available to Newco as of April 9, 1999, if the
Company were to (i) borrow the maximum amount available from the
life insurance policies held by the Company under The ▇▇▇▇▇▇,
Inc. Executive Life Insurance Plan and contribute such amount to
the Company's Executive Benefits Trust and (ii) obtain waivers
from each of the Company's executives listed on Section 3.10(k)
of the Disclosure Schedule to the effect that there will be no
required funding of the Company's Benefits Protection Trust
(together with the Company's Executive Benefits Trust, the "Rabbi
Trusts") in excess of the amount provided in this Section
3.10(k), the maximum amount that would be required to be funded
pursuant to the provisions of the Rabbi Trusts would be not more
than $1,500,000 as of the date hereof.
SECTION III.11 Tax Matters. Except for matters which
would not have or would not reasonably be likely to have a
Material Adverse Effect, the Company and each of its
Subsidiaries, and any consolidated, combined, unitary or
aggregate group for tax purposes of which the Company or any of
its Subsidiaries is currently a member (a "Company Affiliated
Group"), has timely filed all Tax Returns (as defined below)
required to be filed by it in the manner provided by law, has
paid all Taxes (as defined below) shown thereon to be due and has
provided adequate reserves in its financial statements for any
Taxes that have not been paid, whether or not shown as being due
on any Tax Returns. Except for matters which would not have or
would not reasonably be likely to have a Material Adverse Effect:
(i) there is no audit examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company, any Subsidiary of the Company
or any member of the Company Affiliated Group; (ii) no requests
for waivers of the time to assess any Taxes have been granted or
are pending (other than with respect to years that are currently
under examination by the U.S. Internal Revenue Service or other
applicable taxing authorities); (iii) all material assessments
21
for Taxes due and owing by the Company, any Subsidiary of the
Company or any member of the Company Affiliated Group with
respect to completed and settled examinations or concluded
litigation have been paid, unless such amounts are not yet due or
are being contested in good faith; (iv) the statute of
limitations on assessment or collection of any federal or state
income taxes due from the Company or any of its Subsidiaries has
expired for all taxable years of the Company and its Subsidiaries
through February 1993; (v) the federal income Tax Returns of the
Company and each of its Subsidiaries have been examined by and
settled with the U.S. Internal Revenue Services for all years
through February 1993; (vi) the Company and each of its
Subsidiaries have complied in all material respects with all
rules and regulations relating to the withholding of Taxes; and
(vii) to the knowledge of the Company, no liability for Taxes of
another corporation has been asserted against the Company or any
of its Subsidiaries by reason of its being or having been a
member of any consolidated, combined, unitary or aggregate group
for tax purposes (other than a Company Affiliated Group). For
purposes of this Agreement, "Taxes" shall mean any taxes of any
kind, including but not limited to those on or measured by or
referred to as income, gross receipts, capital, sales, use, ad
valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, value
added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority,
domestic or foreign. For purposes of this Agreement, "Tax
Return" shall mean any return, report or statement required to be
filed with any governmental authority with respect to Taxes,
including any schedule or attachment thereto or amendment
thereof.
SECTION III.12 Form S-4; Proxy Statement. None of the
information supplied or to be supplied by the Company
specifically for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented and at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are
made, not misleading and (ii) the proxy statement to be sent to
the stockholders of the Company in connection with the
Stockholders Meeting (such proxy statement, as amended or
supplemented, is herein referred to as the "Proxy Statement")
will, at the date it is first mailed to the stockholders of the
Company and at the time of the 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 the light of the circumstances under
22
which they are made, not misleading. The Form S-4 will, as of
its effective date, and the prospectus contained therein will, as
of its date, comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations
promulgated thereunder. The Proxy Statement will, at the time of
the Stockholders Meeting, comply as to form in all material
respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated
thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information
supplied by Newco or any of its affiliates or representatives
which is contained or incorporated by reference in the Form S-4
or the Proxy Statement.
SECTION III.13 Labor Matters. (i) Neither the Company
nor any of its Subsidiaries is a party to any agreement pursuant
to which a labor organization is certified under applicable labor
law as a bargaining agent for any of the Company's or any of its
Subsidiaries' employees or is presently negotiating any such
agreement, (ii) there are no strikes, work stoppages, work
slowdowns, sick-outs, lock-outs, or, to the knowledge of the
Company, threats of any of the foregoing, except as would not
have or would not reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect and (iii) to the
knowledge of the Company, the Company and each of its
Subsidiaries is in compliance with all applicable laws,
agreements, contracts and policies relating to employment,
employment practices and wages, except for any such failure to
comply with such laws, agreements, contracts or policies which,
individually or in the aggregate, would not have or would not
reasonably be likely to have a Material Adverse Effect.
SECTION III.14 Properties. The Company or one of its
Subsidiaries has (i) good and marketable title to the real
property owned in fee by the Company or any of its Subsidiaries
and (ii) good and valid leasehold title or other occupancy right
to the real property leased, subleased or licensed by the Company
or any of its Subsidiaries, in each case where any such real
property is reasonably necessary to the conduct of the business
of the Company and its Subsidiaries as it is presently conducted
(collectively, the "Real Properties"), except for any failure to
have such title or right which, individually or in the aggregate,
would not have or would not reasonably be likely to have a
Material Adverse Effect. With respect to any Real Property owned
by the Company or any of its Subsidiaries, such property is owned
free and clear of all liens and other encumbrances, except for
(i) any such liens or other encumbrances for taxes, assessments
and other governmental charges not yet due and payable or, if
due, not delinquent or being contested in good faith by
appropriate proceedings during which collection or enforcement
against the Real Property is stayed, (ii) easements, licenses,
covenants, conditions, rights-of-way and other similar
23
restrictions and encumbrances, including any other agreements,
restrictions or encumbrances which would be shown by a current
title report or other similar report or listing and other matters
of record, so long as any such easements, licenses, covenants,
conditions, rights-of-way and other similar restrictions and
encumbrances do not prevent the use of such Real Property as
currently used, (iii) zoning, building and other similar
restrictions, (iv) any such liens or other encumbrances in
respect of pledges or deposits and worker's compensation laws or
similar legislation, unemployment insurance or other types of
social security or to secure the performance of tenders,
statutory obligations, and appeal bonds, bids, leases, government
contracts, performance and return of money bonds and similar
obligations or mechanics', artisan's or workmen's liens so long as
any such liens do not prevent the use of such Real Property as
currently used or (v) where the existence of any such liens or
other encumbrances, individually or in the aggregate, would not
have or would not reasonably be likely to have a Material Adverse
Effect. There are no pending or, to the knowledge of the
Company, threatened condemnation proceedings against or affecting
any owned Real Property and none of the owned Real Property is
subject to any commitment or other arrangement for its sale to a
third party outside the ordinary course of business, except where
the existence of any such proceeding, commitment or other
arrangement which, individually or in the aggregate, would not
have or would not reasonably be likely to have a Material Adverse
Effect.
SECTION III.15 Environmental Matters. (a) Except as
would not have or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect:
(i) the Company and each of its Subsidiaries complies with all
applicable Environmental Laws (as defined below) and possesses
and complies with all applicable Environmental Permits (as
defined below) required under such laws to operate its business
as it presently operates; (ii) within the past two years the
Company has not received any (A) written notification alleging
that it or any of its Subsidiaries has violated or is liable
under any Environmental Law or (B) written request for
information pursuant to section 104(e) of the U.S. Comprehensive
Environmental Response, Compensation and Liability Act or similar
U.S. state statute concerning disposal of Materials of
Environmental Concern (as defined below) at any location;
(iii) there are no Environmental Claims (as defined below)
pending or, to the knowledge of the Company, threatened, against
the Company or any of its Subsidiaries or, to the knowledge of
the Company, against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has or
is alleged to have retained or assumed either contractually or by
operation of law; and (iv) since January 1, 1992 none of the
Company or any of its Subsidiaries has contractually retained or
contractually assumed any liabilities or obligations that could
24
reasonably be expected to provide the basis for an Environmental
Claim. Notwithstanding the generality of any other
representations and warranties in this Agreement, the
representations and warranties in this Section 3.15 shall be
deemed the only representations and warranties in this Agreement
with respect to matters relating to Environmental Laws or to
Materials of Environmental Concern.
(b) To the knowledge of the Company after due inquiry,
there have been no Releases (as defined below) of Materials of
Environmental Concern (as defined below) in a condition or
concentration that is reasonably likely to result in a material
Environmental Claim against the Company or any of its
Subsidiaries at any property currently or formerly owned or
operated by the Company or any of its Subsidiaries or any
properties at which Materials of Environmental Concern were
stored or disposed of or to which Materials of Environmental
Concern were transported by or on behalf of the Company or any of
its Subsidiaries.
(c) For purposes of this Agreement, the following
terms are defined as set forth below:
"Environmental Claim" means any and all administrative,
regulatory or judicial actions, orders, decrees, suits, demands,
demand letters, claims, investigations, liens, proceedings,
notices of noncompliance or violation, and, in the case of the
province of Ontario, program approvals, of which the Company or
any of its Subsidiaries has been notified in writing or of which
the Company's general counsel has been notified orally, by any
person or entity (including any Governmental Entity), alleging
potential liability (including potential responsibility or
liability for enforcement, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs,
natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from (A) the
presence, Release or threatened Release of any Materials of
Environmental Concern at any location, whether or not owned,
operated, leased or managed by the Company or any of its
Subsidiaries, (B) any violation or alleged violation of any
Environmental Law or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence,
Release or threatened Release of any Materials of Environmental
Concern;
"Environmental Laws" means all foreign or U.S. federal,
state or local statutes, regulations, ordinances, codes, decrees,
judgments or binding agreements issued, promulgated or entered
into by or with any Governmental Entity or relating to pollution
or protection of the environment (including the ambient air,
25
soil, surface water or groundwater), in effect as of the date of
the Closing;
"Environmental Permits" means all permits, licenses,
registrations and, in the case of the province of Ontario,
certificates of approval, and other authorizations required under
applicable Environmental Laws;
"Materials of Environmental Concern" means: (i) any
hazardous, acutely hazardous or toxic substance or waste defined
as such, or any other chemical or material regulated, under
Environmental Laws, including the U.S. Comprehensive
Environmental Response, Compensation and Liability Act and the
U.S. Resource Conservation and Recovery Act; and (ii) petroleum
and petroleum by-products; and
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration into the environment (including
ambient air, soil, surface water or groundwater) or within any
building, structure, facility or fixture.
SECTION III.16 Intellectual Property. To the
knowledge of the Company, the Company and its Subsidiaries own or
possess adequate rights to use all patents, trademarks, trade
names, service marks, inventions, processes, designs, know-how
and other proprietary intellectual property rights reasonably
necessary for the conduct of the business of the Company and its
Subsidiaries as presently conducted (the "Intellectual
Property"), except for any such failure to own or possess which,
individually or in the aggregate, would not have or would not
reasonably be likely to have a Material Adverse Effect. To the
knowledge of the Company, neither the Company nor any of its
Subsidiaries has received any written notice or claim in the past
twenty-four months that any Intellectual Property is invalid or
ineffective, infringes in any material way on similar rights
owned or alleged to be owned by others or is being infringed by
others in any material way, except for any such failure to be
valid or effective or any such infringement which, individually
or in the aggregate, would not have or would not reasonably be
likely to have a Material Adverse Effect.
SECTION III.17 Year 2000. All computer software,
computer hardware and other applicable technology used by the
Company or any of its Subsidiaries is currently designed or in
the process of being prepared to operate in all respects after
December 31, 1999 to process accurately data (including
calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, except for any such
deficiencies which could be remediated by December 31, 1999 or
which, individually or in the aggregate, would not have or would
26
not reasonably be likely to have a Material Adverse Effect.
SECTION III.18 Opinion of Financial Advisor. The
Beacon Group Capital Services, LLC (the "Financial Advisor") has
delivered to the Board of Directors of the Company its written
opinion (or oral opinion to be confirmed in writing) that the
consideration to be received by the stockholders of the Company
pursuant to the Merger is fair to such stockholders from a
financial point of view.
SECTION III.19 Brokers. No broker, finder or
investment banker (other than the Financial Advisor) is entitled
to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company.
SECTION III.20 Takeover Statutes; Rights Plans. No
"fair price", "moratorium", "control share acquisition" or other
similar antitakeover statute or regulation enacted under state or
federal laws in the United States (with the exception of
Section 203 of the DGCL) applicable to the Company is applicable
to the Merger or the other transactions contemplated hereby. As
of the date of this Agreement, the Company does not have any
stockholder rights plan or similar antitakeover device in effect.
Assuming the accuracy of the representation and warranty of
Newco set forth in Section 4.8, the action of the Board of
Directors of the Company in approving the Merger, this Agreement
and the Stockholder Agreement (and the transactions provided for
herein and therein) is sufficient to render inapplicable to the
Merger and this Agreement and the Stockholder Agreement (and the
transactions provided for herein and therein) the restrictions on
"business combinations" (as defined in Section 203 of the DGCL)
set forth in Section 203 of the DGCL.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF NEWCO
Newco hereby represents and warrants to the Company
that:
SECTION IV.1 Corporate Organization. Newco is duly
organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite power and
authority to own, operate or lease its properties and to carry on
its business as it is now being conducted.
SECTION IV.2 Authority Relative to This Agreement.
Newco has all necessary power and authority to execute and
deliver this Agreement and the Stockholder Agreement, to perform
27
its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Stockholder
Agreement by Newco and the consummation by Newco of the
transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary action (including by the
Boards of Directors or equivalent bodies of Parent and Newco and,
prior to the Effective Time, by Parent as the sole stockholder of
Newco), and no other proceedings on the part of Newco are
necessary to authorize this Agreement or the Stockholder
Agreement or to consummate the transactions contemplated hereby
and thereby (other than the filing with the Secretary of State of
the State of Delaware of the Certificate of Merger as required by
the DGCL). This Agreement has been duly executed and delivered
by Newco and, assuming due authorization, execution and delivery
hereof by the Company, constitutes a legal, valid and binding
obligation of each such party enforceable against it in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
SECTION IV.3 No Conflict; Required Filings and
Consents. (a) The execution and delivery of this Agreement and
the Stockholder Agreement by Newco and the consummation by Newco
of the transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate the respective certificates
or articles of incorporation or by-laws or equivalent
organizational documents of Newco, (ii) assuming that all
consents, approvals and authorizations contemplated by
subsection (b) below have been obtained and all filings described
in such subsection have been made, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to
Newco or by which its properties are bound or (iii) result in any
breach or violation of or constitute a default (or an event which
with notice or lapse of time or both would become a default) or
result in the loss of a material benefit under, or give rise to
any right of termination, cancellation, material amendment or
material acceleration of, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit or other instrument
or obligation to which Newco is a party or by which Newco or any
of its properties are bound, except, in the case of clauses (ii)
and (iii), for any such conflict, violation, breach, default or
other occurrence which, individually or in the aggregate, would
not have or would not reasonably be likely to have a Newco
Material Adverse Effect (as defined below).
As used herein, "Newco Material Adverse Effect" means
any change or effect that would be materially adverse to the
28
ability of Newco to perform its obligation under this Agreement
or to consummate the Merger and the other transactions
contemplated hereby.
(b) The execution and delivery of this Agreement and
the Stockholder Agreement by Newco and the consummation by Newco
of the transactions contemplated hereby and thereby do not and
will not require any consent, approval, authorization or permit
of, action by, filing with or notification to any Governmental
Entity, except for (i) compliance with and filings under, to the
extent required, the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, the HSR Act and
state securities, takeover and Blue Sky laws, (ii) the filing of
the Form S-4, including the Proxy Statement, with the SEC under
the Securities Act, (iii) the filing with the Secretary of State
of the State of Delaware of the Certificate of Merger as required
by the DGCL, (iv) compliance with and filings under, to the
extent required, applicable requirements of the Department of
Defense and the Bureau of Alcohol, Tobacco and Firearms, which
requirements are not applicable prior to the Effective Time,
(v) compliance with and filings under, to the extent required,
the applicable requirements of the Investment Canada Act and the
Canada Competition Act, (vi) compliance with and filings under,
to the extent required, the applicable requirements with the
Brazilian Antitrust Authority, (vii) compliance with and filings
under, to the extent required, the applicable requirements of the
NYSE or the Nasdaq Stock Market, as the case may be, and
(viii) any such consent, approval, authorization, permit, action,
filing or notification, the failure of which to make or obtain,
individually or in the aggregate, would not have or would not
reasonably be likely to have a Newco Material Adverse Effect.
SECTION IV.4 Form S-4; Proxy Statement. None of the
information supplied or to be supplied by Newco specifically for
inclusion in (i) the Form S-4 will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented and
at the time it becomes effective under the Securities Act,
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 the light of the
circumstances under which they are made, not misleading and
(ii) the Proxy Statement will, at the date it is first mailed to
the stockholders of the Company and at the time of the
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
the light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, Newco makes no
representation or warranty with respect to any information
29
supplied by the Company or any of its representatives which is
contained or incorporated by reference in the Form S-4 or the
Proxy Statement.
SECTION IV.5 Brokers. No broker, finder or investment
banker (other than ▇▇▇▇▇▇ Brothers Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Newco or any of its
affiliates.
SECTION IV.6 Financing. Newco has received and
delivered to the Company two commitment letters each dated
April 17, 1999 addressed to Parent and Newco (the "Bank
Commitment Letters") from ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇
Commercial Paper Inc. whereby ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇
Commercial Paper Inc. have committed, upon the terms and subject
to the conditions set forth therein, to provide debt financing in
the aggregate amount of $825 million (of which $325 million shall
be in the form of senior subordinated indebtedness)
(collectively, the "Debt Financings"). Newco has received and
delivered to the Company a letter dated the date hereof (the
"Parent Commitment Letter") from Parent addressed to Newco and
the Company whereby Parent has committed, upon the terms and
subject to the conditions set forth therein, to provide a cash
contribution in the form of common equity financing to Newco in
the amount of $417.5 million, less the equity investment in the
Company made as part of the Closing by members of the Company's
management pursuant to the Management Agreements (the
"Contribution Amount" and, together with the Debt Financings, the
"Financings"). Each of the Bank Commitment Letters and the
Parent Commitment Letter is in effect on the date hereof and has
not been amended or modified and there is no breach or default
existing (or which with notice or lapse of time or otherwise may
exist) thereunder. The aggregate proceeds of the Financings are
sufficient to pay the cash portion of the Merger Consideration,
to repay the existing indebtedness of the Company and its
Subsidiaries (excluding any indebtedness the parties agree shall
not be repaid) and to pay all fees and expenses related to the
transactions contemplated by this Agreement.
SECTION IV.7 Operations of Newco. Newco was formed on
April 6, 1999 solely for the purpose of engaging in the
transactions contemplated by this Agreement and the Stockholder
Agreement and prior to the Effective Time will have engaged in no
other business activities and will have incurred no liabilities
or obligations other than as contemplated herein. The authorized
capital stock of Newco consists of 1,000 shares of common stock,
par value $0.01 per share, all shares of which are issued and
outstanding. All of such issued and outstanding shares are
validly issued, fully paid and nonassessable and are owned by
Parent, free and clear of all security interests, liens, claims,
30
pledges, agreements, limitations on voting rights, charges or
other encumbrances of any nature whatsoever. Newco has no direct
or indirect Subsidiaries and does not own, directly or
indirectly, any capital stock, membership interest, partnership
interest, joint venture interest or other equity interest in any
person.
SECTION IV.8 Ownership of Company Common Stock. As of
the date of this Agreement, Newco or its affiliates do not own
(directly of indirectly, beneficially or of record) any shares of
Company Common Stock, and none of Newco or its affiliates hold
any rights to acquire any shares of Company Common Stock except
pursuant to this Agreement.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION V.1 Conduct of Business of the Company Pending
the Merger. The Company covenants and agrees that, during the
period from the date hereof until the Effective Time, except as
specifically contemplated by this Agreement or the Management
Agreements, as set forth on Section 5.1 of the Disclosure
Schedule or as required by law, or unless Newco shall otherwise
consent in writing, the business of the Company and its
Subsidiaries shall be conducted in its ordinary course of
business consistent with past practice and the Company shall use
its reasonable best efforts to preserve substantially intact its
business organization, to keep available the services of its
officers and employees and to preserve its present relationships
with customers, suppliers, Governmental Entities and other
persons with which it has significant business relations.
Between the date of this Agreement and the Effective Time, except
as specifically contemplated by this Agreement or the Management
Agreements, as set forth on Section 5.1 of the Disclosure
Schedule or as required by law, neither the Company nor any of
its Subsidiaries shall without the prior written consent of
Newco:
(a) amend or otherwise change its certificate of
incorporation or by-laws or equivalent organizational documents;
(b) authorize for issuance, issue, deliver, sell,
pledge, dispose of or encumber any shares of capital stock of any
class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including but not limited to stock
appreciation rights or phantom stock rights), of the Company or
any of its Subsidiaries (except (i) for the issuance of shares of
Company Class A Common Stock issuable in accordance with the
terms of Employee Options as in effect on the date hereof,
31
(ii) for the conversion of shares of Company Class B Common Stock
into shares of Company Class A Common Stock, (iii) for the grant
of Employee Options, and issuances of Company Class A Common
Stock pursuant thereto, in the ordinary course of business
consistent with past practice or (iv) in connection with the
dividend reinvestment plan of the Company);
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock (except for
(i) any dividend or distribution by a wholly-owned (other than
directors' qualifying shares) Subsidiary of the Company or
(ii) regular quarterly dividends of the Company in an amount not
to exceed $0.07125 per Share per quarter, subject to increases
consistent with past practice);
(d) effect any reorganization or recapitalization or
reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire any capital stock of the Company or any of its
Subsidiaries (except in connection with the conversion of shares
of Company Class B Common Stock into shares of Company Class A
Common Stock), other than the transactions contemplated hereby
and by the Stockholder Agreement;
(e) (i) acquire (by merger, consolidation or
acquisition of stock or assets) or sell (by merger, consolidation
or sale of stock or assets) any corporation, partnership or other
business organization or division thereof or any assets, in each
case, which are material to the Company and its Subsidiaries
taken as a whole, (ii) incur any long-term indebtedness for
borrowed money or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any
person, or make any loans, advances or capital contributions to,
or investments in, any other person (other than a Subsidiary of
the Company), in each case, other than (A) in the ordinary course
of business consistent with past practice or (B) any letter of
credit entered into in the ordinary course of business consistent
with past practice, (iii) other than in the ordinary course of
business consistent with past practice, enter into or renew or
amend in any material respect any contract or agreement which is
or would be material to the Company and its Subsidiaries taken as
a whole or (iv) authorize any new capital expenditures which are,
in the aggregate, in excess of $25,000,000;
(f) except as contemplated by Section 6.6 or except to
the extent required under the Company Plans and Employment
Agreements as in effect on the date of this Agreement, increase
the compensation or fringe benefits of any of its directors,
officers or employees, except for increases for officers and
employees of the Company or its Subsidiaries in the ordinary
32
course of business consistent with past practice, or establish,
adopt, enter into or amend or terminate any collective bargaining
agreement, Company Plan or bonus, profit sharing, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) sell, lease or otherwise dispose of, or grant any
lien with respect to, any assets or properties of the Company or
its Subsidiaries which are, individually or in the aggregate,
material to the Company and its Subsidiaries, taken as a whole,
except for dispositions of excess or obsolete assets and sales of
inventories in the ordinary course of business consistent with
past practice;
(h) change in any material respect any of the
accounting principles or practices used by it, except as may be
required as a result of a change in SEC guidelines or generally
accepted accounting principles;
(i) make any material Tax election or settle or
compromise any material Tax liability, other than in the ordinary
course of business;
(j) pay, discharge or satisfy any liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than any payment, discharge or
satisfaction (i) in the ordinary course of business consistent
with past practice, (ii) in accordance with the terms of any such
liabilities or obligations, (iii) as otherwise permitted by this
Agreement or (iv) which does not involve an amount in excess of
$500,000;
(k) settle or compromise any litigation (whether or
not commenced prior to the date of this Agreement) other than
settlements or compromises of litigation where the amount paid
(less the amount reserved for such matters by the Company) in
settlement or compromise in each case does not exceed $250,000;
(l) adopt a plan of complete or partial liquidation,
dissolution, consolidation, restructuring, recapitalization,
merger or other reorganization of the Company or any of its
Subsidiaries not constituting an inactive Subsidiary (other than
the Merger); or
(m) agree to take any of the actions described in
Sections 5.1(a) through 5.1(l).
33
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION VI.1 Stockholders Meeting. (a) As soon as
reasonably practicable following the date of this Agreement, the
Company, acting through its Board of Directors, shall (i) duly
call, give notice of, convene and hold a meeting of its
stockholders for the purpose of adopting this Agreement (the
"Stockholders Meeting") and (ii) (A) include in the Proxy
Statement the recommendation of the Board of Directors that the
stockholders of the Company vote in favor of the adoption of this
Agreement and the written opinion of the Financial Advisor that
the Merger Consideration to be received by the stockholders of
the Company pursuant to the Merger is fair to such stockholders
from a financial point of view and (B) use its reasonable best
efforts to obtain the necessary adoption of this Agreement by the
stockholders of the Company; provided that the Board of Directors
of the Company may fail to make or withdraw, modify or change
such recommendation and/or may fail to use such efforts if it
shall have determined in good faith, after consultation with
outside counsel to the Company, that such action is necessary in
order for the Board of Directors to act in a manner consistent
with its fiduciary duties under applicable law.
(b) Notwithstanding anything to the contrary contained
in this Agreement, this Agreement shall be submitted to the
stockholders of the Company whether or not the Board of Directors
determines at any subsequent time after the date of this
Agreement to withdraw, modify or change its recommendation that
the stockholders of the Company vote in favor of the adoption of
this Agreement; provided that the Company shall not be required
to hold the Stockholders Meeting and submit this Agreement if
this Agreement is terminated.
SECTION VI.2 Form S-4 and Proxy Statement. As soon as
reasonably practicable following the date of this Agreement, the
Company shall prepare the Form S-4 and the Proxy Statement and
shall file with the SEC under the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder the
Form S-4, in which the Proxy Statement will be included. Newco
and the Company will cooperate with each other in the preparation
of the Form S-4 and the Proxy Statement. Without limiting the
generality of the foregoing, Newco will furnish to the Company
the information relating to it or its affiliates required by the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Form S-4 and the
Proxy Statement. The Company shall use its reasonable best
efforts to have the Form S-4 declared effective under the
Securities Act as soon as reasonably practicable after it is
34
filed with the SEC. The Company shall use its reasonable best
efforts to cause the Proxy Statement to be mailed to the
stockholders of the Company as soon as reasonably practicable
after the Form S-4 is declared effective under the Securities
Act. The Company shall also use its reasonable best efforts to
take any action required to be taken under any applicable state
securities laws in connection with the registration and
qualification of the Non-Cash Election Shares following the
Merger. Each of Newco and the Company agree to correct any
information provided by it for use in the Form S-4 which shall
have become false or misleading. The Company shall as soon as
reasonably practicable notify Newco of (i) the effectiveness of
the Form S-4, (ii) the receipt of any comments from the SEC with
respect to the Form S-4 and the Proxy Statement and (iii) any
request by the SEC for any amendment to the Form S-4 and the
Proxy Statement or for additional information.
SECTION VI.3 Resignation of Directors. At the
Closing, the Company shall deliver to Newco evidence reasonably
satisfactory to Newco of the resignation of all directors of the
Company, effective at the Effective Time.
SECTION VI.4 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, upon reasonable
prior written notice, the Company shall, and shall use its
reasonable best efforts to cause its Subsidiaries, officers,
directors and employees to, afford the officers, employees,
auditors and other authorized representatives of Newco reasonable
access, consistent with applicable law, at all reasonable times
to its officers, employees, properties, offices, plants and other
facilities and to all books and records, including security
position listings or other information concerning beneficial
owners and/or record owners of the Company's securities, and
shall furnish Newco with all financial, operating and other data
and information as Newco, through its officers, employees or
authorized representatives, may from time to time reasonably
request in writing. Notwithstanding the foregoing, any such
investigation or consultation shall be conducted in such a manner
as not to interfere unreasonably with the business or operations
of the Company or its Subsidiaries and shall be in accordance
with any other existing agreements or obligations binding on the
Company or any of its Subsidiaries.
(b) Newco shall hold and treat and shall cause its
officers, employees, auditors and other authorized
representatives and those of its affiliates to hold and treat in
confidence all documents and information concerning the Company
and its Subsidiaries furnished to Parent or Newco in connection
with the transactions contemplated in this Agreement and the
Stockholder Agreement in accordance with the confidentiality
agreement, dated December 7, 1998, between the Company and Newco
35
(the "Confidentiality Agreement"), which Confidentiality
Agreement shall remain in full force and effect in accordance
with its terms.
SECTION VI.5 No Solicitation of Transactions.
(a) The Company shall immediately cease any existing discussions
or negotiations, if any, with any parties conducted heretofore
with respect to any Takeover Proposal (as defined below). The
Company shall not directly or indirectly, and it shall use its
reasonable best efforts to cause its officers, directors,
employees, representatives, agents or affiliates, including any
investment bankers, attorneys or accountants (collectively,
"Representatives") retained by the Company or any of its
Subsidiaries or affiliates not to, (i) solicit, initiate,
encourage or otherwise facilitate (including by way of furnishing
information) any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a
merger, recapitalization, consolidation, business combination,
sale of a substantial portion of the assets of the Company and
its Subsidiaries, taken as a whole, sale of 15% or more of the
shares of capital stock (including by way of a tender offer,
share exchange or exchange offer) or similar or comparable
transactions involving the Company or any of its Subsidiaries,
other than the transactions contemplated by this Agreement (any
of the foregoing inquiries or proposals being referred to in this
Agreement as a "Takeover Proposal"), or (ii) engage in
negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Takeover
Proposal. Notwithstanding anything in this Agreement to the
contrary, the Board of Directors of the Company may, at any time
prior to adoption of this Agreement by the stockholders of the
Company, furnish information (pursuant to a customary
confidentiality agreement no more favorable, in the aggregate, to
the party receiving information than the Confidentiality
Agreement (it being understood that the Company may enter into a
confidentiality agreement without a standstill or with a
standstill provision less favorable to the Company if it waives
or similarly modifies the standstill provision in the
Confidentiality Agreement; provided that in no circumstances
shall any such standstill provision in any such further
confidentiality agreement be more favorable with respect to the
purchase of shares of Company Common Stock)) to, or engage in
discussions or negotiations with, any person in response to an
unsolicited bona fide written Takeover Proposal of such person,
if, and only to the extent that, (A) the Board of Directors of
the Company, after consultation with its financial advisors and
outside legal counsel to the Company, determines in good faith
that such Takeover Proposal could reasonably be expected to
constitute a Superior Proposal (as defined herein) and (B) prior
to furnishing such information to, or entering into discussions
or negotiations with, such person, the Company provides written
notice to Newco to the effect that it is furnishing information
36
to, or entering into discussions or negotiations with, such
person and the Company complies with Section 6.5(c).
(b) Notwithstanding anything in this Agreement to the
contrary, in response to an unsolicited Takeover Proposal, the
Company's Board of Directors shall be permitted (i) to withdraw,
modify or change, or propose to withdraw, modify or change, the
approval or recommendation by the Board of Directors of this
Agreement, the Merger or the other transactions contemplated by
this Agreement; or (ii) to approve or recommend, or propose to
approve or recommend, any Takeover Proposal, but only if, in each
case referred to in clauses (i) and (ii), the Board of Directors
of the Company concludes in good faith that such Takeover
Proposal, if consummated, would constitute a Superior Proposal.
"Superior Proposal" means any written Takeover Proposal which the
Board of Directors of the Company determines in good faith (after
consultation with its financial advisors and legal counsel)
taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal,
(i) would, if consummated, result in a transaction that is more
favorable to the Company's stockholders (in their capacity as
stockholders), from a financial point of view, than the
transactions contemplated by this Agreement and (ii) is
reasonably capable of being completed (provided that for purposes
of this definition the term Takeover Proposal shall have the
meaning assigned to such term in Section 6.5(b), except that
(x) the reference to "15%" in the definition of Takeover Proposal
shall be deemed to be a reference to "50%", (y) "Takeover
Proposal" shall only be deemed to refer to a transaction
involving the Company, or with respect to assets (including the
shares of any Subsidiary of the Company) of the Company and its
Subsidiaries, taken as a whole, and not any of its Subsidiaries
alone and (z) no such sale of assets shall be deemed to be
"substantial" unless such sale is for at least 75% of the assets
of the Company and its Subsidiaries, taken as a whole.
(c) The Company shall notify Newco as promptly as
reasonably practicable (and no later than 24 hours) after receipt
by the Company of any Takeover Proposal or any request for non-
public information in connection with a Takeover Proposal or for
access to the properties, books or records of the Company by any
person or entity that informs the Company that it is considering
making, or has made, a Takeover Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions
of such proposal, inquiry or contact to the extent available to
the Company.
(d) Nothing contained in this Section 6.5 shall
prohibit the Company or its Board of Directors (i) from taking
and disclosing to its stockholders a position contemplated by
37
Rule 14e-2(a) promulgated under the Exchange Act or from making
any legally required disclosure to the stockholders of the
Company or (ii) prior to the adoption of this Agreement by the
stockholders of the Company, from taking any action as
contemplated by Section 8.1(e).
SECTION VI.6 Employment and Employee Benefits Matters.
(a) As of the Effective Time, the obligations of the Company
and its Subsidiaries under each Company Plan, Employment
Agreement and New Employment Agreement shall continue as
obligations of the Surviving Corporation and its Subsidiaries,
respectively.
(b) On and after the Effective Time, the Surviving
Corporation shall and shall cause its Subsidiaries (i) to pay
promptly or provide when due all compensation and benefits earned
through or prior to the Effective Time as provided pursuant to
the terms of the Company Plans and the Employment Agreements and
(ii) to pay promptly or provide when due all other compensation
and benefits required to be paid pursuant to the terms of the
Company Plans, the Employment Agreements and the New Employment
Agreements.
(c) Subject to any rights that any employee may have
under any Company Plan, Employment Agreement or New Employment
Agreement, the Surviving Corporation shall and shall cause each
of its Subsidiaries, for the period commencing at the Effective
Time and ending on the second anniversary thereof, to maintain
for any individual who is actively employed by the Company or any
of its Subsidiaries immediately prior to the Effective Time (the
"Affected Employees") (i) overall compensation levels (such term
to include salary, bonus opportunities and commissions) and
Company Plans (other than stock-based plans) that in the
aggregate are no less favorable than the overall compensation
levels and Company Plans and (ii) Severance Plans that are no
less favorable than the Severance Plans, in each case enjoyed by
such Affected Employees immediately prior to the Effective Time;
provided that nothing herein shall prevent the amendment or
termination of any Company Plan or require that the Surviving
Corporation provide or permit investment in the securities of the
Surviving Corporation or interfere with the Surviving
Corporation's right or obligation to make such changes as are
necessary to conform with applicable law.
(d) Affected Employees shall be given credit for all
service with the Company and its Subsidiaries, to the same extent
as such service was credited for such purpose by the Company,
under each benefit plan, program or arrangement, and the vacation
policies, of Newco or its Subsidiaries in which such Affected
Employees are eligible to participate for purposes of eligibility
and vesting; provided that in no event shall the Affected
Employees be entitled to any credit for benefit accrual purposes
under any defined benefit pension plan of Newco, Newco or their
38
respective affiliates or otherwise to the extent that it would
result in a duplication of benefits with respect to the same
period of service.
(e) Prior to the Closing, the Company will use its
reasonable best efforts to borrow from the key man life insurance
policies listed on Section 6.6(e) of the Disclosure Schedule (the
"Policies") the maximum amount available under such Policies and
will use the proceeds of such loans to fund the Rabbi Trusts to
the extent required under the Rabbi Trusts as a result of the
execution of this Agreement or otherwise.
SECTION VI.7 Directors' and Officers' Indemnification
and Insurance. (a) From the Effective Time through the sixth
anniversary of the date on which the Effective Time occurs, the
Surviving Corporation shall indemnify and hold harmless each
present (as of the Effective Time) or former officer, director or
employee of the Company and its Subsidiaries (the "Indemnified
Parties"), against all claims, losses, liabilities, damages,
judgments, fines and reasonable fees, costs and expenses,
including attorneys' fees and disbursements (collectively,
"Costs"), incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to
(i) the fact that the Indemnified Party is or was an officer,
director or employee of the Company or any of its Subsidiaries or
(ii) matters existing or occurring at or prior to the Effective
Time (including this Agreement and the Stockholder Agreement and
the transactions and actions contemplated hereby and thereby),
whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under applicable law;
provided that no Indemnified Party may settle any such claim
without the prior approval of the Surviving Corporation (which
approval shall not be unreasonably withheld or delayed). Each
Indemnified Party will be entitled to advancement of expenses
incurred in the defense of any claim, action, suit, proceeding or
investigation from the Surviving Corporation within ten business
days of receipt by the Surviving Corporation from the Indemnified
Party of a request therefor; provided that any person to whom
expenses are advanced provides an undertaking, to the extent
required by the DGCL, to repay such advances if it is ultimately
determined that such person is not entitled to indemnification.
(b) The Certificate of Incorporation and by-laws of
the Surviving Corporation shall contain provisions no less
favorable with respect to indemnification, advancement of
expenses and exculpation of former or present directors, officers
and employees than are presently set forth in the Certificate of
Incorporation and by-laws of the Company, which provisions shall
not be amended, repealed or otherwise modified for a period of
39
six years from the Effective Time in any manner that would
adversely affect the rights thereunder of any such individuals.
(c) The Surviving Corporation shall maintain, at no
expense to the beneficiaries, in effect for six years from the
Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company with
respect to matters existing or occurring at or prior to the
Effective Time (including the transactions contemplated by this
Agreement and the Stockholder Agreement); provided that the
Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions which are
not materially less advantageous to any beneficiary thereof.
(d) Notwithstanding anything herein to the contrary,
if any claim, action, suit, proceeding or investigation (whether
arising before, at or after the Effective Time) is made against
any Indemnified Party, on or prior to the sixth anniversary of
the Effective Time, the provisions of this Section 6.7 shall
continue in effect until the final disposition of such claim,
action, suit, proceeding or investigation.
(e) The covenants contained in this Section 6.7 are
intended to be for the benefit of, and shall be enforceable by,
each of the Indemnified Parties and their respective heirs and
legal representatives and shall not be deemed exclusive of any
other rights to which an Indemnified Party is entitled, whether
pursuant to law, contract or otherwise.
(f) In the event that the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors or assigns
of the Surviving Corporation shall succeed to the obligations set
forth in Section 6.6 and this Section 6.7.
SECTION VI.8 Further Action; Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties
hereto shall use its reasonable best efforts to take, or cause to
be taken, all appropriate action, and to do or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable,
including but not limited to (i) cooperation in the preparation
and filing of the Form S-4, the Proxy Statement, any required
filings under the HSR Act and any amendments to any thereof and
(ii) using its reasonable best efforts to make all required
40
regulatory filings and applications (and responding to requests
for further information) and to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts as are
necessary or reasonably advisable for the consummation of the
transactions contemplated by this Agreement and to fulfill the
conditions to the Merger. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the parties hereto
shall, to the extent practicable, cause their respective proper
officers and directors to use their reasonable best efforts to
take all such necessary action.
(b) The Company and Newco each shall keep the other
apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing
the other with copies of notices or other communications received
by Newco or the Company, as the case may be, or any of their
respective Subsidiaries or affiliates, from any Governmental
Entity with respect to the Merger or any of the other
transactions contemplated by this Agreement. The parties hereto
will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any
party hereto in connection with proceedings under or relating to
the HSR Act or any other antitrust or competition law or
regulation.
(c) Each party will as promptly as practicable, but in
no event later than ten business days following the execution and
delivery of this Agreement, file with the United States Federal
Trade Commission (the "FTC") and the United States Department of
Justice (the "DOJ") the notification and report form, if any,
required for the transactions contemplated hereby and any
supplemental information requested in connection therewith
pursuant to the HSR Act, and make similar filings within, to the
extent reasonably practicable, a similar time frame with any
other Governmental Entity for which such filing is required. Any
such notification and report form and supplemental information
will be in substantial compliance with the requirements of the
HSR Act or other applicable antitrust or competition law or
regulation. Newco shall pay all HSR Act filing fees. Each party
will furnish to the other such necessary information and
reasonable assistance as it may reasonably request in connection
with its preparation of such filings. Each party will supply the
other with copies of all correspondence, filings or
communications between such party or its representatives and the
FTC, the DOJ or any other governmental agency or authority or
members of their respective staffs with respect to this Agreement
or the transactions contemplated hereby. Notwithstanding the
other provisions of this Section 6.8, each of the parties will
use its best efforts to obtain any clearance required under the
41
HSR Act or other applicable antitrust or competition law or
regulation for the consummation of the transactions contemplated
hereby.
(d) Each of the Company and Newco shall use its
reasonable best efforts to cause the Merger to be accounted for
as a recapitalization for financial reporting purposes and such
accounting treatment to be accepted by their respective
accountants and by the SEC. Neither Newco nor any of its
officers, directors, employees, advisors, counsel, accountants or
affiliates may hold discussions or correspond with the SEC
regarding the Form S-4, the Proxy Statement, the Merger, the
method of recording the Merger for financial reporting purposes
or the other transactions contemplated hereby without the prior
written consent of the Company (which consent shall not be
unreasonably withheld or delayed) and the Company shall be
entitled (with its advisors, counsel and/or accountants) to
attend any meeting with, participate in any telephone conferences
with, and review, comment on and approve any materials to be
submitted to (which review, comment and approval shall not be
unreasonably withheld or delayed), the SEC in connection with the
foregoing.
(e) At the written request of Newco, the Company shall
on the Closing Date (i) call for the prepayment or redemption of
the 7% Senior Notes Due June 15, 2005 of the Company (the
"Senior Notes"); provided that concurrently with any such request
Newco shall provide to the Company reconfirmations of the Bank
Commitment Letters and Parent Commitment Letter in form and
substance reasonably satisfactory to the Company and a new
commitment letter or amended Bank Commitment Letters with respect
to the provision of the funds necessary for any such prepayment
or redemption in form and substance, and from an institution,
reasonably satisfactory to the Company or (ii) call for the
prepayment or redemption of or prepay or redeem, as the case may
be, any other then existing indebtedness of the Company; provided
that no such prepayment or redemption or call for prepayment or
redemption shall actually be made (nor shall the Company or any
of its Subsidiaries be required to incur any liability in respect
of any such prepayment or redemption) until contemporaneously
with or after the Effective Time.
(f) None of Newco or any of its affiliates shall take
any initiatives involving the Company that would otherwise
require the Company to make a public announcement, make any
public comment or proposal with respect to any Takeover Proposal,
become a member of a "group" within the meaning of Section 13(d)
of the Exchange Act, enter into any discussions, negotiations,
arrangements or understanding with any third party with respect
to any of the foregoing or otherwise seek to control or influence
42
the Company, in all cases, except as expressly contemplated by
this Agreement or the Stockholder Agreement.
(g) Without limiting the generality of Section 6.8(a),
the Company agrees to provide, and shall cause its Subsidiaries
and shall use its reasonable best efforts to cause its and their
respective officers, employees and advisors to provide, all
reasonable assistance to Newco in connection with the completion
of the Debt Financings contemplated by the Bank Commitment
Letters to be consummated contemporaneous with or at or after the
Closing in respect of the transactions contemplated by this
Agreement, including the preparation by the Company of a
Rule 144A private placement memorandum and, upon reasonable
advance notice, (i) participation in meetings, due diligence
sessions and road shows and (ii) the execution and delivery of
any underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other
requested certificates or documents, as may be reasonably
requested by Newco; provided that (A) the terms and conditions of
any of the agreements and other documents referred to in
clause (ii) shall be consistent with the terms and conditions of
the financing required to satisfy the condition precedent set
forth in Section 7.2(g), shall be customary for a corporation
engaged in the business of the Company and shall be subject to
the prior review and comment of the Company (such review and
comment not to be unreasonably withheld or delayed), (B) the
terms and conditions of such financing may not require the
payment of any commitment or other fees by the Company or any of
its Subsidiaries, or the incurrence of any liabilities by the
Company or any of its Subsidiaries, prior to the Effective Time
and the obligation to make any such payment shall be subject to
the occurrence of the Closing and (C) the Company shall not be
required to provide any such assistance which would interfere
unreasonably with the business or operations of the Company or
its Subsidiaries.
(h) (i) Without limiting the generality of
Section 6.8(a), Newco hereby agrees to use its reasonable best
efforts to obtain the financing in respect of the transactions
contemplated by this Agreement as provided for in the Bank
Commitment Letters and the Parent Commitment Letter, including
using its reasonable best efforts (A) to negotiate definitive
agreements with respect thereto, (B) to satisfy all conditions
applicable to Newco in such definitive agreements and (C) when
permitted under the Senior Subordinated Commitment Letter, to
require LCPI (as defined therein) to provide the Interim Loans
(as defined therein). Newco will keep the Company informed on a
regular ongoing basis of the status of its efforts to obtain such
financing. In the event any portion of such financing becomes
unavailable in the manner or from the sources originally
contemplated, Newco will use its reasonable best efforts to
43
obtain any such portion from alternative sources on substantially
comparable terms, if available.
(ii) Subject to the Company having received the
proceeds of the financing described in the Bank Commitment
Letters and in Section 7.2(g) and after the satisfaction or
waiver of all of the other conditions set forth in Sections 7.1
and 7.2, Newco at Closing will be capitalized with a cash
contribution in the form of common equity of an amount at least
equal to the Contribution Amount.
SECTION VI.9 Public Announcements. No public release
or announcement concerning the transactions contemplated by this
Agreement or the Stockholder Agreement shall be issued by any
party without the prior written consent of the Company and Newco
(which consent shall not be unreasonably withheld or delayed),
except as such release or announcement may be required by law or
the rules or regulations of any applicable United States
securities exchange, in which case the party required to make the
release or announcement shall use its reasonable best efforts to
allow each other party reasonable time to comment on such release
or announcement in advance of such issuance, it being understood
that the final form and content of any such release or
announcement, to the extent so required, shall be at the final
discretion of the disclosing party.
SECTION VI.10 Listing. The parties hereto shall use
their reasonable best efforts to have the Non-Cash Election
Shares admitted for listing on the NYSE or to maintain the
listing of the Non-Cash Election Shares on the NYSE, as
applicable, or if the Non-Cash Election Shares do not qualify for
listing on the NYSE, to have the Non-Cash Election Shares
admitted for quotation on the Nasdaq Stock Market (the
"Listing"). Any fees in connection with the Listing payable
prior to the Effective Time shall be paid by Newco. Neither
Newco nor the Company will take any action, for at least three
years from the Effective Time, to cause the Listing to be
terminated, except (i) in accordance with the applicable
requirements of the NYSE, including compliance with Rule 500 of
the NYSE, as interpreted in Section 806 of the NYSE Listed
Company Manual as in effect on the date hereof, or the Nasdaq
Stock Market, as applicable, and (ii) with the approval of a
majority of the Non-Cash Election Shares not held of record or
beneficially by Parent or its affiliates; provided that nothing
in this Section 6.10 shall require Newco or the Company to take
any affirmative action to prevent the Listing from being
terminated by the NYSE or the Nasdaq Stock Market, as applicable,
in the event that the Non-Cash Election Shares cease to meet the
applicable Listing standards.
SECTION VI.11 Letter as to Solvency. The parties
hereto shall engage, at the expense of Newco, an appraisal firm
to deliver a letter addressed to the Board of Directors of the
44
Company and the Company (and on which the Board of Directors of
the Company shall be entitled to rely) indicating that
immediately after the Effective Time, and after giving effect to
the Merger and the financings contemplated by this Agreement and
any other transactions contemplated in connection with the
Merger, the Surviving Corporation (i) will not be insolvent and
will have assets sufficient to pay its debts and (ii) will not
have unreasonably small capital with which to engage in its
business.
SECTION VI.12 Affiliates. Prior to the Closing Date,
the Company shall deliver to Newco a letter identifying all
persons who are, at the time this Agreement is submitted for
approval to the stockholders of the Company, "affiliates" of the
Company for the purposes of Rule 145 under the Securities Act
(the parties agreeing that none of Trinity I Fund, L.P., TF
Investors, L.P., Trinity Capital Management, Inc., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Portfolio H Investors, L.P., Portfolio Associates, Inc.
or any of their affiliates shall constitute an "affiliate" of the
Company for the purposes of Rule 145 under the Securities Act for
the purposes of this Agreement). The Company shall use its
reasonable best efforts to cause each such person to deliver to
Newco on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit C hereto.
SECTION VI.13 Third Party Standstill Agreements;
Tortious Interference. During the period from the date of this
Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the
Company or any of its Subsidiaries is a party (other than
involving Parent or its affiliates). Subject to the foregoing,
during such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court having jurisdiction. This
Section 6.13 shall be subject to Section 6.5.
ARTICLE VII
CONDITIONS OF MERGER
SECTION VII.1 Conditions to Obligation of Each Party
to Effect the Merger. The respective obligations of each party
to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) this Agreement shall have been adopted by the
affirmative vote of the stockholders of the Company by the
45
requisite vote in accordance with the Company's Certificate of
Incorporation and the DGCL;
(b) no statute, rule, regulation, executive order,
decree, ruling, injunction or other order (whether temporary,
preliminary or permanent) shall have been enacted, entered,
promulgated or enforced by any United States or state court or
governmental authority which prohibits, restrains or enjoins the
consummation of the Merger; provided that prior to invoking this
condition each party shall comply with Section 6.8;
(c) the waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been
terminated or shall have expired; and
(d) the Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and
other state securities laws applicable to the registration and
qualification of the Non-Cash Election Shares shall have been
complied with in all material respects.
SECTION VII.2 Conditions to Obligations of Newco. The
obligations of Newco to effect the Merger shall be further
subject to the satisfaction or waiver at or prior to the
Effective Time of the following conditions:
(a) The representations and warranties of the Company
in this Agreement that are qualified as to materiality shall be
true and correct and those not so qualified shall be true and
correct in all material respects as of the Closing Date as though
made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier
date (in which case such representations and warranties qualified
as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on
and as of such earlier date); provided that this paragraph (a)
shall be deemed satisfied so long as the failure of all such
representations and warranties to be so true and correct would
not have or would not reasonably be likely to have a Material
Adverse Effect; and Newco shall have received a certificate
signed on behalf of the Company by an executive officer of the
Company to such effect.
(b) The Company shall have performed in all material
respects the material obligations required to be performed by it
under this Agreement at or prior to the Closing Date; and Newco
shall have received a certificate signed on behalf of the Company
by an executive officer of the Company to such effect.
46
(c) Newco shall have received evidence, in form and
substance reasonably satisfactory to it, that such consents,
approvals, authorizations, permits, actions, filings or
notifications of, with or to all Governmental Entities as
specified in Section 3.5(b) have been obtained, except where the
failure to obtain such consents, approvals, authorizations,
permits, actions, filings or notifications would not have or
would not reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect.
(d) There shall not be pending any suit, action or
proceeding by any U.S. federal Governmental Entity
(i) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the transactions
contemplated by this Agreement or, in connection therewith,
seeking to obtain from Newco or any of its affiliates any damages
that are material to the Company and its Subsidiaries, taken as a
whole, (ii) seeking to prohibit or limit the ownership or
operation by Newco of any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or
(iii) seeking to impose limitations on the ability of Newco to
acquire or hold, or exercise full rights of ownership of, any
shares of the Company Common Stock, including the right to vote
the Company Common Stock on all matters properly presented to the
stockholders of the Company, except in each case for clauses (i),
(ii) or (iii) where any such suit, action or proceeding would not
have or would not reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect.
(e) Newco shall have received the agreements referred
to in Section 6.12.
(f) The number of Dissenting Shares (other than any
Dissenting Shares owned by Trinity I Fund, L.P., TF Investors,
L.P., Trinity Capital Management, Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Portfolio H Investors, L.P., Portfolio Associates, Inc. or any of
their affiliates or any other person or group holding 3% or more
of the issued and outstanding shares of Company Common Stock)
shall not exceed 5% of the issued and outstanding shares of
Company Common Stock.
(g) The Company shall have received the financing
proceeds under the Debt Financings on the terms and conditions
set forth in the Bank Commitment Letters or upon terms and
conditions which are substantially equivalent thereto, and to the
extent that any of the terms and conditions are not as so set
forth or substantially equivalent, on terms and conditions
reasonably satisfactory to Newco; provided that Newco shall have
complied with the provisions of Section 6.8.
47
(h) Newco shall be reasonably satisfied that the
Merger shall be recorded as a recapitalization for financial
reporting purposes.
SECTION VII.3 Conditions to Obligations of the
Company. The obligation of the Company to effect the Merger
shall be further subject to the satisfaction or waiver at or
prior to the Effective Time of the following conditions:
(a) The representations and warranties of Newco in
this Agreement that are qualified as to materiality shall be true
and correct and those not so qualified shall be true and correct
in all material respects as of the Closing Date as though made on
the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case
such representations and warranties qualified as to materiality
shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such
earlier date); provided that this paragraph (a) shall be deemed
satisfied so long as the failure of all such representations and
warranties to be so true and correct would not have or would not
reasonably be likely to have a Newco Material Adverse Effect; and
the Company shall have received a certificate signed on behalf of
Newco by an executive officer of Newco to such effect.
(b) Newco shall have performed in all material
respects the material obligations required to be performed by it
under this Agreement at or prior to the Closing Date; and the
Company shall have received a certificate signed on behalf of
Newco by an executive officer of Newco to such effect.
(c) The Company and its Board of Directors shall have
received the letter referred to in Section 6.11 or Newco shall
have provided to the Company and its Board of Directors from
another appraisal firm a comparable letter in form and substance
reasonably satisfactory to the Company.
(d) The Listing of the Non-Cash Election Shares shall
have been approved, subject only to official notice of issuance.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION VIII.1 Termination. This Agreement may be
terminated and the Merger contemplated hereby may be abandoned at
any time prior to the Effective Time, notwithstanding approval
thereof by the stockholders of the Company:
48
(a) by mutual written consent of Newco and the Company;
(b) by Newco or the Company if any Governmental Entity
of competent jurisdiction located or having jurisdiction within
the United States or any country or economic region in which the
Company, directly or indirectly, has material assets or
operations, shall have issued a final order, decree or ruling or
taken any other final action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other
action is or shall have become final and nonappealable and, with
respect to any Governmental Entity of competent jurisdiction
located outside the United States, such order, decree, ruling or
other action would have or would reasonably be likely to have a
Material Adverse Effect;
(c) by either Newco or the Company if the Effective
Time shall not have occurred on or before the date which is the
later of (i) September 30, 1999 or (ii) two months after the date
that the Form S-4 is declared effective by the SEC; provided that
such date which is two months after the date that the Form S-4 is
declared effective by the SEC is not later than November 30, 1999
(the "Termination Date"); provided that the right to terminate
this Agreement pursuant to this Section 8.1(c) shall not be
available (x) to the party seeking to terminate if any action of
such party or the failure of such party to perform any of its
obligations under this Agreement required to be performed at or
prior to the Effective Time or (y) to the Company at any such
time that there is an unremedied or continuing breach of the
Stockholder Agreement by the Principal Stockholder and Newco at
such time is seeking specific performance of the Stockholder
Agreement in a court proceeding (provided that this clause (y)
shall cease to be of effect after December 31, 1999) and, in each
case for clauses (x) and (y), any such action, failure to perform
or breach has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before the Termination Date
and, in each case for clause (x), any such action or failure to
perform constitutes a breach of this Agreement;
(d) by the Company if there shall have been a material
breach of any covenant or agreement on the part of Newco
contained in this Agreement or the Stockholder Agreement which
materially adversely affects Newco's ability to consummate (or
materially delays consummation of) the Merger on the terms
contemplated hereby, and which shall not have been cured prior to
the earlier of (I) 10 business days following notice of such
breach and (II) the Termination Date; provided that the Company
shall not have the right to terminate this Agreement pursuant to
this Section 8.1(d) if the Company is then in material breach of
any of its covenants or agreements contained in this Agreement;
49
(e) by the Company if prior to the adoption of this
Agreement by the stockholders of the Company, upon two business
days prior notice to Newco, the Board of Directors of the Company
shall approve or recommend to stockholders a Superior Proposal;
provided, however, that (i) the Board of Directors of the Company
shall have concluded in good faith, after giving effect to all
the concessions which may be offered by Newco pursuant to
clause (ii) below, after consultation with its financial advisors
and outside counsel, that such proposal is a Superior Proposal
and (ii) prior to any such termination, the Company shall, and
shall cause its legal and financial advisors to, negotiate with
Newco to make such adjustments in the terms and conditions of
this Agreement as would enable the Company to proceed with the
transactions contemplated hereby; provided, further, that such
termination under this Section 8.1(e) shall not be effective
unless the Company and the Board of Directors of the Company
shall have complied with all their obligations under Section 6.5
and until payment of the Termination Fee pursuant to
Section 8.3(b);
(f) by Newco (i) if there shall have been a material
breach of any covenant or agreement on the part of the Company
contained in this Agreement (including Section 6.5) or on the
part of the Principal Stockholder contained in the Stockholder
Agreement, in each case which shall not have been cured prior to
the earlier of (A) 10 business days following notice of such
breach and (B) the Termination Date, provided that (x) Newco
shall not have the right to terminate this Agreement pursuant to
this Section 8.1(f)(i) if Newco is then in material breach of any
of its covenants or agreements contained in this Agreement or the
Stockholder Agreement and (y) the Company will have no right to
cure a breach of Section 6.5 (if such breach is not reasonably
capable of being cured) and the Principal Stockholder will have
no right to cure a breach of Section 3(c) of the Stockholder
Agreement (if such breach is not reasonably capable of being
cured); or (ii) if the Board of Directors of the Company shall
have withdrawn, modified or changed (it being understood and
agreed that a communication by the Board of Directors of the
Company to the stockholders of the Company pursuant to
Rule 14d-9(e)(3) of the Exchange Act, or any similar
communication to the stockholders of the Company in connection
with the making or amendment of a tender offer or exchange offer,
shall not be deemed to constitute a withdrawal, modification or
change of its recommendation of this Agreement or the Merger) in
a manner adverse to Newco its approval or recommendation of this
Agreement or the Merger or shall have approved or recommended to
the stockholders of the Company a Takeover Proposal other than
the Merger, or shall have resolved to effect any of the foregoing
(it being understood and agreed that the delivery of notice
pursuant to the immediately foregoing paragraph (e) and any
50
subsequent public announcement of such notice shall not entitle
Newco to terminate this Agreement pursuant to this
paragraph (f)); or
(g) by either Newco or the Company if, at the
Stockholders Meeting or any adjournment thereof, the holders of a
majority in voting power of the outstanding shares of Company
Common Stock shall not have adopted this Agreement.
SECTION VIII.2 Effect of Termination. In the event of
the termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto, except as set forth in
this Section 8.2, Section 3.19, Section 4.5, Section 6.4(b),
Section 8.3 and Article IX; provided that nothing herein shall
relieve any party from liability for any breach hereof.
SECTION VIII.3 Fees and Expenses. (a) Except as
otherwise specifically provided herein, each party shall bear its
own expenses in connection with this Agreement and the
transactions contemplated hereby.
(b) The Company shall (y) pay to Newco a fee of
$34 million (the "Termination Fee") if: (i) the Company
terminates this Agreement pursuant to Section 8.1(e); (ii) Newco
terminates this Agreement pursuant to Section 8.1(f)(i) as a
result of a breach by the Company of Section 6.5 or pursuant to
Section 8.1(f)(ii); or (iii) Newco or the Company terminates this
Agreement in accordance with Section 8.1(g) and prior to any such
termination a Takeover Proposal shall have been made and remain
pending; provided, however, that no Termination Fee shall be
payable to Newco pursuant to clause (iii) of this paragraph (b)
unless within 18 months of such termination the Company or any
Subsidiary of the Company enters into a definitive agreement to
consummate the transactions contemplated by a Takeover Proposal
or a Takeover Proposal is otherwise consummated. The Termination
Fee shall be paid by wire transfer of same-day funds on the date
of termination of this Agreement (except that, in the case of
termination pursuant to clause (iii) above, such payment shall be
made on the date of execution of such definitive agreement or, if
earlier, consummation of such transactions).
SECTION VIII.4 Amendment. This Agreement may be
amended by the parties hereto by action taken by or on behalf of
their respective Boards of Directors at any time prior to the
Effective Time whether before or after adoption of this Agreement
by the stockholders of the Company; provided that, after adoption
of this Agreement by the stockholders of the Company, no
amendment may be made which by law requires the further approval
of the stockholders of the Company without such further approval.
51
This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION VIII.5 Waiver. At any time prior to the
Effective Time, any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) subject to the
requirements of applicable law, waive compliance with any of the
agreements or conditions contained herein. Any such extension or
waiver shall only be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION IX.1 Non-Survival of Representations,
Warranties and Agreements. The representations and warranties in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 8.1, as the
case may be. This Section 9.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION IX.2 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by cable, facsimile,
telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Newco:
Red Dog Acquisition, Corp.
c/▇ ▇▇▇▇▇▇ Brothers Merchant Banking Partners II L.P.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
52
with an additional copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: 212-474-3700
if to the Company:
▇▇▇▇▇▇ International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Panettiere
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with an additional copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and
Bradley, Arant, Rose & White
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Legal Counsel for the Principal Stockholder
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
SECTION IX.3 Certain Definitions. For purposes of
this Agreement, the term:
(a) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "beneficial owner" with respect to any Shares
means a person who shall be deemed to be the beneficial
53
owner of such Shares (i) which such person or any of its
affiliates or associates (as such term is defined in
Rule 12b-2 under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly,
by any other persons with whom such person or any of its
affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting
or disposing of any Shares (and the term "beneficially
owned" shall have a corresponding meaning);
(c) "business day" means any day on which the
principal offices of the SEC in Washington, D.C. are open to
accept filings or, in the case of determining a date when
any payment is due, any day on which banks are not required
or authorized to close in New York, New York;
(d) "control" (including the terms "controlled",
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of
the management policies of a person, whether through the
ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise;
(e) "generally accepted accounting principles" shall
mean the generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession in the
United States, in each case, as applicable, as of the time
of the relevant financial statements referred to herein or,
with respect to filings of certain foreign subsidiaries of
the Company which include or are prepared on the basis of
non-U.S. generally accepted accounting principles, the
foreign generally accepted accounting principles applicable
to such Subsidiaries;
(f) "including" means including, without limitation;
(g) "person" means an individual, corporation,
partnership, limited liability company, association, trust,
54
unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act);
(h) "Subsidiary" or "Subsidiaries" of the Company, the
Surviving Corporation, Newco or any other person means any
corporation, partnership, joint venture or other legal
entity of which the Company, the Surviving Corporation,
Parent or such other person, as the case may be (either
alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or
other equity interests the holder of which is generally
entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal
entity; and
(i) "to the knowledge of the Company" means to the
knowledge of any executive officer of the Company.
SECTION IX.4 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.
SECTION IX.5 Entire Agreement; Assignment. Except as
may otherwise be agreed by the parties, this Agreement, the
Disclosure Schedule and the Confidentiality Agreement constitute
the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. The Disclosure
Schedule signed for identification by the parties hereto is
incorporated herein and made a part hereof for all purposes as if
fully set forth herein. Any fact or item disclosed on any
section of the Disclosure Schedule shall not by reason only of
such disclosure be deemed to be material and shall not be
employed as a point of reference in determining any standard of
materiality under this Agreement. 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.
55
SECTION IX.6 Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason
of this Agreement, other than with respect to the provisions of
Sections 2.2 and 6.7 which shall inure to the benefit of the
persons or entities benefitting therefrom who are intended to be
third-party beneficiaries thereof.
SECTION IX.7 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles or conflicts of laws thereof.
SECTION IX.8 Headings. The descriptive headings
contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION IX.9 Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION IX.10 Specific Performance; Jurisdiction. 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 any Delaware state court,
this being in addition to any other remedy to which such party is
entitled at law or in equity. In addition, each of the parties
hereto (i) 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, (ii) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave
from any such court, (iii) 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 and (iv) consents
to service being made through the notice procedures set forth in
Section 9.2. Newco hereby irrevocably designates and appoints
The Corporation Trust Company at Corporation Trust Center,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as its duly
56
appointed agent for service of process in the State of Delaware,
for any suit or proceeding in connection with this Agreement or
the transactions contemplated hereby.
IN WITNESS WHEREOF, Newco and the Company have caused
this Agreement to be executed as of the date first written above
by their respective officers thereunto duly authorized.
RED DOG ACQUISITION, CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman
▇▇▇▇▇▇ INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board of
Directors
EXHIBIT C
Form of Company Affiliate Letter
Gentlemen:
The undersigned, a holder of shares of Class A Common
Stock, par value $0.01 per share, of ▇▇▇▇▇▇ International, Inc.,
a Delaware corporation (the "Company"), and/or shares of Class B
Common Stock, par value $0.01 per share, of the Company, is
entitled to receive in connection with the merger (the "Merger")
of the Company with Red Dog Acquisition, Corp., a Delaware
corporation ("Newco"), securities (the "Securities") of the
Company. The undersigned acknowledges that the undersigned may
be deemed an "affiliate" of the Company within the meaning of
Rule 145 ("Rule 145") promulgated under the Securities Act
of 1933, as amended (the "Act"), although nothing contained
herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the
Act, the undersigned's ability to sell, assign or transfer the
Securities received by the undersigned pursuant to the Merger may
be restricted unless such transaction is registered under the Act
or an exemption from such registration is available. The
undersigned understands that such exemptions are limited and the
undersigned has obtained advice of counsel as to the nature and
conditions of such exemptions, including information with respect
to the applicability to the sale of such Securities of Rules 144
and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with
the Company that the undersigned will not sell, assign or
transfer any of the Securities received by the undersigned
pursuant to the Merger, except (i) pursuant to an effective
registration statement under the Act, (ii) in conformity with the
volume and other limitations of Rule 145 or (iii) in a
transaction which, in the opinion of counsel or as described in a
"no-action" or interpretive letter from the Staff of the
Securities and Exchange Commission (the "SEC"), is not required
to be registered under the Act.
In the event of a sale or other disposition by the
undersigned of Securities pursuant to Rule 145, the undersigned
will supply the Company with evidence of compliance with such
Rule, in the form of a letter in the form of Annex I hereto. The
undersigned understands that the Company may instruct its
transfer agent to withhold the transfer of any Securities
disposed of by the undersigned, but that upon receipt of such
evidence of compliance the transfer agent shall effectuate the
transfer of the Securities sold as indicated in the letter.
The undersigned acknowledges and agrees that
appropriate legends will be placed on certificates representing
Securities received by the undersigned in the Merger or held by a
transferee thereof, which legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form and
substance reasonably satisfactory to the Company from independent
counsel to the effect that such legends are no longer required
for purposes of the Act.
The undersigned acknowledges that (i) the undersigned
has carefully read this letter and understands the requirements
hereof and the limitations imposed upon the distribution, sale,
transfer or other disposition of Securities and (ii) the receipt
by Newco of this letter is an inducement and a condition to
Newco's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT C
[Name] [Date]
On __________________, the undersigned sold the
securities of ▇▇▇▇▇▇ International, Inc. (the "Company")
described below in the space provided for that purpose (the
"Securities"). The Securities were received by the undersigned
in connection with the merger of Red Dog Acquisition, Corp. with
and into the Company.
Based upon the most recent report or statement filed by
the Company with the Securities and Exchange Commission, the
Securities sold by the undersigned were within the prescribed
limitations set forth in paragraph (e) of Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act").
To the extent required by Rule 144 under the Act, the
undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the
Act or in transactions directly with a "market maker" as that
term is defined in Section 3(a)(38) of the Securities Exchange
Act of 1934, as amended. The undersigned further represents that
the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer
or sale of the Securities to any person other than to the broker
who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]