Exhibit 2
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of November 23, 1999
Among
WEYERHAEUSER COMPANY,
WTJ, INC.
And
TJ INTERNATIONAL, INC.
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TABLE OF CONTENTS
Page
ARTICLE I The Offer and the Merger
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SECTION 1.01. The Offer.................................................... 2
SECTION 1.02. Company Actions.............................................. 3
SECTION 1.03. The Merger................................................... 4
SECTION 1.04. Closing...................................................... 5
SECTION 1.05. Effective Time............................................... 5
SECTION 1.06. Effects...................................................... 5
SECTION 1.07. Certificate of Incorporation and By-laws..................... 5
SECTION 1.08. Directors.................................................... 6
SECTION 1.09. Officers..................................................... 6
ARTICLE II Effect on the Capital Stock of the Constituent Corporations;
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Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock...................................... 6
SECTION 2.02. Exchange of Certificates..................................... 8
ARTICLE III Representations and Warranties of the Company
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SECTION 3.01. Organization, Standing and Power............................. 11
SECTION 3.02. Company Subsidiaries; Equity Interests....................... 11
SECTION 3.03. Capital Structure............................................ 12
SECTION 3.04. Authority; Execution and Delivery; Enforceability............ 14
SECTION 3.05. No Conflicts; Consents....................................... 15
SECTION 3.06. SEC Documents................................................ 17
SECTION 3.07. Information Supplied......................................... 18
SECTION 3.08. Absence of Certain Changes or Events......................... 19
SECTION 3.09. Taxes........................................................ 20
SECTION 3.10. Absence of Changes in Benefit Plans.......................... 21
SECTION 3.11. ERISA Compliance; Excess Parachute Payments.................. 22
SECTION 3.12. Labor Matters................................................ 24
SECTION 3.13. Litigation................................................... 24
SECTION 3.14. Compliance with Applicable Laws.............................. 25
SECTION 3.15. Brokers; Schedule of Fees and Expenses....................... 25
SECTION 3.16. Opinion of Financial Advisor................................. 25
SECTION 3.17. Year 2000 Compliance......................................... 26
SECTION 3.18. Environmental Matters........................................ 26
SECTION 3.19. Contracts; Debt Instruments.................................. 27
SECTION 3.20. Intellectual Property........................................ 27
ARTICLE IV Representations and Warranties of Parent and Sub
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SECTION 4.01. Organization, Standing and Power............................. 28
SECTION 4.02. Sub Actions.................................................. 28
SECTION 4.03. Authority; Execution and Delivery; Enforceability............ 29
SECTION 4.04. No Conflicts; Consents....................................... 29
SECTION 4.05. Information Supplied......................................... 30
SECTION 4.06. Financing.................................................... 30
SECTION 4.07. Stock Ownership; Interested Stockholders..................... 31
SECTION 4.08. Brokers...................................................... 31
ARTICLE V Covenants Relating to Conduct of Business
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SECTION 5.01. Conduct of Business.......................................... 31
SECTION 5.02. No Solicitation.............................................. 35
ARTICLE VI Additional Agreements
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SECTION 6.01. Preparation of Proxy Statement; Stockholders Meetings........ 38
SECTION 6.02. Access to Information; Confidentiality....................... 40
SECTION 6.03. Reasonable Efforts; Notification............................. 40
SECTION 6.04. Company Employee Stock Options............................... 41
SECTION 6.05. Existing Agreements, Plans and Policies...................... 43
SECTION 6.06. Indemnification.............................................. 45
SECTION 6.07. Fees and Expenses............................................ 47
SECTION 6.08. Public Announcements......................................... 49
SECTION 6.09. Transfer Taxes............................................... 49
SECTION 6.10. Rights Agreements; Consequences if Rights Triggered.......... 50
SECTION 6.11. Directors.................................................... 50
SECTION 6.12. TJM Partnership Agreement.................................... 51
SECTION 6.13. Grant of Option.............................................. 54
SECTION 6.14. Termination/Amendment of ESOP; Redemption of
Company Preferred Stock; Repayment of ESOP Loan............ 55
ARTICLE VII Conditions Precedent
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SECTION 7.01. Conditions to Each Party's Obligation To Effect the Merger... 56
ARTICLE VIII Termination, Amendment and Waiver
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SECTION 8.01. Termination.................................................. 57
SECTION 8.02. Effect of Termination........................................ 59
SECTION 8.03. Amendment.................................................... 59
SECTION 8.04. Extension; Waiver............................................ 60
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver.... 60
ARTICLE IX General Provisions
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SECTION 9.01. Nonsurvival of Representations and Warranties................ 60
SECTION 9.02. Notices...................................................... 60
SECTION 9.03. Definitions.................................................. 61
SECTION 9.04. Interpretation; Disclosure Letters........................... 62
SECTION 9.05. Severability................................................. 62
SECTION 9.06. Counterparts................................................. 63
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries............... 63
SECTION 9.08. Governing Law................................................ 63
SECTION 9.09. Assignment................................................... 63
SECTION 9.10. Enforcement.................................................. 63
Exhibits
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Exhibit A Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER dated as of November 23, 1999 (this
"Agreement"), among WEYERHAEUSER COMPANY, a Washington
corporation ("Parent"), WTJ, INC. a Delaware corporation ("Sub"),
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and a wholly owned subsidiary of Parent, and TJ INTERNATIONAL,
INC., a Delaware corporation (the "Company").
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WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as such tender offer may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase all the
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outstanding (x) shares of common stock, par value $1.00 per share, of the
Company (the "Company Common Stock"), including the associated Company Rights
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(as defined in Section 3.03(a)), at a price per share of Company Common Stock
(including the associated Company Right) of $42.00 (such amount, or any greater
amount per share paid pursuant to the Offer, the "Offer Price") and (y) shares
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of ESOP Convertible Preferred Stock, par value $1.00 per share, of the Company
(the "Company Preferred Stock" and, together with the Company Common Stock, the
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"Company Capital Stock") at a price per share of Company Preferred Stock equal
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to the Offer Price, in each case, net to the seller in cash, on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub into the Company, or (at
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the election of Parent) the Company into Sub, on the terms and subject to the
conditions set forth in this Agreement, whereby each issued share of Company
Common Stock not owned by Parent, Sub or the Company, including each share of
Company Common Stock issued upon the automatic conversion of shares of Company
Preferred Stock immediately prior to the Merger, shall be converted into the
right to receive the Offer Price in cash; and
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WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
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SECTION 1.01. The Offer. (a) Subject to the conditions of this
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Agreement, as promptly as practicable but in no event later than five business
days after the date of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer within the meaning of the applicable rules and regulations of
the Securities and Exchange Commission (the "SEC"). The obligation of Sub to,
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and of Parent to cause Sub to, commence the Offer and accept for payment, and
pay for, any shares of Company Capital Stock tendered pursuant to the Offer are
subject to the conditions set forth in Exhibit A (any of which may be waived by
Sub, in its sole discretion, provided that, without the consent of the Company,
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Sub may not waive the Minimum Tender Condition (as defined in Exhibit A)) and to
the other conditions in this Agreement. The initial expiration date of the
Offer shall be January 5, 2000. Sub expressly reserves the right to modify the
terms of the Offer, except that, without the consent of the Company, Sub shall
not (i) reduce the number of shares of Company Capital Stock subject to the
Offer, (ii) reduce the price per share of Company Common Stock to be paid
pursuant to the Offer, (iii) reduce the price per share of Company Preferred
Stock to be paid pursuant to the Offer, (iv) modify or add to the conditions set
forth in Exhibit A, (v) extend the Offer, (vi) change the form of consideration
payable in the Offer or (vii) otherwise amend the Offer in any manner materially
adverse to holders of Company Capital Stock. Notwithstanding the foregoing, Sub
may, without the consent of the Company, (i) extend the Offer, if, at the
scheduled expiration date of the Offer, any of the conditions to Sub's
obligation to purchase shares of Company Capital Stock are not satisfied, until
such time as such conditions are satisfied or waived, (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer and (iii) extend the Offer for
any reason for a period (a "Parent Extension Period") of not more than 10
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business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence or that results from an
extension of the Offer requested by the Company pursuant to the next sentence;
provided, however, that if Sub extends the Offer pursuant to clause (iii) of
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this sentence, it shall waive during any such Parent Extension Period all
conditions of the Offer set forth in Exhibit A other than (x) the Minimum Tender
Condition and (y) the condition in paragraph (b) of Exhibit A solely to the
extent Parent and Sub would violate any Applicable Law (as defined in Section
3.05(a)) or Judgment (as defined in
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Section 3.05(a)) in purchasing shares of Company Common Stock pursuant to the
Offer. If any of the conditions of the Offer set forth in Exhibit A (other than
the Minimum Tender Condition) is not satisfied or waived on any scheduled
expiration date of the Offer, then, if requested by the Company, Sub shall
extend the Offer one or more times (the period of each such extension to be
determined by Sub) for up to 30 days in the aggregate for all such extensions,
provided that at the time of such extension any such condition is reasonably
capable of being satisfied. On the terms and subject to the conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, pay for all
shares of Company Capital Stock validly tendered and not withdrawn pursuant to
the Offer that Sub becomes obligated to purchase pursuant to the Offer as soon
as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). Each of Parent, Sub
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and the Company shall promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents as so amended or supplemented to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case, as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel with any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 1.02. Company Actions. (a) The Company hereby approves of
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and consents to the Offer and the Merger and the other transactions contemplated
by this Agreement.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
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Section 3.04(b) and shall mail the
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Schedule 14D-9 to the holders of Company Capital Stock. Each of the Company,
Parent and Sub shall promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case, as and to the extent
required by applicable Federal securities laws. The Company shall provide Parent
and its counsel with any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to promptly furnish Sub with mailing labels containing the names
and addresses of the record holders of Company Capital Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Capital Stock, and shall furnish to
Sub such information and assistance (including updated lists of stockholders,
security position listings and computer files) as Parent may reasonably request
in communicating the Offer to the Company's stockholders. Subject to the
requirements of Applicable Law, and, except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the transactions contemplated by this Agreement, Parent and Sub shall hold in
confidence the information contained in any such labels, listings and files,
shall use such information only in connection with the Offer and the Merger,
and, if this Agreement shall be terminated, shall, upon request, deliver to the
Company all copies of such information then in their possession.
SECTION 1.03. The Merger. On the terms and subject to the conditions
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set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
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the Effective Time (as defined in Section 1.05). At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"). Notwithstanding the
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foregoing, Parent may elect, at any time prior to the
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Merger, instead of merging Sub with and into the Company as provided above, to
merge the Company with and into Sub; provided, however, that the Company shall
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not be deemed to have breached any of its representations, warranties or
covenants set forth in this Agreement solely by reason of such election. In such
event, the parties shall execute an appropriate amendment to this Agreement in
order to reflect the foregoing. At the election of Parent, any direct or
indirect subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 1.04. Closing. The closing (the "Closing") of the Merger
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shall take place at the offices of Cravath, Swaine & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by Applicable Law, waiver by all
parties) of the conditions set forth in Section 7.01, or as soon as practicable
after all the conditions set forth in Section 7.01 have been satisfied (or, to
the extent permitted by Applicable Law, waived by the parties entitled to the
benefits thereof), or at such other place, time and date as shall be agreed in
writing between Parent and the Company. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date".
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SECTION 1.05. Effective Time. Prior to the Closing, Parent shall
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prepare, and on the Closing Date or as soon as practicable thereafter, Parent
shall file with the Secretary of State of the State of Delaware, a certificate
of merger or other appropriate documents (in any such case, the "Certificate of
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Merger") executed in accordance with the relevant provisions of the DGCL, and
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shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with such Secretary of State, or at such other time as Parent and the Company
shall agree and specify in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time").
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SECTION 1.06. Effects. The Merger shall have the effects set forth
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in Section 259 of the DGCL.
SECTION 1.07. Certificate of Incorporation and By-laws. (a) The
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Certificate of Incorporation of the Company shall be amended at the Effective
Time to:
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(i) delete Articles Tenth and Eleventh thereof; and (ii) amend paragraph (a) of
Article Fifth thereof to delete all but the first sentence thereof, and, as so
amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter changed or amended
as provided therein or by Applicable Law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by Applicable Law;
provided, however, that the By-laws of the Surviving Corporation shall include
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the provisions of Article XI of the Company By-laws (as defined in Section 3.01)
as of the date of this Agreement (only to the extent such provisions are
applicable to events occurring prior to the Effective Time) for a period of at
least six years following the Effective Time.
SECTION 1.08. Directors. The directors of Sub immediately prior to
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the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.09. Officers. The officers of the Company immediately
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prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
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virtue of the Merger and without any action on the part of the holder of any
shares of Company Capital Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
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capital stock of Sub shall be converted into and become a number of fully paid
and nonassessable shares of common stock, par value $0.01 per share, of the
Surviving Corporation (the "Surviving Corporation Common
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8
Stock") equal to (i) the number of shares of Company Common Stock (including
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each share of Company Common Stock issued upon the automatic conversion of
shares of Company Preferred Stock immediately prior to the Effective Time as
provided in paragraph (B) of Section 8 of the Company Preferred Certificate of
Designation (as defined in Section 2.01(c)) outstanding immediately prior to the
Effective Time divided by (ii) 1000; provided, however, that to the extent the
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aggregate number of shares of Surviving Corporation Common Stock into which the
capital stock of Sub is to be converted pursuant to this Section 2.01(a) is not
a whole number, such number shall be rounded up to the next higher whole number.
(b) Cancelation of Treasury Stock, Parent-Owned Stock and Sub-Owned
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Stock. Each share of Company Capital Stock that is owned by the Company, Parent
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or Sub shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and no Parent capital stock or other
consideration shall be delivered or deliverable in exchange therefor. Each
share of Company Capital Stock that is owned by any Company Subsidiary (as
defined in Section 3.01) or Parent (other than Sub) shall automatically be
converted into one fully paid and nonassessable share of Surviving Corporation
Common Stock.
(c) Conversion of Company Capital Stock. Subject to Section 2.01(b),
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each issued share of Company Common Stock (including each share of Company
Common Stock issued upon the automatic conversion of shares of Company Preferred
Stock immediately prior to the Effective Time as provided in paragraph (B) of
Section 8 of the Certificate of Designation of the terms of the Company
Preferred Stock (the "Company Preferred Certificate of Designation")) shall be
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converted into the right to receive the Offer Price in cash. The cash payable
upon the conversion of shares of Company Common Stock pursuant to this Section
2.01(c) is referred to, collectively as "Merger Consideration". As of the
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Effective Time, all shares of Company Capital Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Capital Stock shall cease to have any rights with respect thereto, except the
right to receive Merger Consideration upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
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the contrary, shares (the "Appraisal
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Shares") of Company Common Stock that are outstanding immediately prior to the
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Effective Time and that are held by any person who is entitled to demand and
properly demands appraisal of such Appraisal Shares pursuant to, and who
complies in all respects with, Section 262 of the DGCL ("Section 262") shall not
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be converted into Merger Consideration as provided in Section 2.01(c), but,
rather, each holder of Appraisal Shares shall be entitled to payment of the fair
market value of such Appraisal Shares in accordance with Section 262; provided,
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however, that, if any such holder shall fail to perfect or otherwise shall
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waive, withdraw or lose the right to appraisal under Section 262, then the right
of such holder to be paid the fair value of such holder's Appraisal Shares shall
cease and such Appraisal Shares shall be deemed to have been converted as of the
Effective Time into, and to have become exchangeable solely for the right to
receive, Merger Consideration as provided in Section 2.01(c). The Company shall
provide prompt notice to Parent of any demands received by the Company for
appraisal of any shares of Company Capital Stock, and Parent shall have the
right to participate in and direct all negotiations and proceedings with respect
to such demands. Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
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the Effective Time, Parent shall select a bank or trust company to act as paying
agent (the "Paying Agent") for the payment of Merger Consideration upon
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surrender of certificates representing Company Common Stock. Parent shall take
all steps necessary to enable and cause the Surviving Corporation to provide to
the Paying Agent, immediately following the Effective Time, all the cash
necessary to pay for the shares of Company Common Stock converted into the right
to receive cash pursuant to Section 2.01(c) (such cash, the "Exchange Fund").
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(b) Exchange Procedure. As soon as reasonably practicable after the
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Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") that immediately prior to the
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Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive Merger Consideration pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify), and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for Merger Consideration. Upon surrender of a Certificate for cancelation to
the Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed, at any time after the
Effective Time, to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the shares of Company Common Stock
theretofore represented by such Certificate have been converted pursuant to
Section 2.01. No interest shall be paid or accrue on the cash payable upon
surrender of any Certificate. If a mutilated Certificate is surrendered to the
Paying Agent or if the holder of a Certificate submits an affidavit to the
Paying Agent stating that the Certificate has been lost, destroyed or wrongfully
taken, such holder shall furnish an indemnity bond sufficient in the judgment of
Parent to
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protect Parent, the Surviving Corporation and the Paying Agent from any loss
that any of them may suffer.
(c) No Further Ownership Rights in Company Capital Stock. The Merger
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Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to shares of Company Capital
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by the Company on such shares
of Company Capital Stock in accordance with the terms of this Agreement or prior
to the date of this Agreement and that remain unpaid at the Effective Time, and,
after the Effective Time, there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of shares of Company
Capital Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, any Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
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that remains undistributed to the holders of Company Capital Stock for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holder of Company Capital Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying
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Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Applicable Law. If any Certificate has not been
surrendered prior to the date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.05(b)), 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.
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(f) Investment of Exchange Fund. The Paying Agent shall invest any
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cash included in the Exchange Fund, as directed by Parent, on a daily basis. If
for any reason (including losses) the Exchange Fund is inadequate to pay the
amounts to which holders of Company Capital Stock shall be entitled under this
Article II, Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Exchange Fund shall not be used except as provided in
this Agreement. Any interest and other income resulting from such investments
shall be paid to Parent.
(g) Withholding Rights. Parent or the Surviving Corporation shall be
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entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Capital Stock pursuant to this Agreement such amounts as may
be required to be deducted and withheld with respect to the making of such
payment under the Code (as defined in Section 3.11(b)), or under any provision
of state, local or foreign tax law.
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ARTICLE III
Representations and Warranties of the Company
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The Company represents and warrants to Parent and Sub that, except as
set forth in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed Company SEC Documents") or in the letter,
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dated the date of this Agreement, from the Company to Parent and Sub (the
"Company Disclosure Letter"):
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SECTION 3.01. Organization, Standing and Power. Each of the Company
---------------------------------
and each of its subsidiaries (the "Company Subsidiaries") is duly organized,
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validly existing and in good standing under the laws of the jurisdiction in
which it is organized, and has full power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, except where the failure
(i) to be duly organized, validly existing and in good standing, in each case,
other than any such failure in respect of the Company or the Partnership (as
defined in Section 6.12(b)), or (ii) to have such power or authority or to
possess such franchises, licenses, permits, authorizations and approvals,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Company (a "Company Material
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Adverse Effect") or a material adverse effect on the ability of the Company to
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consummate the transactions contemplated by this Agreement. The Company and
each Company Subsidiary is duly qualified to do business in each jurisdiction
where the nature of its business or their ownership or leasing of its properties
make such qualification necessary other than such failures to qualify that,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. The Company has made
available to Parent true and complete copies of the certificates of
incorporation of the Company, as amended to the date of this Agreement (the
"Company Charter"), and the By-laws of the Company, as amended to the date of
----------------
this Agreement (the "Company By-laws"), and the comparable charter and
---------------
organizational documents of each Company Subsidiary, in each case, as amended
through the date of this Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests. (a) The
---------------------------------------
Company Disclosure Letter lists each
14
Company Subsidiary and its jurisdiction of organization. All the outstanding
shares of capital stock of each Company Subsidiary have been validly issued and
are fully paid and nonassessable and, except as set forth in the Company
Disclosure Letter, are owned by the Company, by another Company Subsidiary or by
the Company and another Company Subsidiary, free and clear of all pledges,
liens, charges, mortgages, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"), except such as, individually or in
-----
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect (provided that the representation in this sentence with respect
--------
to significant subsidiaries of the Company (within the meaning of Regulation S-X
of the SEC, the "Significant Subsidiaries") is not qualified by reference to
------------------------
such Company Material Adverse Effect).
(b) Except for its interests in the Company 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.
SECTION 3.03. Capital Structure. (a) The authorized capital stock of
------------------
the Company consists of 200,000,000 shares of Company Common Stock and
10,000,000 shares of preferred stock, par value $1.00 per share (the "Company
-------
Authorized Preferred Stock" and, together with the Company Common Stock, the
--------------------------
"Company Stock"). At the close of business on November 17, 1999, (i)
--------------
18,351,054 shares of Company Common Stock were issued and outstanding, (ii)
1,097,719 shares of Company Authorized Preferred Stock were issued and
outstanding, consisting entirely of shares of Company Preferred Stock, (iii)
2,837,558 shares of Company Common Stock were held by the Company in its
treasury, (iv) 1,097,719 shares of Company Common Stock were reserved for
issuance upon conversion of outstanding shares of Company Preferred Stock,
1,671,436 shares of Company Common Stock were reserved for issuance pursuant to
exercise of outstanding Company Employee Stock Options (as defined in Section
6.04(d)) and 550,564 additional shares of Company Common Stock were reserved for
issuance pursuant to the Company Stock Plans (as defined in Section 6.04(d)),
and (v) 185,000 shares of Series A Junior Participating Preferred Stock, par
value $1.00 per share (the "Junior Preferred Stock"), of the Company were
----------------------
reserved for issuance in connection with the rights (the "Company Rights")
--------------
issued pursuant to the Rights Agreement dated as of August 26,
15
1999, between the Company and First Chicago Trust Company of New York, as Rights
Agent (as amended from time to time, the "Company Rights Agreement"). Except as
------------------------
set forth above at the close of business on November 17, 1999, no shares of
Company Capital Stock or other equity securities or voting securities of the
Company were issued, reserved for issuance or outstanding. There are no
outstanding Company SARs (as defined in Section 6.04) that were not granted in
tandem with a related Company Employee Company Stock Option. All outstanding
shares of Company Capital Stock are, and all such shares that may be issued
prior to the Effective Time will be when issued, duly authorized, validly
issued, fully paid and nonassessable. There are not any bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which holders of Company Stock may vote ("Voting Company Debt"). Except as
-------------------
set forth above, except pursuant to the ESOP (as defined in Section 3.03(c)), a
true and complete copy of which has been previously provided to Parent, and
except for the transactions contemplated by this Agreement, there are not any
options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts (as defined in Section 3.05(a)), arrangements or
undertakings of any kind to which the Company or any Company Subsidiary is a
party or by which any of them is bound (i) obligating the Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company or of any Company Subsidiary or any Voting
Company Debt, (ii) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (iii) that give any person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights occurring to holders of Company Capital Stock.
As of the date of this Agreement, except as set forth in the Partnership
Agreement (as defined in Section 6.12(a)), there are not any outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary. The Company has delivered to Parent a complete and correct
copy of the Company Rights Agreement.
16
(b) The "Liquidation Price" (as defined in the Company Preferred
Certificate of Designation) is $11.8125 per share of Company Preferred Stock.
The annual dividend payable on each share of Company Preferred Stock is $1.065,
and the Company has paid all dividends on the Company Preferred Stock that have
become payable as provided in the Company Preferred Certificate of Designation.
Each share of Company Preferred Stock currently is convertible into one share of
Company Common Stock as provided in the Company Preferred Certificate of
Designation. In accordance with paragraph (B) of Section 8 of the Company
Preferred Certificate of Designation, as a result of the transactions
contemplated by Sections 1.07 and 2.01 each issued share of Company Preferred
Stock will be automatically converted into one share of Company Common Stock
immediately prior to the Effective Time, and, at the Effective Time, there will
not be any shares of Company Preferred Stock issued or outstanding. The Company
has not taken any action to redeem, or that gives any holder the right to
redeem, any shares of Company Preferred Stock other than as required by
paragraph (C) of Section 8 of the Company Preferred Certificate of Designation
by reason of the Company entering into this Agreement. The Company has not
taken any action that would require any adjustment or other action under Section
9 of the Company Preferred Certificate of Designation.
(c) As of the date hereof, the number of outstanding shares of
Company Preferred Stock held by the trustee (the "Trustee") under the employee
-------
stock ownership plan portion of the Company's Investment Plan (the "ESOP") is
----
1,097,719, of which 487,436 shares are allocated to participants and
beneficiaries under the Company's Investment Plan and 610,283 shares are
unallocated. As of the date hereof, the outstanding and unpaid principal amount
of the note evidencing the agreement to repay the loan (the "ESOP Loan") from
---------
the Company to the Trustee, dated September 21, 1990, pursuant to which the
Trustee on behalf of the ESOP purchased on such date 634,921 shares of Company
Preferred Stock (equivalent after giving effect to a subsequent stock split to
1,269,842 shares of Company Preferred Stock), is $8,364,238.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
--------------------------------------------------
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated by
17
this Agreement. The execution and delivery by the Company of this Agreement and
the consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to receipt of the
Company Stockholder Approval (as defined in Section 3.04(c)) if required under
the DGCL and, in the case of the Option (as defined in Section 6.13(a)), any
stockholder approval that may be required pursuant to the rules of The Nasdaq
Stock Market, Inc. The Company has duly executed and delivered this Agreement,
and, assuming the due and valid authorization, execution and delivery of this
Agreement by Parent and Sub, this Agreement constitutes a legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms.
(b) The Board of Directors of the Company (the "Company Board"), at a
-------------
meeting duly called and held prior to the date of this Agreement, duly and
unanimously adopted resolutions (i) approving this Agreement, the Offer and the
Merger, (ii) determining that the transactions contemplated by this Agreement,
including each of the Offer and the Merger, are fair to and in the best
interests of the Company and its stockholders, (iii) recommending that the
Company's stockholders accept the Offer and tender their shares pursuant to the
Offer, (iv) recommending that the Company's stockholders adopt this Agreement,
to the extent required by Applicable Law, and (v) declaring that this Agreement
is advisable. In addition, the Company Board has taken action sufficient to
render Section 203 of the DGCL and Article Tenth of the Company Charter
inapplicable (A) to Parent and Sub solely by reason of their entering into this
Agreement or consummating the Offer or the Merger or the grant or exercise of
the Option and (B) to the Offer, the Merger and the other transactions
contemplated by this Agreement, assuming the accuracy of Parent's representation
in Section 4.07. To the Company's Knowledge, as of the date of this Agreement
no other state takeover statute or similar state statute or regulation applies
or purports to apply to the Company with respect to this Agreement, the Offer,
the Merger or the grant or exercise of the Option.
(c) If a vote on the Merger by the Company's stockholder is required
under the DGCL, the only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the adoption of this Agreement by the holders of a majority of the outstanding
Company Common Stock and
18
outstanding Company Preferred Stock, voting together as a single class (the
"Company Stockholder Approval"). The affirmative vote of the holders of Company
----------------------------
Capital Stock, or any of them, is not necessary to consummate the Offer or any
transaction contemplated by this Agreement other than the Merger, except that
the exercise of the Option may require Company stockholder approval pursuant to
the rules of The Nasdaq Stock Market, Inc.
SECTION 3.05. No Conflicts; Consents. (a) None of the execution and
-----------------------
delivery by the Company of this Agreement and the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement and compliance
with the terms hereof will, (i) conflict with the Company Charter, the Company
By-laws or the comparable charter or organizational documents of any Significant
Subsidiary or (ii) conflict with or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, any
provision of (A) any contract, lease, license, indenture, note, bond, agreement,
permit, concession, franchise or other instrument (a "Contract") to which the
--------
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets is bound or (B) subject to the filings and other matters
referred to in Section 3.05(b), any judgment, order or decree ("Judgment") or
--------
statute, law (including common law), ordinance, rule or regulation ("Applicable
----------
Law") applicable to the Company or any Company Subsidiary or their respective
---
properties or assets, other than, in the case of clauses (A) and (B) of this
sentence, any such items that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect
or a material adverse effect on the ability of the Company to consummate the
transactions contemplated by this Agreement.
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit from, any
---------
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity") is
-------------------
required to be obtained or made by or with respect to the Company or any Company
19
Subsidiary in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated by this
Agreement, other than (i) compliance with and filings under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the
-------
filing with the SEC of (A) the Schedule 14D-9, (B) a proxy or information
statement relating to the adoption of this Agreement by the Company's
stockholders if required under the DGCL (the "Proxy Statement"), (C) any
---------------
information statement (the "Information Statement") required under Rule 14f-1 in
---------------------
connection with the Offer and (D) such reports under Sections 13 and 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
------------
required in connection with this Agreement, the Offer, the Merger and the other
transactions contemplated by this Agreement, (iii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of the other jurisdictions in which the
Company is qualified to do business, (iv) Consents the failure of which to be
obtained or made would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or a material adverse effect
on the ability of the Company to consummate the transactions contemplated by
this Agreement, (v) such filings as may be required in connection with the
Transfer Taxes (as defined in Section 6.09) described in Section 6.09 and (vi)
any items required solely by reason of the participation of Parent (as opposed
to any third party) in the transactions contemplated by this Agreement.
(c) Assuming the accuracy of Parent's representation in Section 4.07,
the Company and the Company Board have taken all action necessary to (i) render
the Company Rights inapplicable to this Agreement, the Offer, the Merger and the
other transactions contemplated by this Agreement and (ii) ensure that (A)
neither Parent nor any of its affiliates or associates is or will become an
"Acquiring Person" (as defined in the Company Rights Agreement) by reason of
this Agreement, the Offer, the Merger or any other transaction contemplated by
this Agreement), (B) a "Distribution Date" (as defined in the Company Rights
Agreement) shall not occur by reason of this Agreement, the Offer, the Merger or
any other transaction contemplated by this Agreement and (C) the Company Rights
shall expire immediately prior to the Effective Time.
20
SECTION 3.06. SEC Documents; Financial Statements. The Company has
------------------------------------
filed all reports, schedules, forms, statements and other documents required to
be filed by the Company with the SEC since January 1, 1998 (the "Company SEC
-----------
Documents"). As of its respective date, each Company SEC Document complied in
---------
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
--------------
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated balance sheets as
of January 2, 1999, January 3, 1998, and December 28, 1997, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three fiscal years in the period ended January 2, 1999 (including the
related notes and schedules thereto) of the Company contained in the Forms 10-K
for the fiscal years ended January 2, 1999, January 3, 1998, and December 28,
1997 included in the Company SEC Documents present fairly in all material
respects the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries as of
the dates or for the periods presented therein in conformity with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
----
during the periods involved except as otherwise noted therein, including the
related notes. The consolidated balance sheets and the related statements of
income and cash flows (including in each case the related notes thereto) of the
Company contained in the Forms 10-Q that are Company SEC Documents have been
prepared in accordance with the requirements for interim financial statements
contained in Regulation S-X, which do not require all the information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. The Forms 10-Q that are Company SEC Documents reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly in all material respects the consolidated financial position,
results of operations and cash flows of the Company for all periods presented.
None of the Company Subsidiaries is, or has at any time since January 1, 1998
been, subject to the reporting requirements of Sections 13(a) and 15(d) of the
Exchange Act.
21
SECTION 3.07. Information Supplied. None of the information supplied
---------------------
or to be supplied by the Company for inclusion or incorporation by reference in
(i) the Offer Documents, the Schedule 14D-9 or the Information Statement, will,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain an 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 not misleading or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting (as defined in Section 6.01(b)), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-
9, the Proxy Statement and the Information Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub in writing for inclusion or incorporation
by reference therein.
SECTION 3.08. Absence of Certain Changes or Events. From the date of
-------------------------------------
the most recent audited financial statements included in the Filed Company SEC
Documents to the date of this Agreement, the Company has, as a general matter,
conducted its business only in the ordinary course (other than any changes that
resulted from the MacMillan ▇▇▇▇▇▇▇ Transaction (as defined in Section 6.12(a)),
and during such period there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect or a material adverse effect on the ability of the
Company to consummate the transactions contemplated by this Agreement;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock (other than regular annual quarterly cash dividends
not in excess of $0.055 per share of Company
22
Common Stock with usual record and payment dates and in accordance with the
Company's present dividend policy and other than regular cash dividends not
in excess of $1.065 per share of Company Preferred Stock payable on
outstanding Company Preferred Stock in accordance with the current terms
thereof);
(iii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock;
(iv) (A) any granting by the Company or any Company Subsidiary to any
director or executive officer of the Company or any Company Subsidiary of
any increase in compensation, except in the ordinary course consistent with
prior practice or as was required under employment agreements in effect as
of the date of the most recent audited financial statements included in the
Filed Company SEC Documents, (B) any granting by the Company or any Company
Subsidiary to any such director or executive officer of any increase in
severance or termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of the most
recent audited financial statements included in the Filed Company SEC
Documents and except for any increase in severance or termination pay
resulting solely from increases in compensation made in the ordinary
course, or (C) any entry by the Company or any Company Subsidiary into, or
any amendment of, any employment, severance or termination agreement with
any such director or executive officer;
(v) any change in financial accounting methods, principles or
practices by the Company or any Company Subsidiary materially affecting the
consolidated assets, liabilities or results of operations of the Company,
except insofar as may have been required by a change in GAAP; or
(vi) any material elections with respect to Taxes (as defined in
Section 3.09(f)) by the Company or any Company Subsidiary or settlement or
compromise by the Company or any Company Subsidiary of any material Tax
liability or refund, except, in each case, in the ordinary course
consistent with past practice or as
23
required to comply with changes in Applicable Law occurring prior to the
date of this Agreement.
SECTION 3.09. Taxes. (a) Each of the Company and each Company
------
Subsidiary has timely filed, or has caused to be timely filed on its behalf, all
Tax Returns (as defined in Section 3.09(f)) required to be filed by it, and all
such Tax Returns are true, complete and accurate, except to the extent any
failure to file or any failure to be true, complete or accurate in any filed Tax
Returns would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. All Taxes shown to be due on such Tax
Returns, or otherwise owed, have been timely paid, except to the extent that any
failure to pay, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all current Taxes payable
by the Company and the Company Subsidiaries (in addition to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) for all taxable periods and portions thereof through the date of such
financial statements, except to the extent that any failures have not had and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No deficiency with respect to any Taxes has
been proposed, asserted or assessed against the Company or any Company
Subsidiary, and no requests for waivers of the time to assess any such Taxes are
pending, except to the extent any such deficiency or request for waiver,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(c) The Federal income Tax Returns of the Company and each corporation
that is a Company Subsidiary consolidated in such Tax Returns have been examined
by and settled with the United States Internal Revenue Service for all years
through 1991. All material assessments for Taxes due with respect to such
completed and settled examinations or any concluded litigation have been fully
paid.
(d) As of the date of this Agreement, neither the Company nor any
Company Subsidiary is bound by any sharing, allocation or indemnification
agreement with respect to Taxes that is material to the business, financial
condition
24
or ongoing, longer-term profitability (but not prospects) of the Company and the
Company Subsidiaries, taken as a whole.
(e) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) in a distribution which
otherwise constitutes part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(f) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created or imposed,
-----
and whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, foreign, Federal or other Governmental Entity,
including all interest, penalties and additions imposed with respect to such
amounts.
"Tax Return" means all Federal, state, local, provincial and foreign
----------
Tax returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return required to be filed with any taxing
authority with respect to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. There has not
------------------------------------
been any adoption or amendment in any material respect by the Company or any
Company Subsidiary of the Company Benefit Plans described in the Company's
Associate Benefits Summary referred to in Section 3.11(a) or in the Filed
Company SEC Documents. For purposes of this Agreement, the term "Company
-------
Benefit Plans" means, collectively, any bonus, pension, profit sharing, deferred
-------------
compensation, incentive compensation, stock ownership, stock purchase, stock
option, "phantom" stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, agreement or arrangement
providing benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary. As of the date of this Agreement, there are
not any employment, consulting, indemnification, severance or termination
agreements or arrangements between the Company or any Company Subsidiary and
any current or former executive officer or director of the Company or any
Company
25
Subsidiary, nor are there any such agreements with any other current or former
employee of the Company or any Company Subsidiary who is or was employed in the
United States or Canada, other than (i) agreements that do not require the
payment of more than $100,000 per year, and (ii) letter agreements setting forth
the terms and conditions of employment in connection with the hiring of such
individual and not providing for any entitlement to severance pay and benefits
in excess of $100,000.
SECTION 3.11. ERISA Compliance; Excess Parachute Payments. (a) The
--------------------------------------------
Company Disclosure Letter includes a copy of the Company's Associate Benefits
Summary, which sets forth an accurate description of the principal Company
Benefit Plans (other than those Company Benefit Plans that are filed with the
Filed Company SEC Documents) provided to employees of the Company and the
Company Subsidiaries who are employed in the United States (the "U.S.
----
Employees"), as in effect as of July 1, 1999 (the "U.S. Benefits"). The
--------- -------------
compensation and benefits provided pursuant to Company Benefit Plans for
employees of the Company and the Company Subsidiaries who are not U.S. Employees
are (i) with respect to expatriates, consistent with customary practice for
expatriate employees, and (ii) with respect to all other such employees,
designed to provide similar benefits to the U.S. Benefits, to the extent
possible subject to Applicable Law, and, in each case, the aggregate cost
thereof is not materially greater, on a per capita basis, than the aggregate
cost of the U.S. Benefits. The Company has made available, or will hereafter
make available upon request, to Parent true, complete and correct copies of (i)
each Company Benefit Plan (or, in the case of any unwritten Company Benefit
Plan, a description thereof), (ii) the most recent annual report on Form 5500
filed with the Internal Revenue Service with respect to each Company Benefit
Plan (if any such report was required), (iii) the most recent summary plan
description for each Company Benefit Plan for which such summary plan
description is required and (iv) each trust agreement and group annuity contract
relating to any Company Benefit Plan.
(b) All "employee pension benefit plans" (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
-----
that are maintained for U.S. Employees (sometimes referred to herein as "Company
-------
Pension Plans") have been the subject of determination letters from the Internal
-------------
Revenue Service to the effect that such Company Pension Plans are qualified and
26
exempt from Federal income taxes under Sections 401(a) and 501(a), respectively,
of the Internal Revenue Code of 1986, as amended (the "Code"), and no such
----
determination letter has been revoked nor, to the Knowledge of the Company, has
revocation been threatened, nor has any such Company Pension Plan been amended
since the date of its most recent determination letter or application therefor
in any respect that would adversely affect its qualification. All Forms 5500
required to be filed with respect to Company Benefit Plans have been timely
filed.
(c) None of the Company, any Company Subsidiary, or any person that
is considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code, has or could reasonably be expected to have any
liability under Title IV of ERISA with respect to any "employee benefit plan"
(as defined in Section 3(3) of ERISA) other than for payment of premiums to the
Pension Benefit Guaranty Corporation with respect to the defined benefit pension
plan disclosed in the Company Disclosure Letter. None of the Company Pension
Plans has an "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA or Section 412 of the Code), whether or not waived. None
of the Company, any Company Subsidiary, any officer of the Company or any of its
Company Subsidiary or any of the Company Benefit Plans that are subject to
ERISA, including the Company Pension Plans, and to the Knowledge of the Company,
any trusts created thereunder or any trustee or administrator thereof, have
engaged in a "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company, any Company Subsidiary or any officer of the Company
or any Company Subsidiary to the Tax or penalty on prohibited transactions
imposed by such Section 4975 in any material amount or to any material liability
under Section 502(i) or 502(1) of ERISA.
(d) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, except as disclosed in the Company Disclosure Letter, (i)
no such Company Benefit Plan is unfunded or funded through a "welfare benefits
fund" (as defined in Section 419(e) of the Code) and (ii) each such Company
Benefit Plan that is a "group health plan" (as defined in Section 5000(b)(1) of
the Code), complies with the applicable requirements of Section 4980B(f) of the
Code. Neither the Company nor any Company Subsidiary has any obligations for
retiree health and life benefits under any
27
Company Benefit Plan with respect to U.S. Employees (other than as required
under Section 4980B(f) of the Code).
(e) The Company Disclosure Letter sets forth a complete and accurate
list of each individual who is a party to a change-in-control employment
agreement with the Company, together with such individual's current base salary
and target bonus.
SECTION 3.12. Labor Matters. There are no collective bargaining or
---------------
other labor union agreements to which the Company or any Company Subsidiary is a
party or by which any of them is bound. As of the date of this Agreement, to
the Knowledge of the Company, there is not any labor union organizing activity
or any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts that, individually or in the aggregate, have had or would reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.13. Litigation. There is no suit, action or proceeding
-----------
pending or, to the Knowledge of the Company, threatened against or affecting the
Company or any Company Subsidiary (and the Company is not aware of any basis for
any such suit, action or proceeding) that, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material Adverse Effect,
nor is there any Judgment outstanding against the Company or any Company
Subsidiary that has had or would reasonably be expected to have a Company
Material Adverse Effect. As of the date of this Agreement, there is no suit,
action or proceeding pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any Company Subsidiary (and the Company is
not aware of any basis for any such suit, action or proceeding) that,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the ability of the Company to consummate the
transactions contemplated by this Agreement, nor as of the date of this
Agreement is there any Judgment outstanding against the Company or any Company
Subsidiary that would reasonably be expected to have a material adverse effect
on the ability of the Company to consummate the transactions contemplated by
this Agreement.
SECTION 3.14. Compliance with Applicable Laws. The Company and the
--------------------------------
Company Subsidiaries are in compliance with all Applicable Laws, including those
relating to occupational health and safety, except for such instances of
28
noncompliance that, individually or in the aggregate, have not had or would not
reasonably be expected to have a Company Material Adverse Effect. As of the
date of this Agreement, the Company and the Company Subsidiaries are in
compliance with all Applicable Laws, including those relating to occupational
health and safety, except for such instances of noncompliance that, individually
or in the aggregate, would not reasonably be expected to have a material adverse
effect on the ability of the Company to consummate the transactions contemplated
by this Agreement. To the Knowledge of the Company neither the Company nor any
Company Subsidiary has received any written communication during the past two
years from a Governmental Entity that alleges that the Company or a Company
Subsidiary is not in compliance with any Applicable Law, except with respect to
any alleged noncompliance that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. This Section
3.13 does not relate to matters with respect to Taxes, which are the subject of
Section 3.09, or environmental matters, which are the subject of Section 3.18.
SECTION 3.15. Brokers; Schedule of Fees and Expenses. No broker,
---------------------------------------
investment banker, financial advisor or other person, other than ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co., the fees and expenses of which will be paid by the Company, is entitled
to any brokers', finders', financial advisors' or other similar fee or
commission in connection with the Offer, the Merger and the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company has furnished to Parent the financial details of all
agreements between the Company and ▇▇▇▇▇▇▇, Sachs & Co. relating to the Offer,
the Merger and the other transactions contemplated by this Agreement.
SECTION 3.16. Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the Offer and
the Merger by the holders of Company Common Stock is fair to such holders from a
financial point of view, a signed copy of which opinion will promptly be
delivered to Parent upon receipt by the Company.
SECTION 3.17. Year 2000 Compliance. (a) To the Knowledge of the
---------------------
Company, the computer systems of the Company and the Company Subsidiaries are
Year 2000 Compliant (as defined below), except to the extent that such failures
29
to be Year 2000 Compliant would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. All inventory
of the Company and the Company Subsidiaries that is, consists of, includes or
uses computer software is Year 2000 Compliant. Any failure on the part of the
customers of and suppliers to the Company and the Company Subsidiaries to be
Year 2000 Compliant by December 31, 1999, is not expected to have a Company
Material Adverse Effect. As of the date of this Agreement, the SAP project is
expected to be completed on schedule and within budget.
(b) The term "Year 2000 Compliant", with respect to a computer system
-------------------
or software program, means that such computer system or program: (i) is capable
of recognizing, processing, managing, representing, interpreting and
manipulating correctly date-related data for dates earlier and later than
January 1, 2000; (ii) has the ability to provide date recognition for any data
element without limitation for the purposes designed; (iii) has the ability to
function automatically into and beyond the year 2000 without human intervention
and without any change in operations associated with the advent of the year
2000; (iv) has the ability to interpret data, dates and time correctly into and
beyond the year 2000; (v) has the ability not to produce noncompliance in
existing data, nor otherwise corrupt such data, into and beyond the year 2000;
(vi) has the ability to process correctly after January 1, 2000, data containing
dates before that date; and (vii) has the ability to recognize all "leap year"
dates, including February 29, 2000.
SECTION 3.18. Environmental Matters. Neither the Company nor any
----------------------
Company Subsidiary has (x) to the Knowledge of the Company, placed, held,
located, released, transported or disposed of any Hazardous Substances (as
defined below) on, under, from or at any of the Company's or any of the Company
Subsidiaries' properties, other than in a manner that would not, in all such
cases taken individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect, or (y) any Knowledge or reason to know of
the presence of any Hazardous Substances on, under or at any of the Company's or
any of the Company Subsidiaries' properties, other than in a manner that would
not, in all such cases taken individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. There are no claims,
investigations or administrative actions pending or, to the
30
Knowledge of the Company, threatened against or affecting the Company or any
Company Subsidiary arising from or related to the harmful effects of, or the
removal or remediation of, Hazardous Substances that has had or would be
reasonably expected to have a Company Material Adverse Effect. For purposes of
this Agreement, "Environmental Law" means any Applicable Law or Judgment of any
-----------------
Governmental Entity relating to any matter of pollution, protection of the
environment, environmental regulation or control or regarding Hazardous
Substances on or under any of the Company's or any of the Company Subsidiary's
properties or any other properties. For purposes of this Agreement, the term
"Hazardous Substance" shall mean any toxic or hazardous materials or substances,
-------------------
including asbestos, buried contaminants, chemicals, flammable explosives,
radioactive materials, petroleum and petroleum products and any substances
defined as, or included in the definition of, "hazardous substances", "hazardous
wastes", "hazardous materials" or "toxic substances" under any Environmental
Law.
SECTION 3.19. Contracts; Debt Instruments. As of the date of this
----------------------------
Agreement, there are no contracts or agreements that are material to the conduct
of the business of the Company and the Company Subsidiaries taken as a whole
that are required to be filed as part of the Company SEC Documents. Neither the
Company nor any of the Company Subsidiaries is in violation of or in default
under (nor does there exist any condition which upon the passage of time or the
giving of notice would cause such a violation of or default under) any Contract
to which it is a party or by which it or any of its properties or assets is
bound that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.20. Intellectual Property. The Company and the Company
----------------------
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service ▇▇▇▇ rights, copyrights and other
proprietary intellectual property rights and computer programs (collectively,
"Intellectual Property Rights") which are material to the conduct of the
----------------------------
business of the Company and the Company Subsidiaries taken as a whole, in each
case, as currently conducted. No claims are pending or, to the Knowledge of the
Company, threatened that the Company or any of the Company Subsidiaries is
infringing or
31
otherwise adversely affecting the rights of any person with regard
to any Intellectual Property Right, except for such claims that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. To the Knowledge of the Company, no person is
infringing the rights of the Company or any of the Company Subsidiaries with
respect to any Intellectual Property Right, except for such infringements that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.01. Organization, Standing and Power. Each of Parent and
---------------------------------
Sub is duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized, and has full power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, except where
the failure to have such power or authority or to possess such franchises,
licenses, permits, authorizations and approvals, individually or in the
aggregate, has not had and would not reasonably be expected to have a material
adverse effect on Parent (a "Parent Material Adverse Effect") or a material
------------------------------
adverse effect on the ability of Parent to consummate the transactions
contemplated by this Agreement. Each of Parent and Sub is duly qualified to do
business in each jurisdiction where the nature of its business or its ownership
or leasing of its properties makes such qualification necessary other than such
failures to qualify that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.02. Sub Actions. (a) Since the date of its incorporation,
------------
Sub has not carried on any business or conducted any operations other than the
execution of this Agreement, the performance of its obligations hereunder and
matters ancillary thereto.
32
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $0.01 per share, all of which shares have been validly
issued, are fully paid and nonassessable and are owned by Parent free and clear
of any Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability. (a)
--------------------------------------------------
Each of Parent and Sub has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery by each of Parent
and Sub of this Agreement and the consummation by it of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action as the part of Parent and Sub. Parent, as sole stockholder of
Sub, has approved this Agreement. Each of Parent and Sub has duly executed and
delivered this Agreement, and, assuming the due and valid authorization,
execution and delivery of this Agreement by the Company, this Agreement
constitutes a legal, valid and binding obligation of each of Parent and Sub,
enforceable against each of them in accordance with its terms.
(b) The Board of Directors of Parent (the "Parent Board"), at a
------------
meeting duly called and held duly and unanimously adopted resolutions approving
this Agreement.
SECTION 4.04. No Conflicts; Consents. (a) None of the execution and
-----------------------
delivery by each of Parent and Sub of this Agreement and the consummation of the
Offer, the Merger and the other transactions contemplated by this Agreement and
compliance with the terms hereof will (i) conflict with the certificate of
incorporation or by-laws of Parent or Sub or (ii) conflict with or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of Parent or Sub under any
provision of, (A) any Contract to which Parent or Sub is a party or by which any
of their respective properties or assets is bound or (B) subject to the filings
and other matters referred to in Section 4.04(b), any Judgment or Applicable Law
applicable to Parent or Sub or their respective properties or assets, other
than, in the case of clauses (A) and (B) of this sentence, any such items that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
33
(b) No Consent of, or registration, declaration or filing with, or
permit from, any Governmental Entity is required to be obtained or made by or
with respect to Parent or any subsidiary of Parent in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, other than (i) compliance with and
filings under the HSR Act, (ii) expiration or earlier termination of the waiting
period under Part IX of the Competition Act (Canada) (the "Competition Act")
---------------
and/or receipt of an advance ruling certificate ("ARC") pursuant to the
---
Competition Act or, in the alternative of an ARC, a no-action letter from the
Commissioner of Competition, (iii) the filing with the SEC of (A) the Offer
Documents and (B) such reports under Sections 13 and 16 of the Exchange Act, as
may be required in connection with this Agreement, the Offer, the Merger and the
other transactions contemplated by this Agreement, (iv) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (v)
Consents the failure of which to be obtained or made would not, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect, (vi) such filings as may be required in connection with the Transfer
Taxes described in Section 6.09 and (vii) such other items (A) required solely
by reason of the participation of the Company (as opposed to any third party) in
the transactions contemplated by this Agreement or (B) that, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 4.05. Information Supplied. None of the information supplied
---------------------
or to be supplied by Parent or Sub for inclusion or incorporation by reference
in (i) the Offer Documents, the Schedule 14D-9 or the Information Statement,
will, at the time such document is filed with the SEC, at any time it is amended
or supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain an 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 not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Offer
34
Documents will comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
SECTION 4.06. Financing. Parent and Sub collectively will have at
----------
the expiration date of the Offer and at the Effective Time, and Parent will make
available to Sub, sufficient funds to enable Sub to pay for all outstanding
Company Capital Stock purchased pursuant to the Offer or converted into cash
pursuant to the Merger, to perform Parent and Sub's obligations under this
Agreement and to pay all fees and expenses related to the transactions
contemplated by this Agreement payable by them.
SECTION 4.07. Stock Ownership; Interested Stockholders. As of the
-----------------------------------------
date hereof, neither Parent nor Sub beneficially owns any Company Capital Stock
and neither Parent nor Sub is an "interested stockholder" of the Company, as
such term is defined in Section 203(c)(5) of the DGCL.
SECTION 4.08. Brokers. No broker, investment banker, financial
--------
advisor or other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees
and expenses of which will be paid by Parent, is entitled to any brokers',
finders', financial advisors' or other similar fee or commission in connection
with the Offer, the Merger and the other transactions contemplated hereby based
upon arrangements made by or on behalf of Parent.
35
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business. (a) Conduct of Business by the
-------------------- --------------------------
Company. Except for matters set forth in the Company Disclosure Letter or
--------
otherwise contemplated by this Agreement, from the date of this Agreement to the
Effective Time or earlier termination of this Agreement, the Company shall, and
shall cause each Company Subsidiary to, conduct its business in the usual and
ordinary course consistent with past practice, except as required to comply with
changes in Applicable Law occurring after the date hereof, and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its current
business organization and keep available the services of its current officers
and employees to maintain its goodwill and ongoing business. In addition, and
without limiting the generality of the foregoing, except for matters set forth
in the Company Disclosure Letter or otherwise contemplated by this Agreement,
from the date of this Agreement to the Effective Time, the Company shall not,
and shall not permit any Company Subsidiary to, do any of the following without
the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than (1)
dividends and distributions by a direct or indirect wholly owned subsidiary
of the Company to its parent, (2) regular quarterly cash dividends with
respect to the Company Common Stock, not in excess of $0.055 per share,
with usual declaration, record and payment dates and in accordance with the
Company's past dividend policy, (3) regular annual cash dividends, not in
excess of $1.065 per share, payable on outstanding Company Preferred Stock
in accordance with the current terms thereof and (4) any dividend or
distribution permitted by the terms of the Partnership Agreement (as
defined in Section 6.12(a)) or previously approved by the Board of
Directors of the Partnership, (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or (C) except for the redemption of Company Preferred Stock as required by
paragraph (C) of Section 8 of the Company Preferred Certificate of
Designation by reason of this Agreement or pursuant to
36
a request by Parent under Section 6.14, purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than (1) the issuance of Company Common Stock (and
associated Company Rights) upon the exercise of Company Employee Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms, (2) the issuance of up to an additional 2,500 Company
Employee Stock Options, each of which shall have an exercise price not less
than the fair market value of Company Common Stock on the date of grant,
pursuant to the Company Stock Plans in accordance with their present terms
and the issuance of Company Common Stock (and associated Company Rights)
upon the exercise of such Company Employee Stock Options and (3) the
issuance of Junior Preferred Stock upon the exercise of Company Rights;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) except in the ordinary course consistent with past practice,
acquire or agree to acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner,
any equity interest in or business or any corporation, partnership, joint
venture, association or other business organization or division thereof or
(B) any assets that are material, individually or in the aggregate, to the
Company and the Company Subsidiaries, taken as a whole;
(v) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in compensation, except in the ordinary
course consistent with prior practice or to the extent required under
37
employment agreements in effect as of the date hereof, (B) grant to any
employee, officer or director of the Company or any Company Subsidiary any
increase in severance or termination pay, except to the extent required
under any agreement in effect as of the date hereof, (C) enter into any
employment, consulting, indemnification, severance or termination agreement
with any officer or director of the Company or any Company Subsidiary, (D)
establish, adopt, enter into or amend in any material respect any
collective bargaining agreement or Company Benefit Plan, except as may be
required by Applicable Law in effect as of the date hereof, (E) take any
action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course consistent with prior practice,
under any collective bargaining agreement or Company Benefit Plan or (F)
enter into any agreement described in clause (C) hereof with (1) any other
employee of the Company or any Company Subsidiary employed in the United
States or Canada or (2) any such employee employed outside the United
States and Canada except for agreements required by Applicable Law in the
relevant jurisdiction; provided, however, that the Company shall be
-------- -------
permitted to adopt the amendment to its Severance Pay Plan set forth in the
Company Disclosure Letter;
(vi) make any change in financial accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as may
have been required by a change in GAAP or by operation of Applicable Law;
(vii) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any properties or assets, except sales of inventory and
excess or obsolete assets or real property in the ordinary course
consistent with past practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
38
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course consistent with past practice,
or (B) make any loans, advances or capital contributions to, or investments
in, any other person, other than to or in the Company or any direct or
indirect wholly owned subsidiary of the Company or to or in the
Partnership;
(ix) make or agree to make any new capital expenditure or
expenditures (other than expenditures in the existing capital expenditure
budget, a copy of which is attached to the Company Disclosure Letter) that,
individually, is in excess of $5,000,000 or, in the aggregate, are in
excess of $9,000,000;
(x) make any material Tax election, except in the ordinary course
consistent with past practice or as required to comply with changes in
Applicable Law occurring after the date of this Agreement, or settle or
compromise any material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course consistent with past practice or in accordance with their
terms or the terms of this Agreement, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Filed
Company SEC Documents or incurred in the ordinary course consistent with
past practice, (B) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value or (C) waive
the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Company
Subsidiary is a party, except, in the case of this clause (C), to the
extent necessary to comply with the fiduciary obligations of the Company
Board, as determined in good faith by it after consultation with outside
counsel;
(xii) exercise any rights (the "Buy Rights") it may have under
----------
Section 15.2 of the Partnership Agreement to exercise the "buy procedure",
as set out in Section 15.3 of the Partnership Agreement, as a result of the
MacMillan ▇▇▇▇▇▇▇ Transaction; or
39
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall not
--------------
permit any of their respective subsidiaries to, take any action that would, or
that would reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement that is qualified by
reference to a material adverse effect becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) except as otherwise permitted by Section 5.02, any
condition to the Merger set forth in Article VII not being satisfied.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall
----------------
it permit any Company Subsidiary to, nor shall it authorize any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or Company Subsidiary to, (i) solicit, initiate
or knowingly encourage the submission of, any Company Takeover Proposal (as
defined in Section 5.02(e)), (ii) enter into any agreement with respect to any
Company Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to knowingly facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Company Takeover Proposal; provided, however, that at any time during the period
-------- -------
following the execution of the Agreement and prior to the consummation of the
Offer (the "Company Applicable Period"), if the Company receives a proposal or
-------------------------
offer that was not solicited by the Company and that did not otherwise result
from a breach of this Section 5.02(a) and that the Company Board determines in
good faith (based on consultation with its outside counsel and a financial
advisor of nationally recognized reputation) could result in a third party
making a Superior Company Proposal (as defined in Section 5.02(e)), and subject
to compliance with Section 5.02(c), the Company may, to the extent necessary to
comply with the fiduciary obligations of the Company Board, as determined in
good faith by it after consultation with outside counsel, (A) furnish
information with respect to the Company to the person making such proposal or
offer pursuant to a customary confidentiality agreement, as determined by the
Company after consultation with its outside counsel, and
40
(B) participate in discussions or negotiations with such person regarding such
proposal or offer. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the preceding sentence by any
executive officer of the Company or any Company Subsidiary or any affiliate,
director or investment banker, attorney or other advisor or representative of
the Company or any of the Company Subsidiaries, shall be deemed to be a breach
of this Section 5.02(a) by the Company. The Company shall, and shall cause its
officers and directors and any investment banker, attorney or other advisor or
representative of the Company or any Company Subsidiary, to, cease immediately
all discussions and negotiations regarding any proposal that constitutes, or may
reasonably be expected to lead to, a Company Takeover Proposal.
(b) Except as expressly permitted by this Section 5.02, neither the
Company Board nor any committee thereof shall approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Company Takeover Proposal or approve or recommend, or propose to approve or
recommend, any Company Takeover Proposal. The Company may terminate this
Agreement pursuant to Section 8.01(f) only if (i) the Company Board has received
a Superior Company Proposal, (ii) in light of such Superior Company Proposal the
Company Board has determined in good faith, after consultation with outside
counsel, that it is necessary for the Company Board to withdraw or modify its
approval or recommendation of this Agreement, the Offer or the Merger in order
to comply with its fiduciary obligations, (iii) the Company has notified Parent
in writing of the determinations described in clause (ii) above, (iv) at least
three business days following receipt by Parent of the notice referred to in
clause (iii) above, and taking into account any revised proposal made by Parent
since receipt of the notice referred to in clause (iii) above, such Superior
Company Proposal remains a Superior Company Proposal and the Company Board has
again made the determinations referred to in clause (ii) above (although no
additional time period shall be required following such determinations), (v) the
Company is in compliance with this Section 5.02, (vi) the Company Board
concurrently approves, and the Company concurrently enters into, a definitive
agreement providing for the implementation of such Superior Company Proposal,
(vii) such definitive agreement contains the guarantee required by Section
6.12(b) and (viii) Parent is not at such time entitled to terminate this
Agreement pursuant to
41
Section 8.01(c) solely as a result of a knowing and deliberate breach by the
Company of a representation or warranty in this Agreement or a material breach
by the Company of a covenant in this Agreement.
(c) The Company promptly shall advise Parent orally and in writing of
any Company Takeover Proposal or any inquiry with respect to or that could
reasonably be expected to lead to any Company Takeover Proposal, the identity of
the person making any such Company Takeover Proposal or inquiry and the material
terms of any such Company Takeover Proposal or inquiry. The Company shall (i)
keep Parent fully informed of the status of any such Company Takeover Proposal
or inquiry and (ii) provide to Parent as soon as practicable after receipt or
delivery thereof with copies of all correspondence and other written material
sent or provided to the Company from any third party in connection with any
Company Takeover Proposal; provided, however, that the Company shall not be
-------- -------
required to provide any nonpublic information specified in clause (ii) regarding
the business or financial condition or prospects of such third party if (A) the
Company is prohibited from disclosing such information pursuant to a legally
binding confidentiality agreement and (B) such Company Takeover Proposal
provides for consideration consisting solely of cash.
(d) Neither the Company nor the Company Board nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to Parent or Sub, the approval or recommendation of the Company
Board of this Agreement, the Offer or the Merger, or approve or recommend, or
propose publicly to approve or recommend, a Company Takeover Proposal, unless a
withdrawal or modification of such approval or recommendation is, in the good
faith judgment of the Company Board after consultation with its outside counsel,
necessary to comply with its fiduciary obligations. Nothing contained in this
Section 5.02 shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any required disclosure to the Company's
stockholders if, in the good faith judgment of the Company Board, based on the
opinion of outside counsel, failure so to disclose would be inconsistent with
its obligations under Applicable Law.
(e) For purposes of this Agreement:
42
"Company Takeover Proposal" means any inquiry, proposal or offer for a
-------------------------
merger, consolidation, dissolution, liquidation, recapitalization or other
business combination involving the Company or Company Subsidiary, any
proposal or offer for the issuance by the Company of over 15% of its equity
securities as consideration for the assets or securities of any person or
any proposal or offer to acquire in any manner, directly or indirectly,
over 15% of the equity securities of consolidated total assets of the
Company, in each case, other than the transactions contemplated by this
Agreement.
"Superior Company Proposal" means any proposal made by a third party
-------------------------
to acquire all or substantially all of the equity securities or assets of
the Company, pursuant to a tender or exchange offer, a merger, a
consolidation, a liquidation or dissolution, a recapitalization, a sale of
its assets or otherwise, which a majority of the disinterested directors of
the Company determines in its good faith judgment (i) to be on terms
superior in value from a financial point of view to the holders of Company
Capital Stock than the transactions contemplated by this Agreement (based
on consultation with the Company's independent financial advisor), taking
into account all the terms and conditions of such proposal and this
Agreement (including any proposal by Parent to amend the terms of the
transactions contemplated by this Agreement) and (ii) reasonably capable of
being completed, taking into account all financial, regulatory, legal and
other aspects of such proposal.
ARTICLE VI
Additional Agreements
---------------------
43
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meetings.
------------------------------------------------------
(a) If the approval of this Agreement by the Company's stockholders is required
by Applicable Law, the Company shall, at Parent's request, as soon as
practicable following the expiration of the Offer, prepare and file with the SEC
the Proxy Statement in preliminary form, and the Company shall use its
reasonable efforts to respond as promptly as practicable to any comments of the
SEC with respect thereto. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information, and shall supply Parent with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of the Company Stockholder Approval,
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. The Company shall use its reasonable efforts to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after filing with the SEC.
(b) If the approval of this Agreement by the Company's stockholders
is required by Applicable Law, the Company shall, as soon as practicable
following the expiration of the Offer, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company Stockholders Meeting") for the
----------------------------
purpose of seeking the Company Stockholder Approval. The Company shall, through
the Company Board, recommend to its stockholders that they give the Company
Stockholder Approval, except to the extent that the Company Board shall have
withdrawn or modified its approval or recommendation of this Agreement, the
Offer or the Merger as permitted by Section 5.02(b). Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant to
the first sentence of this Section 6.01(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Company Takeover Proposal. Notwithstanding the foregoing, if Parent, Sub
or any other subsidiary of Parent shall acquire at least 90% of the outstanding
shares of each outstanding class of capital stock of the Company entitled to
vote on the Merger, the parties shall, at the
44
request of Parent, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the expiration of the Offer
without a stockholders meeting in accordance with Section 253 of the DGCL.
(c) Parent shall cause all shares of Company Capital Stock purchased
pursuant to the Offer and all other shares of Company Capital Stock owned by
Parent, Sub or any other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
SECTION 6.02. Access to Information; Confidentiality. (a) The
---------------------------------------
Company shall, and shall cause each of the Company Subsidiaries to, afford to
Parent and to its officers, employees, accountants, counsel, financial advisors
and other representatives, reasonable access during normal business hours during
the period prior to the Effective Time to all of their properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall, and shall cause each of the Company Subsidiaries to, promptly
furnish to Parent (i) a copy of each report, schedule, registration statement
and other document filed by the Company or any of the Company Subsidiaries
during such period pursuant to the requirements of Federal or state securities
laws and (ii) all other information concerning its business, properties and
personnel as Parent may reasonably request, subject to legally binding
confidentiality restrictions with third parties in effect as of the date of this
Agreement. Without limiting the generality of the foregoing, in the event the
Company receives a Company Takeover Proposal, the Company shall, within two
business days of request therefor, provide to Parent the information described
in Rule 14a-7(a)(2)(ii) under the Exchange Act and any information to which a
holder of Company Capital Stock would be entitled under Section 220 of the DGCL
(assuming such holder met the requirements of such section). All information
exchanged pursuant to this Section 6.02 shall be subject to the Confidentiality
Agreement, dated November 16, 1999, between the Company and Parent (the
"Confidentiality Agreement").
-------------------------
(b) The Company and Parent shall cooperate in determining whether the
Company or any Company Subsidiary is or has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code at any
time during the five year period ending at the Effective Time.
45
SECTION 6.03. Reasonable Efforts; Notification. (a) Upon the terms
---------------------------------
and subject to the conditions set forth in this Agreement, each of the parties
shall use all reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, and Consents from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary Consents from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement and to fully carry out the
purposes of this Agreement. In connection with and without limiting the
foregoing, the Company and the Company Board shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to any
transaction contemplated by this Agreement, take all action necessary to ensure
that the Offer, the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement. Notwithstanding the foregoing, (x) the Company
shall not be prohibited under this Section 6.03(a) from taking any action
permitted by Section 5.02(b) and (y) nothing in this Agreement shall be deemed
to require any party to take any action that would result in any of the
consequences referred to in paragraph (a) of Exhibit A.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to a material
adverse effect becoming untrue or inaccurate in any respect or any such
representation or warranty that is not
46
so qualified becoming untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
-------- -------
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 6.04. Company Employee Stock Options. (a) As soon as
-------------------------------
practicable following the date of this Agreement, the Company Board (or, if
appropriate, any committee administering the Company Stock Plans) shall adopt
such resolutions or take such other actions as are required, subject to any
required consent of the holders, to adjust the terms of all outstanding Company
Employee Stock Options and all outstanding Company SARs heretofore granted under
any Company Stock Plan to provide that each Company Employee Stock Option (and
any Company SAR related thereto) outstanding immediately prior to the acceptance
for payment of shares of Company Common Stock pursuant to the Offer shall be
canceled in exchange for a cash payment by the Company at that time of an amount
equal to (i) the excess, if any, of (x) the Merger Consideration over (y) the
exercise price per share of Company Common Stock subject to such Company
Employee Stock Option, multiplied by (ii) the number of shares of Company Common
Stock for which such Company Employee Stock Option shall not theretofore have
been exercised. All amounts payable pursuant to this Section 6.04 shall be
subject to any required withholding of Taxes and shall be paid without interest.
(b) The Company shall use its reasonable best efforts to obtain all
consents of the holders of the Company Employee Stock Options as shall be
necessary to effectuate the foregoing and to ensure that following the Effective
Time no holder of a Company Employee Stock Option or Company SAR or any
participant in any Company Stock Plan or other Company Benefit Plan shall have
any right thereunder to acquire any capital stock of the Company or the
Surviving Corporation. Notwithstanding anything to the contrary contained in
this Agreement, payment shall, at Parent's request, be withheld in respect of a
Company Employee Stock Option until all necessary consents in respect of such
Company Employee Stock Option are obtained.
(c) The Company Stock Plans shall terminate as of the Effective Time,
and the provisions in any other Benefit
47
Plan providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time.
(d) In this Agreement:
"Company Employee Stock Option" means any option to purchase Company
-----------------------------
Common Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
-----------
of Company Common Stock and granted under any Company Stock Plan.
"Company Stock Plans" means the Company's Key Employees' 1992 Stock
-------------------
Option Plan, Key Employees' 1993 Stock Option Plan, Amended and Restated
Restricted Stock Plan for Non-Employee Directors, Key Employees' 1982
Incentive Stock Option Plan, as amended, 1985 Incentive Stock Option Plan,
as amended, 1998 Stock Option Plan, as amended, Non-Employee Directors 1997
Stock Plan and 1996 Stock Option Plan.
SECTION 6.05. Existing Agreements, Plans and Policies. (a) From and
----------------------------------------
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to honor in accordance with their respective terms (as in effect on
the date of this Agreement), all the Company's employment, severance and
termination agreements, plans and policies disclosed in the Company Disclosure
Letter.
(b) If prior to the Effective Time Parent agrees to grant options to
acquire Parent Common Stock to any officer or director of the Company prior to
the Effective Time, the Board of Directors of Parent, or an appropriate
committee of non-employee directors thereof, shall if necessary adopt a
resolution consistent with the interpretive guidance of the SEC so that the
acquisition by any officer or director of the Company who may become a covered
person of Parent for purposes of Section 16 of the Exchange Act and the rules
and regulations thereunder ("Section 16") of options to acquire Parent Common
----------
Stock pursuant to this Agreement and the Merger shall be an exempt transaction
for purposes of Section 16.
(c) For a period of not less than one year following the Effective
Time, Parent shall provide, or shall
48
cause to be provided, to current employees of the Company and the Company
Subsidiaries (the "Company Employees"), taken as a whole, employee benefits that
-----------------
are, in the aggregate, no less favorable than those provided from time to time
after the Effective Time to employees of Parent and its subsidiaries who are
similarly situated, in terms of positions and geographic locations, to such
Company Employees; provided, however, that nothing contained in this Section
-------- -------
6.05(c) shall require Parent to continue or cause to be continued any Company
Stock Plan. Without limiting the generality of the foregoing, all Company
Employees who are covered by the Company's Severance Pay Plan as in effect on
the date hereof and whose employment is terminated on or before the first
anniversary of the Effective Time shall be provided with severance pay and
benefits on a basis, and in amounts, not less favorable than those provided for
under the Company's Severance Pay Plan as in effect on the date hereof as
amended to reflect the amendment as described in the Company Disclosure Letter.
(d) For all purposes under the employee benefit plans of Parent and
its affiliates providing benefits to any Company Employees after the Effective
Time (the "New Plans"), each Company Employee shall be credited with his or her
---------
years of service with the Company and its affiliates before the Effective Time,
to the same extent as such Company Employee was entitled, before the Effective
Time, to credit for such service under any similar Company Benefit Plans, except
for purposes of benefit accrual under defined benefit pension plans. In
addition, and without limiting the generality of the foregoing: (i) each
Company Employee shall be immediately eligible to participate, without any
waiting time, in any and all New Plans to the extent coverage under such New
Plan replaces coverage under a comparable Company Benefit Plan in which such
Company Employee participated immediately before the Effective Time and
previously described to Parent (such plans, collectively, the "Old Plans"); and
---------
(ii) for purposes of each New Plan providing medical, dental, pharmaceutical
and/or vision benefits to any Company Employee, Parent shall cause all pre-
existing condition exclusions and actively-at-work requirements of such New Plan
to be waived for such employee and his or her covered dependents (other than
limitations or waiting periods that are already in effect with respect to such
employees and dependents and that have not been satisfied as of the Effective
Time), and Parent shall cause any eligible expenses incurred by such employee
and his or her covered dependents during the
49
portion of the plan year of the Old Plan ending on the date such employee's
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such employee and his or her
covered dependents for the applicable plan year as if such amounts had been paid
in accordance with such New Plan.
(e) Parent agrees that for purposes of any of the Company Benefit
Plans conferring rights on a current or former employee, officer or director as
a result of a change of control of the Company, the consummation of the Merger
(or such earlier event contemplated hereby and specified in such Company Benefit
Plans) shall be deemed to constitute a "Change of Control" (as that term is
defined in such Company Benefit Plans).
(f) Subject to compliance by Parent with its obligations under
Sections 6.05(a) and 6.05(c), nothing contained in this Section 6.05 or
elsewhere in this Agreement shall be construed to prevent the termination of
employment of any individual Company Employee or any change in the employee
benefits available to any individual Company Employee or the amendment or
termination of any particular Company Benefit Plan to the extent permitted by
its terms as in effect immediately prior to the Effective Time.
SECTION 6.06. Indemnification. (a) Parent shall, to the fullest
----------------
extent permitted by Applicable Law, cause the Surviving Corporation to honor all
the Company's obligations to indemnify (including any obligations to advance
funds for expenses) the current or former directors or officers of the Company
and the Company Subsidiaries for acts or omissions by such directors and
officers occurring at or prior to the Effective Time to the extent that such
obligations of the Company exist on the date of this Agreement, whether pursuant
to the Company Charter, the Company By-laws, individual indemnity agreements or
otherwise, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of the Company Charter, the
Company By-laws and such individual indemnity agreements from the Effective Time
until the expiration of the applicable statute of limitations with respect to
any claims against such directors or officers arising out of such acts or
omissions.
50
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; provided,
--------
however, that Parent shall not be obligated to make annual premium payments for
-------
such insurance to the extent such premiums exceed 300% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 300% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all,
---------------
or can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium;
provided, however, if such insurance coverage cannot be obtained at all, Parent
-------- -------
shall purchase all available extended reporting periods with respect to pre-
existing insurance in an amount which, together with all other insurance
purchased pursuant to this Section 6.06(b), does not exceed the Maximum Premium.
The Company represents to Parent that the Maximum Premium is $955,500. Parent
shall not, and shall cause the Company not to, take any action that would have
the effect of limiting the aggregate amount of insurance coverage required to be
maintained for the individuals referred to in this Section 6.06(b).
(c) From and after the consummation of the Offer, to the full extent
permitted by Applicable Law, Parent shall, and shall cause the Company (or any
successor to the Company) to, indemnify, defend and hold harmless the present
officers and directors of the Company and the Company Subsidiaries (each an
"Indemnified Party") against all losses, claims, damages, liabilities, fees and
-----------------
expenses (including attorneys' fees and disbursements), judgments, fines and
amounts paid in settlement (collectively, "Losses") arising out of actions or
------
omissions occurring at or prior to the Effective Time in connection with this
Agreement, the Offer, the Merger and the other transactions contemplated hereby;
provided, however, that an Indemnified Party shall not be entitled to
-------- -------
indemnification under this Section 6.06(c) for Losses arising out of actions or
omissions by the Indemnified Party constituting (i) a breach of this Agreement,
(ii) criminal conduct or (iii) any
51
violation of federal, state or foreign securities laws. In order to be entitled
to indemnification under this Section 6.06(c), an Indemnified Party must give
Parent and the Company written notice of any third party claim which may give
rise to any indemnity obligation under this Section 6.06(c), and Parent and the
Company shall have the right to assume the defense of any such claim through
counsel of their own choosing, subject to such counsel's reasonable judgment
that separate defenses that would create a conflict of interest on the part of
such counsel are not available. If Parent and the Company do not assume any such
defense, they shall be liable for all reasonable costs and expenses of defending
such claim incurred by the Indemnified Party, including reasonable fees and
disbursements of counsel and shall advance such reasonable costs and expenses to
the Indemnified Party; provided, however, that such advance shall be made only
-------- -------
after receiving an undertaking from the Indemnified Party that such advance
shall be repaid if it is determined that such Indemnified Party is not entitled
to indemnification therefor. Neither Parent nor the Company shall be liable
under this Section 6.06(c) for any Losses resulting from any settlement,
compromise or offer to settle or compromise any such claim or litigation or
other action, without the prior written consent of Parent or the Company.
(d) The Company shall not, and Parent shall not permit the Company
to, amend or repeal any provision of the certificate of incorporation or by-laws
of the Company after the consummation of the Offer if such action would
adversely affect the rights of individuals who on or prior to the consummation
of the Offer were entitled to advances, indemnification or exculpation
thereunder for actions or omissions by such individuals prior to the Effective
Time. The individuals referred to in the preceding sentence shall include any
individuals who served as of the Effective Time as directors or officers of any
Company Subsidiary at the Company's request, it being acknowledged by the
parties hereto that each director or officer of the Company who is currently
serving as a director or officer of a Company Subsidiary is doing so at such
request of the Company.
(e) In the event the Surviving Corporation or any successor to the
Surviving Corporation (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any person,
52
then, and in each case, proper provision shall be made so that the successors of
the Surviving Corporation honor the obligations of the Company set forth in this
Section 6.06.
SECTION 6.07. Fees and Expenses. (a) Except as provided below, all
------------------
fees and expenses incurred in connection with the Offer, the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay to Parent:
(i) a fee of $12,500,000 if this Agreement is terminated
pursuant to Section 8.01(f);
(ii) in addition to the fee paid under clause (i) above, a
fee of $12,500,000 if this Agreement is terminated in the
circumstances contemplated by clause (i) above and thereafter a
Company Takeover Proposal is consummated that involves the person
whose Superior Company Proposal resulted in such termination;
(iii) a fee of $12,500,000 if this Agreement is terminated
pursuant to Section 8.01(d);
(iv) in addition to the fee paid under clause (iii) above, a
fee of $12,500,000 if this Agreement is terminated in the
circumstances contemplated by clause (iii) above and within 12
months of such termination either (x) a Company Acquisition
Proposal (as defined below) is consummated or (y) the Company
enters into an agreement to consummate a Company Acquisition
Proposal and any Company Acquisition Proposal is thereafter
consummated that includes the person party to such agreement,
whether or not such consummation is within such 12 month period;
(v) a fee of $12,500,000 if (A) after the date of this
Agreement and prior to the termination of this Agreement, any
person
53
makes a Company Takeover Proposal, (B) the Offer remains open
until the scheduled expiration date immediately following the
date such Company Takeover Proposal is made (or such later date
as the Offer may be extended at the Company's request pursuant to
Section 1.01(a)), (C) the Minimum Tender Condition is not
satisfied at the expiration of the Offer, (D) this Agreement is
terminated pursuant to Section 8.01(b)(iii) and (E) within 12
months of such termination the Company enters into an agreement
to consummate a Company Acquisition Proposal;
(vi) in addition to the fee paid under clause (v) above, a
fee of $12,500,000 if this Agreement is terminated in the
circumstances contemplated by clause (v) above and thereafter a
Company Acquisition Proposal is consummated that involves the
person party to the agreement referred to in Section
6.07(b)(v)(E); and
(vii) a fee of $25,000,000 if (A) after the date of this
Agreement and prior to the termination of this Agreement, any
person makes a Company Takeover Proposal, (B) the Offer remains
open until the scheduled expiration date immediately following
the date such Company Takeover Proposal is made (or such later
date as the Offer may be extended at the Company's request
pursuant to Section 1.01(a)), (C) the Minimum Tender Condition is
not satisfied at the expiration of the Offer, (D) this Agreement
is terminated pursuant to Section 8.01(b)(iii) and (E) within 12
months of such termination a Company Acquisition Proposal is
consummated.
(c) Any fee due under Section 6.07(b)(i) shall be paid simultaneously
with, and as a condition to, the termination of this Agreement. Any fee due
under Section 6.07(b)(ii), 6.07(b)(vi) or 6.07(b)(vii) shall be paid at or prior
to the consummation of the relevant transaction. Any fee due under Section
6.07(b)(iii) shall be paid on the business day following termination of this
Agreement. Any fee due under Section 6.07(b)(iv) or 6.07(b)(v) shall be at
54
or prior to the consummation of the relevant transaction. All fees under due
Section 6.07(b) shall be paid by wire transfer of same-day funds. Under no
circumstances will the Company be obligated to pay fees pursuant to this Section
6.07 in excess of $25,000,000 in the aggregate.
(d) "Company Acquisition Proposal" shall mean a Company Takeover
----------------------------
Proposal, provided that for the purpose of this definition, each reference to
--------
"15%" in the definition of Company Takeover Proposal shall be deemed a reference
to "50%".
SECTION 6.08. Public Announcements. Parent and Sub, on the one hand,
---------------------
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by Applicable Law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or The Nasdaq Stock Market, Inc.
SECTION 6.09. Transfer Taxes. All stock transfer, real estate
---------------
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes") incurred
--------------
in connection with the transactions contemplated by this Agreement shall be paid
by either Parent, Sub or Surviving Corporation, and Parent, Sub and the
Surviving Corporation shall hold all other persons and entities (including the
Company prior to the Merger) harmless from and against any losses in connection
with such Transfer Taxes, and the Company shall cooperate with Sub or Parent in
preparing, executing and filing any Tax Returns with respect to such Transfer
Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company that are located in New York State and
any information with respect to such property that is reasonably necessary to
complete such Tax Returns. The portion of the consideration to be received by
holders of Company Capital Stock in connection with the Merger that is allocable
to the real property of the Company and the Company Subsidiaries in New York
State shall be determined by Sub in its reasonable discretion.
55
SECTION 6.10. Rights Agreements; Consequences if Rights Triggered.
----------------------------------------------------
Except as approved in writing by Parent, the Company Board shall not (i) amend
the Company Rights Agreement, (ii) redeem the Company Rights or (iii) take any
action with respect to, or make any determination under, the Company Rights
Agreement, except, in each case, to the extent necessary to comply with the
fiduciary obligations of the Company Board, as determined by it in good faith
after consultation with outside counsel. If any "Distribution Date" or "Share
Acquisition Date" occurs under the Company Rights Agreement at any time during
the period from the date of this Agreement to the Effective Time, the Company
and Parent shall make such adjustment to the Offer Price as the Company and
Parent shall mutually agree so as to preserve the economic benefits that the
Company and Parent each reasonably expected on the date of this Agreement to
receive as a result of the consummation of the Offer and the Merger.
SECTION 6.11. Directors. (a) Promptly upon the acceptance for
----------
payment of, and payment by Sub for, any shares of Company Capital Stock pursuant
to the Offer, Sub shall be entitled to designate such number of directors on the
Company Board as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Company Board equal to at least that number
of directors, rounded up to the next whole number, which is the product of (A)
the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (B) the percentage
that (i) such number of shares of Company Capital Stock so accepted for payment
and paid for by Sub plus the number of shares of Company Capital Stock otherwise
owned by Sub or any other subsidiary of Parent bears to (ii) the number of Fully
Diluted Shares (as defined in Exhibit A), and the Company shall, at such time,
cause Sub's designees to be so elected; provided, however, that, in the event
-------- -------
that Sub's designees are appointed or elected to the Company Board, until the
Effective Time, the Company Board shall have at least three directors who are
directors on the date of this Agreement and who are not officers of the Company
(the "Independent Directors"); and provided further, however, that, in such
--------------------- -------- ------- -------
event, if the number of Independent Directors shall be reduced below three for
any reason whatsoever, any remaining Independent Directors (or Independent
Director, if there shall be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent Directors
for purposes of this Agreement or, if no Independent Directors then remain, the
other
56
directors shall designate three persons to fill such vacancies who are not
officers, stockholders or affiliates of the Company, Parent or Sub, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to Applicable Law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
--------
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company promptly
shall, at the option of Sub, use all reasonable efforts to either increase the
size of the Company Board or obtain the resignation of such number of its
current directors as is necessary to enable Sub's designees to be elected or
appointed to the Company Board as provided above.
(b) Following the election or appointment of Sub's designees pursuant
to Section 6.11(a) and prior to the Effective Time, any amendment or termination
of this Agreement approved by the Company, extension for the performance or
waiver of the obligations of Parent or Sub or waiver of the Company's rights
hereunder shall require the concurrence of a majority of the Independent
Directors.
SECTION 6.12. TJM Partnership Agreement. (a) The Company hereby
--------------------------
waives, and will cause any Company Subsidiary with a partnership interest under
the Partnership Agreement to waive, any rights it may have under Section 15.2 of
the Partnership Agreement to exercise (x) the "sell procedure" as set out in
Section 15.4 of the Partnership Agreement or (y) the "mandatory buy/sell
procedure" set out in Section 15.5 of the Partnership Agreement (the rights
referred to in clauses (x) and (y), together with the Buy Rights, are referred
to as the "Buy/Sell Rights"), in each case, as result of the consummation of the
---------------
transactions contemplated by the Amended and Restated Merger Agreement, made as
of June 20, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited and MacMillan
▇▇▇▇▇▇▇ Limited (the "MacMillan ▇▇▇▇▇▇▇ Transaction"). The Company acknowledges
-----------------------------
that Parent does not agree that the Company is entitled to exercise any of the
Buy/Sell Rights as a result of the MacMillan ▇▇▇▇▇▇▇ Transaction and that the
inclusion of this Section 6.12 and Section 5.01(a)(xii) in this Agreement does
not constitute
57
an admission or the acceptance by Parent that any of such Buy/Sell Rights have
been triggered by the MacMillan ▇▇▇▇▇▇▇ Transaction, and Parent acknowledges
that the Company believes that it is entitled to exercise the Buy/Sell Rights as
a result of the MacMillan ▇▇▇▇▇▇▇ Transaction and that the inclusion of this
Section 6.12 and Section 5.01(a)(xii) in this Agreement does not constitute an
admission or the acceptance by the Company that any of such Buy/Sell Rights have
not been triggered by the MacMillan ▇▇▇▇▇▇▇ Transaction. "Partnership Agreement"
---------------------
means the Limited Partnership Agreement between the Company and MacMillan
▇▇▇▇▇▇▇ of America Inc. dated as of September 30, 1991, as amended by the
Amendment to Limited Partnership Agreement dated as of February 14, 1992.
(b) If this Agreement is terminated pursuant to Section 8.01(f), the
Company shall, subject to the next sentence, purchase the entire partnership
interest (the "Parent Interest") of Parent and its subsidiaries in Trus Joist
---------------
MacMillan A Limited Partnership (the "Partnership") held under the Partnership
-----------
Agreement, and Parent shall, and shall cause its subsidiaries to, in each case,
subject to the next sentence, sell the Parent Interest to the Company, for
$700,000,000 in cash. Such purchase and sale shall be consummated simultaneously
with, and as a condition to, the consummation of the transactions contemplated
by any Company Takeover Proposal made by the person who made the Superior
Company Proposal that gave rise to such termination. In the agreement entered
into by the Company with such person in connection with such termination, such
person must unconditionally guarantee (for the benefit of Parent and its
subsidiaries) the obligations of the Company under this Section 6.12(b).
(c) If (i) after the date of this Agreement, any person makes a
Company Takeover Proposal or amends a Company Takeover Proposal made prior to
the date of this Agreement, (ii) the Offer remains open until the scheduled
expiration date immediately following the date such Company Takeover Proposal is
made (or such later date as the Offer may be extended to at the Company's
request pursuant to Section 1.01(a)), (iii) the Minimum Tender Condition is not
satisfied at the expiration of the Offer and (iv) this Agreement is terminated
pursuant to Section 8.01(b)(iii), then the Buy Rights, if any, resulting from
the MacMillan ▇▇▇▇▇▇▇ Transaction shall terminate; provided, however,
-------- -------
notwithstanding anything in the Partnership Agreement to the contrary:
58
(A) the Company may exercise the Buy Rights within the 10 day period
beginning with the date of termination of this Agreement for a "Buy Price"
of $700,000,000 in cash and otherwise pursuant to the terms of Section 15.3
of the Partnership Agreement; and
(B) if the Company does not exercise its right under clause (A) above
and within 12 months following the date of such termination the Company
enters into an agreement to consummate a Company Acquisition Proposal, or a
Company Acquisition Proposal is consummated, the Company shall purchase the
Parent Interest, and Parent shall, and shall cause its subsidiaries, to
sell the Parent Interest to the Company, for $700,000,000 in cash, such
purchase and sale to be consummated simultaneously with, and as a condition
to, the consummation of such Company Acquisition Proposal.
(d) Notwithstanding anything contained in the Partnership Agreement
to the contrary, but subject to this Section 6.12, the Company may not exercise
the Buy Rights as a result of the MacMillan ▇▇▇▇▇▇▇ Transaction if this
Agreement is terminated prior to the acceptance for payment of shares pursuant
to the Offer:
(i) in the circumstances contemplated by Section 6.12(b) or
6.12(c);
(ii) pursuant to Section 8.01(d) or pursuant to Section
8.01(b)(iii) following the failure of the condition in paragraph (f)
of Exhibit A; or
(iii) pursuant to Section 8.01(c) or pursuant to Section
8.01(b)(iii) following the failure of the condition in paragraph (e)
of Exhibit A because, in either case, (A) other than as disclosed in
the Filed Company SEC Documents or the Company Disclosure Letter,
since the date of the most recent audited financial statements
included in the Filed Company SEC Documents and prior to the date of
this Agreement, there shall have occurred any event, change, effect or
development that, individually or in the aggregate, has had or is
reasonably likely to have a Company Material Adverse Effect or (B)(1)
any representation or warranty of the Company in this Agreement that
is qualified as to Company Material Adverse Effect shall not be true
and correct as of
59
the date of this Agreement or (2) the representations and warranties
of the Company that are not qualified as to Company Material Adverse
Effect shall not be true and correct in all respects as of the date of
this Agreement if the failure of all such representations and
warranties in this clause (2) to be true and correct, individually or
in the aggregate, is materially adverse to the transactions
contemplated by this Agreement, taken as a whole.
(e) Notwithstanding any provision to the contrary in the Partnership
Agreement, if this Agreement is terminated in accordance with the terms hereof
and none of Sections 6.12(b), 6.12(c) and 6.12(d) is applicable, the 90-day
period under the Partnership Agreement during which the Company may exercise its
Buy Rights, if any, in connection with the MacMillan ▇▇▇▇▇▇▇ Transaction shall
be deemed to begin to run from the date of such termination of this Agreement.
Except with respect to the running of the 90-day period, the procedures
governing the Buy Rights as set forth in the Partnership Agreement, to the
extent applicable, shall apply.
(f) Except as provided above, the Partnership Agreement shall continue
in full force and effect in accordance with its terms.
SECTION 6.13. Grant of Option. (a) The Company hereby grants to
-----------------
Sub an irrevocable option (the "Option") to purchase for a price of $42.00 per
------
share (the "Per Share Price") in cash a number of shares of Company Common Stock
---------------
(the "Optioned Shares") equal to the Applicable Amount. The "Applicable Amount"
--------------- -----------------
shall be the number of shares of Company Common Stock which, when added to the
number of shares of Company Common Stock owned by Parent and Sub immediately
prior to its exercise of the Option, would result in Sub owning immediately
after its exercise of the Option 90% of the then-outstanding shares of Company
Common Stock. Sub may exercise the Option only if, at the time of exercise,
Parent, Sub and any other subsidiary of Parent shall have acquired at least
50.1% of the Fully Diluted Shares pursuant to the Offer. The Option shall
expire if not exercised prior to the Effective Time. The Per Share Price may,
at the election of Sub, be paid either (i) in cash or (ii) a combination of
$1.00 in cash and a promissory note of Parent in a principal amount equal to
$41.00, which promissory note shall mature in 12 months (and be prepayable at
any time by
60
Parent without penalty) and shall bear interest at an annual rate of 6.50%
payable at maturity.
(b) In the event that Sub wishes to exercise the Option, Sub shall
give written notice (the date of such notice, the "Notice Date") to the Company
-----------
specifying the number of Optioned Shares it will purchase pursuant to such
exercise and a place and date (not later than 10 business days from the Notice
Date) for the closing of such purchase.
(c) At any closing hereunder, (i) Sub will make payment to the
Company of the full purchase price for the Optioned Shares by (A) certified or
official bank check payable to the order to Company or by wire transfer to the
Company, in an amount equal to the product of the cash portion of the Per Share
Price (determined in accordance with the last sentence of Section 6.13(a))
multiplied by the number of Optioned Shares being purchased at such closing, and
(B) delivery of the promissory note described in the last sentence of Section
6.13(a), and (ii) the Company will deliver to Sub a duly executed certificate or
certificates representing the number of Optioned Shares so purchased, registered
in the name of Sub or its nominee in the denominations designated by Sub in its
notice of exercise.
(d) Parent and Sub represent that any Optioned Shares purchased by
Sub will be acquired for investment only and not with a view to any public
distribution thereof and Sub will not offer to sell or otherwise dispose of any
Optioned Shares so acquired by it in violation of the registration requirements
of the Securities Act. The certificate(s) representing the shares of Company
Common Stock acquired pursuant to the exercise of the Option will bear a legend
indicating that such shares of Company Common Stock were sold without
registration under the Securities Act.
(e) In the event of any change in the number of outstanding shares of
Company Common Stock by reason of any stock dividend, stock split,
recapitalization, combination, exchange of shares, merger, consolidation,
reorganization or the like or any other change in the corporate or capital
structure of the Company that would have the effect of diluting Sub's rights
hereunder, the number of Optioned Shares and the Per Share Price shall be
adjusted appropriately so as to restore Sub to its rights hereunder with respect
to the Option; provided, however, that nothing in this Section 6.13(e) shall be
-------- -------
construed as permitting the
61
Company to take any action or enter into any transaction prohibited by this
Merger Agreement.
SECTION 6.14. Termination/Amendment of ESOP; Redemption of Company
----------------------------------------------------
Preferred Stock; Repayment of ESOP Loan. If upon consummation of the Offer,
----------------------------------------
Sub owns a number of shares of Company Common Stock that, together with the
shares of Company Common Stock that Sub has the Option to purchase pursuant to
Section 6.13, equals at least 90% of the then-outstanding Company Common Stock
(after giving effect to the exercise of such Option), then the Company shall
take such action as requested by Parent and permitted by the terms of the
Company Preferred Certificate of Designation and Applicable Law to terminate
and/or amend the ESOP and to call for redemption all the then-outstanding
Company Preferred Stock as promptly as practicable after such request by Parent.
As soon as practicable following the date of this Agreement, the Company shall
direct the Trustee to use any cash proceeds resulting from the redemption of the
Company Preferred Stock or resulting from the purchase or exchange of Company
Common Stock (into which Company Preferred Stock was converted) for cash
pursuant to the Offer or the Merger, in each case, with respect to shares that
have not been allocated to participants or beneficiaries under the Company's
Investment Plan, to repay any outstanding amounts under the ESOP Loan and shall
use its best efforts to take or cause to be taken such other actions consistent
with Applicable Law to cause the Trustee to comply with such direction, and the
parties hereto agree that any remaining cash proceeds shall be allocated to
participants and beneficiaries under the Company's Investment Plan in accordance
with Applicable Law.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger is subject
-------
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company shall have obtained the
---------------------
Company Stockholder Approval if required by Applicable Law.
62
(b) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
-------- -------
the parties shall have used its reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
-------------------
payment and paid for Company Capital Stock pursuant to the Offer.
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated at any
------------
time prior to the Effective Time, whether before or after receipt of the Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company; provided
--------
that, any such consent shall require the concurrence of a majority of the
Independent Directors if it occurs after the purchase by Sub of shares of
Company Capital Stock pursuant to the Offer;
(b) by either Parent or the Company:
(i) if the Offer is not consummated on or before April 3, 2000
(the "Outside Date"), unless the failure to consummate the Offer is
------------
the result of a material breach of this Agreement by the party seeking
to terminate this Agreement; provided, however, that the passage of
-------- -------
such period shall be tolled for any part thereof during which any
party shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation of
the Offer and the Outside Date shall be extended day-by-day for each
day tolled; provided further, however, that the Outside Date shall not
-------- ------- -------
be extended past May 18, 2000;
63
(ii) if any Governmental Entity issues an order, decree or
ruling or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; or
(iii) if as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, the Offer shall have
terminated or expired in accordance with its terms and the
requirements of Section 1.01(a) without Sub having purchased any
shares of Company Capital Stock pursuant to the Offer; provided,
--------
however that the right to terminate this Agreement pursuant to this
-------
clause (iii) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in the
failure of any such condition;
(c) by Parent, if, prior to the consummation of the Offer, the Company
breaches or fails to perform in any material respect any of its
representations, warranties or covenants contained in this Agreement, which
breach or failure to perform (i) would give rise to the failure of a
condition set forth in Exhibit A, and (ii) cannot be or has not been cured
within 30 days after the giving of written notice to the Company of such
breach (provided that Parent may not terminate this Agreement pursuant to
--------
this Section 8.01(c) if it is then in material breach of any
representation, warranty or covenant contained in this Agreement);
(d) by Parent:
(i) if the Company Board or any committee thereof withdraws or
modifies, or publicly proposes to withdraw or modify, in a manner
adverse to Parent or Sub, its approval or recommendation of this
Agreement, the Offer or the Merger or fails to recommend to the
Company's stockholders that they give the Company Stockholder Approval
or approves or recommends, or publicly proposes to approve or
recommend, any Company Takeover Proposal; or
(ii) if the Company Board fails to reaffirm publicly and
unconditionally its recommendation to
64
the Company's stockholders that they give the Company Stockholder
Approval, which public reaffirmation must be made within 10 business
days after Parent's written request to do so (which request may be
made at any time that a Company Takeover Proposal is pending and not
withdrawn) and must also include the unconditional rejection of such
Company Takeover Proposal (to the extent not previously withdrawn);
provided, however, that, Parent may not request the Company Board to
-------- -------
make more than one such reaffirmation in respect of any Company
Takeover Proposal unless such Company Takeover Proposal has been
materially amended or modified (and not withdrawn);
(e) by the Company, if prior to the acceptance of shares of Company
Capital Stock for payment pursuant to the Offer, Parent breaches or fails
to perform in any material respect of any of its representations,
warranties or covenants contained in this Agreement, which breach or
failure to perform cannot be or has not been cured within 30 days after the
giving of written notice to Parent of such breach (provided that the
Company may not terminate this Agreement pursuant to this Section 8.01(e)
if it is not then in material breach of any representation, warranty or
covenant in this Agreement);
(f) by the Company prior to the acceptance of shares of Company
Capital Stock for payment pursuant to the Offer in accordance with all the
requirements of Section 5.02(b), including the notice provisions therein;
(g) by the Company if the Offer has not been commenced within seven
business days after the date of this Agreement; or
(h) by the Company if any event occurs which would result in the
condition set forth in paragraph (d) of Exhibit A not being satisfied, and
five business days have elapsed since such occurrence, unless Parent shall
have waived its right to terminate this Agreement and its right not to
consummate the Offer for the failure of such condition resulting from such
event, in each case in accordance with Section 8.04.
65
SECTION 8.02. Effect of Termination. In the event of termination of
----------------------
this Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the first
sentence of Section 3.15, Section 4.08, the last sentence of Section 6.02(a),
Section 6.07, Section 6.12, this Section 8.02 and Article IX, which provisions
shall survive such termination, and except for any liability arising from the
material breach by a party of any representation, warranty or covenant set forth
in this Agreement.
SECTION 8.03. Amendment. Subject to the requirements of Section
----------
6.11(b), this Agreement may be amended by the parties at any time before or
after receipt of the Company Stockholder Approval; provided, however, that,
-------- -------
after receipt of the Company Stockholder Approval, there shall be made no
amendment that by Applicable Law requires further approval by the stockholders
of the Company without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
SECTION 8.04. Extension; Waiver. Subject to the requirements of
------------------
Section 6.11(b), at any time prior to the Effective Time, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 8.03, waive compliance
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
--------------------------------------------------
Waiver. A termination of this Agreement pursuant to Section 8.01, an amendment
-------
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require (x) in the case of Parent,
Sub or the Company, action by its Board of Directors or the duly authorized
designee of its Board of Directors and (y) if applicable,
66
satisfaction of the requirements set forth in Section 6.11(b).
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
--------
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Weyerhaeuser Company
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
67
(b) if to the Company, to
TJ International, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. Definitions. For purposes of this Agreement:
------------
An "affiliate" of any person means another person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Knowledge of the Company" or "Company's Knowledge" means, when used
------------------------ -------------------
in any representation, covenant or warranty of the Company contained herein, the
actual knowledge of, or what should reasonably have been known by, any officer
or director of the Company.
A "material adverse effect" on a party means a material adverse effect
-----------------------
on the business, financial condition or ongoing, longer-term profitability (but
not prospects) of such party and its subsidiaries, taken as a whole; provided,
--------
however, that any adverse effect that has resulted or may result from the
-------
acquisition of MacMillan ▇▇▇▇▇▇▇ Limited by Parent shall not be deemed a
material adverse effect for purposes of this Agreement. For the purposes of
Article III of this Agreement, in any provision qualified by reference to a
material adverse effect or Company Material Adverse Effect, the words "has had"
and "have had" shall be deemed to be followed by the words "since January 2,
1999".
A "person" means any individual, firm, corporation, partnership,
------
company, limited liability
68
company, trust, joint venture, association, Governmental Entity or other entity.
A "subsidiary" of any person means another person, an amount of the
----------
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.04. Interpretation; Disclosure Letters. When a reference
-----------------------------------
is made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Any matter disclosed
in any section of the Company Disclosure Letter shall be deemed disclosed only
for the purposes of the specific Sections of this Agreement to which such
section relates or such other sections in which such disclosure may be
specifically cross-referenced.
SECTION 9.05. Severability. If any term or other provision of this
--------------
Agreement is invalid, illegal or incapable of being enforced by any rule or
Applicable 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 materially 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 transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 9.06. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
69
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries. This
-----------------------------------------------
Agreement, taken together with the Company Disclosure Letter and the
Confidentiality Agreement, (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the transactions contemplated hereby and (b) except for
the provisions of Article II and Sections 6.04, 6.06 and 6.12, are not intended
to confer upon any person other than the parties any rights or remedies.
SECTION 9.08. 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 of conflicts
of laws thereof.
SECTION 9.09. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent or Sub of any of its
obligations under this Agreement. Any purported assignment without such consent
shall be void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. It
is 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 Delaware state court or any Federal court
located in the State of Delaware, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any
Delaware state court or any Federal
court located in the State of Delaware in the event any dispute arises out of
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement in any
court other than any Delaware state court or any Federal court sitting in the
State of Delaware and (d) waives any right to trial by jury with respect to any
action related to or arising out of this Agreement.
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
WEYERHAEUSER COMPANY,
by
_______________________________
Name:
Title:
WTJ, INC.,
by
_______________________________
Name:
Title:
TJ INTERNATIONAL, INC.,
by
_______________________________
Name:
Title:
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Capital Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Company Capital Stock tendered pursuant to the Offer unless
(i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Company Capital Stock which
would represent at least 50.1% of the Fully Diluted Shares (the "Minimum Tender
--------------
Condition") and (ii)(A) any waiting period under the HSR Act applicable to the
---------
purchase of shares of Company Capital Stock pursuant to the Offer shall have
expired or been terminated, (B) any waiting period under the Competition Act
applicable to the purchase of shares of Company Capital Stock pursuant to the
Offer shall have expired or been terminated and/or an ARC pursuant to the
Competition Act or, in the alternative of an ARC, a no-action letter from the
Commissioner of Competition, related thereto shall have been received and (C)
any consents, approvals and filings under any foreign antitrust law, the absence
of which would prohibit the consummation of the Offer, shall have been obtained
or made. The term "Fully Diluted Shares" means all outstanding securities
--------------------
entitled generally to vote in the election of directors of the Company on a
fully diluted basis, after giving effect to the exercise or conversion of all
options, rights and securities exercisable or convertible into such voting
securities, other than potential dilution attributable to the Company Rights and
shares of Company Common Stock issuable pursuant to Section 6.13. Furthermore,
notwithstanding any other term of the Offer, Sub may, subject to the terms of
this Agreement, amend the Offer or postpone the acceptance for payment of or
payment for tendered Company Capital Stock, if, at any time on or after the date
of this Agreement and before the expiration of the Offer, any of the following
conditions exists:
(a) there shall be pending any suit, action or proceeding by any
Governmental Entity that has a reasonable likelihood of success, (i)
challenging the acquisition by Parent or Sub of any Company Capital
2
Stock, seeking to restrain or prohibit the making or consummation of the
Offer or the Merger, or seeking to obtain from the Company, Parent or Sub
any damages that are material in relation to the Company and the Company
Subsidiaries taken as whole as a result of the transactions contemplated by
this Agreement, (ii) seeking to prohibit or limit in any material respect
the ownership or operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, or to
compel the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, as a result
of the Offer and the Merger, (iii) seeking to impose limitations on the
ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Capital Stock, including the right to
vote the Company Capital Stock purchased by it on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
Parent or any of its subsidiaries from controlling in any material respect
the business or operations of the Company and the Company Subsidiaries;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated or issued with respect to, or deemed applicable to, or any
consent or approval withheld with respect to, (i) Parent, the Company or
any of their respective subsidiaries or (ii) the Offer, the Merger or any
other transaction contemplated by this Agreement, in each case, by any
Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (a) above;
(c) except as disclosed in the Filed Company SEC Documents or the
Company Disclosure Letter, since the date of this Agreement shall have
occurred any event, change, effect or development that, individually or in
the aggregate, has had or is reasonably likely to have, a Company Material
Adverse Effect;
(d) there shall have occurred and continued to exist (i) any general
suspension of trading in, or limitation on prices for, securities on any
national
3
securities exchange or in the over-the-counter market in the United States
(excluding any suspension or limitations resulting from physical damage or
interference with such exchange not related to market conditions), (ii) a
decline of at least 30% in the Dow ▇▇▇▇▇ Industrial Average, (iii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iv) any mandatory limitation by any
Governmental Entity on, or other event that materially and adversely
affects, the extension of credit by banks or other lending institutions in
the United States, (v) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving
the United States or (vi) in the case of any of the foregoing existing on
the date of this Agreement, a material acceleration or worsening thereof;
(e) (i) any representation and warranty of the Company in this
Agreement that is qualified as to Company Material Adverse Effect shall not
be true and correct as of the date of this Agreement or as of such time,
except to the extent such representation and warranty expressly relates to
an earlier date (in which case on and as of such earlier date), and (ii)
the representations and warranties of the Company that are not qualified as
to Company Material Adverse Effect shall not be true and correct in all
respects as of the date of this Agreement, or as of such time, except to
the extent such representations and warranties expressly relate to an
earlier date (in which case on and as of such earlier date) if the failure
of all such representations and warranties in this clause (ii) to be true
and correct, in aggregate, is materially adverse to the transactions
contemplated by this Agreement, taken as a whole;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement; or
(g) this Agreement shall have been terminated in accordance with its
terms;
which, in the sole judgment of Sub or Parent, in any such case, and regardless
of the circumstances giving rise to any
4
such condition (including any action or inaction by Parent or any of its
affiliates not otherwise required by the Merger Agreement), makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and may be asserted by Sub or Parent regardless of the circumstances giving rise
to such condition or may be waived by Sub and Parent in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent, Sub
or any other affiliate of Parent at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.