================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 20, 1999
AMONG
ARMCO INC.
AK STEEL HOLDING CORPORATION
AND
AK STEEL CORPORATION
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TABLE OF CONTENTS
PAGE
Article I THE MERGER1
SECTION 1.1 The Merger............................................................................1
SECTION 1.2 Effective Time........................................................................1
SECTION 1.3 Closing of the Merger.................................................................2
SECTION 1.4 Effects of the Merger.................................................................2
SECTION 1.5 Certificate of Incorporation and Bylaws...............................................2
SECTION 1.6 Directors.............................................................................2
SECTION 1.7 Officers..............................................................................2
Article II CONVERSION OF SECURITIES........................................................................3
SECTION 2.1 Conversion of Securities..............................................................3
SECTION 2.3 Exchange Funds........................................................................9
SECTION 2.4 Exchange and Election Procedures......................................................9
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates.............................11
SECTION 2.6 No Further Ownership Rights..........................................................11
SECTION 2.7 No Fractional Shares of Parent Common Stock..........................................11
SECTION 2.8 Dissenting Shares....................................................................13
SECTION 2.9 Termination of Exchange Fund.........................................................14
SECTION 2.10 No Liability.........................................................................14
SECTION 2.11 Investment of the Exchange Funds.....................................................14
SECTION 2.12 Lost Certificates....................................................................14
SECTION 2.13 Withholding Rights...................................................................15
SECTION 2.14 Stock Transfer Books.................................................................15
SECTION 2.15 Affiliates...........................................................................15
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................15
SECTION 3.1 Organization and Qualification; Subsidiaries.........................................16
SECTION 3.2 Capitalization of the Company and Its Subsidiaries...................................16
SECTION 3.3 Authority Relative to This Agreement; Consents and Approvals.........................18
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SECTION 3.4 SEC Reports; Financial Statements....................................................19
SECTION 3.5 No Undisclosed Liabilities...........................................................20
SECTION 3.6 Absence of Changes...................................................................21
SECTION 3.7 Information Supplied.................................................................22
SECTION 3.8 Consents and Approvals; No Violations................................................23
SECTION 3.9 No Default...........................................................................24
SECTION 3.10 Real Property........................................................................24
SECTION 3.11 Litigation...........................................................................25
SECTION 3.12 Company Permits; Compliance with Applicable Laws.....................................25
SECTION 3.13 Employee Plans.......................................................................26
SECTION 3.14 Labor Matters........................................................................27
SECTION 3.15 Environmental Matters................................................................28
SECTION 3.16 Taxes................................................................................31
SECTION 3.17 Absence of Questionable Payments.....................................................33
SECTION 3.18 Material Contracts...................................................................33
SECTION 3.19 Insurance............................................................................34
SECTION 3.20 Insurance Business...................................................................34
SECTION 3.21 Intellectual Property................................................................35
SECTION 3.22 Year 2000............................................................................36
SECTION 3.23 Opinion of Financial Advisor.........................................................37
SECTION 3.24 Brokers..............................................................................37
SECTION 3.25 Accounting Matters; Tax Treatment....................................................37
SECTION 3.26 Takeover Statutes....................................................................37
SECTION 3.27 Amendment to the Company Rights Agreement............................................37
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY........................................38
SECTION 4.1 Organization.........................................................................38
SECTION 4.2 Capitalization of Parent.............................................................38
SECTION 4.3 Authority Relative to This Agreement.................................................39
SECTION 4.4 SEC Reports; Financial Statements....................................................40
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SECTION 4.5 No Undisclosed Liabilities...........................................................41
SECTION 4.6 Absence of Certain Changes or Events.................................................41
SECTION 4.7 Information Supplied.................................................................41
SECTION 4.8 Consents and Approvals; No Violations................................................41
SECTION 4.9 Compliance with Applicable Laws......................................................42
SECTION 4.10 Absence of Questionable Payments.....................................................42
SECTION 4.11 Year 2000............................................................................43
SECTION 4.12 Opinion of Financial Advisor.........................................................43
SECTION 4.13 Brokers..............................................................................43
SECTION 4.14 Accounting Matters; Tax Treatment....................................................43
Article V COVENANTS RELATED TO CONDUCT OF BUSINESS.......................................................44
SECTION 5.1 Conduct of Business of the Company...................................................44
SECTION 5.2 Conduct of Business of Parent........................................................47
SECTION 5.3 Access to Information................................................................48
Article VI ADDITIONAL AGREEMENTS..........................................................................49
SECTION 6.1 Preparation of S-4 and the Proxy Statement...........................................49
SECTION 6.2 Letter of Accountants................................................................49
SECTION 6.3 Meetings.............................................................................50
SECTION 6.4 Reasonable Best Efforts..............................................................50
SECTION 6.5 No Solicitation; Acquisition Proposals...............................................52
SECTION 6.6 Public Announcements.................................................................54
SECTION 6.7 Indemnification; Directors' and Officers' Insurance..................................54
SECTION 6.8 Notification of Certain Matters......................................................55
SECTION 6.9 Pooling..............................................................................56
SECTION 6.10 Tax-Free Reorganization Treatment....................................................56
SECTION 6.11 Employee Matters.....................................................................57
SECTION 6.12 Affiliate Letters....................................................................57
SECTION 6.13 SEC Filings..........................................................................57
SECTION 6.14 Fees and Expenses....................................................................58
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SECTION 6.15 Listing of Stock.....................................................................58
SECTION 6.16 Antitakeover Statutes................................................................58
SECTION 6.17 Combined Operations..................................................................59
Article VII CONDITIONS TO CONSUMMATION OF THE MERGER.......................................................59
SECTION 7.1 Conditions to Each Party's Obligations to Effect
the Merger...........................................................................59
SECTION 7.2 Conditions to the Obligations of the Parent and the
Operating Company....................................................................60
SECTION 7.3 Conditions to the Obligations of the Company.........................................62
Article VIII TERMINATION; AMENDMENT; WAIVER.................................................................63
SECTION 8.1 Termination by Mutual Agreement......................................................63
SECTION 8.2 Termination by Either Parent or the Company..........................................63
SECTION 8.3 Termination by the Company...........................................................64
SECTION 8.4 Termination by Parent................................................................65
SECTION 8.5 Effect of Termination and Abandonment................................................65
SECTION 8.6 Amendment............................................................................67
SECTION 8.7 Extension; Waiver....................................................................67
Article IX MISCELLANEOUS..................................................................................67
SECTION 9.1 Nonsurvival of Representations and Warranties........................................67
SECTION 9.2 Entire Agreement; Assignment.........................................................67
SECTION 9.3 Notices..............................................................................68
SECTION 9.4 Governing Law........................................................................69
SECTION 9.5 Descriptive Headings.................................................................69
SECTION 9.6 Parties in Interest..................................................................69
SECTION 9.7 Severability.........................................................................69
SECTION 9.8 Specific Performance.................................................................70
SECTION 9.9 Counterparts.........................................................................70
SECTION 9.10 Interpretation.......................................................................70
SECTION 9.11 Definitions..........................................................................71
SECTION 9.12 Certain Ohio Matters.................................................................72
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Defined Terms Defined on Page
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1998 Stock Incentive Plan..............................................39
Acquiring Person.......................................................38
Acquiring Person Statement.............................................49
Acquisition Proposal...................................................71
Antitrust Law..........................................................51
APB 16.................................................................56
Assumed Stock Option....................................................8
Audit Date.............................................................21
Average Parent Stock Price..............................................4
beneficial ownership...................................................71
beneficially own.......................................................71
Cash Election...........................................................6
Cash Election Notice....................................................6
Cash Election Percentage................................................6
CERCLA.................................................................29
Certificates............................................................9
Certificates of Merger..................................................1
Change of Control Provisions............................................5
Class A Preferred Stock.................................................4
Class B Preferred Stock.................................................4
Closing.................................................................2
Closing Date............................................................2
Code....................................................................1
Common Exchange Fund....................................................9
Common Merger Consideration.............................................4
Common Shares Trust....................................................12
Company.................................................................1
Company Agreements.....................................................23
Company Board..........................................................18
Company Common Stock....................................................3
Company Disclosure Schedule............................................15
Company Option Plans....................................................8
Company Permits........................................................25
Company Preferred Stock.................................................4
Company Required Approvals.............................................23
Company Requisite Vote.................................................18
Company Rights Agreement...............................................17
Company SEC Reports....................................................19
Company Stock Option....................................................8
Company Stockholder Meeting............................................50
Company Year 2000 Plan.................................................36
Confidentiality Agreement..............................................49
Control Shares Acquisition Law.........................................37
Covered Transactions...................................................37
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Defined Terms Defined on Page
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Current Premium........................................................54
Delaware Certificate of Merger..........................................1
DGCL....................................................................1
Dissenters Shares......................................................13
Distribution Date......................................................38
DOJ ...................................................................51
Effective Time..........................................................2
Election Form..........................................................10
Election Shares Trust..................................................12
Employee Benefit Plan..................................................26
Employee Benefit Plans.................................................26
Environmental Costs and Liabilities....................................29
Environmental Law......................................................29
Excess Common Shares...................................................12
Excess Election Shares.................................................12
Exchange Act...........................................................19
Exchange Agent..........................................................9
Exchange Ratio..........................................................3
Excluded Shares.........................................................3
Expenses...............................................................58
Expiration Date........................................................38
Final Conversion Date...................................................5
Financial Advisor......................................................37
FTC ...................................................................51
GAAP...................................................................19
Governmental Entity....................................................23
Guaranty...............................................................20
Hazardous Material.....................................................29
HSR Act................................................................23
Incentive Program.......................................................7
Indemnified Parties....................................................54
Insurance Departments..................................................23
Insurance Laws.........................................................35
Insurance Subsidiaries.................................................34
Intellectual Property..................................................36
know...................................................................71
knowledge..............................................................71
Law ...................................................................24
Lien...................................................................17
Lower Collar............................................................4
Material Adverse Effect................................................71
Material Contracts.....................................................34
Measurement Period......................................................4
Merger..................................................................1
Merger Consideration....................................................5
Multiemployer Plan.....................................................26
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Defined Terms Defined on Page
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Multiple Employer Plans................................................26
NNIC...................................................................20
NYSE....................................................................4
OCI ...................................................................20
OGCL....................................................................1
Ohio Certificate of Merger..............................................1
Operating Company.......................................................1
Orders.................................................................20
OSHA...................................................................29
Parent..................................................................1
Parent $3.625 Preferred Stock...........................................5
Parent and Operating Company Agreements................................42
Parent Board...........................................................40
Parent Common Stock.....................................................3
Parent Disclosure Schedule.............................................38
Parent Expenses........................................................66
Parent Preferred Stock.................................................38
Parent Required Approvals..............................................42
Parent Requisite Vote..................................................40
Parent Rights...........................................................3
Parent Rights Agreement.................................................3
Parent SEC Reports.....................................................40
Parent Stockholder Meeting.............................................50
Parent Year 2000 Plan..................................................43
Permits................................................................35
person.................................................................71
Preferred Exchange Fund.................................................9
Preferred Merger Consideration..........................................5
Proxy Statement........................................................22
Real Property Leases...................................................24
Release................................................................29
Remedial Action........................................................29
Representative.........................................................10
Rights.................................................................38
S-4 ...................................................................22
SAP Financial Statements...............................................19
SEC ....................................................................1
Securities Act.........................................................15
Share...................................................................3
Share Issuance.........................................................22
Shares..................................................................3
Stat...................................................................19
subsidiary.............................................................71
Superior Proposal......................................................52
Surviving Corporation...................................................1
Takeover Statutes......................................................37
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Defined Terms Defined on Page
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Tax Returns............................................................32
Taxes..................................................................32
Termination Date.......................................................63
Termination Notice......................................................4
Top-Up Intent Notice....................................................4
Voting Shares..........................................................18
WARN Act...............................................................28
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of May 20, 1999 is among
ARMCO INC., an Ohio corporation (the "COMPANY"), AK STEEL HOLDING CORPORATION, a
Delaware corporation ("PARENT"), and AK STEEL CORPORATION, a Delaware
corporation and a direct wholly owned subsidiary (as hereinafter defined) of
Parent (the "OPERATING COMPANY").
WHEREAS, the respective Boards of Directors of the Company, Parent
and the Operating Company, and Parent as the sole stockholder of the Operating
Company, each have, in light of and subject to the terms and conditions set
forth herein, resolved to deem this Agreement and the transactions contemplated
hereby, including the Merger (as defined in Section 1.1), taken together,
advisable and fair to, and in the best interests of, their respective
stockholders;
WHEREAS, for federal income Tax (as defined in Section 3.16)
purposes, it is intended that the Merger shall qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE");
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a "pooling of interests" under APB 16 (as defined in Section
6.9(a)) and the applicable rules and regulations of the Securities and Exchange
Commission (the "SEC"); and
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and the Operating
Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time (as defined in Section
1.2), upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL") and the Ohio
General Corporation Law (the "OGCL"), the Company shall be merged with and into
the Operating Company (the "MERGER"). Following the Merger, the Operating
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and shall continue its corporate existence under the DGCL, and the
separate corporate existence of the Company shall cease.
SECTION 1.2 Effective Time. Subject to the provisions of this
Agreement, Parent, the Operating Company and the Company shall cause the Merger
to be consummated by (i) filing a certificate of merger complying with the DGCL
with the Secretary of State of the State of Delaware (the "DELAWARE CERTIFICATE
OF MERGER") and (ii) filing a certificate of merger (the "OHIO CERTIFICATE OF
MERGER" and, together with the Delaware Certificate of Merger, the "CERTIFICATES
OF MERGER") complying with the
OGCL with the Secretary of State of the State of Ohio, in each case as soon as
practicable on or after the Closing Date (as defined in Section 1.3). The Merger
shall become effective upon the later of such filings or at such time thereafter
as is provided in the Certificates of Merger (the "EFFECTIVE TIME").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
"CLOSING") will take place at a time and on a date (the "CLOSING DATE") to be
specified by the parties, which shall be no later than the tenth business day
(or such fewer number of business days as Parent shall determine (upon not less
than two business days' notice to the Company)) after satisfaction or waiver of
the conditions set forth in Article VII (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions), at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another time, date or place
is agreed to in writing by the parties hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the DGCL and the OGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, immunities, powers and franchises of the Company and the
Operating Company shall vest in the Surviving Corporation, and all debts,
liabilities, obligations and duties of the Company and the Operating Company
shall become the debts, liabilities, obligations and duties of the Surviving
Corporation.
SECTION 1.5 Certificate of Incorporation and Bylaws. The Certificate
of Incorporation of the Operating Company in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until amended in accordance with such Certificate of Incorporation
and the DGCL. The Bylaws of the Operating Company in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until
amended in accordance with such Bylaws, the Certificate of Incorporation and the
DGCL.
SECTION 1.6 Directors. The directors of the Operating Company
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until such director's
successor is duly elected or appointed and qualified.
SECTION 1.7 Officers. The officers of the Operating Company at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
2
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of any of the parties
hereto or any holder of shares of Company Common Stock (as defined in Section
2.1(c)) or Company Preferred Stock (as defined in Section 2.1(d)):
(a) Securities of the Operating Company and Parent. The issued and
outstanding securities of the Operating Company shall remain outstanding and
shall be unchanged as a result of the Merger. The issued and outstanding
securities of Parent shall remain outstanding and shall be unchanged as a result
of the Merger.
(b) Cancellation of Treasury Shares and Parent-Owned Shares. Each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time that is owned by the Company, or by Parent, the Operating Company
or any other subsidiary of Parent (other than shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned by third
parties) shall automatically be cancelled and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Subject to the provisions of
Section 2.1(e), each share of common stock, par value $.01 per share, of the
Company (including the associated Rights (as defined in the Company Rights
Agreement referred to in Section 3.2(a)), "COMPANY COMMON STOCK") issued and
outstanding immediately prior to the Effective Time (individually, a "SHARE" and
collectively, the "SHARES") (other than Shares to be cancelled in accordance
with Section 2.1(b) and any Dissenters Shares (as defined in Section 2.8)
(collectively, "EXCLUDED SHARES")), shall be converted into and be exchangeable
for the right to receive a fraction (rounded to the nearest ten thousandth) of a
fully paid and non-assessable share of common stock, par value $.01 per share,
of Parent (including the associated rights (the "PARENT RIGHTS") to purchase
shares of Series A Junior Preferred Stock pursuant to the Rights Agreement,
dated as of January 23, 1996, between Parent and The Bank of New York as
predecessor to The Fifth Third Bank, as Rights Agent (the "PARENT RIGHTS
AGREEMENT"), "PARENT COMMON STOCK"), such fraction to be in the ratio provided
below (the "EXCHANGE RATIO"). If the Average Parent Stock Price (as hereinafter
defined) is:
(i) greater than $28.21, the Exchange Ratio shall be $8.00
divided by the Average Parent Stock Price;
(ii) equal to or greater than $26.44 but less than or equal to
$28.21, the Exchange Ratio shall be fixed at 0.2836;
(iii) equal to or greater than $22.00 but less than $26.44, the
Exchange Ratio shall be $7.50 divided by the Average
Parent Stock Price; or
3
(iv) less than $22.00 (the "LOWER COLLAR"), the Exchange Ratio
shall be fixed at 0.3409;
provided that if the Average Parent Stock Price is less than the Lower Collar,
the Company shall have the right to give written notice to Parent (a
"TERMINATION NOTICE") that the Company elects to terminate this Agreement. Any
Termination Notice shall be delivered to Parent no later than 5:00 p.m. New York
City time on the first business day following the last day of the Measurement
Period (as hereinafter defined). If the Company delivers a timely Termination
Notice, Parent shall have the right to give written notice to the Company (the
"TOP-UP INTENT NOTICE") that Parent elects to increase the Exchange Ratio such
that the product of the Exchange Ratio as so increased and the Average Parent
Stock Price shall equal $7.50. Any Top-Up Intent Notice shall be delivered to
the Company no later than 5:00 p.m. New York City time on the third business day
prior to the date of the Company Stockholder Meeting (as defined in Section
6.3(a)). As used herein, the "AVERAGE PARENT STOCK PRICE" shall mean the average
of the per share closing prices of Parent Common Stock (rounded to the nearest
ten thousandth) on the New York Stock Exchange, Inc. ("NYSE") (as reported in
the New York City edition of The Wall Street Journal or, if not reported
thereby, another nationally recognized source) during the ten consecutive
trading day period (the "MEASUREMENT PERIOD") ending on the sixth trading day
prior to the Company Stockholder Meeting). All shares of Parent Common Stock
issued pursuant to this Section 2.1(c), together with the cash (if any) to be
delivered pursuant to Section 2.1(e)(i) and any cash in lieu of fractional
shares to be paid in respect of such Parent Common Stock pursuant to Section
2.7, is referred to herein as the "COMMON MERGER CONSIDERATION".
(d) Conversion of Company Preferred Stock.
(i) Each share of Class A Preferred Stock of the Company,
no par value ("CLASS A PREFERRED STOCK"), other than the $3.625
Cumulative Convertible Preferred Stock of the Company (the "$3.625
PREFERRED STOCK"), and each share of Class B Preferred Stock of the
Company, par value $1.00 per share ("CLASS B PREFERRED STOCK" and
collectively with the Class A Preferred Stock, the "COMPANY PREFERRED
Stock") issued and outstanding immediately prior to the Effective
Time (other than shares of Company Preferred Stock held by the
Company, Parent or the Operating Company) shall be converted into and
be exchangeable for the right to receive, at the election of the
holder of such share made in accordance with Section 2.4(b), (x) cash
in an amount equal to the redemption price of such class or series of
the Company Preferred Stock, if such share of Company Preferred Stock
were redeemed by the Company immediately prior to the Effective Time
in accordance with the Amended Articles of Incorporation of the
Company (plus an amount equal to the dividends that would have
accrued on such Company Preferred Stock from the Effective Time
through the Final Conversion Date (as hereinafter defined)) or (y)
the number of shares of Parent Common Stock such holder would have
been entitled to receive pursuant to Section 2.1(c) if such holder
had converted such Company Preferred Stock into shares of Company
Common Stock immediately prior to the Effective Time in
4
accordance with the Amended Articles of Incorporation of the Company,
plus a cash payment in the amount of any accrued and unpaid dividend
which such holder would have been entitled to receive upon the
conversion of such shares of Company Preferred Stock in accordance
with the Amended Articles of Incorporation of the Company if the date
of the conversion was the date of the holder's election to take
shares of Parent Common Stock under this clause (y); provided, that
if such holder fails to make such election in accordance with Section
2.4(b) within 30 days following the mailing by the Surviving
Corporation of a notice to each such holder that the Effective Time
has occurred (such 30th day following such mailing being referred to
herein as the "FINAL CONVERSION DATE"), each such share of Company
Preferred Stock held by such holder shall be converted into and be
exchangeable for the right to receive cash in accordance with clause
(x) of this Section 2.1(d)(i).
(ii) Subject to the provisions of Section 2.1(e), each
share of $3.625 Preferred Stock issued and outstanding immediately
prior to the Effective Time (other than shares of $3.625 Preferred
Stock held by the Company, Parent or the Operating Company) shall be
converted into and be exchangeable for the right to receive one share
of Parent Preferred Stock (as defined in Section 4.2(a)), designated
as Parent's $3.625 Cumulative Convertible Preferred Stock ("PARENT
$3.625 PREFERRED STOCK"), which stock shall have the same rights,
preferences, privileges, qualifications, limitations and restrictions
as the $3.625 Preferred Stock, except that, subject to the provisions
of paragraph 8 of Subdivision E of Section 2 of Article Fourth of the
Amended Articles of Incorporation of the Company (the "CHANGE OF
CONTROL PROVISIONS"), the rate at which the $3.625 Preferred Stock of
the Company is convertible into Company Common Stock immediately
prior to the Effective Time shall be multiplied by the Exchange Ratio
to determine the initial rate at which Parent $3.625 Preferred Stock
shall be convertible into Parent Common Stock following the Effective
Time.
The cash to be delivered pursuant to Section 2.1(d)(i) and, if
applicable, Section 2.1(e)(ii), the shares of Parent $3.625 Preferred Stock to
be issued pursuant to Section 2.1(d)(ii) and, if applicable, the shares of
Parent Common Stock to be issued pursuant to Section 2.1(d)(i) or 2.1(e)(ii),
together with any cash in lieu of fractional shares to be paid in respect of
such Parent Common Stock pursuant to Section 2.7, is referred to herein as the
"PREFERRED MERGER CONSIDERATION" and, together with the Common Merger
Consideration, is referred to as the "MERGER CONSIDERATION".
(e) Parent Cash Election. Notwithstanding the provisions of Sections
2.1(c) and 2.1(d)(ii), if Parent's independent accountants do not deliver the
letter contemplated by Section 6.9(b) hereof as of the date the S-4 (as defined
in Section 3.7) is declared effective:
5
(i) Parent shall have the right (the "CASH ELECTION"), by written
notice (the "CASH ELECTION NOTICE") to the Company delivered prior to the date
the S-4 is declared effective, to cause up to 25% of the Shares to be converted
into the right to receive cash in lieu of Parent Common Stock. The Cash Election
Notice shall specify the percentage (expressed as a fraction, the "CASH ELECTION
PERCENTAGE") of the Shares to be so converted into cash. If a Cash Election
Notice is delivered, each Share (other than Excluded Shares) shall be converted
into and be exchangeable for the right to receive (x) cash in an amount equal to
the product of (A) the Per Share Value (as hereunder defined) and (B) the Cash
Election Percentage and (y) a fraction of a share of Parent Common Stock equal
to the product of (C) the Exchange Ratio and (D) one (1) minus the Cash Election
Percentage. For purposes of this Section 2.1(e)(i), "Per Share Value" shall
mean: if the Average Parent Stock Price is (q) greater than $28.21, $8.00; (r)
equal to or greater than $26.44 but less than or equal to $28.21, the Average
Parent Stock Price multiplied by the Exchange Ratio; (s) equal to or greater
than $22.00 but less than $26.44, $7.50; or (t) less than $22.00, the Average
Parent Stock Price multiplied by the Exchange Ratio (unless the Company gives a
Termination Notice and Parent gives a Top-Up Intent Notice, in which case the
Per Share Value shall be $7.50); and
(ii) each share of $3.625 Preferred Stock issued and outstanding
immediately prior to the Effective Time (other than shares of $3.625 Preferred
Stock held by the Company, Parent or the Operating Company) shall be converted
into and be exchangeable for the right to receive, at the election of the holder
of such share made in accordance with Section 2.4(b), (x) cash in an amount
equal to the redemption price of the $3.625 Preferred Stock, if such share of
$3.625 Preferred Stock were redeemed by the Company immediately prior to the
Effective Time in accordance with the Amended Articles of Incorporation of the
Company (plus an amount equal to the dividends that would have accrued on such
$3.625 Preferred Stock from the Effective Time through the Final Conversion
Date) or (y) the greater of (A) the number of shares of Parent Common Stock such
holder would have been entitled to receive pursuant to Section 2.1(c) if such
holder had converted such $3.625 Preferred Stock into shares of Company Common
Stock immediately prior to the Effective Time in accordance with the Amended
Articles of Incorporation of the Company and (B) the number of shares of Parent
Common Stock such holder would have been entitled to receive pursuant to Section
2.1(c) if such holder had converted such $3.625 Preferred Stock into shares of
Company Common Stock pursuant to the Change of Control Provisions plus a cash
payment in the amount of any accrued and unpaid dividend which such holder would
have been entitled to receive upon the conversion of such $3.625 Preferred Stock
in accordance with the Amended Articles of Incorporation of the Company if the
date of conversion was the date of the holder's election to take shares of
Parent Common Stock under this clause (y); provided, that if such holder fails
to make such election in accordance with Section 2.4(b) within 45 days following
the mailing by the Surviving Corporation of a notice to each such holder that
the Effective Time has occurred, each share of $3.625 Preferred Stock held by
such holder shall be converted into and be exchangeable for the right to receive
cash in accordance with clause (x) of this Section 2.1(e)(ii).
6
(f) Certain Adjustments. If between the date of this Agreement and
the Effective Time the outstanding shares of Parent Common Stock shall have been
changed into a different number of shares or a different class by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or any similar event, the amount of shares of
Parent Common Stock constituting the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares or such similar
event.
(g) Tax Opinion Adjustment. If, based on the Merger Consideration
payable pursuant to Sections 2.1(c) and 2.1(d), and taking into account Section
2.1(e), the tax opinions referred to in Sections 7.2(d) and 7.3(d) hereof cannot
be delivered as a result of the Merger potentially failing to satisfy continuity
of interest requirements under applicable Federal income tax principles relating
to reorganizations under Section 368(a) of the Code (as reasonably determined by
Weil, Gotshal & ▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇, such determination to be made
(v) assuming that each share of Company Preferred Stock, other than the $3.625
Preferred Stock and shares of Company Preferred Stock held by the Company,
Parent or the Operating Company, shall be converted into cash, (w) if the
provisions of Section 2.1(e) are applicable, by taking into account the Cash
Election Percentage and assuming that each share of $3.625 Preferred Stock,
other than shares of $3.625 Preferred Stock held by the Company, Parent or the
Operating Company, shall be converted into cash (x) taking into account
Dissenters Shares and cash issued in lieu of fractional shares, if any, (y)
using the Closing Date Price (as hereinafter defined) as the measure of value of
the shares of Parent Common Stock issued as Merger Consideration and (z)
requiring that the total value of such Parent Common Stock issued as Merger
Consideration represent no less than 45% of the total consideration issued and
to be issued in the Merger to all holders of Shares), then the Common Merger
Consideration shall be adjusted by reducing, to the extent necessary to enable
the tax opinions to be rendered, the amount of cash to be delivered to the
holders of Shares, for each Share converted, and in lieu thereof delivering to
such holders such number of shares of Parent Common Stock equal to (x) the
amount by which the cash component of the Common Merger Consideration is
reduced, pursuant to this clause, in order to enable the rendering of the tax
opinions, divided by (y) the Closing Date Price.
For purposes hereof, the "Closing Date Price" of a share of Parent
Common Stock shall be the closing sales price of Parent Common Stock as reported
on the NYSE as of the close of the trading day immediately prior to the Closing
Date.
SECTION 2.2 Stock Options
(a) As soon as practicable following the date of this Agreement,
Parent and the Company (or, if appropriate, any committee of the Board of
Directors of the Company administering Company's 1988 Stock Option Plan, 1993
Long-Term Incentive Plan, Amended 1993 Long-Term Incentive Plan, 1996 Incentive
Plan and 1997-1999 Long-Term Incentive Program (the "INCENTIVE PROGRAM")
(collectively, the "COMPANY
7
OPTION PLANS" )) shall take such action as may be required to effect the
following provisions of this Section 2.2(a). Subject to the provisions of
Section 16 of the Exchange Act (as defined in Section 3.4), as of the Effective
Time each option to purchase Shares pursuant to the Company Option Plans (a
"COMPANY STOCK OPTION") which is then outstanding shall be converted into an
option (or a new substitute option shall be granted) (an "ASSUMED STOCK OPTION")
to purchase the number of shares of Parent Common Stock (rounded up to the
nearest whole share) equal to (x) the number of Shares subject to such option
multiplied by (y) the Exchange Ratio, at an exercise price per share of Parent
Common Stock (rounded down to the nearest ▇▇▇▇▇) equal to (A) the former
exercise price per share of Company Common Stock under such option immediately
prior to the Effective Time divided by (B) the Exchange Ratio; provided,
however, that in the case of any Company Stock Option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of the Code,
the conversion formula shall be adjusted, if necessary, to comply with Section
424(a) of the Code. Except as provided above, the Assumed Stock Options shall be
subject to the same terms and conditions (including expiration date and exercise
provisions) as were applicable to the converted Company Stock Option immediately
prior to the Effective Time. The Company (including any committee of the Board
of Directors administering the Company Option Plans) shall take such action as
may be necessary to provide that the vesting of the exercisability of any
Company Stock Option will not be accelerated through the Merger or this
Agreement, except as otherwise provided in the Company Option Plans or in any
agreement in effect on the date hereof between the Company and any holder of a
Company Stock Option.
(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Company Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Option Plans and
the agreements evidencing the grants of such Company Stock Options and that such
Company Stock Options and agreements shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section 2.2) after
giving effect to the Merger and the provisions set forth above. Parent shall
comply with the terms of the Company Option Plans.
(c) Parent shall take such actions as are reasonably necessary for
the conversion of the Company Option Plans or the Company Stock Options pursuant
to this Section 2.2, including the reservation, issuance and listing of Parent
Common Stock as is necessary to effectuate the transactions contemplated by this
Section 2.2. Parent shall prepare and file with the SEC, and use its reasonable
best efforts to cause to become effective, on or prior to the date of the
Effective Time a registration statement on Form S-8 or other appropriate form
with respect to shares of Parent Common Stock subject to the Assumed Stock
Options and shall maintain the effectiveness of such registration statement or
registration statements covering such Assumed Stock Options (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such Assumed Stock Options remain outstanding. With respect to those
individuals, if any, who subsequent to the Effective Time will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, where
applicable, Parent shall use all reasonabl
8
efforts to administer the Company Option Plans assumed pursuant to this Section
2.2 in a manner that complies with Rule 16b-3 promulgated under the Exchange Act
to the extent the applicable Company Option Plan complied with such Rule prior
to the Merger.
SECTION 2.3 Exchange Funds.
(a) Prior to the Effective Time, Parent shall appoint a commercial
bank or trust company reasonably acceptable to the Company to act as exchange
agent hereunder for the purpose of exchanging Shares for the Common Merger
Consideration and Company Preferred Stock for the Preferred Merger Consideration
(the "EXCHANGE AGENT").
(b) At or prior to the Effective Time, Parent shall deposit with the
Exchange Agent, in trust for the benefit of holders of Shares, certificates
representing the Parent Common Stock issuable pursuant to Section 2.1 in
exchange for outstanding Shares. Parent agrees to make available to the Exchange
Agent from time to time as needed, cash sufficient to pay cash in lieu of
fractional shares pursuant to Section 2.7 and any dividends and other
distributions pursuant to Section 2.5. Any cash and certificates of Parent
Common Stock deposited with the Exchange Agent pursuant to this Section 2.3(b)
shall hereinafter be referred to as the "COMMON EXCHANGE FUND."
(c) At or prior to the Effective Time, Parent shall deposit with the
Exchange Agent, in trust for the benefit of holders of the Company Preferred
Stock, cash payable pursuant to Section 2.1(d)(i) or 2.1(e)(ii) in exchange for
outstanding shares of Company Preferred Stock, and certificates representing the
Parent Common Stock and/or Parent $3.625 Preferred Stock issuable pursuant to
Section 2.1(d). Parent agrees to make available to the Exchange Agent from time
to time as needed, cash sufficient to pay cash in lieu of fractional shares
pursuant to Section 2.7 and any dividends and other distributions pursuant to
Section 2.5. Any cash and certificates of Parent Common Stock deposited with the
Exchange Agent pursuant to this Section 2.3(c) shall hereinafter be referred to
as the "PREFERRED EXCHANGE FUND."
SECTION 2.4 Exchange and Election Procedures.
(a) Subject to Section 2.4(b), as soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares or outstanding shares
of Company Preferred Stock (the "CERTIFICATES") (i) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent, and which letter shall be in customary form and have such other
provisions as Parent may reasonably specify; and (ii) instructions for effecting
the surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Exchange Agent, the holder
9
of such Certificate shall be entitled to receive in exchange therefor, as
applicable, (A) shares of Parent Common Stock or Parent $3.625 Preferred Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 2.1 (after taking into account all
Shares or shares of Company Preferred Stock then held by such holder) and (B) a
check in the amount equal to the cash that such holder has the right to receive
pursuant to the provisions of this Article II, including cash in lieu of any
fractional shares of Parent Common Stock pursuant to Section 2.7 and any
dividends and other distributions pursuant to Section 2.5. No interest will be
paid or will accrue on any cash payable pursuant to Section 2.1, 2.5 or 2.7. In
the event of a transfer of ownership of Company Common Stock or Company
Preferred Stock which is not registered in the transfer records of the Company,
shares of Parent Common Stock evidencing, in the aggregate, the proper number of
shares of Parent Common Stock or Parent $3.625 Preferred Stock, a check in the
proper amount of cash in lieu of any fractional shares of Parent Common Stock
pursuant to Section 2.7 and any dividends or other distributions to which such
holder is entitled pursuant to Section 2.5, may be issued with respect to such
Shares or shares of Company Preferred Stock to such a transferee if the
Certificate representing such Shares or shares of Company Preferred Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer Taxes have been paid.
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of a
Certificate representing Company Preferred Stock, in addition to the letter of
transmittal and instructions referred to in Section 2.4(a), an election form in
such form as Parent and Company shall mutually agree (each, an "ELECTION FORM"),
together with instructions for effecting the election to be made by such holder
pursuant to Section 2.1(d) or 2.1(e). Each Election Form shall permit the holder
(or the beneficial owner through appropriate and customary documentation and
instructions) to choose to receive the alternate forms of consideration set
forth in Section 2.1(d) or 2.1(e) for all (but not less than all) such holder's
shares of Company Preferred Stock. Holders of record of shares of Company
Preferred Stock who hold such shares as nominees, trustees or in other
representative capacities (each, a "REPRESENTATIVE") may submit multiple
Election Forms, provided that such Representative certifies that each such
Election Form covers all of the shares of Company Preferred Stock held by such
Representative for a particular beneficial owner. Election Forms in respect of
Company Preferred Stock (other than $3.625 Preferred Stock) must be properly
completed and submitted on or before 5:00 p.m. (New York City time) on the 30th
day following the mailing of the Election Form and accompanying instructions by
the Exchange Agent. Election Forms in respect of $3.625 Preferred Stock must be
properly completed and submitted on or before 5:00 p.m. (New York City time) on
the 45th day following the mailing of the Election Form and accompanying
instructions by the Exchange Agent. An Election Form shall be deemed properly
completed only if accompanied by one or more Certificates and the letter of
transmittal contemplated by Section 2.4(a). Any Election Form may be revoked or
changed by the person submitting such Election Form on or prior to the
applicable election deadline.
10
Parent will have the discretion, which it may delegate in whole or in
part to the Exchange Agent, to determine whether Election Forms have been
properly completed, signed and submitted or revoked and to disregard immaterial
defects in forms of election. If Parent (or the Exchange Agent) shall determine
that any purported Election was not properly made, such purported Election shall
have no force or effect. The decision of Parent (or the Exchange Agent) in all
such matters shall be conclusive and binding. Neither Parent nor the Exchange
Agent will be under any obligation to notify any person of any defect in an
Election Form submitted to the Exchange Agent.
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates.
No dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate representing Shares of Company
Common Stock with respect to the shares of Parent Common Stock that such holder
would be entitled to receive upon surrender of such Certificate and no cash
payment in lieu of fractional shares of Parent Common Stock shall be paid to any
such holder pursuant to Section 2.7 until such holder shall surrender such
Certificate in accordance with Section 2.4. Subject to the effect of applicable
Laws (as defined in Section 3.9), following surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.7 and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such shares of Parent Common Stock.
SECTION 2.6 No Further Ownership Rights. From and after the Effective
Time, dividends shall cease to accrue on the Company Preferred Stock. All shares
of Parent Common Stock and Parent $3.625 Preferred Stock issued and cash paid
upon conversion of the Shares and the shares of Company Preferred Stock in
accordance with the terms of this Article II (including any cash paid pursuant
to Sections 2.5 and 2.7) shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to the Shares and the shares of Company
Preferred Stock.
SECTION 2.7 No Fractional Shares of Parent Common Stock.
(a) No certificates or scrip of shares of Parent Common Stock
representing fractional shares of Parent Common Stock or book-entry credit of
the same shall be issued upon the surrender for exchange of Certificates and
such fractional share interests will not entitle the owner thereof to vote or to
have any rights of a shareholder of Parent or a holder of shares of Parent
Common Stock.
11
(b) Notwithstanding any other provision of this Agreement, each holder of Shares
or Company Preferred Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of Parent Common Stock
(after taking into account all Certificates delivered by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount and in the manner
described below:
(i) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (A) the number
of full shares of Parent Common Stock that would be issuable pursuant
to Section 2.1(c) but for the operation of this Section 2.7 over (B)
the aggregate number of full shares of Parent Common Stock to be
distributed to holders of Shares giving effect to the operation of
this Section 2.7 (such excess being herein called the "EXCESS COMMON
SHARES"). Following the Effective Time, the Exchange Agent, as agent
for the holders of Shares, shall sell the Excess Common Shares at
then prevailing prices on the NYSE, all in the manner provided in
subsection (iii) of this Section 2.7.
(ii) As promptly as practicable following the 30-day
election period referred to in Section 2.1(d)(i) and the 45-day
election period referred to in Section 2.1(e)(ii), the Exchange Agent
shall determine the excess of (A) the number of full shares of Parent
Common Stock that would be issuable pursuant to Section 2.1(d) but
for the operation of this Section 2.7 over (B) the aggregate number
of full shares of Parent Common Stock to be distributed to holders of
Shares giving effect to the operation of this Section 2.7 (such
excess being herein called the "EXCESS ELECTION SHARES"). Following
the applicable election period, the Exchange Agent, as agent for the
holders of the Company Preferred Stock, shall sell the Excess
Election Shares at then prevailing prices on the NYSE, all in the
manner provided in subsection (iii) of this Section 2.7.
(iii) The sale of the Excess Common Shares and Excess
Elected Shares by the Exchange Agent shall be executed on the NYSE
through one or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. The Exchange Agent shall use
all reasonable efforts to complete the sale of the Excess Common
Shares as promptly following the Effective Time and the Excess
Election Shares following the applicable election period as, in the
Exchange Agent's reasonable judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions. Until the net proceeds of such sale or sales have
been distributed to the holders of Shares or the holders of the
Company Preferred Stock, the Exchange Agent will hold such proceeds
in trust for such holders (the "COMMON SHARES TRUST" and the
"ELECTION SHARES TRUST," respectively). The Exchange Agent shall
determine the portion of the Common Shares Trust to which each holder
of Shares shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of fractional share
interests to which such holder is entitled (after taking into account
all Shares held at the Effective Time by such holder) and the
12
denominator of which is the aggregate amount of fractional share
interests to which all holders of Shares are entitled. The Exchange
Agent shall determine the portion of the Election Shares Trust to
which each applicable holder of shares of Company Preferred Stock
shall be entitled, if any, by multiplying the amount of the aggregate
net proceeds comprising the Election Shares Trust by a fraction, the
numerator of which is the amount of fractional share interests to
which such holder of applicable Company Preferred Stock is entitled
(after taking into account all Company Preferred Stock held at the
end of the applicable election period by such holder) and the
denominator of which is the aggregate amount of fractional share
interests to which all holders of applicable Company Preferred Stock
are entitled.
(iv) Notwithstanding the provisions of subsections (i) and
(ii) of this Section 2.7, Parent may elect prior to the Effective
Time, in lieu of the issuance and sale of Excess Common Shares and
Excess Election Shares and the making of the payments contemplated in
such subsections, to pay to the Exchange Agent an amount sufficient
for the Exchange Agent to pay each holder of Shares and Company
Preferred Stock an amount in cash equal to the product of (A) such
fractional part of a share of Parent Common Stock multiplied by (B)
the closing price on the NYSE (as reported in the New York City
edition of The Wall Street Journal or, if not reported thereby,
another nationally recognized source) for a share of Parent Common
Stock on the date of the Effective Time, and, in such case, all
references herein to the cash proceeds of the sale of the Excess
Common Shares, Excess Election Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in
this subsection (iv). In such event, Excess Common Shares and Excess
Election Shares shall not be issued or otherwise transferred to the
Exchange Agent pursuant to Section 2.7.
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Shares with respect
to any fractional share interests, the Exchange Agent shall make
available such amounts, net of any required withholding (and without
interest), to such holders.
SECTION 2.8 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock and Company Preferred
Stock outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger and who has exercised dissenters'
rights in respect of such shares of Company Common Stock or Company Preferred
Stock in accordance with the OGCL ("DISSENTERS SHARES") shall not be converted
into a right to receive the applicable Merger Consideration unless such holder
fails to perfect or withdraws or otherwise loses his dissenters' or objecting
shareholders' rights. Dissenters Shares shall be treated in accordance with
Section 1701.85 of the OGCL. If after the Effective Time such holder fails to
perfect or withdraws or otherwise loses his right to demand the payment of fair
value for Dissenters Shares under the OGCL, such shares of Company Common Stock
or Company Preferred Stock, as the case may be, shall be treated as if they had
been converted as of the Effective Time into a right to receive the applicable
13
Merger Consideration without interest. The Company shall give Parent prompt
notice of any demands received by the Company for the exercise of dissenters'
rights with respect to shares of Company Common Stock or Company Preferred Stock
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands. In the event any amounts shall become due and
payable in respect of such demands, such amounts shall be paid by the Company.
SECTION 2.9 Termination of Exchange Fund.. Any portion of the Common
Exchange Fund or the Preferred Exchange Fund which remains undistributed to the
holders of Certificates for six months after the Effective Time (and any portion
of either Exchange Fund that is not required to be distributed by reason of
stockholders' elections (or the absence thereof) pursuant to Section 2.1) shall
be delivered to Parent or otherwise on the instruction of Parent, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to the Surviving Corporation and Parent for the
Merger Consideration exchangeable for such Certificates to which such holders
are entitled pursuant to Section 2.1 and Section 2.4, any cash in lieu of
fractional shares of Parent Common Stock to which such holders are entitled
pursuant to Section 2.7 and any dividends or distributions with respect to
shares of Parent Common Stock to which such holders are entitled pursuant to
Section 2.5. Any such portion of the Common Exchange Fund or the Preferred
Exchange Fund remaining unclaimed by holders of Shares or shares of Preferred
Stock five years after the Effective Time (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity (as defined in Section 3.8)) shall, to the extent
permitted by Law, become the property of Parent, free and clear of any claims or
interest of any person previously entitled thereto.
SECTION 2.10 No Liability. None of Parent, the Operating Company, the
Company, the Surviving Corporation or the Exchange Agent shall be liable to any
person in respect of any Merger Consideration from the Common Exchange Fund or
the Preferred Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
SECTION 2.11 Investment of the Exchange Funds. The Exchange Agent
shall invest any cash included in the Common Exchange Fund or the Preferred
Exchange Fund as directed by Parent on a daily basis. Any interest and other
income resulting from such investments shall promptly be paid to Parent, and any
loss will be restored promptly by Parent.
SECTION 2.12 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made
14
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect to the Shares formerly represented thereby, any cash
in lieu of fractional shares of Parent Common Stock and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof,
pursuant to this Agreement.
SECTION 2.13 Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares or shares of Preferred Stock of such amounts as it is required to deduct
and withhold with respect to the making of such payment under the Code and the
rules and regulations promulgated thereunder, or any provision of a Tax Law. To
the extent that amounts are so withheld by the Surviving Corporation or Parent,
as the case may be, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Shares in respect to
which such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
SECTION 2.14 Stock Transfer Books. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there shall be
no further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into the Merger
Consideration with respect to the Shares or shares of Company Preferred Stock
formerly represented thereby, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant to Section 2.7
and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 2.5.
SECTION 2.15 Affiliates. Notwithstanding anything to the contrary
herein, no shares of Parent Common Stock, Parent $3.625 Preferred Stock or cash
shall be delivered to a person who may be deemed an "affiliate" of the Company
in accordance with Section 6.12 hereof for purposes of Rule 145 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or for purposes of
qualifying the Merger for "pooling of interests" under APB 16 and the applicable
SEC rules and regulations, until such person has executed and delivered to
Parent the written agreement contemplated by Section 6.12.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") (each Section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein), the Company hereby represents and warrants to each of Parent and the
Operating Company as follows:
15
SECTION 3.1 Organization and Qualification; Subsidiaries.
(a) The Company and each of its subsidiaries is a corporation or
legal entity duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and to carry on its businesses as now conducted and proposed by the
Company to be conducted.
(b) Section 3.1 of the Company Disclosure Schedule sets forth a list
of all subsidiaries of the Company. Except as listed in Section 3.1 of the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other security of any
other entity or any other investment in any other entity.
(c) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(d) The Company has heretofore delivered to Parent accurate and
complete copies of the articles or certificate of incorporation and codes of
regulations, bylaws or other similar organizational documents, as currently in
effect, of each of the Company and each of its subsidiaries.
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.
(a) The authorized capital stock of the Company consists of (i)
150,000,000 shares of Company Common Stock, and (ii) 6,697,231 shares of Class A
Preferred Stock and 5,000,000 shares of Class B Preferred Stock. As of April 30,
1999, (i) 108,704,326 shares of Company Common Stock were issued and outstanding
(of which 2,028,873 shares of Company Common Stock were "Restricted Shares"
under the Company's benefit plans); (ii) 5,261,520 shares of Company Common
Stock were subject to outstanding options issued pursuant to the Company's
benefit plans; (iii) 22,681,261 shares of Company Common Stock were reserved for
issuance upon conversion of Company Preferred Stock; (iv) 34,081 shares of
Company Common Stock were reserved for issuance pursuant to the outstanding
stock unit grants under the 1995 Directors Stock Purchase and Deferred
Compensation Plan; and (v) no shares of Company Common Stock were issued and
held in the treasury of the Company. As of the date hereof, (i) 1,697,231 shares
of Class A $2.10 Cumulative Convertible Preferred Stock, 2,700,000 shares of
Class A $3.625 Cumulative Convertible Preferred Stock, and no shares of
Participating Preferred Stock, are issued and outstanding and 990,000 shares of
Class B $4.50 Cumulative Convertible Preferred Stock are issued and outstanding;
and (ii) 750,000 shares of Participating Preferred Stock are reserved for
issuance upon exercise of the rights pursuant to the Rights Agreement (as
hereinafter defined). Section
16
3.2 of the Company Disclosure Schedule sets forth a complete and correct list of
all holders of options to acquire Shares, including such person's name, the
number of options (vested, unvested and total) held by such person and the
exercise price for each such option. All the outstanding shares of Company
Common Stock are, and all shares of Common Stock issuable upon the exercise of
outstanding options described in the third sentence of this Section 3.2 will be,
when issued in accordance with the terms thereof, duly authorized, validly
issued, fully paid and non-assessable. Except as set forth above or in Section
3.2(a) of the Company Disclosure Schedule and except for the Company's
obligations under the Rights Agreement, dated as of February 23, 1996 (the
"COMPANY RIGHTS AGREEMENT"), between the Company and The Fifth Third Bank, as
rights agent, and except for the transactions contemplated by this Agreement,
(1) there are no shares of capital stock or other voting securities of the
Company authorized, issued or outstanding, (2) there are no outstanding options,
warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock or other voting securities of the Company or any of its
subsidiaries, obligating the Company or any of its subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock, voting securities or other equity interest in the Company or any
of its subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, or (3) there are no
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Shares or other capital stock of the
Company or any subsidiary or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any subsidiary or any
other entity other than loans to Subsidiaries in the ordinary course of
business. There are no stockholder agreements, voting trusts or other agreements
or understandings to which the Company or any of its subsidiaries is a party or
by which it is bound relating to the voting of any shares of capital stock of
the Company.
(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien (as hereinafter defined) or any other limitation or restriction
(including any restriction on the right to vote, transfer or sell the same,
except as may be provided as a matter of Law) except for (i) any limitations
under the Orders (as defined in Section 3.4(b) hereof) and (ii) any directors'
qualifying shares. There are no securities of the Company or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
the Company or its subsidiaries, and no other contract, understanding,
arrangement or obligation (whether or not contingent) providing for the issuance
or sale, directly or indirectly of, any capital stock or other ownership
interests in, or any other securities of, any subsidiary of the Company. There
are no outstanding contractual obligations of the Company or its subsidiaries to
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interests in any subsidiary of the Company. For purposes of
this Agreement, "LIEN" means, with respect to any asset (including,
17
without limitation, any security) any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset.
SECTION 3.3 Authority Relative to This Agreement; Consents and
Approvals.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger and
this Agreement, the Company Requisite Vote (as hereinafter defined)). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof by each of Parent
and the Operating Company, constitutes a valid, legal and binding agreement of
the Company, enforceable against the Company in accordance with its terms.
(b) The Board of Directors of the Company (the "COMPANY BOARD") has
duly and validly authorized the execution and delivery of this Agreement and
approved the consummation of the transactions contemplated hereby, and taken all
corporate actions required to be taken by the Company Board for the consummation
of the transactions, including the Merger, contemplated hereby and has resolved
(i) to deem this Agreement and the transactions contemplated hereby, including
the Merger, taken together, advisable and fair to, and in the best interests of,
the Company and its stockholders; and (ii) to recommend that the stockholders of
the Company approve and adopt this Agreement. The Company Board has directed
that this Agreement be submitted to the stockholders of the Company for their
approval at a meeting to be held for that purpose. The affirmative vote of the
holders of a majority of the voting stock of the Company (which is comprised
solely of the Company Common Stock and the Class A Preferred Stock
(collectively, the "VOTING SHARES")) (voting as a single class) as of the record
date for the Company Stockholders Meeting, and the affirmative vote of the
holders of a majority of the Voting Shares, excluding such shares which are
Interested Shares (as defined by Section 1701.01(CC) of the OGCL) of the Company
(voting as a single class) (together, the "COMPANY REQUISITE VOTE") are the only
votes of the holders of any class or series of capital stock of the Company
necessary to adopt this Agreement and approve the transactions contemplated
hereby, including the Merger. No other vote of the stockholders of the Company
is required by law, the articles of incorporation or the code of regulations of
the Company or otherwise in order for the Company to approve and adopt this
Agreement or to consummate the transactions contemplated hereby. The Company
Board has also approved this Agreement and the transactions contemplated hereby,
including the Merger, for the purposes of Chapter 1704 of the Ohio Revised Code
if and to the extent that Chapter 1704 is applicable thereto.
18
SECTION 3.4 SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
with SEC since January 1, 1996, each of which has complied in all material
respects with all applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "EXCHANGE Act"), each as in
effect on the dates such forms, reports and documents were filed. The Company
has heretofore delivered to Parent, in the form filed with the SEC (including
any amendments thereto), (i) its Annual Reports on Form 10-K for each of the
fiscal years ended December 31, 1996, 1997 and 1998; (ii) all definitive proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) held since January 1, 1996; and (iii) all other reports or registration
statements filed by the Company with the SEC since January 1, 1996 (the "COMPANY
SEC REPORTS"). None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in the Company SEC
Reports complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis ("GAAP") (except as may be indicated in
the notes thereto), the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). Except as set forth in Section 3.4(a) of the Company
Disclosure Schedule, since January 1, 1999, there has not been any change, or
any application or request for any change, by the Company or any of its
subsidiaries in accounting principles, methods or policies for financial
accounting or Tax purposes (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
(b) The Company has previously furnished Parent with copies of
audited annual and unaudited quarterly convention statements as filed with the
domiciliary state insurance department of each Insurance Subsidiary (as defined
in Section 3.9(b)) as of and for the years ended December 31, 1998, 1997, and
1996, and the quarter ended March 31, 1999, prepared in conformity with
accounting practices prescribed or permitted (including, without limitation,
accounting practices permitted by OCI in connection with the Orders, each as
defined below) by the National Association of Insurance Commissioners or the
insurance regulatory authority in the states in which the Insurance Subsidiaries
(as defined in Section 3.20(a)) are domiciled ("STAT"), consistently applied
throughout the specified period, except as permitted by OCI in the Orders or as
set forth in Section 3.18(xi) of the Company Disclosure Schedule (collectively,
the "SAP FINANCIAL STATEMENTS"). Each of the SAP Financial Statements fairly
presents in all material respects the financial position of the applicable
Insurance Subsidiary as of its date and each of the statements of operation
included in the SAP Financial Statements
19
fairly presents in all material respects the respective statutory financial
positions and the result of operations of the applicable Insurance Subsidiary
for the period therein set forth, in each case in accordance with Stat,
consistently applied throughout the specified period, except as permitted by OCI
in the Orders or as set forth in Section 3.18(xi) of the Company Disclosure
Schedule. Except as set forth in Section 3.4(b) of the Company Disclosure
Schedule, each of the SAP Financial Statements was correct in all material
respects when filed and there were no material omissions therefrom. The exhibits
and schedules included in the SAP Financial Statements, when considered in
relation to the basic statutory financial statements included therein, present
fairly in all material respects the information shown therein in accordance with
Stat and the SAP Financial Statements comply in all material respects with all
applicable regulatory requirements, as modified or waived by the applicable
insurance regulatory authority. "Orders" shall mean the orders issued by OCI in
connection with the run-off of Northwestern National Insurance Company ("NNIC")
including, without limitation, the Orders in case numbers 93-C23510, 94-C23861,
95-C24204, 96-C24597 and 97-C25031, and the documents and other orders referred
to therein. "OCI" shall mean the Office of the Commissioner of Insurance of the
State of Wisconsin.
(c) Except for the Guaranty (as hereinafter defined), neither the
Company nor any of its subsidiaries (i) has entered into any agreement,
commitment or understanding, written or otherwise (that is in effect on the date
hereof or will be in effect on the Closing Date), with any Governmental Entity
or Insurance Department which would obligate them to provide any form of
financial or balance sheet support of any nature whatsoever to Armco Financial
Services Corporation, Armco Insurance Group, Inc. and/or the Insurance
Subsidiaries, (ii) has any liabilities or obligations of any nature whatsoever,
whether or not accrued, contingent or otherwise, to any Person to provide any
form of financial or balance sheet support to Armco Financial Services
Corporation, Armco Insurance Group, Inc, and/or the Insurance Subsidiaries,
(iii) has knowledge of any claims, allegations, disputes or assertions by any
Person, including Insurance Departments, that any agreement or obligation of the
type referred to in subsection (i) or (ii) of this Section exist. "GUARANTY"
shall mean the "Run-Off and Surplus Agreement," dated December 30, 1993 between
Armco Financial Services Corporation, Armco Insurance Group, Inc. and Northwest
National Insurance Company of Milwaukee which constitutes Exhibit A to the Order
of the Office of the Commissioner of Insurance of the State of Wisconsin, dated
December 30, 1993 (Case No. 93-C23510) as amended by the Orders, and the
agreements referred to therein, pursuant to which Armco Financial Services
Corporation and Armco Insurance Group, Inc. agreed to, among other things,
maintain the policyholder surplus of Northwestern National Insurance Company at
prescribed levels.
SECTION 3.5 No Undisclosed Liabilities. Neither the Company nor any
of its subsidiaries has any material liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances known to the Company which could be
expected to result in such a liability or obligation, except (a) liabilities or
obligations reflected in the Company SEC Reports filed prior to the date hereof
and (b) liabilities or obligations incurred in the
20
ordinary course of business which do not and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 3.6 Absence of Changes. Except as and to the extent publicly
disclosed in the Company SEC Reports filed prior to the date hereof, as set
forth in Section 3.6 of the Company Disclosure Schedule or as permitted by
Section 5.1, since December 31, 1998 (the "AUDIT Date") the Company and its
subsidiaries have conducted their business in the ordinary and usual course
consistent with past practice and there has not been:
(a) any event, change, occurrence or development which does or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company (other than any event, occurrence, development or
state of circumstances or facts resulting primarily from (i) changes in general
economic conditions or (ii) events or developments generally affecting the
industry in which the Company and its subsidiaries operate);
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company
(other than payment of the Company's regular quarterly cash dividend on
Preferred Stock), or any repurchase, redemption or other acquisition by the
Company or any subsidiary of any Company securities;
(c) any amendment of any term of any outstanding security of the
Company or any subsidiary;
(d) (i) any incurrence or assumption by the Company or any subsidiary
of any indebtedness for borrowed money (A) other than in the ordinary and usual
course of business consistent with past practice (it being understood that any
indebtedness incurred prior to the date hereof in respect of capital
expenditures shall be considered to have been in the ordinary and usual course
of business consistent with past practice) or (B) in connection with any
acquisition or capital expenditure permitted by Section 5.1 or (ii) any
guarantee, endorsement or other incurrence or assumption of liability (whether
directly, contingently or otherwise) by the Company or any subsidiary for the
obligations of any other person (other than any wholly owned subsidiary of the
Company), other than in the ordinary and usual course of business consistent
with past practice;
(e) any creation or assumption by the Company or any subsidiary of
any Lien on any material asset of the Company or any subsidiary other than in
the ordinary and usual course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any subsidiary other than (i) any
acquisition permitted by Section 5.1, (ii) loans, advances or capital
contributions to or investments in wholly owned subsidiaries of the Company or
(iii) loans or advances to employees of the
21
Company or any subsidiary made in the ordinary and usual course of business
consistent with past practice;
(g) (i) any contract or agreement entered into by the Company or any
subsidiary on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by the Company or any subsidiary of
any contract, license or other right (including any insurance policy naming it
as a beneficiary or a loss payable payee) that does or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, other than, in the case of (i) and (ii), transactions, commitments,
contracts or agreements in the ordinary and usual course of business consistent
with past practice and those contemplated by this Agreement;
(h) any material change in any method of accounting or accounting
principles or practice by the Company or any subsidiary, except for any such
change required by reason of a change in GAAP; or
(i) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any of its subsidiaries; (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any of its subsidiaries (it being
acknowledged and agreed that the hiring of employees in the ordinary course of
business on an at-will basis shall not be deemed the entering into of an
employment or similar agreement); (iii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements; or (iv)
increase in compensation, bonus or other benefits payable to directors, officers
or employees of the Company or any of its subsidiaries other than, in the case
of clause (iv) only, increases in compensation, bonus or other benefits payable
to employees of the Company or any of its subsidiaries in the ordinary and usual
course of business consistent with past practice or merit increases in salaries
of employees at regularly scheduled times in customary amounts consistent with
past practices.
SECTION 3.7 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock as required by the terms of
this Agreement (the "SHARE ISSUANCE") pursuant to the Merger (the "S-4"), at the
time the S-4 is filed with the SEC and at the time it becomes effective under
the Securities Act, will contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the proxy statement relating to
the Company Stockholder Meeting (as hereinafter defined) and the Parent
Stockholder Meeting (as defined in Section 4.5) to be held in connection with
the Merger and the Share Issuance (the "PROXY STATEMENT") will, at the date
mailed to stockholders and at the times of the meetings of stockholders to be
held in connection with the Merger or the Share Issuance, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in
22
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time any
event with respect to the Company, its officers and directors or any of its
subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Proxy Statement, the Company shall promptly
so advise Parent and such event shall be so described, and such amendment or
supplement (which Parent shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by Law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
Company Stockholder Meeting, will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.8 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the NYSE, the Securities Act, the
Exchange Act, state securities or blue sky Laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the New York State
Insurance Department, the Wisconsin Insurance Department and any other
applicable state insurance and regulatory agency (collectively, the "INSURANCE
DEPARTMENTS"), the filing and recordation of the Certificates of Merger as
required by the DGCL and the OGCL, filings under Environmental Laws (as defined
in Section 3.15) and as otherwise set forth in Section 3.8 to the Company
Disclosure Schedule (collectively, the "COMPANY REQUIRED APPROVALS"), no filing
with or notice to, and no permit, authorization, consent or approval of, any
court or tribunal or administrative, governmental or regulatory body, agency or
authority, including Insurance Departments (a "GOVERNMENTAL ENTITY") is
necessary for the execution and delivery by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby, except
(other than in respect those to be obtained from Insurance Departments) where
the failure to obtain such permits, authorizations, consents or approvals or to
make such filings or give such notice does not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective articles or certificate of incorporation or code of
regulations or bylaws (or similar governing documents) of the Company or any of
its subsidiaries, (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound (collectively,
the "COMPANY AGREEMENTS"), or (iii) violate any Law applicable to the Company or
any of its subsidiaries or any of their respective properties or assets, except
in the case of (ii) or (iii) for violations, breaches or defaults which do not
or would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse
23
Effect on the Company. Section 3.8 of the Company Disclosure Schedule sets forth
a list of all material third party consents and approvals required to be
obtained under the Company Agreements prior to the consummation of the
transactions contemplated by this Agreement.
SECTION 3.9 No Default. Neither the Company nor any of its
subsidiaries is in violation of any term of (i) its articles or certificate of
incorporation, code of regulations, bylaws or other organizational documents,
(ii) any agreement or instrument related to indebtedness for borrowed money or
any other agreement to which it is a party or by which it is bound, or (iii) any
foreign or domestic law, order, writ, injunction, decree, ordinance, award,
stipulation, statute, judicial or administrative doctrine, rule or regulation
entered by a Governmental Entity ("LAW") applicable to the Company, its
subsidiaries or any of their respective properties or assets, except, in the
case of (ii) and (iii), for violations which do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or to prevent or materially delay the performance of this Agreement
by the Company.
SECTION 3.10 Real Property.
(a) Section 3.10(a) of the Company Disclosure Schedule sets forth all
of the real property owned in fee by the Company and its subsidiaries that is
used as a manufacturing or office facility or is otherwise material to the
conduct of the business of the Company and its subsidiaries, taken as a whole.
Each of the Company and its subsidiaries has good and marketable title to each
parcel of real property owned by it free and clear of all Liens, except (i)
Taxes and general and special assessments not in default and payable without
penalty and interest, and (ii) other liens, mortgages, pledges, encumbrances and
security interests which do not materially interfere with the Company's of any
of its subsidiaries' use and enjoyment of such real property or materially
detract from or diminish the value thereof.
(b) Section 3.10(b) of the Company Disclosure Schedule sets forth all
leases, subleases and other agreements (the "REAL PROPERTY Leases") under which
the Company or any of its subsidiaries uses or occupies or has the right to use
or occupy, now or in the future, any real property that is used as a
manufacturing or office facility or is otherwise material to the conduct of the
business of the Company and its subsidiaries, taken as a whole. The Company has
heretofore delivered to Parent true, correct and complete copies of all Real
Property Leases (and all modifications, amendments and supplements thereto and
all side letters to which the Company or any of its subsidiaries is a party
affecting the obligations of any party thereunder). Each Real Property Lease
constitutes the valid and legally binding obligation of the Company or its
subsidiaries, enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar Laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect. All rent and other sums and charges payable by the Company and
its subsidiaries as tenants under each Real Property Lease are current, no
termination event or condition or uncured default of a material
24
nature on the part of the Company or any such subsidiary or, to the Company's
knowledge, the landlord, exists under any Real Property Lease. Each of the
Company and its subsidiaries has a good and valid leasehold interest in each
parcel of real property leased by it free and clear of all Liens, except (i)
Taxes and general and special assessments not in default and payable without
penalty and interest, and (ii) other liens, mortgages, pledges, encumbrances and
security interests which do not materially interfere with the Company's or any
of its subsidiaries' use and enjoyment of such real property or materially
detract from or diminish the value thereof.
(c) No party to any such Real Property Leases has given notice to the
Company or any of its subsidiaries of or made a claim against the Company or any
of its subsidiaries with respect to any material breach or default thereunder.
SECTION 3.11 Litigation. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports filed prior to the date
hereof or as set forth in Section 3.11 of the Company Disclosure Schedule, there
is no suit, claim, action, proceeding or investigation pending or, to the
Company's knowledge, threatened against the Company or any of its subsidiaries
or any of their respective properties or assets which (a) does or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or (b) as of the date hereof, questions the
validity of this Agreement or any action to be taken by the Company in
connection with the consummation of the transactions contemplated hereby or
could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as and to the extent publicly disclosed
by the Company in the Company SEC Reports filed prior to the date hereof, there
is no judgment, order, writ, injunction or decree outstanding against the
Company or its subsidiaries which does or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
SECTION 3.12 Company Permits; Compliance with Applicable Laws. The
Company and its subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "COMPANY PERMITS"), except (other
than in respect of the Company Permits of the Insurance Subsidiaries) for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which do not or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company. The Company and
its subsidiaries are in compliance in all material aspects with the terms of the
Company Permits, except where the failure to so comply does not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The businesses of the Company and its
subsidiaries are not being conducted in violation of any Law applicable to the
Company or its subsidiaries, except that no representation or warranty is made
in this Section 3.12 with respect to Environmental Laws and except for
violations or possible violations which do not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. To the Company's knowledge, no investigation or review by any
Governmental Entity with respect to the
25
Company or its subsidiaries is pending or threatened, nor, to the Company's
knowledge, has any Governmental Entity indicated an intention to conduct the
same.
SECTION 3.13 Employee Plans.
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth a
list of all "employee benefit plans," as defined in Section 3(3) of ERISA, all
employment, executive compensation, consulting or other compensation agreements,
and all stock option, stock award, stock purchase or other equity-based
compensation, deferred compensation, severance, salary continuation, life
insurance, bonus or other incentive compensation programs or arrangements, and
directors' benefit, bonus or other incentive compensation arrangements, for
which the Company or any of its subsidiaries has any obligation to or liability,
contingent or otherwise, (each, an "EMPLOYEE BENEFIT PLAN" and collectively, the
"EMPLOYEE BENEFIT PLANS"); other than Employee Benefit Plans which do not cover
any of the Company's employees whose annual compensation exceeds $100,000,
officers or directors, have been in existence for at least two years without
material modification, and which (i) are fully funded through insurance policies
or assets held in trusts, (ii) are welfare benefit plans covering only
bargaining unit employees during their employment and their eligible dependents
for which the costs of all accrued liabilities have been properly reflected in
the Company's financial statements, or (iii) are terminable at will without more
than 60 days' prior notice or consent and without any penalty or additional
payment in excess of benefits accrued prior to the date of termination (and such
accrued benefits have been properly reflected as liabilities in the Company's
financial statements). Section 3.13(a) of the Company Disclosure Schedule
separately identifies each Employee Benefit Plan which is subject to Title IV of
ERISA. None of the Employee Benefit Plans is a multiemployer plan, as defined in
Section 3(37) of ERISA ("MULTIEMPLOYER PLAN"), or is or has been subject to
Sections 4063 or 4064 of ERISA ("MULTIPLE EMPLOYER PLANS").
(b) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans set forth in Section 3.13(a)
of the Disclosure Schedule have been delivered to Parent by the Company (i) any
plans and related trust documents, and amendments thereto; (ii) the most recent
Form 5500 and schedules thereto; (iii) the most recent financial actuarial
valuation, if applicable; and (iv) summary plan descriptions. Company has made
available to Parent the actuary or actuaries who are responsible for each
Employee Benefit Plan that is (i) a welfare plan providing for post-employment
medical or death benefit coverage or (ii) subject to Title IV of ERISA.
(c) As of the date hereof, (i) all contributions or other payments
required to be made by or under any Employee Benefit Plan, any related trusts,
or any collective bargaining agreement or pursuant to Law have been made by the
due date therefor (including any valid extension); (ii) the Company and its
subsidiaries have performed all obligations required to be performed by them
under any Employee Benefit Plan; (iii) the Employee Benefit Plans have been
administered in compliance with their terms and the requirements of ERISA, the
Code and other applicable Laws; and (iv) there are no
26
material actions, suits, arbitrations or claims (other than routine claims for
benefit) pending or, to the knowledge of the Company, threatened with respect to
any Employee Benefit Plan, except for such events, acts or omissions that would
not have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure
Schedule or could not reasonably be expected to have a Material Adverse Effect
on the Company:
(i) Neither the Company nor any ERISA Affiliate has
terminated any Title IV Plan for which there is any outstanding
liability under Title IV of ERISA, and no event has occurred that
could reasonably be expected to result in any liability under Title
IV of ERISA (other than payment of PBGC premiums which are not
overdue).
(ii) Neither the Company nor any ERISA Affiliate or any
organization to which the Company or any ERISA Affiliate is a
successor or Parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction within the last five
years which might be alleged to come within the meaning of Section
4069 of ERISA.
(e) Each of the Employee Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so "qualified" and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code, and the
Company knows of no fact which would adversely affect the qualified status of
any such Pension Plan or the exemption of such trust.
(f) Except as set forth in Section 3.13(f) or 6.11 of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will by itself or in
combination with any other event (i) result in any payment becoming due, or
increase the amount of compensation due, to any current or former employee of
the Company or any of its subsidiaries; (ii) increase any benefits otherwise
payable under any Employee Benefit Plan; or (iii) result in the acceleration of
the time of payment or vesting of any such benefits.
SECTION 3.14 Labor Matters.
(a) Section 3.14(a) of the Company Disclosure sets forth a list of
all employment, labor or collective bargaining agreements to which the Company
or any subsidiary is party and except as set forth therein, there are no
employment, labor or collective bargaining agreements which pertain to employees
of the Company or any of its subsidiaries. The Company has heretofore delivered
to Parent true and complete copies of (i) the employment agreements listed on
Section 3.14(a) of the Company Disclosure Schedule and (ii) the labor or
collective bargaining agreements listed on
27
Section 3.14(a) of the Company Disclosure Schedule, together with all material
amendments, modifications and supplements thereto and side letters materially
affecting the duties, rights and obligations of any party thereunder.
(b) No labor organization or group of employees of the Company or any
of its subsidiaries has made a pending demand for recognition or certification;
and, to the Company's knowledge, there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority. To the
Company's knowledge, there are no organizing activities involving the Company or
any of its Subsidiaries pending with any labor organization or group of
employees of the Company or any of its subsidiaries.
(c) Except as set forth in Section 3.14(c) of the Company Disclosure
Schedule, there are no unfair labor practice charges, grievances or complaints
pending or threatened in writing by or on behalf of any employee or group of
employees of the Company or any of its Subsidiaries which do or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the operations of the Company.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, there are no complaints, charges or claims against the Company or any
of its subsidiaries pending, or threatened in writing to be brought or filed,
with any Governmental Entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by the Company or any of its subsidiaries.
(e) The Company and each of its subsidiaries is in compliance in all
material respects with all Laws relating to the employment of labor, including
all such Laws and orders relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health workers' compensation and the
collection and payment of withholding and/or Social Security Taxes and similar
Taxes.
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
Schedule, since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN ACT"), neither the Company nor any of its
subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act,
or any similar state, local or foreign Law) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Company or any of its Subsidiaries; or (ii) a "mass layoff" (as
defined in the WARN Act, or any similar state, local or foreign Law) affecting
any site of employment or facility of the Company or any of its subsidiaries.
SECTION 3.15 Environmental Matters.
(a) For purposes of this Agreement:
28
(i) "ENVIRONMENTAL COSTS AND LIABILITIES" means any and all
losses, liabilities, obligations, damages (including compensatory,
punitive and consequential damages), fines, penalties, judgments,
actions, claims, costs and expenses (including, without limitation,
fees, disbursements and expenses of legal counsel, experts, engineers
and consultants and the costs of investigation and feasibility
studies and clean up, remove, treat, or in any other way address any
Hazardous Materials (as hereinafter defined)) arising from, under or
pursuant to any Environmental Law (as hereinafter defined);
(ii) "ENVIRONMENTAL LAW" means any applicable federal,
state, local or foreign Law (including common Law), statute, rule,
regulation, ordinance, decree or other legal requirement relating to
the protection of natural resources, the environment and public and
employee health and safety or pollution or the release or exposure to
Hazardous Materials (as hereinafter defined) and shall include,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C.ss.9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C.ss.1801
et seq.), the Resource Conservation and Recovery Act (42
U.S.C.ss.6901 et seq.), the Clean Water Act (33 U.S.C.ss.1251 et
seq.), the Clean Air Act (33 U.S.C.ss.7401 et seq.), the Toxic
Substances Control Act (15 U.S.C.ss.7401 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C.ss.651 et seq.)
("OSHA") and the regulations promulgated pursuant thereto, and any
such applicable state or local statutes, and the regulations
promulgated pursuant thereto, as such Laws have been and may be
amended or supplemented through the Closing Date;
(iii) "HAZARDOUS MATERIAL" means any substance, material or
waste which is regulated, classified or otherwise characterized as
hazardous, toxic, pollutant, contaminant or words of similar meaning
or regulatory effect by any Governmental Entity or the United States,
and includes, without limitation, petroleum, petroleum by-products
and wastes, asbestos and polychlorinated biphenyls;
(iv) "RELEASE" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, or migration into the indoor or outdoor
environment, or into or out of any property owned, operated or leased
by the applicable party or its subsidiaries; and
(v) "REMEDIAL ACTION" means all actions, including, without
limitation, any capital expenditures, required by a Governmental
Entity or required under or taken pursuant to any Environmental Law,
or voluntarily undertaken to (A) clean up, remove, treat, or in any
other way, ameliorate or address any Hazardous Materials or other
substance in the indoor or outdoor environment; (B) prevent the
Release or threat of Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten to endanger
the public health or welfare of the indoor or outdoor environment;
29
(C) perform pre-remedial studies and investigations or post-remedial
monitoring and care pertaining or relating to a Release; or (D) bring
the applicable party into compliance with any Environmental Law.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule:
(i) The operations of the Company and its subsidiaries have
been and, as of the Closing Date, will be, in compliance with all
Environmental Laws, except for noncompliance that does not and would
not reasonably be expected to result in the Company and its
subsidiaries incurring material Environmental Costs and Liabilities,
and the Company is not aware of any facts, circumstances or
conditions, which without significant capital expenditures, would
prevent material compliance in the future;
(ii) The Company and its subsidiaries have obtained and
will, as of the Closing Date, maintain all material permits,
authorizations, licenses or similar approvals required under
applicable Environmental Laws for the continued operations of their
respective businesses;
(iii) The Company and its subsidiaries are not subject to
any outstanding written orders or material contracts with any
Governmental Entity or other person respecting (A) Environmental
Laws, (B) Remedial Action or (C) any Release or threatened Release of
a Hazardous Material;
(iv) The Company and its subsidiaries have not received any
written communication alleging, with respect to any such party, the
material violation of or material liabilities (real or potential), in
each case, individually or in the aggregate, under any Environmental
Law;
(v) Neither the Company nor any of its subsidiaries has any
material contingent liability in connection with the Release of any
Hazardous Material (whether on-site or off-site);
(vi) The operations of the Company or its subsidiaries do
not involve the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined and regulated under 40 C.F.R.
Parts 260-270 (in effect as of the date of this Agreement) or any
state equivalent;
(vii) There is not now, nor to the Company's knowledge, has
there been in the past, on or in any property of the Company or its
subsidiaries any of the following: (A) any underground storage tanks
or surface impoundments, (B) any asbestos-containing materials, or
(C) any polychlorinated biphenyls; and
(viii) No judicial or administrative proceedings are
pending or, to the Company's knowledge, threatened against the
Company and its subsidiaries
30
alleging the violation of or seeking to impose liability pursuant to
any Environmental Law and there are no investigations pending or, to
the Company's knowledge, threatened against the Company or any of its
subsidiaries under Environmental Laws.
(c) None of the exceptions set forth in Section 3.15 of the Company
Disclosure Schedule is reasonably likely to result in the Company and its
subsidiaries incurring Environmental Costs and Liabilities which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(d) The Company has provided Parent and Purchaser with copies of all
environmentally related assessments, audits, investigations, sampling or similar
reports relating to the Company or its subsidiaries or any real property
currently or formerly owned, operated or leased by or for the Company and its
subsidiaries.
SECTION 3.16 Taxes. Except as disclosed on Section 3.16 of the
Company Disclosure Schedule:
(a) Each of the Company and each subsidiary of the Company has timely
filed, or has caused to be timely filed on its behalf (taking into account any
extension of time within which to file), all Tax Returns (as hereinafter
defined) required to be filed by it, and all such filed Tax Returns are true,
complete and accurate in all material respects. All Taxes shown to be due on
such Tax Returns, or otherwise required to be paid by the Company or a
subsidiary of the Company, have been timely paid.
(b) The most recent financial statements contained in the Company SEC
Reports reflect an adequate reserve for all Taxes payable by the Company and its
subsidiaries for all Taxable periods and portions thereof through the date of
such financial statements. No deficiency with respect to Taxes has been
proposed, asserted or assessed against the Company or any subsidiary of the
Company. No liens for Taxes exist with respect to any asset of the Company or
any subsidiary of the Company, except for statutory liens for Tax not yet due.
(c) The Federal income Tax Returns of the Company and each subsidiary
of the Company have been examined by and settled with the United States Internal
Revenue Service (or the applicable statute of limitations has expired) for all
years through 1994, and the material state income and franchise Tax Returns of
the Company and each subsidiary of the Company have been examined by and settled
with the applicable state Tax authorities for the years specified in Section
3.16(c) of the Company Disclosure Schedule. All assessments for Taxes due with
respect to such completed and settled examinations or any concluded litigation
have been fully paid.
(d) Neither the Company nor any subsidiary of the Company has any
obligation under any agreement (either with any person or any taxing authority)
with respect to Taxes.
31
(e) Neither the Company nor any subsidiary of the Company 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.
(f) Neither the Company nor any subsidiary of the Company has been a
member of an affiliated group of corporations within the meaning of Section 1504
of the Code, other than the affiliated group of which the Company is the common
parent.
(g) No audit or other administrative or court proceedings are pending
with respect to Federal income or state income or franchise Taxes of the Company
or any subsidiary of the Company and no notice thereof has been received. No
issue has been raised by any taxing authority in any presently pending Federal
income or state income or franchise Tax audit that could be material and adverse
to the Company or any subsidiary of the Company for any period after the
Effective Time.
(h) No claim has been made by a taxing authority in a jurisdiction
where neither the Company nor any subsidiary of the Company files state income
or franchise Tax Returns that the Company or any subsidiary of the Company is or
may be subject to income or franchise taxation in that jurisdiction.
(i) Neither the Company nor any subsidiary of the Company is a party
to any contract, agreement or other arrangement which provides for the payment
of any amount which would not be deductible by reason of Section 162(m) or
Section 280G of the Code.
(j) The Company has made available to Parent true and complete copies
of (i) all Federal income and all material state income and franchise Tax
Returns of the Company and its subsidiaries filed for the preceding three
taxable years for which filings have been made and (ii) any audit report issued
within the last three years (or otherwise with respect to any audit or
proceeding in progress) relating to Taxes of the Company or any subsidiary of
the Company.
(k) No subsidiary of the Company owns any Shares.
(l) 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,
or in connection with any agreement with respect to Taxes including all
interest, penalties and additions imposed with respect to such amounts.
"TAX RETURNS" means all Federal, state, local, provincial and foreign
Tax returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax return relating to Taxes.
32
SECTION 3.17 Absence of Questionable Payments.
(a) Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any director, officer, agent, employee or other person
acting on behalf of the Company or any of its subsidiaries, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Exchange Act. Neither the
Company nor any of its subsidiaries nor, to the Company's knowledge, any
director, officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries, has accepted or received any unlawful
contributions, payments, gifts, or expenditures. To the Company's knowledge, the
Company and each of its subsidiaries which is required to file reports pursuant
to Section 12 or 15(d) of the Exchange Act is in compliance with the provisions
of Section 13(b) of the Exchange Act.
SECTION 3.18 Material Contracts.
(a) Section 3.18 of the Company Disclosure Schedule sets forth a list
of all Material Contracts (as hereinafter defined). The Company has heretofore
made available to Parent true, correct and complete copies of all written or
oral contracts and agreements (and all material amendments, modifications and
supplements thereto and all side letters to which the Company or any of its
subsidiaries is a party materially affecting the obligations of any party
thereunder) to which the Company or any of its subsidiaries is a party or by
which any of its properties or assets are bound that are material to the
business, properties or assets of the Company and its subsidiaries taken as a
whole, including, without limitation, all: (i) employment, severance, personal
services or consulting contracts (other than any such contracts that are
terminable without penalty upon not more than 90 days notice), and all
non-competition or indemnification contracts with current or former directors,
officers or employees of the Company or any of its subsidiaries (including,
without limitation, any contract to which the Company or any of its subsidiaries
is a party involving employees of the Company); (ii) material license agreements
relating to Intellectual Property (as defined in Section 3.21) granting to the
Company a license to practice technology used in the conduct of its current
operations; (iii) contracts granting a right of first refusal or first
negotiation for essential properties, services or supplies, or material sales
not in the ordinary course; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease (including leases in connection
with financing transactions) of any properties or assets of the Company with a
value in excess of $3 million (by merger, purchase or sale of assets or stock or
otherwise) entered into since January 1, 1996; (vi) material contracts or
agreements with any Governmental Entity; (vii) loan or credit agreements,
mortgages, indentures or other agreements or instruments evidencing (A)
indebtedness for borrowed money by the Company or any of its subsidiaries or any
such agreement pursuant to which indebtedness for borrowed money may be incurred
(including guaranties) or (B) Liens securing any such indebtedness; (viii)
agreements that purport to limit, curtail or restrict the ability of the Company
or any of its subsidiaries, or would restrict the ability of Parent or any of
its subsidiaries, to compete in any geographic area or line of business;
33
(ix) agreements or arrangements, including but not limited to ▇▇▇▇▇▇, options,
swaps, caps and collars, designed to protect the Company or any of its
subsidiaries against fluctuations in interest rates, currency exchange rates or
the prices of certain commodities and raw materials; (x) to the extent not
otherwise required to be disclosed pursuant to any other clause of this Section
3.18(a), contracts or agreements that would be required to be filed as an
exhibit to a Form 10-K filed by the Company with the SEC on the date hereof;
(xi) contracts, agreements or understandings with Insurance Departments; and
(xii) commitments and agreements to enter into any of the foregoing
(collectively, together with any such contracts entered into in accordance with
Section 5.1 hereof, the "MATERIAL CONTRACTS"). Except as set forth in Section
3.18 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to or bound by any severance or other agreement with any
employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of (x) the consummation of the transactions contemplated hereby or (y)
the termination of such employment or consulting following such consummation.
(b) Each of the Material Contracts is in full force and effect. There
is no breach or default under any Material Contract either by the Company or, to
the Company's knowledge, by any other party thereto, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
breach or default thereunder by the Company or, to the Company's knowledge, any
other party, except for any such breach or default as does not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(c) No party to any such Material Contract has given notice to the
Company of or made a claim against the Company with respect to any breach or
default thereunder, except for any such breach or default as does not or would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
SECTION 3.19 Insurance. Section 3.19 of the Company Disclosure
Schedule sets forth a list of insurance policies (including information on the
scope and amount of the coverage and deductibles provided thereunder) maintained
by the Company or any of its subsidiaries which policies have been issued by
insurers, which, to the Company's knowledge, are reputable and financially sound
and provide coverage for the operations conducted by the Company and its
subsidiaries of a scope and coverage consistent with customary industry
practice. The Company has delivered to Parent a true and correct copy of the
claims history under such policies from January 1, 1998 through the date hereof.
SECTION 3.20 Insurance Business.
(a) Set forth in Section 3.20(a) of the Company Disclosure Schedule
is a list of all subsidiaries of the Company engaged in the insurance business
(the "INSURANCE SUBSIDIARIES") and each jurisdiction in which the regular
conduct of the business of each
34
Insurance Subsidiary requires it to be qualified as an insurer. Except as set
forth in Section 3.20(a) of the Company Disclosure Schedule, no certificate of
authority with respect to any jurisdiction set forth in Section 3.20(a) of the
Company Disclosure Schedule has been revoked, restricted, suspended, limited or
modified nor is any such certificate of authority the subject of a proceeding
for revocation, restriction, suspension, limitation or modification, nor is any
Insurance Subsidiary operating under any formal or informal agreement or
understanding with the licensing authority of any state which restricts its
authority to do business or requires any Insurance Subsidiary to take, or
refrain from taking, any action.
(b) Except as set forth in Section 3.20(b) of the Company Disclosure
Schedule, each of the Insurance Subsidiaries holds in full force and effect all
licenses, franchises, permits and authorizations ("PERMITS") necessary for the
conduct of their respective businesses as currently conducted under and pursuant
to any applicable Insurance Law (as defined below) relating to the Company and
the Subsidiaries, and there has been no violation of any Permit nor has it
received written notice asserting any such violation. "INSURANCE LAWS" means any
statute, rule or regulation issued by any governmental agency (including,
without limitation, any insurance regulatory agency or body) that relates to the
business conducted by the Insurance Subsidiaries.
SECTION 3.21 Intellectual Property.
(a) Section 3.21 of the Company Disclosure Schedule sets forth a list
of all patents, patent rights, invention disclosure statements, trademarks,
trademark rights, trade names, trade name rights, service marks, and all
applications for any of the foregoing, of the Company and its subsidiaries the
absence of which would reasonably be expected to have a Material Adverse Effect
with respect to the Company. Except as set forth in Section 3.21 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is entitled
to receive or obligated to pay any royalties or similar payments in respect of
Intellectual Property.
(b) The Company and its subsidiaries own or possess adequate licenses
or other valid rights to use (in each case, free and clear of any Liens), all
Intellectual Property (as hereinafter defined) used or held for use in
connection with the business of the Company and its subsidiaries as currently
conducted or as contemplated to be conducted and the absence of which ownership
or rights would reasonably be expected to have a Material Adverse Effect with
respect to the Company.
(c) The use of any Intellectual Property by the Company and its
subsidiaries does not infringe on, or otherwise violate the rights of any person
and is in accordance with any applicable license pursuant to which the Company
or any of its subsidiaries acquired the right to use any material Intellectual
Property, except where the result of such infringement, violation or failure
does not and would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect with respect to the Company.
35
(d) No person is challenging or, to the knowledge of the Company,
infringing on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by and/or licensed
to the Company or its subsidiaries, except where the result of such challenge,
infringement or violation does not and would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect with respect
to the Company.
(e) Neither the Company nor any of its subsidiaries has received any
notice (written or otherwise) of any assertion or claim, pending or not, with
respect to any Intellectual Property used by the Company or its subsidiaries,
except where the result of such assertion or claim does not and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to the Company.
(f) No material Intellectual Property owned/or licensed by the
Company or its subsidiaries is being used or enforced in a manner that would
result in the abandonment, cancellation or unenforceability of such Intellectual
Property, other than as does not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
For purposes of this Agreement, "INTELLECTUAL PROPERTY" means (i) all
trademarks, trademark rights, trade names, trade name rights, trade dress and
other indications of origin, corporate names, brand names, logos, certification
rights, service marks, applications for trademarks and for service marks,
know-how and other proprietary rights and information, the goodwill associated
with the foregoing and registration in any jurisdiction of, and applications in
any jurisdictions to register, the foregoing, including any extension,
modification or renewal of any such registration or application; (ii) all
inventions, discoveries and ideas (whether patentable or unpatentable and
whether or not reduced to practice), in any jurisdiction, all improvements
thereto, and all patents, patent rights, applications for patents (including,
without limitation, divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; (iii) all licenses (whether the Company is licensor or licensee)
and other agreements relating to any Intellectual Property described in (i) or
(ii); (iv) nonpublic information, trade secrets and confidential information and
rights in any jurisdiction to limit the use or disclosure thereof by any person;
(v) writings and other works, whether copyrightable or not, in any jurisdiction,
and all registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; (vi) all mask works and
all applications, registrations and renewals in connection therewith, in any
jurisdiction; (vii) all computer software (including data and related
documentation); (viii) any similar intellectual property or proprietary rights;
and (ix) all copies and tangible documentation thereof and any claims or causes
of action arising out of or relating to any infringement or misappropriation of
any of the foregoing.
SECTION 3.22 Year 2000. The Company and its subsidiaries have
developed and are executing a plan with respect to Year 2000 readiness (the
"COMPANY YEAR 2000 PLAN"). The Company has provided Parent with a copy of the
Company Year 2000 Plan and has provided a report on the status of the Company
Year 2000 Plan
36
through April 30, 1999 that is accurate in all material respects. The Company
Year 2000 Plan addresses the Year 2000 issues which, to the knowledge of the
Company, are material to the Company and its subsidiaries, including internal
information systems and process control risks, embedded circuitry risks and
third party risks.
SECTION 3.23 Opinion of Financial Advisor. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
(the "FINANCIAL ADVISOR") has delivered to the Company Board its opinion, dated
the date of this Agreement, to the effect that, as of such date, the
consideration to be received by the holders of Shares in the Merger is fair to
such holders from a financial point of view, and, as of the date hereof, such
opinion has not been withdrawn or modified.
SECTION 3.24 Brokers. No broker, finder or investment banker (other
than the Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
SECTION 3.25 Accounting Matters; Tax Treatment. Neither the Company
nor any of its affiliates or stockholders has taken or agreed to take any action
or is aware of any fact or circumstance that would (i) prevent the Merger from
qualifying as a "pooling of interests" under APB 16 and the applicable SEC rules
and regulations (except that no representation is made to the effect that the
transactions contemplated by this Agreement will so qualify) or (ii) prevent the
Merger from qualifying as a reorganization under Section 368 of the Code. The
Company has not failed to bring to the attention of Parent any actions,
agreements or understandings, whether written or oral, that would be reasonably
likely to prevent Parent from accounting for the Merger as a "pooling of
interests" under APB 16 and the applicable SEC rules and regulations.
SECTION 3.26 Takeover Statutes. The Company has taken all action
required to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from, and this Agreement and the transactions
contemplated hereby (the "COVERED TRANSACTIONS") are exempt from, the
requirements of any "moratorium", "control share," "fair price," "affiliate
transaction," "business combination" or other antitakeover Laws and regulations
of any state (collectively, "TAKEOVER STATUTES"), including, without limitation,
any antitakeover provision in the Company's articles of incorporation or code of
regulations, other than the provisions of Section 1701.831 of the OGCL (the
"CONTROL SHARES ACQUISITION LAW"). The requirements of the Control Shares
Acquisitions Law will be satisfied upon delivery to the stockholders of the
Company of the Acquiring Person Statement (as defined in Section 6.1 hereof) and
receipt of the Company Requisite Vote.
SECTION 3.27 Amendment to the Company Rights Agreement. The Company
Board has taken all necessary action (including any amendment thereof) under the
Company Rights Agreement so that (a) none of the execution or delivery of this
Agreement, the exchange of the shares of Parent Common Stock for the Shares
37
in accordance with Article II, or any other transaction contemplated hereby will
cause (i) the rights (the "RIGHTS") issued pursuant to the Company Rights
Agreement to become exercisable under the Company Rights Agreement, or a
Distribution Date (as defined on the Company Rights Agreement), (ii) Parent or
the Operating Company to be deemed an Acquiring Person (as defined in the
Company Rights Agreement), or (iii) the Distribution Date (as defined in the
Company Rights Agreement) to occur upon any such event; and (b) the Expiration
Date (as defined in the Company Rights Agreement) of the Rights shall occur
immediately prior to the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Except as set forth in the disclosure schedule delivered by Parent to
the Company prior to the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE") (each Section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Parent
and the Operating Company hereby represent and warrant to the Company as
follows:
SECTION 4.1 Organization.
(a) Each of Parent and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now conducted or proposed by Parent or the Operating Company to be
conducted, except where the failure to be duly organized, existing and in good
standing or to have such power and authority would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
(b) Each of Parent and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the articles of incorporation and bylaws of Parent as
currently in effect.
SECTION 4.2 Capitalization of Parent.
(a) The authorized capital stock of the Parent consists of
200,000,000 shares of Parent Common Stock and 25,000,000 shares of preferred
stock, par value $.01 per share ("PARENT PREFERRED STOCK"). As of April 30, 1999
(i) 59,413,295 shares of
38
Parent Common Stock are issued and outstanding; (ii) 2,111,482 shares of Parent
Common Stock were subject to outstanding options issued pursuant to Parent's
1998 Stock Incentive Plan (the "1998 STOCK INCENTIVE PLAN"), and 4,539,159
shares of Parent Common Stock were reserved for issuance under the 1998 Stock
Incentive Plan; and (iii) 4,877,625 shares of Parent Common Stock were issued
and held in the treasury of the Parent. As of the date hereof, no shares of
Parent Preferred Stock are issued and outstanding and 297,066 shares of Parent
Preferred Stock are reserved for issuance upon exercise of the Parent Rights
pursuant to the Parent Rights Agreement. All the outstanding shares of Parent
Common Stock are, and all shares to be issued as part of the Common Merger
Consideration will be, when issued in accordance with the terms hereof, duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
above, and except for the transactions contemplated by this Agreement and
Parent's obligations under the Parent Rights Agreement, as of the date of this
Agreement (1) there are no shares of capital stock or other voting securities of
Parent authorized, issued or outstanding, (2) there are no authorized or
outstanding options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock or other voting securities of Parent,
obligating Parent to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock, voting securities or other equity interest
in Parent or securities convertible into or exchangeable for such shares or
equity interests, or obligating Parent to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement, arrangement or
commitment, (3) there are no outstanding contractual obligations of Parent to
repurchase, redeem or otherwise acquire any capital stock of Parent. There are
no stockholder agreements, voting trusts or other agreements or understandings
to which Parent is a party or by which it is bound relating to the voting of any
shares of capital stock of Parent.
(b) All of the outstanding capital stock of Parent's subsidiaries
(including the Operating Company) is owned by Parent, directly or indirectly,
free and clear of any Lien or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of Law). There are no securities of Parent or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
Parent or its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any capital stock or other ownership interests in, or
any other securities of, any subsidiary of Parent. There are no outstanding
contractual obligations of Parent or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of Parent.
SECTION 4.3 Authority Relative to This Agreement.
(a) Each of Parent and the Operating Company has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. No other corporate proceedings
on the part of Parent or the Operating Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Share Issuance, the
39
Parent Requisite Vote (as hereinafter defined)). This Agreement has been duly
and validly executed and delivered by each of Parent and the Operating Company
and, assuming the due authorization, execution and delivery hereof by the
Company, constitutes a valid, legal and binding agreement of each of Parent and
the Operating Company, enforceable against each of Parent and the Operating
Company in accordance with its terms.
(b) The Boards of Directors of Parent (the "PARENT BOARD") and the
Operating Company and Parent as the sole stockholder of the Operating Company
have duly and validly authorized the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and taken all
corporate actions required to be taken by such Boards of Directors and Parent as
the sole stockholder of the Operating Company for the consummation of the
transactions. The affirmative approval of the holders of Parent Common Stock
representing a majority vote of stockholders present at the Parent Stockholders
Meeting (as hereinafter defined) (the "PARENT REQUISITE VOTE") is the only vote
of the holders of any class or series of capital stock of Parent necessary to
approve the Share Issuance.
SECTION 4.4 SEC Reports; Financial Statements. Parent has filed all
required forms, reports and documents with the SEC since January 1, 1996, each
of which has complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, each as in effect on the dates such
forms, reports and documents were filed. Parent has heretofore delivered to the
Company, in the form filed with the SEC (including any amendments thereto), (i)
its Annual Reports on Form 10-K for the fiscal year ended December 31, 1996,
1997 and 1998, (ii) all definitive proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held since January 1, 1996
and (iii) all other reports or registration statements filed by Parent with the
SEC since January 1, 1996 (the "PARENT SEC REPORTS"). None of such forms,
reports or documents, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained, when filed,
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Parent
included in the Parent SEC Reports complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto and fairly present, in conformity with GAAP on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments). Since
January 1, 1999, there has not been any change, or any application or request
for any change, by Parent or any of its subsidiaries in accounting principles,
methods or policies for financial accounting or Tax purposes.
40
SECTION 4.5 No Undisclosed Liabilities. Neither the Parent nor any of
its subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances known to Parent which could be expected to
result in such a liability or obligation, except (a) liabilities or obligations
reflected in the Parent SEC Reports filed prior to the date hereof, (b)
liabilities or obligations incurred in the ordinary course of business which do
not and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Parent and (c) liabilities or
obligations incurred in connection with the transactions contemplated hereby.
SECTION 4.6 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Reports filed prior to the date hereof or as set forth in
Section 4.6 of the Parent Disclosure Schedule, since December 31, 1998 (a) the
businesses of the Parent and its Subsidiaries have been conducted in the
ordinary course consistent with past practice, and (b) there has not been any
event, change, occurrence or development that has had, or is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on the
Parent (other than any event, occurrence, development or state of circumstances
or facts resulting primarily from (i) changes in general economic conditions or
(ii) events or developments generally affecting the industry in which the Parent
and its subsidiaries operate).
SECTION 4.7 Information Supplied. None of the information supplied or
to be supplied by Parent or the Operating Company for inclusion or incorporation
by reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(ii) the Proxy Statement will, at the date mailed to stockholders and at the
times of the Company Stockholder Meeting and the Parent Stockholder 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. If at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its subsidiaries should occur which
is required to be described in an amendment of, or a supplement to, the S-4 or
the Proxy Statement, Parent shall promptly so advise the Company and such event
shall be so described, and such amendment or supplement (which the Company shall
have a reasonable opportunity to review) shall be promptly filed with the SEC
and, as required by Law, disseminated to the stockholders of Parent. The S-4
and, insofar as it relates to the Parent Stockholder Meeting, the Proxy
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the Exchange Act, respectively, and the respective rules
and regulations thereunder.
SECTION 4.8 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky Laws, the HSR Act, the Insurance Departments,
the filing and recordation of
41
certificates of merger as required by the DGCL and the OGCL and as otherwise set
forth in Section 4.8 to the Parent Disclosure Schedule (the "PARENT REQUIRED
APPROVALS"), no filing with or notice to, and no permit, authorization, consent
or approval of, any Governmental Entity is necessary for the execution and
delivery by Parent or the Operating Company of this Agreement or the
consummation by Parent or the Operating Company of the transactions contemplated
hereby, except (other than in respect of those to be obtained from Insurance
Departments) where the failure to obtain such permits, authorizations, consents
or approvals or to make such filings or give such notice do not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent. Neither the execution, delivery and performance of
this Agreement by Parent or the Operating Company nor the consummation by Parent
or the Operating Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
articles of incorporation or bylaws (or similar governing documents) of Parent
or the Operating Company or any of Parent's subsidiaries, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or the Operating
Company or any of Parent's subsidiaries is a party or by which any of them or
any of their respective properties or assets may be bound (collectively, the
"PARENT AND OPERATING COMPANY AGREEMENTS" or (iii) violate any Law applicable to
Parent or the Operating Company or any of Parent's subsidiaries or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent. Section 4.8 of the Parent Disclosure Schedule sets forth a list of all
material third party consents and approvals required to be obtained under the
Parent and Operating Company Agreements prior to the consummation of the
transactions contemplated by this Agreement.
SECTION 4.9 Compliance with Applicable Laws. Except as and to the
extent publicly disclosed by Parent in the Parent SEC Reports filed prior to the
date hereof, the businesses of Parent and its subsidiaries are not being
conducted in violation of any Law, ordinance or regulation of any Governmental
Entity, except for violations or possible violations which do not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent. To Parent's knowledge, no investigation or review by
any Governmental Entity with respect to Parent or its subsidiaries is pending or
threatened, nor, to Parent's knowledge, has any Governmental Entity indicated an
intention to conduct the same, other than, in each case, those which Parent
reasonably believes do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
SECTION 4.10 Absence of Questionable Payments. Neither Parent nor any
of its subsidiaries nor, to Parent's knowledge, any director, officer, agent,
employee or other person acting on behalf of Parent or any of its subsidiaries,
has used any corporate or other funds for unlawful contributions, payments,
gifts, or entertainment, or
42
made any unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or unrecorded
funds in violation of Section 30A of the Exchange Act. Neither Parent nor any of
its subsidiaries nor, to Parent's knowledge, any director, officer, agent,
employee or other person acting on behalf of Parent or any of its subsidiaries,
has accepted or received any unlawful contributions, payments, gifts, or
expenditures. To Parent's knowledge, Parent and each of its subsidiaries which
is required to file reports pursuant to Section 12 or 15(d) of the Exchange Act
is in compliance with the provisions of Section 13(b) of the Exchange Act.
SECTION 4.11 Year 2000. Parent and its subsidiaries have developed
and are executing a plan with respect to Year 2000 readiness (the "PARENT YEAR
2000 PLAN"). Parent has provided the Company with a copy of the Parent Year 2000
Plan and has provided a report on the status of the Parent Year 2000 Plan
through April 30, 1999 that is accurate in all material respects. The Parent
Year 2000 Plan addresses the Year 2000 issues which, to the knowledge of Parent,
are material to Parent and its subsidiaries, including internal information
systems and process control risks, embedded circuitry risks and third party
risks.
SECTION 4.12 Opinion of Financial Advisor. The Board of Directors of
the Parent has received the opinion of Credit Suisse First Boston Corporation,
dated the date of this Agreement, to the effect that, as of such date, the
Common Merger Consideration is fair to the Parent from a financial point of view
and, as of the date hereof, such opinion has not been withdrawn or modified in a
manner adverse to Parent.
SECTION 4.13 Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston Corporation) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent or the Operating Company or any of their affiliates.
SECTION 4.14 Accounting Matters; Tax Treatment. Neither Parent nor
any of its affiliates has taken or agreed to take any action or is aware of any
fact or circumstance that would (a) prevent the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
(except that no representation is made to the effect that the transactions
contemplated by this Agreement will so qualify) or (b) prevent the Merger from
qualifying as a reorganization under Section 368 of the Code. Parent has not
failed to bring to the attention of the Company any actions, agreements or
understandings, whether written or oral, that would be reasonably likely to
prevent Parent from accounting for the Merger as a "pooling of interests" under
APB 16 and the applicable SEC rules and regulations.
43
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, the Company will, and will cause each of its subsidiaries to,
conduct its operations in the ordinary and usual course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this Agreement,
seek to preserve intact its current business organizations, seek to keep
available the service of its current officers and employees and seek to preserve
its relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired at
the Effective Time. Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement or in Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, neither the Company
nor any of its subsidiaries will, without the prior written consent of Parent,
(a) amend its certificate of incorporation or bylaws (or other
similar governing instrument) or amend, modify or terminate the Company Rights
Agreement;
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights), except for the issuance or sale of Shares
pursuant to Company Stock Options outstanding on the date of this Agreement or
the issuance of Shares pursuant to stock unit grants outstanding on the date of
this Agreement under the 1995 Directors' Stock Purchase Plan, pursuant to the
Incentive Program (pursuant to irrevocable elections made prior to the date of
this Agreement) or upon conversion of the Company Preferred Stock outstanding on
the date of this Agreement or the issuance of stock options under the Incentive
Program (pursuant to irrevocable elections made prior to the date of this
Agreement);
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock except the declaration and payment of regular quarterly cash dividends on
the Company Preferred Stock in accordance with their respective terms with usual
record and payments dates in accordance with past dividend practice; (iii) make
any other actual, constructive or deemed distribution in respect of any shares
of its capital stock or otherwise make any payments to stockholders in their
capacity as such; or (iv) redeem, repurchase or otherwise acquire any of its
securities or any securities of any of its subsidiaries (including redeeming any
Rights);
44
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with past practice and in
amounts not material to the Company and its subsidiaries, taken as a whole, and
except for obligations of the wholly owned subsidiaries of the Company; (iii)
make any loans, advances or capital contributions to, or investments in, any
other person (other than to the wholly owned subsidiaries of the Company or
customary loans or advances to employees in the ordinary and usual course of
business consistent with past practice and in amounts not material to the maker
of such loan or advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company or its subsidiaries; or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to be created any
material Lien thereupon;
(g) except as may be required by Law, enter into, adopt, amend,
extend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, labor, collective bargaining, employment,
severance or other employee benefit agreement, trust, plan, fund, award or other
arrangement for the benefit or welfare of any director, officer or employee in
any manner, or increase in any manner the compensation or fringe benefits of any
director, officer or (except as required under agreements existing on the date
hereof and except for increases in compensation, bonus or other benefits payable
to employees of the Company or any of its subsidiaries in the ordinary and usual
course of business consistent with past practice or merit increases in salaries
of employees at regularly scheduled times in customary amounts consistent with
past practices) employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Company and its subsidiaries
taken as a whole, enter into any commitment or transaction outside the ordinary
and usual course of business consistent with past practice or grant any
exclusive distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it and,
except as may be
45
required as a result of a change in law or statutory accounting practices of New
York or Wisconsin, as applicable, permit any Insurance Subsidiary to make, any
material change in the reinsurance, claim processing and payment, reserving,
financial or accounting practices or policies of any Insurance Subsidiary;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(k) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any material contract or
agreement, other than in the ordinary and usual course of business consistent
with past practice or amend in any material respect any of the Material
Contracts or the agreements referred to in Section 3.18; (iii) authorize any new
capital expenditure or expenditures which, individually, is in excess of $10
million or, in the aggregate, are in excess of $67 million; or (iv) enter into
or amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability in excess of amounts reserved therefor on the consolidated balance
sheet of the Company as at the Audit Date, or change (or make a request to any
Taxing authority to change) any aspect of its method of accounting for Tax
purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in, or contemplated by, the Company's consolidated
balance sheet as of March 31, 1999 (or the notes thereto) as included in the
Company SEC Reports, or incurred in the ordinary and usual course of business
consistent with past practice;
(n) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party;
(o) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(p) take any action (including any action otherwise permitted by this
Section 5.1) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368(a) of the Code;
46
(q) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any successor thereto, from
engaging or competing in any line of business or in any geographic area;
(r) permit any Insurance Subsidiary to enter into or modify any
reinsurance or retrocession agreement by any Insurance Subsidiary other than in
the ordinary course of business consistent with past practice, or terminate or
commute any reinsurance or retrocession agreement legally carried on the books
of the Insurance Subsidiary at the time of such termination or commutation;
(s) enter into any new agreement, commitment or understanding with
the Insurance Departments, or amend any existing agreement, commitment or
understanding with the Insurance Departments, including the Guaranty; or
(t) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(s) or any action
which would (y) make any of the representations or warranties of the Company
contained in this Agreement (i) which are qualified as to materiality untrue or
incorrect or (ii) which are not so qualified untrue or incorrect in any material
respect or (z) result in any of the conditions to the Merger set forth in
Article VII hereof not being satisfied.
SECTION 5.2 Conduct of Business of Parent. Except as otherwise
expressly provided in this Agreement or as set forth in Section 5.2 of the
Parent Disclosure Schedule, prior to the Effective Time, neither Parent nor any
of its subsidiaries will, without the prior written consent of the Company:
(a) amend its certificate of incorporation (or other similar
governing instrument) in any manner that would be materially adverse to the
holders of Parent Common Stock;
(b) (i) declare, set aside or pay any dividend or other distribution
in respect of its capital stock except the declaration and payment of regular
quarterly cash dividends not in excess of $0.125 per share of Parent Common
Stock, (ii) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such or (iii) redeem, repurchase or otherwise
acquire any shares of Parent Common Stock;
(c) take any action (including any action otherwise permitted by this
Section 5.2) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368(a) of the Code; or
(d) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Section 2.1(e) or Sections 5.2(a) through 5.2(c)
or any action
47
which (y) would make the representations or warranties of Parent and the
Operating Company in this Agreement (i) which are qualified as to materiality
untrue or incorrect or (ii) which are not so qualified untrue in any material
respect or (z) result in any of the conditions to the Merger set forth in
Article VII hereof not being satisfied.
SECTION 5.3 Access to Information.
(a) Between the date hereof and the Effective Time, the Company will
give Parent and the Operating Company and their authorized representatives
(including counsel, financial advisors and auditors) reasonable access during
normal business hours to all employees, plants, offices, warehouses and other
facilities and to all books and records of the Company and its subsidiaries,
will permit Parent and the Operating Company to make such inspections as Parent
and the Operating Company may reasonably require and will cause the Company's
officers and those of its subsidiaries to furnish Parent and the Operating
Company with such financial and operating data and other information with
respect to the business, properties and personnel of the Company and its
subsidiaries as Parent or the Operating Company may from time to time reasonably
request, provided that no investigation pursuant to this Section 5.3(a) shall
affect or be deemed to modify any of the representations or warranties made by
the Company in this Agreement. The Company will keep Parent and the Operating
Company fully informed, and consult with Parent and the Operating Company on a
regular basis concerning, all matters pertaining to the Company's collective
bargaining agreements and any and all negotiations in connection therewith.
(b) Between the date hereof and the Effective Time, Parent and the
Operating Company will give the Company and its authorized representatives
(including counsel, financial advisors and auditors) reasonable access during
normal business hours to all employees, plants, offices, warehouses and other
facilities and to all books and records of Parent and its subsidiaries, will
permit the Company to make such inspections as the Company may reasonably
require and will cause Parent's officers and those of its subsidiaries to
furnish the Company with such financial and operating data and other information
with respect to the business, properties and personnel of Parent and its
subsidiaries as the Company may from time to time reasonably request, provided
that no investigation pursuant to this Section 5.3(b) shall affect or be deemed
to modify any of the representations or warranties made by Parent or the
Operating Company in this Agreement.
(c) Between the date hereof and the Effective Time, the Company shall
furnish to Parent and the Operating Company, (i) concurrently with the
deliveries thereof to management or the Company Board, such monthly financial
statements and data as are regularly prepared for distribution to Company
management or the Company Board and (ii) at the earliest time they are
available, such quarterly and annual financial statements as are prepared for
the Company's SEC filings, which (in the case of this clause (ii)), shall be in
accordance with the books and records of the Company.
48
(d) Each of Parent and the Operating Company will hold and will cause
its authorized representatives to hold in confidence all documents and
information concerning the Company and its subsidiaries furnished to Parent or
the Operating Company in connection with the transactions contemplated by this
Agreement pursuant to the terms of that certain Confidentiality Agreement
entered into between the Company and Parent dated April 23, 1999 (the
"CONFIDENTIALITY AGREEMENT").
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement. Parent and
the Company will, as promptly as practicable, jointly prepare and file with the
SEC the Proxy Statement in connection with the vote of the stockholders of the
Company with respect to the Merger and the vote of the stockholders of Parent
with respect to the Share Issuance. Parent will, as promptly as practicable,
prepare, following receipt of notification from the SEC that it has no further
comments on the Proxy Statement, and file with the SEC the S-4, containing a
joint proxy statement/prospectus, which shall also include all information
required in order for such proxy statement to constitute an Acquiring Person
Statement (as defined by Section 1701.01 (BB) of the OGCL), and forms of proxy,
in connection with the registration under the Securities Act of the shares of
Parent Common Stock issuable upon conversion of the Shares and the other
transactions contemplated hereby. Parent and the Company will, and will cause
their accountants and lawyers to, use all reasonable best efforts to have or
cause the S-4 declared effective as promptly as practicable after filing with
the SEC, including, without limitation, causing their accountants to deliver
necessary or required instruments such as opinions, consents and certificates,
and will take any other action required or necessary to be taken under federal
or state securities Laws or otherwise in connection with the registration
process (other than qualifying to do business in any jurisdiction which it is
not now so qualified or to file a general consent to service of process in any
jurisdiction). The Company and Parent shall, as promptly as practicable after
the receipt thereof, provide to the other party copies of any written comments
and advise the other party of any oral comments, with respect to the Proxy
Statement or the S-4 received from the staff of the SEC. The Company will
provide Parent with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement prior to filing with the SEC and
will provide Parent with a copy of all such filings with the SEC. Each of Parent
and the Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to its stockholders (including, in the case of the
Company, the holders of the Company Preferred Stock) at the earliest practicable
date.
SECTION 6.2 Letter of Accountants.
(a) The Company shall use all reasonable best efforts to cause to be
delivered to Parent a letter of Deloitte & Touche LLP, the Company's independent
auditors, dated a date within two business days before the date on which the S-4
shall become effective and addressed to Parent, in form and substance reasonably
satisfactory
49
to Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4.
(b) Parent shall use all reasonable best efforts to cause to be
delivered to the Company a letter of Deloitte & Touche LLP, Parent's independent
auditors, dated a date within two business days before the date on which the S-4
shall become effective and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
SECTION 6.3 Meetings.
(a) The Company shall take all lawful action to (i) cause a special
meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be duly
called and held as soon as practicable after the date of this Agreement for the
purpose of voting on the approval and adoption of this Agreement and (ii)
solicit proxies from its stockholders to obtain the Company Requisite Vote for
the approval and adoption of this Agreement. The Company Board shall recommend
approval and adoption of this Agreement and the Merger by the Company's
stockholders and, except as permitted by Section 6.5, the Company Board shall
not withdraw, amend or modify in a manner adverse to Parent such recommendation
(or announce publicly its intention to do so).
(b) Parent shall take all lawful action to (i) cause a special
meeting of its stockholders (the "PARENT STOCKHOLDER MEETING") to be duly called
and held as soon as practicable after the date of this Agreement for the purpose
of voting on the approval of the Share Issuance and (ii) solicit proxies from
its stockholders to obtain the Parent Requisite Vote. The Parent Board shall
recommend approval of the Share Issuance by Parent's stockholders and, except as
required to comply with their fiduciary duty under applicable Law, the Parent
Board shall not be permitted to withdraw, amend or modify in a manner adverse to
the Company such recommendation (or announce publicly its intention to do so).
SECTION 6.4 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate the Merger and the other transactions contemplated
by this Agreement. In furtherance and not in limitation of the foregoing, each
party hereto agrees to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable and in any event within ten (10) business days
of the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and use its reasonable best efforts to take, or cause to be taken, all other
actions consistent with this Section 6.4 necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable.
50
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust Law (as hereunder defined), use its reasonable best
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party; and (ii) keep the other
party informed in all material respects of any material communication received
by such party from, or given by such party to, the Federal Trade Commission (the
"FTC"), the Antitrust Division of the Department of Justice (the "DOJ") or any
other Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby; and (iii) permit the other party to review
any material communication given by it to, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any such other
Governmental Entity or, in connection with any proceeding by a private party,
with any other person, and to the extent permitted by the FTC, the DOJ or such
other applicable Governmental Entity or other person, give the other party the
opportunity to attend and participate in such meetings and conferences. For
purposes of this Agreement, "ANTITRUST LAW" means the ▇▇▇▇▇▇▇ Act, as amended,
the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other Laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or restraint
of trade or lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.4(a) and 6.4(b), each of Parent and the Company
shall use its reasonable best efforts to resolve such objections if any, as may
be asserted a Governmental Entity or other person with respect to the
transactions contemplated hereby under any Antitrust Law. In connection with the
foregoing, if any administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of any
Antitrust Law, each of Parent and the Company shall cooperate in all respects
with each other and use its respective reasonable best efforts to contest and
resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 6.4 shall (i) limit a party's right to terminate this Agreement
pursuant to Section 8.2 (a), (d) or (e) so long as such party has up to then
complied in all material respects with its obligations under this Section 6.4,
or (ii) require Parent or the Operating Company to (x) enter into any
"hold-separate" agreement or other agreement with respect to the disposition of
any assets or businesses of the Parent or any of its subsidiaries or the Company
or any of its subsidiaries in order to obtain clearance from the Federal Trade
Commission or the Antitrust Division of the Department of Justice or any state
antitrust or competition authorities to proceed with the consummation of the
transactions contemplated hereby; (y) consummate the transactions
51
contemplated hereby in the event that any consent, approval or authorization of
any Governmental Entity obtained or sought to be obtained in connection with
this Agreement is conditioned upon the imposition of any other significant
restrictions upon, or the making of any material accommodation (financial or
otherwise) in respect of the transactions contemplated hereby or the conduct of
the business of the Surviving Corporation or the Parent (including any agreement
not to compete in any geographic area or line of business) or results, or would
result in, the abrogation or diminishment of any authority or license granted by
any Governmental Entity; or (z) enter into negotiations with any labor
organization representing employees of the Company or any of its subsidiaries as
a condition to consummation of the transactions contemplated by this Agreement.
SECTION 6.5 No Solicitation; Acquisition Proposals.
(a) From the date hereof until the termination hereof, and except as
expressly permitted by the following provisions of this Section 6.5, the Company
will not, nor will it permit any of its subsidiaries to, nor will it authorize
or permit any officer, director or employee of or any investment banker,
attorney, accountant or other advisor or representative of, the Company or any
of its subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any Acquisition Proposal (as defined in Section
9.11(a)), (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to the Company or
any of its subsidiaries, or take any other action to facilitate, any Acquisition
Proposal or any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal or (iii) enter into
any agreement with respect to an Acquisition Proposal (other than a
confidentiality agreement as described below); provided, however, that nothing
contained in this Section 6.5(a) shall prohibit the Company Board from, prior to
receipt of the Company Requisite Vote, furnishing information to, or entering
into discussions or negotiations with, any person that makes an unsolicited bona
fide written Acquisition Proposal if, and only to the extent that (A) the
Company Board, after considering applicable provisions of state law and after
consultation with outside legal counsel, determines in good faith that such
action is necessary for the Company Board to discharge properly its fiduciary
duties to the Company's stockholders under applicable Law, (B) the Company Board
determines in good faith that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated taking into account all legal, financial,
regulatory and other aspects of the proposal and the person making the proposal,
and believes in good faith, after consultation with an independent, nationally
recognized financial advisor and after taking into account the strategic
benefits to be derived from the Merger and the long term prospects of Parent and
its subsidiaries, would, if consummated, result in a transaction more favorable
to the Company's stockholders from a financial point of view than the Merger,
and for which the Company Board determines in its good faith judgment (after
such consultation) that financing, to the event required, is then committed or
reasonably available (any such more favorable Acquisition Proposal being
referred to herein as a "SUPERIOR PROPOSAL"), and (C) prior to taking such
action, the Company (x) provides reasonable notice to Parent to the effect that
it is taking such action and (y) receives from
52
such person an executed confidentiality/standstill agreement in reasonably
customary form and in any event containing terms at least as stringent in all
material respects as those contained in the Confidentiality Agreement between
Parent and the Company as of the date hereof. Prior to providing any information
to or entering into discussions or negotiations with any person in connection
with an Acquisition Proposal by such person, the Company shall notify Parent of
any Acquisition Proposal (including, without limitation, the material terms and
conditions thereof or amendments or supplements thereto and the identity of the
person making it) as promptly as practicable (but in no case later than 24
hours) after its receipt thereof, and shall thereafter inform Parent on a prompt
basis of the status of any discussions or negotiations with such a third party,
and any material changes to the terms and conditions of such Acquisition
Proposal. Immediately after the execution and delivery of this Agreement, the
Company will, and will cause its subsidiaries and affiliates, and their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents to, cease and terminate any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any possible Acquisition Proposal. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.5(a).
(b) From the date hereof until the termination hereof, the Company
will not (A) amend or grant any waiver or release under any standstill or
similar agreement with respect to any class of equity securities of the Company,
or (B) (except as expressly contemplated by this Agreement) amend, or approve
any transaction or redeem rights under, the Company Rights Agreement.
(c) Except as expressly permitted by this Section 6.5 or in
connection with its termination of this Agreement in accordance with the terms
and conditions of Section 8.3(a), the Company Board will not withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Parent, its
approval or recommendation of this Agreement or the Merger unless (i) the
Company has complied with the terms of Section 6.5(a), (ii) a Superior Proposal
is pending at the time the Company Board determines to take any such action,
(iii) the Company Board, after considering applicable provisions of state law
and after consultation with outside legal counsel, determines in good faith that
such action is necessary for the Company Board to discharge properly its
fiduciary duties to the Company's stockholders under applicable Law and (iv) the
Company shall have delivered to Parent a prior written notice advising Parent
that it intends to take such action and describing its reasons for taking such
action (such notice to be delivered not less than two days prior to the time
such action is taken); provided, however, the Company Board may not approve or
recommend (and in connection therewith, withdraw or modify its approval or
recommendation of this Agreement or the Merger) an Acquisition Proposal unless
such an Acquisition Proposal is a Superior Proposal (and the Company shall have
first complied with its obligations set forth in Section 8.3(a) and the time
period referred to in the last sentence of Section 8.3(a) has expired) and
unless it shall have first consulted with outside legal counsel, and have
determined that such action is necessary for the Company Board to comply with
its fiduciary duties to the Company's stockholders. Nothing contained in this
Section 6.5 shall prohibit the Company from
53
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith judgment of the Company Board,
after considering applicable provisions of state law and after consultation with
outside legal counsel is required under applicable Law; provided, that except in
accordance with this Section 6.5(c) or in connection with its termination of
this Agreement in accordance with the terms and conditions of Section 8.3(a),
the Board of Directors of the Company shall not withdraw or modify, or propose
to withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal.
(d) Notwithstanding anything contained in this Agreement to the
contrary, any action by the Company Board permitted by, and taken in accordance
with, this Section 6.5 shall not constitute a breach of this Agreement by the
Company. Nothing in this Section 6.5 shall (i) permit the Company to terminate
this Agreement (except as provided in Article VIII hereof) or (ii) affect any
other obligations of the Company under this Agreement.
SECTION 6.6 Public Announcements. Each of Parent, the Operating
Company and the Company will consult with one another before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation, the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law or by obligations pursuant to any listing agreement with the New York Stock
Exchange, as determined by Parent, the Operating Company or the Company, as the
case may be.
SECTION 6.7 Indemnification; Directors' and Officers' Insurance.
(a) The Parent agrees that all rights to exculpation and
indemnification for acts or omissions occurring prior to the Effective Time now
existing in favor of the current or former directors or officers (the
"INDEMNIFIED PARTIES") of the Company as provided in its articles of
incorporation or code of regulations or in any agreement between the Company and
any of the Indemnified Parties shall survive the Merger and shall continue in
full force and effect in accordance with their terms for a period of six years
following the Effective Time, and accordingly during such period, the Surviving
Corporation shall indemnify the Indemnified Parties to the same extent as such
Indemnified Parties are entitled to indemnification pursuant to the preceding
sentence.
(b) For a period of three (3) years after the Effective Time, Parent
shall cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by the Company for the benefit of those persons
who are covered by such policies at the Effective Time (or Parent may substitute
therefor policies of at least the same coverage with respect to matters
occurring prior to the Effective Time), to the extent that such liability
insurance can be maintained annually at a cost to Parent not greater than 250
percent of the annual premium (the "CURRENT PREMIUM") for the
54
current Company directors' and officers' liability insurance; provided that if
such insurance cannot be so maintained or obtained at such costs, Parent shall
maintain or obtain as much of such insurance as can be so maintained or obtained
at a cost equal to 250 percent of the current annual premiums of the Company for
such insurance. The Company represents and warrants to Parent that the Current
Premium is $315,000.
(c) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of the Company and its subsidiaries
with respect to their activities as such prior to the Effective Time, as
provided in the Company's article of incorporation or code of regulations, in
effect on the date thereof or otherwise in effect on the date hereof, shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time.
(d) The rights of each Indemnified Party under this Section 6.7 are
intended to benefit, and shall be enforceable by, each Indemnified Party.
SECTION 6.8 Notification of Certain Matters. The Company shall, upon
obtaining knowledge of any of the following, give prompt notice to Parent and
the Operating Company, and Parent and the Operating Company shall, upon
obtaining knowledge of any of the following, give prompt notice to the Company,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement, which is qualified as to materiality, to be untrue
or inaccurate, or any representation or warranty not so qualified, to be untrue
or inaccurate in any material respect at or prior to the Effective Time, (ii)
any material failure of the Company, Parent or the Operating Company, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder, (iii) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any condition to the obligations of any party to the effect of
the transactions contemplated hereby not to be satisfied, (iv) any notice of, or
other communication relating to, a default or event which, with notice or lapse
of time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any contract or agreement material to the financial condition,
properties, businesses, results of operations or prospects of it and its
subsidiaries taken as a whole to which it or any of its subsidiaries is a party
or is subject, (v) any notice or other communication from any Governmental
Entity in connection with the Merger or Guaranty, (vi) any actions, suits,
claims, investigations or other proceedings (or communications indicating that
the same may be contemplated) commenced or threatened against the Company or any
of its subsidiaries which, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 3.20 or which relate to
the consummation of the Merger, (vii) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, or (viii)
any Material Adverse Effect in their respective financial condition, properties,
businesses, results of operations or prospects, taken as a whole; provided,
55
however, that the delivery of any notice pursuant to this Section 6.8 shall not
cure such breach or non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.9 Pooling.
(a) The Company shall use its reasonable best efforts to cause to be
delivered to Parent letters from its independent auditors, Deloitte & Touche
LLP, dated as of the date the S-4 is declared effective and dated as of the
Closing Date, stating that the accounting of the Merger as a "pooling of
interests" under Opinion 16 of the Accounting Principles Board ("APB 16") and
the applicable SEC rules and regulations is appropriate if the Merger is
consummated as contemplated by this Agreement (it being understood and agreed
that the delivery of such letters shall not constitute a condition to the
parties' obligations to consummate the transactions contemplated by this
Agreement).
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company letters from its independent auditors, Deloitte &
Touche LLP, dated as of the date the S-4 is declared effective and dated as of
the Closing Date, stating that the accounting of the Merger as a "pooling of
interests" under APB 16 and the applicable SEC rules and regulations is
appropriate if the Merger is consummated as contemplated by this Agreement (it
being understood and agreed that the delivery of such letters shall not
constitute a condition to the parties' obligations to consummate the
transactions contemplated by this Agreement).
(c) Each party hereto shall use its reasonable best efforts to take
such actions (including seeking necessary waivers from employees under Company
benefit plans or agreements with the Company) as are within its reasonable
control so that the Merger will be accounted for as a "pooling of interests"
under APB 16 and the applicable SEC rules and regulations (it being understood
and agreed that the qualification of the Merger as a "pooling of interests"
shall not constitute a condition to the parties' obligations to consummate the
transactions contemplated by this Agreement); provided, that the parties shall
have no further obligations under this Section 6.9(c) following the date the S-4
is declared effective if Parent's accountants do not deliver the letter
contemplated by Section 6.9(b) as of the date the S-4 is declared effective.
SECTION 6.10 Tax-Free Reorganization Treatment. The Company, Parent
and the Operating Company shall execute and deliver to ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel
to the Company, and Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to Parent and the
Operating Company, certificates substantially in the forms agreed to on or prior
to the date hereof at such time or times as reasonably requested by such law
firms in connection with their respective deliveries of opinions with respect to
the transactions contemplated hereby. Prior to the Effective Time, none of the
Company, Parent or the Operating Company shall take or cause to be taken any
action which would cause to be untrue (or fail to take or cause not to be taken
any action which would cause to be untrue) any of the representations in such
certificates.
56
SECTION 6.11 Employee Matters
(a) Parent will cause the Surviving Corporation to honor the
obligations of the Company or any of its subsidiaries under the provisions of
all employment, consulting, termination, severance, change in control and
indemnification agreements disclosed in Section 6.11 of the Company Disclosure
Schedule between and among the Company or any of its subsidiaries and any
current or former officer, director, consultant or employee of the Company or
any of its subsidiaries; provided, however, that nothing in this Agreement shall
preclude Parent or any of its affiliates from having the right to terminate the
employment of any employee of the Company or any of its subsidiaries, with or
without cause, or amend or terminate any Employee Benefit Plan, in each case
after the Effective Time.
(b) The Company Board shall have adopted prior to the Closing Date an
amendment to each of the 1993 Long-Term Incentive Plan of Armco Inc. and the
1996 Incentive Plan of Armco Inc. in the form attached hereto as Schedule
6.11(b).
SECTION 6.12 Affiliate Letters. Section 6.12 of the Company
Disclosure Schedule (which shall be delivered not later than June 4, 1999) will
set forth a list of all persons who are, and all persons who to the Company's
knowledge will be at the Closing Date, "affiliates" of the Company for purposes
of Rule 145 under the Securities Act or for purposes of qualifying the Merger
for "pooling of interests" accounting treatment under APB 16 and applicable SEC
rules, and Section 6.12 of the Parent Disclosure Schedule (which shall be
delivered not later than June 4, 1999) will set forth a list of all persons who
are, and all persons who to Parent's knowledge will be at the Closing Date,
"affiliates" of Parent for purposes of qualifying the Merger for "pooling of
interests" under APB 16 and the applicable SEC rules and regulations. The
Company and Parent will each respectively cause such lists to be updated
promptly through the Closing Date. Not later than 45 days prior to the date of
the Company Stockholder Meeting, the Company shall cause its "affiliates" to
deliver to Parent a written agreement substantially in the form attached as
Exhibit A, and Parent shall cause its "affiliates" to deliver to the Company a
written agreement substantially in the form attached as Exhibit B.
SECTION 6.13 SEC Filings.
(a) The Company shall furnish to the Parent copies of all reports,
proxy statements and prospectuses of the type referred to in Section 3.4 which
it files with the SEC on or after the date hereof, and the Company represents
and warrants that as of the respective dates thereof, such reports will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of operations
and cash
57
flows or other information included therein for the periods or as of the date
then ended (subject, in the case of the interim financial statements, to normal,
recurring year-end adjustments), in each the case of the interim financial
statements, to normal, recurring year-end adjustments), in each case in
accordance with past practice and GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto.)
(b) Parent shall furnish to the Company copies of all reports, proxy
statements and prospectuses of the type referred to in Section 4.4 which it
files with the SEC on or after the date hereof, and Parent represents and
warrants that as of the respective dates thereof, such reports will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present the financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the results of operations
and cash flows or other information included therein for the periods or as of
the date then ended (subject, in the case of the interim financial statements,
to normal, recurring year-end adjustments), in each case in accordance with past
practice and GAAP consistently applied during the periods involved (except as
otherwise disclosed in the notes thereto).
SECTION 6.14 Fees and Expenses. Whether or not the Merger is
consummated, all Expenses (as hereinafter defined) incurred in connection with
this Agreement, and the transactions contemplated hereby shall be paid by the
party incurring such Expenses, except (a) Expenses incurred in connection with
the filing, printing and mailing of the Proxy Statement and the S-4, which shall
be shared equally by the Company and Parent, and (b), if applicable, as provided
in Section 8.5. As used in this Agreement, "EXPENSES" includes all out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with, or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, filing, printing and mailing of the Proxy Statement
and the S-4 and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby.
SECTION 6.15 Listing of Stock. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in connection with the
Merger to be approved for listing on the NYSE on or prior to the Closing Date,
subject to official notice of issuance.
SECTION 6.16 Antitakeover Statutes. If any Takeover Statute is or may
become applicable to the Merger, each of Parent and Company shall take such
actions as are necessary so that the transactions contemplated by this Agreement
may be
58
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any Takeover Statute on
the Merger.
ISECTION 6.17 Combined Operations. Parent agrees to use its
reasonable best efforts to make publicly available, promptly following the
Closing, consolidated financial results (including combined sales and net
income) covering at least 30 days of post-merger combined operations of Parent
and the Company, pursuant to the requirements of APB 16.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
(a) This Agreement shall have been approved and adopted by the
Company Requisite Vote and the Share Issuance shall have been approved by the
Parent Requisite Vote;
(b) Any waiting period applicable to the Merger under the HSR Act
shall have expired or early termination thereof shall have been granted without
limitation, restriction or condition;
(c) There shall not be in effect any Law of any Governmental Entity
of competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or restriction that has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company (or an effect on Parent and its subsidiaries that,
were such effect applied to the Company and its subsidiaries, has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company) and no Governmental Entity shall have instituted
any proceeding which continues to be pending seeking any such Law.
(d) The S-4 shall have been declared effective by the SEC and shall
be effective at the Effective Time, and no stop order suspending effectiveness
shall have been issued, no action, suit, proceeding or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state securities Laws or the
Securities Act or Exchange Act relating to the issuance or trading of the Parent
Common Stock shall have been received.
(e) The Parent Common Stock required to be issued hereunder shall
have been approved for listing on the NYSE, subject only to official notice of
issuance.
59
SECTION 7.2 Conditions to the Obligations of the Parent and the
Operating Company. The respective obligations of Parent and the Operating
Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment at or prior to the Effective Time of each of the
following additional conditions, any or all of which may be waived in whole or
part by Parent and the Operating Company, as the case may be, to the extent
permitted by applicable Law:
(a) The representations and warranties of the Company contained
herein or otherwise required to be made after the date hereof in a writing
expressly referred to herein by or on behalf of the Company pursuant to this
Agreement, to the extent qualified by materiality or Material Adverse Effect,
shall have been true and, to the extent not qualified by materiality or Material
Adverse Effect, shall have been true in all material respects, in each case when
made and on and as of the Closing Date as though made on and as of the Closing
Date (except for representations and warranties made as of a specified date,
which need be true, or true in all material respects, as the case may be, only
as of the specified date).
(b) The Company shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
(c) The Company shall have delivered to Parent a certificate, dated
the date of the Closing, signed by the President or any Vice President of the
Company (but without personal liability thereto), certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b).
(d) Parent shall have received an opinion of Weil, Gotshal & ▇▇▇▇▇▇
LLP, dated the Effective Time, based on the representations of Parent, the
Operating Company and the Company, referred to in Section 6.10, to the effect
that the Merger will be treated for Federal income Tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
(e) (i) All authorizations, consents or approvals of a Governmental
Entity (other than those specified in Section 7.1(b) hereof) required in
connection with the execution and delivery of this Agreement and the performance
of the obligations hereunder shall have been made or obtained, without any
limitation, restriction or condition that has or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
(or an effect on Parent and its subsidiaries that, were such effect applied to
the Company and its subsidiaries, would have or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company), except for such authorizations, consents or approvals, the failure of
which to have been made or obtained does not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company (or an effect on Parent and its subsidiaries that, were such effect
applied to the Company and its subsidiaries, would have or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company).
60
(ii) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding (A) seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or seeking to obtain from the Company or Parent any damages that are
material in relation to the Company and its subsidiaries taken as a whole or
Parent and its subsidiaries taken as a whole, as applicable, (B) seeking to (1)
prohibit or limit 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 and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as applicable, (2) 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 and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, as
applicable, as a result of the Merger or any of the other transactions
contemplated by this Agreement or (3) impose any other significant restrictions
upon, or the making of any material accommodation (financial or otherwise) in
respect of, the transactions contemplated hereby or the conduct of the business
of the Surviving Corporation or the Parent (including any agreement not to
compete in any geographic area or line of business), (C) seeking to impose
limitations on the ability of Parent to acquire or hold, or exercise full rights
of ownership of, any shares of capital stock of the Company or the Surviving
Corporation, including the right to vote the common stock of the Surviving
Corporation, on all matters properly presented to the stockholders of the
Surviving Corporation, (D) seeking to prohibit Parent and its subsidiaries from
effectively controlling in any material respect the business or operations of
the Company and its subsidiaries, taken as a whole, (E) which would result in
the abrogation or diminishment of any authority or license granted by any
Governmental Entity or (F) which otherwise could reasonably be expected to have
a Material Adverse Effect on the Company or Material Adverse Effect on Parent.
(iii) Parent, the Operating Company and the Company shall have
obtained from or filed with, as appropriate, the relevant Insurance Departments
such material consents, approvals, orders, authorizations, registrations,
declarations, permits or filings in connection with this Agreement and the
transactions contemplated by this Agreement for the conduct of their businesses
as currently conducted or as expected to be conducted. All orders, consents,
permits, authorizations, approvals, and waivers necessary to be obtained from
Insurance Departments for the consummation of the Closing of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect, in each case (A) without the abrogation or diminishment of the authority
or license currently held by any Insurance Subsidiary, or the imposition of
significant restrictions upon the transactions contemplated hereby or the
conduct of the business of such Insurance Subsidiaries, following the Effective
Time, (B) without any limitation, requirement or condition on Parent, the
Operating Company, the Company or any subsidiary of the Company (other than the
Insurance Subsidiaries), (C) without any limitation, requirement or condition on
the Insurance Subsidiaries (except as and to the extent any such limitation,
requirement or condition may exist on the date hereof in the Orders or as
described in Section 3.18(xi) of the Company Disclosure Schedule), (D) without
the imposition (either directly, indirectly or by virtue of the transactions
61
contemplated by this Agreement) on Parent or the Operating Company of any
guaranty relating to the obligations of any subsidiary of the Company,
including, without limitation, the Insurance Subsidiaries, and (E) without
requiring Parent, the Operating Company or the Company to vary the financial or
other terms of the transactions contemplated hereby.
(f) The Company shall have obtained (i) the consents and approvals
set forth in Sections 3.3 and 3.8 of the Company Disclosure Schedule and (ii)
the consent or approval of each person whose consent or approval shall be
required under any Material Contract, Real Property Lease or other obligation to
which the Company or any of its subsidiaries is a party, except those for which
the failure to obtain such consents or approvals does not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and would not prevent or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement.
(g) Not later than 45 days prior to the Company Stockholder Meeting,
Parent shall have received from Company's "affiliates" a written agreement
substantially in the form attached as Exhibit A.
(h) The Company Board shall have adopted the amendments to certain of
its incentive plans, as provided in Section 6.11(b).
SECTION 7.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any or all of which may be waived in whole or
in part by the Company to the extent permitted by applicable Law:
(a) The representations and warranties of Parent and the Operating
Company contained herein or otherwise required to be made after the date hereof
in a writing expressly referred to herein by or on behalf of Parent and the
Operating Company pursuant to this Agreement, to the extent qualified by
materiality or Material Adverse Effect, shall have been true and, to the extent
not qualified by materiality or Material Adverse Effect, shall have been true in
all material respects, in each case when made and on and as of the Closing Date
as though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which need be true, or true in all
material respects, as the case may be, only as of the specified date).
(b) Parent shall have performed or complied in all material respects
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) Parent shall have delivered to the Company a certificate, dated
the date of the Closing, signed by the President or any Vice President of Parent
(but without
62
personal liability thereto), certifying as to the fulfillment of the conditions
specified in Section 7.3(a) and 7.3(b).
(d) The Company shall have received an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
dated the Effective Time, based on the representations of Parent, the Operating
Company and the Company, referred to in Section 6.10 hereof, to the effect that
the Merger will be treated for Federal income Tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
(e) Not later than 45 days prior to the date of the Company
Stockholder Meeting, the Company shall have received from Parent's "affiliates"
a written agreement substantially in the form attached as Exhibit B; provided,
that this condition shall be of no force or effect if Parent's accountants do
not deliver the letter contemplated by Section 6.9(b) hereof as of the date the
S-4 is declared effective.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote and the approval of the Shares Issuance by the Parent Requisite
Vote referred to in Section 7.1(a), by mutual written consent of the Company and
Parent by action of their respective Boards of Directors.
SECTION 8.2 Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of the Board of Directors of either Parent or the
Company if:
(a) the Merger shall not have been consummated by December 31, 1999,
whether such date is before or after the date of approval of the Merger by the
Company Requisite Vote or of the Share Issuance by the Parent Requisite Vote
(the "TERMINATION DATE"); provided, however, that if either Parent or the
Company determines that additional time is necessary in connection with
obtaining any consent, registration, approval, permit or authorization required
to be obtained from any Governmental Entity, the Termination Date may be
extended by Parent or the Company from time to time by written notice to the
other party to a date not beyond March 31, 2000;
(b) the Company Requisite Vote shall not have been obtained at the
Company Stockholder Meeting or at any adjournment or postponement thereof;
(c) the Parent Requisite Vote shall not have been obtained at the
Parent Stockholder Meeting or at any adjournment or postponement thereof;
(d) any Law permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable
(whether before or
63
after the approval of the Merger by the Company Requisite Vote or of the Share
Issuance by the Parent Requisite Vote); or
(e) any Governmental Entity shall have failed to issue an order,
decree or ruling or to take any other action which is necessary to fulfill the
conditions set forth in Sections 7.1(b), and 7.2(e), as applicable, and such
denial of a request to issue such order, decree, ruling or take such other
action shall have been final and nonappealable; provided, that the right to
terminate this Agreement pursuant to this Section 8.2 shall not be available to
any party that has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
occurrence of the failure of the Merger to be consummated.
SECTION 8.3 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote referred to in Section 7.1(a), by action of the Company Board:
(a) prior to receipt of the Company Requisite Vote, if (i) the
Company is not in breach of Section 6.5, (ii) the Company Board shall have
determined in good faith, after considering applicable provisions of state law
and after consultation with outside legal counsel, that it is necessary for the
Company Board to discharge properly its fiduciary duties to the Company's
stockholders under applicable law, to terminate this Agreement to enter into an
agreement with respect to or to consummate a transaction constituting a Superior
Proposal, and (iii) the Company Board authorizes the Company, subject to
complying with the terms of this Agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal and the
Company notifies Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement to such notice,
but only if during the five business day period after the Company's notice, (A)
the Company shall have offered to negotiate with (and, if such offer is
accepted, or if requested by Parent, shall have negotiated with), and shall have
caused its respective financial and legal advisors to negotiate with, Parent to
attempt to make such commercially reasonable adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed with the
transactions contemplated herein and (B) the Board of Directors of the Company
shall thereafter have concluded, after considering the results of such
negotiations and the revised proposals made by Parent, if any, that any Superior
Proposal giving rise to the Company's notice continues to be a Superior
Proposal. The Company may not effect such termination unless (i) prior thereto
the Company pays to Parent in immediately available funds the fees required to
be paid pursuant to Section 8.5 and (ii) such termination is within two business
days after the termination of the five business day period referred to in clause
(iii) above. The Company agrees (x) that it will not enter into a binding
agreement referred to in clause (ii) above until at least the sixth business day
after it has provided the notice to Parent required thereby and (y) to notify
Parent promptly if its intention to enter into a written agreement referred to
in its notification shall change at any time after giving such notification;
64
(b) if there is a breach by Parent or the Operating Company of any
representation, warranty, covenant or agreement contained in this Agreement that
would give rise to a failure of a condition set forth in Section 7.3(a) or
7.3(b), which has not been cured within 15 business days following receipt by
Parent of written notice of such breach;
(c) pursuant to Section 2.1(c) if, under the circumstances set forth
therein, the Company has delivered a timely Termination Notice; provided that
such termination shall not be effective unless and until Parent has failed to
deliver a timely Top-Up Intent Notice in accordance with Section 2.1(c); or
(d) the Parent Board, whether or not permitted to do so by this
Agreement, shall have withdrawn or adversely modified its approval of the Share
Issuance, or shall have failed to call the Parent Stockholder Meeting in
accordance with Section 6.3(b).
SECTION 8.4 Termination by Parent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval of the Share Issuance by the Parent Requisite Vote
referred to in Section 7.1(a) if:
(a) the Company enters into a binding agreement for a Superior
Proposal, or the Company Board, whether or not permitted to do so by this
Agreement, shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or the Merger, or shall have failed to call the
Company Stockholder Meeting in accordance with Section 6.3(a);
(b) there is a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement that would give rise to a
failure of a condition set forth in Section 7.2(a) or 7.2(b), which has not been
cured within 15 business days following receipt by the Company of written notice
of such breach; or
(c) the Company enters into, adopts, amends or extends (without the
prior written consent of Parent, whether or not the same is required under this
Agreement) any labor or collective bargaining agreement with respect to
employees of the Company or its subsidiaries which agreement, amendment or
modification is on terms that (i) are different from those in effect on the date
hereof and (ii) Parent believes, in its sole discretion (exercised in good
faith) do, or would reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect on the Company and its subsidiaries or Parent and
its subsidiaries (it being understood that if the Company takes any of the
foregoing actions, the same shall be deemed a material breach by the Company of
this Agreement) .
SECTION 8.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article VIII, this Agreement (other than this
Section 8.5 and
65
Sections 5.3(d), 6.14 and Article IX) shall become void and of no effect with no
liability on the part of any party hereto (or of any of its directors, officers,
employees, agents, legal and financial advisors or other representatives);
provided, however, except as otherwise provided in this Section 8.5, no such
termination shall relieve any party hereto of any liability or damages resulting
from (i) any willful breach of any representations or warranties contained in
this Agreement or (ii) any breach of any covenant or agreement contained in this
Agreement.
(b) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 8.3(a), or (ii) this Agreement is terminated by Parent
pursuant to Section 8.4(a), or (iii) if within 18 months of the termination of
this Agreement pursuant to Section 8.2(b) or by Parent pursuant to Section
8.4(b) any Acquisition Proposal by a third party is entered into, agreed to or
consummated by the Company, then the Company shall pay Parent (by wire transfer
of immediately available funds to an account designated by Parent) a termination
fee of $30,000,000 plus, subject to the last sentence of this Section 8.5(b),
the reimbursement of all of Parent's actual and documented expenses up to a
maximum reimbursed amount of $5,000,000 (the "PARENT EXPENSES"), on the date of
such termination, in the case of clauses (i) or (ii), or on the earlier of the
date an agreement is entered into with respect to an Acquisition Proposal or an
Acquisition Proposal is consummated in the case of clause (iii). In addition, if
an Acquisition Proposal shall have been made to the Company or any of its
stockholders or any person shall have publicly announced an intention (whether
or not conditional) to make an Acquisition Proposal with respect to the Company
and thereafter this Agreement is terminated by either Parent or the Company
pursuant to Section 8.2(b), the Company shall promptly on demand reimburse all
of the Parent Expenses and thereafter be obligated to pay the termination fee
only in the event such fee is payable pursuant to this Section 8.5(b).
(c) In the event that this Agreement is terminated by the Company
pursuant to Section 8.3(d) and, at the time of such termination, (i) Parent
would not have been entitled to terminate this Agreement pursuant to Section 8.2
or 8.4, (ii) all conditions set forth in Sections 7.1 and 7.2 (other than
Section 7.1(a), Section 7.1(d) (to the extent such condition is not satisfied by
reason of any breach by Parent) and those conditions that by their nature are to
be satisfied at the Closing) have been satisfied or waived or shall remain
capable of being satisfied on or prior to the Termination Date and (iii) the
Company shall not have sold its ▇▇▇▇▇▇▇ Tubular Division, Parent shall pay to
the Company, promptly on demand, $3,500,000 in respect of the Company's expenses
in connection with the transactions contemplated by this Agreement; provided
that if, within 18 months of the termination of this Agreement pursuant to
Section 8.3(d), the Company consummates a sale of its ▇▇▇▇▇▇▇ Tubular Division,
the Company shall, promptly on demand, repay such $3,500,000 to Parent.
(d) Each of the Company and Parent acknowledges that the agreements
contained in Sections 8.5(b) and 8.5(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the Company,
Parent and the Operating Company would not have entered into this Agreement;
66
accordingly, if the Company or Parent fails to promptly pay the amount due
pursuant to Section 8.5(b), and, in order to obtain such payment, Parent or the
Company commences a suit which results in a judgment against the Company or
Parent for the fee set forth in this Section 8.5, the Company or Parent, as the
case may be, shall pay to the other its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest from the date of
termination of this Agreement on the amounts owed at the prime rate of The Fifth
Third Bank in effect from time to time during such period plus two percent (2%).
SECTION 8.6 Amendment. This Agreement may be amended by action taken
by the Company, Parent and the Operating Company at any time before or after
approval of the Merger by the Company Requisite Vote and the approval of the
Share Issuance by the Parent Requisite Vote but, after any such approval, no
amendment shall be made which requires the approval of such stockholders under
applicable Law without such approval. This Agreement may not be amended except
by an instrument in writing signed on behalf of the parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective
Time, each party hereto (for these purposes, Parent and the Operating Company
shall together be deemed one party and the Company shall be deemed the other
party) may (i) extend the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto 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 either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Nonsurvival of Representations and Warranties. None of
the representations, warranties, covenants and agreements in this Agreement or
in any exhibit, schedule or instrument delivered pursuant to this Agreement
shall survive beyond the Effective Time, except for those covenants and
agreements contained herein and therein that by their terms apply or are to be
performed in whole or in part after the Effective Time and this Article IX. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2 Entire Agreement; Assignment.
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements
67
and understandings, both written and oral, between the parties with respect to
the subject matter hereof, other than the Confidentiality Agreement.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including, but not
limited to, by merger or consolidation) or otherwise; provided, however, that
the Operating Company may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Agreement to any direct wholly
owned subsidiary of Parent, but no such assignment shall relieve Parent or the
Operating Company of its obligations hereunder if such assignee does not perform
such obligations. Any assignment in violation of the preceding sentence shall be
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 9.3 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; provided
that the fax is promptly confirmed by telephone confirmation thereof, (iii) when
delivered, if delivered personally to the intended recipient and (iv) one
business day following sending by overnight delivery via a national courier
service, and in each case, addressed to a party at the following address for
such party:
if to Parent or to Merger
Sub, to: AK Steel Holding Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to: Armco Inc.
Legal Department
One Oxford Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
68
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4 Governing Law. Except to the extent that Delaware Law or
Ohio Law is mandatorily applicable to the Merger and for the rights of the
shareholders of the Company, this Agreement shall be governed by and construed
in accordance with the Laws of the State of New York, without regard to the
principles of conflicts of Law thereof.
SECTION 9.5 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon
and except as provided in Section 6.7(c) inure solely to the benefit of each
party hereto and its successors and permitted assigns, and, except as provided
in Section 6.7(c), nothing in this Agreement, express or implied, is intended to
or shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
SECTION 9.7 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
69
SECTION 9.8 Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the Southern District of the State of New York or in
New York state court, this being in addition to any other remedy to which they
are entitled at Law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of the courts of the
United States for the Southern District of New York or any New York state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any other court.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.10 Interpretation.
(a) The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined meanings
contained herein when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time, amended, qualified
or supplemented, including (in the case of agreements and instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to May 20, 1999. The phrase "made available" in this agreement shall
mean that the information
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referred to has been actually delivered to the party to whom such information is
to be made available.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 9.11 Definitions.
(a) "ACQUISITION PROPOSAL" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions; (iii) any
tender offer or exchange offer for 20 percent or more of the outstanding Shares
or the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(b) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning provided in Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(c) "KNOW" or "KNOWLEDGE" means, with respect to any party, the
knowledge of such party's executive officers after due inquiry, including
inquiry of such party's counsel and other officers or employees of such party
responsible for the relevant matter.
(d) "MATERIAL ADVERSE EFFECT" means with respect to any entity, any
change, circumstance or effect that, individually or in the aggregate with all
other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, business, condition (financial
or otherwise) or results of operations of such entity and its subsidiaries taken
as a whole or (ii) the ability of such party to consummate the transactions
contemplated by this Agreement.
(e) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(f) "SUBSIDIARY" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of,
which having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar
71
functions with respect to such corporation or other organization, is directly or
indirectly owned or controlled by such party or by any one or more of its
subsidiaries.
SECTION 9.12 Certain Ohio Matters. The Operating Company hereby
represents, warrants and agrees as follows:
(a) The principal office of the Operating Company in Delaware, its
state of incorporation, is c/o The Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
(b) The Operating Company hereby consents to be sued and served with
process in the State of Ohio and hereby irrevocably appoints the Secretary of
State of Ohio as its agent to accept service of process in any proceeding in
Ohio to enforce against the Operating Company any obligation of the Company or
to enforce the rights of a dissenting shareholder of the Company.
(c) The Operating Company desires to transact business in Ohio as a
foreign corporation and has previously qualified to do so. The Operating Company
has appointed CT Corporation System, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ as its
statutory agent for service of process.
[signature page follows]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
AK STEEL HOLDING CORPORATION
By: / s / ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive Officer
AK STEEL CORPORATION
By: / s / ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive Officer
ARMCO INC.
By: / s / ▇▇▇▇▇ ▇. Will
--------------------------------------------------------
Name: ▇▇▇▇▇ ▇. Will
Title: President and Chief Executive Officer
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