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EXHIBIT 2
ANNEX I
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
by and between
MODTECH, INC.
and
SPI HOLDINGS, INC.
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Dated as of September 28, 1998
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TABLE OF CONTENTS
ARTICLE I
THE MERGERS ............................................................. 2
1.1 Organization of Holdings ....................................... 2
1.2 Directors and Officers of Holdings ............................. 2
1.3 Modtech Sub Merger ............................................. 3
1.4 SPI Sub Merger ................................................. 3
1.5 The Closing .................................................... 3
1.6 Effective Time ................................................. 4
1.7 Effects of the Mergers ......................................... 4
1.8 Directors and Officers of the Surviving Entities ............... 4
ARTICLE II
CONVERSION OF SECURITIES ................................................ 5
2.1 Conversion of Securities ....................................... 5
2.2 Conversion of Modtech Shares ................................... 5
2.3 Modtech Election, Allocation and Conversion Procedures ......... 6
2.4 Additional Exchange Procedures ................................. 8
2.5 Dissenting Modtech Shares ...................................... 9
2.6 Modtech Options ................................................ 10
2.7 Conversion of SPI Shares ....................................... 11
2.8 SPI Election, Allocation and Conversion Procedures ............. 12
2.9 Additional Exchange Procedures ................................. 14
2.10 Dissenting SPI Shares .......................................... 16
2.11 SPI Options .................................................... 17
2.12 SPI Warrants ................................................... 18
2.13 Cancellation of Shares ......................................... 18
2.14 No Transfer after the Effective Time ........................... 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MODTECH ............................... 18
3.1 Existence; Good Standing; Corporate Authority .................. 18
3.2 Authorization; Validity and Effect of Agreement ................ 19
3.3 Capitalization ................................................. 19
3.4 Subsidiaries ................................................... 20
3.5 Other Interests ................................................ 20
3.6 No Conflict; Required Filings and Consents ..................... 20
3.7 Compliance ..................................................... 21
3.8 SEC Documents .................................................. 21
3.9 Litigation ..................................................... 22
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3.10 Absence of Certain Changes ..................................... 22
3.11 Environmental Matters .......................................... 22
3.12 Real Properties ................................................ 23
3.13 Tangible Personal Property ..................................... 24
3.14 Intellectual Property .......................................... 24
3.15 Absence of Changes in Modtech Benefit Plans .................... 24
3.16 ERISA Compliance ............................................... 25
3.17 Taxes .......................................................... 27
3.18 Contracts; Debt Instruments .................................... 28
3.19 Insurance ...................................................... 30
3.20 Interests of Officers and Directors ............................ 30
3.21 No Brokers ..................................................... 30
3.22 Customers ...................................................... 30
3.23 Suppliers ...................................................... 30
3.24 Employees ...................................................... 30
3.25 Product Liability .............................................. 31
3.26 Information in Joint Proxy Statement/Prospectus and Form S-4.... 31
3.27 Disclosure ..................................................... 31
3.28 Fairness Opinion ............................................... 31
3.29 Year 2000 Matters .............................................. 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPI ................................... 32
4.1 Existence; Good Standing; Authority ............................ 32
4.2 Authorization; Validity and Effect of Agreement ................ 32
4.3 Capitalization ................................................. 33
4.4 Subsidiaries ................................................... 33
4.5 Other Interests ................................................ 33
4.6 No Conflict; Required Filings and Consents ..................... 34
4.7 Compliance ..................................................... 34
4.8 Financial Statements ........................................... 35
4.9 Litigation ..................................................... 35
4.10 Absence of Certain Changes ..................................... 35
4.11 Environmental Matters .......................................... 36
4.12 Real Properties ................................................ 36
4.13 Tangible Personal Property ..................................... 37
4.14 Intellectual Property .......................................... 37
4.15 Absence of Changes in SPI Benefit Plans ........................ 37
4.16 ERISA Compliance ............................................... 38
4.17 Taxes .......................................................... 40
4.18 Contracts; Debt Instruments .................................... 41
4.19 Insurance ...................................................... 43
4.20 Interests of Officers and Directors ............................ 43
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4.21 No Brokers ..................................................... 43
4.22 Customers ...................................................... 43
4.23 Suppliers ...................................................... 44
4.24 Employees ...................................................... 44
4.25 Product Liability .............................................. 44
4.26 Information in Joint Proxy Statement/Prospectus and Form S-4 ... 44
4.27 Disclosure ..................................................... 44
4.28 Year 2000 Matters .............................................. 44
ARTICLE V
COVENANTS ............................................................... 45
5.1 Conduct of Business by Modtech or SPI .......................... 45
5.2 Meetings of Stockholders ....................................... 46
5.3 Further Assurance and Cooperation .............................. 47
5.4 Certain Filings and Consents ................................... 47
5.5 Publicity ...................................................... 48
5.6 Joint Proxy Statement/Prospectus and Form S-4 .................. 48
5.7 Listing Application ............................................ 48
5.8 Further Action ................................................. 48
5.9 Lockup Agreements .............................................. 49
5.10 Expenses........................................................ 49
5.11 Notice of Change in Representations and Warranties ............. 49
5.12 Consents ....................................................... 49
5.13 Letter of Modtech's Accountants ................................ 49
5.14 Letter of SPI's Accountants .................................... 50
5.15 Registration Statement on Form S-8 ............................. 50
5.16 Tax Matters Certificates ....................................... 50
5.17 Assumption of Obligations by Holdings, Modtech Sub and SPI Sub.. 50
5.19 Development of Holdings Business Plan .......................... 51
5.20 Payment of Transaction Fees; Transaction Advisory Agreement .... 51
5.21 Retention of Holdings' Financial Advisor ....................... 51
5.22 Deregistration of Modtech Shares ............................... 51
ARTICLE VI
CONDITIONS .............................................................. 51
6.1 Conditions to Each of Modtech's and SPI's
Obligation to Effect the Mergers ............................... 51
6.2 Conditions to Obligation of Modtech to Effect the Mergers....... 53
6.3 Conditions to Obligation of SPI to Effect the Mergers .......... 54
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT ....................................... 55
7.1 Termination or Abandonment ..................................... 55
7.2 Effect of Termination .......................................... 56
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7.3 Amendment or Supplement ........................................ 57
7.4 Extension of Time; Waiver, Etc ................................. 57
ARTICLE VIII
INDEMNIFICATION ......................................................... 58
8.1 Indemnification ................................................ 58
ARTICLE IX
GENERAL PROVISIONS ...................................................... 59
9.1 Non-survival of Representations and Warranties ................. 59
9.2 Notices ........................................................ 59
9.3 Assignment; Binding Effect ..................................... 60
9.4 Entire Agreement ............................................... 60
9.5 Governing Law .................................................. 61
9.6 Counterparts ................................................... 61
9.7 Headings 61 ....................................................
9.8 Interpretation ................................................. 61
9.9 Incorporation of Schedules ..................................... 61
9.10 Severability ................................................... 61
9.11 Enforcement of Agreement ....................................... 61
ARTICLE X
DEFINITIONS ............................................................. 62
10.1 Defined Terms ................................................. 62
SCHEDULES
Schedule I Schedule of Modtech Shareholders to be Allocated Holdings Preferred
Stock
DISCLOSURE SCHEDULES
Modtech Disclosure Schedule
SPI Disclosure Schedule
LIST OF EXHIBITS
Exhibit A Form of Certificate of Incorporation of Holdings
Exhibit B Form of Bylaws of Holdings
Exhibit C Form of Certificate of Designation for Holdings Preferred Stock
Exhibit D Form of Voting Agreement
Exhibit E Form of Certificate of Merger to be filed in California
Exhibit F Form of Articles of Merger to be filed in Colorado
Exhibit G Form of Transaction Advisory Agreement
Exhibit H Form of Registration Rights Agreement
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
Agreement and Plan of Reorganization and Merger (this "Agreement"),
dated as of September 28, 1998, by and between Modtech, Inc., a California
corporation ("Modtech") and SPI Holdings, Inc., a Colorado corporation ("SPI").
RECITALS
A. The Board of Directors of Modtech deems it advisable and in the best
interest of Modtech and its stockholders to consummate, and has approved,
including for purposes of Section 1101 of the General Corporation Law of the
State of California (the "CGCL"), the business combination transactions provided
for herein; and the Board of Directors of SPI deems it advisable and in the best
interest of SPI and its stockholders to consummate, and has approved, including
for purposes of Section ▇-▇▇▇-▇▇▇ of the Colorado Business Corporation Act (the
"CBCA"), the business combination transactions provided for herein, in which:
(1) Modtech and SPI will form a Delaware corporation, Modtech
Holdings, Inc. ("Holdings"); and
(2) Because of a number of operational differences between
Modtech and SPI, the Board of Directors of each of Modtech and SPI have
deemed it advisable to maintain the separate existence of Modtech and
SPI following the consummation of the transactions provided for herein;
accordingly, Holdings will form two subsidiaries, a Delaware
corporation which will merge with and into Modtech with Modtech
continuing as the surviving corporation (the "Modtech Merger"), and a
Colorado corporation which will merge with and into SPI with SPI
continuing as the surviving corporation (the "SPI Merger" and, together
with the Modtech Merger, the "Mergers"), and (i) all issued and
outstanding Modtech Shares (as hereinafter defined) and all vested
Modtech Options (as hereinafter defined) will be converted into the
right to receive, in the aggregate, 9,481,118 shares of common stock,
par value $.01 per share, of Holdings ("Holdings Common Stock"),
388,939 shares of Series A Preferred Stock, par value $.01 per share,
of Holdings ("Holdings Preferred Stock") and $39,923,472 in cash, and
(ii) all issued and outstanding SPI Shares (as hereinafter defined),
all vested SPI Options (as hereinafter defined) and all exercisable SPI
Warrants (as hereinafter defined) will be converted into the right to
receive, in the aggregate, 4,974,462 shares of Holdings Common Stock
and $8,076,133 in cash, all as more fully set forth below;
B. For federal income tax purposes, it is intended that the SPI Merger
shall qualify as a "reorganization" within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Modtech Merger
(together with the SPI Merger) shall qualify as an "exchange" under Section 351
of the Code; and
C. Modtech and SPI desire to make certain representations, warranties
and agreements in connection with the Mergers and also to prescribe various
conditions to the Mergers.
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings set forth in Section 10.1 hereof.
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ARTICLE I
THE MERGERS
1.1 Organization of Holdings. As promptly as practicable following the
execution of this Agreement, Modtech and SPI shall cause Holdings to be
organized under the laws of the State of Delaware. The initial certificate of
incorporation and bylaws of Holdings shall be substantially in the forms
attached hereto as Exhibit A and Exhibit B, respectively. The certificate of
designation for the Holdings Preferred Stock shall be substantially in the form
attached hereto as Exhibit C. The authorized capital stock of Holdings shall
consist of 25,000,000 shares of Holdings Common Stock and 5,000,000 shares of
Holdings Preferred Stock, of which 680 shares of Holdings Common Stock will be
issued to Modtech and 320 shares of Holdings Common Stock will be issued to SPI.
Prior to the Effective Time (as hereinafter defined), Modtech and SPI shall
cause Holdings to provide for the issuance of Holdings Common Stock pursuant to
the Mergers.
1.2 Directors and Officers of Holdings.
(a) Upon formation of Holdings, the Board of Directors of Holdings will
consist of seven directors. Modtech and SPI shall cause to be elected as initial
directors of Holdings ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Van Den Bossche, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ III, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇. Each director shall remain in office until his successor is duly
elected or appointed and qualified or until such director's earlier death,
resignation or removal in accordance with the certificate of incorporation and
bylaws of Holdings.
(b) As of the Effective Time, the Board of Directors of Holdings will
consist of nine directors, including the individuals set forth in Section
1.2(a), one additional Independent Director to be selected by SPI and one
additional Independent Director to be selected by the Board of Directors of
Holdings. Each director shall remain in office until his successor is duly
elected or appointed and qualified or until such director's earlier death,
resignation or removal in accordance with the certificate of incorporation and
bylaws of Holdings. In addition, Proactive Partners, LP ("Proactive Partners")
and KRG Capital Partners, LLC ("KRG Capital") shall each be permitted to
designate one non-voting observer, who may be changed from time to time, and who
shall be permitted to attend all meetings of the Board of Directors of Holdings.
(c) Upon formation of Holdings and as of the Effective Time, ▇▇▇▇ ▇.
▇▇▇▇▇▇ shall be the Chairman and Chief Executive Officer of Holdings, ▇▇▇▇▇▇▇
Van Den Bossche shall be the President of Holdings and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
be the Chief Operating Officer and Chief Financial Officer of Holdings.
(d) At each of the first three stockholder's meetings of Holdings at
which directors are elected, the Board of Directors shall, subject to the
exercise of its fiduciary duties, use its best efforts to nominate the
following persons for election to the Board of Directors for one-year terms;
(1) ▇▇▇▇ ▇▇▇▇▇▇; (2) ▇▇▇▇▇▇▇ Van Den Bossche; (3) two designees of Proactive
Partners; (4) two designees of KRG Capital; and (5) three joint designees of
Proactive Partners and KRG Capital, all three of whom shall be Independent
Directors.
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1.3 Modtech Sub Merger .
(a) As promptly as practicable after the formation of Holdings, Modtech
and SPI shall cause Holdings to form a wholly-owned corporation called Modtech
Merger Sub, Inc. ("Modtech Sub") under the laws of the State of Delaware.
Modtech and SPI shall cause Holdings to cause Modtech Sub to execute and deliver
this Agreement and to merge with and into Modtech. Modtech shall be the
surviving corporation in the Modtech Merger and as a result thereof shall become
a wholly-owned subsidiary of Holdings.
(b) The certificate of incorporation and bylaws of Modtech Sub shall be
in such form as shall be determined by Holdings. Upon formation of Modtech Sub,
Holdings shall elect ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Van Den
Bossche as directors of Modtech Sub and such Board of Directors, by unanimous
written consent, shall appoint the officers of Modtech Sub.
(c) Modtech shall use its best efforts to cause the Modtech Merger to
be consummated in accordance with the terms of this Agreement. Modtech and SPI
shall cause Holdings to execute a written consent under Section 228 of the
Delaware General Corporation Law (the "DGCL"), as the sole stockholder of
Modtech Sub, to the execution, delivery and performance of this Agreement by
Modtech Sub.
1.4 SPI Sub Merger .
(a) As promptly as practicable after the formation of Holdings, Modtech
and SPI shall cause Holdings to form a wholly-owned corporation called SPI
Merger Sub, Inc. ("SPI Sub") under the laws of the State of Colorado. Modtech
and SPI shall cause Holdings to cause SPI Sub to execute and deliver this
Agreement and to merge with and into SPI. SPI shall be the surviving corporation
in the SPI Merger and as a result thereof shall become a wholly-owned subsidiary
of Holdings.
(b) The articles of incorporation and bylaws of SPI Sub shall be in
such form as shall be determined by Holdings. Upon formation of SPI Sub,
Holdings shall elect ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Van Den Bossche and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ as directors of SPI Sub and such Board of Directors, by unanimous
written consent, shall appoint the officers of SPI Sub.
(c) SPI shall use its best efforts to cause the SPI Merger to be
consummated in accordance with the terms of this Agreement. Modtech and SPI
shall cause Holdings to execute a written consent under Section ▇-▇▇▇-▇▇▇ of the
CBCA, as the sole stockholder of SPI Sub, to the execution, delivery and
performance of this Agreement by SPI Sub.
1.5 The Closing . The closing (the "Closing") of the transactions
contemplated by this Agreement will take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., local time, as
soon as practicable following the date on which the last of the conditions set
forth in Article 6 is satisfied or waived in accordance herewith or at such
other
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place, time or date as Modtech and SPI may agree. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date".
1.6 Effective Time . On the Closing Date, (i) Modtech will cause a
certificate of merger in the form attached hereto as Exhibit D to be filed with
the Secretary of State of the State of California as provided in Section 1103 of
the CGCL in order to effect the Modtech Merger; and (ii) SPI will cause articles
of merger in the form attached hereto as Exhibit E to be filed with the
Secretary of State of the State of Colorado as provided in Section ▇-▇▇▇-▇▇▇ of
the CBCA in order to effect the SPI Merger. Upon completion of such filings, the
respective Mergers will become effective in accordance with the CGCL and CBCA.
The time and date on which the Mergers become effective is herein referred to as
the "Effective Time".
1.7 Effects of the Mergers . At the Effective Time,
(a) The separate existence of Modtech Sub shall cease and Modtech Sub
shall be merged with and into Modtech, with Modtech continuing as the surviving
corporation (as such, "New Modtech");
(b) The separate existence of SPI Sub shall cease and SPI Sub shall be
merged with and into SPI with SPI continuing as the surviving corporation (as
such, "New SPI" and, together with New Modtech, the "Surviving Entities"); and
(c) The Mergers shall have all the effects of applicable law,
including, without limitation, the applicable provisions of the CGCL and the
CBCA.
1.8 Directors and Officers of the Surviving Entities .
(a) The members of the Board of Directors of New Modtech will be the
members of the Board of Directors of Modtech Sub immediately prior to the
Effective Time and the members of the Board of Directors of New SPI will be the
members of the Board of Directors of SPI Sub immediately prior to the Effective
Time. All of the members of the Board of Directors of New Modtech and New SPI
will serve until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the articles of incorporation and bylaws of New Modtech or New SPI, as the
case may be.
(b) The officers of New Modtech will be the officers of Modtech Sub
immediately prior to the Effective Time and the officers of New SPI will be the
officers of SPI Sub immediately prior to the Effective Time. Such persons will
continue as officers of New Modtech and New SPI until their respective
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the articles of
incorporation and bylaws of New Modtech or New SPI, as the case may be.
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ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Securities of Merger Entities. As of the Effective
Time, by virtue of the Mergers and without any action on the part of the holder
of any securities of the entities involved: (i) each outstanding share of common
stock of Modtech Sub, par value $0.01 per share, which is issued and outstanding
immediately prior to the Effective Time, shall be converted into and become one
(1) share of common stock of New Modtech and (ii) each outstanding share of
common stock of SPI Sub, par value $0.01 per share, which is issued and
outstanding immediately prior to the Effective Time, shall be converted into and
become one (1) share of common stock of New SPI.
2.2. Conversion of Modtech Shares .
(a) As of the Effective Time, by virtue of the Modtech Merger and
without any action on the part of the holder of any securities of the entities
involved, each share of Common Stock, par value $0.01 per share, of Modtech
("Modtech Common Stock" or "Modtech Shares") issued and outstanding immediately
prior to the Effective Time (other than (x) Modtech Shares owned by Modtech or
any of its Subsidiaries or any other Modtech Shares designated as treasury
shares (collectively, the "Modtech Treasury Shares") and (y) any Dissenting
Modtech Shares (as defined in Section 2.5(b))) will, by virtue of the Modtech
Merger, be converted into:
(A) cash in an amount equal to $3.7293, subject to
adjustment as hereinafter provided (the "Modtech Per Share
Cash Stock Consideration"), and
(B) 0.8508 fully paid and nonassessable shares of
Holdings Common Stock (the "Modtech Exchange Ratio"), (the
"Modtech Per Share Common Stock Consideration");
provided, however, that, subject to the election, allocation and
conversion procedures set forth in Section 2.3:
(C) the holders of Modtech Shares may elect to
receive fully paid and nonassessable shares of Holdings
Preferred Stock (the "Modtech Per Share Preferred Stock
Consideration") in lieu of receiving an equal number of shares
of Holdings Common Stock, provided, that, no holder of Modtech
Shares may elect to receive Holdings Preferred Stock for more
than 3.94% (rounded down to the nearest whole share) of such
Record Holders ownership of Holdings Common Stock, and,
provided further, that in the aggregate no greater than
388,939 shares of Holdings Preferred Stock may be issued
pursuant to such elections (such aggregate number of shares,
the "Modtech Preferred Stock Number").
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(D) The maximum number of shares of Holdings
Preferred Stock set forth in paragraph (C) above may be
adjusted upward or downward by the Exchange Agent on the
Closing Date upon receipt by the Exchange Agent of a notice
from Modtech specifying the amount of such adjustment
necessary to ensure that the Modtech Merger meets the minimum
requirements for qualification as a transaction under Section
351 the Code.
(b) At the Effective Time, each Modtech Treasury Share shall, by virtue
of the Modtech Merger and without any action on the part of the holders of any
securities of the entities involved, be canceled and extinguished and shall
cease to exist, and no exchange or payment shall be made therefor.
2.3 Modtech Election, Allocation and Conversion Procedures .
(a) Subject to the allocation and conversion procedures set forth in
Section 2.3(b), each Record Holder of Modtech Shares will be entitled to elect
to receive one share of Holdings Preferred Stock in lieu of each share of
Holdings Common Stock such Record Holder would otherwise receive, provided, such
Holdings Preferred Stock may not exceed 3.94% of the Holdings Common Stock such
Record Holder would receive but for such election. All other Modtech Shares held
by such Record Holders ("Modtech No-Election Shares") shall be converted into
the Modtech Per Share Common Stock Consideration as set forth above. Any Record
Holder who delivers to the Exchange Agent an Election Form electing to receive
Holdings Preferred Stock for greater than 3.94% of the Holdings Common Stock
such Record Holder would receive but for such election shall be deemed to have
elected to receive Holdings Preferred Stock for only 3.94% of the Holdings
Common Stock such Record Holder would receive but for such election. The
percentage of Holdings Common Stock that each Record Holder may convert to
Holdings Preferred Stock may be adjusted upward or downward by the Exchange
Agent on the Closing Date in accordance with the adjustments, if any, made in
the Modtech Preferred Stock Number pursuant to Section 2.2(a)(D) above. If such
adjustment is made, each electing Record Holder's election will be adjusted pro
rata based on the original percentage elected.
(b) Not later than two business days after the Election Deadline,
Holdings shall cause the Exchange Agent to effect the allocations and
conversions among the Record Holders of Modtech Shares of rights to receive the
Modtech Per Share Common Stock Consideration or the Modtech Per Share Preferred
Stock Consideration in the Modtech Merger as follows:
(i) If the number of Modtech Preferred Stock Election Shares
(on the basis of Election Forms received by the Election Deadline) is
less than the Modtech Preferred Stock Number, then
(A) all Modtech Preferred Stock Election Shares shall
be deemed, as of the Effective Time, to have become and been
converted into the right to receive the Modtech Per Share
Preferred Stock Consideration,
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(B) the Exchange Agent shall convert (pro rata
according to the total number of Modtech No-Election Shares
held by each such Record Holder set forth on Schedule I on the
Record Date) into Modtech Preferred Stock Election Shares
("Converted Modtech No-Election Shares") a sufficient number
of Modtech No-Election Shares such that the remainder of (x)
the Modtech Preferred Stock Election Shares plus (y) the
Converted Modtech No-Election Shares shall equal as closely as
practicable the Modtech Preferred Stock Number, and all
Converted Modtech No-Election Shares shall be deemed, as of
the Effective Time, to have become and been converted into the
right to receive the Modtech Per Share Preferred Stock
Consideration, and
(C) the Modtech No-Election Shares that are not
Converted Modtech No-Election Shares shall be deemed, as of
the Effective Time, to have become and been converted into the
right to receive the Modtech Per Share Common Stock
Consideration.
(c) On the Mailing Date, Holdings shall mail an Election Form and a
letter of transmittal (the "Letter of Transmittal") to each Record Holder of
Modtech Shares. To be effective, an Election Form must be properly completed,
signed and actually received by the Exchange Agent not later than the Election
Deadline and must be accompanied by the certificates representing all the
Modtech Shares ("Modtech Certificates") as to which the Election is being made
(or an appropriate guarantee of delivery by an eligible organization). Holdings
shall have reasonable 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 timely submitted or to disregard defects in Election
Forms; such decisions of Holdings (or of the Exchange Agent) shall be conclusive
and binding. Neither Holdings nor the Exchange Agent shall be under any
obligation to notify any person of any defect in an Election Form submitted to
the Exchange Agent, except that if Holdings determines not to disregard a
defect, Holdings shall notify Modtech of such defect and provide a reasonable
opportunity for the defect to be cured by the subject Record Holder. The
Exchange Agent shall also make, and Holdings shall verify, all computations
contemplated by this Section 2.3, and all such computations shall be conclusive
and binding on the Record Holders of Modtech Shares, absent manifest error. The
Exchange Agent shall promptly provide Modtech with a copy of the completed
computation. Modtech Shares covered by an Election Form which is not effective
shall be deemed to be Modtech No-Election Shares. Once an Election is made, it
may not be revoked unless such revocation has been communicated in writing to
the Exchange Agent prior to the Election Deadline.
(d) No fractional interests in shares of Holdings Common Stock or
Holdings Preferred Stock, and no certificates representing such fractional
interests, shall be issued upon the surrender for exchange of Modtech
Certificates or upon the exercise of Modtech Options. In lieu of any fractional
share, Holdings shall pay to each Record Holder of Modtech Shares, or to the
holder of a Modtech Option upon the exercise thereof, who otherwise would be
entitled to receive a fractional interest in a share of Holdings Common Stock or
Holdings Preferred Stock, an amount of cash (without interest) determined by
multiplying (i) closing price of Modtech Common Stock on the last
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trading day on Nasdaq prior to the Closing Date by (ii) the fractional interest
to which such Record Holder would otherwise be entitled.
2.4 Additional Exchange Procedures .
(a) The Letter of Transmittal which accompanies the Election Form
(which shall specify that delivery shall be effected and the risk of loss and
title to the Modtech Certificates (and the Modtech Shares and consideration
therefor represented by such Modtech Certificates) shall pass after the
Effective Time only upon proper delivery of such Modtech Certificates to the
Exchange Agent) will advise the Record Holders of Modtech Certificates of the
procedure for surrendering to the Exchange Agent, Modtech Certificates in
exchange for either the certificates representing the Modtech Per Share Cash
Consideration, the Modtech Per Share Common Stock Consideration or the Modtech
Per Share Preferred Stock Consideration (the "Modtech Merger Consideration").
(b) Each Record Holder of Modtech Shares that have been converted into
a right to receive the Modtech Merger Consideration shall, upon surrender to the
Exchange Agent of a Modtech Certificate or Certificates together with a properly
completed Letter of Transmittal, be entitled to receive the Modtech Merger
Consideration as provided herein.
(c) Until so surrendered, each Modtech Certificate, and each Modtech
Share represented thereby, shall, at and after the Effective Time, represent for
all purposes only the right to receive the Modtech Merger Consideration as
provided herein, and nothing else, subject to applicable law in the case of
Modtech Dissenting Shares.
(d) If any of the Modtech Merger Consideration is to be issued to a
person other than the Record Holder of the Modtech Shares formerly represented
by the Modtech Certificate or Certificates surrendered with respect thereto, it
shall be a condition to such issuance that the Modtech Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such issuance shall pay to the
Exchange Agent any transfer or other taxes required as a result of such issuance
to a person other than the Record Holder of such Modtech Shares or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(e) At and after the Record Date, there shall be no further
registration or transfers of Modtech Shares (other than transfers by operation
of law), and the stock ledgers of Modtech shall be closed. After the Effective
Time, Modtech Certificates presented to the Exchange Agent for transfer shall be
canceled and exchanged for the Modtech Merger Consideration provided for,
without interest, and in accordance with the procedures set forth, in this
Article 2.
(f) One hundred eighty (180) days after the Effective Time, any
Holdings Common Stock or cash made available to the Exchange Agent that remains
unclaimed by the Record Holders of Modtech Shares shall be returned to Holdings,
upon its demand therefor. Any such Record Holder who has not delivered Modtech
Certificates to the Exchange Agent in accordance with this Section
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2.4 prior to that time shall thereafter look only to the Holdings (and only as
general creditors thereof) for the Modtech Merger Consideration in respect of
any Modtech Shares formerly requested thereby. Notwithstanding the foregoing,
neither Holdings nor the Exchange Agent shall be liable to any Record Holder of
Modtech Shares for any securities delivered or any cash paid to a public
official pursuant to applicable escheat or abandoned property laws or for any
securities or cash retained by Holdings as permitted by any such law.
(g) No dividends, interest or other distributions with respect to the
Modtech Merger Consideration shall be paid to the holder of any unsurrendered
Modtech Certificates until such Modtech Certificates are surrendered as provided
in this Section 2.4. Upon such surrender, there shall be paid, without interest,
to the person in whose name any Modtech Per Share Common Stock Consideration is
registered, all dividends and other distributions payable in respect of such
securities on a date subsequent to, and in respect of a record date after, the
Effective Time.
(h) In the event that any Modtech Certificates shall have been lost,
stolen or destroyed, the Exchange Agent shall pay in respect of such lost,
stolen or destroyed certificate, upon the making of an affidavit of that fact by
the holder thereof, the Modtech Merger Consideration as may be provided pursuant
to this Agreement; provided, however, that Holdings may, in its sole discretion
and as a condition precedent to the payment thereof, require the owner of such
lost, stolen or destroyed certificate to deliver an indemnity agreement or a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Holdings, New Modtech or the Exchange Agent or any other
party with respect to the certificate alleged to have been lost, stolen or
destroyed.
(i) If the Record Holder of any Modtech Shares shall become entitled to
receive payment for such shares pursuant to Section 1101 of the CGCL and Section
2.5, such payment shall be made by Holdings in accordance with Section 2.5.
(j) (i) Payments of Modtech Per Share Cash Consideration and payments
in lieu of fractional shares shall be made by check mailed by the Exchange Agent
at the Effective Time, and (ii) certificates representing Modtech Per Share
Common Stock Consideration and Modtech Per Share Preferred Stock Consideration
shall be delivered by hand or mailed by certified mail, return receipt
requested, at the Effective Time; provided the Modtech Certificates have been
provided by the surrendering shareholder to the Exchange Agent in compliance
with Section 2.4. At the time of such payment or mailing, a statement setting
forth in reasonable detail the calculation of the Modtech Merger Consideration
being paid to each Record Holder shall also be mailed to each Record Holder.
Risk of loss shall remain on Holdings until such certificate for Holdings Common
Stock is actually received by the surrendering shareholder.
2.5 Dissenting Modtech Shares .
(a) Notwithstanding any provision of this Agreement to the contrary,
any Modtech Shares held by a holder who has demanded and perfected his demand
for the fair value of his shares in
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accordance with Chapter 13 of the CGCL and as of the Effective Time has neither
effectively withdrawn nor lost his right to demand such fair value (a
"Dissenting Modtech Shareholder") shall not represent a right to receive any
part of the Modtech Merger Consideration, but in lieu thereof the holder thereof
shall be entitled to only such rights as are granted by the CGCL.
(b) Notwithstanding any provision of this Agreement to the contrary, if
any Dissenting Modtech Shareholder demanding the fair value of such Dissenting
Modtech Shareholder's Modtech Shares ("Dissenting Modtech Shares") under the
CGCL shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to a determination of the fair value of his shares, then as
of the Effective Time or the occurrence of such event, whichever later occurs,
such Dissenting Modtech Shares shall automatically be converted into and
represent only the right to receive the fair market value of such Modtech Shares
upon surrender of the certificate or certificates representing such Dissenting
Modtech Shares.
(c) Modtech shall give SPI prompt notice of any demands by a Dissenting
Modtech Shareholder for payment, or notices of intent to demand payment received
by Modtech under the CGCL, and SPI shall have the right to participate in all
negotiations and proceedings with respect to such demands. Modtech shall not,
except with the prior written consent of SPI (which will not be unreasonably
withheld or delayed) or as otherwise required by law, make any payment with
respect to, or settle, or offer to settle, any such demands.
2.6 Modtech Options .
(a) At the Effective Time, adjustments shall be made to the then
outstanding options to purchase Modtech Shares (each, a "Modtech Option"), to
accelerate the vesting of Modtech Options held by those holders whose Modtech
Options are not at least 75% vested. Such Modtech Options shall be accelerated,
pro rata on the basis of the number of unvested Modtech Options held by such
holders of Modtech Options, with the effect that, in the aggregate, all then
outstanding Modtech Options (which theretofore have been granted under Modtech's
1989, 1994 and 1996 Stock Option Plans (the "Modtech Stock Option Plans")) shall
be vested to the extent of 75% of the Modtech Shares covered thereby.
(b) At the Effective Time, after giving effect to the adjustment
contemplated by Section 2.6(a), on an aggregate basis per holder of Modtech
Options:
(i) 14.6709% of all Modtech Options held by such holder which
are vested and exercisable shall be converted into the right to receive
$25.00 per share in cash (less the applicable per share exercise price
of each such Modtech Option and less applicable withholding taxes); and
(ii) each remaining Modtech Option held by such holder,
whether vested or unvested, shall be converted into an option to
acquire, on substantially the same terms and conditions as were
applicable under such Modtech Option immediately prior to the Effective
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Time, except as otherwise set forth in this Section 2.6, for each
Modtech Share subject to such Modtech Option, one (1) share of Holdings
Common Stock at a price per share equal to the original exercise price
of such Modtech Options.
(c) Except as set forth in this Section 2.6, any and all rights under
any provisions of the Modtech Stock Option Plans or in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of Modtech or any Subsidiary thereof shall be
canceled as of the Effective Time. As soon as practicable following the date of
this Agreement, and, in any event, prior to the Effective Time, the Board of
Directors of Modtech (or, if appropriate, the Compensation and Stock Option
Committee thereof) and Modtech shall take all action necessary to give effect to
the provisions of this Section 2.6 and to ensure that no Person shall have any
right under any Modtech Stock Option Plan (or any Modtech Option granted
thereunder) following the Effective Time except for the right to exercise
Modtech Options for shares of Holdings Common Stock as provided in this Section
2.6. As soon as practicable following the date of this Agreement, and, in any
event, prior to the Effective Time, the Board of Directors of Modtech (or, if
appropriate, any committee thereof) and Modtech shall take all action necessary
to either terminate any other plan, program or arrangement with respect to,
including any right to acquire, equity securities of Modtech, or to amend or
modify such other plans, programs or arrangements to provide for the issuance of
shares of Holdings Common Stock in lieu of equity securities of Modtech or New
Modtech.
2.7 Conversion of SPI Shares . To effectuate the SPI Merger and subject
to the terms and conditions of this Agreement:
(a) At the Effective Time, by virtue of the SPI Merger and without any
action on the part of the holder of any securities of the entities involved:
(i) Each share of Common Stock, no par value per share, of SPI
("SPI Common Stock"), and each share of Series A-1 Convertible
Preferred Stock, no par value per share, of SPI ("SPI Series A-1
Preferred Stock"), Series A-2 Convertible Preferred Stock, no par value
per share, of SPI ("SPI Series A-2 Preferred Stock"), Series A-3
Convertible Preferred Stock, no par value per share, of SPI ("SPI
Series A-3 Preferred Stock"), Series A-4 Convertible Preferred Stock,
no par value per share, of SPI ("SPI Series A-4 Preferred Stock"),
Series A-5 Convertible Preferred Stock, no par value per share, of SPI
("SPI Series A-5 Preferred Stock") and Series A-6 Convertible Preferred
Stock, no par value per share, of SPI ("SPI Series A-6 Preferred
Stock") (shares of SPI Common Stock, SPI Series A-1 Preferred Stock,
SPI Series A-2 Preferred Stock, SPI Series A-3 Preferred Stock, SPI
Series A-4 Preferred Stock, SPI Series A-5 Preferred Stock and SPI
Series A-6 Preferred Stock are collectively referred to herein as "SPI
Shares") issued and outstanding immediately prior to the Effective Time
(other than (x) SPI Shares owned by SPI or any of its Subsidiaries or
any other SPI Shares designated as treasury shares (collectively, the
"SPI Treasury Shares") and (y) any SPI Dissenting Shares (as defined in
Section 2.10)) shall be canceled and
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extinguished and be converted into and become a right to receive, at
the election of each holder thereof, but subject to the other
provisions of this Section 2.7,
(A) cash in an amount equal to $49.4097, subject to
adjustment as hereinafter provided (the "SPI Per Share Cash
Consideration"), or
(B) 1.8785 fully paid and nonassessable shares of
Holdings Common Stock (the "SPI Exchange Ratio"), subject to
adjustment as hereinafter provided (the "SPI Per Share Stock
Consideration");
provided, however, that, subject to the election, allocation and
conversion procedures set forth in Section 2.8:
(C) no Record Holder of SPI Shares may elect to
receive the SPI Per Share Cash Consideration for more than
5.9176% of the aggregate number of SPI Shares held by such
Record Holder rounded down to the nearest whole share
(provided that Record Holders of SPI Shares electing to
receive the SPI Per Share Cash Consideration may receive more
than 5.9176% pursuant to the allocation procedures set forth
in Section 2.8);
(D) only 5.9176% of the aggregate number of SPI
Shares outstanding on the Record Date shall be converted into
the right to receive the SPI Per Share Cash Consideration
(such number of shares, the "SPI Cash Number"); and
(E) 94.0728% of the aggregate number of SPI Shares
outstanding on the Record Date shall be converted into the
right to receive the SPI Per Share Stock Consideration (such
number of shares, the "SPI Stock Number").
(b) At the Effective Time, each SPI Treasury Share shall, by virtue of
the SPI Merger and without any action on the part of the holders of any
securities of the entities involved, be canceled and extinguished and shall
cease to exist, and no exchange or payment shall be made therefor.
2.8 SPI Election, Allocation and Conversion Procedures .
(a) Subject to the allocation and conversion procedures set forth in
Section 2.8(b), each Record Holder of SPI Shares will be entitled (i) to elect
to receive Holdings Common Stock for some or all of the SPI Shares ("SPI Stock
Election Shares") held by such Record Holder, (ii) to elect to receive cash for
up to, but not more than, 5.9176% of the SPI Shares ("SPI Cash Election Shares")
held by such Record Holder or (iii) to indicate that such Record Holder makes no
such election for some or all of the SPI Shares ("SPI No-Election Shares") held
by such Record Holder. All Elections pursuant to this Section 2.8(a) shall be
made on an Election Form. Any Record Holder who delivers to the Exchange Agent
an Election Form electing to receive SPI Cash Election Shares for greater than
5.9176% of the SPI Shares held by such Record Holder shall be deemed to have
elected SPI
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Cash Election Shares for only 5.9176% of the SPI Shares held by such Record
Holder. Any SPI Shares with respect to which the Record Holder thereof shall
not, as of the Election Deadline, have properly submitted to the Exchange Agent
a properly completed Election Form shall be deemed to be SPI No-Election Shares.
A Record Holder acting in different capacities or acting on behalf of other
Record Holders in any way shall be entitled to submit an Election Form for each
capacity in which such Record Holder so acts with respect to each Record Holder
for which it so acts.
(b) Not later than two business days after the Election Deadline,
Holdings shall cause the Exchange Agent to effect the allocations and
conversions among the Record Holders of SPI Shares of rights to receive the SPI
Per Share Stock Consideration or the SPI Per Share Cash Consideration in the SPI
Merger as follows:
(i) If the number of SPI Stock Election Shares (on the basis
of Election Forms received by the Election Deadline) is greater than
the SPI Stock Number, then
(A) all SPI Cash Election Shares shall be deemed, as
of the Effective Time, to have become and been converted into
the right to receive the SPI Per Share Cash Consideration,
(B) the Exchange Agent shall convert (pro rata
according to the total number of SPI Stock Election Shares
held by each Record Holder who has elected to receive the SPI
Per Share Cash Consideration) into SPI Cash Election Shares
("Converted SPI Stock Election Shares") a sufficient number of
SPI Stock Election Shares held by those Record Holders who
have elected to receive the SPI Per Share Cash Consideration
such that the remainder of (x) the SPI Stock Election Shares
less (y) the Converted SPI Stock Election Shares shall equal
as closely as practicable the SPI Stock Number, and all
Converted SPI Stock Election Shares shall be deemed, as of the
Effective Time, to have become and been converted into the
right to receive the SPI Per Share Cash Consideration,
(C) if the remainder of the SPI Stock Election Shares
less the Converted SPI Stock Election Shares is greater than
the SPI Stock Number, the Exchange Agent shall convert (pro
rata according to each Record Holder's total number of SPI
No-Election Shares) into Cash Election Shares ("Converted SPI
No-Election Shares") a sufficient number of SPI No-Election
Shares such that the remainder of (x) the SPI Stock Election
Shares less (y) the Converted SPI Stock Election Shares and
less the Converted SPI No-Election Shares shall equal as
closely as practicable the SPI Stock Number, and all Converted
SPI No-Election Shares shall be deemed, as of the Effective
Time, to have become and been converted into the right to
receive the SPI Per Share Cash Consideration, and
(D) the SPI No-Election Shares and the SPI Stock
Election Shares that are not Converted SPI Stock Election
Shares or Converted SPI No-Election Shares shall
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be deemed, as of the Effective Time, to have become and been
converted into the right to receive the SPI Per Share Stock
Consideration.
(c) On the Mailing Date, Holdings shall mail an Election Form and a
Letter of Transmittal to each Record Holder of SPI Shares. To be effective, an
Election Form must be properly completed, signed and actually received by the
Exchange Agent not later than the Election Deadline and must be accompanied by
the certificates representing all the SPI Shares ("SPI Certificates") as to
which the Election is being made (or an appropriate guarantee of delivery by an
eligible organization). Holdings shall have reasonable 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 timely submitted or to
disregard defects in Election Forms; such decisions of Holdings (or of the
Exchange Agent) shall be conclusive and binding. Neither Holdings nor the
Exchange Agent shall be under any obligation to notify any person of any defect
in an Election Form submitted to the Exchange Agent, except that if Holdings
determines not to disregard a defect, Holdings shall notify SPI of such defect
and provide a reasonable opportunity for the defect to be cured by the subject
Record Holder. The Exchange Agent shall also make, and Holdings shall verify,
all computations contemplated by this Section 2.8, and all such computations
shall be conclusive and binding on the Record Holders of SPI Shares, absent
manifest error. The Exchange Agent shall promptly provide SPI with a copy of the
completed computation. SPI Shares covered by an Election Form which is not
effective shall be deemed to be SPI No-Election Shares. Once an Election is
made, it may not be revoked unless such revocation has been communicated in
writing to the Exchange Agent prior to the Election Deadline.
(d) No fractional interests in shares of Holdings Common Stock, and no
certificates representing such fractional interests, shall be issued upon the
surrender for exchange of SPI Certificates or upon the exercise of SPI Options.
In lieu of any fractional share, Holdings shall pay to each Record Holder of SPI
Shares, or to the holder of an SPI Option upon the exercise thereof, who
otherwise would be entitled to receive a fractional interest in a share of
Holdings Common Stock an amount of cash (without interest) determined by
multiplying (i) the closing price of Modtech Common Stock on the last trading
day on Nasdaq prior to the Closing Date by (ii) the fractional interest to which
such Record Holder would otherwise be entitled.
2.9 Additional Exchange Procedures.
(a) The Letter of Transmittal which accompanies the Election Form
(which shall specify that delivery shall be effected and the risk of loss and
title to the SPI Certificates (and the SPI Shares and consideration therefor
represented by such SPI Certificates) shall pass after the Effective Time only
upon proper delivery of such SPI Certificates to the Exchange Agent) will advise
the Record Holders of SPI Certificates of the procedure for surrendering to the
Exchange Agent, SPI Certificates in exchange for either the certificates
representing the SPI Per Share Stock Consideration or the SPI Per Share Cash
Consideration (either, "SPI Merger Consideration").
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(b) Each Record Holder of SPI Shares that have been converted into a
right to receive the SPI Merger Consideration shall, upon surrender to the
Exchange Agent of a SPI Certificate or Certificates together with a properly
completed Letter of Transmittal, be entitled to receive the SPI Merger
Consideration as provided herein.
(c) Until so surrendered, each SPI Certificate, and each SPI Share
represented thereby, shall, at and after the Effective Time, represent for all
purposes only the right to receive the SPI Merger Consideration as provided
herein, and nothing else, subject to applicable law in the case of SPI
Dissenting Shares.
(d) If any of the SPI Merger Consideration is to be issued to a person
other than the Record Holder of the SPI Shares formerly represented by the SPI
Certificate or Certificates surrendered with respect thereto, it shall be a
condition to such issuance that the SPI Certificate or Certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such issuance shall pay to the Exchange
Agent any transfer or other taxes required as a result of such issuance to a
person other than the Record Holder of such SPI Shares or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(e) At and after the Record Date, there shall be no further
registration or transfers of SPI Shares (other than transfers by operation of
law), and the stock ledgers of SPI shall be closed. After the Effective Time,
SPI Certificates presented to the Exchange Agent for transfer shall be canceled
and exchanged for the SPI Merger Consideration provided for, without interest,
and in accordance with the procedures set forth, in this Article 2.
(f) One hundred eighty (180) days after the Effective Time, any
Holdings Common Stock or cash made available to the Exchange Agent that remains
unclaimed by the Record Holders of SPI Shares shall be returned to Holdings,
upon its demand therefor. Any such Record Holder who has not delivered SPI
Certificates to the Exchange Agent in accordance with this Section 2.9 prior to
that time shall thereafter look only to the Holdings (and only as general
creditors thereof) for the SPI Merger Consideration in respect of any SPI Shares
formerly requested thereby. Notwithstanding the foregoing, neither Holdings nor
the Exchange Agent shall be liable to any Record Holder of SPI Shares for any
securities delivered or any cash paid to a public official pursuant to
applicable escheat or abandoned property laws or for any securities or cash
retained by Holdings as permitted by any such law.
(g) No dividends, interest or other distributions with respect to the
SPI Merger Consideration shall be paid to the holder of any unsurrendered SPI
Certificates until such SPI Certificates are surrendered as provided in this
Section 2.9. Upon such surrender, there shall be paid, without interest, to the
person in whose name any SPI Per Share Stock Consideration is registered, all
dividends and other distributions payable in respect of such securities on a
date subsequent to, and in respect of a record date after, the Effective Time.
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(h) In the event that any SPI Certificates shall have been lost, stolen
or destroyed, the Exchange Agent shall pay in respect of such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact by the
holder thereof, the SPI Merger Consideration as may be provided pursuant to this
Agreement; provided, however, that Holdings may, in its sole discretion and as a
condition precedent to the payment thereof, require the owner of such lost,
stolen or destroyed certificate to deliver an indemnity agreement or a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against Holdings, New SPI or the Exchange Agent or any other party with
respect to the certificate alleged to have been lost, stolen or destroyed.
(i) If the Record Holder of any SPI Shares shall become entitled to
receive payment for such shares pursuant to Sections ▇-▇▇▇-▇▇▇ through ▇-▇▇▇-▇▇▇
of the CBCA and Section 2.10, such payment shall be made by Holdings in
accordance with Section 2.10.
(j) (i) Payments of SPI Per Share Cash Consideration and payments in
lieu of fractional shares shall be made by check mailed by the Exchange Agent at
the Effective Time, and (ii) certificates representing SPI Per Share Stock
Consideration shall be delivered by hand or mailed by certified mail, return
receipt requested, at the Effective Time; provided the SPI Certificates have
been provided by the surrendering shareholder to the Exchange Agent in
compliance with Section 2.9. At the time of such payment or mailing, a statement
setting forth in reasonable detail the calculation of the SPI Merger
Consideration being paid to each Record Holder shall also be mailed to each
Record Holder. Risk of loss shall remain on Holdings until such certificate for
Holdings Common Stock is actually received by the surrendering shareholder.
2.10 Dissenting SPI Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any SPI Shares held by a holder who has demanded and perfected his demand for
the fair value of his shares in accordance with Sections ▇-▇▇▇-▇▇▇ through
▇-▇▇▇-▇▇▇ of the CBCA and as of the Effective Time has neither effectively
withdrawn nor lost his right to demand such fair value (a "Dissenting SPI
Shareholder") shall not represent a right to receive any part of the SPI Merger
Consideration, but in lieu thereof the holder thereof shall be entitled to only
such rights as are granted by the CBCA.
(b) Notwithstanding any provision of this Agreement to the contrary, if
any Dissenting SPI Shareholder demanding the fair value of such Dissenting SPI
Shareholder's SPI Shares ("Dissenting SPI Shares") under the CBCA shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to a determination of the fair market value of his shares, then as of the
Effective Time or the occurrence of such event, whichever later occurs, such
Dissenting SPI Shares shall automatically be converted into and represent only
the right to receive the fair market value of such Dissenting SPI Shares upon
surrender of the certificate or certificates representing such Dissenting SPI
Shares.
(c) SPI shall give Modtech prompt notice of any demands by a Dissenting
SPI Shareholder for payment, or notices of intent to demand payment received by
SPI under the CBCA,
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and Modtech shall have the right to participate in all negotiations and
proceedings with respect to such demands. SPI shall not, except with the prior
written consent of Modtech (which will not be unreasonably withheld or delayed)
or as otherwise required by law, make any payment with respect to, or settle, or
offer to settle, any such demands.
2.11 SPI Options.
(a) At the Effective Time, adjustments shall be made to the then
outstanding options to purchase SPI Shares (each, an "SPI Option"), such that
seventy-five percent (75%) of the then outstanding SPI Options (which
theretofore have been granted under SPI's Second Amended and Restated 1997 Stock
Option Plan (the "SPI Stock Option Plan")) shall become vested.
(b) At the Effective Time, after giving effect to the adjustment
contemplated by Section 2.10(a), on an aggregate basis per holder of SPI
Options:
(i) 5.9176% of all SPI Options held by such holder which are
vested and exercisable shall be converted into the right to receive
$49.4097 per share in cash (less the applicable per share exercise
price of each such SPI Option and less applicable withholding taxes);
and
(ii) each remaining SPI Option held by such holder, whether
vested or unvested, shall be converted into an option to acquire, on
substantially the same terms and conditions as were applicable under
such SPI Option immediately prior to the Effective Time, except as
otherwise set forth in this Section 2.10, for each SPI Share subject to
such SPI Option, 1.8785 shares of Holdings Common Stock at a price per
share (rounded upward to the nearest whole cent) equal to (i) the
aggregate exercise price for SPI Shares purchasable pursuant to such
SPI Option (without regard to vesting provisions) divided by (ii) the
number of full shares of Holdings Common Stock deemed purchasable
pursuant to such SPI Option.
(c) Except as set forth in this Section 2.11, any and all rights under
any provisions of the SPI Stock Option Plans or in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of SPI or any Subsidiary thereof shall be canceled as of
the Effective Time. As soon as practicable following the date of this Agreement,
and, in any event, prior to the Effective Time, the Board of Directors of SPI
(or, if appropriate, the Compensation and Stock Option Committee thereof) and
SPI shall take all action necessary to give effect to the provisions of this
Section 2.11 and to ensure that no Person shall have any right under any SPI
Stock Option Plan (or any SPI Option granted thereunder) following the Effective
Time except for the right to exercise SPI Options for shares of Holdings Common
Stock as provided in this Section 2.11. As soon as practicable following the
date of this Agreement, and, in any event, prior to the Effective Time, the
Board of Directors of SPI (or, if appropriate, any committee thereof) and SPI
shall take all action necessary to either terminate any other plan, program or
arrangement with respect to, including any right to acquire, equity securities
of SPI, or to amend or modify such
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other plans, programs or arrangements to provide for the issuance of shares of
Holdings Common Stock in lieu of equity securities of SPI or New SPI.
2.12 SPI Warrants.
(a) All outstanding warrants to purchase SPI Shares (each, an "SPI
Warrant"), shall be deemed exercised immediately prior to the Effective Time.
(b) At the Effective Time:
(i) 5.9176% of all SPI Warrants held by each holder of SPI
Warrants shall be converted into the right to receive $49.4097 per
share in cash (less the applicable per share exercise price of each
such SPI Warrant); and
(ii) each remaining SPI Warrant held by such holder, upon the
payment by the holder of the exercise price thereof, shall be converted
into the right to receive 1.8785 shares of Holdings Common Stock.
2.13 Cancellation of Shares. All shares of Holdings Common Stock
outstanding immediately prior to the Effective Time will be canceled.
2.14 No Transfer after the Effective Time. No transfers of Modtech
Shares will be made on the stock transfer books of Modtech, and no transfers of
SPI Shares will be made on the books of SPI, after the close of business on the
day prior to the date of the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MODTECH
Modtech hereby represents and warrants to SPI as follows:
3.1 Existence; Good Standing; Corporate Authority. Modtech and each of
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, with the power and authority
to own and operate its businesses as presently conducted. Section 3.1 of the
Disclosure Schedule sets forth the state of incorporation of Modtech and each of
its Subsidiaries, and lists each jurisdiction in which Modtech and each of its
Subsidiaries is qualified as a foreign corporation. Modtech and each of its
Subsidiaries is duly qualified as a foreign corporation or other entity to do
business and is in good standing in each jurisdiction where the character of its
Properties or the nature of its activities makes such qualification necessary,
except for such failures of Modtech and any of its Subsidiaries to be so
qualified as would not have a Material Adverse Effect. Modtech has previously
provided SPI with true and correct copies of its articles of incorporation and
bylaws and the charter documents and bylaws or other organizational documents of
each of its Subsidiaries, as currently in effect.
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3.2 Authorization; Validity and Effect of Agreement. Modtech has the
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement, every other document or agreement to be
executed by Modtech under this Agreement (each a "Modtech Transaction Document")
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement by Modtech and the performance by
Modtech of its obligations hereunder, the execution and delivery of each of the
Modtech Transaction Documents by Modtech and the performance of its obligations
thereunder and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Modtech and all
other necessary corporate action on the part of Modtech, other than the adoption
and approval of this Agreement by the stockholders of Modtech, and no other
corporate proceedings on the part of Modtech are necessary to authorize this
Agreement, the Modtech Transaction Documents and the transactions contemplated
hereby and thereby (assuming due authorization, execution and delivery by the
other party or parties thereto). The Board of Directors of Modtech has approved
for the purposes of Section 1101 of the CGCL the agreement of merger contained
in this Agreement and the Modtech Merger. This Agreement has been duly and
validly executed and delivered by Modtech and constitutes a legal, valid and
binding obligation of Modtech, enforceable against it in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general
principles of equity. Each Modtech Transaction Document has been, or, as of the
Effective Time, will have been, duly and validly authorized, executed and
delivered by Modtech, and constitutes or will constitute as of such time a
legally valid and binding obligation of Modtech, enforceable against it in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general principles of equity.
3.3 Capitalization. The authorized capital stock of Modtech consists
of 20,000,000 shares of Modtech Common Stock and 5,000,000 shares of preferred
stock having a par value of $0.01 per share ("Modtech Preferred Stock"), none of
which shares have been designated. As of the date hereof, 9,871,409 shares of
Modtech Common Stock and no shares of Modtech Preferred Stock are issued and
outstanding. As of the date hereof, Modtech Options to acquire 1,625,658 Modtech
Shares are outstanding, 1,219,244 of which will be vested as of the Effective
Time in accordance with Section 2.06. All of the issued and outstanding Modtech
Shares are validly issued, fully paid and non-assessable and no class of Modtech
stock is entitled to preemptive rights. As of the date hereof, except for
Modtech Stock Option Plans, there are no existing options, warrants, calls,
subscriptions, convertible securities or other securities, agreements,
commitments, or obligations which would require Modtech to issue or sell shares
of Modtech Common Stock or any other equity securities, or securities
convertible into or exchangeable or exercisable for shares of Modtech Common
Stock or any other equity securities of Modtech or any of its Subsidiaries.
Modtech has no commitments or obligations to purchase or redeem any shares of
Modtech Common Stock. Set forth in Section 3.3 of the Disclosure Schedule is a
complete list of the Modtech Options held by the executive officers of Modtech
which are outstanding as of the date hereof, which list sets forth, for
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each such holder of a Modtech Option, the number of Modtech Shares subject
thereto, the number of vested options, the exercise price and the expiration
date thereof.
3.4 Subsidiaries. Set forth in Section 3.4 of the Disclosure Schedule
is a complete list of Modtech's Subsidiaries. All of the outstanding shares of
capital stock of each of Modtech's Subsidiaries are validly issued, fully paid,
non-assessable and free of preemptive rights or rights of first refusal. Except
as set forth in Section 3.4 of the Disclosure Schedule, Modtech owns, directly
or indirectly, all of the issued and outstanding capital stock and other
ownership interests of each of its Subsidiaries, free and clear of all
Encumbrances, and there are no existing options, warrants, calls, subscriptions,
convertible securities or other securities, agreements, commitments or
obligations of any character relating to the outstanding capital stock or other
securities of any Subsidiary of Modtech or which would require any Subsidiary of
Modtech to issue or sell any shares of its capital stock, ownership interests or
securities convertible into or exchangeable for shares of its capital stock or
ownership interests.
3.5 Other Interests. Except as set forth in Section 3.4 of the
Disclosure Schedule, neither Modtech nor any of Modtech's Subsidiaries owns,
directly or indirectly, any interest or investment (whether equity or debt) in
any corporation, partnership, limited liability company, joint venture,
business, trust or other Person (other than Modtech Subsidiaries).
3.6 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.6(a) of the Disclosure Schedule,
neither the execution and delivery of this Agreement and the Modtech Transaction
Documents, nor the performance by Modtech of its obligations hereunder and
thereunder, nor the consummation of the transactions contemplated hereby or
thereby, will: (i) assuming receipt of the Modtech Stockholder Approvals (as
defined below), conflict with Modtech's articles of incorporation or bylaws;
(ii) assuming satisfaction of the requirements set forth in Section 3.6(b)
below, violate any statute, law, ordinance, rule or regulation applicable to
Modtech or any of its Subsidiaries or any of their Properties or assets; or
(iii) violate, breach, be in conflict with or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or permit the termination of any provision of, or result in the termination of,
the acceleration of the maturity of, or the acceleration of the performance of
any obligation of Modtech or any of its Subsidiaries, or result in the creation
or imposition of any Encumbrance upon any Properties, assets or business of
Modtech or any of its Subsidiaries under, any note, bond, indenture, mortgage,
deed of trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment or any order, judgment or decree to
which Modtech or any of its Subsidiaries is a party or by which Modtech or any
of its Subsidiaries or any of their respective assets or Properties is bound or
encumbered, or give any Person the right to require Modtech or any of its
Subsidiaries to purchase or repurchase any notes, bonds or instruments of any
kind except, in each case, for such violations, conflicts, defaults or other
occurrences which would not have, and would not reasonably be expected to have,
a Material Adverse Effect.
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(b) Except (i) for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), and state securities or "blue
sky" laws ("Blue Sky Laws"), (ii) for the pre-merger notification requirements
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), (iii) for the filing of
certificates of merger pursuant to the CGCL, (iv) for the Modtech Stockholder
Approvals (as defined below) or (v) with respect to matters set forth in
Sections 3.6(a) or 3.6(b) of the Disclosure Schedule, no consent, approval or
authorization of, permit from, or declaration, filing or registration with, any
governmental or regulatory authority, or any other Person is required to be made
or obtained by Modtech or its Subsidiaries in connection with the execution,
delivery and performance of this Agreement, the Modtech Transaction Documents
and the consummation of the transactions contemplated hereby and thereby except
where the failure to obtain such consent, approval, authorization, permit or
declaration or to make such filing or registration would not have a Material
Adverse Effect.
3.7 Compliance. Modtech and each of its Subsidiaries is in compliance
with all foreign, federal, state and local laws and regulations applicable to
its operations or with respect to which compliance is a condition of engaging in
the business thereof, except to the extent that failure to comply would not have
a Material Adverse Effect. Neither Modtech nor any of its Subsidiaries has
received any notice asserting a failure, or possible failure, to comply with any
such law or regulation, the subject of which notice has not been resolved as
required thereby or otherwise to the satisfaction of the party sending the
notice, except for such failure as would not have a Material Adverse Effect. Set
forth in Section 3.7 of the Disclosure Schedule is a complete list of all
material permits, licenses and franchises from governmental agencies held by
Modtech and its Subsidiaries. Modtech and its Subsidiaries have all material
permits, licenses and franchises from governmental agencies required to conduct
their respective businesses as they are now being conducted and all such
permits, licenses and franchises will remain in effect after the Effective Time,
except for such failures to remain effective that would not have a Material
Adverse Effect.
3.8 SEC Documents.
(a) Set forth in Section 3.8 of the Disclosure Schedule is a complete
list of all registration statements, proxy or information statements, forms,
reports and other documents required to be filed by Modtech with the Securities
and Exchange Commission (the "SEC") since January 1, 1996 (collectively, the
"Modtech SEC Reports"). Modtech has delivered or made available to SPI true and
complete copies of each SEC Reports. As of their respective dates, the Modtech
SEC Reports and any registration statements, reports, forms, proxy or
information statements and other documents filed by Modtech with the SEC after
the date of this Agreement (i) complied or, with respect to those not yet filed,
will comply, in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and (ii) did not or, with respect to those
not yet filed, 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 made therein, in light of the circumstances under which they were
made, not misleading.
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(b) Neither Modtech nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved against in, a balance
sheet of Modtech or in the notes thereto, prepared in accordance with GAAP
consistently applied, except for (i) liabilities or obligations that were so
reserved on, or reflected in (including the notes to), the consolidated balance
sheet of Modtech as of June 30, 1998 and (ii) liabilities or obligations arising
in the ordinary course of business (including trade indebtedness) since June 30,
1998 which would not have a Material Adverse Effect.
3.9 Litigation. Except as set forth in Section 3.9 of the Disclosure
Schedule, there is no Action instituted, pending or, to the best knowledge of
Modtech, threatened, which, if adversely decided, would, directly or indirectly,
have a Material Adverse Effect, nor is there any outstanding judgment, decree,
or injunction or any statute, rule or order of any domestic or foreign court,
governmental department, commission or agency which has or would have a Material
Adverse Effect.
3.10 Absence of Certain Changes.
(a) Except for the transactions expressly contemplated hereby, since
August 14, 1998, Modtech and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course consistent with past practices
and there has not been any change in Modtech's business, operations, condition
(financial or otherwise), results of operations, business prospects, assets,
liabilities, working capital or reserves, except for changes contemplated hereby
or changes which have not had a Material Adverse Effect. From August 14, 1998
through the date of this Agreement, neither Modtech nor any of its Subsidiaries
has taken any of the actions prohibited by Section 5.1 hereof.
(b) Since December 31, 1997, to the best knowledge of Modtech, there
has been no change in (i) the demand in the California public school system for
the products manufactured and sold by Modtech and its Subsidiaries, (ii) the
competitive environment in which Modtech and its Subsidiaries conduct business,
(iii) the regulatory standards or guidelines applicable to the business
conducted by Modtech and its Subsidiaries, (iv) the legislation applicable to
the business conducted by Modtech and its Subsidiaries, (v) the relationship
between Modtech or its Subsidiaries on the one hand, and any customers or
suppliers of Modtech or its Subsidiaries or the owners of any Properties
utilized by Modtech or its Subsidiaries on the other hand, any of which would
have a Material Adverse Effect.
3.11 Environmental Matters.
(a) There are no existing uncured notices of noncompliance, notices of
violation, administrative actions, or lawsuits against Modtech or any of its
Subsidiaries arising under Environmental Laws or relating to the use, handling,
storage, treatment, recycling, generation, or release of Hazardous Materials at
any of the Properties, nor has Modtech received any uncured notification of any
allegation of any responsibility for any disposal, release, or threatened
release at
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any location of any Hazardous Materials, except in any such case which would not
be reasonably expected to have a Material Adverse Effect.
(b) To the best knowledge of Modtech, there have been no spills or
releases of Hazardous Materials at any of the Properties in excess of quantities
reportable under Environmental Laws, except in any such case which would not be
reasonably expected to have a Material Adverse Effect.
(c) There are no consent decrees, consent orders, judgments, judicial
or administrative orders, or Encumbrances by any governmental authority relating
to any Environmental Law which have not already been fully satisfied and which
regulate, obligate, or bind Modtech or any of its Subsidiaries, except in any
such case which would not be reasonably expected to have a Material Adverse
Effect.
(d) Except as set forth in Section 3.11(d) of the Disclosure Schedule,
no Properties or Facilities are listed on the federal National Priorities List,
the federal Comprehensive Environmental Response Compensation Liability
Information System list, or any similar state listing of sites known to be
contaminated with Hazardous Materials.
3.12 Real Properties. Section 3.12 of the Disclosure Schedule lists
all Properties owned by Modtech and its Subsidiaries and all Leased Real Estate
leased by Modtech or any of its Subsidiaries. Except as set forth in Section
3.12 of the Disclosure Schedule, neither Modtech nor any of its Subsidiaries
currently owns, and neither Modtech nor any of its Subsidiaries or any of their
respective predecessors have ever owned, fee title to any Properties. Modtech
has delivered or caused to be delivered to SPI complete and accurate copies of
the Leases which relate to the Leased Real Estate, together with all amendments
or supplements thereto. Modtech has not received written notice of condemnation
or eminent domain proceedings pending or threatened against any Leased Real
Estate. Except as disclosed in Section 3.12 of the Disclosure Schedule, Modtech
has not received any notice from any city, village or other Person of any
zoning, ordinance, building, fire or health code or other legal violation in
respect of any Leased Real Estate. The Leases are in full force and effect and
are valid, binding and enforceable in accordance with their respective terms;
(i) no amount payable under any Lease is past due; (ii) Modtech is in compliance
in all material respects with all commitments and obligations on its part to be
performed or observed under each Lease and is not aware of the failure by any
other party to any Lease to comply in all material respects with all of its
commitments and obligations; (iii) Modtech has not received any written notice
(A) of a default, offset or counterclaim under any Lease, or, any other
communication calling upon it to comply with any provision of any Lease or
asserting noncompliance, or asserting Modtech has waived or altered its rights
thereunder, and no event or condition has happened or presently exists which
constitutes a default or, after notice or lapse of time or both, would
constitute a default under any Lease on the part of Modtech or, to the best
knowledge of Modtech, any other party, or (B) of any Action against any party
under any Lease which if adversely determined would result in such Lease being
terminated or cut off; and (iv) Modtech has not assigned, mortgaged, pledged or
otherwise encumbered its interest, if any, under any Lease.
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3.13 Tangible Personal Property. Except as disclosed in Section 3.13
of the Disclosure Schedule, Modtech and its Subsidiaries (i) have good and valid
title to all the tangible personal property material to its business and
reflected in the latest audited financial statements included in Modtech SEC
Reports as being owned by Modtech and its Subsidiaries or acquired after the
date thereof (except properties sold or otherwise disposed of in the ordinary
course of business since the date thereof), free and clear of all Encumbrances
except Permitted Encumbrances, and (ii) are collectively the lessee of all
tangible personal property material to Modtech's business and reflected as
leased in the latest audited financial statements included in Modtech SEC
Reports (or on the books and records of Modtech as of the date thereof) or
acquired after the date thereof (except for leases that have expired by their
terms or that have been transferred in the ordinary course of business) and are
in possession of the properties purported to be leased thereunder, and each such
lease is valid and in full force and effect without default thereunder by the
lessee or, to Modtech's knowledge, the lessor. Each of Modtech and each of its
Subsidiaries enjoys peaceful and undisturbed possession under all such leases.
Such owned and leased tangible personal property is in good working order,
reasonable wear and tear excepted.
3.14 Intellectual Property. Section 3.14 of the Disclosure Schedule
sets forth a listing of all intellectual property rights utilized by Modtech or
its Subsidiaries other than intellectual property rights relating to the plans
and designs for structures manufactured by Modtech and its Subsidiaries. The
ownership, operation and conduct by Modtech and its Subsidiaries of its
business, as presently owned, operated, and conducted, does not infringe upon or
conflict in any respect with any patent, copyright, trademark, trade name,
service ▇▇▇▇, brand name, any related regulations or other intellectual property
rights of any other Person, and to the knowledge of Modtech no other Person is
infringing upon any such rights of Modtech and its Subsidiaries, in each case,
other than as set forth in Section 3.14 of the Disclosure Schedule.
3.15 Absence of Changes in Modtech Benefit Plans. Section 3.15 of the
Disclosure Schedule sets forth a listing of all Modtech Benefit Plans (as
defined below). Except as required under this Agreement, since December 31,
1997, there has not been (i) any acceleration, amendment or change of the period
of exercisability or vesting of any Modtech Options under the Modtech Option
Plans (including any discretionary acceleration of the exercise periods or
vesting by Modtech's Board of Directors or any committee thereof or any other
persons administering the Modtech Option Plans) or authorization of cash
payments in exchange for any Modtech Options under the Modtech Option Plan, (ii)
any adoption or material amendment by Modtech or any of its Subsidiaries of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, stock appreciation right, retirement, vacation,
severance, disability, death benefit, hospitalization, medical, worker's
compensation, disability, supplementary unemployment benefits, or other plan,
arrangement or understanding (whether or not legally binding) or any employment
agreement providing compensation or benefits to any current or former employee,
officer, director or independent contractor of Modtech or any of its
Subsidiaries or any beneficiary thereof or entered into, maintained or
contributed to, as the case may be, by Modtech or any of its Subsidiaries
(collectively, "Modtech Benefit Plans"), or (iii) any adoption of, or amendment
to, or change in
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employee participation or coverage under, any Modtech Benefit Plans which would
increase materially the expense of maintaining such Modtech Benefit Plans above
the level of the expense incurred in respect thereof for the year ended December
31, 1997.
3.16 ERISA Compliance.
(a) Section 3.16(a) of the Disclosure Schedule contains a list of all
"employee pension benefit plans" (defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), "employee welfare
benefit plans" (defined in Section 3(l) of ERISA) and all other Modtech Benefit
Plans. With respect to each Modtech Benefit Plan, Modtech has delivered or made
available to SPI a true, correct and complete copy of: (A) each writing
constituting a part of such Modtech Benefit Plan, including without limitation
all plan documents, benefit schedules, trust agreements, and insurance contracts
and other funding vehicles; (B) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (C) the current summary plan description, if
any; (D) the most recent annual financial report, if any; and (E) the most
recent determination letter from the United States Internal Revenue Service, if
any.
(b) Section 3.16(b) of the Disclosure Schedule identifies each Modtech
Benefit Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("Qualified Plans"). The Internal Revenue Service has
issued a favorable determination letter with respect to each Qualified Plan that
has not been revoked, and there are no existing circumstances nor any events
that have occurred that could adversely affect the qualified status of any
Qualified Plan or the related trust.
(c) Modtech and its Subsidiaries have complied, and are now in
compliance, in all material respects with all provisions of ERISA, the Code, and
all laws and regulations applicable to the Modtech Benefit Plans of which the
failure to comply with would have a Material Adverse Effect. No prohibited
transaction has occurred with respect to any Modtech Benefit Plan. All
contributions required to be made to any Modtech Benefit Plan by applicable law
or regulation or by any plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Modtech
Benefit Plan, for any period through the date hereof have been timely made or
paid in full or, to the extent not required to be made or paid on or before the
date hereof, have been fully reflected in Modtech SEC Reports.
(d) No Modtech Benefit Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code. None of Modtech, its Subsidiaries and
their respective ERISA Affiliates (as defined below) has at any time since
September 2, 1974, contributed to or been obligated to contribute to any
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA or any
plan with two or more contributing sponsors at least two of whom are not under
common control, within the meaning of Section 4063 of ERISA. There does not now
exist, nor do any circumstances exist that could result in, any Controlled Group
Liability (as defined below) that would be a liability of Modtech or any of its
Subsidiaries following the Closing. "ERISA Affiliate" for purposes of this
Section means, with respect to any entity, trade or business, any other entity,
trade or business that
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is a member of a group described in Section 414(b), (c), (m) or (o) of the Code
or Section 4001(b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the first
entity, trade or business pursuant to Section 4001(a)(14) of ERISA. "Controlled
Group Liability" for purposes of this Section means any and all liabilities
under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of Section 601 et
seq. of ERISA and Section 4980B of the Code, and (v) corresponding or similar
provisions of foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the Modtech Benefit Plans.
(e) Except as set forth in Modtech SEC Reports or in Section 3.16(e) of
the Disclosure Schedule, neither Modtech nor any of its Subsidiaries has any
liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof, except for health continuation
coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA
and at no expense to Modtech and its Subsidiaries.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
employee of Modtech or any of its Subsidiaries. Without limiting the generality
of the foregoing, no amount paid or payable by Modtech or any of its
Subsidiaries in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(g) No labor organization or group of employees of Modtech or any of
its Subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or
filed, with the National Labor Relations Board or any other labor relations
tribunal or authority. There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material grievances, or
other material labor disputes pending or, to the knowledge of Modtech,
threatened against or involving Modtech or any of its Subsidiaries.
(h) There are no pending or, to Modtech's knowledge, threatened claims,
and the fiduciaries of the Modtech Benefit Plans have not advised Modtech that
with respect to their duties to the Modtech Benefit Plans or the assets or any
of the trusts under any of the Modtech Benefit Plans, there are any pending or
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted against the
Modtech Benefit Plans, which could reasonably be expected to result in any
material liability of Modtech or any of its Subsidiaries to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor or any
multiemployer benefit plan.
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3.17 Taxes.
(a) Modtech and its Subsidiaries have duly prepared and filed federal,
state, local and foreign Returns which were required to be filed by or in
respect of Modtech and its Subsidiaries, or any of their Properties, income
and/or operations. As of the time they were filed, such Returns accurately
reflected the material facts regarding the income, business, Assets, operations,
activities, status of the entity on whose behalf the Return was filed, and any
other information required to be shown thereon. No extension of time within
which Modtech or any of its Subsidiaries may file any Return is currently in
force.
(b) With respect to all amounts in respect of Taxes imposed on Modtech
or any of its Subsidiaries or for which Modtech or any of its Subsidiaries is or
could be liable, whether to taxing authorities or to other Persons, all material
amounts required to be paid by or on behalf of Modtech or any of its
Subsidiaries to taxing authorities or others have been paid.
(c) Except as set forth in Section 3.17(c) of the Disclosure Schedule,
Modtech has not been advised that there is any review or audit in process by any
taxing authority of any Tax liability of Modtech or any of its Subsidiaries
currently in progress. Modtech and its Subsidiaries have not received any
written notice of any pending or threatened audit by the Internal Revenue
Service or any state, local or foreign agency of any Returns or Tax liability of
Modtech or any of its Subsidiaries for any period. Modtech and its Subsidiaries
currently have no unpaid deficiencies assessed by the Internal Revenue Service
or any state, local or foreign taxing authority arising out of any examination
of any of the Returns of Modtech or any of its Subsidiaries nor, to the
knowledge of Modtech, is there reason to believe that any material deficiency
will be assessed.
(d) No agreements are in force or are currently being negotiated by or
on behalf of Modtech or any of its Subsidiaries for any waiver or for the
extension of any statute of limitations governing the time of assessments or
collection of any Tax. No closing agreements or compromises concerning Taxes of
Modtech or any Subsidiaries are currently pending.
(e) Modtech and its Subsidiaries have withheld from each payment made
to any of their respective officers, directors and employees, the amount of all
applicable Taxes, including, but not limited to, income tax, social security
contributions, unemployment contributions, backup withholding and other
deductions required to be withheld therefrom by any Tax law and have paid the
same to the proper Taxing authorities within the time required under any
applicable Tax law.
(f) There are no Encumbrances for Taxes, whether imposed by any
federal, state, local or foreign taxing authority, outstanding against any
Assets owned by Modtech or its Subsidiaries, except for Encumbrances for Taxes
that are not yet due and payable. None of the Assets owned by Modtech or its
Subsidiaries is property that is required to be treated as being owned by any
other Person pursuant to the safe harbor lease provisions of former Section
168(f)(8) of the Code. None of the assets owned by Modtech or its Subsidiaries
directly or indirectly secures any debt, the interest on which is tax-exempt
under Section 103(a) of the Code. None of the Assets owned by Modtech
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or its Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h) of the Code. None of Modtech or any of its Subsidiaries is a person other
than a United States person within the meaning of the Code.
(g) Neither Modtech nor any of its Subsidiaries is a party to any
agreement, contract, or arrangement for compensating any employee that,
individually or collectively, could give rise to the payment of any amount
(whether in cash or property, including Modtech Shares or other Equity
Interests) that would not be deductible pursuant to the terms of Sections
162(a)(1), 162(m), 162(n) or 280G of the Code.
(h) Neither Modtech nor any of its Subsidiaries anticipate the
assessment of any additional Taxes against Modtech or any of its Subsidiaries
nor is Modtech or any of its Subsidiaries aware of any unresolved questions,
claims or disputes concerning the liability for Taxes of Modtech or any of its
Subsidiaries which would exceed by more than $1,000,000 the reserves established
on the consolidated balance sheet of Modtech as of June 30, 1998.
3.18 Contracts; Debt Instruments.
(a) Except as otherwise disclosed in Section 3.18 of the Disclosure
Schedule, neither Modtech nor any of its Subsidiaries is a party to or subject
to:
(i) any collective bargaining or other agreements with labor
unions, trade unions, employee representatives, work committees, guilds
or associations representing employees of Modtech and its Subsidiaries;
(ii) any employment, consulting, severance, termination, or
indemnification agreement, contract or arrangement, including any oral
agreement, contract or arrangement which requires the payment of over
$75,000, with any current or former officer, consultant, director or
employee;
(iii) any lease for real or personal property in which the
amount of payments which Modtech is required to make, or is expected to
receive, on an annual basis exceeds $50,000;
(iv) any agreement, contract, instrument, arrangement or
commitment to repurchase assets previously sold or leased, or to
indemnify or otherwise compensate the purchaser in respect thereof;
(v) any agreement, contract, policy, license, document,
instrument, arrangement or commitment that materially limits the
freedom of Modtech or any of its Subsidiaries to compete in any line of
business;
(vi) any agreement or contract relating to any outstanding
commitment for material capital expenditures, or any partially or fully
executory agreement or contract
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relating to the acquisition or disposition of rights or assets other
than those entered into in the ordinary course consistent with past
practices;
(vii) any sale-leaseback, conditional sale, exclusive dealing,
brokerage, finder's fee contract or agreement; or
(viii) any other agreement, contract, policy, license,
document, instrument, arrangement or commitment not made in the
ordinary course of business which is material to Modtech and its
Subsidiaries taken as a whole and which is not otherwise disclosed in
the Disclosure Schedules.
(b) None of Modtech, its Subsidiaries and, to the knowledge of Modtech,
none of the other parties to any of the contracts and agreements identified in
Sections 3.18(a) and (c) of the Disclosure Schedule or otherwise disclosed in
Modtech SEC Reports is in default under or has terminated any such contract or
agreement, or in any way expressed to Modtech an intent to materially reduce or
terminate the amount of its business with Modtech or any of its Subsidiaries in
the future.
(c) Set forth in Section 3.18(c) of the Disclosure Schedule is (A) a
list of all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any indebtedness of Modtech
or any of its Subsidiaries is outstanding or may be incurred, (B) the respective
principal amounts currently outstanding thereunder, and (C) any interest rate
swaps, caps, floors or option agreements or similar interest rate risk
management agreements. Except as set forth in Section 3.18(c) of the Disclosure
Schedule, all such indebtedness is prepayable at any time without penalty,
subject to the notice provisions of the agreements governing such indebtedness
(which, except as set forth in Section 3.18(c)of the Disclosure Schedule, do not
require a notice period of more than thirty days). For purposes of this Section
3.18(c), "indebtedness" shall mean, with respect to any Person, without
duplication, (A) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind to such Person, (B) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such Person upon which interest charges are customarily paid,
(D) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such Person, (E) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such Person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such Person's business), (F) all capitalized lease obligations of such Person,
(G) all indebtedness of others secured by any Lien on property or assets owned
or acquired by such Person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such Person under interest rate or currency
swap transactions (valued at the termination value thereof), (I) all letters of
credit issued for the account of such Person, (J) all obligations of such Person
to purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(K) all guarantees and arrangements having the economic effect of a guarantee of
such Person of any indebtedness of any other person.
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3.19 Insurance. Modtech and its Subsidiaries are covered by valid and
currently effective insurance policies issued in favor of Modtech that are
customary for companies of similar size and financial condition which conduct
similar businesses. All such policies are in full force and effect, all premiums
due thereon have been paid and Modtech has complied with the provisions of such
policies with respect to which the failure to comply with would result in a
cancellation of such policies. Neither Modtech nor any of its Subsidiaries has
received any written notice from or on behalf of any insurance carrier issuing
policies or binders relating to or covering Modtech and its Subsidiaries that
there will be a cancellation or non-renewal of existing policies or binders, or
material modification of any of the methods of doing business, will be required.
3.20 Interests of Officers and Directors. Except as disclosed in
Modtech SEC Reports, neither any of Modtech's or any of its Subsidiaries'
officers, directors or material shareholders, nor any member of their respective
immediate families or any entity with respect to which any such person is an
Affiliate, has any material interest in any property, real or personal, tangible
or intangible, used in or pertaining to the business of Modtech or its
Subsidiaries, or any other business relationship with Modtech or any of its
Subsidiaries.
3.21 No Brokers. Except as set forth in Section 3.21 of the Disclosure
Schedule, no broker, finder, investment banker, or other Person or firm is
entitled to any brokerage, finder's or other similar fee or commission in
connection with this Agreement or the transactions contemplated hereby based
upon arrangements made by or on behalf of Modtech, any of its Subsidiaries or
any of their respective directors, officers or employees.
3.22 Customers. Section 3.22 of the Disclosure Schedule sets forth a
list of the names of the twenty (20) most significant jobs (by revenue) of
Modtech and its Subsidiaries for goods or products ordered from Modtech or any
of its Subsidiaries and the amount of revenue accrued for each such job
completed or in progress during the nine-month period ended September 1, 1998.
Neither Modtech nor any of its Subsidiaries has received any notice that any
significant customer of Modtech or any of its Subsidiaries has ceased, will
cease, or has significantly reduced, or will significantly reduce its ordering
of goods or products from Modtech or any of its Subsidiaries, nor are Modtech or
any of its Subsidiaries aware of any circumstances that could reasonably be
anticipated to cause any such reduction or cessation of orders.
3.23 Suppliers. Section 3.23 of the Disclosure Schedule sets forth a
list of the names of the fifteen (15) most significant suppliers of raw
materials and other goods to Modtech and its Subsidiaries for the nine-month
period ended September 1, 1998. Neither Modtech nor any of its Subsidiaries has
received any notice that any such supplier will cease selling raw materials or
other goods to them at any time after the Closing or materially alter the terms
of such sales (other than normal price increases), nor is Modtech or any of its
Subsidiaries aware of any circumstances that could reasonably be anticipated to
cause such suppliers to make such changes.
3.24 Employees. To the best knowledge of Modtech, no executive, key
employee or group of employees has any plans to terminate employment with
Modtech or any of its Subsidiaries.
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Neither Modtech nor any of its Subsidiaries is a party to or bound by a
collective bargaining agreement, nor does Modtech have any knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the employees of Modtech or its Subsidiaries.
3.25 Product Liability. Each product manufactured by Modtech or any of
its Subsidiaries has been manufactured, sold, delivered and installed in all
material respects in accordance with applicable plans, specifications, laws
(including building codes and regulations) and applicable industry standards.
3.26 Information in Joint Proxy Statement/Prospectus and Form S-4.
Information supplied by Modtech or any of its Subsidiaries for inclusion or
incorporation by reference in (i) the Joint Proxy Statement/Prospectus (as
hereinafter defined) (or any amendment thereof or supplement thereto), at the
date mailed to Modtech stockholders and SPI stockholders and at the time of the
respective meetings of the Modtech stockholders and of the SPI stockholders
contemplated hereby, and (ii) the Form S-4 (as hereinafter defined) at any time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented
and at any time it becomes effective under the Securities Act, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
3.27 Disclosure. The representative and warranties of Modtech
contained in this Agreement are true and correct in all material respects and do
not omit any material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading. There
is no fact known to Modtech which has not been disclosed to SPI in the
Disclosure Schedule and Modtech SEC Reports, taken as a whole, which has had, or
would reasonably be expected to have, a Material Adverse Effect.
3.28 Fairness Opinion. Modtech has engaged ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation ("DLJ") who has rendered an opinion to the
effect that, from a financial point of view, the Modtech Merger Consideration to
be received by the holders of Modtech Shares pursuant to this Agreement is fair
to such holders of Modtech Shares (the "Fairness Opinion").
3.29 Year 2000 Matters. To the best knowledge of Modtech, the
information systems utilized by Modtech and each of its Subsidiaries are capable
of properly recognizing date sensitive information when the year changes to
2000, and as such, the year change to 2000, as it relates to the information
systems of Modtech and its Subsidiaries, will not result in a material
disruption of the business of Modtech or any of its Subsidiaries.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPI
SPI hereby represents and warrants to Modtech as follows:
4.1 Existence; Good Standing; Authority. SPI and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, with the power and authority to
own and operate its businesses as presently conducted. Section 4.1 of the
Disclosure Schedule sets forth the state of incorporation of SPI and each of its
Subsidiaries, and lists each jurisdiction in which SPI and each of its
Subsidiaries is qualified as a foreign corporation. SPI and each of its
Subsidiaries is duly qualified as a foreign corporation or other entity to do
business and is in good standing in each jurisdiction where the character of its
Properties or the nature of its activities makes such qualification necessary,
except for such failures of SPI and any of its Subsidiaries to be so qualified
as would not have a Material Adverse Effect. SPI has previously provided Modtech
with true and correct copies of its articles of incorporation and bylaws and the
charter documents and bylaws or other organizational documents of each of its
Subsidiaries, as currently in effect.
4.2 Authorization; Validity and Effect of Agreement. SPI has the
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement, every other document or agreement to be
executed by SPI under this Agreement (each an "SPI Transaction Document") and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by SPI and the performance by SPI of its obligations
hereunder, the execution and delivery of each of the SPI Transaction Documents
by SPI and the performance of its obligations thereunder and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors of SPI and all other necessary corporate action on the
part of SPI, other than the adoption and approval of this Agreement by the
stockholders of SPI, and no other corporate proceedings on the part of SPI are
necessary to authorize this Agreement, the SPI Transaction Documents and the
transactions contemplated hereby and thereby (assuming due authorization,
execution and delivery by the other party or parties thereto). The Board of
Directors of SPI has approved for the purposes of Section ▇-▇▇▇-▇▇▇ of the CBCA
the agreement of merger contained in this Agreement and the SPI Merger. This
Agreement has been duly and validly executed and delivered by SPI and
constitutes a legal, valid and binding obligation of SPI, enforceable against it
in accordance with its terms, except to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general principles of equity. Each SPI Transaction Document has been, or, as of
the Effective Time, will have been, duly and validly authorized, executed and
delivered by SPI, and constitutes or will constitute as of such time a legally
valid and binding obligation of SPI, enforceable against it in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
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4.3 Capitalization. The authorized capital stock of SPI consists of
6,000,000 shares of SPI Common Stock, 1,100,000 shares of Series A-1 Preferred
Stock, 1,000,000 shares of Series A-2 Preferred Stock, 400,000 shares of Series
A-3 Preferred Stock, 155,000 shares of Series A-4 Preferred Stock, 540,000
shares of Series A-5 Preferred Stock and 67,000 shares of Series A-6 Preferred
Stock. As of the date hereof, 333,614 shares of SPI Common Stock, 994,335 shares
of Series A-1 Preferred Stock, 272,051 shares of Series A-2 Preferred Stock, no
shares of Series A-3 Preferred Stock, 133,334 shares of Series A-4 Preferred
Stock, 500,000 shares of Series A-5 Preferred Stock and 62,333 (subject to
adjustment as set forth in Section 4.3 of the Disclosure Schedule) shares of
Series A-6 Preferred Stock are issued and outstanding. As of the date hereof,
SPI Options to acquire 217,085 (subject to adjustment as set forth in Section
4.3 of the Disclosure Schedule) SPI Shares are outstanding, 162,814 of which
will be vested as of the Effective Time in accordance with Section 2.11, and
warrants to acquire 320,829 SPI Shares are outstanding, all of which are
currently exercisable. All of the issued and outstanding SPI Shares are validly
issued, fully paid and non-assessable and no class of SPI stock is entitled to
preemptive rights. As of the date hereof, except for the SPI Stock Option Plan,
and except as set forth in Section 4.3 of the Disclosure Schedule, there are no
existing options, warrants, calls, subscriptions, convertible securities or
other securities, agreements, commitments, or obligations which would require
SPI to issue or sell shares of SPI Common Stock, SPI Preferred Stock or any
other equity securities, or securities convertible into or exchangeable or
exercisable for SPI Shares or any other equity securities of SPI or any of its
Subsidiaries. Except as set forth in Section 4.3 of the Disclosure Schedule, SPI
has no commitments or obligations to purchase or redeem any SPI Shares. Set
forth in Section 4.3 of the Disclosure Schedule is a complete list of the SPI
Options held by the executive officers of SPI which are outstanding as of the
date hereof, which list sets forth, for each such holder of an SPI Option, the
number of SPI Shares subject thereto, the number of vested options, the exercise
price and the expiration date thereof.
4.4 Subsidiaries. Set forth in Section 4.4 of the Disclosure Schedule
is a complete list of SPI's Subsidiaries. All of the outstanding shares of
capital stock of each of SPI's Subsidiaries are validly issued, fully paid,
non-assessable and free of preemptive rights or rights of first refusal. SPI
owns, directly or indirectly, all of the issued and outstanding capital stock
and other ownership interests of each of its Subsidiaries, free and clear of all
Encumbrances, and there are no existing options, warrants, calls, subscriptions,
convertible securities or other securities, agreements, commitments or
obligations of any character relating to the outstanding capital stock or other
securities of any Subsidiary of SPI or which would require any Subsidiary of SPI
to issue or sell any shares of its capital stock, ownership interests or
securities convertible into or exchangeable for shares of its capital stock or
ownership interests.
4.5 Other Interests. Except as set forth in Section 4.4 of the
Disclosure Schedule, neither SPI nor any of SPI's Subsidiaries owns, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, limited liability company, joint venture, business,
trust or other Person.
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4.6 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 4.6(a) of the Disclosure Schedule,
neither the execution and delivery of this Agreement and the SPI Transaction
Documents, nor the performance by SPI of its obligations hereunder and
thereunder, nor the consummation of the transactions contemplated hereby or
thereby, will: (i) assuming receipt of the SPI Stockholder Approvals (as defined
below), conflict with SPI's articles of incorporation or bylaws; (ii) assuming
satisfaction of the requirements set forth in Section 4.6(b) below, violate any
statute, law, ordinance, rule or regulation applicable to SPI or any of its
Subsidiaries or any of their Properties or assets; or (iii) violate, breach, be
in conflict with or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the termination of, the
acceleration of the maturity of, or the acceleration of the performance of any
obligation of SPI or any of its Subsidiaries, or result in the creation or
imposition of any Encumbrance upon any Properties, assets or business of SPI or
any of its Subsidiaries under, any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit, authorization, license, contract, instrument or
other agreement or commitment or any order, judgment or decree to which SPI or
any of its Subsidiaries is a party or by which SPI or any of its Subsidiaries or
any of their respective assets or Properties is bound or encumbered, or give any
Person the right to require SPI or any of its Subsidiaries to purchase or
repurchase any notes, bonds or instruments of any kind except, in each case, for
such violations, conflicts, defaults or other occurrences which would not have,
and would not reasonably be expected to have, a Material Adverse Effect.
(b) Except (i) for applicable requirements, if any, of the Exchange
Act, the Securities Act and the Blue Sky Laws, (ii) for the pre-merger
notification requirements of the HSR Act, (iii) for the filing of certificates
of merger pursuant to the CBCA, (iv) for the SPI Stockholder Approvals (as
defined below) or (v) with respect to matters set forth in Sections 4.6(a) or
4.6(b) of the Disclosure Schedule, no consent, approval or authorization of,
permit from, or declaration, filing or registration with, any governmental or
regulatory authority, or any other Person is required to be made or obtained by
SPI or its Subsidiaries in connection with the execution, delivery and
performance of this Agreement, the SPI Transaction Documents and the
consummation of the transactions contemplated hereby and thereby except where
the failure to obtain such consent, approval, authorization, permit or
declaration or to make such filing or registration would not have a Material
Adverse Effect.
4.7 Compliance. SPI and each of its Subsidiaries is in compliance with
all foreign, federal, state and local laws and regulations applicable to its
operations or with respect to which compliance is a condition of engaging in the
business thereof, except to the extent that failure to comply would not have a
Material Adverse Effect. Neither SPI nor any of its Subsidiaries has received
any notice asserting a failure, or possible failure, to comply with any such law
or regulation, the subject of which notice has not been resolved as required
thereby or otherwise to the satisfaction of the party sending the notice, except
for such failure as would not have a Material Adverse Effect. Set forth in
Section 4.7 of the Disclosure Schedule is a complete list of all material
permits, licenses and franchises from governmental agencies held by SPI and its
Subsidiaries. SPI and its Subsidiaries
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have all material permits, licenses and franchises from governmental agencies
required to conduct their respective businesses as they are now being conducted
and all such permits, licenses and franchises will remain in effect after the
Effective Time, except for such failures to remain effective that would not have
a Material Adverse Effect.
4.8 Financial Statements.
(a) SPI has delivered or made available to Modtech true and complete
copies of the financial statements set forth in Section 4.8 of the Disclosure
Schedule (collectively, the "SPI Financial Statements"). Each of the
consolidated and consolidating balance sheets included in the SPI Financial
Statements (including the related notes and schedules) presents fairly, in all
material respects, the consolidated financial position of SPI and its
Subsidiaries as of its date, and each of the consolidated and consolidating
statements of income and cash flows included in the SPI Financial Statements
(including any related notes and schedules) presents fairly, in all material
respects, the results of operations or cash flows, as the case may be, of SPI
and its Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments), in each case in
accordance with GAAP consistently applied during the periods involved, except as
may be noted therein.
(b) Neither SPI nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved against in, a
consolidated balance sheet of SPI or in the notes thereto, prepared in
accordance with GAAP consistently applied, except for (i) liabilities or
obligations that were so reserved on, or reflected in (including the notes to),
the consolidated balance sheet of SPI as of June 30, 1998 and (ii) liabilities
or obligations arising in the ordinary course of business (including trade
indebtedness) since June 30, 1998 which would not have a Material Adverse
Effect.
4.9 Litigation. Except as set forth in Section 4.9 of the Disclosure
Schedule, there is no Action instituted, pending or, to the best knowledge of
SPI, threatened, which, if adversely decided, would, directly or indirectly,
have a Material Adverse Effect, nor is there any outstanding judgment, decree,
or injunction or any statute, rule or order of any domestic or foreign court,
governmental department, commission or agency which has or would have any
Material Adverse Effect.
4.10 Absence of Certain Changes.
(a) Except for the transactions expressly contemplated hereby, since
March 31, 1998, SPI and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course consistent with past practices
and there has not been any change in SPI's business, operations, condition
(financial or otherwise), results of operations, business prospects, assets,
liabilities, working capital or reserves, except for changes contemplated hereby
or changes which have not had a Material Adverse Effect. From March 31, 1998
through the date of this Agreement, neither SPI nor any of its Subsidiaries has
taken any of the actions prohibited by Section 5.1 hereof.
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(b) Since December 31, 1997, to the best knowledge of SPI, there has
been no change in (i) the demand for the products manufactured and sold by SPI
and its Subsidiaries, (ii) the competitive environment in which SPI and its
Subsidiaries conduct business, (iii) the regulatory standards or guidelines
applicable to the business conducted by SPI and its Subsidiaries, (iv) the
legislation applicable to the business conducted by SPI and its Subsidiaries,
(v) the relationship between SPI or its Subsidiaries on the one hand, and any
customers or suppliers of SPI or its Subsidiaries or the owners of any
Properties utilized by SPI or its Subsidiaries on the other hand, any of which
would have a Material Adverse Effect.
4.11 Environmental Matters.
(a) There are no existing uncured notices of noncompliance, notices of
violation, administrative actions, or lawsuits against SPI or any of its
Subsidiaries arising under Environmental Laws or relating to the use, handling,
storage, treatment, recycling, generation, or release of Hazardous Materials at
any of the Properties, nor has SPI received any uncured notification of any
allegation of any responsibility for any disposal, release, or threatened
release at any location of any Hazardous Materials, except in any such case
which would not be reasonably expected to have a Material Adverse Effect.
(b) To the best knowledge of SPI, there have been no spills or releases
of Hazardous Materials at any of the Properties in excess of quantities
reportable under Environmental Laws, except in any such case which would not be
reasonably expected to have a Material Adverse Effect.
(c) There are no consent decrees, consent orders, judgments, judicial
or administrative orders, or Encumbrances by any governmental authority relating
to any Environmental Law which have not already been fully satisfied and which
regulate, obligate, or bind SPI or any of its Subsidiaries, except in any such
case which would not be reasonably expected to have a Material Adverse Effect.
(d) Except as set forth in Section 4.11(d) of the Disclosure Schedule,
no Properties or Facilities are listed on the federal National Priorities List,
the federal Comprehensive Environmental Response Compensation Liability
Information System list, or any similar state listing of sites known to be
contaminated with Hazardous Materials.
4.12 Real Properties. Neither SPI nor any of its Subsidiaries
currently owns, and neither SPI nor any of its Subsidiaries or any of their
respective predecessors have ever owned, fee title to any Properties. Section
4.12 of the Disclosure Schedule lists all Leased Real Estate leased by SPI or
any of its Subsidiaries. SPI has delivered or caused to be delivered to Modtech
complete and accurate copies of the Leases which relate to the Leased Real
Estate, together with all amendments or supplements thereto. SPI has not
received written notice of condemnation or eminent domain proceedings pending or
threatened against any Leased Real Estate. Except as disclosed in Section 4.12
of the Disclosure Schedule, SPI has not received any notice from any city,
village or other Person of any zoning, ordinance, building, fire or health code
or other legal violation in respect of
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any Leased Real Estate. The Leases are in full force and effect and are valid,
binding and enforceable in accordance with their respective terms; (i) no amount
payable under any Lease is past due; (ii) SPI is in compliance in all material
respects with all commitments and obligations on its part to be performed or
observed under each Lease and is not aware of the failure by any other party to
any Lease to comply in all material respects with all of its commitments and
obligations; (iii) SPI has not received any written notice (A) of a default,
offset or counterclaim under any Lease, or, any other communication calling upon
it to comply with any provision of any Lease or asserting noncompliance, or
asserting SPI has waived or altered its rights thereunder, and no event or
condition has happened or presently exists which constitutes a default or, after
notice or lapse of time or both, would constitute a default under any Lease on
the part of SPI or, to the best knowledge of SPI, any other party, or (B) of any
Action against any party under any Lease which if adversely determined would
result in such Lease being terminated or cut off; and (iv) SPI has not assigned,
mortgaged, pledged or otherwise encumbered its interest, if any, under any
Lease.
4.13 Tangible Personal Property. Except as disclosed in Section 4.13
of the Disclosure Schedule, SPI and its Subsidiaries (i) have good and valid
title to all the tangible personal property material to its business and
reflected in the latest audited consolidated financial statements of SPI as
being owned by SPI and its Subsidiaries or acquired after the date thereof
(except properties sold or otherwise disposed of in the ordinary course of
business since the date thereof), free and clear of all Encumbrances except
Permitted Encumbrances, and (ii) are collectively the lessee of all tangible
personal property material to SPI's business and reflected as leased in the
latest audited consolidated financial statements of SPI (or on the books and
records of SPI as of the date thereof) or acquired after the date thereof
(except for leases that have expired by their terms or that have been
transferred in the ordinary course of business) and are in possession of the
properties purported to be leased thereunder, and each such lease is valid and
in full force and effect without default thereunder by the lessee or, to SPI's
knowledge, the lessor. Each of SPI and each of its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases. Such owned and leased tangible
personal property is in good working order, reasonable wear and tear excepted.
4.14 Intellectual Property. Section 4.14 of the Disclosure Schedule
sets forth a listing of all intellectual property rights utilized by SPI or its
Subsidiaries other than intellectual property rights relating to the plans and
designs for structures manufactured by SPI and its Subsidiaries. The ownership,
operation and conduct by SPI and its Subsidiaries of its business, as presently
owned, operated, and conducted, does not infringe upon or conflict in any
respect with any patent, copyright, trademark, trade name, service ▇▇▇▇, brand
name, any related regulations or other intellectual property rights of any other
Person, and to the knowledge of SPI no other Person is infringing upon any such
rights of SPI and its Subsidiaries, in each case.
4.15 Absence of Changes in SPI Benefit Plans. Section 4.15 of the
Disclosure Schedule sets forth a listing of all SPI Benefit Plans (as defined
below). Except as set forth in Section 4.15 of the Disclosure Schedule, and
except as required under this Agreement, since March 31, 1998, there has not
been (i) any acceleration, amendment or change of the period of exercisability
or vesting of any SPI Options under the SPI Option Plans (including any
discretionary acceleration of
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the exercise periods or vesting by SPI's Board of Directors or any committee
thereof or any other persons administering the SPI Option Plans) or
authorization of cash payments in exchange for any SPI Options under the SPI
Option Plan, (ii) any adoption or material amendment by SPI or any of its
Subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, stock appreciation right,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical, worker's compensation, disability, supplementary unemployment benefits,
or other plan, arrangement or understanding (whether or not legally binding) or
any employment agreement providing compensation or benefits to any current or
former employee, officer, director or independent contractor of SPI or any of
its Subsidiaries or any beneficiary thereof or entered into, maintained or
contributed to, as the case may be, by SPI or any of its Subsidiaries
(collectively, "SPI Benefit Plans"), or (iii) any adoption of, or amendment to,
or change in employee participation or coverage under, any SPI Benefit Plans
which would increase materially the expense of maintaining such SPI Benefit
Plans above the level of the expense incurred in respect thereof for the fiscal
year ended March 31, 1998.
4.16 ERISA Compliance.
(a) Section 4.16(a) of the Disclosure Schedule contains a list of all
"employee pension benefit plans" (defined in Section 3(2) of ERISA), "employee
welfare benefit plans" (defined in Section 3(l) of ERISA) and all other SPI
Benefit Plans. With respect to each SPI Benefit Plan, SPI has delivered or made
available to Modtech a true, correct and complete copy of: (A) each writing
constituting a part of such SPI Benefit Plan, including without limitation all
plan documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (B) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (C) the current summary plan description, if any;
(D) the most recent annual financial report, if any; and (E) the most recent
determination letter from the United States Internal Revenue Service, if any.
(b) Section 4.16(b) of the Disclosure Schedule identifies each SPI
Benefit Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("Qualified Plans"). The Internal Revenue Service has
issued a favorable determination letter with respect to each Qualified Plan that
has not been revoked, and, except as set forth in Section 4.16(b) of the
Disclosure Schedule, there are no existing circumstances nor any events that
have occurred that could adversely affect the qualified status of any Qualified
Plan or the related trust.
(c) Except as set forth in Section 4.16(c) of the Disclosure Schedule,
SPI and its Subsidiaries have complied, and are now in compliance, in all
material respects with all provisions of ERISA, the Code, and all laws and
regulations applicable to the SPI Benefit Plans of which the failure to comply
with would have a Material Adverse Effect. No prohibited transaction has
occurred with respect to any SPI Benefit Plan. All contributions required to be
made to any SPI Benefit Plan by applicable law or regulation or by any plan
document or other contractual undertaking, and all premiums due or payable with
respect to insurance policies funding any SPI Benefit Plan, for any period
through the date hereof have been timely made or paid in full or, to the
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extent not required to be made or paid on or before the date hereof, have been
fully reflected in the latest audited consolidated financial statements of SPI.
(d) No SPI Benefit Plan is subject to Title IV or Section 302 of ERISA
or Section 412 or 4971 of the Code. None of SPI, its Subsidiaries and their
respective ERISA Affiliates (as defined below) has at any time since September
2, 1974, contributed to or been obligated to contribute to any "multiemployer
plan" within the meaning of Section 4001(a)(3) of ERISA or any plan with two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA. There does not now exist, nor do
any circumstances exist that could result in, any Controlled Group Liability (as
defined below) that would be a liability of SPI or any of its Subsidiaries
following the Closing. "ERISA Affiliate" for purposes of this Section means,
with respect to any entity, trade or business, any other entity, trade or
business that is a member of a group described in Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity,
trade or business, or that is a member of the same "controlled group" as the
first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
"Controlled Group Liability" for purposes of this Section means any and all
liabilities under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii)
Sections 412 and 4971 of the Code, (iv) the continuation coverage requirements
of Section 601 et seq. of ERISA and Section 4980B of the Code, and (v)
corresponding or similar provisions of foreign laws or regulations, other than
such liabilities that arise solely out of, or relate solely to, the SPI Benefit
Plans.
(e) Except as set forth the latest audited consolidated financial
statements of SPI or in Section 4.16(e) of the Disclosure Schedule, neither SPI
nor any of its Subsidiaries has any liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof,
except for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and at no expense to SPI and its Subsidiaries.
(f) Except as set forth in the latest audited consolidated financial
statements of SPI or in Section 4.16(f) of the Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with any
other event) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any employee of SPI
or any of its Subsidiaries. Without limiting the generality of the foregoing, no
amount paid or payable by SPI or any of its Subsidiaries in connection with the
transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(g) Except as set forth in Section 4.16(g) of the Disclosure Schedule,
no labor organization or group of employees of SPI or any of its Subsidiaries
has made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or
filed, with the National Labor Relations Board or any other labor relations
tribunal or authority. There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material
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grievances, or other material labor disputes pending or, to the knowledge of
SPI, threatened against or involving SPI or any of its Subsidiaries.
(h) There are no pending or, to SPI's knowledge, threatened claims, and
the fiduciaries of the SPI Benefit Plans have not advised SPI that with respect
to their duties to the SPI Benefit Plans or the assets or any of the trusts
under any of the SPI Benefit Plans, there are any pending or threatened claims
(other than claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted against the SPI Benefit
Plans, which could reasonably be expected to result in any material liability of
SPI or any of its Subsidiaries to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor or any multiemployer benefit
plan.
4.17 Taxes.
(a) SPI and its Subsidiaries have duly prepared and filed federal,
state, local and foreign Returns which were required to be filed by or in
respect of SPI and its Subsidiaries, or any of their Properties, income and/or
operations. As of the time they were filed, such Returns accurately reflected
the material facts regarding the income, business, Assets, operations,
activities, status of the entity on whose behalf the Return was filed, and any
other information required to be shown thereon. No extension of time within
which SPI or any of its Subsidiaries may file any Return is currently in force.
(b) With respect to all amounts in respect of Taxes imposed on SPI or
any of its Subsidiaries or for which SPI or any of its Subsidiaries is or could
be liable, whether to taxing authorities or to other Persons, all material
amounts required to be paid by or on behalf of SPI or any of its Subsidiaries to
taxing authorities or others have been paid.
(c) SPI has not been advised that there is any review or audit in
process by any taxing authority of any Tax liability of SPI or any of its
Subsidiaries currently in progress. SPI and its Subsidiaries have not received
any written notice of any pending or threatened audit by the Internal Revenue
Service or any state, local or foreign agency of any Returns or Tax liability of
SPI or any of its Subsidiaries for any period. SPI and its Subsidiaries
currently have no unpaid deficiencies assessed by the Internal Revenue Service
or any state, local or foreign taxing authority arising out of any examination
of any of the Returns of SPI or any of its Subsidiaries nor, to the knowledge of
SPI, is there reason to believe that any material deficiency will be assessed.
(d) No agreements are in force or are currently being negotiated by or
on behalf of SPI or any of its Subsidiaries for any waiver or for the extension
of any statute of limitations governing the time of assessments or collection of
any Tax. No closing agreements or compromises concerning Taxes of SPI or any
Subsidiaries are currently pending.
(e) SPI and its Subsidiaries have withheld from each payment made to
any of their respective officers, directors and employees, the amount of all
applicable Taxes, including, but not
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limited to, income tax, social security contributions, unemployment
contributions, backup withholding and other deductions required to be withheld
therefrom by any Tax law and have paid the same to the proper Taxing authorities
within the time required under any applicable Tax law.
(f) There are no Encumbrances for Taxes, whether imposed by any
federal, state, local or foreign taxing authority, outstanding against any
Assets owned by SPI or its Subsidiaries, except for Encumbrances for Taxes that
are not yet due and payable. None of the Assets owned by SPI or its Subsidiaries
is property that is required to be treated as being owned by any other Person
pursuant to the safe harbor lease provisions of former Section 168(f)(8) of the
Code. None of the assets owned by SPI or its Subsidiaries directly or indirectly
secures any debt, the interest on which is tax-exempt under Section 103(a) of
the Code. None of the Assets owned by SPI or its Subsidiaries is "tax-exempt use
property" within the meaning of Section 168(h) of the Code. None of SPI or any
of its Subsidiaries is a person other than a United States person within the
meaning of the Code.
(g) Neither SPI nor any of its Subsidiaries is a party to any
agreement, contract, or arrangement for compensating any employee that,
individually or collectively, could give rise to the payment of any amount
(whether in cash or property, including SPI Shares or other Equity Interests)
that would not be deductible pursuant to the terms of Sections 162(a)(1),
162(m), 162(n) or 280G of the Code.
(h) Neither SPI nor any of its Subsidiaries anticipate the assessment
of any additional Taxes against SPI or any of its Subsidiaries nor is SPI or any
of its Subsidiaries aware of any unresolved questions, claims or disputes
concerning the liability for Taxes of SPI or any of its Subsidiaries which would
exceed by more than $500,000 the reserves established on the consolidated
balance sheet of SPI as of June 30, 1998.
4.18 Contracts; Debt Instruments.
(a) Except as otherwise disclosed in Section 4.18(a) of the Disclosure
Schedule, neither SPI nor any of its Subsidiaries is a party to or subject to:
(i) any collective bargaining or other agreements with labor
unions, trade unions, employee representatives, work committees, guilds
or associations representing employees of SPI and its Subsidiaries;
(ii) any employment, consulting, severance, termination, or
indemnification agreement, contract or arrangement, including any oral
agreement, contract or arrangement which requires the payment of over
$75,000, with any current or former officer, consultant, director or
employee;
(iii) any lease for real or personal property in which the
amount of payments which SPI is required to make, or is expected to
receive, on an annual basis exceeds $50,000;
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(iv) any agreement, contract, instrument, arrangement or
commitment to repurchase assets previously sold or leased, or to
indemnify or otherwise compensate the purchaser in respect thereof;
(v) any agreement, contract, policy, license, document,
instrument, arrangement or commitment that materially limits the
freedom of SPI or any of its Subsidiaries to compete in any line of
business or with any person;
(vi) any agreement or contract relating to any outstanding
commitment for material capital expenditures, or any partially or fully
executory agreement or contract relating to the acquisition or
disposition of rights or assets other than those entered into in the
ordinary course consistent with past practices;
(vii) any sale-leaseback, conditional sale, exclusive dealing,
brokerage, finder's fee contract or agreement; or
(viii) any other agreement, contract, policy, license,
document, instrument, arrangement or commitment not made in the
ordinary course of business which is material to SPI and its
Subsidiaries taken as a whole and which is not otherwise disclosed in
the Disclosure Schedules.
(b) None of SPI, its Subsidiaries and, to the knowledge of SPI, none of
the other parties to any of the contracts and agreements identified in Sections
4.18(a) and (c) of the Disclosure Schedule is in default under or has terminated
any such contract or agreement, or in any way expressed to SPI an intent to
materially reduce or terminate the amount of its business with SPI or any of its
Subsidiaries in the future.
(c) Set forth in Section 4.18(c) of the Disclosure Schedule is (A) a
list of all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any indebtedness of SPI or
any of its Subsidiaries is outstanding or may be incurred, (B) the respective
principal amounts currently outstanding thereunder, and (C) any interest rate
swaps, caps, floors or option agreements or similar interest rate risk
management agreements. Except as set forth in Section 4.18(c) of the Disclosure
Schedule, all such indebtedness is prepayable at any time without penalty,
subject to the notice provisions of the agreements governing such indebtedness
(which, except as set forth in Section 4.18(c) of the Disclosure Schedule, do
not require a notice period of more than thirty days). For purposes of this
Section 4.18(c), "indebtedness" shall mean, with respect to any Person, without
duplication, (A) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind to such Person, (B) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such Person upon which interest charges are customarily paid,
(D) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such Person, (E) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such Person to creditors for raw
materials, inventory, services and
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supplies incurred in the ordinary course of such Person's business), (F) all
capitalized lease obligations of such Person, (G) all indebtedness of others
secured by any Lien on property or assets owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (H) all
obligations of such Person under interest rate or currency swap transactions
(valued at the termination value thereof), (I) all letters of credit issued for
the account of such Person, (J) all obligations of such Person to purchase
securities (or other property) which arises out of or in connection with the
sale of the same or substantially similar securities or property, and (K) all
guarantees and arrangements having the economic effect of a guarantee of such
Person of any indebtedness of any other person.
4.19 Insurance. SPI and its Subsidiaries are covered by valid and
currently effective insurance policies issued in favor of SPI that are customary
for companies of similar size and financial condition which conduct similar
businesses; provided, that SPI currently does not have in force any directors
and officers liability insurance coverage. All such policies are in full force
and effect, all premiums due thereon have been paid and SPI has complied with
the provisions of such policies with respect to which the failure to comply with
would result in a cancellation of such policies. Neither SPI nor any of its
Subsidiaries has received any written notice from or on behalf of any insurance
carrier issuing policies or binders relating to or covering SPI and its
Subsidiaries that there will be a cancellation or non-renewal of existing
policies or binders, or material modification of any of the methods of doing
business, will be required.
4.20 Interests of Officers and Directors. Except as set forth in
Section 4.20 of the Disclosure Schedule, neither any of SPI's or any of its
Subsidiaries' officers, directors or material shareholders nor any member of
their respective immediate families or any entity with respect to which any such
person is an Affiliate, has any material interest in any property, real or
personal, tangible or intangible, used in or pertaining to the business of SPI
or its Subsidiaries, or any other business relationship with SPI or any of its
Subsidiaries.
4.21 No Brokers. Except as set forth in Section 4.21 of the Disclosure
Schedule, no broker, finder, investment banker, or other Person or firm is
entitled to any brokerage, finder's or other similar fee or commission in
connection with this Agreement or the transactions contemplated hereby based
upon arrangements made by or on behalf of SPI, any of its Subsidiaries or any of
their respective directors, officers or employees.
4.22 Customers. Section 4.22 of the Disclosure Schedule sets forth a
list of the names of the twenty (20) most significant customers (by revenue) of
SPI and its Subsidiaries that ordered goods or products from SPI or any of its
Subsidiaries and the amount for which each such customer was invoiced during the
12-month period ended March 31, 1998. Neither SPI nor any of its Subsidiaries
has received any notice that any significant customer of SPI or any of its
Subsidiaries has ceased, will cease, or has significantly reduced, or will
significantly reduce its ordering of goods or products from SPI or any of its
Subsidiaries, nor are SPI or any of its Subsidiaries aware of any circumstances
that could reasonably be anticipated to cause any such reduction or cessation of
orders.
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4.23 Suppliers. Section 4.23 of the Disclosure Schedule sets forth a
list of the names of the twenty (20) most significant suppliers of raw materials
and other goods to SPI and its Subsidiaries for the 12-month period ended March
31, 1998. Neither SPI nor any of its Subsidiaries has received any notice that
any such supplier will cease selling raw materials or other goods to them at any
time after the Closing or materially alter the terms of such sales (other than
normal price increases), nor is SPI or any of its Subsidiaries aware of any
circumstances that could reasonably be anticipated to cause such suppliers to
make such changes.
4.24 Employees. To the best knowledge of SPI, no executive, key
employee or group of employees has any plans to terminate employment with SPI or
any of its Subsidiaries. Except as set forth in Section 4.24 of the Disclosure
Schedule, neither SPI nor any of its Subsidiaries is a party to or bound by a
collective bargaining agreement, nor does SPI have any knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the employees of SPI or its Subsidiaries.
4.25 Product Liability. Each product manufactured by SPI and its
Subsidiaries has been manufactured, sold, delivered and installed in all
material respects in accordance with applicable plans, specifications, laws
(including building codes and regulations) and applicable industry standards.
4.26 Information in Joint Proxy Statement/Prospectus and Form S-4.
Information supplied by SPI or any of its Subsidiaries for inclusion or
incorporation by reference in (i) the Joint Proxy Statement/Prospectus (as
hereinafter defined) (or any amendment thereof or supplement thereto), at the
date mailed to SPI stockholders and Modtech stockholders and at the time of the
respective meetings of the SPI stockholders and of the Modtech stockholders
contemplated hereby, and (ii) the Form S-4 (as hereinafter defined) at any time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented
and at any time it becomes effective under the Securities Act, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
4.27 Disclosure. The representations and warranties of SPI contained
in this Agreement are true and correct in all material respects and do not omit
any material fact necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. There is no
fact known to SPI which has not been disclosed to Modtech in the Disclosure
Schedule and the latest audited consolidated financial statements of SPI, taken
as a whole, which has had, or would reasonably be expected to have, a Material
Adverse Effect.
4.28 Year 2000 Matters. To the best knowledge of SPI, the information
systems utilized by SPI and each of its Subsidiaries are capable of properly
recognizing date sensitive information when the year changes to 2000, and as
such, the year change to 2000, as it relates to the information systems of SPI
and its Subsidiaries, will not result in a material disruption of the business
of SPI or any of its Subsidiaries.
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ARTICLE V
COVENANTS
5.1 Conduct of Business by Modtech or SPI. Commencing the date after
the date hereof and at all times prior to the Effective Time or the date, if
any, on which this Agreement is earlier terminated pursuant to Article 7 hereof
(the "Termination Date"), and except as may be required pursuant to this
Agreement, or as disclosed or contemplated in the Disclosure Schedule (including
the agreements and contemplated agreements referred to therein, and the
consummation of the transactions contemplated by such agreements) or as may be
consented to in writing by the other, Modtech and SPI:
(a) shall, and shall cause each of their respective Subsidiaries to,
conduct their respective operations according to their ordinary and usual course
of business; provided, however, that this provision shall not prohibit the
acquisition by SPI of a nonresidential modular building manufacturer located in
the Southeastern United States or the other transactions contemplated to be
consummated in connection therewith on terms substantially similar to those
discussed with the chief executive officer of Modtech (the "Proposed
Acquisition"); and provided, further, that SPI shall be permitted to update its
Disclosure Schedules to reflect the completion of the Proposed Acquisition, and
that any such updating shall not constitute a breach of any of the
representations or warranties of SPI made herein, or any other provision of this
Agreement;
(b) shall, and shall cause each of their respective Subsidiaries to,
use their best efforts to preserve intact their respective business
organizations and good will in all material respects, keep available the
services of their respective partners, officers and employees as a group and
maintain satisfactory relations with lessees, suppliers, distributors,
customers, banks and others having business relationships with them;
(c) shall confer on a regular and frequent basis with one or more
representatives of the other to report operational matters of a material nature
and the general status of ongoing operations, subject to compliance with
applicable law;
(d) shall notify the other of any emergency or other change in the
normal course of their or their respective Subsidiaries' respective businesses
or in the operation of their or their respective Subsidiaries' Properties and of
any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) if such emergency, change,
complaint, investigation or hearing or the effect thereof would be material to
the business, operations or financial condition of either Modtech or SPI and
their respective Subsidiaries, as the case may be, taken as a whole;
(e) shall not declare or pay any dividends on their outstanding shares
of capital stock;
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(f) shall not, except as otherwise provided in this Agreement, enter
into or amend in any material respect any employment, severance or similar
agreement or any agreement or agreement in principle with respect to, any
merger, consolidation or business combination (other than the Mergers), any
acquisition of a material amount of assets or securities, any disposition of a
material amount of assets or securities or any release or relinquishment of any
material contract rights not in the ordinary course of business; provided,
however, that this provision shall not prohibit the Proposed Acquisition by SPI;
(g) shall not propose or adopt any amendments of their respective
organizational documents;
(h) shall not issue any shares of their capital stock (except upon
exercise of warrants and options issued and outstanding on the date hereof),
effect any stock split, issue any debt securities or borrow any money (other
than bank borrowings in the ordinary course of business consistent with past
practice, borrowings by SPI necessary to consummate the Proposed Acquisition),
or otherwise change its capitalization as it existed on the date hereof;
(i) shall not grant, confer or award any options, warrants, calls,
subscriptions, convertible securities or other securities, or enter into any
agreements, commitments or obligations which would require Modtech or SPI to
acquire any shares of its capital stock except pursuant to employee benefit
plans, programs or arrangements in existence on the date hereof, in the ordinary
course of business and consistent with past practice;
(j) shall not purchase or redeem any shares of their own capital stock,
Modtech Shares or SPI Shares; and
(k) shall not agree in writing, or otherwise, to take any of the
foregoing actions or any action which would make any of their respective
representations or warranties in Articles III or IV hereof untrue or incorrect.
5.2 Meetings of Stockholders. Each of Modtech and SPI will take all
action necessary in accordance with applicable law and its organizational
documents to convene a meeting of its stockholders as promptly as practicable to
consider and vote upon the adoption of this Agreement and the transactions
contemplated hereby, as required by applicable law. The Boards of Directors of
Modtech and SPI will recommend that their respective stockholders vote in favor
of such adoption, and Modtech and SPI will each take all lawful action to
solicit such approval, including, without limitation, timely mailing the Joint
Proxy Statement/Prospectus; provided, however, that nothing contained in this
Section 5.2 shall prohibit either Modtech or SPI from 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, or having any communication with,
their respective stockholders if, in the good faith judgment of the Board of
Directors of Modtech or SPI, as applicable, after consultation with outside
counsel, failure so to disclose or communicate would be inconsistent with its
fiduciary duties under applicable law. The respective meetings of the
stockholders of Modtech
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and SPI shall be held as soon as practicable and in any event (to the extent
permissible under applicable law) within twenty (20) days after the date upon
which the Joint Proxy Statement/Prospectus shall have been approved for release
to the stockholders of Modtech and SPI by the SEC; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, Modtech
and SPI may adjourn or postpone their respective meetings of stockholders to the
extent necessary, in the opinion of their respective counsel, to supplement or
amend the Joint Proxy Statement/Prospectus in advance of a vote on this
Agreement and the Mergers. Modtech and SPI shall coordinate and cooperate with
respect to the timing of such meetings and shall endeavor to hold such meetings
on the same day.
5.3 Further Assurance and Cooperation. Subject to the terms and
conditions herein provided, Modtech and SPI agree to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement and to
cooperate with each other in connection therewith, (a) to obtain all necessary
waivers, consents and approvals from other parties to material loan agreements,
leases and other contracts (provided that neither Modtech nor SPI shall agree to
any substantial modification to any such agreement, lease or contract or to any
payment of funds in order to obtain such waiver, consent or approval without the
prior written consent of the other), (b) to defend any lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, (c) to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated thereby, (d) to effect all necessary registrations and
filings (including any registrations and filings which may be required to be
made by Holdings pursuant to any federal or state securities laws), and (e) to
fulfill all conditions to this Agreement.
5.4 Certain Filings and Consents. Each of Modtech and SPI shall (a)
promptly make the required filings and submissions under the HSR Act, (b)
cooperate with the other in determining whether any other filings are required
to be made or consents, approvals, permits or authorizations are required to be
obtained under any federal, state, local or foreign law or regulation or whether
any consents, approvals or waivers are required to be obtained from other
parties to loan agreements, leases or other contracts in connection with the
consummation of the Mergers and the other transactions contemplated by this
Agreement, and (c) actively assist each other in obtaining any consents,
permits, authorizations, approvals or waivers which are required. Each of
Modtech and SPI shall promptly inform the other of any material communication
between such party and any government or governmental authority regarding the
Mergers or the other transactions contemplated by this Agreement. If Modtech or
SPI receives a request for additional information or documentary material from
any such government or governmental authority, then such party shall endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response to such
request. Modtech and SPI shall cooperate in connection with reaching any
understandings, undertaking or agreements (oral or written) involving any
government or any governmental authority in connection with the transactions
contemplated hereby.
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5.5 Publicity. The initial press release relating to this Agreement
and all press releases or public statements thereafter with respect to the
transactions contemplated hereby shall be joint press releases or statements.
Subject to their respective legal obligations (including requirements of stock
exchanges and other similar regulatory bodies), Modtech and SPI shall consult
with each other in making any filings with any governmental or regulatory
authorities or with any national securities exchange.
5.6 Joint Proxy Statement/Prospectus and Form S-4.
(a) Modtech and SPI will cooperate and promptly prepare and file with
the SEC as soon as practicable a joint proxy statement/prospectus and necessary
forms of proxy in connection with the vote of Modtech's and SPI's stockholders
with respect to the Mergers and the offer to such stockholders of the securities
to be issued pursuant to the Mergers (the "Joint Proxy Statement/Prospectus")
and will cause Holdings to prepare and file with the SEC the registration
statement on Form S-4 (the "Form S-4") under the Securities Act, in which the
Joint Proxy Statement/Prospectus shall be included as a prospectus. Modtech and
SPI will cause the Form S-4 to comply in all material respects with the
applicable provisions of the Securities Act and the Exchange Act. Each of
Modtech and SPI will use its best efforts to have the Form S-4 declared
effective by the SEC as promptly as practicable and to keep the Form S-4
effective as long as is necessary to consummate the Mergers. Modtech and SPI
will cause Holdings to take any action required to be taken to obtain, prior to
the effective date of the Form S-4, all necessary state securities law or "Blue
Sky" permits or approvals required to carry out the transactions contemplated by
this Agreement and all expenses incident thereto will be paid 68% by Modtech and
32% by SPI. No amendment or supplement to the Form S-4 or the Joint Proxy
Statement/Prospectus will be made by Modtech or SPI without the approval of the
other party, such approval not to be unreasonably withheld or delayed. Each of
SPI and Modtech shall use reasonable efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to its respective stockholders as soon as
practicable after the date hereof.
5.7 Listing Application. Each of Modtech and SPI will cause Holdings
to promptly prepare and submit to Nasdaq a listing application covering the
shares of Holdings Common Stock issuable in the Mergers, and will use its best
efforts to obtain, prior to the Effective Time, approval for the listing of such
Holdings Common Stock, subject to official notice of issuance.
5.8 Further Action. Each of Modtech and SPI will, subject to the other
terms and conditions set forth herein and to the fulfillment at or before the
Effective Time of each of the conditions of performance set forth herein or the
waiver thereof, perform such further acts and execute such documents as may be
reasonably required to effect the Mergers. Each of Modtech and SPI will permit
the other and its authorized representatives full access to all of its and its
Subsidiaries premises, properties, personnel, books, records, contracts and
documents, and each party will use commercially reasonable efforts to cause its
representatives to furnish to the other party and its authorized representatives
such additional financial and operating data and other information
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concerning its businesses and properties (and those of its Subsidiaries) as the
other or its duly authorized representatives may from time to time reasonably
request.
5.9 Lockup Agreements. Each of Modtech and SPI will use all reasonable
efforts to deliver or cause to be delivered to the other, prior to the Closing
Date, from each of their respective "affiliates" within the meaning of Rule 145
of the rules and regulations promulgated under the Securities Act, a lockup
agreement pursuant to which each such affiliate will agree not to sell any
shares of Holdings for a period of 90 days following the Effective Time (the
"Lockup Agreement"). Holdings will be entitled, to the extent it is so required
by applicable law (as advised by outside counsel experienced in such matters) to
place legends as specified in such Lockup Agreements on the certificates
evidencing any Holdings Common Stock or Holdings Preferred Stock to be received
by such affiliates pursuant to the terms of this Agreement, and to issue
appropriate stop-transfer instructions to the transfer agent for Holdings Common
Stock, consistent with the terms of such Lockup Agreements.
5.10 Expenses. Whether or not the Mergers are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such expenses except as
expressly provided herein, and except that (i) the filing fee in connection with
the HSR Act filings of SPI and Modtech and the affiliates of SPI and Modtech,
(ii) the filing fee in connection with the filing of the Form S-4 or Joint Proxy
Statement/Prospectus with the SEC, and (iii) the expenses incurred in connection
with the preparation, printing and mailing of the Form S-4 and the Joint Proxy
Statement/Prospectus, will be paid 68% by Modtech and 32% by SPI. In addition,
SPI will reimburse Modtech for 32% of the cost of obtaining the Fairness
Opinion. Following consummation of the Mergers, Holdings will reimburse Modtech
and SPI for their reasonable expenses payable to third parties and incurred in
connection with this Agreement and the transactions contemplated hereby,
including amounts paid by SPI to Modtech to reimburse Modtech for 32% of the
cost of the Fairness Opinion. The provisions of this Section 5.10 will survive
the consummation of the Mergers.
5.11 Notice of Change in Representations and Warranties. Modtech and
SPI will each give prompt notice to the other of (i) any change in its condition
or any event causing a breach of any of its representations and warranties, (ii)
the occurrence or non-occurrence of any event which would, or which would be
reasonably likely to, cause any conditions to their obligations to effect the
Mergers and other transactions contemplated hereby not to be satisfied in any
material respect, and (iii) their failure to satisfy in any material respect any
covenant or condition to be complied with by them pursuant to this Agreement.
5.12 Consents. Modtech and SPI will use all reasonable efforts to
obtain each of the consents identified in Section 3.6 and 4.6, respectively, of
the Disclosure Schedule.
5.13 Letter of Modtech's Accountants. Modtech shall use reasonable
efforts to cause to be delivered to SPI and Holdings a letter of KPMG Peat
Marwick LLP, Modtech's independent auditors, dated a date within two business
days before the date on which the Form S-4 shall become
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effective and addressed to Holdings, in form reasonably satisfactory to SPI and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
5.14 Letter of SPI's Accountants. SPI shall use reasonable efforts to
cause to be delivered to Modtech and Holdings a letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
SPI's independent auditors, dated a date within two business days before the
date on which the Form S-4 shall become effective and addressed to Holdings, in
form reasonably satisfactory to Modtech and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
5.15 Registration Statement on Form S-8. On or promptly after the 90th
day following the Effective Time, Modtech and SPI shall cause Holdings to
prepare and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Holdings Common Stock at
least equal to the number of shares of Holdings Common Stock subject to options
to be received by the holders of Modtech and SPI options pursuant to Section
2.1(c). Such registration statement shall be kept effective (and the current
status of the prospectus or prospectuses required thereby shall be maintained)
at least for so long as any options with respect to Holdings Common Stock
received by the holders of Modtech or SPI options pursuant to Section 2.1(c)
remain outstanding.
5.16 Tax Matters Certificates. In connection with the opinions to be
rendered by counsel to Modtech and SPI pursuant to Sections 6.2(e) and 6.3(e),
respectively, tax certificates shall be delivered to such counsel which
certificates shall be from such parties and in such form and substance as may
reasonably be required by such counsel. Such counsel shall, in rendering such
opinions, be entitled to rely on the representations contained in such tax
certificates.
5.17 Assumption of Obligations by Holdings, Modtech Sub and SPI Sub.
As soon as practicable after the formation of Holdings, Modtech and SPI (i)
shall cause Holdings to sign and become a party to this Agreement and to assume
the obligations applicable to it hereunder, and (ii) shall cause Modtech Sub and
SPI Sub to sign and become parties to this Agreement and to assume their
respective obligations hereunder and under the agreements of merger contained
herein. Upon their execution of this Agreement, Holdings, Modtech Sub and SPI
Sub will be bound by the provisions hereof and Modtech and SPI hereby agree that
upon such execution such entities shall be parties hereto.
5.18 Representations and Warranties of Holdings. Modtech and SPI shall
cause Holdings to deliver, on the Closing Date, a certificate of an executive
officer containing representations and warranties substantially to the effect of
those representations and warranties set forth in Articles III and IV of this
Agreement.
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5.19 Development of Holdings Business Plan. Promptly following the
execution of this Agreement, representatives of Modtech and SPI shall jointly
develop a business plan for the operation of Holdings following the Closing.
5.20 Payment of Transaction Fees; Transaction Advisory Agreement.
Modtech and SPI shall cause Holdings to pay the fees set forth in Section 3.21
and Section 4.21, respectively, of the Disclosure Schedule. In addition to the
payment of the fees described in the preceding sentence, Modtech and SPI shall,
in connection with the Closing, cause Holdings, following approval thereof by
the Independent Directors, to enter into the Transaction Advisory Agreement with
KRG Capital, in substantially the form set forth in Exhibit F (the "Transaction
Advisory Agreement").
5.21 Retention of Holdings' Financial Advisor. Modtech and SPI shall
cause Holdings to retain DLJ as financial advisor to Holdings in connection with
the Mergers.
5.22 Deregistration of Modtech Shares. Promptly after the Closing,
Holdings shall take all necessary steps to deregister the Modtech Shares with
the Securities and Exchange Commission and Nasdaq.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each of Modtech's and SPI's Obligation to Effect the
Mergers. The respective obligations of Modtech and SPI to effect the Mergers
will be subject to the fulfillment or waiver by both parties at or prior to the
Closing Date of the following conditions:
(a) The Modtech Merger and this Agreement shall have been validly
approved and adopted by the affirmative vote of the holders of at least that
number of outstanding shares of Modtech Shares required to approve the Modtech
Merger under the CGCL and Modtech's articles of incorporation at the
stockholders' meeting referred to in Section 5.2 (the "Modtech Stockholder
Approvals");
(b) The SPI Merger and this Agreement shall have been validly approved
and adopted by the affirmative vote of the holders of at least that number of
outstanding shares of SPI Shares required to approve the SPI Merger under the
CBCA and SPI's articles of incorporation at the stockholders' meeting referred
to in Section 5.2 (the "SPI Stockholder Approvals");
(c) Neither Modtech nor SPI shall be subject to any order, decree,
ruling or injunction of a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, and no law, statute, rule or
regulation shall have been promulgated or enacted by a governmental or
regulatory authority, which prohibits the consummation of the transactions
contemplated by this Agreement or would otherwise impair the ability of Holdings
to operate the business of Modtech and SPI on a consolidated basis following the
Closing and there shall be no
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pending action, proceeding or investigation by or before any governmental entity
challenging or seeking material damages in connection with the Mergers or
otherwise limiting the right of Modtech and SPI to continue their respective
operations (and those of their Subsidiaries) following the Closing;
(d) The waiting period applicable to the consummation of the Mergers
under the HSR Act shall have expired or been terminated;
(e) The Form S-4 shall have become effective and shall be effective at
the Effective Time, and no stop order suspending effectiveness of the Form S-4
shall have been issued which shall be in effect at the Effective Time, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing or, to the
knowledge of Modtech or SPI, be threatened in writing, and all necessary
approvals under state securities laws relating to the issuance or trading of
Holdings Common Stock to be issued to Modtech and SPI stockholders in connection
with the Mergers shall have been received;
(f) Holdings shall have successfully negotiated and put into effect a
credit facility on terms acceptable to Holdings, which facility shall provide
approximately $100 million in available credit, (approximately $45 million of
which shall be a term loan, $30 million of which shall be a revolving loan, and
$25 million of which shall be an acquisition line of credit);
(g) All consents, licenses, permits, authorizations, orders and
approvals of (or filings or registrations with) any governmental or regulatory
authorities, and all consents, authorizations and approvals of any other entity
(including, without limitation, any bank or financial institution) required in
connection with the execution, delivery and performance of this Agreement shall
have been obtained or made, except for filings in connection with the Mergers
and any other documents required to be filed after the Effective Time and except
where the failure to have obtained or made any such consent, license, permit,
authorization, order, approval, filing or registration would not have a Material
Adverse Effect on Holdings and its Subsidiaries, taken as a whole, following the
Effective Time;
(h) Holdings Common Stock to be issued to Modtech and SPI stockholders
in connection with the Mergers shall have been approved for listing on Nasdaq,
subject only to official notice of issuance;
(i) After the Effective Time and except as set forth in this Agreement,
no Person will have any right under any stock option plan (or any option granted
thereunder) or other plan, program or arrangement to acquire any securities of
Modtech, SPI or any of their respective Subsidiaries;
(j) Holders of Modtech Shares representing no more than 5% of the
issued and outstanding Modtech Shares shall have exercised, and not withdrawn,
their rights to dissent from the Modtech Merger;
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(k) Holders of SPI Shares representing no more than 5% of the issued
and outstanding SPI Shares shall have exercised, and not withdrawn, their rights
to dissent from the SPI Merger;
(l) All of the parties set forth on the signature page thereof shall
have entered into the Registration Rights Agreement substantially in the form of
Exhibit G;
(m) Holdings and KRG Capital shall each have entered into the
Transaction Advisory Agreement substantially in the form of Exhibit F;
(n) Such key employees as shall be identified by mutual agreement of
Modtech and SPI shall have entered into employment agreements with Holdings on
terms acceptable to Holdings;
(o) Holdings shall have delivered the certificate described in Section
5.16 of this Agreement; and
(p) The affiliates of Modtech and SPI shall have entered into the
Lockup Agreements.
6.2 Conditions to Obligation of Modtech to Effect the Mergers. The
obligation of Modtech to effect the Mergers will be subject to the fulfillment
at or prior to the Closing Date of the following additional conditions, all of
which, except paragraph (e), may be waived by Modtech:
(a) SPI shall have performed and complied in all material respects with
all material obligations and agreements required to be performed and complied
with by it under this Agreement at or prior to the Closing Date;
(b) The representations and warranties of SPI contained in this
Agreement that are qualified as to materiality shall be true and correct, and
such representations and warranties of SPI that are not so qualified shall be
true and correct in all material respects, in each case both as of the date of
this Agreement and on the Closing Date as though made on and as of the Closing
Date, except to the extent such representations and warranties are expressly
made as of an earlier date, in which case, such representations and warranties
shall be true and correct as of such date;
(c) Modtech shall have received a certificate from the President or a
Vice President of SPI, dated as of the Closing Date, to the effect that the
conditions set forth in paragraphs (a) and (b) above have been satisfied;
(d) From the date of this Agreement through the Effective Time, a
Material Adverse Effect with respect to SPI and its Subsidiaries, taken as a
whole, shall not have occurred;
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(e) Modtech shall have received a tax opinion from ▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, in form and substance reasonably satisfactory to Modtech,
substantially to the effect that, on the basis of the facts, representations and
assumptions set forth in such opinion, the Modtech Merger (together with the SPI
Merger) will be treated as an "exchange" under Section 351 of the Code;
(f) Modtech shall have received the opinion of ▇▇▇▇▇▇ & Whitney LLP,
counsel to SPI, dated the Effective Time, in form and substance reasonably
satisfactory to Modtech and its counsel; and
(g) The Fairness Opinion received by Modtech in accordance with the
provisions of Section 3.28 hereof and shall not have been amended, withdrawn or
modified in any adverse manner.
6.3 Conditions to Obligation of SPI to Effect the Mergers. The
obligation of SPI to effect the Mergers will be subject to the fulfillment at or
prior to the Closing Date of the following additional conditions, all of which,
except paragraph (e), may be waived by SPI:
(a) Modtech shall have performed and complied in all material respects
with all material obligations and agreements required to be performed and
complied with by it under this Agreement at or prior to the Closing Date;
(b) The representations and warranties of Modtech contained in this
Agreement that are qualified as to materiality shall be true and correct, and
such representations and warranties of Modtech that are not so qualified shall
be true and correct in all material respects, in each case both as of the date
of this Agreement and on the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and warranties are
expressly made as of an earlier date, in which case, such representations and
warranties shall be true and correct as of such date;
(c) SPI shall have received from Modtech a certificate from the
President or a Vice President of Modtech, dated as of the Closing Date, to the
effect that the conditions set forth in paragraphs (a) and (b) above have been
satisfied;
(d) From the date of this Agreement through the Effective Time, a
Material Adverse Effect on Modtech and its Subsidiaries, taken as a whole, shall
not have occurred;
(e) SPI shall have received a tax opinion from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, in
form and substance reasonably satisfactory to SPI, substantially to the effect
that, on the basis of the facts, representations and assumptions set forth in
such opinion, the SPI Merger will be treated as a "reorganization" within the
meaning of Section 368 of the Code; and
(f) SPI shall have received the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
and ▇▇▇▇▇▇ & Zepfel LLP, counsel to Modtech, in form and substance reasonably
satisfactory to SPI and its counsel.
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ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination or Abandonment. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated and abandoned
at any time prior to the Effective Time, whether before or after the Modtech
Stockholder Approvals and the SPI Stockholder Approvals:
(a) by the mutual written consent of Modtech and SPI;
(b) by Modtech or SPI, if the Effective Time shall not have occurred on
or before six (6) months from the date of this Agreement; provided, however,
that the right to terminate this Agreement under this Section 7.1(b) shall not
be available to any party whose breach of this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by Modtech or SPI if any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Modtech Merger or the SPI Merger;
(d) by Modtech, (i) if SPI shall materially breach any of its
representations, warranties or covenants hereunder and such breach shall not
have been cured within ten (10) business days after receipt by SPI of written
notice of such breach, (ii) if any required approval of the shareholders of SPI
has not been obtained, or (iii) if the Board of Directors of SPI shall have
withdrawn or modified its recommendation of the approval of this Agreement or
the SPI Merger in a manner adverse to Modtech or shall have resolved to do any
of the foregoing;
(e) by SPI, (i) if Modtech shall materially breach any of its
representations, warranties or covenants hereunder and such breach shall not
have been cured within ten (10) business days after receipt by Modtech of
written notice of such breach, (ii) if any required approval of the shareholders
of Modtech has not been obtained, or (iii) if the Board of Directors of Modtech
shall have withdrawn or modified its recommendation of the approval of this
Agreement or the Modtech Merger in a manner adverse to SPI or shall have
resolved to do any of the foregoing;
(f) by Modtech, at any time prior to the Effective Time, by action of
the Board of Directors of Modtech, if Modtech receives an Acquisition Proposal
on terms Modtech's Board of Directors (after consultation with its independent
financial advisors) determines in good faith to be more favorable to the
Modtech's stockholders than the terms of the Modtech Merger, and Modtech's Board
of Directors determines, upon the advice of its legal counsel, that, to continue
to recommend that holders of Modtech Shares vote in favor of the Modtech Merger,
notwithstanding the receipt of such offer with respect to an Acquisition
Proposal, or to fail to recommend or accept the Acquisition Proposal, would not
be consistent with the fiduciary duties of Modtech's Board of Directors;
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provided, however, that Modtech shall not be permitted to terminate this
Agreement pursuant to this Section 7.1(f) unless it has provided SPI with three
(3) business days' prior written notice of its intent to so terminate this
Agreement, together with a detailed summary of the terms and conditions
(including proposed financing, if any) of such Acquisition Proposal; or
(g) by SPI, at any time prior to the Effective Time, by action of the
Board of Directors of SPI, if SPI receives an Acquisition Proposal on terms
SPI's Board of Directors (after consultation with its independent financial
advisors) determines in good faith to be more favorable to the SPI's
stockholders than the terms of the SPI Merger, and SPI's Board of Directors
determines, upon the advice of its legal counsel, that, to continue to recommend
that holders of SPI Shares vote in favor of the SPI Merger, notwithstanding the
receipt of such offer with respect to an Acquisition Proposal, or to fail to
recommend or accept the Acquisition Proposal, would not be consistent with the
fiduciary duties of SPI's Board of Directors; provided, however, that SPI shall
not be permitted to terminate this Agreement pursuant to this Section 7.1(g)
unless it has provided Modtech with three (3) business days' prior written
notice of its intent to so terminate this Agreement, together with a detailed
summary of the terms and conditions (including proposed financing, if any) of
such Acquisition Proposal.
7.2 Effect of Termination.
(a) Modtech shall pay to SPI, concurrently with any termination
pursuant to Sections 7.1(e) or 7.1(f) by wire transfer in same day funds, all
documented fees and expenses of SPI related to this Agreement and the
transactions contemplated hereby, if SPI shall have satisfied all conditions to
the Closing that are or were at the time reasonably within its control and if
SPI shall not have taken any action reasonably calculated to prevent or
unreasonably delay the Closing, plus an additional fee of $2,000,000.
(b) SPI shall pay to Modtech, concurrently with any termination
pursuant to Sections 7.1(d) or 7.1(g) by wire transfer in same day funds, all
documented fees and expenses of Modtech related to this Agreement and the
transactions contemplated hereby, if Modtech shall have satisfied all conditions
to the Closing that are or were at the time reasonably within its control and if
Modtech shall not have taken any action reasonably calculated to prevent or
unreasonably delay the Closing, plus an additional fee of $2,000,000.
(c) The parties agree that the payments contemplated by Sections 7.2(a)
and 7.2 (b) are intended as liquidated damages to reimburse the other party for
all damages it may suffer as a result of termination of this Agreement. The
parties acknowledge and agree that such amounts are not a penalty, and that such
amounts are reasonable considering all the circumstances existing on the date of
this Agreement, including the relationship of the remedy to the range of harm
that could reasonably be anticipated and the anticipation that proof of actual
damages would be costly or inconvenient. The foregoing payments are each
parties' sole and exclusive remedy in the event of a termination of this
Agreement pursuant to Section 7.1 and neither party shall have any other remedy
at law or in equity as a result of such termination.
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(d) The parties acknowledge that the agreements contained in this
Section 7.2 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, neither party would enter into
this Agreement. Accordingly, if either party fails to pay promptly the amounts
due pursuant to this Section 7.2, and, in order to obtain such payments, the
other party commences a suit for the fees set forth in this paragraph, the
prevailing party shall be reimbursed by the other party its costs and expenses
(including attorneys' fees and expenses) in connection with such suit, together
with interest on the amount thereof at the prime rate of as quoted in The Wall
Street Journal on the date such payment was required to be made.
(e) In the event of termination of this Agreement pursuant to Section
7.2, this Agreement shall terminate, and there shall be no other liability on
the part of Modtech or SPI to the other, except that the liability on the
agreements contained in Section 7.2 shall survive the termination hereof, and
except liability arising out of a breach of this Agreement.
7.3 Amendment or Supplement. At any time before or after the Modtech
Stockholder Approvals and the SPI Stockholder Approvals and prior to the
Effective Time, this Agreement may be amended or supplemented in writing by
Modtech and SPI with respect to any of the terms contained in this Agreement,
except that following the Modtech Stockholder Approvals and the SPI Stockholder
Approvals there shall be no amendment or change to the provisions hereof with
respect to the Modtech Exchange Ratio or SPI Exchange Ratio as provided herein,
without further approval by the respective stockholders of Modtech and SPI.
7.4 Extension of Time; Waiver, Etc. At any time prior to the Effective
Time, Modtech and SPI may:
(a) extend the time for the performance of any of the obligations or
acts of the other party;
(b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto; and
(c) waive compliance with any of the agreements or conditions of the
other party contained herein, except the receipt of the tax opinions set forth
in Sections 6.2 and 6.3 above;
provided, however, that no failure or delay by Modtech or SPI in exercising any
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right hereunder. Any agreement on the part of a 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.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification.
(a) From and after the Effective Time, Holdings shall indemnify, defend
and hold harmless the present and former directors, officers and employees of
Modtech and SPI and their respective Subsidiaries (each, an "Indemnified Party")
against all costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of actions or
omissions as directors or officers of Modtech or SPI and their respective
Subsidiaries occurring at or prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement, to the fullest
extent that such persons are indemnified under the laws of the States of
California or Colorado and the organizational documents, as in effect on the
date hereof, of Modtech and SPI and their respective Subsidiaries or any
existing indemnification agreement with any of Modtech or SPI (and during such
period Holdings shall also advance expenses (including expenses constituting
Costs described in Section 8.1(e)) as incurred to the fullest extent permitted
under applicable law, provided that the Person to whom expenses are advanced
provides a written affirmation of his or her good faith that the standard of
conduct necessary for indemnification has been met and an undertaking to repay
such advances if it is ultimately determined that such Person is not entitled to
indemnification with no bond or security to be required); provided that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under applicable law
and any such organizational documents shall be made by independent counsel
(which shall not be counsel that provides material services to Holdings or its
Subsidiaries) selected by Holdings and reasonably acceptable to such officer or
director; and provided, further, that in the absence of applicable judicial
precedent to the contrary, such counsel, in making such determination, shall
presume such officer's or director's conduct complied with such standard and
Holdings shall have the burden to demonstrate that such officer's or director's
conduct failed to comply with such standard.
(b) For a period of not less than six (6) years after the Effective
Time, Holdings will maintain officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered, in their capacities
as current or former officers and directors of Modtech and covering similarly
situated Indemnified Parties of SPI, by existing officers' and directors'
liability insurance policy on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 8.1(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Holdings thereof; provided
that the failure so to notify shall not affect the obligations of Holdings
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under Section 8.1(a) unless and to the extent such failure materially increases
Holdings' liability under such subsection (a).
(d) If Holdings or any of its successors or assigns shall consolidate
with or merge with any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Holdings or any of its
Subsidiaries shall assume the obligations set forth in this Section 8.1.
(e) Holdings shall pay all reasonable Costs, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 8.1. The rights of each
Indemnified Party hereunder shall be in addition to any other rights such
Indemnified Party may have under applicable law.
(f) Modtech and SPI will cause Holdings to keep in effect provisions in
Holdings', New Modtech's and New SPI's organizational documents providing for
exculpation of director and officer liability and its indemnification of the
Indemnified Parties to the fullest extent permitted under the Delaware General
Corporation Law (the "DGCL"), the CGCL or the CBCA, as applicable, which
provisions will not be amended except as required by applicable law or except to
make changes permitted by law that would enlarge the Indemnified Parties' right
of indemnification.
(g) The provisions of this Section 8.1 will survive the consummation of
the Mergers and expressly are intended to benefit each Indemnified Party.
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-survival of Representations and Warranties. All
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement will be deemed to the extent expressly provided
herein to be conditions to the Mergers and will not survive the Mergers. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
9.2 Notices. Any notice required to be given hereunder will be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
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If to Modtech: If to SPI:
Modtech, Inc. SPI Manufacturing, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ Van Den Bossche
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: With copies to:
Proactive Partners, L.P. KRG Capital Partners, LLC
50 ▇▇▇▇▇▇ Place ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to counsel for Modtech: With copies to counsel for SPI:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP ▇▇▇▇▇▇ & Whitney LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq. Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
9.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 8.1, nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.4 Entire Agreement. This Agreement, the Exhibits, the Disclosure
Schedule and any documents delivered by the parties in connection herewith which
will survive the execution and delivery of this Agreement, constitute the entire
agreement among the parties with respect to the
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subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement will be binding upon any party hereto unless made in
writing and signed by all parties hereto.
9.5 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws; provided, however, that all matters covered by the CGCL will
be governed by and construed in accordance with the laws of the State of
California without regard to its rules of conflict of laws and all matters
covered by the CBCA will be governed by and construed in accordance with the
laws of the State of Colorado without regard to its rules of conflict of laws.
9.6 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered will be
an original, but all such counterparts will together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
9.7 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and will be given no substantive or
interpretive effect whatsoever.
9.8 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number will include the plural and vice
versa, and words denoting any gender will include all genders and words denoting
natural Persons will include corporations and partnerships and vice versa.
9.9 Incorporation of Schedules. The Disclosure Schedule attached
hereto and referred to herein is hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
9.10 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision will be interpreted
to be only so broad as is enforceable.
9.11 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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ARTICLE X
DEFINITIONS
10.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
"Acquisition Proposal" shall mean any proposal or offer (including,
without limitation, any proposal or offer to stockholders) with respect to a
merger, consolidation or similar transaction involving, or any purchase of all
or any significant portion of the assets or any equity securities of, Modtech or
SPI or any of the Subsidiaries of Modtech or SPI.
"Action" shall mean any action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding, arbitration or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other Person.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or through one or more intermediaries, controls or is controlled
by or is under common control with such Person.
"Assets" shall mean, with respect to any Person, all land, buildings,
improvements, leasehold improvements, Fixtures and Equipment and other assets,
real or personal, tangible or intangible, owned, leased or licensed by such
Person or any of its Subsidiaries.
"Disclosure Schedule" means the schedules dated as of the date hereof
and delivered by or on behalf of each party hereto to the other party hereto in
connection with this Agreement and which set forth exceptions to the
representations and warranties contained herein and certain other information
called for by other provisions of this Agreement.
"Election" shall mean the election contemplated by Section 2.3 hereof
with respect to the Record Holders of Modtech Shares, and the election
contemplated by Section 2.8 hereof with respect to the Record Holders of SPI
Shares.
"Election Deadline" shall mean a time not later than the time specified
in the Letter of Transmittal, at which time the shareholders of Modtech and SPI
must submit their Election Forms to the Exchange Agent.
"Election Form" shall mean a form for the purpose of making the
Elections, which form shall be delivered to Record Holders in connection with
the delivery of the definitive proxy statement for the transaction contemplated
by this Agreement.
"Encumbrances" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way, covenant,
condition, restriction, encumbrance or other rights of third parties.
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"Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, order, decree, rule or regulation relating to releases,
discharges, emissions or disposals to air, water, land or groundwater of
Hazardous Materials; to the withdrawal or use of groundwater; to the use,
handling or disposal of polychlorinated biphenyls, asbestos or urea formaldehyde
or any other Hazardous Material; to the treatment, storage, disposal or
management of Hazardous Materials; to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances; and to the transportation,
release or any other use of Hazardous Materials, including the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq.
("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.
("RCRA"), the Toxic Substances Control Act, 15 U.S.C. 2601, et seq. ("TSCA"),
the Occupational, Safety and Health Act, 29 U.S.C. 651, et seq., the Clean Air
Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
1251, et seq., the Safe Drinking ▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. 1802 et seq. ("HMTA") and the
Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001 et seq.
("EPCRA"), and other comparable state laws and all rules, regulations and
guidance documents promulgated pursuant thereto or published thereunder.
"Equity Interests" means capital stock, partnership interests or
warrants, options or other rights to acquire capital stock or partnership
interests (including any debt security which is convertible into, or
exchangeable for, capital stock or partnership interests).
"Exchange Agent" shall mean the Person selected by Modtech and SPI to
perform the duties of the exchange agent under this Agreement and shall be a
commercial bank having trust powers or a trust company, either of which shall
have a reported capital and surplus of not less than $100,000,000.
"Facilities" shall mean, with respect to any Person, all of the
offices, plants, factories, storage facilities and similar structures owned or
leased by such Person.
"Fixtures and Equipment" shall mean, with respect to any Person, all of
the furniture, fixtures, furnishings, machinery and equipment owned, leased or
licensed by such Person and located in, at or upon the Facilities of such
Person.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect from time to time, consistently applied.
"Hazardous Materials" shall mean each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance
which is defined, determined or identified as hazardous or toxic under
Environmental Laws or the release of which is regulated under Environmental
Laws. Without limiting the generality of the foregoing, the term includes:
"hazardous substances" as defined in CERCLA; "extremely hazardous substances" as
defined in EPCRA; "hazardous waste" as defined in RCRA; "hazardous materials" as
defined in HMTA; "chemical substance or mixture" as defined in TSCA; crude oil,
petroleum products or any fraction thereof;
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radioactive materials including source, byproduct or special nuclear materials;
asbestos or asbestos-containing materials; and radon.
"Independent Director" shall mean a person other than an officer,
employee or affiliate of Holdings or its subsidiaries or any other individual
having a relationship which, in the opinion of the board of directors of
Holdings, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.
"Leased Real Estate" shall mean all Properties (including all
Facilities) which are leased by any Person as lessee or sublessee.
"Leases" shall mean, with respect to any Person, all leases (including
subleases, licenses, any occupancy agreement and any other agreement) of real or
personal property, in each case to which such Person or any of its Subsidiaries
is a party, whether as lessor, lessee, guarantor or otherwise, or by which any
of them or their respective Properties or assets are bound, or which otherwise
relate to the operation of their respective businesses.
"Mailing Date" shall mean the date agreed to by Holdings, Modtech and
SPI as the date on which a Letter of Transmittal and Election Form shall be
mailed to each Record Holder of Modtech Shares and SPI Shares.
"Material Adverse Effect" shall mean, with respect to any of Holdings
(following the Mergers), Modtech or SPI, as the context requires, a material
adverse change in or effect on the business, results of operations, assets,
liabilities or conditions (financial or otherwise) or prospects of such Person
and its Subsidiaries taken as a whole or any change which impairs or materially
delays the ability of such Person to consummate the transactions contemplated by
this Agreement.
"Permitted Encumbrances" shall mean any Encumbrances resulting from (i)
all statutory or other liens for Taxes or assessments which are not yet due or
delinquent or the validity of which are being contested in good faith by
appropriate proceedings for which adequate reserves are being maintained in
accordance with GAAP; (ii) all workers' and repairers' liens, and other similar
liens imposed by law, incurred in the ordinary course of business; (iii) all
laws and governmental rules, regulations, ordinances and restrictions; (iv) all
leases, subleases or licenses to which any Person or any of its Subsidiaries is
a party; (v) Encumbrances identified on title policies or preliminary title
reports delivered or made available for inspection to any Person prior to the
date hereof; and (vi) all other liens and mortgages (but solely to the extent
such liens or mortgages secure indebtedness described in the Disclosure
Schedule), covenants, imperfections in title, charges, easements, restrictions
and other Encumbrances which, in the case of any such Encumbrances pursuant to
clause (i) through (vi), do not materially detract from or materially interfere
with the value or present use of the asset subject thereto or affected thereby.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, governmental agency or instrumentality, or any
other entity.
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"Properties" shall mean, with respect to any Person, all of the
improved and unimproved real property owned or leased by such Person.
"Record Date" shall mean the record date established in accordance with
applicable charter documents and applicable state law, by Modtech or SPI, as the
case may be, for the respective stockholders' meeting to approve the Mergers.
"Record Holder" shall mean a holder of record as of the Record Date, of
Modtech Shares or SPI Shares, as the case may be.
"Returns" shall mean all returns, declarations, reports, statements,
and other documents required to be filed with respect to federal, state, local
and foreign Taxes or for information purposes.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which at least a
majority of the Equity Interests having ordinary voting power for the election
of directors or other governing body of such organization is owned or controlled
by such Person directly or indirectly.
"Tax" or "Taxes" shall mean all federal, state, local, foreign and
other taxes, levies, imposts, assessments, impositions or other similar
government charges, including, without limitation, income, estimated income,
business, occupation, franchise, real property, payroll, personal property,
sales, transfer, stamp, use, employment, commercial rent or withholding,
occupancy, premium, gross receipts, profits, windfall profits, deemed profits,
license, lease, severance, capital, production, corporation, ad valorem, excise,
duty or other taxes, including interest, penalties and additions (to the extent
applicable) thereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
MODTECH, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
SPI HOLDINGS, INC.
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ Van Den Bossche
Title: President and Chief Executive Officer
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MODTECH, INC.
By:
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
SPI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ VAN DEN BOSSCHE
-------------------------------------
Name: ▇▇▇▇▇▇▇ Van Den Bossche
Title: President and Chief Executive Officer
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MODTECH HOLDINGS, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
MODTECH MERGER SUB, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
SPI MERGER SUB, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
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