EXHIBIT 2
RECAPITALIZATION AGREEMENT
dated as of
August 1, 2000
between
MASCOTECH, INC.
and
RIVERSIDE COMPANY LLC
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions...................................................2
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger...................................................11
SECTION 2.02. Effective Time...............................................11
SECTION 2.03. Effect of the Merger.........................................11
SECTION 2.04. Effect on Securities, Etc....................................12
SECTION 2.05. Dissenting Shares............................................14
SECTION 2.06. Treatment of Options and Restricted Stock....................14
SECTION 2.07. Surrender of Shares..........................................17
SECTION 2.08. Lost, Stolen or Destroyed Certificates.......................19
SECTION 2.09. Further Action...............................................19
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation; By-Laws........................20
SECTION 3.02. Directors and Officers.......................................20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power................................21
SECTION 4.02. Corporate Authorization......................................21
SECTION 4.03. Governmental Authorization...................................22
SECTION 4.04. Non-contravention............................................22
SECTION 4.05. Capitalization...............................................23
SECTION 4.06. Subsidiaries; Equity Investments.............................24
SECTION 4.07. SEC Filings..................................................24
SECTION 4.08. Financial Statements.........................................25
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Page
SECTION 4.09. Disclosure Documents.........................................25
SECTION 4.10. Absence of Certain Changes...................................26
SECTION 4.11. No Undisclosed Material Liabilities..........................27
SECTION 4.12. Compliance with Laws and Court Orders........................27
SECTION 4.13. Litigation...................................................27
SECTION 4.14. Finders' Fees................................................28
SECTION 4.15. Opinion of Financial Advisor.................................28
SECTION 4.16. Taxes........................................................28
SECTION 4.17. Employee Benefit Plans.......................................29
SECTION 4.18. Environmental Matters........................................31
SECTION 4.19. Antitakeover Statutes and Rights Agreement;
Company/Subsidiary Merger..................................32
SECTION 4.20. Disclaimer of Other Representations and Warranties...........32
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY
SECTION 5.01. Existence and Power..........................................32
SECTION 5.02. Authorization................................................33
SECTION 5.03. Governmental Authorization...................................33
SECTION 5.04. Non-contravention............................................33
SECTION 5.05. Disclosure Documents.........................................34
SECTION 5.06. Finders' Fees................................................34
SECTION 5.07. Financing....................................................34
SECTION 5.08. Member Appraisal Rights......................................35
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company.......................................35
SECTION 6.02. Access to Information........................................37
SECTION 6.03. Stockholder Meeting; Proxy Material..........................37
SECTION 6.04. No Solicitation..............................................38
SECTION 6.05. State Takeover Laws..........................................39
SECTION 6.06. Reports......................................................39
SECTION 6.07. Plans........................................................39
SECTION 6.08. Equity Investments...........................................40
SECTION 6.09. Confidentiality Agreement....................................40
SECTION 6.10. Issuance of Class A Preferred Stock and
Class B Preferred Stock....................................40
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Page
SECTION 6.11. Saturn Escrow................................................41
ARTICLE 7
COVENANTS OF MERGER SUBSIDIARY
SECTION 7.01. Obligations of Merger Subsidiary.............................41
SECTION 7.02. Voting of Shares.............................................41
SECTION 7.03. Director and Officer Liability...............................41
SECTION 7.04. Employee Benefits After the Merger...........................42
SECTION 7.05. Financing Arrangements.......................................43
ARTICLE 8
COVENANTS OF MERGER SUBSIDIARY AND THE COMPANY
SECTION 8.01. Commercially Reasonable Efforts..............................44
SECTION 8.02. Certain Filings..............................................44
SECTION 8.03. Public Announcements.........................................45
SECTION 8.04. Notices of Certain Events....................................45
SECTION 8.05. Confidentiality..............................................46
SECTION 8.06. Saturn Sales.................................................46
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to Obligations of Each Party......................47
SECTION 9.02. Conditions to the Obligations of Merger Subsidiary...........49
SECTION 9.03. Conditions to the Obligations of the Company.................50
ARTICLE 10
TERMINATION
SECTION 10.01. Termination..................................................51
SECTION 10.02. Effect of Termination........................................52
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices......................................................52
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Page
SECTION 11.02. Survival of Representations and Warranties...................54
SECTION 11.03. Amendments; No Waivers.......................................54
SECTION 11.04. Expenses; Topping Fee........................................54
SECTION 11.05. Successors and Assigns.......................................55
SECTION 11.06. Governing Law................................................55
SECTION 11.07. Jurisdiction.................................................55
SECTION 11.08. Waiver of Jury Trial.........................................56
SECTION 11.09. Counterparts; Effectiveness..................................56
SECTION 11.10. Entire Agreement.............................................56
SECTION 11.11. Captions.....................................................56
SECTION 11.12. Severability.................................................56
SECTION 11.13. Specific Performance.........................................57
EXHIBITS
Exhibit A - Exchange and Voting Agreement
Exhibit B - Form of Company/Subsidiary Merger Agreement
Exhibit C - Equity Investments Sale Agreement
Exhibit D - Form of Certificate of Merger
Exhibit E - Form of Certificate of Incorporation of Surviving Corporation
Exhibit F - Form of Amended By-laws
Exhibit G - Form of Certificate of Designation of Class A Preferred Stock
Exhibit H - Form of Certificate of Designation of Class B Preferred Stock
Exhibit I - Form of Subordinated Loan Agreement
SCHEDULES
Schedule A - Equity Investments
Schedule B - Knowledge of Officers
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RECAPITALIZATION AGREEMENT
RECAPITALIZATION AGREEMENT dated as of August 1, 2000 between MascoTech,
Inc., a Delaware corporation (the "Company"), and Riverside Company LLC, a
Delaware limited liability company ("Merger Subsidiary").
W I T N E S S E T H :
WHEREAS, the managers and members of Merger Subsidiary seek to acquire a
controlling interest in the Company through a transaction to be accounted for as
a recapitalization under generally accepted accounting principles; and
WHEREAS, a Special Committee (as defined herein) of the board of directors
of the Company (the "Board of Directors") has (i) approved the Company/
Subsidiary Merger (as defined herein) and the Merger (as defined herein), (ii)
has recommended the approval of the Company/Subsidiary Merger and the Merger by
the Board of Directors, (iii) has determined that the Company/Subsidiary Merger
and the Merger are advisable to and in the best interests of the holders of the
Company's capital stock (the "Company Stockholders"), other than the Continuing
Shareholders (as defined herein), (iv) has determined that the Merger
Consideration (as defined herein) is fair to the Company Stockholders, other
than the Continuing Shareholders, and (v) has approved and recommended the
approval of the Company/Subsidiary Merger Agreement and this Agreement to the
Board of Directors; and
WHEREAS, the Board of Directors, subsequent to the recommendation of the
Special Committee, has approved the Company/Subsidiary Merger, the
Company/Subsidiary Merger Agreement, the Merger and this Agreement and
determined that it is advisable and in the best interests of the Company
Stockholders, other than the Continuing Shareholders, for the Company to
consummate the Company/Subsidiary Merger and the Merger and the other
transactions contemplated by this Agreement (collectively, the "Transactions"),
upon the terms and subject to the conditions set forth herein; and
WHEREAS, as an inducement to the parties to enter into this Agreement, the
Continuing Shareholders have entered into an Exchange and Voting Agreement in
substantially the form attached hereto as Exhibit A (the "Exchange and Voting
Agreement"), whereby they have agreed to exchange certain Shares (as defined
herein) owned by them for (x) newly issued shares of Class A Preferred Stock,
par value $1.00 per share and liquidation preference $10.00 per share, of the
Company ("Class A Preferred Stock") and (y) in the case of the Company
Shareholder (as defined herein), newly issued shares of Class B Preferred Stock,
par value $1.00 per share and liquidation preference $10.00 per share, of the
Company ("Class B Preferred Stock") prior to the Merger and they have agreed to
vote their Shares, Class A Preferred Stock and Class B Preferred Stock in favor
of the Transactions; and
WHEREAS, the recapitalization will involve a merger (the "Merger") in which
Merger Subsidiary will merge with and into the Company, with the shares of the
Company being converted into the right to receive the Merger Consideration,
subject to certain exceptions described in this Agreement; and
WHEREAS, the managers of Merger Subsidiary have approved this Agreement and
the Merger in accordance with the applicable provisions of the Limited Liability
Company Act of the State of Delaware (the "DLLCA") and upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Board of Directors has approved this Agreement and the
Exchange and Voting Agreement such that the transactions contemplated by this
Agreement and the Exchange and Voting Agreement are not subject to the
restrictions on "business combinations" contained in Section 203 of the General
Corporation Law of the State of Delaware (the "DGCL").
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
SECTION 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Acquisition Proposal" means any offer or proposal for, or any indication
of interest in, (i) any acquisition or purchase of 30% or more of the
consolidated assets of the Company and its Subsidiaries, (ii) any acquisition or
purchase of an equity interest in the Company representing in excess of 30% of
the power to vote for the election of a majority of the directors of the
Company, or any tender offer or exchange offer for equity securities of the
Company as a result of which the offeror would hold such an equity interest in
the Company or (iii) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company, or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 30% of the consolidated
assets of the Company and its Subsidiaries, in each case other than the
transactions contemplated by this Agreement.
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"Adjustment Amount" means an amount equal to the sum of:
(i) an amount equal to the portion of proceeds (as defined herein)
realized from all transfers, sales or dispositions (including as a result
of any merger, consolidation, liquidation or winding-up of Saturn) of all
or any part of the Saturn Equity Investment (the "Saturn Sales") that
exceed $18 million and are less than or equal to $40 million (the "Initial
Adjustment Amount");
(ii) an amount equal to 60% of the portion of proceeds realized from
Saturn Sales that exceeds $56.7 million;
(iii) an amount equal to 60% of the portion of proceeds realized from
the sales of Equity Investments that exceeds $125 million; and
(iv) an amount equal to 60% of any interest actually earned on
proceeds referred to in clauses (i), (ii) and (iii) of this definition
prior to payment of the Merger Consideration Adjustments and the Option
Consideration Adjustments (clauses (ii), (iii) and (iv), the "Subsequent
Adjustment Amount").
As used in this definition, proceeds means the cash proceeds after deducting all
applicable out-of-pocket costs and expenses (including, without limitation,
underwriting discounts, commissions and fees and financial advisory fees, but
excluding taxes) directly incurred by the Company or the Surviving Corporation
in connection with such transfers, sales or dispositions.
"Adjustment Committee" shall mean ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and Helmet ▇▇▇▇▇, each of whom is a member of the Special Committee
as of the date hereof, or any successors designated by the majority of the
remaining members of such committee.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
"Antitrust Laws" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade or lessening of competition through
merger or acquisition.
"Benefit Plan" means any Plan, other than a Multiemployer Plan, existing at
the Effective Time established or to which contributions have at any time been
made by the Company or any Subsidiary thereof, or any predecessor of the Company
or any Subsidiary thereof, or with respect to which the Company or any
Subsidiary is a party, under which any
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employee, former employee or director of the Company or any Subsidiary thereof,
or any beneficiary thereof, is covered, is eligible for coverage or has benefit
rights in respect of service to the Company or any Subsidiary thereof and any
other Plan with respect to which the Company or any Subsidiary currently has
liability.
"Business Day" means a day other than Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $1.00 per share, of the
Company.
"Company Balance Sheet" means the consolidated balance sheet of the Company
as of December 31, 1999 and the footnotes thereto set forth in the Company 10-K.
"Company Balance Sheet Date" means December 31, 1999.
"Company Shareholder" means Masco Corporation, a Delaware corporation,
provided that such definition and any other definition in this Agreement
utilizing such definition shall be amended, to the extent and in the manner such
definition is amended pursuant to any amendment to the Exchange and Voting
Agreement as a result of one or more Transfers in accordance with Section 2.2 of
the Exchange and Voting Agreement.
"Company Shareholder Exchange Shares" has the meaning specified in the
Exchange and Voting Agreement.
"Company Subsidiary" means MascoTech Harbor, Inc., a Delaware corporation
and a wholly owned subsidiary of the Company.
"Company/Subsidiary Merger" means the merger in accordance with the
Company/Subsidiary Merger Agreement in which the Company Subsidiary will merge
with and into the Company, with the Company being the surviving corporation.
"Company/Subsidiary Merger Agreement" means the merger agreement in the
form attached hereto as Exhibit B, between the Company and the Company
Subsidiary, including all exhibits, pursuant to which the Company/Subsidiary
Merger is to be consummated.
"Company 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1999.
"Continuing Shareholder Exchange Shares" has the meaning specified in the
Exchange and Voting Agreement.
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"Continuing Shareholders" means, collectively, Company Shareholder, IS and
FS.
"Corporate Services Agreement" means the Corporate Services Agreement
between the Company and the Original Company Shareholder dated as of January 1,
1987, as amended by Amendment No. 1 dated as of October 31, 1996 and related
letter agreements dated January 22, 1998 and June 17, 1998.
"Credit Agreement" means the Credit Agreement dated as of January 16, 1998
among the Company, MascoTech Acquisition, Inc., the banks party thereto from
time to time, the First National Bank of Chicago, as Administrative Agent and
Bank of America NT&SA and Nations Bank N.A., as Syndication Agents, as amended
to the date hereof.
"Employee Retention Committee" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and any successor thereto appointed by a designee of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, in the case of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇'▇ resignation from
such committee, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, in the case of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'
resignation from such committee, or appointed by a designee of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, in the case of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ resignation from such committee,
serving as the committee appointed hereby to determine employee matters as soon
as practicable after the date hereof, but no later than the Effective Time.
"Environmental Laws" means the common law and any federal, state, local or
foreign law, treaty, judicial decision, regulation, rule, judgment, order,
decree, injunction, permit or governmental restriction or requirement, in each
case as currently in effect, relating to pollution or protection of the
environment (including, without limitation, ambient air, indoor air, surface
water, groundwater, land surface, subsurface strata, and natural resources).
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating to, the business of the Company or any Subsidiary as currently
conducted.
"Equity Investments" means the equity investments of the Company and its
subsidiaries listed on Schedule A hereto.
"Equity Investments Sale" means the sale of the Equity Investments by the
Company as contemplated by the Equity Investments Sale Agreement.
"Equity Investments Sale Agreement" means the agreement between the Company
and Citicorp Venture Capital, Ltd. dated as of the date hereof and in the form
attached hereto as Exhibit C pursuant to which the Equity Investments Sale will
be consummated.
"ERISA" means the Employee Retirement Income Security Act of 1974.
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"ERISA Affiliate" of any entity means any other Person that, together with
such Person, would be treated as a single employer under Section 414 of the
Code.
"Exchange Date" has the meaning specified in the Exchange and Voting
Agreement.
"Exchanged Preferred Stock" shall mean the Class A Preferred Stock and the
Class B Preferred Stock.
"Facilities" means the "Facilities" as defined in the Commitment Letter or
any replacement, refinancing, extension, amendment or restatement of the
Facilities.
"FS" means the ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Foundation.
"Governmental Authority" means any federal, state or local government or
any court, administrative agency or commission or other governmental or
regulatory agency, authority or official, whether domestic, foreign or
supranational.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"IS" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"knowledge" of the Company or the "Company's knowledge" means the actual
knowledge of the senior officers of the Company listed on Schedule B attached
hereto. "Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
property or asset.
"Material Adverse Effect" means either (i) a material adverse effect on the
condition (financial or otherwise), business or results of operations of the
Company and its Subsidiaries, taken as a whole, or (ii) an effect which is
materially adverse to the ability of the Company or Merger Subsidiary to
consummate the Transactions; provided that with respect to subclause (i) of this
definition, any such effect resulting or arising from (w) this Agreement or the
transactions contemplated hereby or the announcement hereof, (x) changes in
circumstances or conditions affecting industrial manufacturing companies in
general, and not specifically relating to the Company and its Subsidiaries, (y)
changes in general economic, regulatory or political conditions or in financial
markets in the United States or Europe or (z) changes in generally accepted
accounting principles shall not be considered a Material Adverse Effect, and
with respect to subclause (ii) of this definition, any such effect resulting or
arising from subclause (x), (y) or (z) above, shall not be considered a Material
Adverse Effect.
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"Material Subsidiary" means, with respect to any Person, a Subsidiary that
would constitute a "significant subsidiary" of such Person within the meaning of
Rule 1-02 of Regulation S-X under the 1934 Act.
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA with respect to which the Company has an obligation
to contribute or has or could have withdrawal liability under Section 4201 of
ERISA.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Option Plans" means, collectively, the 1991 Long Term Stock Incentive
Plan, the 1984 Restricted Stock Incentive Plan, the 1984 Stock Option Plan and
the 1997 Non-Employee Directors Stock Plan.
"Original Company Shareholder" means Masco Corporation, without giving
effect to any Transfer pursuant to Section 2.2 of the Exchange and Voting
Agreement or any amendment to the Exchange and Voting Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation, other employee benefit, employment, consulting or change of control
agreement, plan, practice, policy or arrangement of any kind, whether written or
oral, or whether for the benefit of a single individual or more than one
individual, including, without limitation, any "employee benefit plan" within
the meaning of Section 3(3) of ERISA (whether or not subject thereto).
"Restricted Stock Permitted Transferee" means, with respect to any holder
of Restricted Stock, the spouse or any lineal descendant (including by adoption
and stepchildren) of such holder of Restricted Stock, any trust of which such
holder of Restricted Stock is the trustee and which is established solely for
the benefit of any of the foregoing individuals, any private charitable
foundations of any such holder of Restricted Stock and such other Persons as may
be approved from time to time by authority of the board of directors of the
Sur-
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viving Corporation; provided that, following an underwritten public offering of
Common Stock of the Surviving Corporation as a result of which 15% or more of
the outstanding Common Stock of the Surviving Corporation is registered under
the 1933 Act, any Person shall be a Restricted Stock Permitted Transferee.
"Restricted Stock Plans" means any Plan of the Company that allows the
award of restricted shares.
"Rights" means the rights granted under the Rights Agreement.
"Rights Agreement" means the Rights Agreement between the Company and the
Bank of New York dated February 20, 1998, as amended as of September 22, 1998.
"Saturn" means Saturn Electronics and Engineering, Inc. and any successor
thereto.
"Saturn Equity Investment" means the equity interests of Saturn
beneficially owned by the Company and/or its Subsidiaries and listed on Schedule
4.06(c) on the date hereof and any additional securities issued or received as a
distribution to holders of such securities in respect thereof or in exchange
therefor.
"SEC" means the Securities and Exchange Commission.
"Shares" means shares of Common Stock.
"Special Committee" means the Special Committee of the Board of Directors
formed to, among other things, evaluate the Transactions.
"Sponsor" means Heartland Industrial Partners, L.P., a Delaware limited
partnership.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, limited liability company or other organization,
whether incorporated or unincorporated, of which the securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions with respect to
such corporation, partnership, association, limited liability company or other
organization are at any time directly or indirectly owned or controlled by such
Person or by any one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries.
"Surviving Corporation Common Shares" means the common stock, par value
$1.00 per share, of the Surviving Corporation.
"Third Party" means any Person as defined in Section 13(d) of the 1934 Act,
other than Merger Subsidiary or Sponsor or any of Sponsor's Affiliates.
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"Topping Fee" means a fee of $16.0 million, less any amount of expense
reimbursement paid by the Company pursuant to Section 11.04(b), payable by wire
transfer in same day funds to a bank account designated by Merger Subsidiary.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Accrual Amount............................................. 2.06
Bank....................................................... 5.07
Base Merger Consideration.................................. 2.04
Board of Directors......................................... Recitals
Cash Out Amount............................................ 2.06
Cash Out Options........................................... 2.06
Cash Out New Restricted Stock.............................. 2.06
Certificate of Merger...................................... 2.02
Class A Base Merger Consideration.......................... 2.04
Class A Exchanged Shares................................... 2.04
Class A Merger Consideration............................... 2.04
Class A Merger Consideration Adjustment.................... 2.04
Class A Preferred Stock.................................... Recitals
Class B Exchanged Shares................................... 2.04
Class B Base Merger Consideration.......................... 2.04
Class B Merger Consideration............................... 2.04
Class B Merger Consideration Adjustment.................... 2.04
Class B Preferred Stock.................................... Recitals
Commitment Letter.......................................... 5.07
Company.................................................... Recitals
Company Proxy Statement.................................... 4.09
Company Representatives.................................... 6.02
Company SEC Documents...................................... 4.07
Company Securities......................................... 4.05
Company Stockholder Meeting................................ 6.03
Company Stockholders....................................... Recitals
Company Subsidiary Securities.............................. 4.06
Company/Subsidiary Certificate of Merger................... 4.19
Confidentiality Agreement.................................. 6.02
Debentures................................................. 4.05
Denominator................................................ 2.04
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Term Section
DGCL....................................................... Recitals
DLLCA...................................................... Recitals
Dissenting Shares.......................................... 2.05
DOJ........................................................ 8.01
Effective Time............................................. 2.02
Effective Time Merger Consideration........................ 2.07
Effective Time Option Consideration........................ 2.06
End Date................................................... 10.01
Equity Commitment Letters.................................. 5.07
Equity Investors........................................... 5.07
Exchange Agent............................................. 2.07
Exchange and Voting Agreement.............................. Recitals
Exchanged Preferred Stock.................................. 2.04
Exchanged Share............................................ 2.04
Financing Agreements....................................... 7.05
Foreign Plan............................................... 4.17
FTC........................................................ 8.01
GAAP....................................................... 4.08
Indemnified Person......................................... 7.03
Initial Adjustment Amount.................................. 1.01
Initial Denominator........................................ 2.04
IRS........................................................ 4.16
Merger..................................................... Recitals
Merger Consideration....................................... 2.04
Merger Consideration Adjustment............................ 2.04
Merger Subsidiary.......................................... Recitals
Merger Subsidiary Common Shares............................ 2.04
Merger Subsidiary Representatives.......................... 6.02
New Awards................................................. 2.06
New Restricted Stock....................................... 2.06
Option..................................................... 2.06
Option Consideration....................................... 2.06
Option Consideration Adjustment............................ 2.06
Preferred Stock............................................ 4.05
Required Amount............................................ 5.07
Restricted Stock........................................... 2.06
Restrictions............................................... 2.06
Saturn Sales............................................... 1.01
Saturn Subsidiary.......................................... 9.01
Schedule 13E-3............................................. 4.09
Series A Preferred Stock................................... 2.04
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Term Section
Surviving Corporation...................................... 2.01
Tax Return................................................. 4.16
Taxes...................................................... 4.16
Taxing Authority........................................... 4.16
Transactions............................................... Recitals
ARTICLE 2
The Merger
SECTION 2.01. The Merger. At the Effective Time, and subject to and upon
the terms and conditions of this Agreement, the DGCL and the DLLCA, Merger
Subsidiary shall be merged with and into the Company, the separate existence of
Merger Subsidiary shall cease, and the Company shall continue as the surviving
corporation (hereinafter sometimes referred to as the "Surviving Corporation").
SECTION 2.02. Effective Time. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 10.01, as promptly as practicable (and in any event within
two Business Days) after the satisfaction or waiver of the conditions set forth
in Article 9 hereof, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger as contemplated by the DGCL and the DLLCA (the
"Certificate of Merger") in the form of Exhibit D attached hereto, together with
any required related certificates, with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL and the DLLCA. The Merger shall become
effective at the time of such filing or at such later time, which will be as
soon as reasonably practicable, specified in the Certificate of Merger (the
"Effective Time"). Prior to such filing, a closing shall be held at such time as
may be agreed upon by Merger Subsidiary and the Company, at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless
another place is agreed to in writing by the parties hereto, for the purpose of
confirming the satisfaction or waiver, as the case may be, of the conditions set
forth in Article 9 hereof.
SECTION 2.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the DGCL and the DLLCA.
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SECTION 2.04. Effect on Securities, Etc.
(a) Capital Stock of Merger Subsidiary. At the Effective Time, each
membership interest of Merger Subsidiary ("Merger Subsidiary Common Shares")
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and non-assessable Surviving
Corporation Common Share.
(b) Cancellation of Treasury Stock. Each Share that is owned by the Company
shall automatically be canceled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Shares. Each Share issued and outstanding immediately
prior to the Effective Time (other than (x) Shares constituting Restricted
Stock, which shall be treated as provided in Section 2.06(b), (y) Dissenting
Shares and (z) Shares owned by any Subsidiary of the Company) (each of such
Shares, other than Shares referred to in clauses (x), (y) and (z), an "Exchanged
Share") shall, by virtue of the Merger, be converted into the right to receive
from the Surviving Corporation after the Merger cash in an amount equal to (i)
$16.90 (the "Base Merger Consideration") and (ii) all Merger Consideration
Adjustments (as defined herein) with respect to each Exchanged Share (clauses
(i) and (ii) together, the "Merger Consideration"). Each such Exchanged Share
shall no longer be outstanding, shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate formerly representing any
such Exchanged Shares shall, to the extent such certificate formerly represented
such Exchanged Shares, cease to have any rights with respect thereto, except the
right to receive the Merger Consideration applicable thereto, upon surrender of
such certificate in accordance with Section 2.07 hereof.
(d) Conversion of Class A Preferred Stock. Each share of Class A Preferred
Stock issued and outstanding immediately prior to the Effective Time (the "Class
A Exchanged Shares") shall, by virtue of the Merger, be converted into (i) one
Surviving Corporation Common Share (the "Class A Base Merger Consideration") and
(ii) the right to receive all Merger Consideration Adjustments with respect to
each Class A Exchanged Share (the "Class A Merger Consideration Adjustment")
(clauses (i) and (ii) together, the "Class A Merger Consideration"). Each such
Class A Exchanged Share shall no longer be outstanding, shall automatically be
canceled and retired and shall cease to exist, and each such holder of a
certificate formerly representing any such Class A Exchanged Shares shall, to
the extent such certificate formerly represented such Class A Exchanged Shares,
cease to have any rights with respect thereto, except the right to receive the
Class A Merger Consideration applicable thereto, upon surrender of such
certificate in accordance with Section 2.07 hereof.
(e) Conversion of Class B Preferred Stock. Each share of Class B Preferred
Stock issued and outstanding immediately prior to the Effective Time (the "Class
B Exchanged Shares," and, together with the Class A Exchange Shares, the
"Exchanged Pre-
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ferred Stock") shall, by virtue of the Merger, be converted into (i) 0.169 of a
fully paid and nonassessable share of Series A Preferred Stock, par value $1.00
per share and liquidation preference $100 per share, of the Surviving
Corporation (the "Series A Preferred Stock"), having the terms set forth in the
certificate of incorporation of the Surviving Corporation set forth in Exhibit E
attached hereto, (ii) 0.086392 of a fully paid and nonassessable Surviving
Corporation Common Share (clauses (i) and (ii) together, the "Class B Base
Merger Consideration") and (iii) the right to receive all Merger Consideration
Adjustments with respect to each Class B Exchanged Share (the "Class B Merger
Consideration Adjustment") (clauses (i), (ii) and (iii) together, the "Class B
Merger Consideration"). Each such Class B Exchanged Share shall no longer be
outstanding, shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate that formerly represented any such Class
B Exchanged Shares shall, to the extent such certificate formerly represented
such Class B Exchanged Shares, cease to have any rights with respect thereto,
except the right to receive the Class B Merger Consideration applicable thereto,
upon surrender of such certificate in accordance with Section 2.07 hereof.
(f) Calculation and Payment of Merger Consideration Adjustment; Escrow. A
"Merger Consideration Adjustment" means an amount per Share, Class A Exchanged
Share and Class B Exchanged Share, as the case may be, calculated by adding (1)
all unpaid Initial Adjustment Amounts divided by the number equal to the number
outstanding immediately prior to the Effective Time (but after the Exchange Date
and before the cancellation of the Restricted Stock under Section 2.06), of (i)
Exchanged Shares, (ii) Class A Exchanged Shares and Class B Exchanged Shares,
(iii) Shares subject to Cash Out Options, (iv) Shares subject to Options with an
exercise price below the Merger Consideration (after giving effect to Adjustment
Amounts previously paid or being paid to such Option holder at the time of the
calculation) and (v) 10% of the Shares of New Restricted Stock ( as defined
herein) (clauses (i), (ii), (iii), (iv) and (v) together, the "Initial
Denominator") and (2) all unpaid Subsequent Adjustment Amounts divided by the
Denominator (as defined herein). "Denominator" shall mean a number equal to sum
of (i) the Initial Denominator and (ii) 90% of the Shares of the Restricted
Stock outstanding immediately prior to the Effective Time and before the
cancellation of the Restricted Stock under Section 2.06(b). To the extent any
part of the Merger Consideration Adjustment is received prior to the Effective
Time, that part of the Merger Consideration Adjustment shall be paid with the
Base Merger Consideration, Class A Base Merger Consideration and Class B Base
Merger Consideration, as the case may be, in accordance with Section 2.07. To
the extent any part of the Adjustment Amount is received after the Effective
Time, that part of the Merger Consideration Adjustments shall be paid by the
Surviving Corporation at the 30th day after the earlier of (i) receipt by the
Surviving Corporation of proceeds representing Adjustment Amounts aggregating
$5.0 million in excess of previously paid Adjustment Amounts and (ii) the date
upon which all amounts which could represent an Adjustment Amount are received
by the Company or the Surviving Corporation, as the case may be. Payment of
Merger Consideration Adjustments shall be without interest thereon.
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SECTION 2.05. Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, any Shares or Exchanged Preferred Stock issued and
outstanding immediately prior to the Effective Time, and held by a holder who
has the right to demand payment for and any appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision), who
perfects his demand for the appraisal of the fair value of his Shares or
Exchanged Preferred Stock in accordance with the DGCL and, as of the Effective
Time, has neither effectively withdrawn nor lost his right to make such demand
(such Shares or Exchanged Preferred Stock, the "Dissenting Shares"), shall not
be converted into or represent a right to receive the consideration for his
Shares or Exchanged Preferred Stock specified in Section 2.04, but the holder
thereof shall be entitled to only such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.05(a), if any holder of
Dissenting Shares effectively withdraws or loses (through failure to perfect or
otherwise) his right to make such demand, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such dissenting holder's
Shares or Exchanged Preferred Stock shall thereafter represent only the right to
receive the consideration for Shares or Exchanged Preferred Stock specified in
Section 2.04, without interest thereon, upon surrender of the certificates
representing such Shares or Exchanged Preferred Stock.
(c) The Company shall give Merger Subsidiary, prior to the Effective Time,
and the Surviving Corporation, after the Effective Time, (i) prompt notice of
any written demands for appraisal of the fair value of any Shares or Exchanged
Preferred Stock, withdrawals of such demands and any other instruments served
pursuant to the DGCL received by the Company after the date hereof and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal or the payment of the fair cash value of any such Shares or
Exchanged Preferred Stock under the DGCL. The Company shall not voluntarily make
any payment with respect to any demands for appraisal or the payment of the fair
cash value of any Shares or Exchanged Preferred Stock and shall not, except with
the prior written consent of Merger Subsidiary, settle or offer to settle any
such demands.
SECTION 2.06. Treatment of Options and Restricted Stock. (a) At or
immediately prior to the Effective Time, each outstanding stock option (each, an
"Option") to purchase Shares granted under any of the Option Plans, whether or
not vested, shall be canceled and holders of such Options with an exercise price
below the Effective Time Option Consideration (as defined herein) (the "Cash Out
Options") shall receive from the Surviving Corporation (subject to any
applicable withholding taxes) an amount equal to the Base Merger Consideration
plus any Option Consideration Adjustments (as defined herein) received prior to
the Effective Time ("Effective Time Option Consideration") in respect of the
number of Shares subject to such Options; provided that the Effective Time
Option Consideration for each Share shall be reduced by the exercise price for
such Option; provided, further that, notwithstanding any action taken pursuant
to Section 6.07(a) hereof, for purposes
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of this Agreement, each Option will be considered vested upon the occurrence of
the Merger without regard to the applicable Option Plan or option agreement or
any performance-based criteria. Each Option whether vested or unvested that has
an exercise price equal to or greater than the Effective Time Option
Consideration shall be canceled as of the Effective Time without consideration;
provided that holders of such Options at the Effective Time shall retain the
right to receive any Option Consideration Adjustments following the Effective
Time only on the terms and to the extent provided in this Section 2.06. Holders
of Cash Out Options shall be entitled to receive in respect of the number of
Shares subject to such Cash Out Options, Option Consideration Adjustments
received after the Effective Time. Holders of Options with an exercise price
below the Effective Time Consideration (after giving effect to all Option
Consideration Adjustments previously paid or being paid at the time of
calculation) shall be entitled to receive Option Consideration Adjustments in
respect of the number of Shares subject to such Option. "Option Consideration"
means the Effective Time Option Consideration plus all Option Consideration
Adjustments previously paid or being paid at the time of calculation. The
"Option Consideration Adjustment" means an amount per Share underlying Cash Out
Options and Options with an exercise price below the Option Consideration
calculated by dividing all unpaid Initial Adjustment Amounts by the Initial
Denominator and all unpaid Subsequent Adjustment Amounts by the Denominator.
With respect to Options that have an exercise price above the Effective Time
Option Consideration and below the Option Consideration, the portion of the
Option Consideration Adjustments that shall be paid to such holder in respect of
the number of Shares underlying such Options shall equal the difference between
(x) the Effective Time Option Consideration plus all Option Consideration
Adjustments previously paid or being paid at the time of the calculation and (y)
the exercise price of such Option. Thereafter, for purposes of future Option
Consideration Adjustments, such holder in respect of the number of Shares
underlying such Options shall receive such Option Consideration Adjustments as
if they were holders of Cash Out Options. To the extent any part of the
Adjustment Amount that represents an Option Consideration Adjustment is received
prior to the Effective Time, that part of the Option Consideration Adjustment
shall be paid in accordance with the first sentence of this Section 2.06(a). To
the extent any part of the Adjustment Amount that represents an Option
Consideration Adjustment is received after the Effective Time, that part of
Option Consideration Adjustments shall be paid by the Surviving Corporation at
the 30th day after the earlier of (i) receipt by the Surviving Corporation of
proceeds representing Adjustment Amounts aggregating $5.0 million in excess of
previously paid Adjustment Amounts and (ii) the date upon which all amounts
which could represent Adjustment Amounts are received by the Surviving
Corporation or the Company, as the case may be. Payment of Option Consideration
Adjustments shall be without interest thereon.
(b) Notwithstanding any provision of this Agreement to the contrary, none
of the restrictions relating to any restricted stock awards ("Restricted Stock")
granted under any Restricted Stock Plan of the Company shall terminate, be
removed or modified as a result of the Transactions. Immediately prior to the
Merger, the Committee(s) administering the Restricted Stock Plans will (i)
cancel all Restricted Stock awards that are then subject to any restrictions
under the terms of the applicable award, and (ii) make new awards ("New Awards")
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under the applicable Restricted Stock Plan to each participant whose awards were
canceled under the preceding subclause (i) as to the same number of shares of
common stock as the canceled award and with such New Award taking effect
immediately following the Merger and relating to Surviving Corporation Common
Shares (the "New Restricted Stock") rather than Shares, provided that such New
Awards will provide, except as set forth on the disclosure schedule, as follows:
(1) 15% of each participant's New Restricted Stock will be available upon the
effectiveness of the New Award to the participant free of restrictions under the
Restricted Stock Plans (other than a prohibition on transfer of such New
Restricted Stock to persons other than Restricted Stock Permitted Transferees
and securities law restrictions on transferability (collectively, the
"Restrictions")), and, in lieu of 10% of an additional amount of New Restricted
Stock ("Cash Out New Restricted Stock") the participants will receive cash
(valuing a Share of the New Restricted Stock for these purposes at the Base
Merger Consideration plus any Merger Consideration Adjustment determined with
reference to Initial Adjustment Amounts received prior to the Effective Time
(the "Cash Out Amount"), subject to applicable withholding taxes, (2) the
balance of each participant's New Restricted Stock will become free of
restrictions under the Restricted Stock Plans (other than the Restrictions)
ratably on each anniversary of the Merger, commencing on the first anniversary
of the Merger through the third anniversary of the Merger, provided that upon
the termination of such Restrictions as contemplated under this clause (2), such
participant shall be entitled to elect, at his or her option, to receive, in
lieu of any share of New Restricted Stock, an amount in cash equal to the sum of
(i) the Cash Out Amount, (ii) any Merger Consideration Adjustments determined
with respect to Initial Adjustment Amounts received subsequent to the Effective
Time and prior to the applicable anniversary date, and (iii) an amount (the
"Accrual Amount") equal to 6% per annum of the Cash Out Amount from the date of
the Merger through the applicable anniversary date and of any such Merger
Consideration Adjustments from the date of the payment to holders of the Shares
through the applicable anniversary date, subject to the balance of this Section
2.06(b); provided, further, that the New Restricted Stock awards will allow the
Surviving Corporation to defer the payment of such cash if the Surviving
Corporation is prevented under the Facilities from making such payments due to a
default, or an event which with notice or lapse of time or both, would
constitute a default (without giving effect to any grace period) under the
Facilities. In the event the Surviving Corporation defers such payment, the
Surviving Corporation will make such payment as soon as practicable after the
Surviving Corporation is no longer in default and any event that would
constitute a default has been cured or waived. For any such deferral period in
respect of a Share of New Restricted Stock, the Accrual Amount in respect of
such Share shall be calculated based upon 12% per annum of the deferred amount
for the period of deferral. Each individual entitled to shares of Cash Out New
Restricted Stock shall be entitled to receive with respect to each share of Cash
Out New Restricted Stock from the Surviving Corporation amounts equal to all
Merger Consideration Adjustments per Share determined with respect to all
Initial Adjustment Amounts received after the Effective Time, payable at the
same time such amounts are paid to holders of Shares. The Surviving Corporation
shall pay with respect to each share of New Restricted Stock which is free of
restriction upon the effectiveness of the New Award pursu-
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ant to clause (ii)(1) of this paragraph, amounts equal to (1) any Merger
Consideration Adjustment determined with reference to Initial Adjustment Amounts
received by the Company prior to the Effective Time, which amount shall be
payable immediately prior to the Merger, and (2) any Merger Consideration
Adjustments determined with reference to Initial Adjustment Amounts received by
the Surviving Corporation and paid to a holder of a Share, which shall be
payable at the same time as paid to holders of Shares. The Surviving Corporation
shall pay with respect to each share of New Restricted Stock which becomes free
of restrictions on the first, second or third anniversary of the Effective Time
and with respect to which the holder does not elect to receive cash pursuant to
clause (ii)(2) of this paragraph, amounts equal to any Merger Consideration
Adjustments determined with reference to Initial Adjustment Amounts received
after the Effective Time, which shall be payable upon the later of (x) the
first, second or third anniversary, as the case may be, on which the
restrictions lapse and the holder does not elect to receive cash, and (y) the
time such Merger Adjustment Amounts are paid to holders of Shares. Each holder
of the New Restricted Stock also shall be entitled to receive with respect to
each share of New Restricted Stock (whether or not Cash Out New Restricted
Stock) all Merger Consideration Adjustments determined with respect to the
Subsequent Adjustment Amounts (whether received prior to or after the Effective
Time), payable at the time such amounts are paid to holders of Shares.
SECTION 2.07. Surrender of Shares. (a) Prior to the Effective Time, Merger
Subsidiary shall appoint a bank or trust company which is reasonably
satisfactory to the Company to act as the exchange agent (the "Exchange Agent")
for the payment of the Base Merger Consideration and any Merger Consideration
Adjustment available at the Effective Time (the "Effective Time Merger
Consideration") with respect to Shares and the Class A Merger Consideration
Adjustment and the Class B Merger Consideration Adjustment available at the
Effective Time. All of the fees and expenses of the Exchange Agent shall be
borne by the Surviving Corporation. The Surviving Corporation will serve in the
capacity of exchange agent with respect to the Class A Base Merger Consideration
and Class B Base Merger Consideration and will, at the Effective Time, upon
receipt of the stock certificates for Class A Exchanged Shares and Class B
Exchanged Shares duly endorsed and in form for transfer with accompanying stock
powers duly executed in blank, exchange such stock certificates for new stock
certificates, shares of the Class A Merger Consideration and Class B Merger
Consideration, respectively, in accordance with Section 2.04(d) and (e). After
the Effective Time, the Surviving Corporation shall be responsible for all
Merger Consideration Adjustments, Class A Merger Consideration Adjustments and
Class B Merger Consideration Adjustments in accordance with Section 2.04.
(b) At or prior to the Effective Time, there will be deposited with the
Exchange Agent cash in an amount equal to the aggregate Effective Time Merger
Consideration (in an amount equal to the number of Exchanged Shares multiplied
by the Effective Time Merger Consideration), the Class A Merger Consideration
Adjustments available at the Effective Time and the Class B Merger Consideration
Adjustment available at the Effective
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Time in immediately available funds. The Exchange Agent shall invest the funds
as directed by the Surviving Corporation on a daily basis. Any interest and
other income resulting from such investments shall be paid to the Surviving
Corporation.
(c) Promptly following the Effective Time, the Surviving Corporation shall
instruct the Exchange Agent to mail, no later than three Business Days after the
Effective Time, to each holder of record of a certificate representing Exchanged
Shares converted upon the Merger pursuant to this Agreement (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates shall pass, only upon delivery of the
certificates to the Exchange Agent and shall be in such form and have such other
provisions as Merger Subsidiary or the Surviving Corporation may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
certificates. The Exchange Agent shall accept such certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange practices.
Each holder of a certificate or certificates representing Exchanged Shares
converted upon the Merger pursuant to this Agreement may thereafter surrender
such certificate or certificates to the Exchange Agent, as agent for such
holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending six months after the Effective Time. Upon
the due surrender of certificates representing Exchanged Shares, the Surviving
Corporation shall cause the Exchange Agent to pay the holder of such
certificates in exchange therefor the Effective Time Merger Consideration
multiplied by the number of Exchanged Shares represented by such certificate
that have been so converted. Until so surrendered, each such certificate shall
represent solely the right to receive the Merger Consideration. With respect to
Class A Merger Consideration Adjustments to be paid to Class A Exchanged Shares
and Class B Merger Consideration Adjustments to be paid to Class B Exchanged
Shares, in each case, to be paid at the Effective Time, the Exchange Agent shall
not require surrender of certificates pursuant to this Section 2.07 but rather,
shall be directed by the Company, by written instructions as to the recipients
of such funds and directions for payment.
(d) If any payment or issuance in respect of Shares, Class A Preferred
Stock or Class B Preferred Stock under this Section 2.07 is to be made to a
Person other than the Person in whose name a surrendered certificate is
registered, it shall be a condition to such payment or issuance that the
certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment or issuance
shall have paid any transfer and other taxes required by reason of such payment
or issuance in a name other than that of the registered holder of the
certificate or instrument surrendered or shall have established to the
satisfaction of the Surviving Corporation or the Exchange Agent that such tax
either has been paid or is not payable.
(e) At and after the Effective Time, no further transfer of Shares or
Exchanged Preferred Stock which have been converted pursuant to Section 2.04 of
this Agreement shall be made, other than transfers of such securities that have
occurred prior to the Effective Time.
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In the event that, after the Effective Time, certificates representing Shares or
Exchanged Preferred Stock which have been converted pursuant to Section 2.04 of
this Agreement are presented to the Surviving Corporation, they shall be
canceled and exchanged in the manner contemplated by Section 2.04 and as
provided in this Section 2.07.
(f) The Merger Consideration paid in the Merger shall be paid in full to
the holder of Shares without interest thereon, and shall be subject to reduction
only for any applicable United States federal or other withholding or stock
transfer taxes payable by such holder.
(g) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to the Surviving Corporation all cash,
certificates and other documents in its possession relating to the Transactions,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate representing Shares may surrender such certificate to the Surviving
Corporation and (subject to any applicable abandoned property, escheat or
similar law) receive in consideration therefor the consideration due to such
holder pursuant to Section 2.04 of this Agreement, without any interest thereon.
(h) None of Merger Subsidiary, the Surviving Corporation or the Exchange
Agent shall be liable to any holder of Shares or Exchanged Preferred Stock for
any cash or securities delivered to a public official pursuant to any abandoned
property, escheat or similar law, rule, regulation, statute, order, judgment or
decree.
SECTION 2.08. Lost, Stolen or Destroyed Certificates. In the event any
certificates representing Exchanged Shares or Exchanged Preferred Stock shall
have been lost, stolen or destroyed, the Exchange Agent or the Surviving
Corporation, as applicable, shall deliver the Effective Time Merger
Consideration, Class A Merger Consideration or Class B Merger Consideration
pursuant to Section 2.04 hereof, in exchange for such lost, stolen or destroyed
certificates upon the making of an affidavit of that fact by the holder thereof;
provided, however, that the Surviving Corporation may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver an indemnity against any claim that
may be made against the Surviving Corporation or the Exchange Agent with respect
to the certificates alleged to have been lost, stolen or destroyed.
SECTION 2.09. Further Action. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to put the Surviving Corporation in possession of all assets and
property of every description and every interest, wherever located, and the
rights, privileges, immunities, powers, franchises and authority, of a public as
well as of a private nature, of the Company and Merger Subsidiary, the officers
and directors of the Surviving Corporation are fully authorized in the name of
their respective corporations immedi-
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ately prior to the Effective Time or otherwise to take, and will take, all such
lawful and necessary action.
ARTICLE 3
The Surviving Corporation
SECTION 3.01. Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. The certificate of incorporation of the
Company, as changed and as set forth on Exhibit E hereto, shall from and after
the Effective Time be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by the DGCL and such
certificate of incorporation.
(b) By-laws. The by-laws of the Company, as changed and as set forth on
Exhibit F hereto, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided in its certificate of incorporation and by the
DGCL.
SECTION 3.02. Directors and Officers. (a) The board of managers of Merger
Subsidiary immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and the Board of Directors will approve,
prior to the Merger, the managers of Merger Subsidiary as the directors of the
Surviving Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation.
(b) The officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed or until their earlier
resignation, removal from office or death.
ARTICLE 4
Representations and Warranties of the Company
The Company represents and warrants to Merger Subsidiary that, except as
set forth in the disclosure schedule delivered by the Company to Merger
Subsidiary immediately prior to execution of this Agreement:
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SECTION 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Company has heretofore delivered to Merger Subsidiary true and complete
copies of the certificate of incorporation and by-laws of the Company as
currently in effect.
SECTION 4.02. Corporate Authorization. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Transactions are within the Company's corporate powers and, except for
the required approval of the Company Stockholders in connection with the
consummation of the Company/Subsidiary Merger and the Merger, have been duly
authorized by all necessary corporate action on the part of the Company. The
affirmative vote of the holders of a majority of the Company's outstanding
capital stock entitled to vote for directors (voting as a class) is the only
vote of the holders of the Company's capital stock necessary in connection with
the consummation of the Company/Subsidiary Merger. The affirmative vote of the
holders of a majority of the Company's outstanding capital stock entitled to
vote for directors (voting as one class) and the affirmative vote of the holders
of a majority of outstanding capital stock entitled to vote for directors (other
than the Continuing Shareholders) are the only votes of the holders of any of
the Company's capital stock necessary by law or contract in connection with the
consummation of the Merger. This Agreement and the Equity Investments Sale
Agreement constitute valid and binding agreements of the Company.
(b) At a meeting duly called and held, the Board of Directors, subsequent
to the unanimous recommendation of the Special Committee, (i) unanimously
approved the Company/Subsidiary Merger and the Company/Subsidiary Merger
Agreement, determined that it is advisable and in the best interests of Company
Stockholders (other than the Continuing Shareholders) to consummate the
Company/Subsidiary Merger, and resolved to recommend approval of the
Company/Subsidiary Merger and the Company/Subsidiary Merger Agreement by Company
Stockholders, and (ii) approved the Merger and this Agreement, determined that
it is advisable and in the best interests of Company Stockholders (other than
Continuing Shareholders) to consummate the Merger and the other Transactions,
and (iii) resolved to recommend approval of the Company/Subsidiary Merger, the
Company/Subsidiary Merger Agreement, the Merger and this Agreement by Company
Stockholders.
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(c) At a meeting duly called and held, the Special Committee has (i)
unanimously resolved to recommend that the Board of Directors approve and
declare advisable the Company/Subsidiary Merger and the Company/Subsidiary
Merger Agreement, (ii) determined that this Agreement and the Transactions are
advisable and fair to and in the best interests of the Company Stockholders
(other than Merger Subsidiary and its Affiliates, Company Shareholder and its
Subsidiaries, IS and FS) and (iii) resolved (subject to Section 6.04 hereof) to
recommend that the Board of Directors approve and declare advisable this
Agreement and the Transactions.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of the Company/Subsidiary Merger Agreement, this
Agreement and the consummation by the Company of the Transactions require no
action by or in respect of, or filing with, or notification or reporting to, any
Governmental Authority, other than (i) the filing of a certificate of merger
with respect to the Company/Subsidiary Merger and the Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which Company is qualified to do business, (ii) compliance with
any applicable requirements of the HSR Act and of the Antitrust Laws of the
foreign jurisdictions set forth on Schedule 4.03, (iii) compliance with any
applicable requirements of the 1933 Act, 1934 Act and any other applicable
securities laws, whether state or foreign, and (iv) any actions or filings the
absence of which would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
SECTION 4.04. Non-contravention. The execution, delivery and performance by
the Company of the Company/Subsidiary Merger Agreement, this Agreement and the
consummation of the Transactions do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or by-laws of the Company, (ii) assuming compliance with the
matters referred to in Section 4.03 hereof, contravene, conflict with or result
in a violation or breach of any provision of any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order, or decree, (iii)
require any consent or other action by any Person under, constitute a default
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation or the loss of any benefit to which the
Company or any of its Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries or under any agreement or
instrument relating to any of the Equity Investments or (iv) result in the
creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries, except for such contraventions, conflicts and violations referred
to in clause (ii) and for such failures to obtain any such consent or other
action, defaults, terminations, cancellations, accelerations, changes, losses or
Liens referred to in clauses (iii) and (iv) that would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
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SECTION 4.05. Capitalization. (a) The authorized capital stock of the
Company consists of 250,000,000 Shares and 25,000,000 shares, par value $1.00
per share, of preferred stock (the "Preferred Stock"). As of the close of
business on July 31, 2000, (i) 44,740,401 Shares were issued and outstanding,
(ii) no shares of Preferred Stock were issued or outstanding and (iii) no Shares
were held by the Company in its treasury. All outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable.
(b) As of the close of business on July 31, 2000, 250,000 shares of
Preferred Stock have been designated as Series A Preferred and are reserved for
issuance pursuant to the Rights (as defined in the Rights Agreement) issued
under the Rights Agreement.
(c) As of the close of business on July 31, 2000, 9,838,710 Shares were
issuable upon conversion of the Company's 4.5% Convertible Subordinated
Debentures due 2003 (the "Debentures") at a conversion price of $31.00 per
Share.
(d) As of the close of business on July 31, 2000:
(i) 3,770,198 Shares were reserved for issuance pursuant to options
granted under the Option Plans which options are outstanding on the date
hereof and, of such options, 1,612,078 are vested and exercisable as of the
date hereof without regard to any "change of control" trigger in an Option
Plan or option agreement governing such Options,
(ii) 3,678,811 shares of Restricted Stock were the subject of awards
under the Restricted Stock Plans and will remain subject to restrictions
until the End Date (as defined herein) (disregarding matters contemplated
by Section 2.06 hereof and the effect of the Transactions) under the
Restricted Stock Plans or an award agreement governing them, and
(iii) 224,826 shares of phantom stock were the subject of awards under
the Company's Phantom Stock Plans, which awards are outstanding on the date
hereof.
(e) Except as set forth in this Section 4.05 or as contemplated by Section
2.06(b), 6.10 or 9.01(g), there are no outstanding (i) shares of capital stock
or voting securities of the Company, (ii) securities of the Company convertible
into or exchangeable for shares of capital stock or voting securities of the
Company, (iii) options or other rights to acquire from the Company, or other
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company or (iv) stock appreciation, phantom stock or similar
rights with respect to the Company (the items in clauses (i), (ii), (iii) and
(iv) being referred to collectively as the "Company Securities"). Except with
respect to the Debentures, there are no outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Company Securities.
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SECTION 4.06. Subsidiaries; Equity Investments. (a) Each Subsidiary of the
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. Each such Subsidiary is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary of the Company is owned by the Company,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other voting securities or
ownership interests). All of the outstanding shares of capital stock of each
subsidiary of the Company have been validly issued and are fully paid and
non-assessable. There are no outstanding (i) securities of the Company or any of
its Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary or the Company
or (ii) options or other rights to acquire from the Company or any of its
Subsidiaries, or other obligation of the Company or any of its Subsidiaries to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary of the Company
(the items in clauses (i) and (ii) being referred to collectively as the
"Company Subsidiary Securities"). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company Subsidiary Securities.
(c) Schedule 4.06(c) lists (x) any equity interest in any subsidiary of the
Company or any other corporation, partnership, joint venture or other business
association or entity owned directly or indirectly by the Company and having a
fair market value or book value in excess of $1.0 million and (y) the Company's
reasonably approximate tax basis in each Equity Investment.
SECTION 4.07. SEC Filings. (a) The Company has delivered to Merger
Subsidiary (i) the Company's annual reports on Form 10-K for its fiscal years
ended December 31, 1999, 1998 and 1997, (ii) its quarterly report on Form 10-Q
for its fiscal quarter ending ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) its proxy statements
relating to meetings of the Company Stockholders held since December 31, 1999
and (iv) all of its other reports, statements, schedules and registration
statements filed with the
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SEC since December 31, 1999 (the documents referred to in this Section 4.07(a),
collectively, the "Company SEC Documents").
(b) As of its filing date, each Company SEC Document complied as to form in
all material respects with the applicable requirements of the 1934 Act.
(c) As of its filing date, each Company SEC Document did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present, in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments and the absence of
notes in the case of any unaudited interim financial statements).
SECTION 4.09. Disclosure Documents. (i) The proxy statement of the Company
to be filed with the SEC in connection with the Merger (the "Company Proxy
Statement") and any amendments or supplements thereto and (ii) the statement on
Schedule 13E-3 to be filed by the Company concurrently with the filing of the
Company Proxy Statement (such statement, as amended or supplemented, is referred
to herein as the "Schedule 13E-3") and any amendments or supplements thereto
will each, when filed, comply as to form in all material respects with the
applicable requirements of the 1934 Act. At the time the Company Proxy Statement
or any amendment or supplement thereto is first mailed to Company Stockholders,
and at the time such stockholders vote on the adoption of the Company/Subsidiary
Merger Agreement and this Agreement, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The Schedule 13E-3 will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.09 will not apply to
statements or omissions included in the Company Proxy Statement or the Schedule
13E-3 based upon information furnished to the Company by or on behalf of Merger
Subsidiary for use therein.
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SECTION 4.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, the business of the Company and its Subsidiaries has been conducted in the
ordinary course consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has or could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company
(other than quarterly cash dividends on the Shares not in excess of $.08
per share per quarter and having customary record and payment dates), or
any repurchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any of its
Subsidiaries (other than ordinary course open market purchases made in
connection with the Company's stock incentive plan);
(c) any amendment of any material term of any outstanding security of
the Company or any of its Material Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of
its Subsidiaries of any indebtedness in excess of $5.0 million,
individually or in the aggregate, other than (i) under the Credit Agreement
in the ordinary course of business consistent with past practices to fund
general corporate purposes, (ii) between the Company and its Subsidiaries
or between two or more of the Company's Subsidiaries or (iii) trade
payables in the ordinary course of business;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset that is material to the Company and
its Subsidiaries, taken as a whole, other than in the ordinary course of
business consistent with past practices;
(f) any making of any material loan, advance or capital contribution
to or investment in any Person other than loans, advances or capital
contributions to or investments in its wholly-owned Subsidiaries or by its
wholly-owned Subsidiaries to or in the Company or other Subsidiaries of the
Company;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or
any of its Subsidiaries that has or could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect;
(h) any change in any method of accounting, method of tax accounting
or accounting principles or practice by the Company or any of its
Subsidiaries, except for
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any such change required by reason of a concurrent change in GAAP,
Regulation S-X under the 1934 Act or other applicable law or regulation; or
(i) except for the severance plans established pursuant to an
agreement by the majority of the members of the Employee Retention
Committee and except as required by law, any adoption or amendment in any
respect of any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, pension, retirement, employment or
other employee benefit agreement, trust, plan or other arrangement for the
benefit or welfare of any director or elected officer of the Company or
increase in any manner of the compensation or fringe benefits of any
director or elected officer of the Company or payment of any benefit not
required by any existing agreement or placement of any assets in any trust
for the benefit of any director or elected officer of the Company not
required by any existing agreement.
SECTION 4.11. No Undisclosed Material Liabilities. There are no liabilities
or obligations of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
other than:
(a) liabilities or obligations disclosed or provided for in the
Company Balance Sheet or in the notes thereto or in any of the Company SEC
Documents filed prior to the date hereof;
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Company Balance Sheet
Date;
(c) liabilities or obligations under this Agreement; and
(d) liabilities or obligations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 4.12. Compliance with Laws and Court Orders. The Company and each
of its Subsidiaries are, and since January 1, 1999 have been, in compliance with
any applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, except for failures to comply or violations that have not and
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 4.13. Litigation. There is no action, suit, investigation or
proceeding pending against, or, to the knowledge of the Company, threatened
against, the Company or any of its Subsidiaries or any of their respective
properties before any court or arbitrator, or before or by any Governmental
Authority,
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that would reasonably be expected to have, individually or in the aggregate,
together with all other such actions, suits, investigations or proceedings, a
Material Adverse Effect.
SECTION 4.14. Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇▇▇▇▇▇
Investments, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ahn, copies of whose engagement
agreements have been provided to Merger Subsidiary, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who might
be entitled to any fee or commission from the Company or any of its Affiliates
in connection with the Transactions.
SECTION 4.15. Opinion of Financial Advisor. (a) The Board of Directors has
received the opinion of the financial advisor to the Company to the effect that,
as of the date of this Agreement, the Merger Consideration is fair, from a
financial point of view, to the holders of Shares (other than Merger Subsidiary
and its Affiliates and the Continuing Shareholders and their respective
Affiliates).
(b) The Special Committee has received the opinion of the financial advisor
to the Special Committee to the effect that, as of the date of this Agreement,
the Merger Consideration is fair, from a financial point of view, to the holders
of Shares (other than Merger Subsidiary and its Affiliates and the Continuing
Shareholders and their Affiliates).
SECTION 4.16. Taxes. (a) The Company and each of its Subsidiaries has
timely filed (or has had timely filed on its behalf), taking into account any
extension of time within which to file, all material Tax Returns required to be
filed by it and all such material Tax Returns are true and complete in all
material respects.
(b) The Company and each of its Subsidiaries has paid (or has had paid on
its behalf), or, where payment is not yet due, has established (or has had
established on its behalf) or will establish or cause to be established in
accordance with GAAP on or before the Effective Time an adequate accrual for the
payment of, all taxes shown on such Tax Returns.
(c) There are no material Liens or encumbrances for Taxes on any of the
assets of the Company or any of its Subsidiaries.
(d) No material federal, state, local or foreign audits or administrative
proceedings are pending or, to the Company's knowledge, threatened, with regard
to any Taxes or any Tax Return of the Company or its Subsidiaries.
(e) Except for the severance, Option Plans, Supplemental Executive
Retirement and Disability Plan and stay bonus plans described in Section 7.04(b)
no amount that could be received (whether in cash or property or the vesting of
property) as a result of any of
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the Transactions by any employee, officer or director of the Company or any of
its affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan
currently in effect could be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code).
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, transfer and recording
taxes, fees and charges, and any other taxes, assessments or similar charges
imposed by the Internal Revenue Service ("IRS") or any taxing authority (whether
domestic or foreign including any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States possession))
(a "Taxing Authority"), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest whether
paid or received, fines, penalties or additional amounts attributable to, or
imposed upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "Tax Return" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
SECTION 4.17. Employee Benefit Plans. (a) Schedule 4.17 lists (i) those
Benefit Plans that are "employee welfare benefit plans" within the meaning of
Section 3(1) of ERISA the liabilities of which would reasonably be expected to
have a Material Adverse Effect on the Company, (ii) all Benefit Plans that are
"employee pension benefit plans" within the meaning of Section 3(2) of ERISA,
and (iii) all Multiemployer Plans. Between the date hereof and 10 days prior to
the Company's Stockholder's Meeting, the Company will use its reasonable best
efforts to revise Schedule 4.17 to list all Benefit Plans and Multiemployer
Plans. Copies of all written Benefit Plans, summary plan descriptions, trust
agreements, actuarial valuation reports and the most recent annual return and
IRS determination letters have been, or will have been, at least 10 days prior
to the Company's Stockholders Meeting, made available to Merger Subsidiary.
(b) Except as would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect:
(i) each Benefit Plan has at all times been maintained and
administered in all respects in accordance with its terms and with the
requirements of all applicable law, including ERISA and the Code. Each
Benefit Plan intended to qualify under Section 401(a) of the Code has been
determined by the IRS to be qualified under Sec-
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tion 401(a) of the Code, and the Company knows of no fact or circumstance
giving rise to a material likelihood that the plan would not be treated as
so qualified by the IRS;
(ii) all required contributions to any Benefit Plans and Multiemployer
Plans that are "defined benefit pension plans" required to be made by the
Company or any Subsidiary in accordance Section 302 of ERISA or Section 412
of the Code, have been timely made; there has been no application for or
waiver of the minimum funding standards imposed by Section 412 of the Code
with respect to any Benefit Plan; and no Benefit Plan has incurred any
"accumulated funding deficiency" within the meaning of Section 302 of ERISA
or Section 412 of the Code;
(iii) no "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Benefit Plan or any Plan maintained
by an ERISA Affiliate since the effective date of said Section 4043;
(iv) no liability has been incurred or is expected to be incurred by
the Company or any Subsidiary thereof under Title IV of ERISA with respect
to any Benefit Plan or Multiemployer Plan, or with respect to any other
Plan presently or heretofore maintained or contributed to during the 5 year
period prior to the Effective Time by any ERISA Affiliate;
(v) with respect to each Multiemployer Plan, (i) no withdrawal
liability (within the meaning of Section 4201(b) of ERISA) has been
incurred by the Company or any ERISA Affiliate, and the Company has no
reason to believe that any such withdrawal liability will be incurred, (ii)
no such Multiemployer Plan is in "reorganization" (within the meaning of
Section 4241 of ERISA), (iii) no notice has been received that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of an excise tax, or that such Multiemployer Plan is or may
become "insolvent" (within the meaning of Section 4241 of ERISA), (iv) to
the knowledge of the Company or any Subsidiary thereof, no proceedings have
been instituted by the PBGC against such Multiemployer Plan, (v) neither
the Company nor any Subsidiary thereof has sold assets in a transaction
intended to satisfy the requirements of Section 4204 of ERISA, and (vi) if
the Company or any ERISA Affiliate were to have a complete or partial
withdrawal under Section 4203 of ERISA as of the Effective Time, no
withdrawal liability would exist on the part of the Company or any ERISA
Affiliate;
(vi) neither the Company nor any ERISA Affiliate has incurred any
liability for any tax imposed under Sections 4971 through 4980E of the Code
or civil liability under Section 502(i) or (l) of ERISA;
(vii) no Tax has been incurred under Section 511 of the Code with
respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto);
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(viii) there is no commitment or agreement that would prevent the
termination or modification as to employees or former employees of the
Company of any Benefit Plan under which obligations to provide
post-retirement welfare benefits arise other than with respect to benefits
the liabilities of which are disclosed in the audited financial statements
of the Company in accordance with FAS 106; and
(ix) no action (excluding claims for benefits incurred in the ordinary
course of Plan activities) has been brought or, to the knowledge of the
Company, threatened against or with respect to any Benefit Plan and there
are no facts or circumstances known to the Company or any Subsidiary
thereof that could reasonably be expected to give rise to any such action.
(c) Except as would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, (i) all contributions required to be
made by the Company or any Subsidiary with respect to a Foreign Plan have been
timely made, (ii) each Foreign Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws and has been maintained, where required, in good standing with the
applicable Governmental Authority, and (iii) neither the Company nor any
Subsidiary has incurred any obligation in connection with the termination or
withdrawal from any Foreign Plan. To the knowledge of the Company, each of the
Foreign Plans that is a defined benefit plan has plan assets with aggregate fair
market value that is greater than such plan's liabilities, as determined in
accordance with applicable laws using reasonable actuarial assumptions. For
purposes hereof, the term "Foreign Plan" shall mean any plan, program, policy,
arrangement or agreement maintained or contributed to by, or entered into with,
the Company or any Subsidiary with respect to employees (or former employees)
employed outside the United States.
SECTION 4.18. Environmental Matters. Except as disclosed in the Company SEC
Documents filed prior to the date hereof and except as would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company, is
threatened by any governmental entity or other Person, nor is the Company
subject to any judgment, decree, or agreement, relating to or arising out
of any Environmental Law; and
(ii) the Company is in compliance with, and has no liability under,
all Environmental Laws and all Environmental Permits.
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SECTION 4.19. Antitakeover Statutes and Rights Agreement;
Company/Subsidiary Merger. (a) The Company has taken all action necessary to
exempt the Merger, this Agreement, the Exchange and Voting Agreement and the
Transactions from the restrictions on "business combinations" contained in
Section 203 of the DGCL, and, accordingly, neither the restrictions of such
Section nor any other antitakeover or similar statute or regulation applies or
purports to apply to any such Transactions.
(b) The Company has taken all action necessary to render the Rights issued
pursuant to the terms of the Rights Agreement inapplicable to the Merger, this
Agreement, and the Transactions. The Rights Agreement has been amended such that
it will expire and all Rights will be canceled immediately prior to the
Effective Time and the Rights Agreement will have no force or effect on or after
the Effective Time.
(c) The Company/Subsidiary Merger will be effective upon the affirmative
vote of the majority of the outstanding Shares and Exchanged Preferred Stock
held by the Company Stockholders (voting as one class) and the filing of the
certificate of merger (in the form attached as Exhibit B to the
Company/Subsidiary Merger Agreement) (the "Company/Subsidiary Certificate of
Merger") with the Secretary of State of the State of Delaware.
SECTION 4.20. Disclaimer of Other Representations and Warranties. The
Company does not make, and has not made, any representations or warranties in
connection with the Merger other than those expressly set forth herein. It is
understood that any data, any financial information or any memoranda or offering
materials or presentations (including but not limited to the Confidential
Information Memorandum dated August, 1999) are not and shall not be deemed to be
or to include representations or warranties of the Company. Except as expressly
set forth herein, no Person has been authorized by the Company to make any
representation or warranty relating to the Company or any Subsidiary thereof or
their respective businesses, or otherwise in connection with the Merger and, if
made, such representation or warranty may not be relied upon as having been
authorized by the Company.
ARTICLE 5
Representations and Warranties of MERGER SUBSIDIARY
Merger Subsidiary represents and warrants to the Company that:
SECTION 5.01. Existence and Power. Merger Subsidiary is a limited liability
company duly formed, validly existing and in good standing under the laws of
Delaware and has all limited liability
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company powers and all governmental licenses, authorizations, permits, consents
and approvals required to carry on its business as now conducted. Merger
Subsidiary was formed solely for the purpose of engaging in the Transactions.
Since the date of its formation, Merger Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement.
Merger Subsidiary has no Subsidiaries.
SECTION 5.02. Authorization. The execution, delivery and performance by
Merger Subsidiary of this Agreement and the consummation by Merger Subsidiary of
the Transactions are within the limited liability company powers of Merger
Subsidiary and have been duly authorized by all necessary limited liability
company action. This Agreement constitutes a valid and binding agreement of
Merger Subsidiary.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Merger Subsidiary of this Agreement and the consummation by
Merger Subsidiary of the Transactions require no action by or in respect of, or
filing with, or notification or reporting to, any Governmental Authority other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Merger Subsidiary is qualified to do
business, (ii) compliance with any applicable requirements of the Antitrust Laws
of the foreign jurisdictions set forth on Schedule 5.03 hereof, (iii) compliance
with any applicable requirements of the 1933 Act, the 1934 Act and any other
securities laws, whether state or foreign, and (iv) any actions or filings the
absence of which would not be reasonably expected to materially impair the
ability of Merger Subsidiary to consummate the Transactions.
SECTION 5.04. Non-contravention. The execution, delivery and performance by
Merger Subsidiary of this Agreement and the consummation by Merger Subsidiary of
the Transactions do not and will not (i) contravene, conflict with, or result in
any violation or breach of any provision of any limited liability company
agreement or organizational document of Merger Subsidiary, (ii) assuming
compliance with the matters referred to in Section 5.03 hereof, contravene,
conflict with or result in a violation or breach of any provision of any law,
rule, regulation, judgment, injunction, order or decree, (iii) require any
consent or other action by any Person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which Merger Subsidiary is
entitled under any provision of any agreement or other instrument binding upon
Merger Subsidiary or any license, franchise, permit, certificate, approval or
other similar authorization affecting, or relating in any way to, the assets or
business of Merger Subsidiary or (iv) result in the creation or imposition of
any Lien on any asset of Merger Subsidiary, except for such contraventions,
conflicts and violations referred to in clause (ii) and for such failures to
obtain any such consent or other action, defaults, terminations, cancellations,
accelerations, changes,
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losses or Liens referred to in clauses (iii) and (iv) that would not be
reasonably expected to materially impair the ability of Merger Subsidiary to
consummate the Transactions.
SECTION 5.05. Disclosure Documents. None of the information provided by
Merger Subsidiary for inclusion (i) in the Company Proxy Statement or any
amendment or supplement thereto, at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to the Company Stockholders and
at the time the Company Stockholders vote on adoption of the Company/Subsidiary
Merger Agreement and this Agreement or (ii) in the Schedule 13E-3 will contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 5.06. Finders' Fees. Except for Chase Securities Inc., Credit
Suisse First Boston Corporation and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation, whose fees will be paid by the Surviving Corporation only if the
Transactions are consummated, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Merger Subsidiary who might be entitled to any fee or commission from the
Company or any of its Affiliates upon consummation of the Transactions.
SECTION 5.07. Financing. (a) Merger Subsidiary has received and furnished
copies to the Company of (i) a commitment letter to provide financing to the
Company or a Subsidiary of the Company (including the Summary of Terms and
Conditions annexed thereto, the "Commitment Letter") with The Chase Manhattan
Bank (the "Bank") dated as of July 31, 2000, and (ii) the Exchange and Voting
Agreement. The funds which Bank has agreed, subject to the terms and conditions
of the Commitment Letter, to provide will be sufficient, when taken together
with other funds available to Merger Subsidiary and assuming compliance by the
Company Shareholder, IS and FS with the Exchange and Voting Agreement, to enable
it to provide to the Exchange Agent the aggregate Merger Consideration and other
amounts owing as a result of the Transactions, to refinance substantially all of
the existing debt of the Company and its Subsidiaries, to the extent
contemplated by the Transactions as contemplated by the Commitment Letter, and
to pay all related fees and expenses (collectively, the "Required Amount").
(b) As of the date hereof (i) the Commitment Letter has not been withdrawn
and is in full force and effect and (ii) Merger Subsidiary has no reason to
believe that any of the conditions set forth in the Commitment Letter will not
be satisfied.
(c) Merger Subsidiary has received and furnished a copy to the Company of
the equity commitment letters (the "Equity Commitment Letters") addressed to
Merger Subsidiary from Sponsor and each of the other equity investors in Merger
Subsidiary (the "Equity Investors"), each dated as of July 31, 2000 pursuant to
which the Equity Investors
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have committed to make available to Merger Subsidiary certain funds, subject to
the terms and conditions contained therein, for the purpose of consummating the
Transactions. As of the date hereof, (i) no Equity Commitment Letter has been
withdrawn and each Equity Commitment Letter is in full force and effect and (ii)
Merger Subsidiary has no reason to believe that any of the conditions set forth
in any Equity Commitment Letter will not be satisfied.
(d) Immediately after the consummation of the Transactions, the Surviving
Corporation (i) will not be insolvent, (ii) will not be left with unreasonably
small capital, and (iii) will not have debts beyond its ability to pay such
debts as they mature.
SECTION 5.08. Member Appraisal Rights. The members of the Merger Subsidiary
are not entitled by law or by contract to receive appraisal rights as a result
of the Merger.
ARTICLE 6
Covenants of the Company
The Company agrees that, except as set forth in the disclosure schedule
delivered by the Company to Merger Subsidiary immediately prior to the execution
of this Agreement:
SECTION 6.01. Conduct of the Company. Except as contemplated by this
Agreement or as expressly agreed to in writing by Merger Subsidiary, during the
period from the date of this Agreement to the Effective Time, the Company shall,
and shall cause each of its Subsidiaries to, conduct its operations according to
its ordinary and usual course of business and consistent with past practice and
use all commercially reasonable efforts to preserve intact their current
business organizations, keep available the services of their current officers
and employees and preserve their relationships with customers, suppliers,
licensors, licensees, advertisers, distributors and others having business
dealings with them and to preserve goodwill. Without limiting the generality of
the foregoing, and except as (x) otherwise expressly provided in this Agreement
or (y) required by law, prior to the Effective Time, the Company shall not, and
shall cause its Subsidiaries not to, without the consent of Merger Subsidiary:
(a) expend funds for capital expenditures that in the aggregate would
cause total capital expenditures for the period from January 1, 2000 to the
Effective Time to exceed 110% of the amounts set forth in the most recent
version of the business plan previously provided to Merger Subsidiary;
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(b) sell, lease, license or otherwise dispose of any Material
Subsidiary or any material amount of assets, securities or property of the
Company and its Subsidiaries, taken as a whole, except (i) pursuant to
existing contracts or commitments and (ii) other dispositions pursuant to
the Company's disposition program set forth on Schedule 6.01(b) or
otherwise in the ordinary course consistent with past practice;
(c) amend its certificate of incorporation, by-laws or equivalent
organizational documents or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any Material Subsidiary of the Company; or split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (d) except for issuances (i)
upon exercise of presently outstanding awards under any Plan, (ii) upon
conversion of the Debentures outstanding on the date hereof, or (iii) as
previously disclosed in writing to Merger Subsidiary or its affiliates,
authorize for issuance, issue, deliver, sell or agree or commit to issue,
sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise),
pledge or otherwise encumber any shares of its capital stock or the capital
stock of any of its Subsidiaries, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities or any other
securities or equity equivalents (including without limitation stock
appreciation rights);
(e) make or agree to make any acquisition of equity interest (whether
through a purchase of stock, establishment of a joint venture or otherwise)
or assets which is material to the Company and its Subsidiaries, taken as a
whole, except for (i) purchases of inventory and supplies in the ordinary
course of business, (ii) pursuant to purchase orders entered into in the
ordinary course of business or (iii) acquisitions disclosed on Schedule
6.01(e) on terms agreed to with Merger Subsidiary;
(f) settle or compromise (i) any shareholder derivative suits arising
out of the Transactions or (ii) any other material litigation (whether or
not commenced prior to the date of this Agreement) set forth on Schedule
6.01(f) or settle, pay or compromise any claims not required to be paid,
other than, in each case, in consultation and cooperation with Merger
Subsidiary and, with respect to any such settlement, with the prior written
consent of Merger Subsidiary;
(g) directly or indirectly, sell, convey, transfer or otherwise
dispose (collectively, a "Transfer") of any of the Equity Investments or
amend or modify the Equity Investments Sale Agreement or enter into any
agreement to do any of the foregoing other than pursuant to the Equity
Investments Sale Agreement; provided that the Company shall be permitted to
Transfer an Equity Investment other than pursuant to
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the Equity Investments Sale Agreement so long as the Company has deposited
the funds received from such Transfer in an escrow account to fund the
Transactions, on reasonably acceptable terms, and otherwise complied with
Section 9.02(d); provided, however, that in the event such escrow
arrangement would cause the Company to be in default under the Credit
Agreement, the Company shall take all action to comply with the Credit
Agreement (including using the proceeds of any such sale to repay
outstanding borrowings under the Credit Agreement) and, if permitted under
the Credit Agreement, make borrowings as soon as practicable thereafter
under the Credit Agreement in the amount of such proceeds for deposit in an
escrow account to fund the Transactions on reasonably satisfactory terms
and otherwise in compliance with Section 9.02(d);
(h) (i) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect at, or
as of any time prior to, the Effective Time or (ii) omit to take any action
necessary to prevent any such representation or warranty from being
materially inaccurate in any respect at any such time;
(i) waive or amend any provision of the Rights Agreement or otherwise
take any action with respect to the Rights Agreement; or
(j) authorize, or commit or agree to take, any of the foregoing
actions.
SECTION 6.02. Access to Information. From the date of this Agreement until
the Effective Time, the Company shall, and shall cause its Subsidiaries, and
each of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, give Merger
Subsidiary and its members, managers, employees, counsel, advisors,
representatives (collectively, the "Merger Subsidiary Representatives") and
representatives of financing sources identified by Merger Subsidiary reasonable
access, upon reasonable notice and during normal business hours, to the offices
and other facilities and to the books and records of the Company and its
Subsidiaries and will cause the Company Representatives and the Company's
Subsidiaries to furnish Merger Subsidiary and the Merger Subsidiary
Representatives and representatives of financing sources identified by Merger
Subsidiary with such financial and operating data and such other information
with respect to the business and operations of the Company and its Subsidiaries
as Merger Subsidiary and representatives of financing sources identified by
Merger Subsidiary may from time to time reasonably request. Merger Subsidiary
agrees that any information furnished pursuant to this Section 6.02 shall be
subject to the provisions of the letter agreement dated April 27, 2000 between
Sponsor and the Company (the "Confidentiality Agreement").
SECTION 6.03. Stockholder Meeting; Proxy Material. The Company shall cause
a meeting of the Company Stockholders (the "Company Stockholder
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Meeting") to be duly called and held as soon as reasonably practicable for the
purpose of voting on the adoption of the Company/Subsidiary Merger Agreement and
the Company/Subsidiary Merger and the adoption of this Agreement and the Merger.
Subject to Section 6.04 hereof, the Board of Directors and the Special Committee
shall recommend adoption of the Company/Subsidiary Merger Agreement and the
Company/Subsidiary Merger and shall recommend adoption of this Agreement and the
Merger by the Company Stockholders. In connection with such meeting, the Company
will (i) promptly prepare and file with the SEC, use all commercially reasonable
efforts to have cleared by the SEC and thereafter mail to the Company
Stockholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (ii) subject to Section 6.04, use all
commercially reasonable efforts to obtain the necessary approvals by the Company
Stockholders of the Company/Subsidiary Merger Agreement, the Company/Subsidiary
Merger, this Agreement and the Transactions and (iii) otherwise comply with all
legal requirements applicable to such meeting.
SECTION 6.04. No Solicitation. (a) The Company agrees that it will not,
directly or indirectly through any officer, subsidiary, affiliate, director,
employee, stockholder, representative, agent or other person, (i) seek,
initiate, solicit or encourage any Person to make an Acquisition Proposal, (ii)
engage in negotiations or discussions concerning an Acquisition Proposal with
any person or group, (iii) disclose any non-public information relating to the
Company or give access to the properties, employees, books or records of the
Company or any of its subsidiaries to any person or group in connection with any
Acquisition Proposal or (iv) approve or recommend or agree to approve or
recommend any Acquisition Proposal; provided that nothing herein shall prevent
the Board of Directors from (a) furnishing information to any person that has
made an Acquisition Proposal not solicited in violation of this paragraph or (b)
subject to the other provisions of this paragraph, entering into or
participating in discussions or negotiations concerning an Acquisition Proposal
not solicited in violation of this paragraph so long as, in any case, (x) the
Board of Directors or the Special Committee shall have concluded in good faith,
after receiving and considering the advice of its outside legal counsel, that
failing to participate in such discussions or negotiations or furnishing such
information would cause the Board of Directors or the Special Committee to be in
breach of its respective fiduciary responsibilities to the Company Stockholders
under applicable law, and (y) prior to participating in such discussions or
negotiations or furnishing any such information, the Company and the party
making such offer agrees to a confidentiality agreement on terms that are, in
the aggregate, no less favorable to the Company than those of the
Confidentiality Agreement to which Sponsor is a party (other than the standstill
provisions thereof) and Merger Subsidiary is given concurrent or advance written
notice thereof unless the Board of Directors or the Special Committee shall have
concluded in good faith, after receiving and considering the advice of its
outside counsel, that doing so would cause it to be in breach of its respective
fiduciary responsibilities to the Company Stockholders under applicable law. The
Board of Directors or the Special Committee may (x) fail to make, withdraw, or
modify in a manner adverse to Merger Subsidiary its recommendation to its
stockholders referred to in Section 6.03 hereof, (y) take and disclose to
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the Company Stockholders a position contemplated by Rule 14e-2 under the 1934
Act or otherwise complying with its disclosure obligations and/or (z) take any
non-appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction, but in each case only if the Board of Directors or the
Special Committee determines, in good faith after consultation with outside
legal counsel to the Company, that such action is required in the exercise of
its respective fiduciary duties under applicable law.
(b) The Company shall notify Merger Subsidiary in writing no later than the
end of the next business day after receipt thereof of the receipt of any
Acquisition Proposal (including a copy thereof if in writing), the terms and
conditions of such Acquisition Proposal and the identity of the person making
it. The Company also shall promptly notify Merger Subsidiary no later than the
end of the next Business Day of any change to or modification of such
Acquisition Proposal.
(c) The Company shall, and shall cause its Subsidiaries and the advisors,
employees and other agents of the Company and any of its Subsidiaries to, cease
immediately and cause to be terminated any and all existing activities,
discussions or negotiations, if any, with any Third Party conducted prior to the
date hereof with respect to any Acquisition Proposal and shall use commercially
reasonable efforts to cause any such Party (or its agents or advisors) in
possession of confidential information about the Company that was furnished by
or on behalf of the Company to return or destroy all such information.
SECTION 6.05. State Takeover Laws. The Company shall, upon the request of
Merger Subsidiary, take all reasonable steps to assist in any challenge by
Merger Subsidiary to the validity or applicability to the Transactions,
including the Merger, of any state takeover law.
SECTION 6.06. Reports. During the period from the date of this Agreement to
the Effective Time, the Company shall provide Merger Subsidiary with monthly
financial statements in the existing reporting format (balance sheet, cash flow
statement, income statement and, if available, notes thereto), broken out by
operating unit (except as to the cash flow statement, which shall be a
consolidated statement), no later than the fifteenth Business Day following the
end of each calendar month following the date of this Agreement; provided that
for calendar months that are also the end of a calendar quarter, the Company may
provide such financial information to Merger Subsidiary on the same date such
information is publicly released in accordance with the past practice of the
Company.
SECTION 6.07. Plans. (a) The Company covenants and agrees that it will take
any and all necessary action including, without limitation, actions contemplated
by Section 3.02 hereof to ensure that the Transactions will not constitute a
"change of control" under any Option Plan or Restricted Stock
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Plan or option agreement or award agreement, except, in the case of the Options,
to the extent contemplated by Section 2.06 hereof.
(b) The Company covenants and agrees that the Committees administering the
Restricted Stock Plans will take any and all necessary action to ensure that
awards of Restricted Stock are replaced with the New Awards, and any necessary
adjustments or actions in respect of the Restricted Stock Plans or reasonably
requested by Merger Subsidiary are made to provide for the treatment of
Restricted Stock required by Section 2.06 hereof.
(c) The Company covenants and agrees that it will take all necessary action
to ensure that the Options that are not Cash Out Options will be canceled in
accordance with Section 2.06(a).
SECTION 6.08. Equity Investments. Except as set forth in Section 6.01(g),
the Company covenants and agrees that it will use commercially reasonable
efforts to cause the Equity Investments to be sold on or prior to the Effective
Time pursuant to the terms and conditions set forth in the Equity Investments
Sale Agreement, as in effect on the date hereof. The Company shall not amend,
modify or terminate the Equity Investments Sale Agreement without the prior
written consent of Merger Subsidiary.
SECTION 6.09. Confidentiality Agreement. The Company agrees to waive the
application of the standstill provisions of the Confidentiality Agreement to the
transactions contemplated by the Exchange and Voting Agreement.
SECTION 6.10. Issuance of Class A Preferred Stock and Class B Preferred
Stock. Promptly after the date hereof, the Company shall file with the Secretary
of State of the State of Delaware a certificate of designation having the terms
set forth as Exhibit G attached hereto establishing and designating 4,250,000
shares of Class A Preferred Stock and a certificate of designation establishing
and designating 2,150,000 shares of Class B Preferred Stock. Upon the surrender
of each Continuing Shareholder Exchange Share on the Exchange Date in accordance
with the Exchange and Voting Agreement, the Company shall promptly on such date
issue one share of Class A Preferred Stock, without additional consideration
therefor to the holder thereof, and such shares of Class A Preferred Stock shall
be validly issued, fully paid and nonassessable. Upon the surrender of each
Company Shareholder Exchange Share on the Exchange Date in accordance with the
Exchange and Voting Agreement, the Company shall promptly on such date issue one
share of Class B Preferred Stock to the holder thereof, and such shares of Class
B Preferred Stock shall be validly issued, fully paid and nonassessable. The
Shares so exchanged for Class A Preferred Stock or Class B Preferred Stock shall
be treasury shares.
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SECTION 6.11. Saturn Escrow. In the event the Company Transfers the Saturn
Equity Investment prior to Closing, the Company shall, in accordance with
2.04(f) and 2.06(a), deposit an amount equal to the proceeds from such sale in
an escrow arrangement on terms reasonably satisfactory to Merger Subsidiary;
provided, however, in the event such escrow arrangement would cause the Company
to be in default under the Credit Agreement, the Company shall take all action
to comply with the Credit Agreement (including using the proceeds of any such
sale to repay outstanding borrowings under the Credit Agreement) and, if
permitted under the Credit Agreement, make borrowings as soon as practicable
thereafter under the Credit Agreement in the amount of such proceeds for deposit
in such an escrow account.
ARTICLE 7
Covenants of MERGER SUBSIDIARY
Merger Subsidiary agrees that:
SECTION 7.01. Obligations of Merger Subsidiary. Merger Subsidiary covenants
and agrees that it will use commercially reasonable efforts to consummate the
Merger on the terms and conditions set forth in this Agreement.
SECTION 7.02. Voting of Shares. Merger Subsidiary agrees to vote all Shares
beneficially owned by it in favor of adoption of the Company/Subsidiary Merger
Agreement and this Agreement at the Company Stockholder Meeting.
SECTION 7.03. Director and Officer Liability. The Surviving Corporation
hereby agrees to do the following:
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless the present and former officers and
directors of the Company and each of its Subsidiaries (each an "Indemnified
Person") in respect of acts or omissions occurring at or prior to the
Effective Time to the fullest extent permitted by the DGCL or any other
applicable laws or provided under the Company's certificate of
incorporation and by-laws in effect on the date hereof, provided that such
indemnification shall be subject to any limitation imposed from time to
time under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of
acts or omissions occur-
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ring prior to the Effective Time covering each such Indemnified Person
currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided
that the Surviving Corporation shall not be obligated to make annual
premium payments for such insurance to the extent such annual premiums
exceed 225% of the annual premiums paid as of the date hereof the by
Company for such insurance and provided, further, that if the premiums with
respect to such insurance exceed 225% of the annual premiums paid as of the
date hereof by the Company for such insurance, the Surviving Corporation
shall be obligated to obtain such insurance with the maximum coverage as
can be obtained at an annual premium equal to 225% of the annual premiums
paid by the Company as of the date hereof.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Merger Subsidiary or the Surviving Corporation, as the case may
be, shall assume the obligations set forth in this Section 7.03.
(d) The rights of each Indemnified Person under this Section 7.03
shall be in addition to any rights such Person may have under the
certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, or under the DGCL or any other applicable laws or under any
agreement of any Indemnified Person with the Company or any of its
Subsidiaries. These rights shall survive consummation of the Merger and are
intended to benefit, and shall be enforceable by, each Indemnified Person.
SECTION 7.04. Employee Benefits After the Merger. (a) Merger Subsidiary
agrees that for a period of two years following the Effective Time, the
Surviving Corporation shall provide (i) compensation programs and plans, and
(ii) employee benefit and welfare plans, programs, contracts, agreements and
policies, fringe benefits and vacation policies, substantially equivalent to the
ones which are currently provided by the Company; provided that notwithstanding
anything in this Agreement to the contrary the Surviving Corporation shall not
be required to maintain any individual plan or program, other than those
contemplated by Section 2.06 and Section 9.01(g); provided, that this provision
shall terminate with respect to the participation in any plans or programs by
employees of any business transferred to any third party after the Effective
Time; and provided, further, that the Surviving Corporation may offer all
employees of the Surviving Corporation employee benefits under "Wellness First"
or "Choices" or substantially similar plans, notwithstanding the fact that some
employees may not be covered by such plan at the Effective Time.
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(b) Notwithstanding the foregoing, nothing in this Section 7.04 shall
preclude Surviving Corporation from seeking to (i) modify any employment
agreement with the consent of the affected employee or employees or (ii) modify
any Plan to the extent such modification is permitted by the terms of such Plan
and is consistent with Section 7.04(a).
(c) Notwithstanding Section 7.04(a), employment of any of the employees by
the Surviving Corporation will be "at will" and may be terminated by the
Surviving Corporation at any time for any reason (subject to any legally binding
agreement other than this Agreement, or any applicable laws or collective
bargaining agreement, or any other arrangement or commitment). No provision of
this Section 7.04 shall confer any third party beneficiary rights or benefits to
any employee of the Surviving Corporation under this Agreement.
SECTION 7.05. Financing Arrangements. (a) Merger Subsidiary shall use its
commercially reasonable efforts to obtain financing in an amount at least equal
to the Required Amount, including by executing definitive agreements for the
Facilities on or prior to the Effective Time. The Commitment Letter and the
definitive agreements for the Facilities (along with any other document pursuant
to which Merger Subsidiary intends to obtain financing of all or a portion of
the Required Amount) are referred to herein collectively as the "Financing
Agreements." The Company will be afforded a reasonable opportunity to review and
comment on the representations and warranties contained in the Financing
Agreements and no such representation or warranty, insofar as it relates to
facts and circumstances relating to the Company and its Subsidiaries, shall be
included therein that the Company shall have advised Merger Subsidiary is
incorrect or inaccurate. Merger Subsidiary shall use commercially reasonable
efforts to ensure that the representations and warranties contained in the
Financing Agreements shall be consistent with the Commitment Letter.
(b) Without limiting the generality of the foregoing, in the event that at
any time funds are not or have not been made available under the Financing
Agreements so as to enable Merger Subsidiary to proceed with the Merger in a
timely manner, Merger Subsidiary shall (i) use its commercially reasonable
efforts to obtain alternative funding in an amount at least equal to the
Required Amount on terms and conditions comparable to those provided in such
Financing Agreements or otherwise on terms reasonably acceptable to Merger
Subsidiary and (ii) shall continue to use its commercially 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 under applicable laws and regulations to
consummate the transactions contemplated by this Agreement; provided, however,
nothing contained herein shall require Merger Subsidiary to obtain equity
financing in excess of the amount of equity financing contemplated in the
Commitment Letter.
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ARTICLE 8
Covenants of MERGER SUBSIDIARY and the Company
The parties hereto agree that:
SECTION 8.01. Commercially Reasonable Efforts. (a) Subject to the terms and
conditions of this Agreement and to the fiduciary duties of the Board of
Directors and the Special Committee under applicable law (as determined by such
directors in good faith), the Company and Merger Subsidiary will use
commercially 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 under
applicable laws and regulations to consummate the Transactions, including, to
assist Merger Subsidiary and cooperate with Merger Subsidiary and the Bank and
other lenders in order for Merger Subsidiary to establish its contemplated debt
financing arrangements. In furtherance and not in limitation of the foregoing,
the Company agrees to make, if required, an appropriate filing of a Notification
and Report Form pursuant to the HSR Act with respect to the Equity Sale
Investments Agreement as promptly as practicable and in any event within 15
Business Days of the date hereof and to supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable.
(b) In connection with the efforts referenced in Section 8.01(a) to obtain
all requisite approvals and authorizations for the Transactions under any other
Antitrust Law, each of Merger Subsidiary and the Company shall use all
commercially reasonable efforts to (i) cooperate in all respects with each other
in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Authority and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the Transactions and (iii) permit
the other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other Governmental Authority or, in connection with any proceeding
by a private party, with any other Person.
SECTION 8.02. Certain Filings. The Company and Merger Subsidiary shall
cooperate with one another (i) in connection with the preparation of the Company
Proxy Statement and the Schedule 13E-3, (ii) in determining whether any action
by or in respect of, or filing with, any Governmental Author-
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ity is required, or any actions, consents, approvals or waivers are required to
be obtained from parties to any material contracts, in connection with the
consummation of the Transactions, and (iii) in taking such actions or making any
such filings, furnishing information required in connection therewith or with
the Company Proxy Statement and seeking timely to obtain any such actions,
consents, approvals or waivers. In addition, the Company will cooperate and
utilize all reasonable commercial efforts to obtain any and all necessary
consents required to consummate the sale of equity investments pursuant to the
Equity Investments Sale Agreement.
SECTION 8.03. Public Announcements. Merger Subsidiary and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the Transactions and, except as may
be required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
SECTION 8.04. Notices of Certain Events. Each of the Company and Merger
Subsidiary shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any Governmental Authority
in connection with the Transactions;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or
involving or otherwise affecting the Company or any of its Subsidiaries
that, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 4.12 or 4.13 hereof, or that relate
to the consummation of the Transactions;
(d) the occurrence or non-occurrence of any fact or event which would
be reasonably likely:
(i) to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any
time from the date hereof to the Effective Time, or
(ii) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied; and
(e) any failure of the Company or Merger Subsidiary, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or
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satisfied by it hereunder; provided, however, that no such notification
shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder.
SECTION 8.05. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, each of Merger Subsidiary and the Company will
hold, and will use all commercially reasonable efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, all confidential documents and information concerning the
other party furnished to it or its Affiliates in connection with the
Transactions in accordance with the terms of the Confidentiality Agreement.
SECTION 8.06. Saturn Sales. (a) The Company hereby appoints the Adjustment
Committee (in their capacity as directors of the Saturn Subsidiary) the
Adjustment Committee and authorizes them to be in sole control in accordance
with the terms of this Agreement of the Saturn Sales, the Merger Consideration
Adjustment and the Option Consideration Adjustment to the extent the Saturn
Sales are not consummated prior to the Effective Time, including, without
limitation, to take any and all necessary, advisable or desirable action that
they deem appropriate in their sole discretion to direct the Saturn Sales and
administer the Merger Consideration Adjustment and the Option Consideration
Adjustment. Notwithstanding the foregoing, the consideration for the Saturn
Sales shall only be cash. Any proceeds that, in accordance with this Agreement,
constitute an Adjustment Amount shall be deposited in an escrow account on terms
satisfactory to the Adjustment Committee, pending payment of the Merger
Consideration Adjustment and the Option Consideration Adjustment with reference
thereto pursuant to the terms of this Agreement.
(b) The Surviving Corporation agrees to indemnify the Adjustment Committee
to the extent provided in Section 8.06(c) for a period of six years from the
date of the consummation of all Saturn Sales. For a period of six years from the
consummation of the Saturn Sales in full, the Surviving Corporation agrees to
provide officers and directors' liability insurance to the Adjustment Committee
comparable to that provided in Section 7.03(b). After the Effective Time, each
member of the Adjustment Committee shall be entitled to a fee, in cash, per
meeting (whether in person or via telephone conference), in an amount equal to
the amount payable prior to the Effective Time to members of the Special
Committee per meeting. Such fee will be payable upon consummation of the Saturn
Sales in full.
(c) So long as the Saturn Sales have not been consummated in full, the
Saturn Subsidiary shall have (x) the Adjustment Committee appointed as its board
of directors, (y) a certificate of incorporation and/or bylaws that provide: (i)
that the corporation only has the power and authority to own the Saturn Equity
Investment and to conduct the Saturn Sales and shall have no authority to
conduct business, other than to consummate the Saturn Sales in accordance with
the terms of this Agreement, and other business activities ancillary to the
own-
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ership, voting and disposition of the Saturn Equity Investment and contain such
restrictions, which shall include, without limitation, a prohibition on the
incurrence of indebtedness and any other obligations that are not related to its
corporate purpose, (ii) that the members of the board of directors may not be
removed except for cause, (iii) that the Saturn Subsidiary and its board of
directors be indemnified by such subsidiary and the Surviving Corporation and
exculpated by such subsidiary in its certificate of incorporation to the maximum
extent permitted by law, except in each case, for action or inaction by such
member of the board of directors determined by a final judgment by a court of
law to have been taken with willful misconduct or gross negligence and, in the
case of indemnification, met any applicable standard of conduct required by law
and (iv) the stockholder of such subsidiary be unable to cause such subsidiary
to be in any type of bankruptcy or other similar proceeding.
(d) The Company or the Surviving Corporation, as the case may be, shall
have no further responsibility with respect to proceeds of Equity Investment
Sales or are Saturn Sales, upon payment of all Merger Consideration Adjustments
and Option Consideration Adjustments required to be paid pursuant to the terms
of this Agreement.
ARTICLE 9
Conditions to the Merger
SECTION 9.01. Conditions to Obligations of Each Party. The obligations of
the Company and Merger Subsidiary to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) (i) the Company/Subsidiary Merger Agreement and the
Company/Subsidiary Merger shall have been approved by the holders of a
majority of the Company's outstanding capital stock entitled to vote for
directors (voting as a class) in accordance with the DGCL and the
Company/Subsidiary Certificate of Merger shall have been filed with the
Secretary of State of the State of Delaware in accordance with the DGCL, in
each case prior to the approvals contemplated by Section 9.01(a)(ii), and
(ii) this Agreement and the Merger shall have been approved by the holders
of (x) a majority of the Company's outstanding capital stock entitled to
vote for directors (voting as a class) in accordance with the DGCL and (y)
the majority of the Company's outstanding capital stock entitled to vote
for directors (other than the Continuing Shareholders) at the Company
Stockholder Meeting;
(b) any applicable waiting period under the HSR Act relating to the
sale of the Equity Investments pursuant to the Equity Investments Sale
Agreement shall have expired or been terminated;
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(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(d) all actions by or in respect of, or filings with, any Governmental
Authority required to permit the consummation of the Merger, shall have
been taken, made or obtained;
(e) receipt of a solvency opinion addressed to each of the Special
Committee, the Board of Directors, Merger Subsidiary, the Sponsor and each
of the Equity Investors, as to the solvency of the Surviving Corporation
after giving effect to the Transactions;
(f) (i) the Equity Investments shall have been purchased pursuant to
the terms and conditions of the Equity Investments Sale Agreement (without
waiver, consent or amendment not previously approved by Merger Subsidiary
in writing) and the Company shall have received no less than $125.0 million
in cash (or, no less than $116.0 million in cash to the extent a right of
first refusal process has not been completed prior to the Effective Time
with respect to certain Equity Investments (but not by virtue of a refusal
to consent to any such sale)) from such sale less any amounts placed in
escrow or used to pay outstanding borrowings under the Credit Agreement
pursuant to Section 6.01(g) and (ii) any amounts placed in escrow pursuant
to Section 6.01(g) shall have been released from escrow;
(g) the Employee Retention Committee will address various matters
related to the Company's employees pursuant to an agreement of the majority
of the members of such committee on terms consistent with Schedule 9.01(g);
(h) all licenses, permits, qualifications, consents, waivers,
approvals, authorizations or orders shall have been obtained and made by
the Company, except where the failure to receive such licenses, permits,
qualifications, consents, waivers, approvals, authorizations or orders,
individually or in the aggregate with all other such failures, would not be
reasonably expected to have a Material Adverse Effect (either before or
after giving effect to the Transactions); and
(i) unless the Saturn Sales have been consummated in full prior to the
Effective Time, the Company shall have transferred the Saturn Equity
Investment to a newly-formed wholly owned subsidiary (the "Saturn
Subsidiary") of the Company; provided, that the obligation of the Company
to pay any Merger Consideration Adjustment and the Option Consideration
Adjustment shall continue to be the obligation of the Company or the
Surviving Corporation, as the case may be, and shall not be shifted to
Saturn Subsidiary.
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SECTION 9.02. Conditions to the Obligations of Merger Subsidiary. The
obligations of Merger Subsidiary to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of the Company
contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto that are qualified by materiality
or Material Adverse Effect shall be true, and all other such
representations and warranties of the Company shall be true in all material
respects, in each case at and as of the Effective Time as if made at and as
of such time and (iii) Merger Subsidiary shall have received a certificate
signed by a duly authorized officer of the Company to the foregoing effect;
(b) no court, arbitrator or Governmental Authority, shall have issued
any order, and there shall not be any statute, rule or regulation,
restraining or prohibiting the consummation of the Merger or the effective
operation of any material portion of the business of Surviving Corporation
and its Subsidiaries after the Effective Time;
(c) the financing contemplated by the Commitment Letter to be provided
by the Bank shall have been completed on substantially the terms and
conditions identified in such Commitment Letter or on such other terms and
conditions or involving such other financing sources, as are acceptable to
Merger Subsidiary and the Company and are not materially more onerous;
provided, however, that this condition shall be deemed satisfied if the
failure of this condition is due to a willful breach by Merger Subsidiary
of any covenant or willful failure to perform any agreement or a willful
breach by Merger Subsidiary of any representation or warranty contained in
any of the Financing Agreements with the Bank;
(d) the Corporate Services Agreement shall have been modified by an
amendment, in form reasonably satisfactory to the Original Company
Shareholder and Merger Subsidiary, to provide for transitional services by
the Original Company Shareholder to the Surviving Corporation identical to
those services provided under the Corporate Services Agreement on the date
hereof and on the same terms as in effect on the date hereof; provided such
transitional services need not be provided beyond 18 months after the
Effective Time and legal services which may be provided under such
agreement need not be provided beyond 6 months after the Effective Time;
(e) Merger Subsidiary shall have received copies of the resolutions of
the Board of Directors of the Company dated prior to the Effective Time
approving the directors of Merger Subsidiary as the directors of the
Surviving Corporation and Merger Subsidiary shall be satisfied that the
Transactions will not constitute a "change of con-
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trol" under any Restricted Stock Plan; Merger Subsidiary shall have
received copies of the resolutions of the Committees administering the
Option Plan and Restricted Stock Plans approving the matters contemplated
by Section 2.06 hereof and shall have received copies of the New Awards;
(f) the Amended and Restated Securities Purchase Agreement dated as of
November 23, 1993 as amended on October 1, 1996 between the Company and the
Original Company Shareholder shall have been terminated. The Company and
the Company Subsidiaries shall have entered into the Subordinated Loan
Agreement in the form attached hereto as Exhibit I;
(g) the Company shall have obtained from the New Jersey Department of
Environmental Protection either (i) a declaration of non-applicability of
the ISRA to the Merger or any other transactions contemplated thereby, or
(ii) approval of a negative declaration or other action required to comply
with ISRA, in each case, which is not in excess of $2.0 million;
(h) each of the Company Shareholder, IS and FS shall have performed in
all material respects all of its obligations required to be performed by it
at or prior to the Effective Time and the representations and warranties of
each of Company Shareholder, IS and FS contained in the Exchange and Voting
Agreement shall be true as if made at the Effective Time;
(i) the Class A Preferred Stock and Class B Preferred Stock shall have
been issued prior to the Effective Time to the Continuing Shareholders in
accordance with the terms of this Agreement and the Exchange and Voting
Agreement; and
(j) stockholders of the Company representing not more than 10% of the
Shares shall have demanded appraisal rights pursuant to Section 262 of the
DGCL.
SECTION 9.03. Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i) Merger Subsidiary shall have performed in all material
respects all of its obligations hereunder required to be performed by it at
or prior to the Effective Time, (ii) the representations and warranties of
Merger Subsidiary contained in this Agreement and in any certificate or
other writing delivered by Merger Subsidiary pursuant hereto that are
qualified by materiality or Material Adverse Effect shall be true, and all
other such representations or warranties of Merger Subsidiary shall be true
in all material respects, in each case at and as of the Effective Time as
if made at and as of such
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time and (iii) the Company shall have received a certificate signed by a
duly authorized manager of Merger Subsidiary to the foregoing effect; and
(b) no court, arbitrator or governmental body, agency or official,
domestic or foreign, shall have issued any order, and there shall not be
any statute, rule or regulation, restraining or prohibiting the
consummation of the Merger.
ARTICLE 10
Termination
SECTION 10.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the Company Stockholders):
(a) by mutual written agreement of the Company and Merger Subsidiary;
(b) by either the Company or Merger Subsidiary, if:
(i) the Merger has not been consummated on or before December 20,
2000 (the "End Date"), provided that the right to terminate this
Agreement pursuant to this Section 10.01(b)(i) shall not be available
to any party whose breach of any provision of this Agreement results
in the failure of the Merger to be consummated by such time;
(ii) there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or any judgment,
injunction, order or decree of any Governmental Authority having
competent jurisdiction enjoining Company or Merger Subsidiary from
consummating the Merger is entered and such judgment, injunction,
order or decree shall have become final and nonappealable;
(iii) the Company/Subsidiary Merger Agreement, the
Company/Subsidiary Merger, this Agreement and the Merger shall not
have been adopted in accordance with this Agreement, the DGCL and the
DLLCA by the Company Stockholders at the Company Stockholder Meeting
(or any adjournment thereof); or
(iv) as permitted by Section 6.04 hereof, the Special Committee
or Board of Directors shall have failed to make or withdrawn, or
modified in a
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manner adverse to Merger Subsidiary, its approval or recommendation of
this Agreement or the Merger;
(c) by Merger Subsidiary, if a breach of or failure to perform any
representation, warranty, covenant or agreement set forth in this Agreement
shall have occurred that would cause the condition set forth in Section
9.02(a) hereof not to be satisfied, and such condition is incapable of
being satisfied by the End Date; or
(d) by the Company, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Merger
Subsidiary or Merger Subsidiary set forth in this Agreement shall have
occurred that would cause the condition set forth in Section 9.03(a) hereof
not to be satisfied, and such condition is incapable of being satisfied by
the End Date.
The party desiring to terminate this Agreement pursuant to this Section
10.01 (other than pursuant to Section 10.01(a)) shall give notice of such
termination to the other party.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01 hereof, this Agreement shall become void and of no
effect without liability of any party (or any stockholder, member, manager,
director, officer, employee, agent, consultant or representative of such party)
to the other party hereto. The provisions of Sections 8.05, 11.04, 11.06, 11.07
and 11.08 shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
Miscellaneous
SECTION 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Merger Subsidiary, to:
Heartland Industrial Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: W. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
if to the Company, to:
MascoTech, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chairman of Board
General Counsel
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
and to:
The Special Committee of the Company
c/o Dykema ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m., and such day is
a Business Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 2.04(c) and (f), 2.06, 7.03, 7.04, 8.05, 8.06, 10.02,
11.04, 11.06, 11.07 and 11.08.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against
whom the waiver is to be effective, provided that, after the adoption of this
Agreement by the Company Stockholders and without their further approval, no
such amendment or waiver shall reduce the amount or change the kind of
consideration to be received in exchange for any shares of capital stock of the
Company or change the certificate of incorporation of the Surviving Corporation.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses; Topping Fee. (a) Except as otherwise provided in
this Section, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
(b) If (x) this Agreement is terminated by the Company or Merger
Subsidiary, (y) the conditions set forth in Section 9.02(a)(i) would not be
satisfied at the date of termination and the condition set forth in Section
9.03(a)(i) would be satisfied at the date of termination, and (z) the Company
has not previously paid to Merger Subsidiary the Topping Fee in accordance with
Section 11.04(c), the Company shall promptly reimburse Merger Subsidiary for all
reasonable and documented out-of-pocket expenses and fees (including, without
limitation, expenses payable to all banks, investment banking firms and other
financial institutions (which shall include, without limitation, fees and
expenses of such banks', firms' and institu-
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tions' legal counsel), and all reasonable fees and expenses of counsel,
accountants, financial printers, experts and consultants to Merger Subsidiary
and its affiliates), whether incurred prior to, on or after the date hereof, in
connection with the Transactions and the other matters contemplated by this
Agreement, and the financing thereof; provided, however, that the reimbursement
for costs and expenses provided in this Section 11.04(b) shall not exceed $2.0
million.
(c) (i) If (x) any Third Party shall have made, proposed, communicated or
disclosed an Acquisition Proposal in a manner which is or otherwise becomes
public prior to the termination of this Agreement, (y) this Agreement is
terminated by either Merger Subsidiary or the Company pursuant to Section
10.01(b)(iii) or Section 10.01(b)(iv) and (z) within six months of such
termination the Company or any of its Subsidiaries shall have entered into a
definitive agreement with respect to an Acquisition Proposal or consummated an
Acquisition Proposal, the Company shall promptly pay Merger Subsidiary the
Topping Fee immediately prior to the earlier of (a) the execution of a
definitive agreement with respect to such Acquisition Proposal or (b) the
consummation of the Acquisition Proposal.
(ii) If (x) any Third Party shall have made, proposed, communicated or
disclosed an Acquisition Proposal in a manner which is or otherwise becomes
public prior to the termination of this Agreement, (y) this Agreement is
terminated pursuant to Section 10.01(b)(i) or Section 10.01(c) and (z) within
six months of such termination, the Company or any of its Subsidiaries shall
have entered into a definitive agreement with respect to an Acquisition Proposal
with such Third Party or consummated an Acquisition Proposal with such Third
Party, the Company shall promptly pay Merger Subsidiary the Topping Fee
immediately prior to the earlier of (a) the execution of a definitive agreement
with respect to such Acquisition Proposal or (b) the consummation of such
Acquisition Proposal.
SECTION 11.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more of
their Affiliates, the right to enter into the transactions contemplated by this
Agreement, but any such transfer or assignment will not relieve Merger
Subsidiary of its obligations hereunder.
SECTION 11.06. Governing Law. The validity, construction and effect of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law of such state.
SECTION 11.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any
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matter arising out of or in connection with, this Agreement or the Transactions
shall be brought in any federal court located in the State of Delaware or any
Delaware state court, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient form. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 11.01 hereof
shall be deemed effective service of process on such party.
SECTION 11.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS.
SECTION 11.09. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. Except as
provided in Section 7.03 and with respect to the indemnification and
compensation to be provided to the Adjustment Committee pursuant to Section 8.06
and Section 9.01(i), no provision of this Agreement is intended to confer any
rights, benefits, remedies, obligations or liabilities hereunder upon any Person
other than the parties hereto and their respective successors and assigns.
SECTION 11.10. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement. Exhibits referred to herein are incorporated
by reference herein and shall constitute a part of this Agreement.
SECTION 11.11. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
SECTION 11.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of
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the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. Upon such a determination, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner so that the Transactions
be consummated as originally contemplated to the fullest extent possible.
SECTION 11.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
-57-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MASCOTECH, INC.
By:
------------------------------------------
Name:
Title:
RIVERSIDE COMPANY LLC
By:
------------------------------------------
Name:
Title:
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Exhibit A
Exchange and Voting Agreement
Exhibit B
Form of Company/Subsidiary Merger Agreement
Exhibit C
Equity Investments Sale Agreement
Exhibit D
Form of Certificate of Merger
Exhibit E
Form of Amended Certificate of Incorporation of Surviving Corporation
Exhibit F
Form of Amended By-laws
Exhibit G
Form of Certificate of Designation of Class A Preferred Stock
Exhibit H
Form of Certificate of Designation of Class B Preferred Stock
Exhibit I
Form of Subordinated Loan Agreement
Schedule A
Equity Investments
Schedule B
Knowledge of Officers
AMENDMENT NO. 1 TO RECAPITALIZATION AGREEMENT
THIS AMENDMENT NO. 1 to the Recapitalization Agreement dated as of August
1, 2000 (the "Recapitalization Agreement") is made on October __, 2000 by
MascoTech, Inc., a Delaware corporation (the "Company"), and Riverside Company
LLC, a Delaware limited liability company ("Merger Subsidiary").
WHEREAS, the Company and the Merger Subsidiary entered into a
Recapitalization Agreement on August 1, 2000; and
WHEREAS, the Company and the Merger Subsidiary desire to amend the
Recapitalization Agreement to reflect a change to the treatment of restricted
stock awards; and
WHEREAS, the parties to the Exchange and Voting Agreement dated as of
August 1, 2000 desire to amend the Exchange and Voting Agreement simultaneously
with the execution of this Amendment to reflect a change in (i) the timing of
the exchange of shares of common stock, par value $1.00 per share, of MascoTech,
Inc. held by Masco Corporation, the ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Foundation and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ into Class A Preferred Stock and Class B Preferred Stock,
as the case may be, and (ii) the terms of the stockholders agreement attached to
the Exchange and Voting Agreement as Exhibit A (the "Stockholders Agreement");
NOW THEREFORE, the parties hereto hereby amend the Recapitalization
Agreement as follows:
Section 1.01. Exchange and Voting Agreement. Upon execution of Amendment
No. 1 to the Exchange and Voting Agreement on the date hereof by each of the
parties thereto, the Exchange and Voting Agreement attached to the
Recapitalization Agreement as Exhibit A (including the Stockholders Agreement)
shall be amended in accordance with such Amendment No. 1 to the Exchange and
Voting Agreement.
Section 1.02. Restricted Stock Awards. (a) Section 2.06(b) of the
Recapitalization Agreement is amended by replacing each reference to
"anniversary date" with "vesting date".
(b) Section 2.06(b)(2) of the Recapitalization Agreement is further amended
by (i) deleting the words "on each anniversary of the Merger, commencing on the
first anniversary of the Merger through the third anniversary of the Merger" and
inserting in their place the words "on each January 14, 2002, 2003 and 2004 (or
if such date is not a Business Day, on the next succeeding Business Day)", (ii)
deleting the words "the first, second or third anniversary of the Effective
Time" and inserting in their place the words "January 14,
-2-
2002, January 14, 2003 and January 14, 2004 (or if such date is not a Business
Day, on the next succeeding Business Day)" and (iii) deleting the words "the
first, second or third anniversary, as the case may be," and inserting in their
place the words "January 14, 2002, January 14, 2003 and January 14, 2004, as the
case may be, (or if such date is not a Business Day, on the next succeeding
Business Day)".
Section 1.03. Effect ofAmendment; Governing Law. Except as expressly
amended hereby, the Recapitalization Agreement shall remain unchanged. The
Recapitalization Agreement, as amended hereby shall remain in full force and
effect. The validity, construction and effect of this Amendment shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without giving effect to the principles of conflicts of law of such
state.
Section 1.04. Defined Terms. Capitalized terms used herein but not defined
herein shall have the terms ascribed to them in the Recapitalization Agreement.
Section 1.05. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
MASCOTECH, INC.
By:
-------------------------------------
Name:
Title:
RIVERSIDE COMPANY LLC
By:
-------------------------------------
Name:
Title:
AMENDMENT NO. 2 TO RECAPITALIZATION AGREEMENT
THIS AMENDMENT NO. 2 to the Recapitalization Agreement dated as of August
1, 2000, as amended by Amendment No. 1 to the Recapitalization Agreement dated
as of October 23, 2000 (the "Agreement"), is made on November 28, 2000 by
MascoTech, Inc., a Delaware corporation (the "Company"), and Riverside
Acquisition Corporation (formerly Riverside Company LLC), a Delaware limited
liability company ("Merger Subsidiary").
WHEREAS, the Company and Merger Subsidiary entered into the
Recapitalization Agreement on August 1, 2000 and entered into Amendment No. 1 to
the Recapitalization Agreement on October 23, 2000; and
WHEREAS, the parties hereto desire to amend the Agreement;
NOW THEREFORE, the parties hereto hereby amend the Agreement as follows:
Section 1.01. Merger Subsidiary. The Company hereby consents to Merger
Subsidiary converting into a Delaware corporation. As of the date and time of
the filing of the conversion certificate with the Secretary of State in the
State of Delaware, (i) each reference to the Merger Subsidiary as a "limited
liability company" or as a "Delaware limited liability company" shall be deleted
and replaced with a reference to it being a "Delaware corporation", (ii) each
reference to the Delaware Limited Liability Company Act or the DLLCA shall be
deleted and replaced with the "Delaware General Corporation Law" or "DGCL",
(iii) each reference to "membership interests of Merger Subsidiary" shall be
deleted and replaced with "common stock of Merger Subsidiary", (iv) each
reference to "manager" or "managers" of Merger Subsidiary shall be deleted and
replaced with "director" or "directors" of Merger Subsidiary, (v) Section 5.08
shall be amended by deleting it in its entirety and replacing it with the
following: "SECTION 5.08. The stockholders of the Merger Subsidiary are not
entitled to appraisal rights under Section 262 of the DGCL as a result of the
Merger." and (vi) all of the representations, warranties, covenants and any
other provisions of the Agreement shall be amended to reflect that Merger
Subsidiary has been converted from a Delaware limited liability company into a
Delaware corporation.
Section 1.02. Restricted Stock.
(a) Section 2.06(b) of the Agreement is amended by deleting it in its
entirety and replacing it with the following:
Notwithstanding any provision of this Agreement to the contrary, none of
the restrictions relating to any restricted stock awards ("Restricted Stock")
granted under any Restricted Stock Plan of the Company shall terminate, be
removed or modified as a result of the
-2-
Transactions. Immediately prior to the Merger, the Committee(s) administering
the Restricted Stock Plans will (i) cancel all Restricted Stock awards that are
then subject to any restrictions under the terms of the applicable award, and
(ii) make new awards ("New Awards") under the applicable Restricted Stock Plan
to each participant whose awards were canceled under the preceding subclause (i)
as to the same number of shares of common stock as the canceled award and with
such New Award taking effect immediately following the Merger and relating to
Surviving Corporation Common Shares (the "New Restricted Stock") rather than
Shares, provided that such New Awards will provide, except as set forth on the
disclosure schedule, as follows: (1) 15% of each participant's New Restricted
Stock will be available upon the effectiveness of the New Award to the
participant free of restrictions under the Restricted Stock Plans (other than a
prohibition on transfer of such New Restricted Stock to persons other than
Restricted Stock Permitted Transferees and securities law restrictions on
transferability (collectively, the "Restrictions")), (2) with respect to 10% of
each participant's New Restricted Stock ("Cash Out New Restricted Stock"), the
participants will receive cash (valuing a Share of the New Restricted Stock for
these purposes at the Base Merger Consideration plus any Merger Consideration
Adjustment determined with reference to Initial Adjustment Amounts received
prior to the Effective Time (the "Cash Out Amount")), subject to applicable
withholding taxes, unless such participant elects to receive shares of New
Restricted Stock, in which case such participant will receive 10% of such
participant's New Restricted Stock and it will be available upon the
effectiveness of the New Award to the participant free of restrictions under the
Restricted Stock Plans (other than the Restrictions) and (3) the balance of each
participant's New Award will become free of restrictions under the Restricted
Stock Plans (other than the Restrictions) ratably on January 14, 2002, January
14, 2003 and January 14, 2004 (or if such date is not a Business Day, on the
next succeeding Business Day), provided that upon the termination of such
restrictions as contemplated under this clause (3) with respect to the New
Restricted Stock, such participant shall receive, in lieu of any share of New
Restricted Stock, an amount in cash equal to the sum of (A) the Cash Out Amount,
(B) any Merger Consideration Adjustments determined with respect to Initial
Adjustment Amounts received subsequent to the Effective Time and prior to the
applicable vesting date (the "New Restricted Stock Adjustment Amount"), and (C)
an amount (the "Accrual Amount") equal to 6% per annum of the Base Merger
Consideration from the date of the Merger through the applicable vesting date
and of any such Merger Consideration Adjustments from the date of the payment to
holders of the Shares through the applicable vesting date, subject to the
balance of this Section 2.06(b), unless such participant elects to receive its
vested New Restricted Stock in shares of New Restricted Stock; provided,
further, that if such participant elects to receive shares of New Restricted
Stock in lieu of cash pursuant to this clause (3), such participant will receive
(in addition to the New Restricted Stock pursuant to this Section) the number of
shares of New Restricted Stock equal to the value of the New Restricted Stock
Adjustment Amount and Accrual Amount (the "Accrual Amount New Restricted
Stock"), which shall be determined by dividing the dollar amount such
participant would have received as the cash New Restricted Stock Adjustment
Amount and Accrual
-3-
Amount pursuant to clauses (B) and (C) by $16.90. At the
election of each participant, such participant may receive (in lieu of 100% cash
or 100% New Restricted Stock pursuant to clause (3)), 60% of its vested New
Restricted Stock in shares of New Restricted Stock and 40% of its New Restricted
Stock in cash, in each case calculated pursuant to clause (3). Notwithstanding
the foregoing, the New Restricted Stock awards will allow the Surviving
Corporation to defer the payment of such cash if the Surviving Corporation is
prevented under the Facilities from making such payments due to a default, or an
event which with notice or lapse of time or both, would constitute a default
(without giving effect to any grace period) under the Facilities. In the event
the Surviving Corporation defers such payment, the Surviving Corporation will
make such payment as soon as practicable after the Surviving Corporation is no
longer in default and any event that would constitute a default has been cured
or waived. For any such deferral period in respect of a Share of New Restricted
Stock, the Accrual Amount in respect of such Share shall be calculated based
upon 12% per annum of the deferred amount for the period of deferral. Each
individual entitled to shares of Cash Out New Restricted Stock shall be entitled
to receive with respect to each share of Cash Out New Restricted Stock from the
Surviving Corporation amounts equal to all Merger Consideration Adjustments per
Share determined with respect to all Initial Adjustment Amounts received after
the Effective Time, payable at the same time such amounts are paid to holders of
Shares. The Surviving Corporation shall pay with respect to each share of New
Restricted Stock which is free of restriction upon the effectiveness of the New
Award pursuant to clause (ii)(1) of this paragraph, amounts equal to (1) any
Merger Consideration Adjustment determined with reference to Initial Adjustment
Amounts received by the Company prior to the Effective Time, which amount shall
be payable immediately prior to the Merger, and (2) any Merger Consideration
Adjustments determined with reference to Initial Adjustment Amounts received by
the Surviving Corporation and paid to a holder of a Share, which shall be
payable at the same time as paid to holders of Shares. The Surviving Corporation
shall pay with respect to each share of New Restricted Stock which becomes free
of restrictions on January 14, 2002, January 14, 2003 and January 14, 2004 (or
if such date is not a Business Day, or the next succeeding Business Day) and
with respect to which the holder does not elect to receive cash pursuant to
clause (ii) (3) of this paragraph, amounts equal to any Merger Consideration
Adjustments determined with reference to Initial Adjustment Amounts received
after the Effective Time, which shall be payable upon the later of (x) January
14, 2002, January 14, 2003 and January 14, 2004, as the case may be, (or if such
date is not a Business Day, on the next succeeding Business Day) on which the
restrictions lapse and the holder does not elect to receive cash, and (y) the
time such Merger Adjustment Amounts are paid to holders of Shares. Each holder
of the New Restricted Stock (other than Accrual Amount New Restricted Stock)
also shall be entitled to receive with respect to each share of New Restricted
Stock (whether or not Cash Out New Restricted Stock) all Merger Consideration
Adjustments determined with respect to the Subsequent Adjustment Amounts
(whether received prior to or after the Effective Time), payable at the time
such amounts are paid to holders of Shares.
-4-
(b) Section 6.07(b) shall be amended by adding the following to the end
thereof:
"The Company covenants and agrees to take any and all necessary action
to ensure that the issuance of the New Awards complies with all applicable
laws, including applicable securities laws."
Section 1.03. Effect of Amendment; Governing Law. Except as expressly
amended hereby, the Agreement shall remain unchanged. The Agreement as amended
hereby shall remain in full force and effect. The validity, construction and
effect of this Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law of such state.
Section 1.04. Defined Terms. Capitalized terms used herein but not defined
herein shall have the terms ascribed to them in the Recapitalization Agreement.
Section 1.05. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
RIVERSIDE ACQUISITION CORPORATION
By:
-----------------------------------------
Name:
Title:
MASCOTECH, INC.
By:
-----------------------------------------
Name:
Title:
ACCEPTED AND AGREED:
MASCO CORPORATION
By:
----------------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:
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Name:
Title:
▇▇▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
FOUNDATION
By:
-----------------------------------------------
Name:
Title: