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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 1997
Bethlehem Steel Corporation
(Exact name of registrant as specified in its charter)
-----------------
Delaware 1-1941 24-0526133
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
1170 Eighth Avenue
Bethlehem, Pennsylvania 18016-7699
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (610) 694-2424
None
(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events.
Bethlehem Steel Corporation, a Delaware corporation
("Bethlehem"), and Lukens Inc., a Delaware corporation
("Lukens"), have entered into an Agreement and Plan of Merger
dated as of December 15, 1997 (the "Merger Agreement"). Under
the Merger Agreement, Bethlehem will acquire Lukens for
approximately $409 million in cash and stock. The Merger
Agreement provides for the merger of a subsidiary of
Bethlehem ("Merger Sub") with and into Lukens (the "Merger").
The Merger is expected to be completed early in the second
quarter of 1998. Following the Merger, Bethlehem intends to
cause Lukens to be merged with and into Bethlehem.
In the Merger, each share of common stock, par
value $.01 per share, of Lukens (a "Lukens Common Share")
that is issued and outstanding immediately prior to the
effective time of the Merger will be converted into the right
to receive, subject to proration and certain other conditions
and limitations, at the election of the holder either (i)
cash from Bethlehem in an amount equal to $25 or (ii) a
number of shares of common stock, par value $1.00 per share,
of Bethlehem ("Bethlehem Shares") equal to the Conversion
Number. The "Conversion Number" will be equal to $25 divided
by the average of the daily closing prices per share of
Bethlehem Common Stock for the 15 consecutive full NYSE
trading days immediately preceding the third full NYSE
trading day prior to the effective time of the Merger (the
"Average Bethlehem Market Price"), but not less than 2.797 or
more than 3.62. Each issued and outstanding share of Lukens
Series B Preferred Stock (a "Lukens Preferred Share") will be
converted into the right to receive the consideration that a
holder of the number of Lukens Common Shares into which such
Lukens Preferred Share could have been converted would have
the right to receive if such holder did not elect to receive
cash.
The merger consideration will consist of
approximately 62% cash and 38% Bethlehem Shares. If Lukens
stockholders elect to receive cash in an aggregate amount in
excess of 62% of the total merger consideration, each Lukens
share for which an election to receive cash is made will be
converted into the right to receive a prorated amount of cash
and Bethlehem Shares. With respect to each Lukens share for
which an election to receive cash is not made, an election to
receive Bethlehem Shares will be deemed to have been made. If
Lukens stockholders are deemed to have elected to receive
Bethlehem Shares in an aggregate amount in excess of 38% of
the total merger consideration, each Lukens share for which a
deemed election to receive Bethlehem Shares is made will be
converted into the right to receive a prorated amount of
Bethlehem Shares and cash.
The Merger is subject to termination or expiration
of the waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, approval by the Lukens stockholders
and certain other conditions. Furthermore, Lukens will not be
obligated to effect the Merger if the Average Bethlehem
Market Price is less than a specified amount.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, which is
attached hereto as an exhibit and incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Description
2.1 Agreement and Plan of Merger dated as of December 15,
1997, between Bethlehem Steel Corporation and Lukens
Inc.
99.1 Press Release dated December 15, 1997, announcing the
execution of the Merger Agreement between Bethlehem
Steel Corporation and Lukens Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
Bethlehem Steel Corporation
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(Registrant)
Date: December 22 , 1997 By: /s/ Lonnie A. Arnett
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(Signature)
Name: Lonnie A. Arnett
Title: Vice President and Controller
(principal accounting officer)
<PAGE>
EXHIBIT INDEX
Exhibit Description
2.1 Agreement and Plan of Merger dated as of December 15,
1997, between Bethlehem Steel Corporation and Lukens
Inc.
99.1 Press Release dated December 15, 1997, announcing the
execution of the Merger Agreement between Bethlehem
Steel Corporation and Lukens Inc.
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of December 15, 1997,
between
BETHLEHEM STEEL CORPORATION
And
LUKENS INC.
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<PAGE>
Contents, p. 1
Page
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger....................................... 2
SECTION 1.02. Closing.......................................... 2
SECTION 1.03. Effective Time................................... 2
SECTION 1.04. Effects of the Merger............................ 2
SECTION 1.05. Certificate of Incorporation
and By-laws.................................... 2
SECTION 1.06. Directors........................................ 3
SECTION 1.07. Officers......................................... 3
ARTICLE II
Effect of the Merger on the Capital Stock
of the Constituent Corporations
SECTION 2.01. Effect on Capital Stock.......................... 3
SECTION 2.02. Cash Elections................................... 7
SECTION 2.03. Proration........................................ 8
SECTION 2.04. Exchange of Certificates......................... 10
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.... 15
SECTION 3.02. Representations and Warranties of Bethlehem...... 34
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.............................. 42
SECTION 4.02. No Solicitation.................................. 45
<PAGE>
Contents, p. 2
Page
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement/Prospectus;
Company Shareholders Meeting................... 48
SECTION 5.02. Letters of the Company's Accountants............. 48
SECTION 5.03. Letters of Bethlehem's Accountants............... 49
SECTION 5.04. Access to Information;
Confidentiality................................ 49
SECTION 5.05. Reasonable Efforts............................... 49
SECTION 5.06. Employee Matters................................. 50
SECTION 5.07. Employee Stock Options........................... 52
SECTION 5.08. Rights Agreement................................. 53
SECTION 5.09. Continuance of Existing Indemnification
Rights......................................... 53
SECTION 5.10. Fees and Expenses................................ 55
SECTION 5.11. Public Announcements............................. 56
SECTION 5.12. Affiliates....................................... 56
SECTION 5.13. Stock Exchange Listings.......................... 56
SECTION 5.14. Shareholder Litigation........................... 56
SECTION 5.15. Merger Sub....................................... 57
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
To Effect the Merger........................... 57
SECTION 6.02. Conditions to Obligations of Bethlehem
and Merger Sub................................. 58
SECTION 6.03. Conditions to Obligation of the
Company........................................ 59
<PAGE>
Contents, p. 3
Page
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination...................................... 60
SECTION 7.02. Effect of Termination............................ 61
SECTION 7.03. Amendment........................................ 62
SECTION 7.04. Extension; Waiver................................ 62
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver............................ 62
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties..................................... 62
SECTION 8.02. Notices.......................................... 63
SECTION 8.03. Definitions...................................... 64
SECTION 8.04. Interpretation................................... 65
SECTION 8.05. Counterparts..................................... 65
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries.................................. 65
SECTION 8.07. Governing Law.................................... 65
SECTION 8.08. Assignment....................................... 66
SECTION 8.09. Disclosure Schedules............................. 66
SECTION 8.10. Severability..................................... 66
SECTION 8.11. Enforcement...................................... 66
EXHIBIT A Affiliate Letter
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of
December 15, 1997, between BETHLEHEM STEEL
CORPORATION, a Delaware corporation
("Bethlehem"), and LUKENS INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of
Bethlehem and the Company have approved the merger of a
subsidiary of Bethlehem with and into the Company (the
"Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of the
Company ("Company Common Stock"), other than shares owned by
the Company and other than Dissenting Shares (as defined in
Section 2.01(e)), will be converted into the right to
receive, at the election of the holder thereof and subject to
the terms hereof, shares of Common Stock, par value $1.00 per
share, of Bethlehem ("Bethlehem Common Stock") or cash, and
each issued and outstanding share of Series B ESOP
Convertible Preferred Stock, par value $.01 per share of the
Company ("Company Series B Preferred Stock"), other than
shares owned by the Company and other than Dissenting Shares,
will be converted into the right to receive, subject to
certain rights of redemption, the number of shares of
Bethlehem Common Stock and the amount of cash that a holder
of the number of shares of Company Common Stock into which
such share of Company Series B Preferred Stock could have
been converted immediately prior to the Effective Time (as
defined in Section 1.03) would receive in the Merger if such
holder failed to exercise the right of election set forth in
Section 2.02 hereof;
WHEREAS, Bethlehem and the Company desire to make
certain representations, warranties, covenants and agreements
in connection with the Merger and also to prescribe various
conditions to the Merger; and
WHEREAS, following the Effective Time, Bethlehem
intends to cause the Company to be merged with and into
Bethlehem.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement, the parties agree as follows:
<PAGE>
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and in
accordance with the Delaware General Corporation Law (the
"DGCL"), a subsidiary of Bethlehem ("Merger Sub") shall be
merged with and into the Company at the Effective Time (as
defined in Section 1.03). Following the Effective Time, the
separate corporate existence of Merger Sub shall cease and
the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Merger Sub in accordance with
the DGCL.
SECTION 1.02. Closing. The closing of the Merger
(the "Closing") will take place at 10:00 a.m. on a date to be
specified by the parties (the "Closing Date"), which (subject
to satisfaction or waiver of the conditions set forth in
Sections 6.01, 6.02 and 6.03) shall be no later than the
second business day after satisfaction or waiver of the
conditions set forth in Section 6.01, at the offices of
Cravath, Swaine & Moore unless another time, date or place is
agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time. Subject to the
provisions of this Agreement, as soon as practicable on or
after the Closing Date, the parties shall file a certificate
of merger (the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall
make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such subsequent time as Bethlehem
and the Company shall agree and as is specified in the
Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger
shall have the effects specified in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and
By-laws. (a) The Restated Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(b) The By-laws of the Company as in effect at the
Effective Time shall be the by-laws of the Surviving
<PAGE>
Corporation until thereafter changed or amended as provided
therein or by applicable law.
SECTION 1.06. Directors. The directors of Merger
Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be. The Company will obtain such resignations as may be
necessary to effect the foregoing.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers
of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock
of the Constituent Corporations
SECTION 2.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Company
Common Stock or Company Series B Preferred Stock:
(a) Capital Stock of Merger Sub. Each issued and
outstanding share of capital stock of Merger Sub shall
be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving
Corporation.
(b) Cancelation of Treasury Stock. Each share of
Company Common Stock and Company Series B Preferred
Stock that is owned by the Company shall automatically
be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Except as
otherwise provided herein and subject to Sections 2.03
and 2.04(e), each issued and outstanding share of
Company Common Stock (other than shares to be canceled
in accordance with Section 2.01(b) and other than
<PAGE>
Dissenting Shares) shall be converted into the following
(the "Common Merger Consideration"):
(i) for each such share of Company Common
Stock with respect to which an election to receive
cash ("Cash Consideration") has been effectively
made and not revoked pursuant to Section 2.02
("Electing Shares"), the right to receive in cash
from Bethlehem an amount equal to $25 (the "Cash
Election Price"); and
(ii) for each such share of Company Common
Stock other than Electing Shares, the right to
receive from Bethlehem a number of duly authorized,
validly issued, fully paid and nonassessable shares
of Bethlehem Common Stock ("Stock Consideration")
equal to the Conversion Number. The "Conversion
Number" means the quotient, rounded to the nearest
thousandth, or if there shall not be a nearest
thousandth, the next higher thousandth, obtained by
dividing the Cash Election Price by the average of
the daily closing prices per share of Bethlehem
Common Stock (the "Average Market Price") as
reported on the New York Stock Exchange ("NYSE")
Composite Transactions Tape (as reported in The
Wall Street Journal or, if not reported therein, in
another authoritative source mutually selected by
Bethlehem and the Company) for the 15 consecutive
full NYSE trading days immediately preceding the
third full NYSE trading day prior to the Effective
Time (the "Averaging Period"); provided that the
Conversion Number shall not be greater than 3.62 or
less than 2.797. Notwithstanding the foregoing, (a)
if the Board of Directors of Bethlehem declares a
dividend on the outstanding shares of Bethlehem
Common Stock having a record date after the
Effective Time but an ex-dividend date (based on
"regular way" trading on the NYSE of shares of
Bethlehem Common Stock (the "Ex-Date")) that occurs
during the Averaging Period, then for purposes of
computing the Average Market Price, the closing
price on the Ex-Date and any trading day in the
Averaging Period after the Ex-Date will be adjusted
by adding thereto the amount of such dividend and
(b) if the Board of Directors of Bethlehem declares
a dividend on the outstanding shares of Bethlehem
Common Stock having a record date before the
Effective Time and an Ex-Date that occurs during
the Averaging Period, then for purposes of
computing the Average Market Price,
<PAGE>
the closing price on any trading day before the
Ex-Date will be adjusted by subtracting therefrom
the amount of such dividend. For purposes of the
immediately preceding sentence, the amount of any
noncash dividend will be the fair market value
thereof on the payment date for such dividend as
determined in good faith by mutual agreement of
Bethlehem and the Company.
(d) Conversion of Company Series B Preferred Stock
Each issued and outstanding share of Company Series
B Preferred Stock (other than Dissenting Shares) shall
be converted into the right to receive the number of
shares of Bethlehem Common Stock and, in accordance with
Sections 2.03(c) and (d), the amount of cash, that a
holder of the number of shares of Company Common Stock
into which such share of Company Series B Preferred
Stock could have been converted immediately prior to the
Effective Time would have the right to receive pursuant
to Sections 2.01(c) and 2.03(c) and (d) if such holder
did not make a Cash Election with respect to such
shares. The consideration issuable pursuant to this
paragraph is referred to herein as the "Preferred Merger
Consideration", and together with the Common Merger
Consideration, as the "Merger Consideration".
(e) Shares of Dissenting Shareholders.
Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Company
Series B Preferred Stock and, if a Stock Proration Event
(as hereinafter defined) shall have occurred, any issued
and outstanding shares of Company Common Stock, in
either case held by a person (a "Dissenting
Shareholder") who shall not have voted to adopt this
Agreement or consented thereto in writing and who shall
have properly demanded appraisal for such shares in
accordance with Section 262 of the DGCL ("Dissenting
Shares") shall not be converted as described in Section
2.01(c) and (d), unless such holder fails to perfect or
withdraws or otherwise loses his right to appraisal. If,
after the Effective Time, such Dissenting Shareholder
fails to perfect or withdraws or loses his right to
appraisal, such Dissenting Shareholder's shares of
Company Common Stock or Company Series B Preferred Stock
shall no longer be considered Dissenting Shares for the
purposes of this Agreement and shall thereupon be deemed
to have been converted
<PAGE>
into and to have become exchangeable for, at the
Effective Time, (x) in the case of Company Common Stock,
the right to receive for each such share the amount in
cash (and, if applicable, the number of shares of
Bethlehem Common Stock), without interest, that a holder
of a share who had not demanded appraisal (a
"Nondissenting Share") of Company Common Stock and who
had made a Cash Election (as defined below) with respect
to such Nondissenting Share pursuant to Section 2.02
prior to the Election Date (as defined below) would have
received with respect to such Nondissenting Share after
giving effect to Section 2.03 (it being understood that
no adjustment shall be made to the proration computation
(if any) made following the Election Date to give effect
to the withdrawal of, or the failure to perfect, the
demand for appraisal with respect to such Dissenting
Shares) and (y) in the case of Company Series B
Preferred Stock, the right to receive for each such
share the number of shares of Bethlehem Common Stock and
the amount of cash that a holder of the number of
Nondissenting Shares of Company Common Stock into which
such share of Company Series B Preferred Stock could
have been converted immediately prior to the Effective
Time who had not made a Cash Election with respect to
such Nondissenting Shares pursuant to Section 2.02 prior
to the Election Date would have received after giving
effect to Section 2.03. The Company shall give Bethlehem
(i) prompt notice of any demands for appraisal of shares
of Company Common Stock or Company Series B Preferred
Stock received by the Company and (ii) the opportunity
to participate in and direct all negotiations and
proceedings with respect to any such demands. The
Company shall not, without the prior written consent of
Bethlehem, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such
demands.
(f) Cancelation of Company Common Stock and Company
Series B Preferred Stock. As of the Effective Time, all
shares of Company Common Stock and Company Series B
Preferred Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and
each holder of a certificate that immediately prior to
the Effective Time represented any such shares of
Company Common Stock or Company Series B Preferred Stock
(a "Certificate") shall cease to have any rights with
respect thereto, except the right to receive the
applicable Merger Consideration and any cash in lieu of
fractional shares to be issued or paid in consideration
therefor upon surrender of such
<PAGE>
Certificate in accordance with Section 2.02 or 2.04,
without interest, or, in the case of Dissenting
Shareholders, if any, the rights, if any, accorded under
Section 262 of the DGCL.
SECTION 2.02. Cash Elections. (a) Each person who,
on or prior to the Election Date referred to in Section
2.02(c) below, is a record holder of shares of Company Common
Stock will be entitled, with respect to all or any portion of
his shares, to make an unconditional election (a "Cash
Election") on or prior to such Election Date to receive the
Cash Consideration, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy
Statement/Prospectus (as defined in Section 3.01(d)),
Bethlehem shall enter into an agreement with a bank or trust
company mutually acceptable to the Company and Bethlehem to
act as exchange agent (the "Exchange Agent") for the payment
of the Merger Consideration.
(c) Bethlehem shall prepare and mail a form of
election, which form shall be subject to the reasonable
approval of the Company (the "Form of Election"), with the
Proxy Statement/Prospectus to the record holders of Company
Common Stock as of the record date for the Company
Shareholders Meeting (as defined in Section 5.01(b)), which
Form of Election shall be used by each record holder of
shares of Company Common Stock who wishes to elect to receive
the Cash Consideration for any or all shares of Company
Common Stock held by such holder. Bethlehem and the Company
will use reasonable efforts to make the Form of Election and
the Proxy Statement/Prospectus available to all persons who
become record holders of Company Common Stock during the
period between such record date and the Election Date
referred to below. Any shareholder's election to receive the
Cash Consideration shall have been properly made only if the
Exchange Agent shall have received at its designated office,
by 5:00 p.m., New York City time, on the business day (the
"Election Date") next preceding the date of the Company
Shareholders Meeting, a Form of Election properly completed
and signed and accompanied by Certificates for the shares of
Company Common Stock to which such Form of Election relates,
properly endorsed or otherwise in proper form for transfer
(or accompanied by an appropriate guarantee of delivery of
such Certificates as set forth in such Form of Election from
a firm which is a member of a registered national securities
exchange or of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States, provided such
<PAGE>
Certificates are in fact delivered to the Exchange Agent
within three NYSE trading days after the date of execution of
such guarantee of delivery). Failure to deliver Certificates
covered by any guarantee of delivery within three NYSE
trading days after the date of execution of such guarantee of
delivery shall be deemed to invalidate any otherwise properly
made Cash Election.
(d) Any Form of Election may be revoked by the
shareholder submitting it to the Exchange Agent only by
written notice received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Election Date. In addition,
all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by Bethlehem and the
Company that the Merger has been abandoned. If a Form of
Election is revoked, the Certificate or Certificates (or
guarantees of delivery, as appropriate) for the shares of
Company Common Stock to which such Form of Election relates
shall be promptly returned to the shareholder submitting the
same to the Exchange Agent.
(e) The determination of the Exchange Agent whether
or not Cash Elections have been properly made or revoked
pursuant to this Section 2.02 and when Cash Elections and
revocations were received by it shall be binding. If the
Exchange Agent determines that any Cash Election was not
properly made with respect to shares of Company Common Stock,
such shares shall be treated by the Exchange Agent as shares
that were not Electing Shares at the Effective Time, and such
shares shall be converted in the Merger into the right to
receive Stock Consideration pursuant to Section 2.01(c)(ii).
The Exchange Agent shall also make all computations as to the
proration contemplated by Section 2.03, and any such
computation shall be conclusive and binding on the holders of
shares of Company Common Stock and on the holders of Company
Series B Preferred Stock. The Exchange Agent may, with the
mutual agreement of Bethlehem and the Company, make such
rules as are consistent with this Section 2.02 for the
implementation of the elections provided for herein as shall
be necessary or desirable fully to effect such elections.
SECTION 2.03. Proration. (a) Notwithstanding
anything in this Agreement to the contrary, the maximum
aggregate amount of cash that may be paid to holders of
Company Common Stock and Company Series B Preferred Stock
pursuant to this Article II (the "Cash Cap") shall be equal
to the product of (x) the Cash Election Price, (y) the number
of Outstanding Shares and (z) .62; provided, however, that
the number in clause (z) shall be increased by an amount
equal to any reduction required to the number in
<PAGE>
clause (z) of Section 2.03(c) pursuant to the proviso to
Section 2.03(c). As used herein, the term "Outstanding
Shares" shall mean the sum of (x) the number of shares of
Company Common Stock outstanding immediately prior to the
Effective Time plus (y) the number of shares of Company
Common Stock into which the outstanding shares of Company
Series B Preferred Stock could have been converted
immediately prior to the Effective Time.
(b) If the product of (x) the number of Electing
Shares and (y) the Cash Election Price (such product, the
"Requested Cash Amount") exceeds the Cash Cap, then each
Electing Share shall be converted into the right to receive
cash and shares of Bethlehem Common Stock in accordance with
the terms of Section 2.01 in the following manner:
(i) a cash proration factor (the "Cash Proration
Factor") shall be determined by dividing the Cash Cap by
the Requested Cash Amount; and
(ii) each Electing Share shall be converted into
the right to receive (x) cash in an amount equal to the
product of (A) the Cash Election Price and (B) the Cash
Proration Factor (such product, the "Prorated Cash
Amount") and (y) a number of shares of Bethlehem Common
Stock equal to the product of (A) the excess of (1) 1
over (2) the Cash Proration Factor and (B) the
Conversion Number.
(c) Notwithstanding anything in this Agreement to
the contrary, the maximum number of shares of Bethlehem
Common Stock that may be issued to holders of Company Common
Stock and Company Series B Preferred Stock pursuant to this
Article II (the "Stock Cap") shall be equal to the product of
(x) the Conversion Number, (y) the number of Outstanding
Shares and (z) .38; provided, however, that the number in
clause (z) shall be reduced to the extent necessary to ensure
that the sum of (A) the Stock Cap and (B) the aggregate
number of shares of Bethlehem Common Stock issuable upon
conversion or exercise of all securities of the Company
outstanding immediately prior to the Effective Time (other
than Company Common Stock and Company Series B Preferred
Stock) shall not exceed the product of (i) the number of
outstanding shares of Bethlehem Common Stock immediately
prior to the Effective Time and (ii) .199.
(d) If the product of (x) the difference between
(A) the number of Outstanding Shares minus (B) the number of
Electing Shares (such difference, the "Deemed Stock Electing
Shares") and (y) the Conversion Number (such product, the
"Requested Stock Amount") exceeds the Stock Cap (a "Stock
<PAGE>
Proration Event"), then each Deemed Stock Electing Share
shall be converted into the right to receive cash and shares
of Bethlehem Common Stock in accordance with the terms of
Section 2.01 in the following manner:
(i) a stock proration factor (the "Stock Proration
Factor") shall be determined by dividing the Stock Cap
by the Requested Stock Amount; and
(ii) each Deemed Stock Electing Share shall be
converted into the right to receive (x) a number of
shares of Bethlehem Common Stock equal to the product of
(A) the Conversion Number and (B) the Stock Proration
Factor (such product, the "Prorated Stock Amount") and
(y) cash in an amount equal to the product of (A) the
excess of (1) 1 over (2) the Stock Proration Factor and
(B) the Cash Election Price.
SECTION 2.04. Exchange of Certificates. (a) Deposit
with the Exchange Agent. As of the Effective Time, Bethlehem
shall deposit with the Exchange Agent, for the benefit of the
holders of shares of Company Common Stock and Company Series
B Preferred Stock, for exchange through the Exchange Agent,
the cash and certificates representing shares of Bethlehem
Common Stock representing the Merger Consideration (such cash
and shares of Bethlehem Common Stock together with any
dividends or distributions with respect to such shares with a
record date after the Effective Time, and any cash payable in
lieu of any fractional shares pursuant to Section 2.04(e)
being hereinafter referred to as the "Exchange Fund") payable
and issuable pursuant to Section 2.01 in exchange for
outstanding shares of Company Common Stock and shares of
Company Series B Preferred Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate or
Certificates, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to such Certificates shall pass, only upon delivery of
such Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Bethlehem and the
Company may reasonably specify) and (ii) instructions for use
in effecting the surrender of such Certificates in exchange
for the Merger Consideration. Upon surrender of such a
Certificate for cancelation to the Exchange Agent or to such
other agent or agents as may be appointed by Bethlehem,
together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the
Exchange Agent, the holder of
<PAGE>
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole
shares of Bethlehem Common Stock and cash, if any, which such
holder has the right to receive pursuant to this Article II,
and the Certificate so surrendered shall forthwith be
canceled. No letter of transmittal will be required with
respect to Certificates previously surrendered with a Form of
Election (unless such Form of Election was duly and timely
revoked). In the event of a transfer of ownership of Company
Common Stock or Company Series B Preferred Stock that is not
registered in the transfer records of the Company, a
certificate representing the proper number of shares of
Bethlehem Common Stock may be issued (and, if applicable,
cash may be paid) to a person other than the person in whose
name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such
issuance shall pay any transfer or other Taxes (as defined in
Section 3.01(k)) required by reason of the issuance of shares
of Bethlehem Common Stock (and, if applicable, the payment of
cash) to a person other than the registered holder of such
Certificate or establish to the satisfaction of Bethlehem
that such Tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.04(b), each
Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such
surrender the Merger Consideration which the holder thereof
has the right to receive in respect of such Certificate
pursuant to the other provisions of this Article II. No
interest will be paid or will accrue on any cash payable to
holders of Certificates pursuant to the provisions of this
Article II. Bethlehem shall pay the charges and expenses of
the Exchange Agent.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect to
Bethlehem Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Bethlehem Common
Stock issuable hereunder in respect thereof, and no cash
payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.04(e), and all such
dividends, other distributions and cash in lieu of fractional
shares of Bethlehem Common Stock shall be paid by Bethlehem
to the Exchange Agent and shall be included in the Exchange
Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificate
representing whole shares of Bethlehem Common Stock issued in
exchange
<PAGE>
therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a
fractional share of Bethlehem Common Stock to which such
holder is entitled pursuant to Section 2.04(e) and the amount
of dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to such
whole shares of Bethlehem Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but
prior to such surrender and with a payment date subsequent to
such surrender payable with respect to such whole shares of
Bethlehem Common Stock.
(d) No Further Ownership Rights in Company Common
Stock and Company Series B Preferred Stock. All cash paid and
shares of Bethlehem Common Stock issued upon the surrender of
Certificates in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.04(e)) shall
be deemed to have been paid and issued in full satisfaction
of all rights pertaining to the shares of Company Common
Stock and Company Series B Preferred Stock theretofore
represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or
make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock or Company
Series B Preferred Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time, and there shall be no
further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common
Stock and Company Series B Preferred Stock that were
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or
scrip representing fractional shares of Bethlehem Common
Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Bethlehem shall
relate to such fractional share interests and such fractional
share interests will not entitle the owner thereof to vote or
to any rights of a stockholder of Bethlehem.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent will determine the excess
<PAGE>
of (A) the number of whole shares of Bethlehem Common Stock
delivered to the Exchange Agent by Bethlehem pursuant to
Section 2.04(a) over (B) the aggregate number of whole shares
of Bethlehem Common Stock to be distributed to holders of
Company Common Stock and Company Series B Preferred Stock
pursuant to Section 2.01 and Section 2.03 (such excess being
herein called the "Excess Common Shares"). Following the
Effective Time, the Exchange Agent will sell the Excess
Common Shares at then-prevailing prices on the NYSE, all in
the manner provided in Section 2.04(e)(iii).
(iii) The sale of the Excess Common Shares by the
Exchange Agent will be executed on the NYSE through one or
more member firms of the NYSE and will be executed in round
lots to the extent practicable. The Exchange Agent will use
reasonable efforts to complete the sale of the Excess Common
Shares as promptly following the Effective Time as, in the
Exchange Agent's sole judgment, is practicable consistent
with obtaining the best execution of such sales in light of
prevailing market conditions. Until the net proceeds of such
sale or sales have been distributed to the holders of
Certificates, the Exchange Agent will hold such proceeds in
trust for the holders of Certificates (the "Common Share
Trust"). The Surviving Corporation will pay all commissions,
transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent
incurred in connection with such sale of the Excess Common
Shares. The Exchange Agent will determine the portion of the
Common Shares Trust to which each holder of Certificates is
entitled, if any, by multiplying the amount of the aggregate
proceeds comprising the Common Shares Trust by a fraction,
the numerator of which is the amount of the fractional share
interest to which such holder of Certificates is entitled
(after taking into account all shares of Company Common Stock
and Company Series B Preferred Stock held at the Effective
Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all
holders of Certificates are entitled.
(iv) Notwithstanding the provisions of Section
2.04(e)(ii) and (iii), the Surviving Corporation may elect at
its option, in lieu of the issuance and sale of Excess Common
Shares and the making of the payments hereinabove
contemplated, to pay each holder of Certificates an amount in
cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder (after taking
into account all shares of Company Common Stock and Company
Series B Preferred Stock held at the Effective Time by such
holder) would otherwise be
<PAGE>
entitled by (B) the closing price for a share of Bethlehem
Common Stock as reported on the NYSE Composite Transactions
Tape (as reported in The Wall Street Journal, or, if not
reported therein, in any other authoritative source) on the
trading day immediately preceding the Closing Date, and, in
such case, all references herein to the cash proceeds of the
sale of the Excess Common Shares and similar references will
be deemed to mean and refer to the payments calculated as set
forth in this Section 2.04(e)(iv).
(v) As soon as practicable after the determination
of the amount of cash, if any, to be paid to holders of
Certificates with respect to any fractional share interests,
the Exchange Agent will make available such amounts to such
holders of Certificates subject to and in accordance with the
terms of Section 2.04(c).
(g) Termination of Exchange Fund. Any portion of
the Exchange Fund that remains undistributed to the holders
of the Certificates for six months after the Effective Time
shall be delivered to Bethlehem, upon demand, and any holders
of the Certificates who have not theretofore complied with
this Article II shall thereafter look only to Bethlehem for
payment of their claim for any cash, any shares of Bethlehem
Common Stock, any cash in lieu of fractional shares and any
dividends or distributions with respect to Bethlehem Common
Stock.
(h) No Liability. None of Bethlehem, the Company or
the Exchange Agent shall be liable to any person in respect
of any shares of Bethlehem Common Stock or any cash from the
Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(i) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as
directed by Bethlehem, on a daily basis. Any interest and
other income resulting from such investments shall be paid to
Bethlehem.
(j) Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration and any
<PAGE>
cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Bethlehem Common Stock
deliverable in respect thereof, pursuant to this Agreement.
(k) Withholding Rights. Bethlehem or the Exchange
Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Common Stock or Company
Series B Preferred Stock such amounts as Bethlehem or the
Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent
that amounts are so withheld and paid over to the appropriate
taxing authority by Bethlehem or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of
Company Common Stock or Company Series B Preferred Stock in
respect of which such deduction and withholding was made by
Bethlehem or the Exchange Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the
Company. Except as set forth with respect to a specifically
identified representation and warranty on the Disclosure
Schedule delivered by the Company to Bethlehem prior to the
execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Bethlehem
as follows:
(a) Organization, Standing and Corporate Power.
Each of the Company and each of its subsidiaries (as
defined in Section 8.03) is a corporation duly
organized, validly existing and in good standing (with
respect to jurisdictions which recognize such concept)
under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and
authority to carry on its business as now being
conducted. Each of the Company and each of its
subsidiaries is duly qualified or licensed to do
business and is in good standing (with respect to
jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or
licensed or to be in good standing individually or
<PAGE>
in the aggregate would not have a material adverse
effect (as defined in Section 8.03) on the Company.
(b) Subsidiaries. The Company Disclosure Schedule
sets forth a true and complete list of each subsidiary
of the Company. All the outstanding shares of capital
stock of each such subsidiary have been validly issued
and are fully paid and nonassessable and are owned
directly or indirectly by the Company, free and clear of
all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of
its subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership
interest in any corporation, limited liability company,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock
of the Company consists of 40,000,000 shares of Company
Common Stock and 1,000,000 shares of series preferred
stock, par value $.01 per share ("Company Preferred
Stock"). At the close of business on November 28, 1997,
(i) 14,941,227 shares of Company Common Stock were
issued and outstanding, (ii) 470,300 shares of Company
Series B Preferred Stock were issued and outstanding
(and 1,410,900 shares of Company Common Stock were
reserved for issuance upon the conversion thereof),
(iii) 872,032 shares of Company Common Stock were held
by the Company in its treasury, (iv) 1,378,847 shares of
Company Common Stock were reserved for issuance pursuant
to Lukens Inc. 1985 Stock Option and Appreciation Plan
and Lukens Inc. Stock Option Plan for Non-Employee
Directors (collectively, the "Stock Plans"), and (v)
200,000 shares of Company Series A Preferred Stock were
reserved for issuance in connection with the rights (the
"Rights") to purchase shares of Company Series A
Preferred Stock issued pursuant to the Renewed Rights
Agreement dated September 25, 1996 (as amended from time
to time, the "Rights Agreement") between the Company and
American Stock Transfer and Trust Company, as rights
agent. Except as set forth above, at the close of
business on December 14, 1997, no shares of capital
stock or other voting securities of the Company were
issued, reserved for issuance or outstanding (except for
shares of Company Common Stock issued upon conversion of
shares of Company Series B Preferred Stock since
November 28, 1997). At the close of business on December
14, 1997, there were no outstanding stock appreciation
rights or rights (other
<PAGE>
than outstanding employee stock options to purchase
shares of Company Common Stock ("Employee Stock
Options")) to receive shares of Company Common Stock on
a deferred basis granted under the Stock Plans or
otherwise. All outstanding shares of capital stock of
the Company are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive
rights. There are no notes, bonds, debentures or other
indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having
the right to vote) on any matters on which shareholders
of the Company may vote. Except as set forth above, at
the close of business on December 14, 1997, there were
no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of
its subsidiaries was a party or by which any of them was
bound obligating the Company or any of its subsidiaries
to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or
other voting securities of the Company or of any of its
subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. At the close of
business on December 14, 1997, and except as provided
pursuant to the terms of the Company Series B Preferred
Stock there were no outstanding contractual obligations
of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock
of the Company or any of its subsidiaries. At the close
of business on December 14, 1997, there were no
outstanding contractual obligations of the Company to
vote or to dispose of any shares of the capital stock of
any of its subsidiaries. The Company has delivered to
Bethlehem a complete and correct copy of the Rights
Agreement.
(d) Authority; Noncontravention. The Company has
all requisite corporate power and authority to enter
into this Agreement and, subject to the Company
Shareholder Approval (as defined in Section 3.01(m)), to
consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement
by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action
on the part of the Company, subject,
<PAGE>
in the case of the adoption of this Agreement, to the
Company Shareholder Approval. This Agreement has been
duly executed and delivered by the Company and
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms. The execution and delivery of this Agreement do
not, and the consummation of the transactions
contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to
a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its
subsidiaries under, (i) the Certificate of Incorporation
or By-laws of the Company or the comparable
organizational documents of any of its subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the
Company or any of its subsidiaries or their respective
properties or assets or (iii) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a
material adverse effect on the Company, (y) impair the
ability of the Company to perform its obligations under
this Agreement in any material respect or (z) prevent or
materially delay the consummation of any of the
transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local
government or any court, administrative or regulatory
agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the
consummation by the Company of the transactions
contemplated by this Agreement, except for (1) the
filing of a premerger notification and report form by
the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act");
(2) the filing with the Securities and Exchange
<PAGE>
Commission (the "SEC") of (A) a proxy statement relating
to the Company Shareholders Meeting (such proxy
statement, (as defined in Section 5.01(c)), in each case
as amended or supplemented from time to time, the "Proxy
Statement/Prospectus"), and (B) such reports under
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement; (3) the
filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business; (4) such filings
and consents as may be required under any environmental,
health or safety law or regulation pertaining to any
notification, disclosure or required approval
necessitated by the Merger or the transactions
contemplated by this Agreement; (5) such filings with
and approvals of the NYSE to permit the shares of
Company Common Stock that are to be issued pursuant to
the terms of this Agreement to be listed on the NYSE
and; (6) such consents, approvals, orders,
authorizations, registrations, declarations and filings
the failure to make or obtain which would not reasonably
be expected to have a material adverse effect on the
Company or impair the ability of the Company to perform
its obligations under this Agreement in any material
respect.
(e) SEC Documents; Undisclosed Liabilities. The
Company has filed all required reports, schedules,
forms, statements and other documents with the SEC since
January 1, 1996 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all
material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the
extent that information contained in any SEC Document
has been revised or superseded by a later Filed SEC
Document (as defined in Section 3.01(g)), none of the
SEC Documents contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
<PAGE>
circumstances under which they were made, not
misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all
material respects with applicable accounting
requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly
present the consolidated financial position of the
Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their
operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the
Filed SEC Documents, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise) that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect
on the Company.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company specifically
for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the
SEC by Bethlehem in connection with the issuance of
Bethlehem Common Stock in the Merger (the "Form S-4")
will, at the time it becomes effective under the
Securities Act, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy
Statement/Prospectus will, at the date it is first
mailed to the Company's shareholders or at the time of
the Company Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
The Proxy Statement/Prospectus will comply as to form in
all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the
Company with respect to statements made or incorporated
by reference therein based on information supplied by
<PAGE>
Bethlehem specifically for inclusion or incorporation by
reference in the Proxy Statement/Prospectus.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (as
amended to the date of this Agreement, the "Filed SEC
Documents"), since the date of the most recent audited
financial statements included in the Filed SEC
Documents, the Company has conducted its business only
in the ordinary course, and there has not been (i) any
material adverse change (as defined in Section 8.03) in
the Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether
in cash, stock or property) with respect to any of the
Company's capital stock, other than regular quarterly
cash dividends, (iii) any split, combination or
reclassification of any of the Company's capital stock
or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in
substitution for shares of the Company's capital stock,
(iv) (x) any granting by the Company or any of its
significant subsidiaries to any executive officer or
other employee of the Company or any of its significant
subsidiaries of any increase in compensation, except for
normal increases in the ordinary course of business
consistent with past practice or as was required under
employment agreements in effect as of the date of the
most recent audited financial statements included in the
Filed SEC Documents or (y) any granting by the Company
or any of its significant subsidiaries to any such
executive officer or other employee of any increase in
severance or termination pay, (v) any damage,
destruction or loss, whether or not covered by
insurance, that has or would reasonably be expected to
have a material adverse effect on the Company, (vi)
except as may have been required by a change in
generally accepted accounting principles, any change in
accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or
business or (vii) any Tax election that would reasonably
be expected to have a material adverse effect on the
Company, or any settlement or compromise of any material
Tax liability.
(h) Litigation. Except as disclosed in the Filed
SEC Documents, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its
subsidiaries that individually or in the aggregate would
reasonably be expected to have a material adverse
<PAGE>
effect on the Company, nor is there any judgment, order,
decree, statute, law, ordinance, rule or regulation of
any Governmental Entity outstanding against the Company
or any of its subsidiaries having, or which would
reasonably be expected to have, such a material adverse
effect.
(i) Absence of Changes in Benefit Plans. Subject to
Section 5.06 and except as disclosed in the Filed SEC
Documents, since the date of the most recent audited
financial statements included in the Filed SEC
Documents, there has not been any adoption or amendment
in any material respect (or any agreement to adopt or
amend in any material respects) by the Company or any of
its subsidiaries of any collective bargaining agreement
or employment contract or any bonus, pension, profit
sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally
binding) providing benefits to any current or former
director, officer or employee of the Company or any of
its subsidiaries ("Company Plans"). Without limiting the
foregoing, except as disclosed in the Filed SEC
Documents, since the date of the most recent audited
financial statements included in the Filed SEC
Documents, there has not been any change in any
actuarial or other assumption used to calculate funding
obligations with respect to any Pension Plan (as defined
in Section 3.01(j)), or in the manner in which
contributions to any Pension Plan are made or the basis
on which such contributions are determined. Except as
disclosed in the Filed SEC Documents, there exist no
employment, consulting, severance, termination or
indemnification agreements, arrangements or
understandings between the Company or any of its
subsidiaries and any current or former director, officer
or employee of the Company or any of its subsidiaries.
(j) ERISA Compliance. (i) The Company Disclosure
Schedule contains a list of each "employee pension
benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as a
"Pension Plan"), each "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA) (sometimes
referred to herein as a "Welfare Plan"), each employment
contract, stock option, stock purchase, deferred
compensation plan or arrangement and each
<PAGE>
other employee fringe benefit plan or arrangement
maintained, contributed to or required to be maintained
or contributed to by the Company, any of its
subsidiaries or any other person or entity that,
together with the Company, is or was treated as a single
employer under Section 414(b), (c), (m) or (o) of the
Code (each, a "Commonly Controlled Entity") for the
benefit of any current or former directors, officers,
employees or independent contractors of the Company or
any of its subsidiaries (collectively, "Company Benefit
Plans"). The Company has delivered or made available to
Bethlehem true, complete and correct copies of (v) each
Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plans, descriptions thereof), (w) the
two most recent annual reports on Form 5500 filed with
the Internal Revenue Service with respect to each
Company Benefit Plan (if any such report was required),
(x) the most recent summary plan description for each
Company Benefit Plan for which such summary plan
description is required, (y) each currently effective
trust agreement, insurance or group annuity contract and
each other funding or financing arrangement relating to
any Company Benefit Plan and (z) the most recent
actuarial and financial valuation prepared with respect
to each Company Benefit Plan.
(ii) Each Company Benefit Plan has been
administered in all respects in accordance with its
terms and the Company, its subsidiaries and all the
Company Benefit Plans are in compliance in all respects
with the applicable provisions of ERISA, the Code and
all other applicable laws and the terms of all
applicable collective bargaining agreements except, in
each case, for any failure to administer or any
non-compliance that would not reasonably be expected to
have a material adverse effect on the Company. To the
knowledge of the Company, there are no investigations by
any Governmental Entity, termination proceedings or
other claims (except routine claims for benefits payable
under the Company Benefit Plans), suits or proceedings
against or involving any Company Benefit Plan or
asserting any rights or claims to benefits under any
Company Benefit Plan that would reasonably be expected
to have a material adverse effect on the Company. To the
knowledge of the Company, there are no facts or
circumstances that could give rise to any liability that
would reasonably be expected to have a material adverse
effect on the Company in the event of any such
investigation, claim, suit or proceeding.
<PAGE>
(iii) (1) All contributions to, and payments from,
the Company Benefit Plans that may have been required to
be made in accordance with the terms of the Company
Benefit Plans, any applicable collective bargaining
agreement and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made, (2)
there has been no application for waiver or waiver of
the minimum funding standards imposed by Section 412 of
the Code with respect to any Pension Plan, (3) no
Pension Plan has or had at any time during the current
plan year an "accumulated funding deficiency" within the
meaning of Section 412(a) of the Code and (4) there is
no liability under Title IV of ERISA with respect to any
Company Benefit Plan (except for insurance premiums
payable to the Pension Benefit Guaranty Corporation
which are not yet due) that has not been satisfied as of
the date hereof, except, in each case, for
contributions, payments, applications, deficiencies or
liabilities that would not reasonably be expected to
have a material adverse effect on the Company.
(iv) Each Pension Plan that is intended to be a
tax-qualified plan has been the subject of a
determination letter from the Internal Revenue Service
to the effect that such Pension Plan and related trust
is qualified and exempt from U.S. Federal income Taxes
under Sections 401(a) and 501(a), respectively, of the
Code; no such determination letter has been revoked,
and, to the knowledge of the Company, revocation has not
been threatened; and no such Pension Plan has been
amended since the effective date of its most recent
determination letter in any respect that would adversely
affect in any material respect its qualification,
materially increase its costs or require security under
Section 307 of ERISA. The Company has delivered or made
available to Bethlehem a copy of the most recent
determination letter received with respect to each
Pension Plan for which such a determination letter has
been issued, as well as a copy of any pending
application for a determination letter.
(v) (1) No "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has
occurred that involves the assets of any Company Benefit
Plan and (2) none of the Company, any of its
subsidiaries or, to the knowledge of the Company, any
non-employee trustee, administrator or other fiduciary
of any Company Benefit Plan or any agent of any of the
foregoing has engaged in any transaction or acted in a
manner that could, or failed to act so as to, subject
the Company or any trustee, administrator or other
<PAGE>
fiduciary to any liability for breach of fiduciary duty
under ERISA or any other applicable law, except, in each
case, for "prohibited transactions" or liabilities that
would not reasonably be expected to have a material
adverse effect on the Company.
(vi) Each Welfare Plan may be amended or terminated
without material liability to the Company at any time
after the Effective Time.
(vii) No employee of the Company will be entitled
to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any
Company Benefit Plan as a result of the transactions
contemplated by this Agreement.
(k) Taxes. (i) Each of the Company and its
subsidiaries has filed all Tax Returns required to be
filed by it or requests for extensions to file such
returns or reports have been timely filed, granted and
have not expired, except to the extent that such
failures to file or to have extensions granted that
remain in effect individually or in the aggregate would
not have a material adverse effect on the Company. All
returns filed by the Company and each of its
subsidiaries are complete and accurate in all material
respects to the knowledge of the Company. The Company
and each of its subsidiaries has paid (or the Company
has paid on its behalf) all Taxes shown as due on such
returns and all material Taxes otherwise due, and the
most recent financial statements contained in the Filed
SEC Documents adequately provide for all Taxes payable
by the Company and its subsidiaries for all taxable
periods and portions thereof accrued through the date of
such financial statements, except where the failure to
have such an adequate liability would not have a
material adverse effect on the Company.
(ii) No deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or
any of its subsidiaries that are not adequately provided
for on the financial statements, except for deficiencies
that individually or in the aggregate would not have a
material adverse effect on the Company, and no requests
for waivers of the time to assess any such Taxes have
been granted or are pending. The U.S. Federal income Tax
returns of the Company and each of its subsidiaries
consolidated in such returns have been either examined
by and settled with the U.S. Internal Revenue Service or
closed by virtue of the applicable statute of
limitations. There is no
<PAGE>
audit, examination, deficiency or refund litigation
pending with respect to Taxes and during the past three
years no taxing authority has given written notice of
the intent to commence any such examination, audit
deficiency or refund litigation. None of the assets or
properties of the Company or any of its subsidiaries is
subject to any material Tax lien, other than any such
liens for Taxes which are not due and payable, which may
thereafter be paid without penalty or the validity of
which are being contested in good faith by appropriate
proceedings and for which adequate provisions are being
maintained in accordance with generally accepted
accounting principles ("Permitted Tax Liens").
(iii) The Company and its subsidiaries shall not be
required to include in a taxable period ending after the
Effective Time any taxable income attributable to income
that economically accrued in a prior taxable period as a
result of Section 481 of the Code, the installment
method of accounting or any comparable provision of
state or local Tax law.
(iv) As used in this Agreement, "Taxes" shall
include all Federal, state and local income, franchise,
use, property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, domestic
or foreign, including any interest, penalties or
additions with respect thereto.
(l) No Excess Parachute Payments; Section 162(m) of
the Code. (i) Any amount that could be received (whether
in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this
Agreement by any director, officer or employee of the
Company or any of its affiliates (as defined in Section
8.03) who is a "disqualified individual" (as such term
is defined in Treasury Regulation Section 1.280G-1)
under any employment, severance or termination
agreement, other compensation arrangement or Company
Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such
term is defined in Section 280G(b)(1) of the Code).
(ii) The disallowance of a deduction under Section
162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by the Company or
any of its subsidiaries under any contract, plan,
program, arrangement or understanding.
<PAGE>
(m) Voting Requirements. The affirmative vote of
the holders of outstanding shares of the Company Common
Stock and Company Series B Preferred Stock, voting
together as a single class, representing a majority of
the voting power of the outstanding shares of Company
Common Stock and Company Series B Preferred Stock (the
"Company Shareholder Approval") is the only vote of the
holders of any class or series of the Company's capital
stock necessary to adopt this Agreement and to approve
the transactions contemplated by this Agreement. The
provisions of Section A of Article ELEVENTH of the
Company's Restated Certificate of Incorporation are
inapplicable to the Merger and the other transactions
contemplated by this Agreement.
(n) State Takeover Statutes. The Board of Directors
of the Company has approved the terms of this Agreement
and the consummation of the Merger and the other
transactions contemplated by this Agreement and such
approval constitutes approval of this Agreement, the
Merger and the other transactions contemplated by this
Agreement under the provisions of Section 203(a)(l) of
the DGCL. To the best of the Company's knowledge, no
other state takeover statute or similar statute or
regulation applies or purports to apply to this
Agreement or any of the transactions contemplated by
this Agreement.
(o) Rights Agreement. The Rights Agreement will be
amended as of the date hereof (the "Rights Plan
Amendment") (i) to render the Rights Agreement
inapplicable to this Agreement, the Merger and the other
transactions contemplated by this Agreement and (ii) to
ensure that (y) neither Bethlehem nor any of its wholly
owned subsidiaries is an Acquiring Person (as defined in
the Rights Agreement) pursuant to the Rights Agreement
and (z) a Stock Acquisition Date, Distribution Date or
Triggering Event (in each case as defined in the Rights
Agreement) does not occur solely by reason of the
execution of this Agreement or the consummation of the
Merger or the other transactions contemplated by this
Agreement.
(p) Brokers. No broker, investment banker,
financial advisor or other person, other than Credit
Suisse First Boston Corporation, is entitled to any
broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
<PAGE>
(q) Opinion of Financial Advisor. The Company has
received the opinion of Credit Suisse First Boston
Corporation, as of the date of this Agreement, to the
effect that, as of such date, the Merger Consideration
is fair to the holders of the Company's Common Stock
from a financial point of view.
(r) Compliance with Applicable Laws. Each of the
Company and its subsidiaries has in effect all Federal,
state and local governmental approvals, authorizations,
certificates, permits, filings, franchises, licenses,
notices and rights, domestic or foreign ("Permits")
necessary for it to own, lease or operate its properties
and assets and to carry on its business as now
conducted, and there has occurred no default under any
such Permit, except for the lack of Permits and for
defaults under Permits which lack or default
individually or in the aggregate would not have a
material adverse effect on the Company. Except as
disclosed in the Filed SEC Documents, the Company and
its subsidiaries are in compliance with all applicable
judgments, orders, decrees, statutes, laws, ordinances,
rules and regulations of any Governmental Entity, except
for possible noncompliance which individually or in the
aggregate would not have a material adverse effect on
the Company.
(s) Environmental Laws and Regulations. Except as
described in the Filed SEC Documents, to the knowledge
of the Company (a) the Company and each of its
subsidiaries is in compliance with all applicable
Federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or
the environment (including, without limitation, ambient
air, surface water, ground water, land surface or
subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that would not, individually
or in the aggregate, have a material adverse effect on
the Company, which compliance includes, but is not
limited to, the possession by the Company and each of
its subsidiaries of permits and other governmental
authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions
thereof; (b) neither the Company nor any of its
subsidiaries has received written notice of, or, to the
knowledge of the Company, is the subject of, any
actions, causes of action, claims, investigations,
demands or notices by any person alleging liability
under or non-compliance with any Environmental Law
("Environmental Claims") that would, individually or in
the aggregate, have a material
<PAGE>
adverse effect on the Company; and (c) there has been no
treatment, storage, disposal or release of any hazardous
or toxic material, substance or waste or petroleum, or
any fractions or by-products thereof, at any property or
facility currently or, to the knowledge of the Company,
formerly owned, leased or operated by the Company in a
manner or at levels that require or could require
investigation, removal or remediation under
Environmental Laws that would either individually or in
the aggregate reasonably be expected to lead to a
material adverse effect on the Company.
(t) Contracts; Indebtedness. (a) Except as
disclosed in the Filed SEC Documents, there are no
contracts or agreements that are material to the
business, properties, assets, financial condition or
results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor
any of its subsidiaries is in violation of or in default
under (nor does there exist any condition which upon the
passage of time or the giving of notice would cause such
a violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding, to
which it is a party or by which it or any of its
properties or assets is bound, except for violations or
defaults that would not reasonably be expected to result
in a material adverse effect on the Company.
(b) The Company Disclosure Schedule sets forth (i)
a list of all agreements, instruments and other
obligations pursuant to which any indebtedness of the
Company or any of its subsidiaries in an aggregate
principal amount in excess of $3,000,000 is outstanding
or may be incurred and (ii) the respective principal
amounts outstanding thereunder as of December 13, 1997.
(u) Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise
have the right to use, all patents, patent rights,
trademarks, trade names, service marks, copyrights, know
how and other proprietary intellectual property rights
and computer programs (collectively, "Intellectual
Property Rights") that are material to the conduct of
the business of the Company and its subsidiaries taken
as a whole. The Company Disclosure Schedule sets forth a
description of all Intellectual Property Rights that are
material to the conduct of the business of the Company
and its subsidiaries taken as a
<PAGE>
whole. No claims are pending or, to the knowledge of the
Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely
affecting the rights of any person with regard to any
Intellectual Property Right so as to materially
adversely affect any of the Company's material
Intellectual Property Rights, and the Company is not
aware of any basis for any such claims. To the knowledge
of the Company, no person is infringing the rights of
the Company or any of its subsidiaries with respect to
any material Intellectual Property Right so as to
materially adversely effect such Intellectual Property
Right.
(v) Labor Matters. Except as disclosed in the Filed
SEC Documents, neither the Company nor any of its
subsidiaries is party to any collective bargaining
agreement, memorandum of understanding, settlement or
other labor agreement with any union or labor
organization and no union or labor organization has been
recognized by the Company or any of its subsidiaries as
an exclusive bargaining representative for employees of
the Company or any of its subsidiaries. Except as
disclosed in the Filed SEC Documents, to the Company's
knowledge, there is no current union representation
question involving employees of the Company or any of
its subsidiaries, nor does the Company have knowledge of
any significant activity or proceeding of any labor
organization (or representative thereof) or employee
group to organize any such employees. Except as
disclosed in the Filed SEC Documents, neither the
Company nor any of its subsidiaries has made any
commitment that would require the application of the
terms of any collective bargaining agreements entered
into by the Company or any of its subsidiaries to
Bethlehem, to any joint venture of Bethlehem, or to any
subsidiary of Bethlehem.
Except as disclosed in the Filed SEC Documents
there is no material labor dispute, strike, picketing or
work stoppage, or any lockout, involving employees of
the Company or any of its subsidiaries pending or, to
the Company's knowledge, threatened against or involving
the Company or any of its subsidiaries.
Except as disclosed in Filed SEC Documents, (i)
there is no grievance, arbitration, unfair labor
practice, investigation, employment discrimination or
other labor or employment related charge, complaint or
claim against the Company or any of its subsidiaries
<PAGE>
pending before any court, arbitrator, mediator or
governmental agency or tribunal, or, to the Company's
knowledge, threatened, and (ii) there has been no
adjudication by any court, arbitrator, mediator or
governmental agency or tribunal that, in the case of
either (i) or (ii), has or that would reasonably be
expected to have a material adverse effect on the
Company or otherwise limit or affect the business
operations of the Company.
(w) Assets Other than Real Property Interests. The
Company or a subsidiary has good and valid title to all
material assets reflected on the most recent balance
sheet included in the Filed SEC Documents (the "Balance
Sheet") or thereafter acquired, except those sold or
otherwise disposed of for fair value since the date of
the Balance Sheet in the ordinary course of business
consistent with past practice and not in violation of
this Agreement, in each case free and clear of all
mortgages, liens, security interests or encumbrances of
any kind except (i) mechanics', carriers', workmen's ,
repairmen's or other like liens arising or incurred in
the ordinary course of business, liens arising under
original purchase price conditional sales contracts and
equipment leases with third parties entered into in the
ordinary course of business and liens for Taxes which
are not due and payable or which may thereafter be paid
without penalty, (ii) mortgages, liens, security
interests and encumbrances which secure debt that is
reflected as a liability on the Balance Sheet and the
existence of which is indicated in the notes thereto and
(iii) other imperfections of title or encumbrances, if
any, which do not, individually or in the aggregate,
materially impair the continued use and operation of the
assets to which they relate in the business of the
Company and the subsidiaries as presently conducted (the
mortgages, liens, security interests, encumbrances and
imperfections of title described in clauses (i), (ii)
and (iii) above are hereinafter referred to collectively
as "Permitted Liens").
All the material tangible personal property of the
Company and the subsidiaries has been maintained in all
material respects in accordance with the past practice
of the Company and the subsidiaries and generally
accepted industry practice. Each item of material
tangible personal property of the Company and the
subsidiaries is in all material respects in good working
order and is adequate and sufficient for the Company's
intended purposes, ordinary wear and tear
<PAGE>
excepted. All leased personal property of the Company
and the subsidiaries is in all material respects in the
condition required of such property by the terms of the
lease applicable thereto during the term of the lease
and upon the expiration thereof.
This Section 3.01(w) does not relate to real
property or interests in real property, such items being
the subject of Section 3.01(x).
(x) Title to Real Property. Schedule 3.01(x) sets
forth a complete list of all real property owned in fee
by the Company and the subsidiaries (individually, an
"Owned Property") and identifies any material reciprocal
easement or operating agreements relating thereto.
Schedule 3.01(x) sets forth a complete list of all real
property and interests in real property leased by the
Company and the subsidiaries (individually, a "Leased
Property") and identifies any material base leases and
reciprocal easement or operating agreements relating
thereto. The Company or a subsidiary has (i) good and
marketable fee title to all Owned Property insurable at
regular rates and (ii) good and valid title to the
leasehold estates in all Leased Property (an Owned
Property or Leased Property being sometimes referred to
herein, individually, as a "Company Property" and,
collectively, as "Company Properties"), in each case
free and clear of all mortgages, liens, security
interests, encumbrances, leases, assignments, subleases,
easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (A)
leases, subleases and similar agreements set forth in
Schedule 3.02(x), (B) Permitted Liens, (C) easements,
covenants, rights-of-way and other similar restrictions
of record, (D) any conditions that may be shown by a
current, accurate survey or physical inspection of any
Company Property made prior to Closing and (E) (I)
zoning, building and other similar restrictions, (II)
mortgages, liens, security interests, encumbrances,
easements, covenants, rights- of-way and other similar
restrictions that have been placed by any developer,
landlord or other third party on property over which the
Company or any subsidiary has easement rights or on any
Leased Property and subordination or similar agreements
relating thereto, and (III) unrecorded easements,
covenants, rights-of- way and other similar
restrictions, none of which items set forth in clauses
(C), (D) and (E), individually or in the aggregate,
materially impair the value or the continued use and
operation of the property to which
<PAGE>
they relate in the business of the Company and the
subsidiaries as presently conducted. To the knowledge of
the Company, the current use by the Company and the
subsidiaries of the plants, offices and other facilities
located on Company Property does not violate any local
zoning or similar land use or government regulations in
any material respect.
(y) Insurance. The Company and the subsidiaries
maintain policies of fire and casualty, liability and
other forms of insurance in such amounts, with such
deductibles and against such risks and losses as are, in
the Company's judgment, reasonable for the business and
assets of the Company and the subsidiaries. The
insurance policies owned and maintained by the Company
and the subsidiaries are listed in Schedule 3.01(y). All
such policies are in full force and effect, all premiums
due and payable thereon have been paid (other than
retroactive or retrospective premium adjustments that
are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date
under comprehensive general liability and workmen's
compensation insurance policies), and no notice of
cancelation or termination has been received with
respect to any such policy which has not been replaced
on substantially similar terms prior to the date of such
cancelation. To the knowledge of the Company, the
activities and operations of the Company and the
subsidiaries have been conducted in a manner so as to
conform in all material respects to all applicable
provisions of such insurance policies.
(z) Transactions with Affiliates. Except as set
forth in the Filed SEC Documents, there is no agreement,
contract or other arrangement between the Company or any
subsidiary, on the one hand, and any affiliate (other
than the Company or a subsidiary), on the other hand,
that will continue in effect subsequent to the Closing.
After the Closing no affiliate of the Company or any
subsidiary (other than the Company or any subsidiary)
will have any material interest in any property (real or
personal, tangible or intangible) or contract used in or
pertaining to the business of the Company or a
subsidiary. No affiliate of the Company or any
subsidiary (other than the Company or any subsidiary)
has any direct or indirect ownership interest in any
person in which the Company or a subsidiary has any
direct or indirect ownership interest or with which the
Company or a subsidiary competes or has a business
relationship.
<PAGE>
(aa) Books and Records. The Company has delivered
to Bethlehem prior to the execution of this Agreement
complete and correct copies of its Restated Certificate
of Incorporation and By-laws and the articles of
incorporation and by-laws (or comparable organizational
documents) of its significant subsidiaries, in each case
as amended to date. The books of account, minute books,
stock record books, and other records of the Company and
its subsidiaries, are complete and correct and have been
maintained in accordance with sound business practices.
The minute books of the Company and its subsidiaries
contain accurate and complete records of all meetings
held of, and corporate action taken by, the
stockholders, the Boards of Directors, and committees of
the Boards of Directors of the Company and its
subsidiaries, and no meeting prior to November 30, 1997
of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been
prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in
the possession of the Company and its subsidiaries.
SECTION 3.02. Representations and Warranties of
Bethlehem. Except as set forth with respect to a specifically
identified representation and warranty on the Disclosure
Schedule delivered by Bethlehem to the Company prior to the
execution of this Agreement (the "Bethlehem Disclosure
Schedule"), Bethlehem represents and warrants to the Company
as follows:
(a) Organization, Standing and Corporate Power.
Bethlehem is a corporation duly organized, validly
existing and in good standing under the laws of Delaware
and has the requisite corporate power and authority to
carry on its business as now being conducted. Bethlehem
is duly qualified or licensed to do business and is in
good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which
the nature of its business or the ownership or leasing
of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the
failure to be so qualified or licensed or to be in good
standing individually or in the aggregate would not have
a material adverse effect on Bethlehem. Bethlehem has
delivered to the Company complete and correct copies of
its Restated Certificate of Incorporation and By-laws as
amended to the date hereof.
<PAGE>
(b) Capital Structure. The authorized capital stock
of Bethlehem consists of 250,000,000 shares of Bethlehem
Common Stock, 20,000,000 shares of preferred stock, par
value $1.00 per share ("Bethlehem Preferred Stock") and
20,000,000 shares of preference stock, par value $1.00
per share ("Bethlehem Preference Stock"). At the close
of business on December 12, 1997, (i) 112,931,683 shares
of Bethlehem Common Stock were issued and outstanding,
(ii) 2,500,000 shares of $5.00 Cumulative Convertible
Preferred Stock, 4,000,000 shares of $2.50 Cumulative
Convertible Preferred Stock, and 5,123,200 shares of
Bethlehem $3.50 Cumulative Convertible Preferred Stock
were issued and outstanding, (iii) 1,703,849 shares of
Bethlehem Series A Preference Stock and 706,254 shares
of Bethlehem Series B Preference Stock were issued and
outstanding, (iv) 2,051,583 shares of Bethlehem Common
Stock were held by Bethlehem in its treasury, (v)
7,716,693 shares of Bethlehem Common Stock were reserved
for issuance pursuant to the 1994 Stock Incentive Plan
of Bethlehem Steel Corporation, the 1988 Stock Incentive
Plan of Bethlehem Steel Corporation, the 1994
Non-Employee Directors Stock Plan of Bethlehem Steel
Corporation, and the Savings Plan for Salaried Employees
of Bethlehem Steel Corporation and Subsidiary Companies
(collectively, the "Bethlehem Stock Plans") and (vi)
1,500,000 shares of Series A Junior Participating
Preference Stock are reserved for issuance in connection
with the rights (the "Bethlehem Rights") to purchase
shares of Series A Junior Participating Preference Stock
issued pursuant to the Rights Agreement dated as of
September 28, 1988 (as amended from time to time, the
"Bethlehem Rights Agreement") between Bethlehem and
Morgan Shareholder Services Trust Company, as Rights
Agent. Except as set forth above, at the close of
business on December 12, 1997, no shares of capital
stock or other voting securities of Bethlehem were
issued, reserved for issuance or outstanding. At the
close of business on December 12, 1997, there were no
outstanding stock appreciation rights or rights (other
than employee stock options to purchase shares of
Bethlehem Common Stock) to receive shares of Bethlehem
Common Stock on a deferred basis granted under the
Bethlehem Stock Plans or otherwise. All outstanding
shares of capital stock of Bethlehem are, and all shares
which may be issued pursuant to this Agreement will be,
when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights.
There are no notes, bonds, debentures or other
indebtedness of Bethlehem having the right to vote (or
<PAGE>
convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders
of Bethlehem may vote. Except as set forth above, at the
close of business on December 12, 1997, there were no
outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or
undertakings of any kind to which Bethlehem or any of
its subsidiaries was a party or by which any of them was
bound obligating Bethlehem or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other
voting securities of Bethlehem or any of its
subsidiaries or obligating Bethlehem or any of its
subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. At the close of
business on December 12, 1997, there were no outstanding
contractual obligations of Bethlehem or any of its
subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of Bethlehem or any of its
subsidiaries.
(c) Authority; Noncontravention. Bethlehem has all
requisite corporate power and authority to enter into
this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and
delivery of this Agreement by Bethlehem and the
consummation by Bethlehem of the transactions
contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of
Bethlehem. This Agreement has been duly executed and
delivered by Bethlehem and constitutes a valid and
binding obligation of Bethlehem, enforceable against
Bethlehem in accordance with its terms. The execution
and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this
Agreement by Bethlehem will not, conflict with, or
result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to
a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the
properties or assets of Bethlehem under, (i) the
Restated Certificate of Incorporation or By-laws of
Bethlehem, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Bethlehem or its properties or assets or
(iii) subject to the governmental filings and other
matters referred to in the following sentence, any
<PAGE>
judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Bethlehem or its properties
or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on
Bethlehem, (y) impair the ability of Bethlehem to
perform its obligations under this Agreement in any
material respect or (z) prevent or materially delay the
consummation of any of the transactions contemplated by
this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with
respect to Bethlehem in connection with the execution
and delivery of this Agreement by Bethlehem or the
consummation by Bethlehem of the transactions
contemplated by this Agreement, except for (1) the
filing of a premerger notification and report form by
Bethlehem under the HSR Act; (2) the filing with the SEC
of the Form S-4 and such reports under Section 13(a),
13(d), 15(d) or 16(a) of the Exchange Act as may be
required in connection with this Agreement; (3) the
filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the
relevant authorities of other states in which Bethlehem
is qualified to do business; (4) such filings and
consents as may be required under any environmental,
health or safety law or regulation pertaining to any
notification, disclosure or required approval
necessitated by the Merger or the transactions
contemplated by this Agreement; (5) such filings with
and approvals of the NYSE and the Chicago Stock Exchange
(the "CSE") to permit the shares of Bethlehem Common
Stock that are to be issued in the Merger and under the
Stock Plans to be listed on the NYSE and the CSE; and
(6) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure to
make or obtain which would not reasonably be expected to
have a material adverse effect on Bethlehem or impair
the ability of Bethlehem to perform its obligations
under this Agreement in any material respect.
(d) SEC Documents; Undisclosed Liabilities.
Bethlehem has filed all required reports, schedules,
forms, statements and other documents with the SEC since
January 1, 1996 (the "Bethlehem SEC Documents"). As of
their respective dates, the Bethlehem SEC Documents
complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of
<PAGE>
the SEC promulgated thereunder applicable to such
Bethlehem SEC Documents, and none of the Bethlehem SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the
extent that information contained in any Bethlehem SEC
Document has been revised or superseded by a later Filed
Bethlehem SEC Document (as defined in Section 3.02(f)),
none of the Bethlehem SEC Documents contains any untrue
statement of a material fact or omits to state any
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading. The financial statements of Bethlehem
included in the Bethlehem SEC Documents comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly
present the consolidated financial position of Bethlehem
and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the Filed
Bethlehem SEC Documents, neither Bethlehem nor any of
its subsidiaries has any material liabilities or
obligations of any nature (whether accrued, absolute,
contingent or otherwise) that, individually or in the
aggregate, would reasonably be expected to have a
material adverse effect on Bethlehem.
(e) Information Supplied. None of the information
supplied or to be supplied by Bethlehem specifically for
inclusion or incorporation by reference in the Form S-4
will, at the time the Form S-4 becomes effective under
the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading. The Form S-4 will
comply as to form in all material respects with the
requirements of the Securities Act and the rules and
regulations thereunder, except that no representation or
warranty
<PAGE>
is made by Bethlehem with respect to statements made or
incorporated by reference therein based on information
supplied by the Company specifically for inclusion or
incorporation by reference in the Proxy Statement/
Prospectus or the Form S-4.
(f) Absence of Certain Changes or Events. Except as
disclosed in the Bethlehem SEC Documents filed and
publicly available prior to the date of this Agreement
(as amended to the date of this Agreement, the "Filed
Bethlehem SEC Documents"), since the date of the most
recent audited financial statements included in the
Filed Bethlehem SEC Documents, Bethlehem has conducted
its business only in the ordinary course, and there has
not been (i) any material adverse change in Bethlehem,
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock
or property) with respect to any of Bethlehem's capital
stock, other than regular quarterly cash dividends,
(iii) any split, combination or reclassification of any
of Bethlehem's capital stock or any issuance or the
authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of
Bethlehem's capital stock, (iv) any damage, destruction
or loss, whether or not covered by insurance, that has
or would reasonably be expected to have a material
adverse effect on Bethlehem, (v) except as may have been
required by a change in generally accepted accounting
principles, any change in accounting methods, principles
or practices by Bethlehem materially affecting its
assets, liabilities or business or (vi) any Tax election
that would reasonably be expected to have a material
adverse effect on Bethlehem, or any settlement or
compromise of any material Tax liability.
(g) Litigation. Except as disclosed in the Filed
Bethlehem SEC Documents, there is no suit, action or
proceeding pending or, to the knowledge of Bethlehem,
threatened against or affecting Bethlehem or any of its
subsidiaries that individually or in the aggregate would
reasonably be expected to have a material adverse effect
on Bethlehem, nor is there any judgment, order, decree,
statute, law, ordinance, rule or regulation of any
Governmental Entity outstanding against Bethlehem or any
of its subsidiaries having, or which would reasonably be
expected to have, any such material adverse effect.
(h) ERISA Compliance. With respect to each
"employee benefit plan" (as defined in Section 3(1) of
<PAGE>
ERISA) and each other employment, compensation, deferred
compensation, change in control, termination or
equity-based plan, program, agreement or arrangement
entered into, maintained or contributed to by Bethlehem
or a Commonly Controlled Entity of Bethlehem ("Bethlehem
Benefit Plan"), no event has occurred and, to the
knowledge of Bethlehem, no condition or set of
circumstances exists, in connection with which Bethlehem
or any of its subsidiaries could be subject to any
liabilities (except liabilities for benefits claims and
funding obligations payable in the ordinary course)
under ERISA, the Code or any other applicable law that
are individually or in the aggregate reasonably likely
to have a material adverse effect on Bethlehem.
(i) Taxes. (i) Each of Bethlehem and its
subsidiaries has filed all Tax Returns required to be
filed by it or requests for extensions to file such
returns or reports have been timely filed, granted and
have not expired, except to the extent that such
failures to file or to have extensions granted that
remain in effect individually or in the aggregate would
not have a material adverse effect on Bethlehem. All
returns filed by Bethlehem and each of its subsidiaries
are complete and accurate in all material respects to
the knowledge of Bethlehem. Bethlehem and each of its
subsidiaries has paid (or Bethlehem has paid on its
behalf) all Taxes shown as due on such returns and all
material Taxes otherwise due, and the most recent
financial statements contained in the Filed Bethlehem
SEC Documents reflect an adequate liability for all
Taxes payable by Bethlehem and its subsidiaries for all
taxable periods and portions thereof accrued through the
date of such financial statements, except where the
failure to have such an adequate liability would not
have a material adverse effect on Bethlehem.
(ii) No deficiencies for any Taxes have been
proposed, asserted or assessed against Bethlehem or any
of its subsidiaries that are not adequately reflected on
the financial statements, except for deficiencies that
individually or in the aggregate would not have a
material adverse effect on Bethlehem, and no requests
for waivers of the time to assess any such Taxes have
been granted or are pending. The U.S. Federal income Tax
returns of Bethlehem and each of its subsidiaries
consolidated in such returns have either been examined
by and settled with the U.S. Internal Revenue Service or
closed by virtue of the applicable statute of
limitations. There is no audit, examination,
<PAGE>
deficiency or refund litigation pending with respect to
Taxes and during the past three years no taxing
authority has given written notice of the intent to
commence any such examination, audit, deficiency or
refund litigation. None of the assets or properties of
Bethlehem or any of its subsidiaries is subject to any
material Tax lien other than Permitted Tax Liens.
(j) Brokers. No broker, investment banker,
financial advisor or other person, other than J.P.
Morgan Securities Inc., the fees and expenses of which
will be paid by Bethlehem, is entitled to any broker's,
finder's, financial advisor's or other similar fee or
commission in connection with the transactions
contemplated by this Agreement based upon arrangements
made by or on behalf of Bethlehem.
(k) Opinion of Financial Advisor. Bethlehem has
received the opinion of J.P. Morgan Securities Inc.,
dated the date of this Agreement, to the effect that, as
of such date, the Merger Consideration is fair to
Bethlehem from a financial point of view.
(l) Compliance with Applicable Laws. Each of
Bethlehem and its significant subsidiaries has in effect
all Permits necessary for it to own, lease or operate
its properties and assets and to carry on its business
as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits
and for defaults under Permits which lack or default
individually or in the aggregate would not have a
material adverse effect on Bethlehem. Except as
disclosed in the Filed Bethlehem SEC Documents,
Bethlehem and its significant subsidiaries are in
compliance with all applicable judgments, orders,
decrees, statutes, laws, ordinances, rules and
regulations of any Governmental Entity, except for
possible noncompliance which individually or in the
aggregate would not have a material adverse effect on
Bethlehem.
(m) Bethlehem Rights Agreement. Under the terms of
the Bethlehem Rights Agreement, the transactions
contemplated by this Agreement will not cause a
Distribution Date (as such term is defined in the
Bethlehem Rights Agreement) to occur or cause the
Bethlehem Rights to become exercisable.
<PAGE>
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business by the Company. Except as set forth in Section 4.01
of the Company Disclosure Schedule or Section 5.06 hereof,
and except with the consent of Bethlehem, during the period
from the date of this Agreement to the Effective Time, the
Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and
ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material
respects with all applicable laws and regulations and, to the
extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, keep
available the services of their current officers and
employees and preserve their relationships with those persons
having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Except as set forth in Section 4.01 of the
Company Disclosure Schedule or Section 5.06 hereof, without
limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its
subsidiaries to, without the consent of Bethlehem:
(i) (x) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of
its capital stock, other than dividends and
distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent and other than
regular quarterly cash dividends of $.25 on Company
Common Stock and $1.20 on Company Series B Preferred
Stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z)
purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries
or any other securities thereof or any rights, warrants
or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, 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
(other than the issuance of Company Common Stock upon
<PAGE>
the exercise of Employee Stock Options outstanding on
the date of this Agreement and in accordance with their
present terms or in accordance with the present terms of
the Stock Plans);
(iii) amend its Restated Certificate of
Incorporation, by-laws, articles of incorporation, code
of regulations or other comparable organizational
documents, as applicable;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, limited liability company,
partnership, joint venture or other entity or division
thereof or (y) any assets that individually or in the
aggregate are material to the Company and its
subsidiaries taken as a whole, except for purchases of
inventory in the ordinary course of business consistent
with past practice;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of
any of its properties or assets other than in the
ordinary course of business consistent with past
practice;
(vi) (y) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities
of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition
of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of
business consistent with past practice, or (z) make any
loans, advances or capital contributions to, or
investments in, any other person, other than to the
Company or any direct or direct subsidiary of the
Company or to officers and employees of the Company or
any of its subsidiaries for travel, business or
relocation expenses in the ordinary course of business;
(vii) make or agree to make any new capital
expenditure or capital expenditures which individually
is in excess of $1,000,000 or in the aggregate are in
excess of $10,000,000;
<PAGE>
(viii) make any Tax election that could reasonably
be expected to have a material adverse effect on the
Company or settle or compromise any material Tax
liability;
(ix) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past
practice or in accordance with their terms, of
liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company
included in the Filed SEC Documents, incurred since the
date of such financial statements in the ordinary course
of business consistent with past practice or which do
not in the aggregate have a material adverse effect on
the Company;
(x) (x) amend (other than as required by applicable
law) any Company Benefit Plan in any material respect,
(y) increase the compensation or bonus opportunity of
any employee of the Company or its subsidiaries, except
for any increases in the ordinary course of business
consistent with past practice, or (z) grant any
additional equity based compensation to any employee of
the Company or its subsidiaries, except for grants in
the ordinary course of business consistent with past
practice;
(xi) except in the ordinary course of business or
except as could not reasonably be expected to have a
material adverse effect on the Company, modify, amend or
terminate any material contract or agreement to which
the Company or any of its subsidiaries is a party or
waive, release or assign any material rights or claims
thereunder;
(xii) make any change to its accounting methods,
principles or practices, except as may be required by
generally accepted accounting principles; or
(xiii) authorize, or commit or agree to take, any
of the foregoing actions.
(b) Conduct of Business by Bethlehem. During the
period from the date of this Agreement to the Effective Time,
Bethlehem shall not (i) amend its Restated Certificate of
Incorporation or by-laws, (ii) make any Tax election that
could reasonably be expected to have a material adverse
<PAGE>
effect on Bethlehem or settle or compromise any material Tax
liability or (iii) authorize, or commit or agree to take, any
of the foregoing actions.
(c) Other Actions. The Company and Bethlehem shall
not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Merger set forth in
Article VI not being satisfied.
(d) Advice of Changes. The Company and Bethlehem
shall promptly advise the other party orally and in writing
of (i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (ii) the
failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or (iii) any
change or event having, or which could reasonably be expected
to have, a material adverse effect on such party or on the
truth of their respective representations and warranties or
the ability of the conditions set forth in Article VI to be
satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or
agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 4.02. No Solicitation. (a) The Company
shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative
retained by it or any of its subsidiaries to, directly or
indirectly through another person, (i) solicit or initiate
(including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the
making of any proposal that constitutes any takeover proposal
(as defined below) or (ii) participate in any discussions or
negotiations regarding any takeover proposal; provided,
however, that if, at any time prior to the adoption of this
Agreement by the holders of Company Common Stock, the Board
of Directors of the Company determines in good faith, after
consultation with outside counsel, that it is necessary to do
so in order to comply with its fiduciary
<PAGE>
duties to the Company's shareholders under applicable law,
the Company may, in response to a takeover proposal that was
not solicited by it, and subject to compliance with Section
4.02(c), (x) furnish information with respect to the Company
and its subsidiaries to any person pursuant to a customary
confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in
negotiations regarding such takeover proposal. For purposes
of this Agreement, "takeover proposal" means any inquiry,
proposal or offer from any person relating to any direct or
indirect acquisition or purchase of 20% or more of the assets
of the Company and its subsidiaries or 20% or more of any
class of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning
20% or more of any class of equity securities of the Company
or any of its subsidiaries, or any merger, consolidation,
business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or
any of its subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section
4.02, neither the Board of Directors of the Company nor any
committee thereof shall (i) (unless it determines in good
faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary
duties to the Company's shareholders under applicable law)
withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Bethlehem, the approval or
recommendation by such Board of Directors or such committee
of the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any takeover
proposal or (iii) cause the Company to enter into any letter
of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement")
related to any takeover proposal. Notwithstanding the
foregoing, in the event that prior to the adoption of this
Agreement by the holders of Company Common Stock the Board of
Directors of the Company receives a superior proposal (as
defined below), the Board of Directors of the Company may (x)
(if it determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's
shareholders under applicable law) withdraw or modify its
approval or recommendation of the Merger or this Agreement or
(y) approve or recommend such superior proposal or terminate
this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter
into any Acquisition Agreement with respect to any
<PAGE>
superior proposal) but only at a time that is after the fifth
business day following Bethlehem's receipt of written notice
from the Company advising Bethlehem that the Board of
Directors of the Company has received a superior proposal,
specifying the terms and conditions of such superior proposal
and identifying the person making such superior proposal. For
purposes of this Agreement, a "superior proposal" means any
proposal or offer made by a third party to acquire, directly
or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the
shares of Company Common Stock then outstanding or a
substantial portion of the assets of the Company and its
subsidiaries and otherwise on terms which the Board of
Directors of the Company determines in its good faith
judgment to be more favorable to the Company's shareholders
than the Merger and for which financing, to the extent
required, is then committed or which, in the good faith
judgment of the Board of Directors of the Company, is
reasonably capable of being obtained by such third party.
(c) In addition to the obligations of the Company
set forth in paragraphs (a) and (b) of this Section 4.02, the
Company shall immediately advise Bethlehem of any takeover
proposal, the material terms and conditions of such takeover
proposal and the identity of the person making such request
or takeover proposal. The Company will keep Bethlehem
reasonably informed of the status and details (including
amendments) of any such takeover proposal.
(d) Nothing contained in this Section 4.02 shall
prohibit the Company from taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good
faith judgment of the Board of Directors of the Company,
after consultation with outside counsel, failure so to
disclose would be inconsistent with its fiduciary duties to
the Company's shareholders under applicable law; provided,
however, that neither the Company nor its Board of Directors
nor any committee thereof shall, except as permitted by
Section 4.02(b), withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a takeover proposal.
<PAGE>
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement/Prospectus; Company Shareholders Meeting. (a)
As soon as practicable following the date of this Agreement,
the Company and Bethlehem shall prepare and file with the SEC
the Proxy Statement/Prospectus and Bethlehem shall prepare
and file with the SEC the Form S-4, in which the Proxy
Statement/Prospectus will be included as a prospectus. Each
of the Company and Bethlehem shall use all reasonable efforts
to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after such filing. The Company
will use all reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to the Company's
shareholders as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Bethlehem shall
also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified or to
file a general consent to service of process) required to be
taken under any applicable state securities laws in
connection with the issuance of Bethlehem Common Stock in
connection with the Merger and the Company shall furnish all
information concerning the Company and the holders of the
Company Common Stock as may be reasonably requested in
connection with any such action.
(b) Subject to the fiduciary duties of the
directors under applicable law, the Company will, as soon as
practicable following the date of this Agreement, duly call,
give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders Meeting") for the
purpose of obtaining the Company Shareholder Approval.
Subject to the fiduciary duties of the directors under
applicable law, the Company will, through its Board of
Directors, recommend to its shareholders the adoption of this
Agreement and the approval of the transactions contemplated
hereby.
SECTION 5.02. Letters of the Company's Accountants.
The Company shall use all reasonable efforts to cause to be
delivered to Bethlehem a letter of Arthur Andersen LLP, the
Company's independent public accountants, dated a date within
two business days before the date on which the Form S-4 shall
become effective and a letter of Arthur Andersen LLP dated a
date within two business days before the Closing Date, each
addressed to Bethlehem, in form and substance reasonably
satisfactory to Bethlehem and customary in scope and
substance for letters delivered by
<PAGE>
independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.03. Letters of Bethlehem's Accountants.
Bethlehem shall use all reasonable efforts to cause to be
delivered to the Company a letter of Price Waterhouse LLP,
Bethlehem's independent public accountants, dated a date
within two business days before the date on which the Form
S-4 shall become effective and a letter of Price Waterhouse
LLP dated a date within two business days before the Closing
Date, each addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope
and substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.04. Access to Information;
Confidentiality. Each of the Company and Bethlehem shall, and
shall cause each of its respective subsidiaries to, afford to
the other party and to the officers, employees, financial
advisors, attorneys, accountants and other representatives of
such other party, reasonable access during normal business
hours during the period prior to the Effective Time to all
their respective properties, books, contracts, commitments,
personnel and records and, during such period, each of the
Company and Bethlehem shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other
party (a) a copy of each report, schedule, form, statement
and other document filed by it during such period pursuant to
the requirements of U.S. Federal or state securities laws and
(b) all other information concerning its business, properties
and personnel as such other party may reasonably request.
Each of the Company and Bethlehem will hold, and will cause
its respective officers, employees, financial advisors,
attorneys, accountants and other representatives and
affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement between
Bethlehem and the Company (the "Confidentiality Agreement").
SECTION 5.05. Reasonable Efforts. (a) Upon the
terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities
<PAGE>
and the making of all necessary registrations and filings
(including filings with Governmental Entities, such as those
referred to in Sections 3.01(d)(1)-(5) and 3.02(c)(1)-(5))
and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary waivers, consents or approvals from third
parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions
contemplated by this Agreement, including seeking to have any
stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, this Agreement.
Notwithstanding the foregoing, in connection with any filing
or submission required or action to be taken by either
Bethlehem or the Company to effect the Merger and to
consummate the other transactions contemplated hereby, the
Company shall not, without Bethlehem's prior written consent,
commit to any divestiture transaction, and neither Bethlehem
nor any of its affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability
to retain, the Company or any of its businesses, product
lines or assets or any of the businesses, product lines or
assets of Bethlehem or any of its affiliates or that
otherwise would have a material adverse effect on Bethlehem.
(b) In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i)
take all reasonable action necessary to ensure that no state
takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement, or any of
the other transactions contemplated by this Agreement and
(ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement,
or any other transaction contemplated by this Agreement, take
all action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
SECTION 5.06. Employee Matters. (a) Bethlehem
agrees that the Company shall honor in accordance with their
respective terms and, on and after the Effective Time,
Bethlehem shall cause the Surviving Corporation to honor,
<PAGE>
without offset, deduction, counterclaim, interruption or
deferment, all Company Plans and all other written
employment, severance, termination and retirement agreements
to which the Company is a party as of the Effective Time,
including those Company Plans set forth in the Company
Disclosure Schedule. Bethlehem acknowledges that, for the
purposes of certain of such Company Plans and certain of such
other employment, severance, termination and retirement
agreements to which the Company is currently a party, the
consummation or shareholder approval (depending upon the
terms of the applicable plan or agreement) of the Merger will
constitute a "change in control" of the Company (as such term
is defined in such plans and agreements) at the Effective
Time and "Good Reason" (as such term is defined in the
Severance Agreements referred to in Section 3.01(j) of the
Company Disclosure Schedule) with respect to the 12 executive
officers of the Company identified in Section 3.01(j) of the
Company Disclosure Schedule at, and subject to, the times
specified therein. Subject to the preceding sentence,
Bethlehem agrees to cause the Surviving Corporation, after
consummation of the Merger, to pay all amounts provided under
such Company Plans and agreements in accordance with their
respective terms and to honor, and to cause the Surviving
Corporation to honor, all rights, privileges and
modifications to or with respect to any such Company Plans or
agreements that become effective as a result of such change
in control.
(b) Bethlehem agrees that, for a period of no less
than one year after the Effective Time, it shall, or shall
cause the Surviving Corporation to, provide employee pension
and welfare plans for the benefit of employees and former
employees of the Company, that, in the aggregate, are not
materially less favorable than the Company Plans in effect
immediately prior to the Effective Time. To the extent any
benefit plan of Bethlehem (or any plan of the Surviving
Corporation) shall be made applicable to any employee or
former employee of the Company, Bethlehem shall, or shall
cause the Surviving Corporation to, grant to employees and
former employees of the Company credit for service with the
Company prior to the Effective Time for the purposes of
determining eligibility to participate and the employee's
nonforfeitable interest in benefits thereunder and, unless a
duplication of benefits would thereby result, for calculating
benefits (including benefits the amount or level of which is
determined by reference to an employee's vesting service)
thereunder. In addition, to the extent any Bethlehem Plan (or
any plan of the Surviving Corporation) that constitutes a
"welfare plan," as defined in Section 3.01(j) hereof, shall
be made applicable to any employee or former employee of the
Company, Bethlehem shall,
<PAGE>
or shall cause the Surviving Corporation to, (i) waive all
preexisting condition exclusions and waiting periods
otherwise applicable to employees and former employees of the
Company, except to the extent any such limitations or waiting
periods in effect under comparable Company Plans have not
been satisfied as of the date such plan is made so applicable
and (ii) credit each employee and former employee of the
Company for any co-payments and deductibles paid by such
employee or former employee under comparable Company Plans
prior to the date such plan is made so applicable. Nothing in
this Agreement shall be interpreted as limiting the power of
the Surviving Corporation to amend or terminate any Company
Plan or any other employee benefit plan, program, agreement
or policy or as requiring the Surviving Corporation or
Bethlehem to offer to continue (other than as required by its
terms) any written employment contract.
SECTION 5.07. Employee Stock Options. At the
Effective Time or such earlier time as is provided in the
applicable stock option plan or employee or director stock
option or agreement as in effect on the date hereof all
Employee Stock Options shall become vested and exercisable in
full. At the Effective Time, each of the Employee Stock
Options which is outstanding and unexercised at the Effective
Time shall be converted automatically into an option to
purchase shares of Bethlehem Common Stock in an amount and at
an exercise price determined as provided below (and otherwise
subject to the terms of the stock option plans of the Company
governing the Employee Stock Options (the "Company Stock
Option Plans")):
(1) The number of shares of Bethlehem Common Stock
to be subject to the new option shall be equal to the product
of the number of shares of Company Common Stock subject to
the original option and the Conversion Number; provided,
however, that any fractional shares of Bethlehem Common Stock
resulting from such multiplication shall be rounded down to
the nearest share; and
(2) The exercise price per share under the new
option shall be equal to (a) the aggregate exercise price of
the original option divided by (b) the total number of shares
of Bethlehem Common Stock subject to the option; provided,
however, that such exercise price shall be rounded up to the
nearest cent.
The adjustment provided herein with respect to any incentive
stock options shall be and is intended to be effected in a
manner that is consistent with Section 424(a) of the Code.
The duration and other terms of the new option shall be the
same as that of the original option, except that all
<PAGE>
references to the Company shall be deemed to be references to
Bethlehem and the vesting of all options shall be accelerated
to the Effective Time. Bethlehem shall file with the SEC a
registration statement on Form S-8 (or other appropriate
form) or a post-effective amendment to the Registration
Statement as promptly as practicable after the date hereof
for purposes of registering all shares of Bethlehem Common
Stock issuable after the Effective Time upon exercise of the
Employee Stock Options, and shall have such registration
statement or post-effective amendment become effective and
comply, to the extent applicable, with state securities or
blue sky laws with respect thereto at the Effective time.
SECTION 5.08. Rights Agreement. The Board of
Directors of the Company shall take all further action (in
addition to that referred to in Section 3.01(o)) reasonably
requested in writing by Bethlehem (including redeeming the
Rights immediately prior to the Effective Time or amending
the Rights Agreement) in order to render the Rights
inapplicable to the Merger and the other transactions
contemplated by this Agreement.
SECTION 5.09. Continuance of Existing
Indemnification Rights. (a) For six years after the Effective
Time, Bethlehem shall, or shall cause the Surviving
Corporation to, indemnify, defend and hold harmless any
person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a
director, officer, employee or agent (an "Indemnified
Person") of the Company or any of its subsidiaries against
all losses, claims, damages, liabilities, costs and expenses
(including attorneys' fees and expenses), judgments, fines,
losses and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such
Claim is based on, or arises out of: (i) the fact that such
Indemnified Person is or was a director, officer, employee or
agent of the Company or any of its subsidiaries or is or was
serving at the request of the Company or any of its
subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise; or (ii) this Agreement or any of the
transactions contemplated hereby, in each case to the extent
that any such Claim pertains to any matter or fact arising,
existing or occurring prior to or at the Effective Time,
regardless of whether such Claim is asserted or claimed prior
to, at or after the Effective Time, to the full extent
permitted under the DGCL, the Company's Restated Certificate
of Incorporation or By-laws or any indemnification agreement
in
<PAGE>
effect at the date hereof, including provisions relating to
advancement of expenses incurred in the defense of any such
Claim; provided, however, that neither Bethlehem nor the
Surviving Corporation shall be required to indemnify any
Indemnified Person in connection with any proceeding (or
portion thereof) involving any Claim initiated by such
Indemnified Person unless the initiation of such proceeding
(or portion thereof) was authorized by the Board of Directors
of Bethlehem or unless such proceeding is brought by an
Indemnified Person to enforce rights under this Section 5.09.
Without limiting the generality of the preceding sentence, in
the event any Indemnified Person becomes involved in any
Claim, after the Effective Time, Bethlehem shall, or shall
cause the Surviving Corporation to, periodically advance to
such Indemnified Person its legal and other expenses
(including the cost of any investigation and preparation
incurred in connection therewith), subject to the providing
by such Indemnified Person of an undertaking to reimburse all
amounts so advanced in the case of a final nonappealable
determination by a court of competent jurisdiction that such
Indemnified Person is not entitled to be indemnified
therefor.
(b) Bethlehem and the Company agree that all rights
to indemnification or liabilities, and all limitations with
respect thereto, existing in favor of any Indemnified Person,
as provided in the Company's Restated Certificate of
Incorporation or By-laws and any indemnification agreement in
effect at the date hereof, shall survive the Merger and shall
continue in full force and effect, without any amendment
thereto, for a period of six years from the Effective Time to
the extent such rights, liabilities and limitations are
consistent with the DGCL; provided, however, that in the
event any Claim is asserted or made within such six-year
period, all such rights, liabilities and limitations in
respect of any such Claim shall continue until disposition
thereof; provided further that any determination required to
be made with respect to whether an Indemnified Person's
conduct complies with the standards set forth under the DGCL,
the Company's Restated Certificate or Incorporation or
By-laws or any such agreement, as the case may be, shall be
made by independent legal counsel selected by such
Indemnified Person and reasonably acceptable to Bethlehem;
provided further that nothing in this Section 5.09 shall
impair any rights or obligations of any current or former
director or officer of the Company; and provided further that
nothing in this Section 5.09 shall require Bethlehem to amend
its certificate of incorporation or by-laws.
<PAGE>
(c) Bethlehem or the Surviving Corporation shall
maintain the company's existing directors' and officers'
liability insurance policy ("D&O Insurance") for a period of
not less than six years after the Effective Time; provided,
however, that Bethlehem may substitute therefor policies of
substantially similar coverage (including pursuant to
Bethlehem's own policy) and amounts containing terms no less
advantageous to such former directors or officers; provided
further that, subject to the preceding proviso, if the
existing D&O Insurance expires or is canceled during such
period, Bethlehem or the Surviving Corporation shall use
their best efforts to obtain substantially similar D&O
Insurance; and provided further that neither Bethlehem nor
the Surviving Corporation shall be required to pay an annual
premium for D&O Insurance in excess of 200% of the last
annual premium paid prior to the date hereof, but in such
case shall purchase as much coverage as possible for such
amount.
SECTION 5.10. Fees and Expenses. (a) Except as
set forth in this Section 5.10, all fees and expenses
incurred in connection with the Merger, this Agreement and
the other transactions contemplated by this Agreement shall
be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated. Bethlehem shall
file any return with respect to and shall pay, any state or
local taxes (including any penalties or interest with
respect thereto), if any, which are attributable to the
transfer of the beneficial ownership of the Company's real
property (collectively, the "Real Estate Transfer Taxes") as
a result of the Merger. The Company shall cooperate with
Bethlehem in the filing of such returns including, in the
case of the Company, supplying in a timely manner a complete
list of all real property interests held by the Company and
any information with respect to such property that is
reasonably necessary to complete such returns. The fair
market value of any real property of the Company subject to
Real Property Transfer Taxes shall be determined by
Bethlehem.
(b) In the event that (i) a takeover proposal shall
have been made known to the Company or any of its
subsidiaries or has been made directly to its shareholders
generally or any person shall have publicly announced an
intention (whether or not conditional) to make a takeover
proposal and thereafter this Agreement is terminated by
either Bethlehem or the Company pursuant to Section
7.01(b)(i) (including without limitation because of the
failure to satisfy the condition set forth in Section
6.03(c)), Section 7.01(b)(ii) or Section 7.01(d) or (ii) this
Agreement is terminated by the Company pursuant to
<PAGE>
Section 7.01(c) then the Company shall promptly pay Bethlehem
a fee equal to $13.5 million (the "Termination Fee") payable
by wire transfer of same day funds; provided, however, that
no Termination Fee shall be payable to Bethlehem pursuant to
clause (i) of this paragraph (b) unless and until within 12
months of such termination the Company or any of its
subsidiaries enters into any Acquisition Agreement or
consummates any takeover proposal (for the purposes of the
foregoing proviso the terms "Acquisition Agreement" and
"takeover proposal" shall have the meanings assigned to such
terms in Section 4.02).
SECTION 5.11. Public Announcements. Bethlehem and
the Company will consult with each other before issuing, and
provide each other the opportunity to review, comment upon
and concur with, any press release or other public statements
with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such
press release or make any such public statement prior to such
consultation, except as may be required by applicable law,
court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties
agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the parties.
SECTION 5.12. Affiliates. Prior to the Closing
Date, the Company shall deliver to Bethlehem a letter
identifying all persons who are, at the time this Agreement
is submitted for adoption to the shareholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under
the Securities Act. The Company shall use all reasonable
efforts to cause each such person to deliver to Bethlehem on
or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit A hereto.
SECTION 5.13. Stock Exchange Listings. Bethlehem
shall use all reasonable efforts to cause the shares of
Bethlehem Common Stock to be issued in the Merger and under
the Stock Plans to be approved for listing on the NYSE and
the CSE, subject to official notice of issuance, prior to the
Closing Date.
SECTION 5.14. Shareholder Litigation. The Company
shall give Bethlehem the opportunity to participate in the
defense or settlement of any shareholder litigation against
the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that no
such settlement shall be agreed to without
<PAGE>
Bethlehem's consent, which consent shall not be unreasonably
withheld.
SECTION 5.15. Merger Sub. Promptly, but in no event
later than three business days after the date hereof, (a)
Bethlehem shall cause Merger Sub to be formed as a Delaware
corporation and its wholly owned subsidiary; (b) Bethlehem
shall cause Merger Sub to adopt and execute and become a
party to this Agreement, all in accordance with Section 251
of the DGCL; and (c) Bethlehem shall notify the Company of
its compliance with the foregoing by written notice delivered
in accordance with Section 8.02 hereof.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
To Effect the Merger. The respective obligation of each party
to effect the Merger is subject to the satisfaction or waiver
on or prior to the Closing Date of the following conditions:
(a) Shareholder Approvals. The Company Shareholder
Approval shall have been obtained.
(b) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have expired.
(c) No Injunctions or Restraints. No judgment,
decree, statute, law, ordinance, rule, regulation,
temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated,
enforced or issued by any court of competent
jurisdiction or other Governmental Entity or other legal
restraint or prohibition (collectively, "Restraints")
preventing the consummation of the Merger shall be in
effect; provided, however, that each of the parties
shall have used all reasonable efforts to prevent the
entry of any such Restraints and to appeal as promptly
as possible any such Restraints that may be entered.
(d) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order, and Bethlehem shall have received all state
securities or "blue sky" authorizations necessary to
<PAGE>
issue the Bethlehem Common Stock issuable pursuant to
this Agreement.
(e) Stock Exchange Listings. The shares of
Bethlehem Common Stock issuable to the Company's
shareholders pursuant to this Agreement and under the
Stock Plans shall have been approved for listing on the
NYSE and the CSE, subject to official notice of
issuance.
SECTION 6.02. Conditions to Obligations of
Bethlehem and Merger Sub. The obligations of Bethlehem and
Merger Sub to effect the Merger are further subject to
satisfaction or waiver (by Bethlehem) on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth
in this Agreement shall be true and correct (without
regard to any materiality qualifications or references
to material adverse effect contained in any specific
representation or warranty), as of the date of this
Agreement and as of the Closing Date as though made on
and as of the Closing Date, except to the extent such
representations and warranties expressly relate to an
earlier date (in which case as of such date); provided
that this paragraph (a) shall be deemed satisfied so
long as the failure of all such representations and
warranties to be true and correct would not have a
material adverse effect on the Company, and Bethlehem
shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief
financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects
all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and
Bethlehem shall have received a certificate signed on
behalf of the Company by the chief executive officer and
the chief financial officer of the Company to such
effect.
(c) No Litigation. There shall not be pending or
threatened by any Governmental Entity any suit, action
or proceeding, (i) challenging the acquisition by
Bethlehem of any shares of capital stock of the Company
or the Surviving Corporation, seeking to restrain or
prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or
seeking to obtain from the Company or Bethlehem any
<PAGE>
damages that are material in relation to the Company and
its subsidiaries taken as a whole or Bethlehem and its
subsidiaries taken as a whole, as applicable, (ii)
seeking to prohibit or limit the ownership or operation
by the Company, Bethlehem or any of their respective
subsidiaries of any material portion of the business or
assets of the Company, Bethlehem or any of their
respective subsidiaries, or to compel the Company,
Bethlehem or any of their respective subsidiaries to
dispose of or hold separate any material portion of the
business or assets of the Company, Bethlehem or any of
their respective subsidiaries, as a result of the Merger
or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the
ability of Bethlehem to acquire or hold, or exercise
full rights of ownership of, any shares of capital stock
of the Company or the Surviving Corporation, (iv)
seeking to prohibit Bethlehem or any of its subsidiaries
from effectively controlling in any material respect the
business or operations of the Company or its
subsidiaries or (v) which otherwise would reasonably be
expected to have a material adverse effect on the
Company or Bethlehem. In addition, there shall not be
any judgment, order, decree, statute, law, ordinance,
rule or regulation, enacted, entered, promulgated or
enforced that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in
clauses (ii) through (v) above.
(d) No Material Adverse Change. At any time after
the date of this Agreement there shall not have occurred
any material adverse change relating to the Company.
SECTION 6.03. Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger
is further subject to satisfaction or waiver on or prior to
the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Bethlehem set forth in
this Agreement shall be true and correct (without regard
to any materiality qualifications or references to
material adverse effect contained in any specific
representation or warranty) as of the date of this
Agreement and as of the Closing Date as though made on
and as of the Closing Date, except to the extent such
representations expressly relate to an earlier date (in
which case as of such date); provided that this
paragraph (a) shall be deemed satisfied so long as the
<PAGE>
failure of all such representations and warranties to be
true and correct would not have a material adverse
effect on Bethlehem, and the Company shall have received
a certificate signed on behalf of Bethlehem by the chief
executive officer of Bethlehem and the chief financial
officer of Bethlehem to such effect.
(b) Performance of Obligations of Bethlehem.
Bethlehem shall have performed in all material respects
all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on
behalf of Bethlehem by the chief executive officer of
Bethlehem and the chief financial officer of Bethlehem
to such effect.
(c) Average Market Price. The Average Market Price
shall be greater than or equal to $6.906.
(d) No Material Adverse Change. At any time after
the date of this Agreement there shall not have occurred
any material adverse change relating to Bethlehem.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after the Company Shareholder Approval:
(a) by mutual written consent of Bethlehem and the
Company;
(b) by either Bethlehem or the Company:
(i) if the Merger shall not have been
consummated on or before June 30, 1998, unless the
failure to consummate the Merger is the result of a
willful and material breach of this Agreement by
the party seeking to terminate this Agreement;
provided, however, that the passage of such period
shall be tolled for any part thereof (but not
exceeding 30 calendar days in the aggregate) during
which any party shall be subject to a nonfinal
order, decree, ruling, injunction or action
restraining, enjoining or otherwise prohibiting the
consummation of the Merger or the
<PAGE>
calling or holding of the Company Shareholders
Meeting;
(ii) if the Company Shareholder Approval shall
not have been obtained at a Company Shareholders
Meeting duly convened therefor;
(iii) if any Governmental Entity shall have
issued an order, decree, ruling or injunction or
taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and
such order, decree, ruling, injunction or other
action shall have become final and nonappealable;
or
(iv) in the event of a breach by the other
party of any representation, warranty, covenant or
other agreement contained in this Agreement which
(A) would give rise to the failure of a condition
set forth in Section 6.02(a) or (b) or Section
6.03(a) or (b), as applicable, and (B) cannot be or
has not been cured within 30 days after the giving
of written notice to the breaching party of such
breach (a "Material Breach") (provided that the
terminating party is not then in Material Breach of
any representation, warranty, covenant or other
agreement contained in this Agreement);
(c) by the Company in accordance with Section
4.02(b); provided that it has complied with all
provisions thereof and that it complies with the
applicable requirements of Section 5.10; or
(d) by Bethlehem if (i) the Board of Directors of
the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to Bethlehem
its approval or recommendation of the Merger or this
Agreement, or approved or recommended any superior
proposal or (ii) the Board of Directors of the Company
or any committee thereof shall have resolved to take any
of the foregoing actions.
SECTION 7.02. Effect of Termination. In the event
of termination of this Agreement by either the Company or
Bethlehem as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any
liability or obligation on the part of Bethlehem, Merger Sub
or the Company, other than the provisions of Section 3.01(p),
Section 3.02(j), the last sentence of Section 5.04, Section
5.10, this Section 7.02 and
<PAGE>
Article VIII and except to the extent that such termination
results from the willful and material breach by a party of
any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties at any time before or after the
Company Shareholder Approval; provided, however, that after
any such approval, there shall not be made any amendment that
by law requires further approval by the stockholders of the
Company without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior
to the Effective Time, a party may (a) extend the time for
the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained
in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.03,
waive compliance by the other parties with any of the
agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of
such rights.
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement pursuant
to Section 7.01, an amendment of this Agreement pursuant to
Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require action by its
Board of Directors or, with respect to any amendment to this
Agreement, to the extent permitted by applicable law, a duly
authorized committee of its Board of Directors.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time. This Section
8.01 shall not limit any covenant or agreement of
<PAGE>
the parties which by its terms contemplates performance after
the Effective Time.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Bethlehem or Merger Sub, to
Bethlehem Steel Corporation
1170 Eighth Avenue
Bethlehem, PA 18016
Fax: (610) 694-1500
Attention: Stephen J. Selden
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Robert A. Kindler
Fax: (212) 474-3700; and
(b) if to the Company, to
Lukens Inc.
50 South First Avenue
Coatesville, PA 19320
Fax: (610) 383-2004
Attention: William D. Sprague, Vice
President and General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
Attention: Steven J. Rothschild
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Fax: (302) 651-3001
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "material adverse change" or "material adverse
effect" means, when used in connection with the Company
or Bethlehem, any change, effect, event or occurrence
that is materially adverse to the business, financial
condition or results of operations of such party and its
subsidiaries taken as a whole, other than any change,
effect, event or occurrence relating to the United
States economy in general or to the Company's or
Bethlehem's, as applicable, industry or industries in
general;
(c) "person" means an individual, corporation,
limited liability company, partnership, joint venture,
association, trust, unincorporated organization or other
entity;
(d) a "subsidiary" of any person means another
person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by
such first person;
(e) a "significant subsidiary" of any person means
any subsidiary of such person that constitutes a
significant subsidiary within the meaning of Rule 1-02
of Regulation S-X promulgated by the SEC;
(f) "takeover proposal" has the meaning assigned
thereto in Section 4.02(a);
(g) "superior proposal" has the meaning assigned
thereto in Section 4.02(b); and
(h) "Taxes" has the meaning assigned thereto in
Section 3.01(k)(iv).
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SECTION 8.04. Interpretation. When a reference is
made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference shall be to an Article or Section
of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes"
or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall
have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless
otherwise defined herein. The definitions contained in this
Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to
the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the
case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are
also to its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents and
instruments referred to herein) and the Confidentiality
Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter of
this Agreement and (b) except for the provisions of Article
II, Section 5.06(a) and Section 5.09, are not intended to
confer upon any person other than the parties any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement shall
be governed by, and construed in accordance with, the laws of
the State of Delaware, regardless of the laws that
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might otherwise govern under applicable principles of
conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement
nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by either party without the
prior written consent of the other party. Any assignment in
violation of the preceding sentence shall be void. Subject to
the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
SECTION 8.09. Disclosure Schedules. Matters
reflected on the Company Disclosure Schedule and the
Bethlehem Disclosure Schedule are not necessarily limited to
matters required by this Agreement to be reflected therein
and the inclusion of such matters shall not be deemed an
admission that such matters were required to be reflected on
the Company Disclosure Schedule or the Bethlehem Disclosure
Schedule, as the case may be. Such additional matters are set
forth for informational purposes only and do not necessarily
include other matters of a similar nature.
SECTION 8.10. Severability. If any provision of
this Agreement or the application thereof to any person or
circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to
which it has been held invalid or unenforceable, shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated thereby. Upon any such determination,
the parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to
effect the original intent of the parties.
SECTION 8.11. Enforcement. The parties agree that
irreparable damage would occur and that the parties would not
have any adequate remedy at law in the event that
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any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties will be
entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any Federal court located in
the State of Delaware or in Delaware state court, the
foregoing being in addition to any other remedy to which they
are entitled at law or in equity.
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IN WITNESS WHEREOF, Bethlehem and the Company have
caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
BETHLEHEM STEEL CORPORATION
by /s/ Curtis H. Barnette
--------------------------
Name: Curtis H. Barnette
Title: Chairman and Chief
Executive Officer
LUKENS INC.
by /s/ R. W. Van Sant
--------------------------
Name: R. W. Van Sant
Title: Chairman and Chief
Executive Officer
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EXHIBIT A
TO THE AGREEMENT AND PLAN OF MERGER
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common
stock, par value $.01 per share ("Company Common Stock"), or
Lukens Series B Preferred Stock ("Company Preferred Stock")
of Lukens Inc., a Delaware corporation (the "Company"),
acknowledges that the undersigned may be deemed an
"affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), by the Securities and
Exchange Commission (the "SEC"), although nothing contained
herein should be construed as an admission of such fact.
Pursuant to the terms of the Agreement and Plan of Merger
dated as of December 15, 1997, between Bethlehem Steel
Corporation, a Delaware corporation ("Bethlehem") and the
Company, a subsidiary of Bethlehem ("Merger Sub") will be
merged with and into the Company (the "Merger"), and in
connection with the Merger, the undersigned is entitled to
receive common stock, par value $1.00 per share ("Bethlehem
Common Stock"), of Bethlehem.
If in fact the undersigned were an affiliate under
the Securities Act, the undersigned's ability to sell, assign
or transfer the Bethlehem Common Stock received by the
undersigned in exchange for any shares of Company Common
Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an
exemption from such registration is available. The
undersigned understands that such exemptions are limited and
the undersigned has obtained or will obtain advice of counsel
as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of
such securities of Rules 144 and 145(d) promulgated under the
Securities Act. The undersigned understands that Bethlehem
will not be required to maintain the effectiveness of any
registration statement under the Securities Act for the
purposes of resale of Bethlehem Common Stock by the
undersigned.
The undersigned hereby represents to and covenants
with Bethlehem that the undersigned will not sell, assign or
transfer any of the Bethlehem Common Stock received by the
undersigned in exchange for shares of Company Common Stock or
Company Preferred Stock in connection with the Merger except
(i) pursuant to an effective registration statement under the
Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in
the opinion of the general counsel of Bethlehem or other
counsel reasonably satisfactory to Bethlehem (it being
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expressly agreed that Skadden, Arps, Slate, Meagher & Flom
LLP shall be considered reasonably satisfactory for all
purposes under this Agreement) or as described in a "no-
action" or interpretive letter from the Staff of the SEC
specifically issued with respect to a transaction to be
engaged in by the undersigned, is not required to be
registered under the Securities Act.
In the event of a sale or other disposition by the
undersigned of Bethlehem Common Stock pursuant to Rule 145,
the undersigned will supply Bethlehem with evidence of
compliance with such Rule, in the form of a letter in the
form of Annex I hereto (or other reasonably satisfactory
documentation evidencing compliance with Rule 145) and the
opinion of counsel or no-action letter referred to above. The
undersigned understands that Bethlehem may instruct its
transfer agent to withhold the transfer of any Bethlehem
Common Stock disposed of by the undersigned, but that
(provided such transfer is not prohibited by any other
provision of this letter agreement) upon receipt of such
evidence of compliance, Bethlehem shall cause the transfer
agent to effectuate the transfer of the Bethlehem Common
Stock sold as indicated in such letter.
Bethlehem covenants that it will take all such
actions as may be reasonably available to it to permit the
sale or other disposition of Bethlehem Common Stock by the
undersigned under Rule 145 in accordance with the terms
thereof.
The undersigned acknowledges and agrees that the
legends set forth below will be placed on certificates
representing Bethlehem Common Stock received by the
undersigned in connection with the Merger or held by a
transferee thereof, which legends will be removed by delivery
of substitute certificates upon receipt of an opinion in form
and substance reasonably satisfactory to Bethlehem from
counsel reasonably satisfactory to Bethlehem to the effect
that such legends are no longer required for purposes of the
Securities Act.
There will be placed on the certificates for
Bethlehem Common Stock issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were
issued pursuant to a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies.
The shares have not been acquired by the holder with a
view to, or for resale in connection with, any
distribution thereof within the meaning of the
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Securities Act of 1933. The shares may not be sold,
pledged or otherwise transferred except in accordance
with an exemption from the registration requirements of
the Securities Act of 1933."
The undersigned acknowledges that (i) the
undersigned has carefully read this letter and understands
the requirements hereof and the limitations imposed upon the
distribution, sale, transfer or other disposition of
Bethlehem Common Stock and (ii) the receipt by Bethlehem of
this letter is an inducement to Bethlehem's obligations to
consummate the Merger.
Very truly yours,
Dated:
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ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities of
Bethlehem Steel Corporation ("Bethlehem") described below in
the space provided for that purpose (the "Securities"). The
Securities were received by the undersigned in connection
with the merger of a subsidiary of Bethlehem with and into
Lukens Inc., a Delaware corporation.
Based upon the most recent report or statement filed by
Bethlehem with the Securities and Exchange Commission, the
Securities sold by the undersigned were within the prescribed
limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
The undersigned hereby represents that the Securities
were sold in "brokers' transactions" within the meaning of
Section 4(4) of the Securities Act or in transactions
directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as
amended. The undersigned further represents that the
undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to
the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
EXHIBIT 99.1
PRESS RELEASE
BETHLEHEM, Pa., December 15, 1997 -- Bethlehem
Steel Corporation and Lukens Inc. announced today their
signing of a definitive merger agreement in which Bethlehem
would acquire the Coatesville, Pa.-based steelmaker in a
transaction valued at about $650 million, including the
assumption of about $250 million of debt. The equity value of
about $400 million is based on Bethlehem paying $25 for each
share of Lukens' common stock outstanding on the date of
closing by issuing Bethlehem common stock for 38 percent of
the total equity value and paying cash for the remaining 62
percent. The amount of Bethlehem common stock per Lukens
share will be based on the 15-day closing average prior to
closing, but not less than 2.797 Bethlehem shares or more
than 3.62 Bethlehem shares.
Curtis H. Barnette, chairman and chief executive
officer of Bethlehem said, "This transaction has significant
strategic benefits to Bethlehem and will establish the
premier plate business in North America by combining the
strengths of each company to create a more globally
competitive and customer-focused plate business with the
broadest range of plate products in the industry. It will
also result in better utilization of the best facilities of
both companies and will result in significant synergies,
improved customer satisfaction and overall lower costs."
Mr. R. W. Van Sant, chairman and chief executive
officer, Lukens Inc., said, "Over the last five years, we
have generated considerable strategic value in our company.
Bethlehem Steel's offer recognized the role this value can
play in its plans for building the world's premier plate
steel business. We believe that this combination will yield
highly attractive benefits for all stakeholders, and we look
forward to working with the Bethlehem team to meet these
goals in the future."
Bethlehem said that after a transition period
required to integrate the operations of the two companies, it
expects that the combination will increase its earnings per
share. The transaction is expected to close by early Second
Quarter 1998, subject to approval of Lukens' shareholders and
government regulators.
Bethlehem said that it is actively studying options
for maximizing the value of Lukens' light flat rolled
stainless business and its Washington Specialty Metals
business, a leading distributor of stainless steel products.
Bethlehem said that these operations are not part of its core
business strategy and therefore plans to divest these assets.
Mr. Van Sant said, "These assets are well managed businesses
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with strong management teams and good potential for
significant value."
In announcing the agreement, Bethlehem said that it
would act promptly after closing to combine the plate
businesses of both companies to take full and immediate
advantage of the merged facilities' capabilities. "We are
planning to have the Bethlehem and Lukens plate operations
function as a separate Division of Bethlehem, headquartered
in Coatesville, with consolidated operations and marketing
resources. This will allow the newly created Business
Division, to be called the Bethlehem-Lukens Plate Division,
to concentrate solely on the plate business and to provide
its customers a greater level of quality and service," said
Mr. Barnette.
Bethlehem's three plate mills -- Burns Harbor's
160" and 110" sheared plate mills and Sparrows Point's 160"
sheared plate mill -- have annual shipments of about 1.5
million tons. Lukens ships approximately 750,000 tons of
carbon and alloy plate and 260,000 tons of stainless steel
products from its Coatesville 140" and 206" plate mills, its
Conshohocken 110" combination Steckel/sheared mill and its
stainless facilities in Pennsylvania and Ohio.
After an appropriate period of transition, the new
Division will operate four of the present six plate mills now
operated by both companies. Bethlehem indicated that the
business of the Coatesville 206" plate mill and Sparrows
Point's 160" plate mill will be consolidated with the other
four mills. These two mills will be closed at a future time
to be established, and a restructuring charge of about $50
million will be incurred.
In addition to complementing Bethlehem's carbon and
alloy plate business, Lukens' stainless plate capabilities
will allow the new Division to provide its customers an even
broader product line. The combined business will produce the
widest range of plate gages and grades in North America,
including carbon, alloy, resulphurized, high strength-low
alloy, normalized, quenched and tempered, clad and stainless
plate.
The combination should significantly reduce costs
by improving utilization of the four remaining mills. Lukens
has also just completed a major $350-million modernization
program to enhance melting, rolling and certain finishing
capabilities, which will enhance the new Division's
strengths. Bethlehem said that the combined plate businesses
would cause it to be one of the lowest cost carbon plate
producers, improve the utilization of its raw
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steelmaking capabilities and reduce administration and
associated costs.
The principal consuming markets for plate products
are service centers, construction, industrial machinery, farm
equipment, transportation, railroad cars, pipe and tube, oil
and gas pipeline, and shipbuilding industries. The total
domestic market for both cut and coil plate was about twelve
million tons in 1996, including about 25 percent imports.
Bethlehem Steel, with current annual sales of about
$4.7 billion, is the second largest steel company in the
United States. Bethlehem produces plate at its Burns Harbor,
Ind., and Sparrow Point, Md., facilities, and consumes plate
at its Pennsylvania Steel Technologies' pipe mill in
Steelton, Pa. Lukens, which currently has sales of about $1.0
billion per year, is the only steelmaker in North America
that produces carbon, alloy and stainless steels on a
flexible, fully integrated manufacturing system. Lukens
presently has major steelmaking and finishing facilities in
Coatesville, Conshohocken, Houston and Washington, Pa. and in
Massillon, Ohio.
After the combination of the two companies,
Bethlehem's annual sales, excluding Lukens' stainless sheet
and distribution businesses, will be about $5.5 billion per
year, with annual shipments of about ten million tons.
Bethlehem currently has about 15,500 employees and Lukens has
about 3,400 employees.
Following the combination, Mr. Barnette will
continue as Chairman and Chief Executive Officer of Bethlehem
Steel Corporation. Mr. Van Sant will serve as the President
of the Bethlehem-Lukens Plate Division.
J.P. Morgan acted as financial adviser to Bethlehem
on this transaction, and Credit Suisse First Boston was the
adviser to Lukens.
