<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
SCHEDULE 14D-1
Tender Offer Statement Pursuant To Section 14(d)(1)
of the Securities Exchange Act of 1934
_____________________
LONE STAR INDUSTRIES, INC.
(Name of Subject Company)
LEVEL ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
DYCKERHOFF AKTIENGESELLSCHAFT
(Bidders)
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COMMON STOCK,
PAR VALUE $1.00 PER SHARE COMMON STOCK
(Including the Associated Rights PURCHASE WARRANTS
to purchase Common Stock)
(Title of Class of Securities) (Title of Class of Securities)
542290 408 542290 11
(CUSIP Number of Class of Securities) (CUSIP Number of Class of Securities)
</TABLE>
DR. PETER ROHDE
PETER STEINER
DYCKERHOFF AKTIENGESELLSCHAFT
BIEBRICHER STRASSE 69
65203 WIESBADEN, GERMANY
49 (0611) 676-0
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
with a copy to:
THOMAS A. RALPH
WILLIAM G. LAWLOR
PETER D. CRIPPS
DECHERT PRICE & RHOADS
4000 BELL ATLANTIC TOWER
1717 ARCH STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 994-4000
__________________
Calculation of Filing Fee
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Transaction Valuation* Amount of Filing Fee**
<S> <C>
$1,194,507,044 $238,901
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* Estimated for purposes of calculating the amount of the filing fee only. The
filing fee calculation assumes the purchase of 19,297,418 shares of common
stock, $1.00 par value per share (the "Shares"), of Lone Star Industries,
Inc., together with the associated rights to purchase common stock issued
pursuant to the Rights Agreement, dated as of November 10, 1994 by and
between the Company and Chemical Bank, as Rights Agent, at a price of $50.00
per Share in cash, without interest thereon, and 2,826,291 Common Stock
Purchase Warrants (the "Warrants"), each representing the right to purchase
two Shares at an exercise price of $18.75 per Warrant (or $9.375 per Share),
issued pursuant to the Warrant Agreement dated as of April 13, 1994 between
the Company and Chemical Bank, as Warrant Agent, for $81.25 per Warrant in
cash, without interest thereon. Such number of Shares and such number of
Warrants includes all outstanding Shares and Warrants as of September 1,
1999.
** The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th
of one percent of the value of the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
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Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
</TABLE>
<PAGE>
CUSIP NOS. 542290 408 and 542290 11 Page 1 of 2
14D-1
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<S> <C>
______________________________________________________________________________
1. NAMES OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION
NOS. OF ABOVE PERSONS
Dyckerhoff Aktiengesellschaft
______________________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
______________________________________________________________________________
3. SEC USE ONLY
______________________________________________________________________________
4. SOURCE OF FUNDS
BK
______________________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
______________________________________________________________________________
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
______________________________________________________________________________
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,320,870 Shares*
0 - Warrants
______________________________________________________________________________
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
______________________________________________________________________________
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
6.8% of the outstanding Shares*
0.0% of the outstanding Warrants
______________________________________________________________________________
10. TYPE OF REPORTING PERSON
CO
______________________________________________________________________________
* Beneficial ownership is based upon the provisions of the Tender
Agreement dated as of September 2, 1999 among Parent (as hereinafter
defined), Purchaser (as hereinafter defined) and certain
stockholders (the "Certain Stockholders") of the Company (as
hereinafter defined), pursuant to which each Certain Stockholder has
agreed to tender in the Offer, and not to withdraw therefrom, the
Shares and Warrants owned by such Certain Stockholder, as well as
any other Shares or Warrants acquired prior to the expiration of the
Offer.
</TABLE>
<PAGE>
CUSIP NOS. 542290 408 and 542290 11 Page 2 of 2
14D-1
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<S> <C>
______________________________________________________________________________
1 NAMES OF REPORTING PERSONS. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE
PERSONS
LEVEL ACQUISITION CORP. (E.I.N.: 52-2189300)
______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 SOURCE OF FUNDS
BK
______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
______________________________________________________________________________
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,320,870 Shares*
0-Warrants
______________________________________________________________________________
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
______________________________________________________________________________
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
6.8% of the outstanding Shares*
0.0% of the outstanding Warrants
______________________________________________________________________________
10 TYPE OF REPORTING PERSON
CO
_____________________________________________________________________________
* Beneficial ownership is based upon the provisions of the Tender
Agreement dated as of September 2, 1999 among Parent (as hereinafter
defined), Purchaser (as hereinafter defined) and certain stockholders
(the "Certain Stockholders") of the Company (as hereinafter defined),
pursuant to which each Certain Stockholder has agreed to tender in
the Offer, and not to withdraw therefrom, the Shares and Warrants
owned by such Certain Stockholder, as well as any other Shares or
Warrants acquired prior to the expiration of the Offer.
</TABLE>
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Level Acquisition Corp., a Delaware corporation ("Purchaser") and
an indirect wholly owned subsidiary of Dyckerhoff Aktiengesellschaft, a
corporation formed under the laws of the Federal Republic of Germany ("Parent"),
to purchase (i) all of the outstanding shares of common stock, par value $1.00
per share (the "Shares"), of Lone Star Industries, Inc., a Delaware corporation
(the "Company"), together with the associated rights to purchase common stock
issued pursuant to the Rights Agreement, dated as of November 10, 1994 by and
between the Company and Chemical Bank, as Rights Agent, at a price of $50.00 per
Share, net to the seller in cash, without interest thereon, and (ii) all of the
outstanding Common Stock Purchase Warrants (the "Warrants"), each representing
the right to purchase two Shares at an exercise price of $18.75 per Warrant (or
$9.375 per Share), issued pursuant to the Warrant Agreement dated as of April
13, 1994 between the Company and Chemical Bank, as Warrant Agent, for $81.25 per
Warrant, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated September 3,
1999 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit
(a)(1), and in the related Letters of Transmittal, copies of which are attached
hereto as Exhibits (a)(2) and (a)(3) (the Offer to Purchase and the Letters of
Transmittal, as amended or supplemented from time to time, together constitute
the "Offer").
ITEM 1. Security and Subject Company.
(a) The name of the subject company is Lone Star Industries, Inc., and the
address of its principal executive offices is 300 First Stamford Place,
Stamford, CT 06912-0014. The telephone number of the Company at such location
is (203) 969-8600.
(b) The information set forth in the "Introduction" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Price Range of the Securities; Dividends"
of the Offer to Purchase is incorporated herein by reference.
ITEM 2. Identity and Background.
(a) through (d), (g): This Statement is being filed by Purchaser and
Parent. The information set forth in the "Introduction," "Certain Information
Concerning Parent and Purchaser" and Schedule I of the Offer to Purchase is
incorporated herein by reference. The name, business address, present principal
occupation or employment, the material occupations, positions, offices or
employments for the past five years and citizenship of each member of the
Supervisory Board or Board of Management and each executive officer of Parent
and each director and executive officer of Purchaser and the name, principal
business and address of any corporation or other organization in which such
occupations, positions, offices and employments are or were carried on are set
forth in Schedule I to the Offer to Purchase and incorporated herein by
reference.
(e) through (f): During the last five years, neither Purchaser nor Parent
nor, to the best knowledge of Purchaser and Parent, any of the persons referred
to in Sections 1,2 or 3 of Schedule I to the Offer to Purchase (i) have been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
<PAGE>
ITEM 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons referred to in Sections 1, 2 or 3 of Schedule I to the Offer to
Purchase have entered into any transaction with the Company, or any of the
Company's affiliates which are corporations, since the commencement of the
Company's third full fiscal year preceding the date of this Statement, the
aggregate amount of which was equal to or greater than one percent of the
consolidated revenues of the Company for (i) the fiscal year in which such
transaction occurred or (ii) the portion of the current fiscal year which has
occurred if the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons referred to in Sections 1, 2 or 3 of Schedule I to the Offer to
Purchase have entered into any transaction since the commencement of the
Company's third full fiscal year preceding the date of this Statement with the
executive officers, directors or affiliates of the Company which are not
corporations, in which the aggregate amount involved in such transaction or in a
series of similar transactions, including all periodic installments in the case
of any lease or other agreement providing for periodic payments or installments,
exceeded $40,000.
(b) The information set forth in the "Introduction," "Certain Information
Concerning Parent and Purchaser," "Background of the Offer; Contacts with the
Company" and "Plans for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. Source and Amount of Funds or Other Consideration.
(a) and (b): The information set forth in the "Introduction" and "Sources
and Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. Purpose of the Tender Offer and Plans or Proposals of the Bidders.
(a) through (e): The information set forth in the "Introduction," "Purpose
of the Offer and the Merger; the Merger Agreement and Certain Other Agreements,"
"Plans for the Company; Other Matters" and "Dividends and Distributions" of the
Offer to Purchase is incorporated herein by reference.
(f) and (g): The information set forth in the "Introduction" and "Effect
of the Offer on the Market for the Securities; Stock Exchange Listing; Exchange
Act Registration; Margin Regulations" of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. Interest in Securities of the Subject Company.
(a) and (b): The information set forth in the "Introduction," "Certain
Information Concerning Parent and Purchaser" and "Background of the Offer;
Contacts with the Company" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the "Introduction," "Sources and Amount of
Funds," "Background of the Offer; Contacts with the Company," "Purpose of the
Offer and the Merger; the Merger Agreement and Certain Other Agreements," "Plans
for the Company; Other Matters" and "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
<PAGE>
ITEM 8. Persons Retained, Employed or to be Compensated.
The information set forth in "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. Financial Statements of Certain Bidders.
The information set forth in "Certain Information Concerning Parent and
Purchaser" of the Offer to Purchase is incorporated herein by reference.
ITEM 10. Additional Information.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Sections 1, 2 or 3 of Schedule I to the Offer to
Purchase, and the Company or any of its executive officers, directors,
controlling persons or subsidiaries.
(b) and (c): The information set forth in the "Introduction," "Certain
Conditions of the Offer," "Certain Legal Matters and Regulatory Approvals" and
"Miscellaneous" of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in "Effect of the Offer on the Market for
the Securities; Stock Exchange Listing; Exchange Act Registration; Margin
Regulations" and "Certain Legal Matters and Regulatory Approvals" of the Offer
to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letters of
Transmittal, copies of which are attached hereto as Exhibits (a)(1), (a)(2) and
(a)(3), to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated September 3, 1999.
(a)(2) Letter of Transmittal to Tender Shares of Common Stock.
(a)(3) Letter of Transmittal to Tender Warrants to Purchase Common Stock.
(a)(4) Notice of Guaranteed Delivery.
(a)(5) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(6) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Press Release dated September 2, 1999.
(a)(9) Summary Advertisement.
<PAGE>
(b)(1) Term Loan Facilities Agreement, dated as of September 1, 1999, by
and among Parent, Purchaser, Deutsche Bank AG and Dresdner Bank AG.
(c)(1) Agreement and Plan of Merger, dated as of September 2, 1999, by and
among Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of July 8, 1999, by and among
Parent, Dyckerhoff, Inc. and the Company.
(c)(3) Tender Agreement, dated as of September 2, 1999, by and among
Parent, Purchaser and certain stockholders of the Company.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: September 3, 1999
DYCKERHOFF AKTIENGESELLSCHAFT
/s/ Peter Steiner
By: _________________________________________
Name: Peter Steiner
Title: Chief Financial Officer
/s/ Luis Rauch
By: _________________________________________
Name: Luis Rauch
Title: Treasurer
LEVEL ACQUISITION CORP.
/s/ Felix Pardo
By: __________________________________________
Name: Felix Pardo
Title: President, Treasurer and Secretary
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
- -------
(a)(1) Offer to Purchase, dated September 3, 1999.
(a)(2) Letter of Transmittal to Tender Shares of Common Stock.
(a)(3) Letter of Transmittal to Tender Warrants to Purchase Common Stock.
(a)(4) Notice of Guaranteed Delivery.
(a)(5) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(6) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Press Release dated September 2, 1999.
(a)(9) Summary Advertisement.
(b)(1) Term Loan Facilities Agreement, dated as of September 1, 1999, by and
among Parent, Purchaser, Deutsche Bank AG and Dresdner Bank AG.
(c)(1) Agreement and Plan of Merger, dated as of September 2, 1999, by and among
Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of July 8, 1999, by and among Parent,
Dyckerhoff, Inc. and the Company.
(c)(3) Tender Agreement, dated as of September 2, 1999, by and among Parent,
Purchaser and certain stockholders of the Company.
(d) None.
(e) Not applicable.
(f) None.
<PAGE>
Offer To Purchase For Cash
All Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
and
All Outstanding Warrants to Purchase Common Stock
of
Lone Star Industries, Inc.
at
$50.00 Net Per Share
and
$81.25 Net Per Warrant
by
Level Acquisition Corp.
an indirect wholly owned subsidiary of
Dyckerhoff AG
-----------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
-----------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES AND WARRANTS REPRESENTING AT LEAST A MAJORITY OF THE FULLY
DILUTED SHARES AND (II) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED OR BEEN
TERMINATED. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN
THIS OFFER TO PURCHASE. SEE SECTION 15.
-----------------
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS
OF SEPTEMBER 2, 1999, BY AND AMONG DYCKERHOFF AKTIENGESELLSCHAFT, LEVEL
ACQUISITION CORP. AND LONE STAR INDUSTRIES, INC. (THE "COMPANY"). THE BOARD OF
DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER AND
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S SECURITYHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
SECURITYHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES AND THEIR WARRANTS
PURSUANT TO THE OFFER.
-----------------
IMPORTANT
Any securityholder desiring to tender all or any portion of such
securityholder's Securities should either (i) complete and sign the
appropriate Letter of Transmittal (the green Letter of Transmittal in the case
of the Shares and the blue Letter of Transmittal in the case of the Warrants)
(or a manually signed facsimile thereof) in accordance with the Instructions
in the appropriate Letter of Transmittal, have such securityholder's signature
thereon guaranteed (if required by Instruction 1 to the appropriate Letter of
Transmittal), mail or deliver the appropriate Letter of Transmittal (or a
manually signed facsimile thereof) and any other required documents to the
Depositary and either deliver the certificates for such Securities to the
Depositary along with the appropriate Letter of Transmittal (or such manually
signed facsimile) or, in the case of a book-entry transfer effected pursuant
to the procedures described in Section 3 of this Offer to Purchase, deliver an
Agent's Message and any other required documents to the Depositary and deliver
such Securities pursuant to the procedure for book-entry transfer set forth in
Section 3 of this Offer to Purchase or (ii) request such securityholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such securityholder. Any securityholder whose Securities are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee to tender such Securities.
Any securityholder who desires to tender Securities and whose certificates
evidencing such Securities are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of
the Offer, may tender such Securities by following the procedure for
guaranteed delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letters of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be directed to the
Information Agent or the Dealer Manager, or to brokers, dealers, commercial
banks or trust companies.
-----------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
September 3, 1999
<PAGE>
TABLE OF CONTENTS
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Page
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INTRODUCTION.................... 1
THE OFFER....................... 4
1. Terms of the Offer.......... 4
Acceptance for Payment and
2. Payment..................... 6
Procedures for Tendering
3. Securities.................. 7
4. Withdrawal Rights........... 10
5. Certain U.S. Federal Income
Tax Consequences............ 11
6. Price Ranges of the
Securities; Dividends....... 12
7. Effect of the Offer on the
Market for the Securities;
Stock Exchange Listing;
Exchange Act Registration;
Margin Regulations.......... 13
8. Certain Information
Concerning the Company...... 14
9. Certain Information
Concerning Parent and
Purchaser................... 16
</TABLE>
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Page
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10. Sources and Amount of Funds.. 19
11. Background of the Offer;
Contacts with the Company.... 19
12. Purpose of the Offer and the
Merger; the Merger Agreement
and Certain Other
Agreements................... 20
13. Plans for the Company; Other
Matters...................... 33
14. Dividends and Distributions.. 35
15. Certain Conditions of the
Offer........................ 35
16. Certain Legal Matters and
Regulatory Approvals......... 37
17. Fees and Expenses............ 39
18. Miscellaneous................ 40
Schedule I--Information
Concerning Directors and
Executive Officers of Parent and
Purchaser and Certain Other
Persons......................... I-1
</TABLE>
<PAGE>
To the Holders of Common Stock and
Warrants of Lone Star Industries, Inc.:
INTRODUCTION
Level Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Dyckerhoff Aktiengesellschaft, a
corporation formed under the laws of the Federal Republic of Germany
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $1.00 per share (the "Common Stock" or the "Shares"), of Lone Star
Industries, Inc., a Delaware corporation (the "Company"), together with the
associated rights to purchase common stock (the "Rights") issued pursuant to
the Rights Agreement, dated as of November 10, 1994 (the "Rights Agreement")
by and between the Company and Chemical Bank, as Rights Agent, at a price of
$50.00 per Share, net to the seller in cash, without interest thereon (the
"Share Price"), and all of the outstanding Common Stock Purchase Warrants (the
"Warrants"), each representing the right to purchase two Shares at an exercise
price of $18.75 per Warrant (or $9.375 per Share), issued pursuant to the
Warrant Agreement dated as of April 13, 1994 between the Company and Chemical
Bank, as Warrant Agent (the "Warrant Agreement") for $81.25 per Warrant, net
to the seller in cash, without interest thereon (the "Warrant Price"), (the
Common Stock (and associated Rights) and the Warrants being collectively
referred to as the "Securities") upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Letters of Transmittal
(which, as amended or supplemented from time to time, collectively constitute
the "Offer"). All references herein to Rights shall include all benefits that
may inure to holders of the Rights pursuant to the Rights Agreement. Unless
the context otherwise requires, all references herein to Shares shall include
the Rights.
Tendering securityholders of record who tender Securities directly will not
be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the appropriate Letter of Transmittal, transfer taxes on the
purchase of Securities by Purchaser pursuant to the Offer. However, any
tendering securityholder or other payee who fails to complete and sign the
Substitute Form W-9 included in the Letter of Transmittal may be subject to
backup federal income tax withholding of 31% of the gross proceeds payable to
such securityholder or other payee pursuant to the Offer. See Section 3.
Securityholders who hold their Securities through a bank or broker should
check with such institution as to whether they charge any service fees.
Purchaser will pay all fees and expenses of Morgan, Stanley & Co. Incorporated
("Morgan Stanley"), which is acting as Dealer Manager (in such capacity, the
"Dealer Manager"), EquiServe, L.P. which is acting as the Depositary (in such
capacity, the "Depositary") and Georgeson & Company, Inc., which is acting as
the Information Agent (in such capacity, the "Information Agent"), incurred in
connection with the Offer and in accordance with the terms of the agreements
entered into between Purchaser and/or Parent and each such person. See Section
17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), AND DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
SECURITYHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SECURITYHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES AND THEIR WARRANTS PURSUANT TO THE OFFER.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("MERRILL LYNCH"),
FINANCIAL ADVISOR TO THE COMPANY, HAS DELIVERED TO THE COMPANY BOARD ITS
WRITTEN OPINION, DATED SEPTEMBER 2, 1999 (THE "FINANCIAL ADVISOR OPINION"), TO
THE EFFECT THAT, AS OF SUCH DATE AND BASED UPON AND SUBJECT TO CERTAIN MATTERS
STATED THEREIN, THE CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF SECURITIES
PURSUANT TO THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW,
TO SUCH SECURITYHOLDERS. A COPY OF THE FINANCIAL ADVISOR
1
<PAGE>
OPINION IS ATTACHED AS AN EXHIBIT TO THE COMPANY'S SOLICITATION/
RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH HAS
BEEN FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") IN CONNECTION WITH THE OFFER AND WHICH IS BEING MAILED TO
SECURITYHOLDERS HEREWITH. SECURITYHOLDERS ARE URGED TO, AND SHOULD, READ THE
FINANCIAL ADVISOR OPINION CAREFULLY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SECURITIES REPRESENTING AT LEAST A MAJORITY OF THE FULLY DILUTED
SHARES (AS DEFINED HEREIN) (THE "MINIMUM CONDITION") AND (II) ANY APPLICABLE
WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED (THE "HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS
ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE
SECTIONS 1 AND 15.
Purchaser reserves the right, subject only to the applicable rules and
regulations of the Commission, to waive each of the conditions (other than the
Minimum Condition) to the obligations of Purchaser to consummate the Offer,
the Merger and the other transactions contemplated by the Merger Agreement and
the Tender Agreement (as defined below) (the "Transactions").
The Company has advised Parent and Purchaser that each member of the Company
Board and each of the Company's executive officers intends to tender all
Securities owned by such person pursuant to the Offer or (solely in the case
of directors and executive officers who would as a result of the tender incur
liability under Section 16(b) of the Exchange Act of 1934, as amended (the
"Exchange Act")) to vote in favor of the Merger. In addition, simultaneously
with the execution and delivery of the Merger Agreement, Parent and Purchaser,
on the one hand, and certain securityholders on the other hand (the "Certain
Securityholders"), entered into a Tender Agreement dated as of September 2,
1999 (the "Tender Agreement"). The Tender Agreement relates to 1,320,870
issued and outstanding Shares owned by the Certain Securityholders, which
represent approximately 5.3% of the Fully Diluted Shares. Pursuant to the
Tender Agreement, each Certain Securityholder has agreed, among other things,
to tender in the Offer the Securities owned by such Certain Securityholders,
as well as any other Securities acquired prior to the expiration of the Offer,
including pursuant to the exercise of options. See Section 12.
As used in this Offer to Purchase, "Fully Diluted Shares" means all
outstanding securities entitled generally to vote in the election of directors
of the Company on a fully diluted basis, after giving effect to the exercise
or conversion of all options (excluding the options which will be cashed out
and cancelled as provided in Section 2.10 of the Merger Agreement and
described in Section 12 under "Merger Agreement--Options"), warrants
(including the Warrants) and securities exercisable or convertible into such
voting securities. The Company has represented and warranted to Parent and
Purchaser that, as of September 1, 1999, (i) the authorized capital stock of
the Company consists of 75,000,000 Shares, (ii) 19,297,418 Shares are issued
and outstanding, (iii) 5,652,582 Shares are issuable pursuant to the exercise
of the Company's outstanding Warrants, and (iv) 310,500 shares are reserved
for issuance pursuant to outstanding options (the "Options") issued under
certain Company stock option plans. The Merger Agreement provides, among other
things, that the Company will not, without the prior written consent of
Parent, issue any shares of capital stock of any class of the Company, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock of the Company (except for the
issuance of Shares issuable pursuant to Warrants and Options outstanding on
the date hereof). See Section 12. Based on the foregoing and assuming that
there are an aggregate of 24,950,000 Fully Diluted Shares, the Minimum
Condition will be satisfied if 12,475,001 Securities are validly tendered and
not withdrawn prior to the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 2, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. Pursuant to the Merger Agreement and in accordance
with Delaware General Corporation Law (the "DGCL"), as promptly as practicable
after the
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completion of the Offer and satisfaction or waiver, if permissible, of all
conditions (sometimes referred to herein as the "consummation" of the Offer)
and the approval and adoption of the Merger Agreement by the stockholders of
the Company (if required by applicable law), Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger (the "Surviving Corporation") and, as of the
Effective Time (as defined below), an indirect wholly-owned subsidiary of
Parent; alternatively, Purchaser may elect to merge the Company with and into
Purchaser (or another wholly owned subsidiary of Parent), and Purchaser or
such subsidiary will be the Surviving Corporation in the Merger. At the
effective time of the Merger (the "Effective Time"), each Share then
outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries, including Purchaser and
(iii) stockholders who properly perfect their appraisal rights with respect to
such Shares under the DGCL will be converted into the right to receive $50.00
in cash (the "Merger Consideration"), without interest thereon. After the
Effective Time, each Warrant then outstanding, other than Warrants held by the
Company, will remain outstanding and unaffected by the Merger; except that, if
the Company is not the Surviving Corporation in the Merger, each holder of
Warrants will have the right to obtain, upon the exercise of each Warrant, the
Merger Consideration in lieu of each Share theretofore issuable upon exercise
of such Warrant. The Merger Agreement is more fully described in Section 12.
The Merger Agreement provides that immediately upon the purchase by
Purchaser of Securities pursuant to the Offer, Purchaser shall be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board as shall give Purchaser representation on the Company Board
equal to the product of the total number of directors on the Company Board
(giving effect to the directors elected pursuant to this sentence) multiplied
by the percentage that the number of votes represented by Shares beneficially
owned by Purchaser and its affiliates (including Shares so accepted for
payment and purchased and any Warrants so accepted for payment and purchase
and converted by Purchaser into Shares) bears to the number of votes
represented by Shares then outstanding, and the Company shall, at such time,
use its best efforts promptly to cause Purchaser's designees to be elected as
directors of the Company, including increasing the size of the Company Board
or securing the resignations of incumbent directors or both.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law. See
Section 12. Under the DGCL and pursuant to the Certificate of Incorporation
and the Bylaws of the Company, the affirmative vote of the holders of a
majority of the outstanding Shares at a meeting of the Company's stockholders
is the only vote of any class or series of the Company's capital stock that
would be necessary to approve the Merger Agreement and the Merger. If the
Minimum Condition is satisfied and Purchaser purchases (or acquires upon the
exercise of Warrants purchased in the Offer) at least a majority of the
outstanding Shares in the Offer, Purchaser will be able to effect the Merger
without the affirmative vote of any other stockholder. Pursuant to the Merger
Agreement, Purchaser has agreed to vote the Shares acquired by it pursuant to
the Offer in favor of the Merger. See Section 12.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of capital stock of a subsidiary corporation,
the corporation holding such stock may merge such subsidiary into itself, or
itself into such subsidiary, without any action or vote on the part of the
board of directors or the stockholders of such other corporation (a "short-
form merger"). In the event that Purchaser acquires in the aggregate at least
90% of the outstanding Shares pursuant to the Offer or otherwise, a short-form
merger could be effected without any further approval of the Company Board or
the stockholders of the Company. In the Merger Agreement, Purchaser and the
Company have agreed that Purchaser may extend the Offer on one or more
occasions for an aggregate period of not more than five business days if the
Minimum Condition has been satisfied but less than 90% of the Fully Diluted
Shares have been validly tendered and not properly withdrawn. Even if
Purchaser does not own 90% of the outstanding Shares following consummation of
the Offer, Purchaser could seek to purchase additional Shares in the open
market or otherwise in order to reach the 90% threshold and employ a short-
form merger. The per Share consideration paid for any Shares so acquired in
open market purchases may be greater or less than that paid in the Offer.
Purchaser presently intends to effect a short-form merger, if permitted to do
so under the DGCL, pursuant to which Purchaser will be merged with the
Company. See Section 13.
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The Company has distributed one Right for each outstanding Share pursuant to
the Rights Agreement. Each Right represents the right to purchase one-tenth of
a Share upon the terms and conditions set forth in the Rights Agreement. The
Company has represented in the Merger Agreement that it has taken all action
necessary under the Rights Agreement such that the Offer and the Merger are
"Permitted Offers" (as such term is defined in the Rights Agreement) and that
the consummation of the Transactions will not result in the triggering of the
provisions of Sections 11 or 13 of the Rights Agreement or the occurrence of a
"Distribution Date" or "Shares Acquisition Date" under the Rights Agreement
and will not result in Parent, Purchaser or any of their affiliates or
associates becoming an "Acquiring Person" under the Rights Agreement and that
upon consummation of the Merger the former holders of the Rights will not have
any claims or rights thereunder (without any necessity to redeem the Rights to
effectuate the foregoing).
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5. Please also see Section 5 for a
description of certain Federal income tax consequences of tendering the
Warrants in contrast to exercising the Warrants and tendering the Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTERS OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), Purchaser will accept for payment
and pay for all Securities validly tendered prior to the Expiration Date, and
not properly withdrawn in accordance with Section 4. The term "Expiration
Date" shall mean 12:00 Midnight, New York City time, on Friday, October 1,
1999, unless and until Purchaser, in accordance with the terms of the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire.
The Offer is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of any waiting period imposed by the HSR Act, and
the other conditions set forth in Section 15. If such conditions are not
satisfied at or prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the Commission, to (i) decline to purchase
any Securities tendered in the Offer and terminate the Offer and return all
tendered Securities to the tendering securityholders, (ii) waive any or all
conditions to the Offer (except the Minimum Condition) and, subject to
complying with applicable rules and regulations of the Commission, purchase
all Securities validly tendered, (iii) extend the Offer and, subject to the
right of securityholders to withdraw Securities until the Expiration Date,
retain all Securities which have been tendered during the period or periods
for which the Offer is extended or (iv) subject to the provisions of next
paragraph, amend the Offer.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the Commission, Purchaser expressly reserves the right, in its
sole discretion, at any time or from time to time, to (a) extend the period of
time during which the Offer is open and thereby delay acceptance for payment
of and the payment for any Securities, by giving oral or written notice of
such extension to the Depositary and (b) amend the Offer in any other respect
by giving oral or written notice of such amendment to the Depositary. Under no
circumstances will interest be paid on the purchase price for tendered
Securities, whether or not Purchaser exercises its right to extend the Offer.
Under the Merger Agreement, Purchaser has the right, in its sole discretion,
to modify and make changes to the terms and conditions of the Offer, provided
that without the prior consent of the Company, no modification or change may
be made which (i) decreases the consideration payable in the Offer, (ii)
changes the form of consideration payable in the Offer (other than by adding
consideration), (iii) changes the Minimum Condition, (iv) decreases the
maximum number of Securities sought pursuant to the Offer, (v) adversely
changes the
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<PAGE>
conditions to the Offer, (vi) imposes additional conditions to the Offer
(other than in respect of any consideration which is payable in addition to
the Share Price and Warrant Price), or (vii) except as provided in the next
sentence, extend the Offer. Notwithstanding the foregoing, Purchaser may (but
shall not be required under the Merger Agreement or otherwise to), without the
consent of the Company, (i) extend the Offer on one or more occasions for such
period as may be determined by Purchaser in its sole discretion (each such
extension period not to exceed 10 business days at a time), if at the then
scheduled Expiration Date any of the conditions to Purchaser's obligations to
accept for payment and pay for Securities shall not be satisfied or waived,
(ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable
to the Offer, (iii) extend the Offer on one or more occasions for an aggregate
period of not more than five business days if the Minimum Condition has been
satisfied but less than 90% of the Fully Diluted Shares have been validly
tendered and not properly withdrawn, and (iv) extend the Offer for any reason
on one or more occasions for an aggregate period of not more than ten business
days beyond the latest expiration date that would otherwise be permitted under
clause (i), (ii) or (iii) of this sentence, notwithstanding the prior
satisfaction of the conditions to the Offer set forth in Section 15. Without
limiting the right of Purchaser to extend the Offer pursuant to the
immediately preceding sentence, in the event that the condition set forth in
paragraph (d) of Section 15 with respect to the HSR Act or with respect to an
action or proceeding by a Governmental Entity (as defined herein) shall not
have been satisfied or waived at the Expiration Date (and such condition is
the sole remaining condition to be satisfied or waived if the Offer were to be
consummated on that date), at the request of the Company, Purchaser shall, and
Parent shall cause Purchaser to, extend the Offer, in five business day
increments, up to November 30, 1999, unless Parent determines in good faith
that such condition cannot be satisfied prior to November 30, 1999. The
conditions to the Offer are for the benefit of Purchaser and, except with
respect to the Minimum Condition, may be waived by Purchaser, in whole or in
part at any time and from time to time, in its sole discretion.
Any extension, delay, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under
the Exchange Act, which require that material changes be promptly disseminated
to holders of Securities. Subject to applicable law and without limiting the
obligation of Purchaser under such Rules or the manner in which Purchaser may
choose to make any public announcement, Purchaser will not have any obligation
to publish, advertise or otherwise communicate any such public announcement
other than by making a press release to the Dow Jones News Service. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Securities) is delayed in its purchase of, or
payment for, Securities or is unable to pay for Securities pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary may retain tendered Securities on behalf of Purchaser,
and such Securities may not be withdrawn except to the extent tendering
securityholders are entitled to the withdrawal rights described in Section 4.
However, the ability of Purchaser to delay the payment for Securities which
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by, or on behalf of, holders of securities
promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated its view that an offer must remain
open for a minimum period of time following a material change in the terms of
such offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of such offer. The release states
that an offer should remain open for a minimum of five business days from the
date a material change is first
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<PAGE>
published, or sent or given to securityholders and that, if material changes
are made with respect to information not materially less significant than the
offer price and the number of shares being sought, a minimum of 10 business
days may be required to allow adequate dissemination and investor response.
The requirement to extend the Offer will not apply to the extent that the
number of business days remaining between the occurrence of the change and the
then scheduled Expiration Date equals or exceeds the minimum extension period
that would be required because of such amendment. If, prior to the Expiration
Date, Purchaser increases the consideration offered to holders of Shares or
Warrants pursuant to the Offer, such increased consideration will be paid to
all holders whose Shares or Warrants, as the case may be, are purchased in the
Offer whether or not such Shares or Warrants were tendered prior to such
increase.
The Company has provided Purchaser with the Company's securityholder lists
and security position listings for the purpose of disseminating the Offer to
securityholders. This Offer to Purchase, the related Letters of Transmittal
and other relevant documents will be mailed to record holders of Securities
whose names appear on the securityholder lists and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's securityholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Securities.
2. Acceptance for Payment and Payment. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), Purchaser will
accept for payment and will pay for all Securities validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4
promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions of the Offer set forth in Section 15
related to regulatory matters. Any determination concerning the satisfaction
of such terms and conditions shall be within the sole discretion of Purchaser.
See Section 4.
The Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Securities in order to comply in
whole or in part with any applicable law, including without limitation the HSR
Act. See Section 16. If Purchaser is delayed in its acceptance for payment of,
or payment for (whether before or after its acceptance for payment of
Securities), Securities or is unable to accept for payment or pay for
Securities pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer (including such rights as are set forth in
Sections 1 and 15) (but subject to compliance with Rule 14e-1(c) under the
Exchange Act, which requires that a tender offeror pay the consideration
offered or return the tendered securities promptly after termination or
withdrawal of a tender offer), the Depositary may, nevertheless, on behalf of
Purchaser, retain tendered Securities, and such Securities may not be
withdrawn except to the extent tendering securityholders are entitled to
exercise, and duly exercise, withdrawal rights as described in Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Securities properly tendered to Purchaser and
not withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Securities. Upon the terms
and subject to the conditions of the Offer, payment for Securities accepted
for payment pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
securityholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering securityholders. In all cases, payment for
Securities accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Securities (or a
timely Book Entry Confirmation (as defined below) with respect thereto), (ii)
the appropriate Letter of Transmittal (the green Letter of Transmittal in the
case of the Shares and the blue Letter of Transmittal in the case of the
Warrants) (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined below) and (iii) any other
documents required by the appropriate Letter of Transmittal. Accordingly,
payment may be made to tendering securityholders at different times if
delivery of the certificates and other required documents occur at different
times. The per Share consideration paid to any holder of Shares pursuant to
the Offer will be the highest per Share consideration paid to any other holder
of such Shares pursuant to the Offer. The per Warrant consideration paid to
any holder of Warrants pursuant to the Offer will be the highest per Warrant
consideration paid to any other holder of such Warrants pursuant to the Offer.
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Under no circumstances will interest be paid on the Share Price or the
Warrant Price to be paid by Purchaser for the Securities, regardless of any
extension of the Offer or any delay in making such payment.
If any tendered Securities are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Securities than are
tendered, certificates evidencing Securities not tendered or not accepted for
purchase will be returned to the tendering securityholder, or such other
person as the tendering securityholder shall specify in the appropriate Letter
of Transmittal, as promptly as practicable following the expiration,
termination or withdrawal of the Offer. In the case of Securities delivered by
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Securities
will be credited to such account maintained at the Book-Entry Transfer
Facility as the tendering securityholder shall specify in the appropriate
Letter of Transmittal, as promptly as practicable following the expiration,
termination or withdrawal of the Offer. If no such instructions are given with
respect to Securities delivered by book-entry transfer, any such Securities
not tendered or not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated in the appropriate Letter of
Transmittal as the account from which such Securities were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Securities tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering securityholders to receive payment for
Securities validly tendered and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Securities.
Valid Tender. For Securities to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (the
green Letter of Transmittal in the case of Shares and the blue Letter of
Transmittal in the case of the Warrants) (or a manually signed facsimile
thereof), together with any required signature guarantees, or in the case of a
book-entry transfer, an Agent's Message, and any other required documents,
must be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date and either
certificates evidencing tendered Securities must be received by the Depositary
at one of such addresses or such Securities must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering securityholder must comply
with the guaranteed delivery procedures described below.
If certificates evidencing tendered Securities are forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) must accompany
each delivery. No alternative, conditional or contingent tenders will be
accepted and no fractional Securities will be purchased.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Securities at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of
Securities by causing the Book-Entry Transfer Facility to transfer such
Securities into the Depositary's account in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Securities may be effected through book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility, the appropriate
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering stockholder must comply with the guaranteed delivery
procedures described below. The confirmation of a book-entry transfer of
Securities into the Depositary's account at the Book-Entry Transfer Facility
as described above is referred to herein as a "Book-Entry Confirmation."
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The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Securities that such participant has received
and agrees to be bound by the terms of the appropriate Letter of Transmittal
and that Purchaser may enforce such agreement against such participant.
The appropriate Letter of Transmittal and any other required document must
be transmitted to and received by the Depositary at one of its addresses set
forth on the back cover page of this Offer to Purchase. Delivery of the
appropriate Letter of Transmittal and any other required documents to the
Book-Entry Transfer Facility will not constitute delivery to the Depositary.
The method of delivery of Securities, the appropriate Letter of Transmittal
and all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the election and risk of the tendering
securityholders. Securities will be deemed delivered only when actually
received by the Depositary (including, in the case of a Book-Entry Transfer,
by Book-Entry Confirmation). If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
Signature Guarantees. No signature guarantee is required on a Letter of
Transmittal (i) if such Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Securities) of Securities tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on such Letter of Transmittal or (ii) if such Securities are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution" and, collectively, "Eligible Institutions"). In all other cases,
all signatures on Letters of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 to the appropriate Letter of
Transmittal. If the certificates for Securities are registered in the name of
a person other than the signer of the Letter of Transmittal, or if payment is
to be made, or certificates for Securities not tendered or not accepted for
payment are to be returned, to a person other than the registered holder of
the certificates surrendered, then the tendered certificates for such
Securities must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. See Instructions 1 and 5 to the
appropriate Letter of Transmittal.
Guaranteed Delivery. If a securityholder desires to tender Securities
pursuant to the Offer and such securityholder's certificates are not
immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such securityholder's
tender may be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date;
(iii) in the case of Shares, the certificates for all tendered Shares, in
proper form for transfer, or a Book-Entry Confirmation, together with a
properly completed and duly executed green Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery; and
(iv) in the case of Warrants, the certificates for all tendered Warrants,
in proper form for transfer, or a Book Entry Confirmation, together with a
properly completed and duly executed blue Letter of Transmittal
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<PAGE>
(or a manually signed facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery.
A "trading day" is any day on which the New York Stock Exchange (the "NYSE")
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Securities accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Securities, (b) a Letter of Transmittal (or
a manually signed facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering securityholders may be paid at
different times depending upon when certificates for Securities or Book-Entry
Confirmations with respect to such Securities are actually received by the
Depositary.
The valid tender of Securities pursuant to one of the procedures described
above will constitute a binding agreement between the tendering securityholder
and Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the appropriate Letter of Transmittal as set forth
above (including delivery through an Agent's Message), the tendering
securityholder will irrevocably appoint designees of Parent as such
securityholder's attorneys-in-fact and proxies in the manner set forth in the
appropriate Letter of Transmittal, each with full power of substitution, to
the full extent of such securityholder's rights with respect to the Securities
tendered by such securityholder and accepted for payment by Purchaser and with
respect to any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect of such Securities on or
after September 2, 1999 (collectively, "Distributions"). However, regular
quarterly cash dividends consistent with past practices (including as to
declaration, record and payment dates) that do not exceed $0.05 per share per
fiscal quarter are permitted to be declared and paid by the Company prior to
the consummation of the Offer, and will be paid to tendering stockholders (but
not warrantholders in their capacity as such) to the extent so declared and
paid. All such proxies will be considered coupled with an interest in the
tendered Securities. Such appointment will be effective if, as and when, and
only to the extent that, Purchaser accepts for payment Securities tendered by
such securityholder as provided herein. All such powers of attorney and
proxies will be irrevocable and will be deemed granted in consideration of the
acceptance for payment by Purchaser of Securities tendered in accordance with
the terms of the Offer. Upon such appointment, all prior powers of attorney,
proxies and consents given by such securityholder with respect to such
Securities (and any and all Distributions) will, without further action, be
revoked and no subsequent powers of attorney, proxies, consents or revocations
may be given by such securityholder (and, if given, will not be deemed
effective). The designees of Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Securities (and any and all
Distributions), including, without limitation, in respect of any annual or
special meeting of the Company's securityholders and any adjournment or
postponement thereof), actions by written consent in lieu of any such meeting
or otherwise, as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper. Purchaser reserves the right to require
that, in order for Securities to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Securities, Purchaser must be able
to exercise full voting, consent and other rights with respect to such
Securities (and any and all Distributions), including voting at any meeting of
securityholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Securities will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Securities determined by it not to
be in proper form or the acceptance for payment of which, or payment for
9
<PAGE>
which, may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also
reserves the absolute right, in its sole discretion, to waive any defect or
irregularity in any tender of Securities of any particular securityholder,
whether or not similar defects or irregularities are waived in the case of
other securityholders. No tender of Securities will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the Offer (including the
appropriate Letter of Transmittal and the instructions thereto) will be final
and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a securityholder surrendering
Securities in the Offer, or its assignee (in either case, the "Payee") must,
unless an exemption applies, provide the Depositary with such Payee's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such Payee is not
subject to backup withholding. If a Payee does not provide such Payee's
correct TIN or fails to provide the certifications described above, the
Internal Revenue Service (the "IRS") may impose a penalty on such Payee and
payment of cash to such Payee pursuant to the Offer may be subject to backup
withholding of 31%. All securityholders surrendering Securities pursuant to
the Offer and other Payees should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Certain Payees (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign securityholders should complete and sign a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See Instruction 10 to
the appropriate Letter of Transmittal.
4. Withdrawal Rights. Except as otherwise provided in this Section 4 or as
provided by applicable law, tenders of Securities are irrevocable. Securities
tendered pursuant to the Offer may be withdrawn pursuant to the procedures set
forth below at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
at any time after November 1, 1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Securities to be withdrawn, the number of Securities to be withdrawn and
the name of the registered holder of the Securities to be withdrawn, if
different from the name of the person who tendered the Securities. If
certificates evidencing Securities to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Securities have been tendered by
an Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Securities have been delivered
pursuant to the procedures for book-entry transfer as set forth in Section 3,
any notice of withdrawal must also specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn
Securities and otherwise comply with such Book-Entry Transfer Facility's
procedures.
Withdrawals of tendered Securities may not be rescinded, and any Securities
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Securities may be retendered by again
following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
10
<PAGE>
5. Certain U.S. Federal Income Tax Consequences. The following is a general
summary of certain U.S. Federal income tax consequences of the Offer and the
Merger relevant to a beneficial holder of Securities whose Securities are
tendered and accepted for payment pursuant to the Offer or whose Securities
are converted to cash in the Merger (a "Holder"). The discussion is based on
the Internal Revenue Code of 1986, as amended (the "Code"), regulations issued
thereunder, judicial decisions and administrative rulings, all of which are
subject to change, possibly with retroactive effect. The following discussion
does not address the U.S. Federal income tax consequences to all categories of
Holders that may be subject to special rules (e.g., holders who acquired their
Securities pursuant to the exercise of employee stock options or other
compensation arrangements with the Company, holders who perfect applicable
appraisal rights under the DGCL, foreign holders, insurance companies, tax-
exempt organizations, dealers in securities and persons who have acquired the
Securities as part of a straddle, hedge, conversion transaction or other
integrated investment), nor does it address the Federal income tax
consequences to persons who do not hold the Securities as "capital assets"
within the meaning of Section 1221 of the Code (generally, property held for
investment).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH
HOLDER SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH HOLDER AND THE PARTICULAR
TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT
OF U.S. FEDERAL, STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Securities pursuant to the Offer or the Merger will
be a taxable transaction for U.S. Federal income tax purposes and may also be
a taxable transaction under applicable state, local and foreign income and
other tax laws. In general, a Holder who sells Securities pursuant to the
Offer or receives cash in exchange for Securities pursuant to the Merger will
recognize gain or loss for Federal income tax purposes equal to the
difference, if any, between the amount of cash received and the Holder's
adjusted tax basis in the Securities sold pursuant to the Offer or surrendered
for cash pursuant to the Merger. Gain or loss will be determined separately
for each block of Securities (i.e., Securities acquired at the same cost in a
single transaction) tendered pursuant to the Offer or surrendered for cash
pursuant to the Merger. Such gain or loss will be long-term capital gain or
loss if the Holder has held the Securities for more than one year at the time
of the consummation of the Offer or the Merger. Capital gains recognized by an
individual investor (or an estate or certain trusts) upon a disposition of a
Security that has been held for more than one year generally will be subject
to a maximum tax rate of 20% or, in the case of a Security that has been held
for one year or less, will be subject to tax at ordinary income rates. Certain
limitations apply to the use of capital losses.
If a warrantholder has held a Warrant for more than one year, any gain or
loss recognized upon either the tendering of such Warrant pursuant to the
Offer or, assuming the Offer is completed, the Merger, would generally be
treated as long-term capital gain or loss. However, if such warrantholder were
to exercise the Warrant, the Shares acquired through the exercise of such
Warrant would have a holding period beginning as of the date on which the
Warrant was exercised. Therefore, any Shares so acquired and tendered pursuant
to the Offer or the Merger would not qualify for long-term capital gain or
loss if the warrant holder were to become entitled to the receipt of cash
within one year or less of the date of the exercise of such Warrant.
Accordingly, warrantholders who are considering exercising such Warrants
should consult with their own tax advisors as to whether or not they would be
foregoing a possible long-term capital gain or loss by not tendering such
Warrants pursuant to the Offer and instead incurring a short-term capital gain
or loss through the exercise of such Warrants and the receipt of cash within
one year following such exercise in exchange for the Shares received upon the
exercise of such Warrants.
11
<PAGE>
6. Price Ranges of the Securities; Dividends. The Shares are listed on the
NYSE under the symbol "LCE". The following table sets forth, for each of the
fiscal quarters indicated, the high and low sales price per Share on the NYSE
and the amount of cash dividends paid per Share, as reported in published
financial sources.
<TABLE>
<CAPTION>
Sales
Price(1)
-------------- Cash
High Low Dividends(1)
---- ---- ------------
<S> <C> <C> <C>
Fiscal Year Ended December 31, 1997:
First Quarter........................... $22 5/8 $17 7/16 $0.05
Second Quarter.......................... 22 25/32 18 5/8 0.05
Third Quarter........................... 27 1/8 22 5/8 0.05
Fourth Quarter.......................... 30 5/8 24 7/16 0.05
Fiscal Year Ended December 31, 1998:
First Quarter........................... $34 13/16 $25 5/8 $0.05
Second Quarter.......................... 42 7/16 33 1/4 0.05
Third Quarter........................... 41 27/32 26 1/4 0.05
Fourth Quarter.......................... 39 7/16 28 0.05
Fiscal Year Ending December 31, 1999:
First Quarter........................... $37 3/4 $30 5/8 $0.05
Second Quarter.......................... 38 3/16 31 1/8 0.05
Third Quarter (through September 2,
1999).................................. 49 1/2 30 1/2 0.05(2)
</TABLE>
- --------
(1) Share prices and cash dividends per Share have been restated to reflect
the Company's two-for-one stock split effective December 14, 1998.
(2) Cash dividend per Share was declared on August 19, 1999 and is scheduled
to be paid on September 15, 1999.
On September 1, 1999, the last full trading day prior to the date of the
public announcement of the execution of the Merger Agreement, the last
reported sales price of the Shares on the NYSE was $34 9/16 per Share. On
September 2, 1999 the last full trading day prior to the commencement of the
Offer, the last reported sales price of the Shares on the NYSE was $49 1/8 per
Share. Stockholders are urged to obtain a current market quotation for the
Shares.
Under the terms of the Merger Agreement, the Company is not permitted to
declare or pay dividends with respect to the Shares without the prior written
consent of Parent except that the Company may declare and pay to holders of
Shares regular quarterly cash dividends not to exceed $0.05 per Share per
fiscal quarter, including the quarterly cash dividend of $0.05 per Share
declared on August 19, 1999 and scheduled to be paid on September 15, 1999 to
stockholders of record on September 1, 1999.
The Warrants are listed on the NYSE under the symbol "LCE t". The following
table sets forth, for each of the fiscal quarters indicated, the high and low
sales price per Warrant on the NYSE, as reported in published financial
sources.
<TABLE>
<CAPTION>
Sales
Price
------------
High Low
---- ----
<S> <C> <C>
Fiscal Year Ended December 31, 1997:
First Quarter........................................... $28 5/8 $18 1/4
Second Quarter.......................................... 28 21
Third Quarter........................................... 36 1/2 28 1/2
Fourth Quarter.......................................... 43 3/8 31 3/4
Fiscal Year Ended December 31, 1998:
First Quarter........................................... $51 1/8 $33 1/2
Second Quarter.......................................... 66 48 1/4
Third Quarter........................................... 64 1/2 34 1/2
Fourth Quarter.......................................... 60 38 1/8
Fiscal Year Ending December 31, 1999:
First Quarter........................................... $59 $35 1/2
Second Quarter.......................................... 60 1/4 41 1/2
Third Quarter (through September 2, 1999)............... 79 3/4 42 3/4
</TABLE>
12
<PAGE>
On September 1, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Warrants on the NYSE was $50 1/2 per Warrant. On September 2,
1999 the last full trading day prior to the commencement of the Offer, the
last reported sales price of the Warrants on the NYSE was $ 79 7/16 per
Warrant. Warrantholders are urged to obtain a current market quotation for the
Warrants.
7. Effect of the Offer on the Market for the Securities; Stock Exchange
Listing; Exchange Act Registration; Margin Regulations
Market for the Securities. The purchase of Securities by Purchaser pursuant
to the Offer will reduce the number of holders of Securities and the number of
Securities that might otherwise trade publicly and, depending upon the number
of Securities so purchased, could adversely affect the liquidity and market
value of the remaining Securities held by the public.
Stock Exchange Listing. The Securities are listed on the NYSE. Depending
upon the number of Securities purchased pursuant to the Offer, the Securities
may no longer meet the requirements for continued listing on the NYSE and
either or both of them may therefore be delisted from the NYSE. According to
the NYSE's published guidelines, the NYSE would consider delisting the Shares
or the Warrants if, among other things: (i) the number of record holders of
100 or more Shares or Warrants, as the case may be, should fall below 1,200;
(ii) the number of publicly held Shares or Warrants, as the case may be
(exclusive of holdings of Parent and Purchaser and any other subsidiaries or
affiliates of Parent and of officers or directors of the Company or their
immediate families or other concentrated holdings of 10% or more ("Excluded
Holdings")) should fall below 600,000; or (iii) the aggregate market value of
such publicly held Shares or Warrants, as the case may be (exclusive of
Excluded Holdings) should fall below $5,000,000.
If the NYSE were to delist either the Shares or the Warrants, it is possible
that the delisted Securities would continue to trade on other securities
exchanges or in the over-the-counter market and that price quotations would be
reported by such exchanges or through the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or other sources. However, the
extent of the public market for the delisted Securities and the availability
of such quotations would depend upon such factors as the number of
stockholders or warrantholders, as the case may be, and/or the aggregate
market value of the publicly-traded Shares or Warrants, as the case may be,
remaining at such time, the interest in maintaining a market in the delisted
Securities on the part of securities firms, the possible termination of
registration under the Exchange Act as described below and other factors.
Exchange Act Registration. The Securities are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if such Securities are not listed on a national
exchange and there are fewer than 300 holders of record of each of such
Securities. The termination of the registration of the Securities under the
Exchange Act would reduce the information required to be furnished by the
Company to the holders thereof and to the Commission, and would make certain
of the provisions of the Exchange Act, such as short-swing profit recovery
provisions of Section 16(b) of the Exchange Act, the requirement of furnishing
a proxy statement in connection with the stockholders' meetings pursuant to
Section 14(a) or 14(c) of the Exchange Act and the related requirement of an
annual report to stockholders and the requirements of Rule 13e-3 of the
Exchange Act with respect to going private transactions, no longer applicable
with respect to the Securities or the Company. Furthermore, if a substantial
number of Securities are acquired by the Purchaser, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended, may be impaired or, with respect to
certain persons, eliminated. If registration of the Shares under the Exchange
Act were terminated, the Shares would no longer be margin securities or
eligible for stock exchange listing or NASDAQ reporting. If registration of
the Warrants under the Exchange Act were terminated, the Warrants would no
longer be margin securities or eligible for stock exchange listing or NASDAQ
reporting. The Purchaser believes that the purchase of the Securities pursuant
to the Offer may result in the Securities
13
<PAGE>
becoming eligible for deregistration under the Exchange Act and it is the
intention of the Purchaser to cause the Company to make an application for
termination of registration of the Securities as soon as possible after
successful completion of the Offer, if the Securities are then eligible for
such termination. If registration of the Securities under the Exchange Act is
not terminated prior to the Merger, registration of the Securities under the
Exchange Act will be terminated following the consummation of the Merger.
Margin Regulations. The Securities are presently "margin securities" under
the regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Securities.
Depending upon factors similar to those described above regarding stock
exchange listing and market quotations, it is possible that, following the
Offer, the Securities would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers. In addition,
if registration of the Securities under the Exchange Act were terminated, the
Securities would no longer constitute "margin securities."
8. Certain Information Concerning the Company. The information concerning
the Company contained in this Offer to Purchase, including that set forth
below under "--Summary of Selected Financial Data," has been furnished by the
Company or has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 8 and elsewhere in this
Offer to Purchase is derived from the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 and the Company's Quarterly Report on
Form 10-Q for the six months ended June 30, 1999, as filed with the Commission
pursuant to the Exchange Act, and other publicly available information. The
summary information set forth below is qualified in its entirety by reference
to such reports (which may be obtained and inspected as described below) and
should be considered in conjunction with the more comprehensive financial and
other information in such reports and other publicly available reports and
documents filed by the Company with the Commission and other publicly
available information. Although Purchaser and Parent do not have any knowledge
that would indicate that any statements contained herein based upon such
reports are untrue, neither Parent nor Purchaser assumes responsibility for
the accuracy or completeness of the information concerning the Company
contained in such documents and records or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Parent or Purchaser.
General. The Company is a Delaware corporation with principal executive
offices located at 300 First Stamford Place, Stamford, Connecticut 06912. The
telephone number of the Company at such offices is (203) 969-8600. The
business of the Company consists of the production and sale of cement and
ready-mixed concrete.
Selected Financial Information. Set forth below is a summary of certain
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and the Company's Quarterly Report on Form 10-Q for
the six months ended June 30, 1999, as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in such reports
(including management's discussion and analysis of financial condition and
results of operations) and in other documents filed by the Company with the
Commission. The following summary is qualified in its entirety by reference to
such reports and other documents and all of the financial information
(including any related notes) contained therein. Such reports, documents and
financial information may be inspected and copies may be obtained from the
Commission in the manner set forth below under "--Available Information."
14
<PAGE>
LONE STAR INDUSTRIES, INC.
SUMMARY OF SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
Year Ended December 31 (Unaudited)
-------------------------- -----------------
1998 1997 1996 1999 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales...................... $347,065 $357,565 $367,673 $168,729 $155,496
Total revenues................. 365,857 374,059 378,058 175,690 164,255
Income before taxes............ 115,142 98,736 81,770 49,094 44,488
Net income applicable to common
shares ....................... 76,282 65,413 54,160 32,525 29,473
Balance Sheet Data (at period
end):
Cash........................... $120,161 $154,080 $ 71,215 $ 78,407 $146,331
Total current assets........... 205,846 232,976 165,214 181,946 243,861
Total assets................... 588,514 598,977 562,151 583,068 623,575
Total current liabilities...... 62,454 63,382 297,869 60,002 62,862
Senior notes payable........... 50,000 50,000 50,000 50,000 50,000
Total shareholders' equity..... 324,316 333,634 264,282 323,366 359,513
Weighted average common shares
outstanding(/1/):
Basic.......................... 20,745 21,881 22,581 19,865 21,426
Diluted........................ 26,516 26,857 26,493 24,353 27,360
Earnings per common share(/1/):
Basic.......................... $ 3.68 $ 2.99 $ 2.40 $ 1.64 $ 1.38
Diluted........................ 2.88 2.44 2.04 1.34 1.08
Dividends declared per common
share(/1/)...................... $ 0.20 $ 0.20 $ 0.20 $ 0.10 $ 0.10
</TABLE>
- --------
(1) Per share data has been restated to give retroactive recognition to the
two-for-one stock split to shareholders of record of the Company on
December 14, 1998.
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent or its representatives with certain information about
the Company and its financial performance which is not publicly available. The
information provided included financial projections for the Company as an
independent company (i.e., without regard to the impact to the Company of a
transaction with Parent and Purchaser). The following is a summary of selected
projected financial information provided to Parent by the Company.
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
Projected
---------------------
(In thousands, except
per share data)
<S> <C>
Net Sales.......................................... $367,659
Operating profit................................... $115,873
Income before taxes................................ $119,296
Net income applicable to common stock.............. $ 79,028
Average shares outstanding (fully diluted)......... 24,063
Earnings per share (fully diluted)................. $ 3.28
Capital expenditures............................... $109,281
</TABLE>
15
<PAGE>
The Company has advised Purchaser and Parent that it does not as a matter of
course make public any projections as to future performance or earnings, and
the projections set forth above are included in this Offer only because the
information was provided to Parent and Purchaser. The projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
The Company has advised Parent and Purchaser that its internal operating
projections are, in general, prepared solely for internal use and capital
budgeting and other management decisions and are subjective in many respects
and thus susceptible to various interpretations and periodic revision based on
actual experience and business developments. According to the Company, the
projections were based on a number of internal assumptions with respect to
industry performance, general business, economic, market and financial
conditions and other matters, some of which are beyond the control of the
Company, Purchaser or Parent or their respective financial advisors and
representatives and some of which inevitably will prove to be incorrect.
Although the Company has advised Parent and Purchaser that it believes the
assumptions used in preparing this information were reasonable when made in
May 1999, no prediction can be made as to whether such assumptions were or
will be accurate; accordingly, there can be no assurance, and no
representation or warranty is made, that actual results will not vary
materially from those described above. The foregoing information is forward-
looking in nature and inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, including
industry performance, general business and economic conditions (including the
strength of local real estate markets) customer requirements, competition,
adverse changes in applicable laws, regulations or rules governing
environmental, tax and accounting matters, adverse weather conditions,
unexpected operational difficulties and other matters. The inclusion of this
information should not be regarded as an indication that Parent, Purchaser,
the Company or anyone who received this information then considered, or now
considers, it a reliable prediction of future events, and this information
should not be relied on as such. None of Parent or Purchaser or any of their
respective financial advisors or the Dealer Manager assumes any responsibility
for the validity, reasonableness, accuracy or completeness of the projections,
and the Company has made no representation to Parent or Purchaser regarding
the projections described above. None of the Company, Purchaser, Parent or any
of their respective financial advisors or the Dealer Manager intends to
update, revise or correct such projections if they are or become inaccurate
(even in the short term). The projections have not been adjusted to reflect
the effects of the Offer or the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's securityholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
website on the Internet at http://www.sec.gov that contains reports, proxy
statements and other information relating to the Company which have been filed
via the Commission's EDGAR System.
9. Certain Information Concerning Parent and Purchaser.
Parent and Purchaser. Parent is a corporation organized under the laws of
the Federal Republic of Germany, with its principal executive offices located
at Biebricher Strabe 69, 65203 Wiesbaden, Germany. The telephone number of
Parent at such location is 49 (0611) 676-0. Parent produces cement, concrete
and finishing products.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any
significant activities other than in connection with the Offer and the Merger.
The principal offices of Purchaser are located at Ten Post Office Square
South, Boston, Massachusetts 02109.
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All of the outstanding capital stock of Purchaser is owned directly by
Dyckerhoff, Inc., a Delaware corporation and a wholly owned operating
subsidiary of Parent ("Subsidiary"). Until immediately prior to the time
Purchaser purchases Securities pursuant to the Offer, it is not anticipated
that Purchaser will have any significant assets or liabilities or engage in
any significant activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
Financial Information of Parent. Parent is not subject to the informational
reporting requirements of the Exchange Act, and, accordingly, does not file
reports or other information with the Commission relating to its business,
financial condition and other matters.
Set forth below is certain selected consolidated financial information
relating to Parent and its subsidiaries for Parent's last two fiscal years.
The selected consolidated financial information has been prepared in Deutsche
Mark in accordance with the standards issued by the International Accounting
Standards Committee ("IAS"). IAS differ in certain significant respects from
generally accepted accounting principles in the United States ("U.S. GAAP"). A
summary of the significant differences between U.S. GAAP and IAS is set forth
below. Parent, however, believes that the differences are not material to a
decision by a holder of Securities of whether to sell, tender or hold any
Securities because any such differences would not affect the ability of
Purchaser to obtain sufficient funds to pay for Securities to be acquired
pursuant to the Offer. The amounts in the table set forth below are in
Deutsche Mark unless otherwise indicated.
DYCKERHOFF AG
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in Deutsche Mark ("DM"),
except where otherwise indicated in United States dollars ("$"))
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1998(1) 1998 1997
-------------- --------------- ---------------
(in million $) (in million DM) (in million DM)
<S> <C> <C> <C>
Profit and Loss Account Data:
(Amounts in accordance with IAS)
Sales........................... $2,072 DM3,454 DM3,278
Net income...................... 106 177 164
Group net income (attributable
to Parent)..................... 97 161 148
Balance Sheet Data:
(Amounts in accordance with IAS)
Liquid funds.................... $ 76 DM 126 DM 112
Current assets.................. 572 953 882
Total assets.................... 2,198 3,664 3,336
Long-term financial
liabilities.................... 497 828 606
Shareholders' equity............ 783 1,305 1,215
</TABLE>
- --------
(1) Amounts in this column are unaudited and have been translated solely for
the convenience of the reader at an exchange rate of DM1.6670 = $1.00, the
Noon Buying Rate on December 31, 1998. No representation is made that the
Deutsche Mark has been, could have been or could be, converted into U.S.
dollars at that or any other rate.
The following represents, in the opinion of management of Parent, the
significant differences between U.S. GAAP and IAS that would affect the
determination of consolidated net income and shareholders' equity of Parent
for the periods for which the selected consolidated financial information has
been presented herein.
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Pension Plans. U.S. GAAP requires pension costs to be recognized and
computed as stipulated by the Statement of Financial Accounting Standard No.
87 ("SFAS 87"). While, under IAS, Parent generally calculated its December 31,
1998 projected benefit obligation in accordance with SFAS 87, under IAS,
Parent completely recorded such projected benefit obligation as a liability in
its consolidated balance sheet at December 31, 1998. Under U.S. GAAP Parent
would not have been permitted to record the entire projected benefit
obligation as a liability but rather would have been required to amortize
certain portions of the projected benefit obligation through the consolidated
profit and loss account over the future service lives of the employees. In
1997, under IAS Parent calculated its pension obligations using a different
actuarial method and using differing actuarial assumptions than required under
SFAS 87.
Deferred Taxes. Under IAS, Parent has not recorded certain deferred tax
liabilities arising from the adjusting to fair value fixed assets acquired in
business combinations. Under U.S. GAAP, Parent would be required to record
deferred taxes on such fair value adjustments. The effect of such U.S. GAAP
difference would be to increase deferred tax liabilities and goodwill
resulting from the acquisitions which would, in turn, increase goodwill
amortization expense.
Pro Rata Method of Accounting. As permitted under IAS, Parent uses the pro
rata or proportionate method of accounting for certain investments in jointly
controlled companies. Under U.S. GAAP, Parent's investment in such jointly
controlled companies would be required to be accounted for using the equity
method of accounting.
Profit and Loss Account Format. As permitted under IAS, Parent's profit and
loss account is prepared using the "total cost" method of presentation. Such
method of presentation does not result in Parent reporting an amount for cost
of goods sold. Under U.S. GAAP, Parent would be required to report its profit
and loss account using the "cost of sales" method of presentation.
Other Information Regarding Parent, Subsidiary and Purchaser. The name,
citizenship, business address, principal occupation or employment and five-
year employment history for each of the executive officers of Purchaser,
Subsidiary and Parent, and for members of the board of directors of Purchaser
and Subsidiary and members of the supervisory board and management board of
Parent, respectively, and certain other information are set forth in Schedule
I hereto.
Except as set forth in this Offer to Purchase, none of Purchaser,
Subsidiary, Parent, or to the best knowledge of Purchaser, Subsidiary and
Parent, any of the persons listed on Schedule I hereto or any associate or
majority owned subsidiary of Purchaser, Subsidiary, Parent or any of the
persons so listed, beneficially owns or has a right to acquire, directly or
indirectly, any Securities, and none of Purchaser, Subsidiary or Parent, or to
the best knowledge of Purchaser, Subsidiary and Parent, any of the persons or
entities referred to above, nor any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any
transaction in the Securities during the past 60 days.
Except as set forth in this Offer to Purchase, none of Purchaser,
Subsidiary, Parent or, to the best knowledge of Purchaser, Subsidiary and
Parent, any of the persons listed on Schedule I hereto, has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser,
Subsidiary, Parent, any of their respective affiliates, nor, to the best
knowledge of Purchaser, Subsidiary or Parent, any of the persons listed on
Schedule I, has had, since January 1, 1996, any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that would be required to be reported under the rules of the
Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, since January 1, 1996 there have been no contacts, negotiations or
transactions between Purchaser, Subsidiary, Parent, any of their respective
affiliates or, to the best knowledge of Purchaser or Parent, any of the
persons listed on Schedule I, and the Company or its
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<PAGE>
affiliates concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets.
10. Sources and Amount of Funds.
The total amount of funds required by the Purchaser to purchase the
Securities in the Offer and the Merger, refinance existing Company
indebtedness and pay related fees and expenses is estimated to be
approximately $1.25 billion. Parent and Purchaser intend to obtain the funds
from loans to be provided by Deutsche Bank AG and Dresdner Bank AG (the
"Banks"). The Banks have entered into a Term Loan Facilities Agreement with
Parent and Purchaser dated September 1, 1999 (the "Credit Agreement") pursuant
to which the Banks have agreed to provide up to $1.3 billion in borrowings
under unsecured senior credit facilities (the "Credit Facilities"). It is
anticipated that the Banks will syndicate the Credit Facilities to a group of
commercial banks. The Credit Agreement provides for the Credit Facilities to
be made available as term loans in three tranches. The first tranche is a term
loan in the amount of $800 million which is repayable on August 22, 2000. The
second tranche is a term loan in the amount of $200 million which is repayable
on February 28, 2001. The third tranche is a term loan in the amount of $300
million which is repayable semi-annually beginning August 21, 2001 in the
amounts set forth therein. Each tranche of the Credit Facilities will bear
interest at LIBOR plus a margin of .65% if the amount is in excess of $1
billion declining to .375% if the amount is less than $300 million. The term
loans under the Credit Agreement will be available for drawdown through
January 31, 2000. It is anticipated that the term loans will be partially
refinanced by the issuance of U.S. dollar denominated Eurobonds in an amount
approximately equal to DM 1.5 billion and by an increase in the equity of
Parent in an amount of DM 0.4 billion. The Banks' obligations are subject to
no litigation which could result in a material adverse change to the business
of the Company or Parent, the receipt of all relevant governmental approvals
and other customary conditions precedent. The Offer is not conditioned upon
the availability of financing under the Credit Agreement or otherwise.
The foregoing summary of the Credit Agreement is not a complete description
of the terms and conditions of the Credit Agreement and is qualified by
reference to the full text of the Credit Agreement filed with the Commission
as an exhibit to the Tender Offer Statement on Schedule 14D-1 filed by Parent
and Purchaser (the "Schedule 14D-1").
11. Background of the Offer; Contacts with the Company.
In early June 1999, Michael B. Clarke, President and Chief Executive Officer
of Dyckerhoff, Inc., Parent's U.S. subsidiary, contacted William M. Troutman,
President and Chief Executive Officer of the Company, regarding a possible
acquisition of the Company by Parent. Mr. Troutman agreed to arrange a meeting
with representatives of Parent to discuss the specifics of a proposed
transaction.
On June 22, 1999, Mr. Troutman and David W. Wallace, Chairman of the
Company, met with Felix Pardo, Chairman of Dyckerhoff, Inc. and Mr. Clarke. At
the meeting, the Company indicated its required terms for a proposed
transaction, including an all-cash $50.00 per Share price, and Mr. Pardo and
Mr. Clarke informed Messrs. Wallace and Troutman that they might be able to
make such an offer if warranted by Parent's due diligence.
On July 8, 1999, Parent signed a confidentiality agreement with the Company
and during July 1999, Parent conducted business and legal due diligence with
respect to the Company. The Company furnished to Parent detailed information
concerning the Company's business and prospects.
On July 30, 1999, Mr. Wallace and Mr. Pardo met again. Mr. Wallace repeated
the $50.00 per Share minimum price, and Mr. Pardo indicated that Parent was
still interested in pursuing the transaction. However, Mr. Pardo indicated at
that time that Parent valued the Company at between $47.00 and $48.00 per
Share.
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<PAGE>
On August 2, 3 and 4, 1999, representatives of Parent toured certain of the
Company's facilities. On August 10-12, 1999, representatives of Parent and
Morgan Stanley met with senior management of the Company and representatives
of Merrill Lynch to conduct due diligence on the Company.
On August 13, 1999, Mr. Wallace advised Mr. Peter Steiner, Chief Financial
Officer of the Parent, that a transaction had to value the Company at a price
of at least $50.00 per Share, and requested Mr. Steiner to respond to the
Company before its regularly scheduled Board Meeting on August 19, 1999, if
Purchaser remained interested in proceeding with the transaction at that
price. On August 14, 1999, the Purchaser's counsel furnished drafts of the
Merger Agreement and the Tender Agreement to the Company and its counsel. On
August 17, 1999, Mr. Steiner advised Mr. Wallace that subject to the
satisfactory conclusion of due diligence and the negotiation of an acceptable
Merger Agreement, including provision for the Termination Fee (as defined
below), Parent would proceed with the transaction at $50.00 per Share.
On August 19, 1999, at its regularly scheduled meeting, the Board of
Directors of the Company was advised about the terms of the proposed
transaction with Parent and based upon the price indication, authorized
management to proceed.
On August 24, 1999, Dr. Peter Rohde, Chairman of the Management Board of
Parent, along with Mr. Steiner, Mr. Pardo, and Mr. Clarke, met with Mr.
Wallace, Mr. Troutman, William E. Roberts, Vice President and Chief Financial
Officer of the Company, and James W. Langham, Vice President and General
Counsel of the Company. Dr. Rohde confirmed that Parent remained interested in
acquiring the Company for $50.00 per Share, subject to the satisfactory
completion of selected due diligence items and the negotiation of an
acceptable Merger Agreement including the Termination Fee. Thereafter the
parties negotiated the terms of the Merger Agreement and the Tender Agreement,
including during meetings in Greenwich, Connecticut on August 24 and 25, 1999.
On August 27, 1999, revised drafts of the Merger Agreement and the Tender
Agreement were delivered to the Board of Directors of the Company.
On September 1, 1999, the Company informed Parent that the Company's Board
of Directors held a meeting in Greenwich, Connecticut to consider the proposed
transaction.
On September 2, 1999, the Company's Board of Directors and Parent's
Supervisory Board and Board of Managing Directors each approved the Merger
Agreement and the Company, Parent and Purchaser executed the Merger Agreement,
and Parent, Purchaser and certain of the Company's stockholders executed the
Tender Agreement.
On September 2, 1999, Parent and the Company also issued press releases
announcing the transactions contemplated by the Merger Agreement.
On September 3, 1999, Purchaser commenced the Offer.
12. Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is to enable Parent to acquire control of, and the entire equity interest in,
the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer. The Company will, as of the Effective Time,
be an indirect wholly owned subsidiary of Parent.
Merger Agreement.
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement filed with the Commission as an exhibit to the
Schedule 14D-1 and is
20
<PAGE>
incorporated herein by reference. Capitalized terms not otherwise defined
below shall have the meanings set forth in the Merger Agreement. The Merger
Agreement may be examined, and copies obtained, as set forth in Section 8 of
this Offer to Purchase.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that upon the terms and subject to prior satisfaction or waiver
(to the extent permitted to be waived) of the conditions of the Offer, the
Purchaser will purchase all Securities validly tendered pursuant to the Offer.
The Merger Agreement provides that the Purchaser has the right, in its sole
discretion, to modify and make certain changes to the terms and conditions of
the Offer as described in Section 1.
The Company's Board of Directors. The Merger Agreement provides that
immediately upon the acceptance for payment of and payment for any Securities
by Purchaser pursuant to the Offer, Purchaser will be entitled to designate
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to the product of (i) the total number of directors on the
Board of Directors of the Company (giving effect to the increase in the size
of such Board pursuant to this paragraph) and (ii) the percentage that the
number of votes represented by Shares beneficially owned by Purchaser and its
affiliates (including Shares so accepted for payment and purchased and any
Warrants so accepted for payment and purchased and converted by Purchaser into
Shares) bears to the number of votes represented by Shares then outstanding.
In furtherance thereof, concurrently with such acceptance for payment and
payment for such Securities the Company will, upon request of Parent and in
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, use its best efforts promptly either to increase the size of its
Board of Directors or to secure the resignations of such number of its
incumbent directors, or both, as is necessary to enable such designees of
Parent to be so elected or appointed to the Company's Board of Directors, and
the Company shall take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. At such time, the Company
will, if requested by Parent, also take all action necessary to cause persons
designated by Parent to constitute at least the same percentage (rounded up to
the next whole number) as is on the Company's Board of Directors of (i) each
committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each subsidiary of the Company and (iii) each committee
(or similar body) of each such board. Notwithstanding the foregoing, the
Company will use its best efforts to ensure that, in the event that
Purchaser's designees are elected to the Board of Directors of the Company,
such Board of Directors will have, at all times prior to the Effective Time,
at least two directors who are directors on the date of the Merger Agreement
and who are not officers or affiliates of the Company (it being understood
that for purposes of this paragraph, a director of the Company will not be
deemed an affiliate of the Company solely as a result of his status as a
director of the Company), Parent or any of their respective subsidiaries (the
"Independent Directors"); and provided further, that, in such event, if the
number of Independent Directors is reduced below two for any reason whatsoever
the remaining Independent Director may designate a person to fill such vacancy
who will be deemed to be an Independent Director for purposes of the Merger
Agreement or, if no Independent Directors then remain, the other directors may
designate two persons to fill such vacancies who may not be officers or
affiliates of the Parent or any of its subsidiaries (other than the Company),
and such persons will be deemed to be Independent Directors for purposes of
the Merger Agreement. Subject to applicable law, the Company will promptly
take all action requested by Parent necessary to effect any such election,
including mailing to its securityholders the information required by Section
14(f) of the Exchange Act and Rule 14(f)-1 promulgated thereunder (or, at
Parent's request, furnishing such information to Parent for inclusion in the
Offer Documents initially filed with the SEC and distributed to the
securityholders of the Company) as is necessary to enable Parent's designees
to be elected to the Company's Board of Directors. Each of Parent and
Purchaser will furnish to the Company, and be solely responsible for, any
information with respect to itself and its nominees, directors and affiliates
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors and prior to the
Effective Time, any amendment of the Merger Agreement, any termination of the
Merger Agreement by the Company, any extension of time for performance of any
of the obligations of Parent or Purchaser, any waiver of any material
condition to the Company's obligations or any of the Company's rights or
21
<PAGE>
other material action by the Company thereunder may be effected only by the
action of a majority of the Independent Directors of the Company, which action
will be deemed to constitute the action of any committee specifically
designated by the Board of Directors of the Company to approve the actions
contemplated thereby and the full Board of Directors of the Company; provided
that, if there shall be no Independent Directors, such actions may be effected
by majority vote of the entire Board of Directors of the Company, except that
no such action may amend the terms of the Merger Agreement or modify the terms
of the Offer or the Merger in a manner materially adverse to the holders of
Securities.
The Merger. Pursuant to the Merger Agreement and the DGCL, as promptly as
practicable after the completion of the Offer and satisfaction or waiver, if
permissible, of all conditions, including the purchase of Securities pursuant
to the Offer and the approval and adoption of the Merger Agreement by the
stockholders of the Company (if required by applicable law), Purchaser will be
merged with and into the Company and the Company will be the surviving
corporation (the "Surviving Corporation") and, as of the Effective Time, an
indirect wholly owned subsidiary of Parent. Notwithstanding the foregoing,
Parent may elect at any time prior to the time that notice of the meeting of
stockholders of the Company to consider approval of the Merger and the Merger
Agreement (the "Stockholder Meeting") is first given to the Company's
stockholders that instead of merging Purchaser into the Company as hereinabove
described, to merge the Company into Purchaser or another direct or indirect
wholly owned subsidiary of Parent. In such event the parties will execute an
appropriate ministerial amendment to the Merger Agreement in order to reflect
the foregoing and to provide that Purchaser or such other subsidiary of Parent
will be the Surviving Corporation. At the Effective Time, (x) each Share then
outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries, including Purchaser, and
(iii) stockholders who properly perfect their dissenters' rights under the
DGCL, will be converted into the right to receive the Merger Consideration,
without interest and (y) each Warrant then outstanding, other than Warrants
held by (i) the Company or any of its subsidiaries or (ii) Parent or any of
its subsidiaries, including Purchaser, will remain outstanding following, and
be unaffected by, the Merger, except that, to the extent provided in Section
10.5 of the Warrant Agreement, from and after the Effective Time each holder
of Warrants will have the right to obtain upon the exercise of each Warrant,
in lieu of each Share theretofore issuable upon exercise of such Warrant, the
Merger Consideration without interest thereon, net to the holder in cash.
Purchaser's Certificate of Incorporation will become the Certificate of
Incorporation of the Surviving Corporation, and Purchaser's Bylaws will be the
Bylaws of the Surviving Corporation.
Options. The Merger Agreement provides that prior to the date of the Merger
Agreement, the Board of Directors of the Company (or, if appropriate, any
committee thereof) will adopt appropriate resolutions and take all other
actions necessary to provide that (A) effective on the date of the Merger
Agreement, no further grants will be made under the Company's Directors Stock
Option Plan, dated July 1, 1996 (the "Directors Plan"), the Company's
Management Stock Option Plan, dated April 14, 1994 (the "Management Plan") or
the Company's 1996 Long Term Incentive Plan (collectively, the "Company Stock
Option Plans"), (B) effective at the Effective Time, each outstanding Option,
or any other award providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any subsidiary heretofore
granted under any of the Company's Stock Option Plans, whether or not then
vested or exercisable, will, at the Effective Time, be canceled, and each
holder thereof will be entitled to receive a payment in cash from the Company
(the "Cash Payment"), upon cancellation, equal to the product of (x) the total
number of Shares subject or related to such Option, whether or not then vested
or exercisable, and (y) the excess, if any, of the Merger Consideration over
the exercise price or purchase price, as the case may be, per Share subject or
related to such Option, each such Cash Payment to be paid to each holder of an
outstanding Option upon cancellation. Except as specifically set forth in this
paragraph, the Company Stock Option Plans (and any benefit plan or other plan,
program or arrangement) providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any subsidiary will
terminate as of the Effective Time. Within 5 business days of the date of the
Merger Agreement, the Company will obtain the consent of each of the holders
of the Options as is necessary to effectuate the transactions contemplated by
this paragraph. Notwithstanding anything to the contrary contained in the
Merger Agreement, payment will, at Parent's request, be withheld in respect of
any Option until all necessary consents are obtained,
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<PAGE>
and in any event all such consents, if any, must be obtained prior to
Purchaser's acceptance for payment of any Securities pursuant to the Offer.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries,
capitalization, authority to enter into the Merger Agreement, the absence of
certain changes, required consents, no conflicts between the Merger Agreement
and applicable laws and certain agreements to which the Company or its assets
may be subject, financial statements, filings with the Commission, disclosures
in proxy statements and tender offer documents, absence of certain changes or
events, litigation, insurance, labor and employment matters, employee benefit
plans, tax matters, compliance with applicable laws, Year 2000 compliance,
brokers' and finders' fees, environmental matters, material contracts,
applicability of state takeover statutes, undisclosed liabilities, title to
properties, insurance, indemnification claims, excess parachute payments,
termination agreements, deductions under Section 162(m) of the Code, the vote
required to approve the Merger Agreement and its receipt of the Financial
Advisor Opinion.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and applicable
laws and certain agreements to which Parent or Purchaser or their assets may
be subject, financing, disclosures in proxy statements and tender offer
documents and brokers' and finders' fees.
Interim Operations. Pursuant to the Merger Agreement, the Company has agreed
that, prior to the Effective Time, unless otherwise expressly contemplated by
the Merger Agreement or consented to in writing by Parent, it will and will
cause each of its subsidiaries to (i) operate its business in the usual and
ordinary course consistent with past practices; (ii) use its reasonable
efforts to preserve intact its business organization, maintain its rights and
franchises, retain the services of its respective key employees and maintain
its relationships with its respective customers and suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time; (iii) maintain and keep
its properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted, and maintain supplies and inventories in
quantities consistent with its customary business practice; and (iv) use its
reasonable efforts to keep in full force and effect insurance and bonds
comparable in amount and scope of coverage to that currently maintained.
Except as set forth in the disclosure schedules to the Merger Agreement, the
Company has agreed that, except as expressly contemplated by the Merger
Agreement or otherwise consented to in writing by Parent (which consent will
not be unreasonably withheld or delayed), from the date of the Merger
Agreement until the Effective Time, it will not, and will not permit any of
its subsidiaries to (a) (i) increase the compensation (or benefits) payable to
or to become payable to any director or employee, except for increases in
salary or wages of employees in the ordinary course of business and consistent
with past practice; (ii) grant any severance or termination pay (other than
pursuant to the severance policy or practice of the Company or its
subsidiaries as disclosed in the disclosure schedules to the Merger Agreement
and in effect on the date of the Merger Agreement) to, or enter into or amend
in any material respect any employment or severance agreement with, any
employee; (iii) establish, adopt, enter into or amend in any material respect
any collective bargaining agreement or any benefit plan of the Company or any
commonly controlled entity; or (iv) take any action to accelerate any rights
or benefits, or make any determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining agreement or
benefit plan of the Company or any commonly controlled entity; provided that
the Company may amend the Company Stock Option Plans to accelerate the vesting
of any unvested Options and to permit employees and directors to tender any
shares acquired upon exercise of any Option into the Offer in accordance with
the terms of the Merger Agreement; (b) declare, set aside or pay any dividend
on, or make any other distribution in respect of (whether in cash, stock or
property), outstanding shares of capital stock, except for (i) dividends by a
wholly owned subsidiary of the Company to the Company or another wholly owned
subsidiary of the Company and (ii) regular quarterly cash dividends by the
Company
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<PAGE>
consistent with past practices (including as to declaration, record and
payment dates) in no event to exceed $0.05 per Share per fiscal quarter; (c)
redeem, purchase or otherwise acquire, or offer or propose to redeem, purchase
or otherwise acquire, any outstanding shares of capital stock of, or other
equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any
shares of capital stock of, or other equity interests in, the Company or any
of its subsidiaries (other than (i) any such acquisition by the Company or any
of its wholly owned subsidiaries directly from any wholly owned subsidiary of
the Company in exchange for capital contributions or loans to such subsidiary,
or (ii) any purchase, forfeiture or retirement of shares or the Options
occurring pursuant to the terms (as in effect on the date of the Merger
Agreement) of any existing benefit plan of the Company or any of its
subsidiaries, in a manner otherwise consistent with the terms of the Merger
Agreement); (d) effect any reorganization or recapitalization; or split,
combine or reclassify any of the capital stock of, or other equity interests
in, the Company or any of its subsidiaries or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of such capital stock or such equity interests; (e)
offer, sell, issue or grant, or authorize or propose the offering, sale,
issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any voting company debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units, other than
issuances of Shares upon the exercise of the Options and Warrants outstanding
at the date of the Merger Agreement in accordance with the terms thereof (as
in effect on the date of the Merger Agreement); (f) acquire or agree to
acquire, by merging or consolidating with, by purchasing an equity interest in
or a portion of the assets of, or in any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire any assets of any other person (other
than the purchase of assets from suppliers or vendors in the ordinary course
of business and consistent with past practice); (g) sell, lease, exchange or
otherwise dispose of, or grant any lien with respect to, any of the properties
or assets of the Company or any of its subsidiaries that are, individually or
in the aggregate, material to the business of the Company and its
subsidiaries, except for dispositions of excess or obsolete assets and sales
of inventories in the ordinary course of business and consistent with past
practice; (h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents; (i) effect any
change in any accounting methods, principles or practices in effect as of
December 31, 1998 affecting the reported consolidated assets, liabilities or
results of operations of the Company, except as may be required by a change in
generally accepted accounting principles; (j) (i) incur any indebtedness for
borrowed money, 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 such indebtedness or 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, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person, other than to or in the
Company or any direct or indirect wholly owned subsidiary of the Company; (k)
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 the most recent
consolidated financial statements (or the notes thereto) of the Company
included in the Company's filings and reports under the Exchange Act filed and
publicly available prior to the date of the Merger Agreement or incurred since
the date of such financial statements in the ordinary course of business
consistent with past practice; (l) settle the terms of any material litigation
affecting the Company or any of its subsidiaries; (m) make any tax election
except in a manner consistent with past practice, change any method of
accounting for tax purposes, or settle or compromise any material tax
liability; (n) make or agree to make any new capital expenditures which
individually are in excess of $1,000,000 or which in the aggregate are in
excess of $3,000,000 except in accordance with the Company's budget; or (o)
agree in writing or otherwise to take any of the foregoing actions or any
action which would make any representation or warranty in the Merger Agreement
untrue or incorrect or cause any condition set forth in Section 15 to occur or
any condition under "--Conditions to the Merger" to be unsatisfied.
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No Solicitation. In the Merger Agreement, the Company has agreed that from
and after the date of the Merger Agreement until the Effective Time or the
termination of the Merger Agreement, the Company and its subsidiaries will
not, and the Company will use its reasonable best efforts to cause their
respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries) not to,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or take any other
action to facilitate, any inquiries or the making or submission of any
Acquisition Proposal (as defined herein) or enter into or maintain or continue
discussions or negotiate with any person or group in furtherance of such
inquiries or to obtain or induce any person or group to make or submit an
Acquisition Proposal or agree to or endorse any Acquisition Proposal or assist
or participate in, facilitate or knowingly encourage, any effort or attempt by
any other person or group to do or seek any of the foregoing or authorize any
of its officers, directors or employees or any of its subsidiaries or
affiliates or any investment banker, financial advisor, attorney, accountant
or other representative or agent retained by it or any of its subsidiaries to
take any such action; provided, however, that nothing contained in the Merger
Agreement prohibits the Company or the Board of Directors of the Company from,
prior to the earlier to occur of payment for the Securities pursuant to the
Offer or adoption of the Merger Agreement by the requisite vote of the
stockholders of the Company, (i) furnishing information to or (ii) entering
into discussions or negotiations with any person or entity that makes an
unsolicited written Acquisition Proposal, if, and only to the extent that (x)
in each case referred to in (i) and (ii) above, the Board of Directors of the
Company, with the advice of independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), determines in good
faith that the failure to do so would result in a breach of the fiduciary duty
of the Board of Directors of the Company to stockholders of the Company under
applicable law and (y) in the case referred to in (ii), the Board of Directors
of the Company determines in good faith that such Acquisition Proposal is
reasonably likely to lead to a Superior Proposal and (z) prior to taking such
action the Company (A) delivers to Parent and Purchaser the notice required
pursuant to the Merger Agreement stating that it is taking such action and (B)
receives from such person or group an executed confidentiality agreement that
is not, in any material respect, less restrictive (including in respect of
confidentiality and standstill restrictions) as to such person or entity than
the confidentiality agreement dated July 8, 1999 between Parent and the
Company.
Except as expressly permitted by the Merger Agreement, neither the Board of
Directors of the Company nor any committee thereof will (i) withdraw, modify
or fail to make, or propose to withdraw, modify or fail to make its approval
or recommendation of the Offer or the Merger or of the Merger Agreement, the
Tender Agreement, and the other Transactions, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, (iii) take any
action to render the provisions of any anti-takeover statute, rule or
regulation (including Section 203 of the DGCL) inapplicable to any person
(other than Parent, Purchaser or their affiliates) or group or to any
Acquisition Proposal or redeem the Rights or otherwise modify the Rights
Agreement to facilitate any Acquisition Proposal or purchase of Shares by any
Person other than Parent and Purchaser, or (iv) cause the Company to accept
such Acquisition Proposal and/or enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Acquisition Proposal; provided,
however, that prior to the earlier to occur of acceptance for payment of
Securities pursuant to the Offer or adoption of the Merger Agreement by the
requisite vote of the stockholders of the Company, the Board of Directors of
the Company may terminate the Merger Agreement if, and only to the extent that
(A) such Acquisition Proposal is a Superior Proposal, (B) the Board of
Directors of the Company, with the advice of independent legal counsel (who
may be the Company's regularly engaged independent counsel), determines in
good faith that the failure to do so would result in a breach of the fiduciary
duty of the Board of Directors of the Company to the stockholders of the
Company under applicable law, (C) the Company shall, prior to or
simultaneously with the taking of such action, have paid or pay to Parent or
Purchaser or their designee the Termination Fee (as defined below), (D) the
Company is not in material breach of the provisions of the Merger Agreement
relating to the solicitation and negotiation of Acquisition Proposals which
material breach has resulted in a Superior Proposal, and (E) the Company shall
have complied with its obligations relating to termination of the Merger
Agreement in this situation.
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In addition to the obligations of the Company set forth in the two preceding
paragraphs above, the Company agreed to promptly advise Parent of any request
for information or the submission or receipt of any Acquisition Proposal, or
any inquiry with respect to or which could lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person making any such request, Acquisition
Proposal or inquiry and its response or responses thereto. The Company agreed
to keep Parent fully informed of the status and details (including amendments
or proposed amendments) of any such request, Acquisition Proposal or inquiry.
The Company also agreed to immediately cease and cause to be terminated any
then-existing activities, discussions or negotiations with any parties
conducted prior to execution of the Merger Agreement with respect to any of
the foregoing.
"Acquisition Proposal" means an inquiry, offer or proposal regarding any of
the following (other than the transactions contemplated by the Merger
Agreement) involving the Company: (i) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business combination or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of the Company and
its subsidiaries, taken as a whole, or of any Material Business (as defined
herein) or of any subsidiary or subsidiaries responsible for a Material
Business in a single transaction or series of related transactions; (iii) any
tender offer (including a self tender offer) or exchange offer that, if
consummated, would result in any person or group beneficially owning more than
15% of the outstanding shares of any class of equity securities of the Company
or its subsidiaries or the filing of a registration statement under the
Securities Act in connection therewith; (iv) any acquisition of 15% or more of
the outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith or any
other acquisition or disposition the consummation of which would prevent or
materially diminish the benefits to Parent of the Merger; or (v) any public
announcement by the Company or any third party of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. "Superior Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction, for
at least a majority of the Fully Diluted Shares, or at least 51% of the
consolidated assets of the Company, which the Board of Directors of the
Company determines in good faith (after consultation with a financial advisor
of nationally recognized reputation) to be superior to the Company's
stockholders (taking into account any changes to the terms of the Merger
Agreement and the Offer that have been proposed by Parent in response to such
proposal) and to be more favorable to the Company and the Company's
stockholders (taking into account relevant considerations, including relevant
legal, financial, regulatory and other aspects of such proposal and the third
party making such proposal and the conditions and prospects for completion of
such proposal) than the Offer, the Merger and the other Transactions taken as
a whole. "Material Business" means any business (or the assets needed to carry
out such business) that contributed or represented 15% or more of the net
sales, the net income or the assets (including equity securities) of the
Company and its subsidiaries taken as a whole, or the Company's interest in a
particular joint venture.
The Merger Agreement provides that nothing contained therein will prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if the Board of Directors
of the Company, with the advice of independent legal counsel (who may be the
Company's regularly engaged independent counsel), determines in good faith
that the failure to take such action would result in a breach of the fiduciary
duty of the Board of Directors to the stockholders of the Company under
applicable law; provided that neither the Board of Directors of the Company
nor any committee thereof withdraws or modifies, or proposes to withdraw or
modify, the approval or recommendation of the Board of Directors of the
Company of the Offer or the Merger or approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company
and the Board of Directors of the Company have complied in all material
respects with all the provisions of the Merger Agreement relating to the
solicitation and negotiation of Acquisition Proposals.
Indemnification. In the Merger Agreement, Purchaser has agreed that all
rights to indemnification for acts or omissions occurring prior to the
Effective Time existing as of the date of the Merger Agreement in favor of
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the current or former directors or officers, employees and agents of the
Company and its subsidiaries as provided in their respective certificates of
incorporation, bylaws or certain specified agreements as in effect on the date
of the Merger Agreement will survive the Merger and will continue in full
force and effect in accordance with their terms for a period of six years from
the Effective Time. Parent will cause to be maintained, if available, for a
period of six years from the Effective Time the Company's current directors'
and officers' insurance and indemnification policy and fiduciary liability
policy (the "D&O Insurance") (provided that Parent may substitute therefor, at
its election, policies or financial guarantees with the same carriers or other
reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions which are no less advantageous than
the existing D&O Insurance) to the extent that such insurance policies provide
coverage for events occurring prior to the Effective Time for all persons who
are or were directors and officers of the Company on or prior to the date of
the Merger Agreement, so long as the annual premium to be paid by the Company
after the date of the Merger Agreement for such D&O Insurance during such six-
year period would not exceed 200% of the annual premium as of the date of the
Merger Agreement. If, during such six-year period, such insurance coverage
cannot be obtained at all or can only be obtained for an amount in excess of
200% of the annual premium therefor as of the date of the Merger Agreement,
Parent will use reasonable best efforts to cause insurance coverage to be
obtained for an amount equal to 200% of the current annual premium therefor,
on terms and conditions substantially similar to the existing D&O Insurance.
Employee Plans and Benefits and Agreements. In the Merger Agreement, the
Surviving Corporation agreed, from and after the Effective Time, to honor in
accordance with their terms (i) all existing employment, change of control
agreements and other arrangements between the Company or any of its
subsidiaries and any current or former officer of the Company or any of its
subsidiaries which are specifically disclosed on the disclosure schedule to
the Merger Agreement, (ii) with respect to all employees, officers and
directors of the Company, all benefits or other amounts earned or accrued
through the Effective Time under the benefit plans disclosed in the disclosure
schedule to the Merger Agreement and (iii) certain obligations relating to
retiree medical benefits.
For a period of not less than one year following the Effective Time, the
Company and the Surviving Corporation, as the case may be, will establish or
maintain a compensation structure and benefit plans for employees of the
Company (other than its officers and/or directors) who remain employees of the
Surviving Corporation ("Transferred Employees") with terms that, in the
aggregate, are substantially comparable to the compensation structure and
benefit plans currently in place for such employees; provided that Parent,
Purchaser, the Company and/or the Surviving Corporation do not have any
obligation to (i) include any individual in any stock option or other equity-
based compensation or benefit plan or arrangement, (ii) include any such
Transferred Employee in any benefit plan of Parent or any related entity or
(iii) provide any individual with benefits resulting from any change of
control of Parent, the Company or the Surviving Corporation that occurs after
the Effective Time; provided further that the Company or the Surviving
Corporation, as the case may be, will honor certain specified severance plans.
From and after the Effective Time, for eligibility and vesting purposes (but
not for benefit accrual purposes) under any severance, welfare, pension or
other benefit plan or arrangement sponsored by the Company and/or the
Surviving Corporation, as the case may be, that are made available to
Transferred Employees, service with the Company and/or the Surviving
Corporation, as the case may be (whether before or after the Effective Time)
will be credited as if such services had been rendered to Parent or any
related entity. Effective on the date of the Merger Agreement, the Company
amended the Company's Employee Stock Purchase Plan (the "Stock Purchase Plan")
to provide that (A) no individual eligible to participate in the Stock
Purchase Plan will be permitted to increase the rate or level of his or her
participation in the Stock Purchase Plan (including without limitation
changing the amount of his or her contributions to the Stock Purchase Plan or
enrolling to participate in the Stock Purchase Plan following the date of the
Merger Agreement), (B) no further purchases of Securities shall occur pursuant
to the Stock Purchase Plan after the date immediately preceding the date that
Securities are first purchased pursuant to the Offer and (C) effective on the
date that Securities are first purchased pursuant to the Offer, the Stock
Purchase Plan shall terminate.
Reasonable Best Efforts. In the Merger Agreement, subject to the terms and
conditions thereof, each of the parties thereto has agreed to use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
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and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective as soon
as reasonably practicable the transactions contemplated by the Merger
Agreement and the Tender Agreement. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
the Merger Agreement and the Tender Agreement, the proper officers and
directors of each party to the Merger Agreement and the Tender Agreement will
take all such necessary action. Such reasonable best efforts include, without
limitation, (i) using such efforts to obtain all necessary consents, approvals
or waivers from third parties and 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") necessary to the consummation of the transactions contemplated by the
Merger Agreement and the Tender Agreement and (ii) opposing vigorously any
litigation or administrative proceeding relating to the Merger Agreement or
the Tender Agreement, including, without limitation, promptly appealing any
adverse court or agency order. Notwithstanding the foregoing or any other
provisions contained in the Merger Agreement and the Tender Agreement to the
contrary, (i) neither Parent nor the Company nor any of their respective
affiliates will be under any obligation of any kind to enter into any
negotiations or to otherwise agree with or litigate against any Governmental
Entity, including but not limited to any governmental or regulatory authority
with jurisdiction over the enforcement of any applicable Federal, state, local
and foreign antitrust, competition or other similar laws and (ii) neither
Parent or any of its affiliates will be under any obligation to otherwise
agree with any Governmental Entity or any other party to sell or otherwise
dispose of, agree to any limitations on the ownership or control of, or hold
separate (through the establishment of a trust or otherwise) particular assets
or categories of assets or businesses of any of the Company, its subsidiaries,
Parent or any of Parent's affiliates.
Pursuant to the Merger Agreement, the Company and its Board of Directors
will (i) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to the Offer, the
Merger, the Merger Agreement, the Tender Agreement or any of the other
transactions contemplated by the foregoing and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Offer, the
Merger, the Merger Agreement, the Tender Agreement or any other transactions,
take all action necessary to ensure that the Offer, the Merger and the other
transactions, including the transactions contemplated by the Merger Agreement
and the Tender Agreement, may be consummated as promptly as practicable on the
terms contemplated by the Merger Agreement and the Tender Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer,
the Merger and the other transactions.
Standstill Agreements. During the period from the date of the Merger
Agreement through the Effective Time, the Merger Agreement provides that the
Company will not terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the Company or any
of its subsidiaries is a party (other than any involving Parent). Subject to
the foregoing, during such period, the Company agrees to enforce and agrees to
permit Parent and Purchaser to enforce on its behalf and as third party
beneficiaries thereof, to the fullest extent permitted under applicable law,
the provisions of any such agreements, including obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court or other tribunal having jurisdiction. In
addition, the Company waived any rights the Company may have under any
standstill or similar agreements to object to the transfer to Purchaser of all
Securities held by securityholders covered by such standstill or similar
agreements and agreed not to consent to the transfer of any Securities held by
such securityholders to any other person unless (i) the Company has obtained
the specific, prior written consent of Parent with respect to any such
transfer or (ii) the Merger Agreement has been terminated in accordance with
the provisions set forth in "--Termination."
Stockholder Meeting. The Merger Agreement provides that, to the extent
required by applicable law, the Company will promptly after consummation of
the Offer take all action necessary in accordance with the DGCL and its
Certificate of Incorporation and Bylaws to convene a meeting of the
stockholders of the Company to consider and vote on the Merger and the Merger
Agreement. At such stockholder meeting, all of the Shares then owned by
Parent, Purchaser or any other subsidiary of Parent will be voted to approve
the Merger and the Merger Agreement. The Board of Directors of the Company
will recommend that the Company's stockholders vote to
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approve the Merger and the Merger Agreement if such vote is sought, will use
its best efforts to solicit from stockholders of the Company proxies in favor
of the Merger and will take all other action in its judgment necessary and
appropriate to secure the vote of stockholders required by the DGCL to effect
the Merger.
Notwithstanding the foregoing, in the event that Purchaser acquires at least
90% of the then outstanding Shares, at the request of Purchaser, the parties
to the Merger Agreement will take all necessary and appropriate action to
effect the Merger as a "short-form merger" without a meeting of the
stockholders of the Company. See Section 13.
Conditions to the Merger. The respective obligations of each party to effect
the Merger are subject to the satisfaction or waiver, where permissible, prior
to the Effective Time, of the following conditions: (i) if required by the
DGCL, the Merger Agreement will have been approved by the affirmative vote of
the stockholders of the Company by the requisite vote in accordance with
applicable law; and (ii) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time (notwithstanding approval
thereof by the stockholders of the Company) prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of Directors
of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become
nonappealable;
(c) by Parent or Purchaser if due to the occurrence and continued
existence of any of the conditions to the Offer described in Section 15,
Purchaser shall have (i) failed to commence the Offer within the time
required by Regulation 14D under the Exchange Act, (ii) terminated the
Offer without purchasing any securities pursuant to the Offer or (iii)
failed to accept for payment Securities pursuant to the Offer prior to
November 30, 1999;
(d) by the Company (i) if there shall not have been a material breach of
any representation, warranty, covenant or agreement on the part of the
Company, and Purchaser shall have (A) failed to commence the Offer within
the time required by Regulation 14D under the Exchange Act, (B) terminated
the Offer without purchasing any Securities pursuant to the Offer, or (C)
failed to accept for payment Securities pursuant to the Offer prior to
November 30, 1999; provided further that the applicable date pursuant to
this clause (C) shall also be extended to the extent that the four business
day notice period in clause (ii)(y) below is applicable and has not yet
expired and also to the extent the Expiration Date of the Offer is required
to be extended by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to a modification to the Offer by
Purchaser in response to the Superior Proposal which gave rise to the
notice period in clause (ii)(y) below, or (ii) prior to the purchase of
Securities pursuant to the Offer, concurrently with the execution of an
Acquisition Agreement under the circumstances permitted by the provisions
described under "--No Solicitation" in connection with a Superior Proposal,
provided that such termination under this clause (ii) will not be effective
unless (x) the Company and its Board of Directors shall have complied in
all material respects with their obligations under the provisions described
under "--No Solicitation" in connection with such Superior Proposal and the
Company has paid the Termination Fee and (y) the Company provides Parent
and Purchaser with at least four business days' written notice prior to
terminating the Merger Agreement, which notice is accompanied by (1) a copy
of the proposed Acquisition Agreement with respect to the Superior Proposal
that the Company proposes to accept and (2) the Company's written
certification that it has made the determinations with respect to such
Superior Proposal set forth in clauses (A) and (B) of the proviso in the
second paragraph under "--No Solicitation" and the
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representation that the Company will, in the absence of any other superior
Acquisition Proposal, execute such Acquisition Agreement unless Parent or
Purchaser modifies the Offer or the Merger Agreement such that the
Company's Board of Directors reasonably believes in good faith after
consultation with its independent legal counsel and financial advisors that
the Offer and the Merger (as so modified) are at least as favorable as such
Superior Proposal;
(e) by Parent or Purchaser prior to the purchase of Securities pursuant
to the Offer, if (i) any representations or warranties of the Company
(without reference to any materiality qualifications therein) contained in
the Merger Agreement shall not be true and correct at any time prior to the
acceptance for payment of Securities pursuant to the Offer, except where
the failure to be true and correct would not have a Material Adverse Effect
(as defined below) on the Company (other than to the extent such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall not be true and
correct as of such date except where the failure to be true and correct
would not have a Material Adverse Effect on the Company), or (ii) the
Company shall not have performed and complied with, in all material
respects (without reference to any materiality qualifications therein),
each material covenant or agreement contained in the Merger Agreement and
required to be performed or complied with by it, and which breach, in the
case of clause (i) and (ii) above, shall not have been cured prior to the
earlier of (A) fifteen days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, provided,
however, (x) that in the event of a material breach of the provisions
described under""--No Solicitation" the Company will have three days
following notice of such breach in order to cure and (y) in the event of a
willful or intentional breach Parent and Purchaser may immediately
terminate this Agreement, provided further there will be no right to cure
breaches which are non-curable, or (iii) the Board of Directors of the
Company or any committee thereof shall have withdrawn, or modified, amended
or changed (including by amendment of the Schedule 14D-9) in a manner
adverse to Parent or Purchaser its approval or recommendation of the Offer,
the Merger, any of the Transactions or the Merger Agreement, or shall have
approved or recommended to the Company's stockholders an Acquisition
Proposal or any other acquisition of Securities other than the Offer and
the Merger, or shall have adopted any resolutions to effect any of the
foregoing or the Company shall have taken action to redeem the Rights or
otherwise modify the Rights Agreement to facilitate an Acquisition Proposal
or purchase of Securities by any person other than Parent or Purchaser, or
(iv) Merrill Lynch shall have withdrawn, or modified or qualified in any
manner adverse to Parent or Purchaser, the Financial Advisor Opinion;
(f) by the Company prior to the purchase of any Securities pursuant to
the Offer if (i) there shall have been a material breach of any
representation or warranty in the Merger Agreement on the part of Parent or
Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or (ii) Parent or Purchaser shall not have
performed or complied with, in all material respects (without reference to
any materiality qualifications therein), each covenant or agreement
contained in the Merger Agreement and required to be performed or complied
with by them, and such breach materially adversely affects (or materially
delays) the consummation of the Offer, and which breach, in the case of
clause (i) and clause (ii) above, shall not have been cured prior to the
earlier of (A) 10 days following notice of such breach and (B) two business
days prior to the date on which the Offer expires; provided, however, that
Parent and Purchaser shall have no right to cure such breach and the
Company may immediately terminate the Merger Agreement in the event that
such breach by Parent or Purchaser was willful or intentional, provided
further there shall be no right to cure breaches which are noncurable; or
(g) by Parent or Purchaser prior to the purchase of Securities pursuant
to the Offer if any person or group (which includes a "person" or "group"
as such terms are defined in Section 13(d)(3) of the Exchange Act) other
than Parent, Purchaser, or any of their affiliates, shall have acquired
beneficial ownership of more than 51% of the Shares outstanding or shall
have consummated or entered into a definitive agreement with the Company
with respect to an Acquisition Proposal, or consummates an Acquisition
Proposal pursuant to a definitive agreement with the Company.
In the event of the termination and abandonment of the Merger Agreement
pursuant to the provisions set forth under "--Termination" above, the Merger
Agreement, except for certain enumerated provisions, will
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become void and have no effect, without any liability on the part of any party
or its affiliates, directors, officers or stockholders. Nothing in this
provision will relieve any party to the Merger Agreement of liability for
breach of the Merger Agreement.
Termination Fee. Except as provided below, the Merger Agreement provides
that all fees and expenses incurred by the parties to the Merger Agreement
will be borne solely and entirely by the party which has incurred such fees
and expenses.
If:
(i) Parent or Purchaser terminates the Merger Agreement pursuant to
paragraph (c) under "--Termination" or the Company terminates pursuant to
clause (d)(i) under "--Termination", in either case due to a failure to
achieve the Minimum Condition and Parent and Purchaser are not in material
breach of the Merger Agreement, Parent or Purchaser terminates pursuant to
paragraph (c) under "--Termination" because of the occurrence and continued
existence of the conditions set forth in paragraphs (a) or (b) of Section
15 or Parent or Purchaser terminates pursuant to clauses (e)(i) or (ii)
under "--Termination", in each case set forth in this clause (i), in
circumstances when, prior to such termination any third party shall have
acquired beneficial ownership of 51% or more of the outstanding Shares or
made or consummated or announced an intention to make or consummate an
Acquisition Proposal for 51% or more of the consolidated assets of the
Company or a majority of the outstanding Shares of the Company (or with
respect to any such proposal that may be existing on the date hereof, not
withdrawn such Acquisition Proposal), and, in the case of such an
Acquisition Proposal which has not been consummated prior to such
termination, within 12 months thereafter such Acquisition Proposal (or, in
the case Parent or Purchaser terminates the Merger Agreement pursuant to
paragraph (c) under "--Termination" due to a failure to achieve the Minimum
Condition, any other Acquisition Proposal for 51% or more of the
consolidated assets of the Company or a majority of the outstanding Shares
of the Company) has been consummated for consideration per Share higher
than the per Share consideration in the Offer or for an aggregate
consideration, including the retention of any equity by shareholders, of
more than the aggregate consideration of the Offer and the Merger;
(ii) Parent or Purchaser terminates the Merger Agreement pursuant to
clauses (e)(iii) or (iv) under""--Termination", pursuant to paragraph (c)
under "--Termination" because of the occurrence and continued existence of
the conditions set forth in paragraphs (g) or (i) of Section 15, pursuant
to paragraph (g) under "--Termination", because of a material breach of the
provisions described under "--No Solicitation", or a willful or intentional
breach of the Company's covenants and agreements which materially
interferes with the consummation of the Transactions;
(iii) the Company terminates the Merger Agreement pursuant to clause
(d)(ii) under "--Termination"; or
(iv) the Company terminates the Merger Agreement pursuant to paragraph
(f) under "--Termination" in circumstances when Parent or Purchaser shall
also have the right to terminate the Merger Agreement in the circumstances
where Parent or Purchaser would have been entitled to a Termination Fee
pursuant to clauses (i) or (ii) above;
then, in each case, the Company will pay to Parent, within one business day
following the date on which Parent becomes entitled to a Termination Fee (or
earlier, if applicable), a fee (a "Termination Fee"), in cash, equal to $42.25
million; provided that the Company in no event shall be obligated to pay more
than one such Termination Fee with respect to all such agreements and
occurrences and such termination. Any payment required to be made pursuant to
these provisions shall be made to Parent by wire transfer of immediately
available funds to an account designated by Parent. These provisions will not,
subject to the following paragraph, derogate from any rights or remedies which
Parent, Purchaser or the Company may possess under the Merger Agreement or the
Tender Agreement or under applicable law, as the case may be, including with
respect to any breach of the representations, warranties, agreements or
covenants contained in the Merger Agreement, provided that,
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notwithstanding the foregoing, the Termination Fee shall be the sole and
exclusive remedy of Parent unless the Parent elects to forego the Termination
Fee in such circumstances and pursue other rights and remedies in such
circumstances.
If the Merger Agreement is terminated by Parent or Purchaser pursuant to the
provisions set forth in paragraph (c) under "--Termination" because of the
occurrence and continued existence of the conditions set forth in paragraph
(a) of Section 15 or pursuant to the provisions set forth in clause (e)(i)
under "--Termination" and the condition does not result from a willful breach,
promptly upon demand the Company shall reimburse Parent and Purchaser for all
their reasonable documented out-of-pocket fees and expenses incurred by
Parent, Purchaser and their respective affiliates in connection with the
Merger Agreement, the Offer, the Merger, the Tender Agreement and the other
Transactions, including all such fees and expenses of counsel, accountants,
investment bankers, experts and consultants to each of Parent and Purchaser
and their respective affiliates, commitment and other reasonable documented
fees and expenses payable to financing sources and the expenses of the
preparation, printing, filing and mailing of the Offer documents and any other
related costs and expenses (the "Expenses"). Other than as provided in the
enforcement provisions of the Merger Agreement, payment of Expenses shall be
the sole and exclusive remedy of Parent and Purchaser for such a breach,
provided that Purchaser shall also be entitled to a Termination Fee to the
extent clause (i) under "--Termination Fee" is applicable to the termination
(in which event the payment of Expenses shall be returned).
For purposes of the provisions under "--Termination Fee", "willful" shall
mean that the Merger Agreement is terminated as a result of one or more
representations and warranties in the Merger Agreement not being true when
made and one or more of the persons listed on the disclosure schedules to the
Merger Agreement had knowledge at that time of events, facts, circumstances or
conditions not disclosed in the Merger Agreement which caused such
representations and warranties to be false or misleading.
Tender Agreement.
The following is a summary of certain provisions of the Tender Agreement.
This summary is not a complete description of the terms and conditions of the
Tender Agreement and is qualified in its entirety by reference to the full
text of the Tender Agreement filed with the Commission as an exhibit to the
Schedule 14D-1 and is incorporated herein by reference. Capitalized terms not
otherwise defined below shall have the meanings set forth in the Tender
Agreement. The Tender Agreement may be examined, and copies obtained, as set
forth in Section 8 of this Offer to Purchase.
Pursuant to the Tender Agreement, each Certain Securityholder agreed that
such Certain Securityholder will validly tender (or cause the record owner of
such shares to validly tender) and sell pursuant to and in accordance with the
terms of the Offer not later than the tenth business day after commencement of
the Offer (or the earlier of the expiration date of the offer and the tenth
business day after such Shares or Warrants, as the case may be, are acquired
by such Certain Securityholder if the Certain Securityholder acquires
Securities after the date of the Tender Agreement), or, if the Certain
Securityholder has not received the Offer Documents by such time, within two
business days following receipt of such documents, all of the then outstanding
Securities beneficially owned by such Certain Securityholder (including the
Securities outstanding as of the date of the Tender Agreement and set forth in
the Tender Agreement opposite such Certain Securityholder's name). Subject to
the terms of the Tender Agreement, upon the purchase by Purchaser of all of
such then outstanding Securities beneficially owned by such Certain
Securityholder pursuant to the Offer in accordance with this the Tender
Agreement, the Tender Agreement will terminate as it relates to such Certain
Securityholder. Each Certain Securityholder acknowledges that Purchaser's
obligation to accept for payment and pay for the Securities tendered in the
Offer is subject to all the terms and conditions of the Offer and the Merger
Agreement.
The Tender Agreement will terminate as to any Certain Securityholder upon
the earlier of (a) the purchase of all the Securities beneficially owned by
such Certain Securityholder pursuant to the Offer in accordance with the
provisions in the Tender Agreement setting forth how to tender the Securities
and (b) the date the Merger Agreement is terminated in accordance with its
terms.
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Confidentiality Agreement.
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on July 8, 1999 by Parent, Subsidiary and the Company
(the "Confidentiality Agreement"). This summary is not a complete description
of the terms and conditions of the Confidentiality Agreement and is qualified
in its entirety by reference to the full text of the Confidentiality Agreement
filed with the Commission as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference. Capitalized terms not otherwise defined
below have the meanings set forth in the Confidentiality Agreement. The
Confidentiality Agreement may be examined, and copies obtained, as set forth
in Section 8 of this Offer to Purchase.
Pursuant to the terms of the Confidentiality Agreement, the parties agreed
to provide, among other things, for the confidential treatment of their
discussions regarding the Offer and the Merger and the exchange of certain
confidential information concerning the Company. In addition, Parent has
agreed in the Confidentiality Agreement to certain restrictions on its ability
to acquire, or offer to acquire, Shares or take certain other actions, subject
to certain exceptions with respect to third party offers to purchase Shares.
13. Plans for the Company; Other Matters.
Plans for the Company. Parent has evaluated the past performance of the
Company and believes it to be very well-managed. Parent intends to continue
programs, policies and management practices which it believes have allowed the
Company to achieve its success. Parent will continue to evaluate and review
the Company and its business, assets, corporate structure, capitalization,
operations, properties, programs, policies, practices, management and
personnel with a view towards determining how to optimally realize any
potential benefits which arise from the combination of the operations of the
Company with those of Parent. Such evaluation and review is ongoing and will
not be completed until sometime after the consummation of the Offer and the
Merger. If, as and to the extent that Purchaser acquires control of the
Company, Parent and Purchaser will complete such evaluation and review of the
Company and will determine what, if any, changes would be desirable in light
of the circumstances which then exist. In addition, subject to the terms of
the Merger Agreement, Parent currently intends to terminate the declaration of
the Company's regular quarterly dividend after the consummation of the Offer.
Assuming the Minimum Condition is satisfied and Purchaser purchases
Securities pursuant to the Offer, Parent intends to promptly exercise its
rights under the Merger Agreement to obtain majority representation on, and
control of, the Company Board. See Section 12. Purchaser presently intends to
exercise its rights to cause the Company to elect to the Company Board its
designees, and Purchaser intends to select such designees from among the
individuals (who are currently officers or directors of Parent or Purchaser)
identified in Schedule I hereto and in the Schedule 14D-9. The Merger
Agreement also provides that the directors of Purchaser immediately prior to
the Effective Time shall be the directors of the Surviving Corporation at and
after the Effective Time. Purchaser or an affiliate of Purchaser may,
following the consummation or termination of the Offer, seek to acquire
additional Securities through open market purchases, privately negotiated
transactions, a tender offer or exchange offer or otherwise, upon such terms
and at such prices as it shall determine, which may be more or less than the
price paid in the Offer, subject to the terms of the Confidentiality
Agreement. Purchaser and its affiliates also reserve the right to dispose of
any or all Securities acquired by them, subject to the terms of the Merger
Agreement.
Except as disclosed in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, or sale
or transfer of a material amount of assets, involving the Company or any of
its subsidiaries, or any material changes in the Company's capitalization,
corporate structure, business or composition of its management or the Company
Board.
Stockholder Approval. Under the DGCL and the Company's Certificate of
Incorporation, the approval of the Company Board and the affirmative vote of
the holders of a majority of the outstanding Shares are required
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to adopt and approve the Merger Agreement and the Merger. The Company has
represented in the Merger Agreement that the execution and delivery of the
Merger Agreement by the Company and the consummation by the Company of the
transactions contemplated by the Merger Agreement have been duly authorized by
all necessary corporate action on the part of the Company, subject to the
approval of the Merger and the Merger Agreement by the Company's stockholders
in accordance with the DGCL. In addition, the Company has represented that the
affirmative vote of the holders of a majority of the outstanding Shares is the
only vote of the holders of any class or series of the Company's capital stock
which is necessary to approve the Merger Agreement and the transactions
contemplated thereby, including the Merger. Therefore, unless the Merger is
consummated pursuant to the short-form merger provisions under the DGCL
described below (in which case no further corporate action by the stockholders
of the Company will be required to complete the Merger), the only remaining
required corporate action of the Company will be the approval of the Merger
Agreement and the Merger by the affirmative vote of the holders of a majority
of the outstanding Shares. The Merger Agreement provides that Parent will
vote, or cause to be voted, all of the Shares then owned by Parent, Purchaser
or any of Parent's other subsidiaries and affiliates in favor of the approval
of the Merger and the adoption of the Merger Agreement. In the event that
Parent, Purchaser and Parent's other subsidiaries acquire in the aggregate at
least a majority of the Shares entitled to vote on the approval of the Merger
and the Merger Agreement, they would have the ability to effect the Merger
without the affirmative votes of any other stockholders.
Short-Form Merger. The short-form merger provision of Section 253 of the
DGCL provides that, if a corporation owns at least 90% of the outstanding
shares of each class of capital stock of a subsidiary corporation, the
corporation holding such stock may merge such subsidiary into itself, or
itself into such subsidiary, without any action or vote on the part of the
board of directors or the stockholders of such other corporation. In the event
that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company. In the Merger Agreement, Purchaser and the Company have agreed that
Purchaser may extend the Offer on one or more occasions for an aggregate
period of not more than five business days if the Minimum Condition has been
satisfied but less than 90% of the Fully Diluted Shares have been validly
tendered and not properly withdrawn. Even if Purchaser does not own 90% of the
outstanding Shares following consummation of the Offer. Purchaser could seek
to purchase additional Shares in the open market or otherwise in order to
reach the 90% threshold and employ a short-form merger. The per Share
consideration paid for any Shares so acquired may be greater or less than that
paid in the Offer. Purchaser presently intends to effect a short-form merger,
if permitted to do so under the DGCL.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company
would have certain rights to dissent and demand appraisal of, and payment in
cash of the fair value of, their Shares under the DGCL. Under the DGCL, such
rights, if the statutory procedures were complied with, could lead to a
judicial determination of the fair value (excluding any element of value
arising from the accomplishment or expectation of the Merger) required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than, or in addition to, the price paid in the Offer and the market
value of the Shares, including asset values and the investment value of the
Shares. The value so determined could be more or less than the purchase price
per Share pursuant to the Offer or the consideration per Share to be paid in
the Merger. The Company has represented to the Parent and Purchaser that the
Warrants will not entitle holders thereof to appraisal rights pursuant to the
DGCL in connection with the Merger.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger or another business
combination following the purchase of Securities pursuant to the Offer in
which Purchaser seeks to acquire the remaining Securities not held by it.
Purchaser believes, however, that Rule 13e-3 will not be applicable to the
Merger because it is anticipated that the Merger would be effected within one
year following consummation of the Offer and in the Merger stockholders would
receive the same price per Share as paid in the Offer. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial
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information concerning the Company, and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such a transaction, be filed with the Commission and disclosed
to minority stockholders prior to consummation of the transaction. The
purchase of a substantial number of Securities pursuant to the Offer may
result in the Company being able to terminate its Exchange Act registration,
although Parent has no current intention to do so prior to the Effective Time.
See Section 7. If such registration were terminated, Rule 13e-3 would be
inapplicable to any such future Merger or such alternative transaction.
14. Dividends and Distributions.
The Merger Agreement provides that between the date of the Merger Agreement
and the Effective Time, the Company will not, and will not permit any of its
subsidiaries without the prior written consent of Parent to, (i) split,
combine or reclassify any issued and outstanding shares of its capital stock,
or declare, set aside or pay any dividend or other distribution (payable in
cash, stock, property or otherwise) with respect to such shares, (ii) redeem,
purchase, acquire or offer to acquire (or permit any subsidiary to redeem,
purchase, acquire or offer to acquire) any shares of its capital stock or
(iii) issue, sell, pledge, accelerate, modify the terms of or dispose of, or
agree to issue, sell, pledge, accelerate, modify the terms of or dispose of,
any additional shares of, or securities convertible or exchangeable for, or
any options, warrants, calls, commitments or rights of any kind to acquire any
shares of, its capital stock of any class or other property or assets,
provided, that the Company may declare and pay to holders of Shares (but not
warrantholders in their capacity as such) regular quarterly cash dividends not
to exceed $0.05 per Share per fiscal quarter.
15. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer but subject to the terms
and conditions of the Merger Agreement, in addition to (and not in limitation
of) Purchaser's rights pursuant to the Merger Agreement to extend and amend
the Offer at any time, in its sole discretion, to the extent permitted by the
Merger Agreement, Purchaser shall not be required to accept for payment or,
subject to Rule 14e-1(c) of the Exchange Act, pay for and may delay the
acceptance for payment of or, subject to Rule 14e-1(c) of the Exchange Act,
the payment for, any Securities not theretofore accepted for payment or paid
for, and Purchaser may terminate or amend the Offer if (i) a number of
Securities representing at least a majority of the Fully Diluted Shares shall
not have been validly tendered and not withdrawn immediately prior to the
expiration of the Offer ("Minimum Condition"), or (ii) at any time on or after
the date of the Merger Agreement and prior to the time of acceptance of such
Securities for payment or the payment therefor, any of the following
conditions has occurred and continues to occur:
(a) any representation and warranty of the Company in the Merger
Agreement (without reference to any materiality qualifier therein other
than the representations and warranties in the Merger Agreement concerning
capitalization, which must be true and correct in all material respects)
shall not be true and correct as of such time, except where the failure to
be so true and correct (other than the representations and warranties in
the Merger Agreement concerning capitalization) would not have a Material
Adverse Effect on the Company (other than to the extent any such
representation and warranty expressly relates to an earlier date, in which
case such representation and warranty shall not be true and correct as of
such date, except where the failure to be so true and correct would not
have a Material Adverse Effect on the Company) and which breach shall not
have been cured prior to the earlier of (i) fifteen days following notice
of such breach and (ii) two business days prior to the date on which the
Offer expires; provided, however, that the Company shall have no right to
cure such breach in the event that such breach by the Company was willful
or intentional, provided further, there shall be no right to cure breaches
which are non-curable);
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications
therein), each covenant or agreement contained in the Merger Agreement and
required to be performed or complied with by it and which breach shall not
have been cured prior to the earlier of (i) fifteen days following notice
of such breach and (ii) two business days prior to the
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date on which the Offer expires; provided, however, (x) that in the event
of a material breach of a provision set forth "--No Solicitation", the
Company shall have three days following notice of such breach in order to
cure and (y) in the event of a willful or intentional breach Parent and
Purchaser may immediately terminate the Merger Agreement, provided further,
there shall be no right to cure breaches which are non-curable;
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange (excluding any coordinated trading halt triggered
as a result of a specified decrease in a market index) related to market
conditions, (ii) any extraordinary adverse change in the financial markets
in the United States or the Federal Republic of Germany, (iii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or the Federal Republic of Germany by
any Governmental Entity, (iv) any material mandatory limitation by any
Governmental Entity on the extension of credit by banks or other lending
institutions, or (v) a commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States or the Federal Republic of Germany;
(d) any applicable waiting period under the HSR Act shall not have
expired or been terminated or there shall be threatened or pending any
suit, action, investigation or proceeding by any Governmental Entity, or
pending any suit by any other person which has a reasonable possibility of
success, (i) challenging the acquisition by Parent or Purchaser of any
Securities, seeking to make illegal, materially delay, make materially more
costly or otherwise directly or indirectly restrain or prohibit the making
or consummation of the Offer and the Merger or the performance of any of
the other Transactions or seeking to obtain from the Company, Parent or
Purchaser any damages that are material in relation to the Company and its
subsidiaries taken as whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries or affiliates of any of the businesses or assets of the
Company, Parent or any of their respective subsidiaries or affiliates, or
to compel the Company, Parent or any of their respective subsidiaries or
affiliates to dispose of or hold separate any of the businesses or assets
of the Company, Parent or any of their respective subsidiaries or
affiliates, as a result of the Offer, the Merger or any of the other
Transactions, (iii) seeking to impose limitations on the ability of Parent
or Purchaser to acquire or hold, or exercise full rights of ownership of,
any Securities accepted for payment pursuant to the Offer including,
without limitation, the right to vote the Shares accepted for payment by it
on all matters properly presented to the stockholders of the Company, (iv)
seeking to prohibit Parent or any of its subsidiaries or affiliates from
effectively controlling in any material respect the business or operations
of the Company or its subsidiaries, (v) requiring divestiture by Purchaser
or any of its affiliates of any Securities or (vi) which otherwise is
reasonably likely to have a Material Adverse Effect on the Company or
Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters)
threatened, proposed or sought (which in each case Parent believes in good
faith is reasonably likely to become effective), enacted, entered,
enforced, promulgated or issued with respect to or deemed applicable to, or
any consent or approval withheld with respect to (i) Parent, the Company or
any of their respective subsidiaries or affiliates or (ii) the Offer or the
Merger or any of the other Transactions by any Governmental Entity or
court, that has resulted or is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) though
(v) of paragraph (d) above;
(f) since the date of the Merger Agreement there shall have occurred any
events, changes, effects or developments that, individually or in the
aggregate, have had or are reasonably likely to have, a Material Adverse
Effect on the Company;
(g) (1) the Board of Directors of the Company or any other committee
thereof shall have (i) withdrawn, or modified, amended or changed
(including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser, its approval or recommendation of the Offer, the
Merger, any of the other Transactions or the Merger Agreement, (ii)
approved or recommended to the Company's stockholders an Acquisition
Proposal or any other acquisition of Securities other than the Offer and
the Merger or (iii)
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adopted any resolution to effect any of the foregoing, or the Company shall
have taken action to redeem the Rights or otherwise modify the Rights
Agreement to facilitate an Acquisition Proposal or purchase of Securities
by any person other than Parent or Purchaser or (2) Merrill Lynch shall
have withdrawn, or modified or qualified in any manner adverse to Parent or
Purchaser, the Financial Advisor Opinion;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser, any of
their affiliates, or any group of which any of them is a member, shall have
acquired beneficial ownership of more than 51% of the Shares or shall have
consummated or entered into a definitive agreement with the Company with
respect to an Acquisition Proposal.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition and, subject to certain limitations
described in Section 1.1 of the Merger Agreement, may be waived by Purchaser
or Parent, in whole or in part, at any time and from time to time, in the sole
discretion of Purchaser or Parent. The failure by Purchaser or Parent or any
of their respective affiliates at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each right will
be deemed an ongoing right which may be asserted at any time and from time to
time.
"Material Adverse Effect" shall mean any change or effect that is (after
giving effect to any appropriate reserves for such matter on the financial
statements included in the Company's filings and reports under the Exchange
Act filed and publicly available prior to the date of the Merger Agreement)
materially adverse to the business, results of operations, assets, liabilities
or financial condition of the Company and its subsidiaries, taken as a whole,
or any event, matter, condition or effect which precludes the Company from
performing its obligations under the Merger Agreement or the consummation of
the Transactions; provided, however, that in determining whether there has
been a Material Adverse Effect, any adverse effect directly attributable to
the following shall be disregarded: (i) general economic or business
conditions; (ii) general industry conditions; (iii) the taking of any action
permitted or required by the Merger Agreement or the Tender Agreement; (iv)
the announcement or pendency of the Offer, the Merger or any of the other
Transactions; (v) the breach by Parent or Purchaser of the Merger Agreement;
and (vi) a decline in the Company's stock price (provided, however, that any
adverse effect attributable to the factors identified in clause (i) or (ii)
above shall not be disregarded to the extent that the impact on the Company is
greater than that on similarly situated companies).
16. Certain Legal Matters and Regulatory Approvals.
General. Except as described in this Section 16, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, neither Purchaser nor
Parent is aware of any license or regulatory permit that is material to the
business of the Company and its subsidiaries, taken as a whole, and is likely
to be adversely affected by the acquisition of Securities by Parent or
Purchaser pursuant to the Offer, the Merger or otherwise, or of any approval
or other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required prior to the
acquisition of Securities by Purchaser pursuant to the Offer, the Merger or
otherwise, except for those approvals and actions which Parent and Purchaser
presently expect to obtain. To the extent that any such approval or other
action is required, Purchaser and Parent presently contemplate that such
approval or other action will be sought, except as described below under "--
State Antitakeover Statutes." While, except as otherwise described in this
Offer to Purchase, Purchaser does not presently intend to delay the acceptance
for payment of, or payment for, Securities tendered pursuant to the Offer
pending the outcome of any such matter, there can be no assurance that any
such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of, or other substantial conditions complied with, in the
event that such approvals were not obtained or such other
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actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Securities tendered. See Section 15 for certain conditions to the
Offer, including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of DGCL, in general, prohibits a
Delaware corporation, such as the Company, from engaging in a "Business
Combination" (defined as a variety of transactions, including mergers) with an
"Interested Stockholder" (defined generally as a person that is the beneficial
owner of 15% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an Interested Stockholder unless, prior to the date such person became
an Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The provisions of Section 203
of DGCL are not applicable to any of the transactions contemplated by the
Merger Agreement, because the Merger Agreement and the transactions
contemplated thereby were approved by the Company Board prior to the execution
thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Purchaser does not believe that the antitakeover laws and regulations of any
state other than the State of Delaware will by their terms apply to the Offer,
and, except as set forth above with respect to Section 203 of DGCL, Purchaser
has not attempted to comply with any state antitakeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer and nothing in this Offer to
Purchase or any action taken in connection with the Offer is intended as a
waiver of such right. If it is asserted that any state antitakeover statute is
applicable to the Offer and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required
to file certain information with, or to receive approvals from, the relevant
state authorities, and Purchaser might be unable to accept for payment or pay
for Securities tendered pursuant to the Offer or may be delayed in
consummating the Offer. In such case, Purchaser may to be obligated to accept
for payment, or pay for, any Securities tendered pursuant to the Offer. See
Section 15.
The Company has agreed in the Merger Agreement that it and its Board of
Directors will (i) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to the
Transactions and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Transactions, take all action necessary
to ensure that the Transactions may be consummated as promptly as practicable
on the terms contemplated by the Merger Agreement and the Tender Agreement and
otherwise to minimize the effect of such statute or regulation on the
Transactions.
United States Antitrust. The Offer and the Merger are subject to the HSR
Act, which provides that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the United States Federal Trade Commission (the "FTC") and certain waiting
period requirements have been satisfied.
38
<PAGE>
The rules promulgated by the FTC require the filing by each of Parent and
the Company of a Notification and Report Form with respect to the Offer under
the HSR Act. Parent made the required filing on September 2, 1999. The waiting
period under the HSR Act with respect to the Offer will expire at 11:59 p.m.,
New York City time, on the fifteenth day after the date Parent's form was
filed unless early termination of the waiting period is granted. However, the
Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent. If such a request
is made, such waiting period will expire at 11:59 p.m., New York City time, on
the tenth day after substantial compliance by Parent with such request. Only
one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while such negotiations continue. The
Purchaser will not accept for payment Securities tendered pursuant to the
Offer unless and until the waiting period requirements imposed by the HSR Act
with respect to the Offer have been satisfied. See Section 15.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws (as defined below) of transactions such as Purchaser's
acquisition of Shares pursuant to the Offer and the Merger. At any time before
or after Purchaser's acquisition of Securities, the Antitrust Division or the
FTC could take such action under the Antitrust Laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Securities pursuant to the Offer or otherwise seeking divestiture of
Securities acquired by Purchaser or divestiture of substantial assets of
Parent or its subsidiaries. Private parties, as well as state governments, may
also bring legal action under the Antitrust Laws under certain circumstances.
Based upon an examination of publicly available information provided by the
Company relating to the businesses in which the Company and its subsidiaries
are engaged, Parent and Purchaser believe that the acquisition of Securities
by Purchaser will not violate the Antitrust Laws. Nevertheless, there can be
no assurance that a challenge to the Offer or other acquisition of Securities
by Purchaser on antitrust grounds will not be made or, if such a challenge is
made, of the result. See Section 15 for certain conditions to the Offer,
including conditions with respect to litigation and certain government
actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal, state and
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade.
17. Fees and Expenses.
Purchaser and Parent have retained Georgeson & Company, Inc., to serve as
the Information Agent and EquiServe, L.P. to serve as the Depositary in
connection with the Offer. The Information Agent may contact holders of
Securities by personal interview, mail, telephone, telex, telegraph and other
methods of electronic communication and may request brokers, dealers, banks,
trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection with their services, including certain
liabilities under the Federal securities laws.
Parent has engaged Morgan Stanley to act as its financial advisor and as the
Dealer Manager. Pursuant to a letter agreement dated July 2, 1999, Parent has
agreed to pay Morgan Stanley for its services, including its services as
Dealer Manager and as financial advisor to Parent, under customary terms and
conditions, an aggregate of $5.2 million upon consummation of the Offer.
Parent has also agreed to reimburse Morgan Stanley
39
<PAGE>
for all reasonable expenses, and to indemnify Morgan Stanley against
liabilities and expenses in connection with its services, including
liabilities under Federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Securities pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be
reimbursed by Purchaser for customary mailing and handling expenses incurred
by them in forwarding the Offer materials to their customers.
18. Miscellaneous.
The Offer is being made solely by this Offer to Purchase and the related
Letters of Transmittal and is being made to all holders of Securities.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Securities pursuant thereto,
Purchaser shall make a good faith effort to comply with such statute or seek
to have such statute declared inapplicable to the Offer. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) holders of
Securities in such state. In those jurisdictions where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer is being made on behalf of Purchaser by the Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
No person has been authorized to give any information or to make any
representation on behalf of Parent or Purchaser not contained herein or in the
Letters of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the same manner set forth in
Section 8 of this Offer to Purchase (except that such material will not be
available at the regional offices of the Commission).
Level Acquisition Corp.
September 3, 1999
40
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER AND CERTAIN OTHER PERSONS
1. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each member of the Supervisory Board and the Board of Managing Directors and
executive officer of Parent. Unless otherwise indicated, each such person is a
citizen of Germany and the business address of each such person is c/o
Dyckerhoff AG, Biebricher Strabe 69, 65203 Wiesbaden, Germany. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Parent. Unless otherwise indicated, each such person
has held his or her present occupation as set forth below, or has been an
executive officer at Parent for the past five years.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------------
Supervisory Board
<C> <S>
Dr. Jurgen Lose................ Chairman of the Supervisory Board since 1998. Mr. Lose,
64, former Member of the Board of Managing Directors of
Dyckerhoff AG.
Ulrich Schowalter.............. Vice Chairman of the Supervisory Board. Mr. Schowalter,
57, Chairman of the Employees' Council of the Gollheim
plant, Dyckerhoff Zement GmbH.
Jurgen Birk.................... Member of the Supervisory Board. Mr. Birk, 46, Chairman
of the Employees' Council of ispo GmbH.
Christa Blotsch................ Member of the Supervisory Board. Ms. Blotsch, 56,
Chairwoman of the Employees' Council of schneider + klein
GmbH.
Otto Boehringer................ Member of the Supervisory Board. Mr. Boehringer, 69,
partner of C.H. Boehringer Sohn.
Klaus Bussau................... Member of the Supervisory Board. Mr. Bussau, 52, head of
the Laboratory of the Wilhelm Dyckerhoff Institute for
Building Materials Technology.
Dr. Gotz Dyckerhoff............ Member of the Supervisory Board. Mr. Dyckerhoff, 57,
Managing Director of Grunenthal GmbH.
Gunter Ernst................... Member of the Supervisory Board. Mr. Ernst, 54, Director
of Bayerische Hypo- und Vereinsbank AG.
Dr. Jurgen Forterer............ Member of the Supervisory Board. Mr. Forterer, 57,
Chairman of the Board of Managing Directors of R & V
Versicherungsgruppe.
Werner Hab..................... Member of the Supervisory Board. Mr. Hab, 44, Union
Secretary.
Dr. Tessen von Heydebreck...... Member of the Supervisory Board. Mr. von Heydebreck, 54,
member of the Board of Managing Directors of Deutsche
Bank AG.
Karl-Heinz Horstkotte.......... Member of the Supervisory Board. Mr. Horstkotte, 52,
Chairman of the Employees' Council of the Lengerich
plant, Dyckerhoff Zement GmbH.
Winfried Mehlhose.............. Member of the Supervisory Board. Mr. Mehlhose, 61, head
of the Central Personnel Department of Dyckerhoff Zement
GmbH.
Kurt Morgen.................... Member of the Supervisory Board. Mr. Morgen, 63, former
member of the Board of Managing Directors of Dresdner
Bank AG.
Thomas Weisgerber.............. Member of the Supervisory Board. Mr. Weisgerber, 50,
member of the Management of Bundesverband deutscher
Banken.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------------
<C> <S>
Hans-Joachim Wilms............. Member of the Supervisory Board. Mr. Wilms, 44, Vice
Chairman of the Board of Industriegewerkschaft Bauen-
Agrar-Umwelt.
Board of Managing Directors
Dr. Peter Rohde................ Chairman of Board of Managing Directors since 1995.
Mr. Rohde, 58, former Member of the Board of Managing
Directors of Ruhrkohle AG.
Kurt Bischof................... Member of Board of Managing Directors since 1997.
Mr. Bischof, 63, former Senior General Manager of
Dyckerhoff AG.
Michael Busch.................. Member of Board of Managing Directors since 1997.
Mr. Busch, 56, former Senior General Manager of
Dyckerhoff AG.
Philipp Magel.................. Member of Board of Managing Directors since 1992.
Mr. Magel, 62.
Peter Steiner.................. Member of Board of Managing Directors since 1998.
Mr. Steiner, 40, former Member of the Board of Managing
Directors of SUBA Bau AG.
</TABLE>
2. Directors and Executive Officers of Dyckerhoff, Inc. The following table
sets forth the name and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five
years, of each director and executive officer of Purchaser. Each such person
is a citizen of the United States of America, unless otherwise noted, and the
business address of each such person is Ten Post Office Square South, Boston,
Massachusetts 02109.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------------
<C> <S>
Felix Pardo.................... Director since 1997. Mr. Pardo, 62, Chairman since 1998;
President and Chief Executive Officer of Phillip Services
Inc. in 1998; President and Chief Executive Officer of
Ruhr-American Coal Corp. from 1992 to 1998.
Michael B. Clarke.............. Director since 1994. Mr. Clarke, 53, President and Chief
Executive Officer since 1997; President and Chief
Executive Officer of Glens Falls Cement Company Inc.
since 1988; President of Glens Falls Lehigh Cement
Company since 1999.
Fred Cohrs..................... Director since 1997. Mr. Cohrs, 65, President of Florida
Rock Cement Group since 1995 and Vice President of
Florida Rock Industries since 1995; General Manager and
Partner of Carolina Cement Company from 1991 to 1995. His
business address is 155 East 21st Street, Jacksonville,
Florida 32206.
Philipp Magel.................. Director since 1992. See Part 1 of this Schedule I.
Joel Bravard................... Director since 1997. Mr. Bravard, 45, a citizen of
France, Member of the Board of Managing Directors of
Dyckerhoff Zement International GmbH since 1997; Director
of Ciments Francais from 1994 to 1997. His business
address c/o Dyckerhoff AG, Biebricher Stra(Beta)e 69, 65203
Wiesbaden, Germany.
Michael Busch.................. Director since 1998. See Part 1 of this Schedule I.
</TABLE>
I-2
<PAGE>
3. Directors and Executive Officers of Purchaser. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Purchaser. Each such person is a
citizen of the United States of America, and the business address of each such
person is Ten Post Office Square South, Boston, Massachusetts 02109.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- ---------------------------------------------------------
<S> <C>
Felix Pardo.................... Director, President, Treasurer and Secretary since 1999.
See Part 2 of this Schedule I.
</TABLE>
4. Certain Other Persons. Approximately 41% of the voting power of the stock
of Parent is held by approximately 300 Dyckerhoff family stockholders under a
voting agreement. When matters are submitted to Parent's stockholders for
vote, the parties to the voting agreement determine, by majority vote of the
shares subject to the voting agreement, how all of the shares of Parent stock
subject to the voting agreement are to be voted on a particular matter. The
members of the Dyckerhoff family that are parties to the voting agreement may
be deemed to control Parent.
I-3
<PAGE>
Facsimile copies of the Letters of Transmittal, properly completed and duly
executed, will be accepted. The appropriate Letter of Transmittal,
certificates for Securities and any other required documents should be sent or
delivered by each securityholder of the Company or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary, at the
applicable address set forth below:
The Depositary for the Offer is:
EQUISERVE
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
EquiServe Corporate EquiServe EquiServe Corporate Actions
Actions c/o Securities Transfer Suite 4680
Suite 4660 & Reporting Services Inc. 14 Wall Street, 8th Floor
P.O. Box 2569 Attn: Corporate Actions New York, NY 10005
Jersey City, NJ 07303- 100 Williams Street, Galleria
2569 New York, NY 10038
</TABLE>
Any questions or requests for assistance or additional copies of this Offer to
Purchase, the Letters of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent or
the Dealer Manager at the address and telephone number set forth below.
Securityholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF GEORGESON SHAREHOLDER COMMUNICATIONS APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Call Collect (212) 440-9800
Call Toll Free (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
Call Collect (212) 761-4747
<PAGE>
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
of
LONE STAR INDUSTRIES, INC.
Pursuant to the Offer to Purchase
Dated September 3, 1999
by
LEVEL ACQUISITION CORP.
an indirect wholly owned subsidiary of
DYCKERHOFF AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
EQUISERVE
By Mail: By Hand: By Overnight Delivery:
EquiServe Corporate EquiServe EquiServe
Actions c/o Securities Transfer Corporate Actions
Suite 4660 & Reporting Services Suite 4680
P.O. Box 2569 Inc. 14 Wall Street, 8th
Jersey City, NJ 07303- Attn: Corporate Actions Floor
2569 100 Williams Street, New York, NY 10005
Galleria
New York, NY 10038
Delivery of this Letter of Transmittal to an address other than as set
forth above will not constitute a valid delivery to the Depositary.
You must sign this Letter of Transmittal in the appropriate space therefor
provided below and complete the Substitute Form W-9 set forth below.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Lone Star
Industries, Inc. if certificates for Shares (as defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and pursuant to the procedures set forth in Section 3 of the
Offer to Purchase). Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders who
deliver shares are referred to herein as "Certificate Stockholders."
<PAGE>
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _____________________________________________
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ____________________________________________
Window Ticket Number (if any) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery ________________________
Name of Institution that Guaranteed Delivery ______________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank, exactly
as name(s) Shares Tendered
appear(s) on share certificate(s)) (Attach additional signed list if necessary)
- ---------------------------------------------------------------------------------
Number of Shares
Share Represented Number of
Certificate by Shares
Number(s)(1) Certificate(s)(1) Tendered(2)
---------------------------------------------
<S> <C> <C> <C>
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Total Shares
- ---------------------------------------------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
(2) UNLESS OTHERWISE INDICATED, ALL SHARES REPRESENTED BY SHARE CERTIFICATES
DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN TENDERED. SEE
INSTRUCTION 4.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN
THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Level Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of
Dyckerhoff Aktiengesellschaft, a corporation formed under the laws of the
Federal Republic of Germany ("Parent"), the above-described shares of common
stock, par value $1.00 per share (the "Shares"), of Lone Star Industries,
Inc., a Delaware corporation (the "Company"), together with the associated
rights to purchase common stock (the "Rights") issued pursuant to the Rights
Agreement, dated as of November 10, 1994 (the "Rights Agreement"), by and
between the Company and Chemical Bank, as Rights Agent, pursuant to
Purchaser's offer to purchase all of the outstanding Shares at a price of
$50.00 per Share, net to the seller in cash, without interest upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
September 3, 1999, and in this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"). All references herein to Rights shall include all benefits that may
inure to holders of the Rights pursuant to the Rights Agreement. Unless the
context otherwise requires, all references herein to Shares shall include the
Rights. The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 2, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
September 2, 1999 (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Felix Pardo in his capacity as an officer of Purchaser, and any
individual who shall thereafter succeed to such office of Purchaser, and each
of them, and any other designees of Purchaser, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution, to vote at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof or otherwise in such manner as each such attorney-in-
fact and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all of the Shares (and any and all Distributions) tendered hereby and
3
<PAGE>
accepted for payment by Purchaser. This appointment will be effective if and
when, and only to the extent that, Purchaser accepts such Shares for payment
pursuant to the Offer. This power of attorney and proxy are irrevocable and
are granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke any prior powers of attorney and proxies
granted by the undersigned at any time with respect to such Shares (and any
and all Distributions), and no subsequent powers of attorney, proxies,
consents or revocations may be given by the undersigned with respect thereto
(and, if given, will not be deemed effective). Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at
any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. This tender is irrevocable; provided that the Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the
Expiration Date and, unless theretofore accepted for payment as provided in
the Offer to Purchase, may also be withdrawn at any time after November 1,
1999, subject to the withdrawal rights set forth in Section 4 of the Offer to
Purchase.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions"
4
<PAGE>
and "Special Delivery Instructions" are both completed, please issue the check
for the purchase price of all Shares purchased and/or return any certificates
evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled "Special Payment Instructions," please credit any Shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above.
The undersigned recognizes that Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN,
HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:________
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (see Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if
check for the purchase price of certificates for Shares not
Shares accepted for payment is to tendered or not accepted for
be issued in the name of someone payment and/or the check for the
other than the undersigned, if purchase price of Shares accepted
certificates for Shares not for payment is to be sent to
tendered or not accepted for someone other than the undersigned
payment are to be issued in the or to the undersigned at an
name of someone other than the address other than that shown
undersigned or if Shares tendered under "Description of Shares
hereby and delivered by book-entry Tendered."
transfer that are not accepted for
payment are to be returned by
credit to an account maintained at
a Book-Entry Transfer Facility
other than the account indicated
above.
Mail check and/or Share
certificate(s) to:
Name ______________________________
(Please Print)
Address ___________________________
Issue check and/or Share (Zip Code)
certificate(s) to:
___________________________________
Name ______________________________ (Taxpayer Identification or Social
(Please Print) Security Number)
Address ___________________________ (See Substitute Form W-9)
(Zip Code)
___________________________________
(Taxpayer Identification or Social
Security Number)
(See Substitute Form W-9)
[_]Credit Shares delivered by
book-entry transfer and not
purchased to the Book-Entry
Transfer Facility account.
Account number ____________________
5
<PAGE>
IMPORTANT
SIGN HERE
(Complete Substitute Form W-9 below)
_______________________________________________________________
_______________________________________________________________
(Signature(s) of Owner(s))
Name(s) _____________________________________________________________________
Name of Firm ________________________________________________________________
(Please Print)
Capacity (full title) _______________________________________________________
(See Instruction 5)
Address _____________________________________________________________________
________________________________________________________________________
(Zip Code)
Area Code and Telephone Number ______________________________________________
Taxpayer Identification or Social Security Number ___________________________
(see Substitute Form W-9)
Dated _____________________________ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized signature(s) _____________________________________________________
Name(s) _____________________________________________________________________
Name of Firm ________________________________________________________________
(Please Print)
Address _____________________________________________________________________
________________________________________________________________________
(Zip Code)
Area Code and Telephone Number ______________________________________________
Dated _____________________________ , 1999
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee Of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (each, an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution.
See Instruction 5.
2. Delivery Of Letter Of Transmittal And Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder validly to tender Shares
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), together with
any required signature guarantees or an Agent's Message (in connection with
book-entry transfer) and any other required documents, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration
Date and either (i) certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii)
Shares must be delivered pursuant to the procedures for book-entry transfer
set forth herein and in Section 3 of the Offer to Purchase and a Book-Entry
Confirmation must be received by the Depositary prior to the Expiration Date
or (b) the tendering stockholder must comply with the guaranteed delivery
procedures set forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents must be received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange is open for
business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
The method of delivery of the Shares, this Letter of Transmittal and all
other required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering stockholder. The Shares
will be deemed delivered only when actually received by the Depositary
7
<PAGE>
(including, in the case of a Book-Entry Transfer, by Book-Entry Confirmation).
If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or a manually signed facsimile thereof), waive any
right to receive any notice of acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures On Letter Of Transmittal; Stock Powers And Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted. If this Letter of Transmittal is signed by the
registered holder(s) of the Shares listed and transmitted hereby, no
endorsements of Share certificates or separate stock powers are required
unless payment or certificates for Shares not tendered or not accepted for
payment are to be issued in the name of a person other than the registered
holder(s). Signatures on any such Share certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
8
<PAGE>
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. Special Payment And Delivery Instructions. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of,
and/or Share certificates for Shares not accepted for payment or not tendered
are to be issued in the name of and/or returned to, a person other than the
signer of this Letter of Transmittal or if a check is to be sent, and/or such
certificates are to be returned, to a person other than the signer of this
Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-
Entry Transfer Facility designated above as the account from which such Shares
were delivered.
8. Requests For Assistance Or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or Dealer Manager at the addresses and phone
numbers set forth below, or from brokers, dealers, commercial banks or trust
companies.
9. Waiver Of Conditions. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer, in whole or in part, in
the case of any Shares tendered.
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future, such stockholder should
write "Applied For" in the space provided for the TIN in Part 1 of the
Substitute Form W-9 and sign and date the Substitute Form W-9, and the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the Certificate of Awaiting Taxpayer Identification
Number is completed, the Depositary will withhold 31% on all payments made
prior to the time a properly certified TIN is provided to the Depositary.
However, such amounts will be refunded to such stockholder if a TIN is
provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
9
<PAGE>
11. Lost, Destroyed Or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS,
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY
WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct taxpayer identification number on Substitute Form
W-9 below. If such stockholder is an individual, the taxpayer identification
number is his social security number. If the Depositary is not provided with
the correct taxpayer identification number, the stockholder may be subject to
a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future, such
stockholder should write "Applied For" in the space provided for the TIN in
Part 1 of the Substitute Form W-9 and sign and date the Substitute Form W-9,
and the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments made prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to such stockholder if a
TIN is provided to the Depositary within 60 days.
11
<PAGE>
PAYER'S NAME:
Part I--PLEASE PROVIDE
SUBSTITUTE YOUR TIN IN THE BOX AT TIN: _________________
Form W-9 RIGHT AND CERTIFY BY Social security number
Department of SIGNING AND DATING BELOW. or Employer
the Treasury identification number
Internal -----------------------------------------------------
Revenue Service Part II--For Payees exempt from backup
withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number on
Payer's Request for Substitute Form W-9 and complete as instructed
Taxpayer Identification therein.
Number (TIN) and
Certification -----------------------------------------------------
Certification--Under penalties of perjury, I
certify that the number shown on this form is my
correct TIN (or I am waiting for a number to be
issued to me).
-----------------------------------------------------
SIGNATURE: _____________________ DATE: ___________
Certification Instructions--See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitution Form W-9" for the appropriate
TIN and signature for the certification. Persons awaiting a taxpayer
identification number should complete the additional certification described
below. Foreign persons claiming exemption from these requirements should
consult the Depositary regarding proper establishment of the exemption.
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR
TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me,
and either (1) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Officer or (2)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a TIN by the time of payment, 31% of all payments
pursuant to the Offer made to me thereafter will be withheld until I provide
a number.
SIGNATURE: ____________________________________ Date: ____________________
12
<PAGE>
The Information Agent for the Offer is:
[LOGO OF GEORGESON SHAREHOLDER & COMMUNICATIONS INC. APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Call Collect (212) 440-9800
Call Toll Free (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
Call Collect (212) 761-4747
<PAGE>
LETTER OF TRANSMITTAL
To Tender Warrants to Purchase Common Stock
of
LONE STAR INDUSTRIES, INC.
Pursuant to the Offer to Purchase
Dated September 3, 1999
by
LEVEL ACQUISITION CORP.
an indirect wholly owned subsidiary of
DYCKERHOFF AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS
EXTENDED.
The Depositary for the Offer is:
EQUISERVE
By Mail: By Hand: By Overnight Delivery:
EquiServe EquiServe EquiServe
Corporate Actions c/o Securities Transfer Corporate Actions
Suite 4660 & Reporting Services Suite 4680
P.O. Box 2569 Inc. 14 Wall Street, 8th
Jersey City, NJ 07303- Attn: Corporate Actions Floor
2569 100 Williams Street, New York, NY 10005
Galleria
New York, NY 10038
Delivery of this Letter of Transmittal to an address other than as set
forth above will not constitute a valid delivery to the Depositary.
You must sign this Letter of Transmittal in the appropiate space therefor
provided below and complete the Substitute Form W-9 set forth below.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by warrantholders of Lone Star
Industries, Inc. if certificates for Warrants (as defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in Instruction 2
below) is utilized, if delivery of Warrants is to be made by book-entry
transfer to an account maintained by the Depositary at the Book-Entry Transfer
Facility (as defined in and pursuant to the procedures set forth in Section 3
of the Offer to Purchase). Warrantholders who deliver Warrants by book-entry
transfer are referred to herein as "Book-Entry Warrantholders" and other
warrantholders who deliver warrants are referred to herein as "Certificate
Warrantholders."
<PAGE>
Warrantholders whose certificates for Warrants are not immediately available
or who cannot deliver either the certificates for, or a Book-Entry
Confirmation (as defined in Section 3 of the Offer to Purchase) with respect
to, their Warrants and all other documents required hereby to the Depositary
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Warrants pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
[_] CHECK HERE IF TENDERED WARRANTS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER WARRANTS BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _____________________________________________
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
[_] CHECK HERE IF TENDERED WARRANTS ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ____________________________________________
Window Ticket Number (if any) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery ________________________
Name of Institution that Guaranteed Delivery ______________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
DESCRIPTION OF WARRANTS TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank, exactly
as name(s) Warrants Tendered
appear(s) on warrant certificate(s)) (Attach additional signed list if necessary)
- -----------------------------------------------------------------------------------
Number of
Warrants
Warrant Represented Number of
Certificate by Warrants
Number(s)(1) Certificate(s)(1) Tendered(2)
---------------------------------------------
<S> <C> <C> <C>
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Total Warrants
- -----------------------------------------------------------------------------------
</TABLE>
(1) NEED NOT BE COMPLETED BY BOOK-ENTRY WARRANTHOLDERS.
(2) UNLESS OTHERWISE INDICATED, ALL WARRANTS REPRESENTED BY WARRANT
CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE DEEMED TO HAVE BEEN
TENDERED. SEE INSTRUCTION 4.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN
THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Level Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of
Dyckerhoff Aktiengeseillschaft, a corporation formed under the laws of the
Federal Republic of Germany ("Parent"), the above-described Common Stock
Purchase Warrants (the "Warrants"), each representing the right to purchase
two shares of common stock, per value $1.00 per share (the "Shares"), of Lone
Star Industries, Inc., a Delaware corporation (the "Company"), at an exercise
price of $18.75 per Warrant (or $9.375 per Share), issued pursuant to the
Warrant Agreement, dated as of April 13, 1994, between the Company and
Chemical Bank, as Warrant Agent (the "Warrant Agreement"), pursuant to
Purchaser's offer to purchase all of the outstanding Warrants at a price of
$81.25 per Warrant, net to the seller in cash, without interest upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
September 3, 1999, and in this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Warrants tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering warrantholders to receive payment for
Warrants validly tendered and accepted for payment pursuant to the Offer.
Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 2, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the
Warrants tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all the Warrants that are
being tendered hereby (and any and all non-cash dividends, distributions,
rights, other Shares or Warrants or other securities issued or issuable in
respect thereof on or after September 2, 1999 (collectively, "Distributions"))
and irrevocably constitutes and appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Warrants
(and all Distributions), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver certificates for such Warrants (and any and all Distributions), or
transfer ownership of such Warrants (and any and all Distributions) on the
account books maintained by the Book-Entry Transfer Facility, together, in any
such case, with all accompanying evidences of transfer and authenticity, to or
upon the order of Purchaser, (ii) present such Warrants (and any and all
Distributions) for transfer on the books of the Company, and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Warrants (and any and all Distributions), all in accordance with the terms of
the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Felix Pardo in his capacity as an officer of Purchaser, and any
individual who shall thereafter succeed to such office of Purchaser, and each
of them, and any other designees of Purchaser, the attorneys-in-fact and
proxies of the undersigned, each with full power of substitution, to execute
any written consent concerning any matter as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of
the Warrants (and any and all Distributions) tendered hereby and accepted for
payment by Purchaser. This appointment will be effective if and when, and only
to the extent that, Purchaser accepts such Warrants for payment pursuant to
the Offer. This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Warrants in accordance
with the terms of the Offer. Such acceptance for payment shall, without
further action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Warrants (and any and all
Distributions), and no subsequent
3
<PAGE>
powers of attorney, proxies, consents or revocations may be given by the
undersigned with respect thereto (and, if given, will not be deemed
effective). Purchaser reserves the right to require that, in order for
Warrants or other securities to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Warrants, Purchaser must be able to
exercise full voting, consent and other rights with respect to such Warrants
(and any and all Distributions), including voting at any meeting of the
Company's warrantholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Warrants tendered
hereby and all Distributions, that the undersigned owns the Warrants tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Warrants complies with Rule 14e-4 under the Exchange Act, and that
when the same are accepted for payment by Purchaser, Purchaser will acquire
good, marketable and unencumbered title thereto and to all Distributions, free
and clear of all liens, restrictions, charges and encumbrances and the same
will not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Warrants tendered hereby and all Distributions. In addition,
the undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Warrants tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Warrants tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. This tender is irrevocable; provided that the Warrants tendered
pursuant to the Offer may be withdrawn at any time on or prior to the
Expiration Date and, unless theretofore accepted for payment as provided in
the Offer to Purchase, may also be withdrawn at any time after November 1,
1999, subject to the withdrawal rights set forth in Section 4 of the Offer to
Purchase.
The undersigned understands that the valid tender of Warrants pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and
in the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Warrants tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Warrants purchased and/or return
any certificates for Warrants not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Warrants Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Warrants purchased and/or return any certificates for Warrants not tendered or
not accepted for payment (and any accompanying documents, as appropriate) to
the address(es) of the registered holder(s) appearing above under "Description
of Warrants Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Warrants purchased and/or return
any certificates evidencing Warrants not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Warrants
4
<PAGE>
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Warrants from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Warrants so tendered.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING WARRANTS THAT YOU OWN,
HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF WARRANTS REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES: ______
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if
check for the purchase price of certificates for Warrants not
Warrants accepted for payment is tendered or not accepted for
to be issued in the name of payment and/or the check for the
someone other than the purchase price of Warrants
undersigned, if certificates for accepted for payment is to be sent
Warrants not tendered or not to someone other than the
accepted for payment are to be undersigned or to the undersigned
issued in the name of someone at an address other than that
other than the undersigned or if shown under "Description of
Warrants tendered hereby and Warrants Tendered."
delivered by book-entry transfer
that are not accepted for payment
are to be returned by credit to an
account maintained at a Book-Entry
Transfer Facility other than the
account indicated above.
Issue check and/or Warrant Mail check and/or Warrant
certificate(s) to: certificate(s) to:
Name ______________________________ Name ______________________________
(Please Print) (Please Print)
Address ___________________________ Address ___________________________
(Zip Code) (Zip Code)
___________________________________
(Taxpayer Identification or Social ___________________________________
Security Number) (Taxpayer Identification or Social
(See Substitute Form W-9) Security Number)
(See Substitute Form W-9)
[_]Credit Warrants delivered by
book-entry transfer and not
purchased to the Book-Entry
Transfer Facility account.
Account number ____________________
5
<PAGE>
IMPORTANT
SIGN HERE
(Complete Substitute Form W-9 below)
_______________________________________________________________
_______________________________________________________________
(Signature(s) of Owner(s))
Name(s) _____________________________________________________________________
Name of Firm ________________________________________________________________
(Please Print)
Capacity (full title) _______________________________________________________
(See Instruction 5)
Address _____________________________________________________________________
-----------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number ______________________________________________
Taxpayer Identification or Social Security Number ___________________________
(see Substitute Form W-9)
Dated _____________________________ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
warrant certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized signature(s) _____________________________________________________
Name(s) _____________________________________________________________________
Name of Firm ________________________________________________________________
(Please Print)
Address _____________________________________________________________________
-----------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number ______________________________________________
Dated _____________________________ , 1999
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee Of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Warrants) of
Warrants tendered herewith, unless such registered holder(s) has completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (b) if such
Warrants are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses)
that is a participant in the Security Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery Of Letter Of Transmittal And Warrants; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by warrantholders of
the Company either if Warrant certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Warrants is to be made
by book-entry transfer pursuant to the procedures set forth herein and in
Section 3 of the Offer to Purchase. For a warrantholder validly to tender
Warrants pursuant to the Offer, either (a) a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof),
together with any required signature guarantees or an Agent's Message (in
connection with book-entry transfer) and any other required documents, must be
received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date and either (i) certificates for tendered Warrants must be
received by the Depositary at one of such addresses prior to the Expiration
Date or (ii) Warrants must be delivered pursuant to the procedures for book-
entry transfer set forth herein and in Section 3 of the Offer to Purchase and
a Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering warrantholder must comply with the
guaranteed delivery procedures set forth herein and in Section 3 of the Offer
to Purchase.
Warrantholders whose certificates for Warrants are not immediately available
or who cannot deliver their certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot comply with the
book-entry transfer procedures on a timely basis may tender their Warrants by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Warrants, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Warrants), together
with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents must be received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange is open for
business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Warrants, that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Warrants tendered
hereby.
7
<PAGE>
The method of delivery of the Warrants, this Letter of Transmittal and all
other required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering warrantholder. The
Warrants will be deemed delivered only when actually received by the
Depositary (including, in the case of a Book-Entry Transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Warrants will be purchased. All tendering warrantholders, by
executing this Letter of Transmittal (or a manually signed facsimile thereof),
waive any right to receive any notice of acceptance of their Warrants for
payment.
3. Inadequate Space. If the space provided herein under "Description of
Warrants Tendered" is inadequate, the number of Warrants tendered and the
Warrant certificate numbers with respect to such Warrants should be listed on
a separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to warrantholders who tender by book-
entry transfer). If fewer than all the Warrants evidenced by any Warrant
certificate delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Warrants that are to be tendered in the box entitled
"Number of Warrants Tendered." In any such case, new certificate(s) for the
remainder of the Warrants that were evidenced by the old certificates will be
sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the Expiration
Date or the termination of the Offer. All Warrants represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures On Letter Of Transmittal; Warrant Powers And Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the
Warrants tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Warrants tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Warrants are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Warrant certificate or warrant power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted. If this Letter of Transmittal is signed by the
registered holder(s) of the Warrants listed and transmitted hereby, no
endorsements of Warrant certificates or separate warrant powers are required
unless payment or certificates for Warrants not tendered or not accepted for
payment are to be issued in the name of a person other than the registered
holder(s). Signatures on any such Warrant certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Warrants evidenced by certificates listed and
transmitted hereby, the Warrant certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of
the registered holder(s) appear(s) on the Warrant certificates. Signature(s)
on any such Warrant certificates or stock powers must be guaranteed by an
Eligible Institution.
6. Security Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all security transfer taxes with respect to the transfer
and sale of any Warrants to it or its order pursuant to the Offer. If,
however, payment of the purchase price of any Warrants purchased is to be made
to, or if certificates for Warrants not tendered or not accepted for payment
are to be registered in the name of, any person other than the
8
<PAGE>
registered holder(s), or if tendered certificates are registered in the name
of any person other than the person(s) signing this Letter of Transmittal, the
amount of any security transfer taxes (whether imposed on the registered
holder(s) or such other person) payable on account of the transfer to such
other person will be deducted from the purchase price of such Warrants
purchased unless evidence satisfactory to Purchaser of the payment of such
taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Warrant certificates evidencing the
Warrants tendered hereby.
7. Special Payment And Delivery Instructions. If a check for the purchase
price of any Warrants accepted for payment is to be issued in the name of,
and/or Warrant certificates for Warrants not accepted for payment or not
tendered are to be issued in the name of and/or returned to, a person other
than the signer of this Letter of Transmittal or if a check is to be sent,
and/or such certificates are to be returned, to a person other than the signer
of this Letter of Transmittal, or to an address other than that shown above,
the appropriate boxes on this Letter of Transmittal should be completed. Any
warrantholder(s) delivering Warrants by book-entry transfer may request that
Warrants not purchased be credited to such account maintained at the Book-
Entry Transfer Facility as such warrantholder(s) may designate in the box
entitled "Special Payment Instructions." If no such instructions are given,
any such Warrants not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above as the account from which
such Warrants were delivered.
8. Requests For Assistance Or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or Dealer Manager at the addresses and phone
numbers set forth below, or from brokers, dealers, commercial banks or trust
companies.
9. Waiver Of Conditions. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer, in whole or in part, in
the case of any Warrants tendered.
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a warrantholder
surrendering Warrants in the Offer must, unless an exemption applies, provide
the Depositary with such warrantholder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 in this Letter of Transmittal and
certify, under penalties of perjury, that such TIN is correct.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the warrantholder upon filing
an income tax return.
The warrantholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Warrants. If the Warrants are held in more than one name or are not in the
name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
If the tendering warrantholder has not been issued a TIN and has applied for
a TIN or intends to apply for a TIN in the near future, such warrantholder
should write "Applied For" in the space provided for the TIN in Part 1 of the
Substitute Form W-9 and sign and date the Substitute Form W-9, and the
warrantholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the Certificate of Awaiting Taxpayer Identification
Number is completed, the Depositary will withhold 31% on all payments made
prior to the time a properly certified TIN is provided to the Depositary.
However, such amounts will be refunded to such warrantholder if a TIN is
provided to the Depositary within 60 days.
9
<PAGE>
Certain warrantholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign warrantholders should complete and sign the
main signature form and a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid backup
withholding. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for more instructions.
11. Lost, Destroyed Or Stolen Warrant Certificates. If any certificate(s)
representing Warrants has been lost, destroyed or stolen, the warrantholder
should promptly notify the Depositary by checking the box immediately
preceding the special payment/special delivery instructions and indicating the
number of Warrants lost. The warrantholder will then be instructed as to the
steps that must be taken in order to replace the Warrant certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen Warrant certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS,
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED WARRANTS MUST BE RECEIVED BY THE DEPOSITARY OR
WARRANTS MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER,
IN EACH CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING WARRANTHOLDER MUST
COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a warrantholder whose tendered Warrants are
accepted for payment is required to provide the Depositary (as payer) with
such warrantholder's correct taxpayer identification number on Substitute Form
W-9 below. If such warrantholder is an individual, the taxpayer identification
number is his social security number. If the Depositary is not provided with
the correct taxpayer identification number, the warrantholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such warrantholder with respect to Warrants
purchased pursuant to the Offer may be subject to backup withholding.
Certain warrantholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that warrantholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt warrantholders, other
than foreign individuals, should furnish their TIN, write "Exempt" on the face
of the Substitute Form W-9 below, and sign, date and return the Substitute
Form W-9 to the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the warrantholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a warrantholder
with respect to Warrants purchased pursuant to the Offer, the warrantholder is
required to notify the Depositary of such warrantholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such warrantholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The warrantholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Warrants.
If the Warrants are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering warrantholder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future, such
warrantholder should write "Applied For" in the space provided for the TIN in
Part 1 of the Substitute Form W-9 and sign and date the Substitute Form W-9,
and the warrantholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% on all
payments made prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to such warrantholder if a
TIN is provided to the Depositary within 60 days.
11
<PAGE>
PAYER'S NAME:
Part I--PLEASE PROVIDE
SUBSTITUTE YOUR TIN IN THE BOX AT TIN: _________________
Form W-9 RIGHT AND CERTIFY BY Social security number
Department of SIGNING AND DATING BELOW. or Employer
the Treasury identification number
Internal Part II--For Payees exempt from backup
Revenue Service withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed
therein.
-----------------------------------------------------
Payer's Request for Taxpayer Identification Number (TIN) and Certification
-----------------------------------------------------
Certification--Under penalties of perjury, I
certify that the number shown on this form is my
correct TIN (or I am waiting for a number to be
issued to me).
-----------------------------------------------------
SIGNATURE: _____________________ DATE: ___________
Certification Instructions--See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitution Form W-9" for the appropriate
TIN and signature for the certification. Persons awaiting a taxpayer
identification number should complete the additional certification described
below. Foreign persons claiming exemption from these requirements should
consult the Depositary regarding proper establishment of the exemption.
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR
TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me,
and either (1) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Officer or (2)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a TIN by the time of payment, 31% of all payments
pursuant to the Offer made to me thereafter will be withheld until I provide
a number.
SIGNATURE: ____________________________________ Date: ____________________
12
<PAGE>
The Information Agent for the Offer is:
[LOGO OF GEORGESON & COMPANY, INC. APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Call Collect (212) 440-9800
Call Toll Free (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
Call Collect (212) 761-4747
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
and Warrants to Purchase Common Stock
of
LONE STAR INDUSTRIES, INC.
to
LEVEL ACQUISITION CORP.
an indirect wholly owned subsidiary of
DYCKERHOFF AG
(Not To Be Used For Signature Guarantees)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) (i) if
certificates for Shares (as defined below) or Warrants (as defined below) are
not immediately available, (ii) if the procedure for book-entry transfer
cannot be completed prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase described below), or (iii) if Shares or Warrants all
required documents cannot be delivered the Depositary prior to the Expiration
Date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
EQUISERVE
By Mail: By Hand: By Overnight Delivery:
EquiServe EquiServe EquiServe
Corporate Actions c/o Securities Corporate Actions
Suite 4660 Transfer & Reporting Suite 4680
P.O. Box 2569 Services Inc. 14 Wall Street, 8th
Jersey City, NJ 07303- Attn: Corporate Floor
2569 Actions New York, NY 10005
100 Williams Street,
Galleria
New York, NY 10038
By Facsimile
Transmission: Confirm Receipt of
(201) 222-4720 or (201) Facsimile by Telephone:
222-4721 (201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE
APPROPRIATE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Level Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of
Dyckerhoff Aktiengesellschaft, a corporation formed under the laws of the
Federal Republic of Germany, upon the terms and subject to the conditions set
forth in Purchaser's Offer to Purchase dated September 3, 1999 (the "Offer to
Purchase") and the related Letters of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares set forth below of common stock,
par value $1.00 per share (the "Shares"), of Lone Star Industries, Inc., a
Delaware corporation, together with the associated rights to purchase common
stock (the "Rights") issued pursuant to the Rights Agreement, dated as of
November 10, 1994 by and between the Company and Chemical Bank as Rights
Agent, and the number of Common Stock Purchase Warrants (the "Warrants")
issued pursuant to the Warrant Agreement, dated as of April 13, 1994, between
Lone Star Industries, Inc. and Chemical Bank, as Warrant Agent, set forth
below, pursuant to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase.
Signature(s) _______________________ Address(es) _______________________
___________________________________ ___________________________________
Name(s) of Record Holder(s) _______ Zip Code
___________________________________ Area Code and Tel. No.(s) _________
Please Print or Type
___________________________________ Taxpayer Identification or Social
Number of Shares __________________ Security Number ___________________
Certificate No.(s) (If Available) Check box if Shares will be
___________________________________ tendered by book-entry
___________________________________ transfer: [_]
Number of Warrants ________________ Account Number ____________________
Certificate No.(s) (If Available) Check box if Warrants will be
___________________________________ tendered by book-entry
___________________________________ transfer: [_]
Dated ________________________ 1999
Account Number ____________________
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program,
the Stock Exchange Medallion Program or an "eligible guarantor institution"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Depositary either
certificates representing the Shares and Warrants tendered hereby, in proper
form for transfer, or confirmation of book-entry transfer of such Shares and
Warrants into the Depository's accounts at The Depository Trust Company, in
each case with delivery of a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase), and any other required documents, within three trading days (as
defined in the Offer to Purchase) after the date hereof.
___________________________________ ___________________________________
Name of Firm Authorized Signature
___________________________________ Name ______________________________
Address Please Print or Type
___________________________________ Title _____________________________
Zip Code Date _______________________ , 1999
Area Code and Tel. No. ____________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR WARRANTS WITH THIS NOTICE.
CERTIFICATES SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
and
All Outstanding Warrants to Purchase Common Stock
of
LONE STAR INDUSTRIES, INC.
at
$50.00 Net Per Share
and
$81.25 Net Per Warrant
by
LEVEL ACQUISITION CORP.
an indirect wholly owned subsidiary of
DYCKERHOFF AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS
EXTENDED.
September 3, 1999
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by Level Acquisition Corp., a Delaware corporation
("Purchaser") and an indirect wholly owned subsidiary of Dyckerhoff
Aktiengesellschaft, a corporation formed under the laws of the Federal
Republic of Germany ("Parent"), to act as Dealer Manager in connection with
Purchaser's offer to purchase all outstanding shares of common stock, par
value $1.00 per share (the "Shares"), of Lone Star Industries, Inc., a
Delaware corporation (the "Company"), together with the associated rights to
purchase common stock (the "Rights") issued pursuant to the Rights Agreement,
dated as of November 10, 1994 (the "Rights Agreement") by and between the
Company and Chemical Bank, as Rights Agent, at $50.00 per Share, net to the
seller in cash without interest, and all of the outstanding Common Stock
Purchase Warrants (the "Warrants") issued pursuant to the Warrant Agreement
dated as of April 13, 1994 between the Company and Chemical Bank, as Warrant
Agent, at $81.25 per Warrant, net to the seller in cash without interest, upon
the terms and subject to the conditions set forth in the Offer to Purchase
dated September 3, 1999 (the "Offer to Purchase") and in the related Letters
of Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer") enclosed herewith. Please furnish copies
of the enclosed materials to those of your clients for whose accounts you hold
Shares or Warrants registered in your name or in the name of your nominee.
<PAGE>
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn immediately prior to the expiration of the Offer a
number of Shares and Warrants representing at least a majority of the Fully
Diluted Shares (as defined in the Offer to Purchase) and (ii) any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, having expired or been terminated. The Offer is also subject to
the other conditions set forth in the Offer to Purchase. See Section 15 of the
Offer to Purchase.
The Board of Directors of the Company has unanimously approved the Merger
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined in
the Offer to Purchase), and determined that the Offer and the Merger are fair
to, and in the best interests of, the Company's securityholders and
unanimously recommends that the securityholders accept the Offer and tender
their Shares and their Warrants pursuant to the Offer.
For your information and for forwarding to your clients for whom you hold
Shares or Warrants registered in your name or in the name of your nominee, we
are enclosing the following documents:
1. Offer to Purchase dated September 3, 1999;
2. The green Letter of Transmittal for your use in tendering Shares and
for the information of your clients and the blue Letter of Transmittal for
your use in tendering Warrants and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares or Warrants and all other required documents cannot
be delivered to EquiServe, L.P., (the "Depositary"), or if the procedures
for book-entry transfer cannot be completed, by the Expiration Date (as
defined in the Offer to Purchase);
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares or Warrants registered in your name or in the name
of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
5. A letter to securityholders of the Company from William M. Troutman,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated September 3,
1999, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares and
Warrants which are validly tendered prior to the Expiration Date (as defined
in the Offer to Purchase) and not theretofore properly withdrawn when, as and
if Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares and Warrants for payment pursuant to the Offer.
Payment for Shares and Warrants purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) certificates
for such Shares or Warrants, or timely confirmation of a book-entry transfer
of such Shares and Warrants into the Depositary's account at The Depository
Trust Company, pursuant to the procedures described in Section 3 of the Offer
to Purchase, (ii) a properly completed and duly executed Letter of Transmittal
(or a properly completed and manually signed facsimile thereof) or an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-entry
transfer and (iii) all other documents required by the appropriate Letter of
Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Information Agent and the Dealer
Manager as described in the Offer to Purchase) for soliciting tenders of
Shares or Warrants pursuant to the Offer. Purchaser will, however, upon
request, reimburse brokers,
2
<PAGE>
dealers, commercial banks and trust companies for customary mailing and
handling costs incurred by them in forwarding the enclosed materials to their
customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares and Warrants pursuant to the Offer, except as
otherwise provided in Instruction 6 of the appropriate Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares and Warrants, and any other required documents, should be
sent to the Depositary, and certificates representing the tendered Shares or
Warrants should be delivered or such Shares or Warrants should be tendered by
book-entry transfer, all in accordance with the Instructions set forth in the
appropriate Letter of Transmittal and in the Offer to Purchase.
If holders of Shares or Warrants wish to tender, but it is impracticable for
them to forward their certificates or other required documents or to complete
the procedures for delivery by book-entry transfer prior to the expiration of
the Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover of the Offer to Purchase.
Very truly yours,
MORGAN STANLEY DEAN WITTER
Nothing contained herein or in the enclosed documents shall constitute you
the agent of Parent, Purchaser, the Company, the Dealer Manager, the
Information Agent, the Depositary, or any affiliate of any of the foregoing,
or authorize you or any other person to use any document or make any statement
on behalf of any of them in connection with the Offer other than the documents
enclosed herewith and the statements contained therein.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
and
All Outstanding Warrants to Purchase Common Stock
of
LONE STAR INDUSTRIES, INC.
at
$50.00 Net Per Share
and
$81.25 Net Per Warrant
by
LEVEL ACQUISITION CORP.
an indirect wholly owned subsidiary of
DYCKERHOFF AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
September 3, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated September 3,
1999 (the "Offer to Purchase") and the related Letters of Transmittal (the
green Letter of Transmittal in the case of the Shares and the blue Letter of
Transmittal in the case of the Warrants) (which, together with any amendments
or supplements thereto, collectively constitute the "Offer") in connection
with the offer by Level Acquisition Corp., a Delaware corporation
("Purchaser"), and an indirect wholly owned subsidiary of Dyckerhoff
Aktiengesellschaft, a corporation formed under the laws of the Federal
Republic of Germany ("Parent"), to purchase all outstanding shares of common
stock, par value $1.00 per share (the "Shares"), of Lone Star Industries,
Inc., a Delaware corporation (the "Company"), together with the associated
rights to purchase common stock (the "Rights") issued pursuant to the Rights
Agreement, dated as of November 10, 1994 (the "Rights Agreement") by and
between the Company and Chemical Bank, as Rights Agent, at $50.00 per Share,
net to the seller in cash without interest, and all of the outstanding Common
Stock Purchase Warrants (the "Warrants" and together with the Shares, the
"Securities") issued pursuant to the Warrant Agreement dated as of April 13,
1994 between the Company and Chemical Bank, as Warrant Agent, at $81.25 per
Warrant, net to the seller in cash without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the
related Letters of Transmittal enclosed herewith.
We are the holder of record of Shares or Warrants held for your account. A
tender of such Shares or Warrants can be made only by us as the holder of
record and pursuant to your instructions. The enclosed Letters of Transmittal
are furnished to you for your information only and cannot be used by you to
tender Shares or Warrants held by us for your account.
<PAGE>
We request instructions as to whether you wish us to tender any or all of
the Shares or Warrants held by us for your account, upon the terms and subject
to the conditions set forth in the Offer to Purchase. Your attention is
directed to the following:
1. The tender price for Shares is $50.00 per Share (and the associated
Rights), net to you in cash without interest.
2. The tender price for Warrants is $81.25 per Warrant, net to you in
cash without interest.
3. The Offer is being made for all outstanding Shares (and the associated
Rights) and Warrants.
4. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (as defined in the
Offer to Purchase), and has unanimously determined that the Offer and the
Merger are fair to, and in the best interests of, the Company's
securityholders and unanimously recommends that the securityholders accept
the Offer and tender their Shares and Warrants pursuant to the Offer.
5. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Friday, October 1, 1999, unless the Offer is extended.
6. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn immediately prior to the expiration of the Offer
a number of Securities representing at least a majority of the Fully
Diluted Shares (as defined in the Offer to Purchase) and any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, having expired or been terminated. The Offer is also
subject to the other conditions set forth in the Offer to Purchase. See
Section 15 of the Offer to Purchase.
7. Any transfer taxes for Shares or Warrants applicable to the sale of
Shares and Warrants to Purchaser pursuant to the Offer will be paid by
Purchaser, except as otherwise provided in Instruction 6 of the appropriate
Letter of Transmittal.
The Offer is being made solely by the Offer to Purchase and the related
Letters of Transmittal and is being made to all holders of Securities.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Securities pursuant thereto,
Purchaser shall make a good faith effort to comply with such statute or seek
to have such statute declared inapplicable to the Offer. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) holders of
Securities in such state. In those jurisdictions where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer being made on behalf of Purchaser by the Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
If you wish to have us tender any or all of your Shares or Warrants, please
so instruct us by completing, executing and returning to us the instruction
form set forth on the reverse side of this letter. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares or
Warrants, all such Shares or Warrants will be tendered unless otherwise
specified on the reverse side of this letter. Your instructions should be
forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
SHARES OF COMMON STOCK OF LONE STAR INDUSTRIES, INC. AND ALL OUTSTANDING
WARRANTS TO PURCHASE COMMON STOCK OF LONE STAR INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated September 3, 1999 and the related Letters of Transmittal in
connection with the Offer by Level Acquisition Corp., a Delaware corporation
and an indirect wholly owned subsidiary of Dyckerhoff Aktiengesellschaft, a
corporation formed under the laws of the Federal Republic of Germany, to
purchase all outstanding shares of common stock, par value $1.00 per share
(the "Shares"), of Lone Star Industries, Inc., a Delaware corporation (the
"Company"), together with the associated rights to purchase common stock (the
"Rights") issued pursuant to the Rights Agreement, dated as of November 10,
1994 (the "Rights Agreement") by and between the Company and Chemical Bank as
Rights Agent, and all outstanding Common Stock Purchase Warrants (the
"Warrants") issued pursuant to the Warrant Agreement dated as of April 13,
1994 between the Company and Chemical Bank, as Warrant Agent.
This will instruct you to tender the number of Shares or Warrants indicated
below (or if no number is indicated below, all Shares and Warrants) held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares (and the associated Rights) Tendered:* ___________________
Certificate Nos. (if available):___________________________________________
Check the box if Shares will be tendered by book-entry transfer: [_]
Number of Warrants Tendered:** ____________________________________________
Certificate Nos. (if available): __________________________________________
Check the box if Warrants will be tendered by book-entry transfer: [_]
Account No: _______________________________________________________________
Dated: ______________________________
SIGN HERE
Signature(s): _____________________________________________________________
Please type or print address(es): _________________________________________
Area Code and Telephone Number: ___________________________________________
Taxpayer Identification or Social Security Number(s): _____________________
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
**Unless otherwise indicated, it will be assumed that all Warrants held by us
for your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------------------------------------------------
Give the name and
TAXPAYER
IDENTIFICATION
For this type of account: number of--
- --------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(2)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(2)
4. Custodian account of a The minor(3)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(4)
minor, or incompetent
person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust The actual
account that is not a owner(1)
legal or valid trust
under State law
8. Sole proprietorship The owner(5)
account
- --------------------------------------------------------------------------------
Give the name and
TAXPAYER
IDENTIFICATION
For this type of account: number of--
- --------------------------------------------------------------------------------
9. A valid trust, estate, Legal entity (Do
or pension trust not furnish the
identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(1)
10. Corporate account The organization
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the legal trust, estate, or pension
trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for a Social Security Number Card, or Form SS-
4, Application for Employer Identification Number, at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization, or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) Civil Penalty for False Information With Respect To Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Dyckerhoff AG and Lone Star Industries, Inc. Announce Merger Agreement
WIESBADEN, Germany --Sept. 2, 1999--Dyckerhoff AG (Frankfurt and Luxemburg
Exchanges: DYK) and Lone Star Industries, Inc. (NYSE: LCE) announced today that
they have entered into a definitive merger agreement providing for the
acquisition of Lone Star Industries by Dyckerhoff.
Under the merger agreement, Dyckerhoff will on September 3, 1999 commence an
all-cash tender offer for all of Lone Star's outstanding common stock at a price
of $50 per share and for all of Lone Star's outstanding warrants (each to
purchase two shares of common stock) at a price of $81.25 per warrant. Following
successful completion of the tender offer, Dyckerhoff will acquire for the same
cash price any shares of common stock that are not tendered by means of a merger
of Lone Star with a wholly owned subsidiary of Dyckerhoff. The per share offer
price represents almost a 45 percent premium to the September 1, 1999 closing
price for Lone Star common stock and the total purchase price will be
approximately $1.2 billion, including debt assumed. In connection with the
merger agreement, certain executives of Lone Star have agreed to tender their
shares in the offer.
Lone Star's Board of Directors has approved the transaction unanimously and has
recommended acceptance by the Lone Star stockholders. David W. Wallace, Chairman
of the Board of Lone Star, stated, "We believe this merger is in the best
interests of all those connected to Lone Star. Our shareholders will receive a
substantial premium to the current market value of their stock, and our
customers, suppliers and employees will benefit from the combined resources of
the two companies. We are also pleased that realizing the benefits of this
merger will result in minimal dislocations in our operations."
Peter Rohde, Chairman of the Board of Management of Dyckerhoff, said, "We are
excited about the combination of Lone Star with Dyckerhoff, and we believe this
transaction will help us achieve excellent geographic balance, diversifying the
Company's business from its heavy emphasis on Europe. Furthermore, it
establishes critical mass in the important North American market, and provides a
strong platform for future growth. These benefits, combined with the excellent
stand-alone operating performance of Lone Star and the high quality of its
employees, should provide both immediate and longer term value to our
shareholders." The tender offer is conditioned upon, among other things, there
being tendered and not withdrawn prior to the expiration date of the offer at
least a majority of the outstanding Lone Star shares on a fully diluted basis,
and on the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. The offer will expire on October 1, 1999,
unless further extended.
Morgan Stanley Dean Witter is acting as financial advisor to Dyckerhoff and
dealer manager in the transaction and Dresdner Kleinwort Benson is acting as co-
financial advisor. Dechert Price &
<PAGE>
Rhoads is acting as legal counsel to Dyckerhoff. Merrill Lynch & Co. is acting
as financial advisor and Proskauer, Rose LLC is acting as legal counsel to Lone
Star.
Lone Star is a producer of cement and ready-mixed concrete.
Dyckerhoff is one of the leading cement and building materials companies in
Europe with sales volume in excess of $2.2 billion. In the U.S., Dyckerhoff has
a 50 percent share in Glens Falls Lehigh Cement Company servicing the
northeastern part of the U.S.
Contact:
Dyckerhoff Contact:
Morgan Stanley Dean Witter
Gregory Munsell, 212/761-4747
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Securities. The Offer is being made solely by the Offer to Purchase
dated September 3, 1999 and the related Letters of Transmittal, and is being
made to all holders of Securities. Purchaser is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to any valid state statute. If Purchaser becomes aware of any valid state
statute prohibiting the making of the Offer or the acceptance of the Securities
pursuant thereto, Purchaser shall make a good faith effort to comply with such
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, Purchaser cannot comply with such state statute,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) holders of Securities in such state. In those jurisditions where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer is being made on behalf of Purchaser by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdictions.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
and
All Outstanding Warrants to Purchase Common Stock
of
LONE STAR INDUSTRIES, INC.
at
$50.00 Net Per Share
and
$81.25 Net Per Warrant
by
LEVEL ACQUISITION CORP.
an indirect wholly owned subsidiary of
DYCKERHOFF AKTIENGESELLSCHAFT
Level Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Dyckerhoff Aktiengesellschaft, a corporation
formed under the laws of the Federal Republic of Germany ("Parent"), is offering
to purchase all of the outstanding shares of common stock, par value $1.00 per
share (the "Shares"), of Lone Star Industries, Inc., a Delaware corporation (the
"Company"), together with the associated rights to purchase common stock (the
"Rights") issued pursuant to the Rights Agreement, dated as of November 10, 1994
(the "Rights Agreement") by and between
<PAGE>
the Company and Chemical Bank, as Rights Agent, at a price of $50.00 per Share,
net to the seller in cash, without interest thereon, and all of the Common Stock
Purchase Warrants (the "Warrants," and together with the Shares (and associated
Rights), the "Securities"), each representing the right to purchase two Shares
at an exercise price of $18.75 per Warrant (or $9.375 per Share), issued
pursuant to the Warrant Agreement, dated as of April 13, 1994, between the
Company and Chemical Bank, as Warrant Agent, for $81.25 per Warrant, net to
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated September 3, 1999 (the
"Offer to Purchase") and in the related Letters of Transmittal (which, as
amended or supplemented from time to time, collectively constitute the "Offer").
Unless the context otherwise requires, all references herein to Shares shall
include the Rights. Capitalized terms used but not defined herein are defined in
the Offer to Purchase.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn immediately prior to the expiration of the
Offer a number of Securities representing at least a majority of the Fully
Diluted Shares and (ii) any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 having expired or been terminated. The
Offer is also subject to the other conditions set forth in the Offer to
Purchase. See Section 15 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of September 2, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware
General Corporation Law (the "DGCL"), as promptly as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions contained in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger; alternatively, Parent may elect to merge the Company
with and into Purchaser (or another wholly owned subsidiary of Parent), and
Purchaser or such subsidiary will be the surviving corporation in the Merger. At
the effective time of the Merger (the "Effective Time"), each Share then
outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries, including Purchaser, and
(iii) stockholders who properly perfect their dissenters' rights under the DGCL,
will be converted into the right to receive $50.00 per Share, net to the holder
in cash, without interest thereon (the "Merger Consideration"). After the
Effective Time, each Warrant then outstanding, other than Warrants held by the
Company, will remain outstanding and unaffected by the Merger except that, if
the Company is not the surviving corporation in the Merger, each holder of
Warrants will have the right to obtain, upon exercise of each Warrant, the
Merger Consideration in lieu of each Share issuable upon exercise of such
Warrant. The Merger Agreement is more fully described in Section 12 of the Offer
to Purchase.
-2-
<PAGE>
The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, and determined that the Offer and the Merger are
fair to, and in the best interests of, the Company's securityholders and
unanimously recommends that securityholders accept the Offer and tender their
Shares and their Warrants pursuant to the Offer.
Simultaneously with the execution and delivery of the Merger
agreement, Parent and Purchaser, on the one hand, and certain securityholders
(the "Certain Securityholders"), on the other hand, entered into the Tender
Agreement dated as of September 2, 1999 (the "Tender Agreement"). The Tender
Agreement relates to the 1,320,870 Shares owned by the Certain Securityholders
currently representing 5.3% of the Fully Diluted Shares. Pursuant to the Tender
Agreement, each Certain Securityholder has agreed, among other things, to tender
in the Offer the Shares owned by such Certain Securityholders, as well as any
other Securities acquired prior to the expiration of the Offer. The Tender
Agreement is more fully described in Section 12 of the Offer to Purchase.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, Securities properly tendered to Purchaser
and not withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Securities. Upon the terms and
subject to the conditions of the Offer, payment for Securities accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
securityholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering securityholders. In all cases, payment for
Securities accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Securities (or a
confirmation of a book-entry transfer of such Securities into the Depositary's
account at the Book-Entry Transfer Facility), (ii) the appropriate Letter of
Transmittal (the green Letter of Transmittal in the case of the Shares and the
blue Letter of Transmittal in the case of the Warrants) (or manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message and (iii) any other documents required by the appropriate Letter of
Transmittal. Under no circumstances will interest be paid on the purchase price
to be paid by Purchaser for such Securities, regardless of any extension of the
Offer or any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Friday, October 1, 1999, unless and until Purchaser (in accordance with
the terms of the Merger Agreement), shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser
shall expire.
Subject to terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission, Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time, to
-3-
<PAGE>
(a) extend the period of time during which the Offer is open and thereby delay
acceptance for payment of and the payment for any Securities, by giving oral or
written notice of such extension to the Depositary and (b) amend the Offer in
any other respect by giving oral or written notice of such amendment to the
Depositary. Any extension, delay, waiver, amendment or termination of the Offer
will be followed as promptly as practicable by a public announcement thereof,
the announcement in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Securities previously
tendered and not properly withdrawn will remain subject to the Offer, subject to
the right of a tendering securityholder to withdraw such securityholder's
Securities. Subject to applicable law and without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser will have no
obligation to publish, advertise or otherwise communicate any such announcement
other than by issuing a press release to the Dow Jones News Service.
Except as otherwise provided in the Offer to Purchase, tenders of
Securities made pursuant to the Offer are irrevocable. Securities tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
and, unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after Monday, November 1, 1999. For a
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth in the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person having tendered the Securities to be withdrawn,
the number of Securities to be withdrawn and the name of the registered holder
of the Securities to be withdrawn, if different from the name of the person who
tendered the Securities. If certificates evidencing such Securities to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such
Securities have been tendered for the account of an Eligible Institution (as
defined in the Offer to Purchase), the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Securities have been delivered
pursuant to the procedures for book-entry transfer set forth in Section 3 of the
Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Securities and otherwise comply with the Book-Entry Transfer
Facility's procedures. Withdrawals of tendered Securities may not be rescinded,
and any Securities properly withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. However, withdrawn Securities may be
retendered by again following one of the procedures described in Section 3 of
the Offer to Purchase at any time prior to the Expiration Date. All questions as
to the form and validity (including time of receipt) of notices of withdrawal
will be determined by Purchaser, in its sole discretion, whose determination
will be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's securityholder
lists and security position listings for the purpose of disseminating the Offer
to securityholders.
-4-
<PAGE>
The Offer to Purchase, the related Letters of Transmittal and other relevant
documents will be mailed to record holders of Securities whose names appear on
the securityholder lists, and will be furnished to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the Company's securityholder lists, or, if applicable, who are listed
as participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Securities.
The Offer to Purchase and the related Letters of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or additional copies of the
Offer to Purchase, Letters of Transmittal and other tender offer documents may
be directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below, and copies will be furnished
promptly at Purchaser's expense. Neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person other than the
Information Agent and the Dealer Manager for soliciting tenders of Securities
pursuant to the Offer.
-5-
<PAGE>
The Information Agent for the Offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
Wall Street Plaza
New York, New York 10005
Call Collect (212) 440-9800
Call Toll Free (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10036
Call Collect (212) 761-4747
September 3, 1999
-6-
<PAGE>
EXECUTION COPY
DATED 1 September 1999
DYCKERHOFF AKTIENGESELLSCHAFT
as Original Borrower and Guarantor
LEVEL ACQUISITION CORP.
as Additional Borrower
DEUTSCHE BANK AG
DRESDNER BANK AG
as Joint Arrangers
DEUTSCHE BANK LUXEMBOURG S.A.
DRESDNER BANK AG
as Underwriters
DRESDNER BANK LUXEMBOURG S.A.
as Agent
____________________________________________
USD 1,300,000,000
TERM LOAN
FACILITIES AGREEMENT
____________________________________________
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. DEFINITIONS AND INTERPRETATION...................................... 1
2. THE FACILITIES...................................................... 17
3. UTILISATION OF THE TRANCHE A FACILITY............................... 18
4. UTILISATION OF THE TRANCHE B FACILITY............................... 19
5. UTILISATION OF THE TRANCHE C FACILITY............................... 20
6. INTEREST PERIODS.................................................... 21
7. PAYMENT AND CALCULATION OF INTEREST................................. 22
8. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES.................... 22
9. NOTIFICATION........................................................ 23
10. REPAYMENT OF THE TRANCHE A FACILITY................................. 24
11. REPAYMENT OF THE TRANCHE B FACILITY................................. 24
12. REPAYMENT OF THE TRANCHE C FACILITY................................. 24
13. CANCELLATION AND PREPAYMENT......................................... 24
14. TAXES............................................................... 26
15. TAX RECEIPTS........................................................ 27
16. INCREASED COSTS..................................................... 28
17. ILLEGALITY.......................................................... 29
18. MITIGATION.......................................................... 30
19. REPRESENTATIONS..................................................... 30
20. FINANCIAL INFORMATION............................................... 35
21. FINANCIAL CONDITION................................................. 37
22. COVENANTS........................................................... 39
23. EVENTS OF DEFAULT................................................... 43
</TABLE>
<PAGE>
<TABLE>
<S> <C>
24. GUARANTEE........................................................... 46
25. COMMITMENT COMMISSION AND FEES...................................... 48
26. COSTS AND EXPENSES.................................................. 49
27. DEFAULT INTEREST AND BREAK COSTS.................................... 49
28. GUARANTOR'S INDEMNITIES............................................. 51
29. CURRENCY OF ACCOUNT................................................. 52
30. PAYMENTS............................................................ 52
31. SET-OFF............................................................. 54
32. SHARING............................................................. 54
33. THE AGENT, THE ARRANGERS AND THE BANKS.............................. 55
34. ASSIGNMENTS AND TRANSFERS........................................... 60
35. CALCULATIONS AND EVIDENCE OF DEBT................................... 62
36. REMEDIES AND WAIVERS, PARTIAL INVALIDITY............................ 63
37. NOTICES............................................................. 64
38. COUNTERPARTS........................................................ 65
39. AMENDMENTS, MISCELLANEOUS........................................... 65
40. GOVERNING LAW....................................................... 66
41. JURISDICTION........................................................ 66
THE FIRST SCHEDULE THE BANKS............................................. 67
THE SECOND SCHEDULE FORM OF TRANSFER CERTIFICATE......................... 68
THE THIRD SCHEDULE CONDITIONS PRECEDENT.................................. 71
THE FOURTH SCHEDULE NOTICE OF DRAWDOWN................................... 73
THE FIFTH SCHEDULE EXISTING ENCUMBRANCES................................. 74
THE SIXTH SCHEDULE FORM OF COMPLIANCE CERTIFICATE........................ 75
THE SEVENTH SCHEDULE MANDATORY COSTS RATE................................ 76
</TABLE>
<PAGE>
THIS AGREEMENT is made on 1 September 1999
BETWEEN
(1) DYCKERHOFF AKTIENGESELLSCHAFT (the "Original Borrower" and the
"Guarantor");
(2) LEVEL ACQUISITION CORP. (the "Additional Borrower");
(3) DEUTSCHE BANK AG and DRESDNER BANK AG in Wiesbaden as joint arrangers of
the Facilities (the "Arrangers");
(4) DEUTSCHE BANK LUXEMBOURG S.A. and DRESDNER BANK AG in Wiesbaden as
underwriters of the Facilities (the "Underwriters");
(5) DRESDNER BANK LUXEMBOURG S.A. as agent for the Banks (the "Agent"); and
(6) THE BANKS (as defined below).
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"Acquisition" means the proposed acquisition through public takeover by the
Original Borrower through the Purchaser of at least 50 per cent, plus one
share of the issued shares of Lone Star and the subsequent merger of the
Purchaser with Lone Star.
"Acquisition Costs" means the purchase price for 100 per cent, of the
shares, warrants and options of Lone Star and compensation payments to the
remaining shareholders of Lone Star in connection with the merger of Lone
Star with the Purchaser and other transaction costs in connection with the
Acquisition in an aggregate amount not to exceed USD 1,300,000,000.
"Acquisition Documents" means any sale and purchase agreement, the merger
agreement and/or tender offer document entered into by the Purchaser in
connection with the Acquisition.
"Additional Borrower" means LEVEL Acquisition Corp.
"Advance" means an advance made or to be made by the Banks hereunder.
"Agent's Spot Rate of Exchange" means the spot rate of exchange quoted by
the Agent at or about 11.00 a.m. on the third Business Day preceding the
first day of the relevant Interest Period for the purchase of United States
Dollars with Deutsche Mark.
-1-
<PAGE>
"Authorised Signatory" means, in relation to an Obligor, any person who is
duly authorised (in such manner as may be reasonably acceptable to the
Agent) and in respect of whom the Agent has received a certificate signed
by a director or another Authorised Signatory of such Obligor setting out
the name and signature of such person and confirming such person's
authority to act.
"Availability Period" means the period from and including the date hereof
to and including the earlier of (a) 31 January 2000 or (b) the first
Business Day on which the Available Commitments of each of the Banks is
zero.
"Available Commitment" means the aggregate of the Tranche A Commitment, the
Tranche B Commitment and the Tranche C Commitment.
"Available Facilities" means the aggregate of the Available Tranche A
Facility, the Available Tranche B Facility and the Available Tranche C
Facility.
"Available Tranche A Commitment" means, in relation to a Bank at any time
and save as otherwise provided herein, its Tranche A Commitment at such
time less the aggregate of its share of the Tranche A Advances which are
then outstanding provided that such amount shall not be less than zero.
"Available Tranche B Commitment" means, in relation to a Bank at any time
and save as otherwise provided herein, its Tranche B Commitment at such
time less the aggregate of its share of the Tranche B Advances which are
then outstanding provided that such amount shall not be less than zero.
"Available Tranche C Commitment" means, in relation to a Bank at any time
and save as otherwise provided herein, its Tranche C Commitment at such
time less the aggregate of its share of the Tranche C Advances which are
then outstanding provided that such amount shall not be less than zero.
"Available Tranche A Facility" means, at any time, the aggregate amount of
the Available Tranche A Commitments adjusted, in the case of any proposed
drawdown, so as to take into account:
(a) any reduction in the Tranche A Commitment of a Bank pursuant to the
terms hereof; and
(b) the amount of any Tranche A Advance which, pursuant to any other
drawdown is to be made,
on or before the proposed drawdown date.
"Available Tranche B Facility" means, at any time, the aggregate amount of
the Available Tranche B Commitments adjusted, in the case of any proposed
drawdown, so as to take into account:
(a) any reduction in the Tranche B Commitment of a Bank pursuant to the
terms hereof; and
-2-
<PAGE>
(b) the amount of any Tranche B Advance which, pursuant to any other
drawdown is to be made,
on or before the proposed drawdown date.
"Available Tranche C Facility" means, at any time, the aggregate amount of
the Available Tranche C Commitments adjusted, in the case of any proposed
drawdown, so as to take into account:
(a) any reduction in the Tranche C Commitment of a Bank pursuant to the
terms hereof; and
(b) the amount of any Tranche C Advance which, pursuant to any other
drawdown is to be made,
on or before the proposed drawdown date.
"Bank" means any financial institution named in:
(a) the First Schedule (The Banks); or
(b) which has become a party hereto in accordance with Clause 34.5
(Assignments by Banks) or Clause 34.6 (Transfers by Banks),
and which has not ceased to be a party hereto in accordance with the terms
hereof.
"Borrowers" means the Original Borrower and the Additional Borrower.
"Business Day" means a day (other than a Saturday or Sunday) on which banks
generally are open for business as required in connection with the relevant
transaction in Frankfurt, London and Luxembourg and, in relation to a date
for the payment or purchase of any sum denominated in United States
Dollars, a day on which banks generally are open for business in New York.
"Code" means the United States Internal Revenue Code 1986 (as amended) and
the regulations promulgated and rulings issued thereunder as in effect from
time to time.
"Commitment" means the aggregate of a Bank's Tranche A Commitment, Tranche
B Commitment and Tranche C Commitment.
"Compliance Certificate" means a certificate substantially in the form set
out in the Sixth Schedule (Form of Compliance Certificate).
"Computer System" means any computer hardware or software or any equipment
operated by electronic means.
"Due Diligence Reports" means:
(i) any legal, financial, commercial, tax, market and environmental due
diligence report prepared in connection with the Acquisition; and
-3-
<PAGE>
(ii) a legal opinion describing the contemplated merger prepared by the
Borrowers' U.S. legal counsel,
each in form and substance satisfactory to the Arrangers and addressed to
or with reliance letters in favour of the Arrangers and the Agent on behalf
of themselves and the Banks from time to time.
"EBIT" means, in respect of any Relevant Period, the consolidated net
income of the Group members before:
(a) any income or expense on account of taxation;
(b) any interest, commission, discounts or other fees incurred or payable,
received or receivable by any Group member in respect of Financial
Indebtedness; and
(c) any items treated as exceptional or extraordinary items.
"Employee Plan" means an "employee benefit plan" as defined in Section 3(3)
of ERISA, other than a Multiemployer Plan, which is maintained for, or
under which contributions are made on behalf of, employees of any Obligor
or an ERISA Affiliate.
"Encumbrance" means (a) a mortgage, charge, pledge, lien or other
encumbrance securing any obligation of any person, (b) any arrangement
under which money or claims to, or the benefit of, a bank or other account
may be applied, set off or made subject to a combination of accounts so as
to effect discharge of any sum owed or payable to any person or (c) any
other type of preferential arrangement (including any title transfer and
retention arrangement) having a similar effect.
"Environmental Claim" means any claim, proceedings or investigation by any
person pursuant to any Environmental Law.
"Environmental Law" means any applicable law in any jurisdiction in which
any member of the Group conducts business which relates to the pollution or
protection of the environment or harm to or the protection of human health
or the health of animals or plants.
"Environmental Permits" means any permit, licence, consent, approval and
other authorisation and the filing of any notification, report or
assessment required under any Environmental Law for the operation of the
business of any member of the Group conducted on or from the properties
owned or used by the relevant member of the Group.
"ERISA" shall mean, at any date, the US Employee Retirement Income Security
Act of 1974 (as amended) and the regulations promulgated and rulings issued
thereunder, all as the same shall be in effect at such date.
"ERISA Affiliate" shall mean any person that for purposes of Title I and
Title IV of ERISA and Section 412 of the Code who is a member of the Group,
or under common control with any Obligor, within the meaning of Section
414(b) or (c) of the Code.
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"ERISA Event" shall mean:
(h) (1) any reportable event, as defined in Section 4043 of ERISA, with
respect to an Employee Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within thirty days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA shall be a reportable event for the
purposes of this paragraph (1) regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code) or (2) the
requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) or any waiver under subsection (4) of such
Section) are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of an Employee Plan and an event
described in paragraph (9), (10), (11), (12) or (13) of Section
4043(c) of ERISA is reasonably expected to occur with respect to such
Employee Plan within the following 30 days;
(i) the filing under Section 4041(c) of ERISA of a notice of intent to
terminate any Employee Plan or the termination of any Employee Plan
under Section 4041(c) of ERISA;
(j) the institution of proceedings under Section 4042 of ERISA by the PBGC
for the termination of, or the appointment of a trustee to administer,
any Employee Plan;
(k) the failure to make a required contribution to any Employee Plan that
would result in the imposition of an Encumbrance under Section 412 of
the Code or Section 302 of ERISA; and
an engagement in a non-exempt prohibited transaction within the meaning of
Section 4795 of the Code or Section 406 of ERISA which could be reasonably
likely to have a Material Adverse Effect.
"Escrow Account" means the interest bearing account held in Luxembourg with
the Agent and identified in a letter between the Original Borrower and the
Agent as the Escrow Account which is pledged to the Agent and the Banks to
secure amounts due under the Finance Documents and from which no
withdrawals may be made by any Group member without the written consent of
the Agent.
"Event of Default" means any circumstance described as such in Clause 23
(Events of Default).
"Facilities" means the term loan facilities granted to the Borrowers under
this Agreement.
"Facility Office" means, in relation to the Agent or any Bank, the office
identified with its signature below (or, in the case of a Transferee, at
the end of the Transfer Certificate to which it is a party as Transferee)
or such other office as it may reasonably select by notice from time to
time.
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"Finance Documents" means this Agreement and the fee letter referred to in
Clauses 25.2 (Arrangement Fee) and 25.3 (Agency Fee).
"Finance Parties" means the Agent, the Arrangers, the Underwriters and the
Banks.
"Financial Indebtedness" means any indebtedness for or in respect of:
(a) any indebtedness for monies borrowed or debit balances at banks;
(b) any indebtedness (actual or contingent) under a guarantee, bond,
security indemnity or other commitment designed to assure any creditor
against any loss in respect of any financial indebtedness of any third
party;
(c) any indebtedness under any acceptance credit;
(d) any indebtedness under any debenture, note, bond, bill of exchange or
commercial paper instrument;
(e) any indebtedness for monies owing in respect of any interest rate swap
or cross-currency swap or forward sale or purchase contract or other
form of interest or currency hedging transaction (and the amount of
the Financial Indebtedness in relation to any such transaction shall
be calculated by reference to the mark to market valuation of such
transaction at the relevant time);
(f) receivables sold or discounted (other than on a non-recourse basis);
(g) any other payment obligation under any lease entered into for the
purpose of obtaining or raising finance; and
(h) any amount raised under any other transaction (including any forward
sale or purchase agreement) having the commercial effect of a
borrowing.
"Financial Projections" means the management forecasts for each financial
year and the following four years prepared on a consolidated basis for the
Group and comprising income statement, balance sheet and cash flow
forecasts in a form satisfactory to the Agent.
"Group" means the Original Borrower and its subsidiaries from time to time.
"Holding Account" means the interest bearing account held in Luxembourg
with the Agent and identified in a letter between the Original Borrower and
the Agent as the Holding Account which is pledged to the Agent and the
Banks to secure amounts due under the Finance Documents and from which no
withdrawals may be made by any Group member without the written consent of
the Agent.
"Information Memorandum" means the document concerning the Group, which at
its request and on its behalf, will be prepared in relation to this
transaction and will be distributed by the Arrangers to selected banks
wishing to become a Bank during Syndication.
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"Initial Financial Projections" means the management forecasts provided
pursuant to The Third Schedule (Conditions Precedent) for the financial
years 1999-2003 prepared on a consolidated basis for the Group and for Lone
Star and comprising income statement, balance sheet and cash flow forecasts
in a form satisfactory to the Arrangers.
"International Accounting Standards" means the international accounting
standards as from time to time promulgated by the International Accounting
Standards Committee.
"Interest Period" means, save as otherwise provided herein:
(a) any of those periods mentioned in Clause 6.1 (Interest Periods); and
(b) in relation to an Unpaid Sum, any of those periods mentioned in Clause
27.1 (Default Interest Periods).
"LIBOR" means the London Interbank Offered Rate and will be determined by
reference to the Telerate pages 3740 or 3750, as appropriate, or if not
available, the arithmetic mean (rounded upwards, if not already such a
multiple, to the nearest 4 decimal places) of the rates (as notified to the
Agent) at which each of the Reference Banks was offering to prime banks in
the London interbank market deposits in United States Dollars for the
specified period at or about 11.00 a.m., London time, on the Quotation
Date.
"Loan" means the Tranche A Loan, the Tranche B Loan and the Tranche C Loan.
"Lone Star" means Lone Star Industries, Inc., Stamford, Connecticut, U.S.A.
"Majority Banks" means:
(a) whilst no Advances are outstanding, a Bank or Banks whose Commitments
amount (or, if each Bank's Commitment has been reduced to zero, did
immediately before such reduction to zero, amount) in aggregate to at
least sixty-six and two thirds per cent. of the Total Commitments; and
(b) whilst at least one Advance is outstanding, a Bank or Banks to whom in
aggregate at least sixty-six and two thirds per cent. of the Loan is
(or immediately prior to its repayment was then) owed.
"Mandatory Cost Rate" means in relation to any Advance the percentage rate
per annum determined by the Agent as the weighted average of:
(a) the percentage rate per annum determined by the Agent in accordance
with the Seventh Schedule (Mandatory Costs) in relation to that part
of the Advance which is being or is to be provided by any Bank with a
Facility Office in the United Kingdom; and
(b) (in relation to the remaining part of the Advance) the percentage rate
per annum notified to the Agent by any Bank which is required to
comply with the
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regulations of the European Central Bank or the European System of
Central Banks as being the cost, expressed as a percentage rate per
annum, incurred by such Bank in making, maintaining or funding its
respective share of the Advance as a result of compliance with any
applicable reserve cost-requirements imposed by the European Central
Bank or the European System of Central Banks (as currently set out in
ECB Regulations EC/2818/98 and EC/2819/98) provided that if a Bank
(which does not fall under (a) above) does not notify such percentage
rate to the Agent until close of business on the Business Day prior to
the Quotation Date such cost to such Bank shall be deemed to be zero.
"Margin" means:
(a) 0.65 per cent. per annum; or
(b) if the total amount of the Loan and Available Commitments is less than
or equal to USD 1,000,000,000 but greater than USD 750,000,000, 0.5
per cent. per annum;
(c) if the total amount of the Loan and Available Commitments is less than
or equal to USD 750,000,000 but greater than USD 500,000,000, 0.45 per
cent. per annum;
(d) if the total amount of the Loan and Available Commitments is less than
or equal to USD 500,000,000 but greater than USD 300,000,000, 0.40 per
cent. per annum; or
(e) if the total amount of the Loan and Available Commitments is less than
or equal to USD 300,000,000, 0.375 per cent. per annum.
with any reduction in the Margin becoming effective immediately upon the
relevant reduction in the total amount of the Loan and Available
Commitment.
"Material Adverse Effect" means a material adverse effect on (a) the
ability of any Obligor to fulfil or perform its obligations under the
Finance Documents; or (b) the validity or enforceability of the Finance
Documents or the rights or remedies of any Finance Party hereunder.
"Notice of Drawdown" means a notice substantially in the form set out in
the Fourth Schedule (Notice of Drawdown).
"Obligors" means the Borrowers and the Guarantor.
"Original USD Amount" means, in relation to an Advance, the amount thereof
requested in the Notice of Drawdown relating thereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
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"Participating Member State" means any member state which has adopted the
Euro as its lawful currency at the relevant time.
"Permitted Disposals" means:
(a) disposals of assets by a Group member which do not represent a
substantial part of the Original Borrower's consolidated assets
provided such disposals are on arm's length terms and at fair market
value;
(b) disposals by a Group member in the ordinary course of business on
arm's length terms and at fair market value;
(c) disposals (irrespective whether against cash or in kind contribution
or against any other consideration) between members of the Group
provided that such disposal is on arm's length terms and at fair
market value.
(d) any disposal made with the prior consent of the Agent acting on the
instruction of the Majority Banks; and
(e) any disposal of shares in Lone Star or in another entity holding,
directly or indirectly, Lone Star shares provided that such disposal
is on arms length terms and at fair market value.
"Permitted Encumbrance" means:
(a) any Encumbrance which has been disclosed as specified in the Fifth
Schedule (Existing Encumbrances) prior to the date of signing of this
Agreement and which secures only indebtedness outstanding at the date
hereof;
(b) any Encumbrance arising solely by operation of law in the ordinary
course of business and not due to a default;
(c) any Encumbrance existing at the time of an asset's acquisition not
created in contemplation of such acquisition and not exceeding the
fair market value of the acquired asset provided that within six (6)
months after its creation such Encumbrance ceases to exist or is
released and the amount secured does not exceed DEM 75,000,000;
(d) any Encumbrance arising in connection with a title transfer or
retention of title arrangement entered into in the normal course of
its trading activities and on customary terms;
(e) any Encumbrance created in relation to the netting of bank account
balances in the normal course of banking arrangements, including
general banking conditions, and under hedging arrangements; and
(f) any other Encumbrance securing Financial Indebtedness which in
aggregate does not exceed DEM 75,000,000.
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"Potential Event of Default" means any event which would constitute (with
the passage of time, the giving of notice, the making of any determination
hereunder or any combination thereof (all as provided for herein)) an
Event of Default.
"Principal Group Member" means each of the Obligors and any subsidiary of
the Original Borrower, from time to time which has:
(a) net revenues representing 1 per cent, or more of the total
consolidated net revenues of the Group; or
(b) total assets representing 1 per cent, or more of the total
consolidated assets of the Group; or
(c) EBIT representing 1 per cent, or more of the EBIT of the Group.
Compliance with the conditions set out in paragraphs (a) or (b) shall be
determined by reference to the latest audited financial statements of such
subsidiary (consolidated in the case of a subsidiary which itself has
subsidiaries) and the latest audited consolidated financial statements of
the Group provided that:
(i) if a subsidiary has been acquired since the date as at which the
latest audited consolidated financial statements of the Group were
prepared, such financial statements shall be adjusted in order to
take into account the acquisition of such subsidiary as soon as
practicable after the date of such acquisition (after the elapse of
the next quarter) (such adjustment being certified by the Group's
auditors as representing an accurate reflection of the revised net
sales and total assets and EBIT at the next date consolidated annual
accounts are prepared);
(ii) if, in the case of any subsidiary which itself has subsidiaries, no
consolidated financial statements are prepared and audited, its net
sales and total assets shall be determined on the basis of pro forma
consolidated financial statements of the relevant subsidiary and its
subsidiaries, prepared for this purpose by the auditors of the
Borrower or the auditors for the time being of the relevant
subsidiary as soon as practicable after the date of the preparation
of the unconsolidated accounts of such subsidiary; and
(iii) if any intra-group transfer or re-organisation takes place, the
audited financial statements of the Group and of all relevant
subsidiaries shall be adjusted by the Group's auditors in order to
take into account such intra-group transfer or reorganisation.
A report by the auditors of the Borrower that a subsidiary is or is not a
Principal Subsidiary shall, in the absence of manifest error, be conclusive
and binding on all parties hereto.
"Proportion" means, in relation to a Bank:
(a) whilst no Advances are outstanding, the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments are
then zero, by its
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Commitment to the Total Commitments immediately prior to their
reduction to zero); or
(b) whilst at least one Advance is outstanding, the proportion borne by
its share of the Loan owed.
"Purchaser" means the Additional Borrower.
"Quotation Date" means, in relation to any period for which an interest
rate is to be determined hereunder, the Business Day which is two Business
Days before the first day of such period or such other day on which
quotations would ordinarily be given by prime banks in the relevant
interbank market for deposits in the relevant currency, provided that if,
for any such period, quotations would ordinarily be given on more than one
date or another day, the Quotation Date for that period shall be the last
of those dates.
"Reference Banks" means, prior to the Syndication Date, Deutsche Bank
Luxembourg S.A. and Dresdner Bank Luxembourg S.A. and after the Syndication
Date, Dresdner Bank Luxembourg S.A., Deutsche Bank Luxembourg S.A. and any
two other banks as may be appointed as such by the Agent after due
consultation with the Guarantor.
"Reference Financial Statements" means the financial statements delivered
by the Original Borrower for the financial year of the Group ending 31
December 1998.
"Relevant Period" means each period of twelve (12) months ending on the
last day of each financial quarter of the Borrower's financial year.
"Repayment Date" means the Tranche A Termination Date, Tranche B
Termination Date or a Tranche C Repayment Date.
"Repeated Representations" means each of the representations set out in
Clause 19.1 (Status) to Clause 19.24 (Acquisition).
"Rolling Basis" means the calculation of a ratio or an amount made at the
end of a financial quarter in respect of that financial quarter and each of
the preceding three (3) financial quarters falling on or after 31 March
2000.
"Shareholder Loans" means any loan made by the Original Borrower or any
member of the Group to the Additional Borrower.
"Subsequent Participant" means a Participating Member State that adopts the
Euro as its lawful currency after 1 January 1999.
"Syndication" means the process of the Arrangers inviting banks and other
persons to participate in the Facilities at such times and places as the
Arrangers may reasonably select such process to be completed as of the
Syndication Date.
"Syndication Date" means the day specified by the Arrangers as the day on
which Syndication is to be completed.
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"Total Commitments" means, at any time, the aggregate of the Banks'
Commitments.
"Tranche A Advance" means an Advance made or to be made by the Banks under
the Tranche A Facility.
"Tranche A Commitment" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set out opposite its name under the
heading "Tranche A Commitment" in the First Schedule (The Banks).
"Tranche A Loan" means, at any time, the aggregate principal amount of the
Tranche A Advances outstanding at such time.
"Tranche A Termination Date" means 22 August 2000 and, if such day is not a
Business Day, the immediately preceding Business Day.
"Tranche B Advance" means an Advance made or to be made by the Banks under
the Tranche B Facility.
"Tranche B Commitment" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set out opposite its name under the
heading "Tranche B Commitment" in the First Schedule (The Banks).
"Tranche B Loan" means, at any time, the aggregate principal amount of the
Tranche B Advances outstanding at such time.
"Tranche B Termination Date" means 28 February 2001 and, if such day is not
a Business Day, the immediately preceding Business Day.
"Tranche C Advance" means an Advance made or to be made by the Banks under
the Tranche C Facility.
"Tranche C Commitment" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set out opposite its name under the
heading "Tranche C Commitment" in the First Schedule (The Banks).
"Tranche C Loan" means, at any time, the aggregate principal amount of the
Tranche C Advances outstanding at such time.
"Tranche C Repayment Date" has the meaning given to it in Clause 12
(Repayment of the Tranche C Facility).
"Tranche C Termination Date" means 31 August 2004 and, if such day is not a
Business Day, the immediately preceding Business Day.
"Transfer Certificate" means a certificate substantially in the form set
out in the Second Schedule (Form of Transfer Certificate) or the standard
form from time to time of the Loan Market Association ("LMA") signed by a
Bank and a Transferee under which:
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(a) such Bank seeks to procure the transfer to such Transferee of all or
a part of such Bank's rights, benefits and obligations hereunder upon
and subject to the terms and conditions set out in Clause 34.2
(Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations it will assume
as a result of delivery of such certificate to the Agent as
contemplated in Clause 0 (Transfers by Banks).
"Transfer Date" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in such Transfer Certificate.
"Transferee" means a person to which a Bank seeks to transfer by transfer
and assumption all or part of such Bank's rights, benefits and obligations
hereunder.
"Unpaid Sum" means the unpaid balance of any of the sums referred to in
Clause 27.1 (Default Interest Periods).
"Year 2000 Compliant" means, in relation to any Computer System, that any
reference to or use of data before, on or after 31 December 1999 in the
operation of that Computer System will not have an adverse effect on the
use of that Computer System.
1.2 Interpretation
Any reference in this Agreement to:
the "Agent", the "Arrangers" or any "Bank" shall be construed so as to
include its and any subsequent successors and permitted transferees in
accordance with their respective interests;
"continuing", in relation to an Event of Default, shall be construed as a
reference to an Event of Default which has not been waived in accordance
with the terms hereof and, in relation to a Potential Event of Default, one
which has not been remedied within the relevant grace period or waived in
accordance with the terms hereof;
"control" of a body corporate means:
(i) the power to:
(a) cast or control the casting of more than one-half of the maximum
number of votes that might be cast at a general meeting of the
body corporate; or
(b) appoint or remove all, or the majority, of the directors of the
body corporate (and the relevant person or persons shall be
deemed to have power to make such an appointment if;
(1) an individual cannot be appointed as a director of the body
corporate without the exercise by the relevant person or
persons of such power in the individual's favour; or
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(2) an individual's appointment as a director of the body
corporate follows necessarily from the individual being a
director or other officer of any of the relevant person or
persons); or
(c) to give directions with respect to the operating and financial
policies of the body corporate which the directors of the body
corporate are obliged to comply with; or
(ii) the holding of more than one-half of the issued share capital of the
body corporate (excluding any part of that issued share capital that
carries no right to participate beyond a specified amount in a
distribution of either profits or capital);
a "holding company" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a subsidiary;
"indebtedness" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent (including contingent
obligations by reason of any guarantee or other assumption of liability for
obligations of third parties);
a "law" shall be construed as any law (including common or customary law),
statute, constitution, decree, judgment, treaty, regulation, directive,
bye-law, order or any other legislative measure of any government,
supranational, local government, statutory or regulatory body or court;
a "member state" shall be construed as a reference to a member state of the
European Union;
a "month" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that:
(a) if any such numerically corresponding day is not a Business Day, such
period shall end on the immediately succeeding Business Day to occur
in that next succeeding calendar month or, if none, on the immediately
preceding Business Day; and
(b) if there is no numerically corresponding day in that next succeeding
calendar month, that period shall end on the last Business Day in that
next succeeding calendar month
(and references to "months" shall be construed accordingly);
a "person" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or
more of the foregoing;
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the "relevant interbank market" is a reference to the London
interbank market.
the "relevant interbank rate" is a reference to LIBOR.
"repay" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "prepay" (or, as the case may be, the
corresponding derivative form thereof);
a "subsidiary" of a company or corporation or partnership shall be
construed as a reference to any company or corporation or partnership:
(a) which is controlled, directly or indirectly, by the first-mentioned
company or corporation;
(b) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(c) which is a subsidiary of another subsidiary of the first-mentioned
company or corporation;
a "successor" shall be construed so as to include an assignee (other than
an assignment pursuant to Clause 0 (Assignments and Transfers by Banks) or
successor in title of such party and any person who under the laws of its
jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under this Agreement or to which, under such
laws, such rights and obligations have been transferred;
"tax" shall be construed so as to include any tax which shall include
corporation tax and advance corporation tax) levy, impost, duty or other
charge of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the same);
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time;
a "wholly-owned subsidiary" of a company or corporation shall be construed
as a reference to any company or corporation which has no other members
except that other company or corporation and that other company's or
corporation's wholly-owned subsidiaries or persons acting on behalf of that
other company or corporation or its wholly-owned subsidiaries; and
the "winding-up", "dissolution" or "administration" of a company or
corporation or partnership shall be construed so as to include any
equivalent or analogous proceedings under the laws of the jurisdiction in
which such company or corporation or partnership is incorporated or any
jurisdiction in which such company or corporation or partnership carries on
business including the seeking of liquidation, winding-up, reorganisation,
dissolution, administration, arrangement, adjustment, protection or relief
of debtors,
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provided that the following shall not be construed as a "winding-up",
"dissolution" or "administration" for the purposes of this Agreement:
(i) a consolidation, amalgamation, merger or reconstruction, the terms of
which have previously been approved by the Agent acting on the
instructions of the Majority Banks; or
(ii) a voluntary solvent winding-up or dissolution in connection with the
transfer of all or the major part of the assets or shares of a member
of the Group to another member of the Group.
1.3 Currency Symbol
"United States Dollars" and "USD" denotes the lawful currency of the United
States of America.
1.4 Agreements and Statutes
Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall be construed
as a reference to this Agreement, or as the case may be, such other
agreement or document as the same may have been, or may from time to
time be, amended, varied, novated or supplemented; and
1.4.2 a statute or treaty shall be construed as a reference to such
statute or treaty as the same may have been, or may from time to time
be, amended or, in the case of a statute, re-enacted.
1.5 Headings
Clause and Schedule headings are for ease of reference only.
1.6 Time
Any reference in this Agreement to a time of day shall, unless a contrary
indication appears, be a reference to Frankfurt time.
2. THE FACILITIES
2.1 Grant of the Facilities
The Banks grant to the Borrowers, upon the terms and subject to the
conditions hereof:
2.1.1 a term loan facility (the "Tranche A Facility") in an aggregate
amount of USD 800,000,000 (United States Dollar eight hundred
million);
2.1.2 a term loan facility (the "Tranche B Facility") in an aggregate
amount of USD 200,000,000 (United States Dollar two hundred million);
and
2.1.3 a term loan facility (the "Tranche C Facility") in an aggregate
amount of USD 300,000,000 (United States Dollar three hundred
million).
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2.2 Purpose and Application
The Facilities will be used to finance the Acquisition and to pay the
Acquisition Costs as well as to finance directly and/or indirectly capital
increases in the Purchaser for the purposes of accomplishing the
Acquisition.
2.3 Lower Acquisition Price
In the event that the Acquisition Costs are less than USD 1,300,000,000
(United States Dollar one billion three hundred million) then the Total
Commitments shall be reduced rateably to the actual amount of the
Acquisition Costs and each Bank's Commitment shall be reduced by a pro rata
amount of such reduction.
2.4 Not All Money Applied to Acquisition
In the event that any relevant Borrower fails to apply any portion of any
Advance toward payment of the Acquisition Costs, it shall credit
immediately the portion of such Advance not so applied to the Escrow
Account. Any amount so deposited may be withdrawn only with the written
consent of the Agent and shall be used only for prepayment of the Loan
pursuant to Clause 0 (Mandatory Prepayment) or for payment of the
Acquisition Costs.
2.5 Conditions Precedent
Save as the Banks may otherwise agree, the relevant Borrower may not
deliver any Notice of Drawdown unless the Agent has confirmed to such
Borrower and the Banks that it has received all of the documents and other
evidence listed in the Third Schedule (Conditions Precedent) as appropriate
and that each is, in form and substance, satisfactory to the Agent.
2.6 Original Borrower's Approval
The Arrangers are aware of the fact that the Original Borrower needs the
approval of its supervisory board (Aufsichsrat) to enter into this
Agreement.
2.7 Banks' Obligations Several
The obligations of each Bank are several and the failure by a Bank to
perform its obligations hereunder shall not affect the obligations of an
Obligor towards any other party hereto nor shall any other party be liable
for the failure by such Bank to perform its obligations hereunder.
2.8 Banks' Rights Several
The rights of each Bank are several and any debt arising hereunder at any
time from an Obligor to any of the other parties hereto shall be a separate
and independent debt. Each such party shall be entitled to protect and
enforce its individual rights arising out of this Agreement independently
of any other party (so that it shall not be necessary for any party hereto
to be joined as an additional party in any proceedings for this purpose).
2.9 Additional Borrower's Agent
The Additional Borrower appoints the Original Borrower as its agent for all
purposes of or connected with the Facility Documents. The Finance Parties
may rely in good
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faith upon any document signed by or on behalf of the Original Borrower as
if it had been signed by the Additional Borrower.
3. UTILISATION OF THE TRANCHE A FACILITY
3.1 Drawdown Conditions for Tranche A Advances
A Tranche A Advance will be made by the Banks to the Additional Borrower
if:
3.1.1 not less than three (3) Business Days before the proposed date for
the making of such Tranche A Advance, the Agent has received a
completed Notice of Drawdown;
3.1.2 the proposed date for the making of such Tranche A Advance is a
Business Day within the Availability Period;
3.1.3 the proposed date for the making of such Tranche A Advance is not
less than five (5) Business Days after the date upon which the
previous Tranche A Advance (if any) was made;
3.1.4 the proposed Original USD Amount of such Tranche A Advance is (a)
(if less than the Available Tranche A Facility) in an amount not less
than USD 15,000,000 and in integral multiples of USD 5,000,000 or (b)
equal to the amount of the Available Tranche A Facility;
3.1.5 there would not, immediately after the making of such Tranche A
Advance, be more than ten (10) Tranche A Advances outstanding;
3.1.6 the interest rate applicable to such Tranche A Advance during its
first Interest Period would not fall to be determined pursuant to
Clause 8.1 (Market Disruption);
3.1.7 pro rata amounts of the Tranche B Facility and the Tranche C
Facility will also be drawn on the same day by any Borrower; and
3.1.8 on and as of the proposed date for the making of such Tranche A
Advance (a) no Event of Default or Potential Event of Default is
continuing and (b) the Repeated Representations are true in all
material respects.
3.2 Each Bank's Participation in Tranche A Advances
Each Bank will participate through its Facility Office in each Tranche A
Advance made pursuant to Clause 3.1 (Drawdown Conditions for Tranche A
Advances) in the proportion borne by its Available Tranche A Commitment to
the Available Tranche A Facility immediately prior to the making of that
Tranche A Advance.
3.3 Reduction of Available Tranche A Commitment
If a Bank's Available Tranche A Commitment is reduced in accordance with
the terms hereof after the Agent has received the Notice of Drawdown for a
Tranche A Advance and such reduction was not taken into account in the
Available Tranche A Facility, then
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both the Original USD Amount and the amount of that Tranche A Advance shall
be reduced accordingly.
4. UTILISATION OF THE TRANCHE B FACILITY
4.1 Drawdown Conditions for Tranche B Advances
A Tranche B Advance will be made by the Banks to the Original Borrower if:
4.1.1 not less than three (3) Business Days before the proposed date for
the making of such Tranche B Advance, the Agent has received a
completed Notice of Drawdown;
4.1.2 the proposed date for the making of such Tranche B Advance is a
Business Day within the Availability Period;
4.1.3 the proposed date for the making of such Tranche B Advance is not
less than five (5) Business Days after the date upon which the
previous Tranche B Advance (if any) was made;
4.1.4 the proposed Original USD Amount of such Tranche B Advance is (a)
(if less than the Available Tranche B Facility) in an amount not less
than USD 15,000,000 and in integral multiples of USD 5,000,000 or (b)
equal to the amount of the Available Tranche B Facility;
4.1.5 there would not, immediately after the making of such Tranche B
Advance, be more than ten (10) Tranche B Advances outstanding;
4.1.6 the interest rate applicable to such Tranche B Advance during its
first Interest Period would not fall to be determined pursuant to
Clause 8.1 (Market Disruption);
4.1.7 pro rata amounts of the Tranche A Facility and the Tranche C
Facility will also be drawn on the same day by any Borrower; and
4.1.8 on and as of the proposed date for the making of such Tranche B
Advance (a) no Event of Default or Potential Event of Default is
continuing and (b) the Repeated Representations are true in all
material respects.
4.2 Each Bank's Participation in Tranche B Advances
Each Bank will participate through its Facility Office in each Tranche B
Advance made pursuant to Clause 4.1 (Drawdown Conditions for Tranche B
Advances) in the proportion borne by its Available Tranche B Commitment to
the Available Tranche B Facility immediately prior to the making of that
Tranche B Advance.
4.3 Reduction of Available Tranche B Commitment
If a Bank's Available Tranche B Commitment is reduced in accordance with
the terms hereof after the Agent has received the Notice of Drawdown for a
Tranche B Advance and such reduction was not taken into account in the
Available Tranche B Facility, then
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both the Original USD Amount and the amount of that Tranche B Advance shall
be reduced accordingly.
5. UTILISATION OF THE TRANCHE C FACILITY
5.1 Drawdown Conditions for Tranche C Advances
A Tranche C Advance will be made by the Banks to a Borrower if:
5.1.1 not less than three (3) Business Days before the proposed date for
the making of such Tranche C Advance, the Agent has received a
completed Notice of Drawdown;
5.1.2 the proposed date for the making of such Tranche C Advance is a
Business Day within the Availability Period;
5.1.3 the proposed date for the making of such Tranche C Advance is not
less than five (5) Business Days after the date upon which the
previous Tranche C Advance (if any) was made;
5.1.4 the proposed Original USD Amount of such Tranche C Advance is (a)
(if less than the Available Tranche C Facility) in an amount not less
than USD 15,000,000 and in integral multiples of USD 5,000,000 or (b)
equal to the amount of the Available Tranche C Facility provided that
the Additional Borrower shall at no time have ever drawn more than
62.5% of the Tranche C Facility and the Original Borrower shall at no
time have ever drawn more than 37.5% of the Tranche C Facility;
5.1.5 there would not, immediately after the making of such Tranche C
Advance, be more than ten (10) Tranche C Advances outstanding;
5.1.6 the interest rate applicable to such Tranche C Advance during its
first Interest Period would not fall to be determined pursuant to
Clause 8.1 (Market Disruption);
5.1.7 pro rata amounts of the Tranche A Facility and the Tranche B
Facility will also be drawn on the same day by any Borrower; and
5.1.8 on and as of the proposed date for the making of such Tranche C
Advance (a) no Event of Default or Potential Event of Default is
continuing and (b) the Repeated Representations are true in all
material respects.
5.2 Each Bank's Participation in Tranche C Advances
Each Bank will participate through its Facility Office in each Tranche C
Advance made pursuant to Clause 5.1 (Drawdown Conditions for Tranche C
Advances) in the proportion borne by its Available Tranche C Commitment to
the Available Tranche C Facility immediately prior to the making of that
Tranche C Advance.
5.3 Reduction of Available Tranche C Commitment
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If a Bank's Available Tranche C Commitment is reduced in accordance with
the terms hereof after the Agent has received the Notice of Drawdown for a
Tranche C Advance and such reduction was not taken into account in the
Available Tranche C Facility, then both the Original USD Amount and the
amount of that Tranche C Advance shall be reduced accordingly.
6. INTEREST PERIODS
6.1 Interest Periods
The period for which an Advance is outstanding shall be divided into
successive periods each of which (other than the first, which shall begin
on the day such Advance is made) shall start on the last day of the
preceding such period.
6.2 Duration
The duration of each Interest Period shall, save as otherwise provided
herein, be one, two, three or six months (or such other customary period of
not more than twelve months which the relevant Borrower and the Agent shall
agree), in each case as the relevant Borrower may not later than 11:00 a.m.
three (3) Business Days' beforehand select provided that:
6.2.1 if the relevant Borrower fails to give such notice of its selection
in relation to an Interest Period, the duration of that Interest
Period shall, subject to sub-clauses 6.2.2 and 6.2.3, be one month;
6.2.2 any Interest Period which begins during or at the same time as any
other Interest Period and relates to an Advance from the same tranche
shall end at the same time as that other Interest Period;
6.2.3 any Interest Period which would otherwise end during the month
preceding, or extend beyond, a Repayment Date shall be of such
duration that it shall end on that Repayment Date; and
6.2.4 prior to the Syndication Date, the duration of any Interest Period
shall be not more than one month.
6.3 Consolidation of Advances
The Agent may, at its discretion, direct that at the end of the
Availability Period, any two or more Advances from the same tranche be
consolidated into a single Advance so that at no time after the
Availability Period shall there be more than three (3) Advances from the
same tranche outstanding at any one time.
6.4 Division of Advances
The relevant Borrower may, by delivery of notice to the Agent not later
than 11:00 a.m. three (3) Business Days' beforehand, direct that any
Advance shall, at the beginning of any Interest Period relating thereto, be
divided into (and thereafter, save as otherwise provided herein, treated in
all respects as) two or more Advances from the same tranche having such
Original USD Amounts (in aggregate, equalling the amount of the Advance
being so divided) as shall be specified by a Borrower in such notice
provided
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that at no time shall there be not more than three (3) Advances from the
same tranche outstanding at any one time.
7. PAYMENT AND CALCULATION OF INTEREST
7.1 Payment of Interest
On the last day of each Interest Period the relevant Borrower shall pay
accrued interest on the Advance to which such Interest Period relates, and,
in the case of an Interest Period of more than six months, the date six
months after the first day of such Interest Period.
7.2 Calculation of Interest
The rate of interest applicable to an Advance from time to time during an
Interest Period relating thereto shall be the rate per annum which is the
sum of:
7.2.1 the Margin;
7.2.2 the Mandatory Cost Rate if applicable; and
7.2.3 the relevant interbank rate.
8. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
8.1 Market Disruption
If, in relation to any Advance or Unpaid Sum:
8.1.1 The Agent determines that at or about 11.00 a.m. on the Quotation
Date for the relevant Interest Period in respect of such Advance or
Unpaid Sum it is unable to access the relevant page or an interest
rate for deposits of United States Dollars in the relevant interbank
market does not appear on the relevant page (as appropriate, or such
other page as may replace such page) and none or only one of the
Reference Banks was offering to prime banks in the relevant interbank
market deposits for the proposed duration of such Interest Period in
the currency in which such Advance or Unpaid Sum is to be
denominated; or
8.1.2 before the close of business in the relevant interbank market on the
Quotation Date for such Advance or Unpaid Sum the Agent has been
notified by a Bank or each of a group of Banks to whom in aggregate
thirty-five per cent. or more of such Advance if made would be owed
(or such Unpaid Sum is owed) that the relevant interbank rate does
not accurately reflect the cost of funding its participation in such
Advance or Unpaid Sum,
then the Agent shall notify the other parties hereto of such event and,
notwithstanding anything to the contrary in this Agreement, Clause 8.2
(Substitute Interest and Interest Rate) shall apply to such Advance or
Unpaid Sum. If sub-clauses 8.1.1 or 8.1.2 apply to a proposed Advance, such
Advance shall not be made.
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8.2 Substitute Interest Period and Interest Rate
If either sub-clause 8.11 or 8.12 of Clause 8.1 (Market Disruption)
applies to an Advance or an Unpaid Sum the rate of interest applicable to
such Advance or Unpaid Sum during the relevant Interest Period or Term
shall (subject to any agreement reached pursuant to Clause 8.3 (Alternative
Rate)) be the rate per annum which is the sum of:
8.2.1 the Margin; and
8.2.2 the rate per annum determined by the Agent to be the weighted
average (rounded to four decimal places) of the rates notified by
each Bank to the Agent before the last day of such Interest Period
to be that which expresses as a percentage rate per annum the cost
to each Bank of funding from whatever reasonable sources it may
select its portion of such Advance or Unpaid Sum during such
Interest Period.
8.3 Alternative Rate
If (a) either of those events mentioned in sub-clauses 0 and 0 of Clause
8.1 (Market Disruption) occurs in relation to an Advance or Unpaid Sum or
(b) by reason of circumstances affecting the relevant interbank market
during any period of three consecutive Business Days the relevant interbank
rate is not available for United States Dollars to prime banks in the
relevant interbank market, then if the Agent or the relevant Borrower so
requires, the Agent and the relevant Borrower shall enter into negotiations
with a view to agreeing a substitute basis (i) for determining the rates of
interest from time to time applicable to the Advances and Unpaid Sums
and/or (ii) upon which the Advances and Unpaid Sums may be maintained
thereafter and any such substitute basis that is agreed shall take effect
in accordance with its terms and be binding on each party hereto, provided
that the Agent may not agree any such substitute basis without the prior
consent of each Bank.
9. NOTIFICATION
9.1 Advances and Interest Periods
Not later than 11:00 a.m. three (3) Business Days before an Advance is to
be made the Agent shall notify each Bank of the proposed amount of the
relevant Advance, its proposed Interest Period and the aggregate principal
amount of the relevant Advance allocated to such Bank pursuant to Clause
3.2 (Each Bank's Participation in Tranche A Advances), Clause 4.2 (Each
Bank's Participation in Tranche B Advances) or Clause 5.2 (Each Bank's
Participation in Tranche C Advances).
9.2 Interest Rate Determination
The Agent shall promptly notify the relevant Borrower and the Banks of each
determination of the relevant interbank rate applicable to an Advance.
9.3 Changes to interbank rate, Interest Periods, or Interest Rates
The Agent shall promptly notify the relevant Borrower and the Banks of (a)
any change to the relevant interbank rate or (b) the proposed length of an
Interest Period or an interest rate occasioned by the operation of Clause
8.1 (Market Disruption).
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10. REPAYMENT OF THE TRANCHE A FACILITY
The relevant Borrower shall repay each Tranche A Advance made to it in full
on the Tranche A Termination Date.
11. REPAYMENT OF THE TRANCHE B FACILITY
The relevant Borrower shall repay each Tranche B Advance made to it in full
on the Tranche B Termination Date.
12. REPAYMENT OF THE TRANCHE C FACILITY
Each date on which an instalment of the Tranche C Loan is to be repaid is
herein referred to as "Tranche C Repayment Date". The relevant Borrower
shall repay the Tranche C Loan in instalments in the amount representing
the percentage of the Tranche C Loan as at the expiry of the Availability
Period and on the Tranche C Repayment Dates set out in the table below:
Tranche C Repayment Date Percentage of Tranche C Loan
31 August 2001 10.0%
28 February 2002 12.5%
30 August 2002 12.5%
28 February 2003 15.0%
29 August 2003 15.0%
27 February 2004 17.5%
31 August 2004 17.5%
-----
100.0%
13. CANCELLATION AND PREPAYMENT
13.1 Cancellation of the Loan
13.1.1 Voluntary Cancellation
The Original Borrower may, by giving to the Agent not less than ten (10)
Business Days' prior notice to that effect, cancel the whole or any part
(being an amount no less than USD 25,000,000 or equivalent and in integral
multiples of USD 5,000,000) of the Available Facility without premium or
penalty. Any such cancellation shall reduce the Available Commitment and
the Commitment of each Bank rateably pro rata across the tranches.
13.1.2 Automatic Cancellation
The Available Facilities shall be automatically cancelled at 5:00 p.m. on
the last day of the Availability Period.
13.2 Cancellation of a Bank's Commitment
If:
13.2.1 any sum payable to any Bank by an Obligor is required to be
increased pursuant to Clause 0 (Tax Gross-up); or
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13.2.2 any Bank claims indemnification from the relevant Borrower under
Clause 14.2 (Tax Indemnity) or Clause 16.1 (Increased Costs),
the relevant Borrower may, whilst such circumstance continues, by not less
than 30 Business Days' prior notice to the Agent (which notice shall be
irrevocable), cancel such Bank's Commitment whereupon such Bank shall cease
to be obliged to participate in Advances and its Commitment shall be
reduced to zero.
13.3 Voluntary Prepayment
Any Borrower with the consent of the Guarantor may without premium or
penalty, if the Guarantor has given to the Agent not less than ten (10)
Business Days' prior notice to that effect, prepay the whole of any Advance
or any part of any Advance (being an amount such that the amount of such
Advance will be reduced by an amount not less than USD 25,000,000 and in an
integral multiple of USD 5,000,000). Any prepayment so made may give rise
to amounts becoming due to the Banks from the relevant Borrower pursuant to
Clause 27.4 (Break Costs) and shall satisfy pro tanto such Borrower's
obligations under Clause 10 (Repayment of the Tranche A Facility), Clause
11 (Repayment of the Tranche B Facility) and Clause 12 (Repayment of the
Tranche C Facility).
13.4 Mandatory Prepayment
In the event that any member of the Group:
13.4.1 disposes of any material asset of any Principal Group Member (in
any single transaction or any series of transactions which the
Agent reasonably determines to be the equivalent of a single
transaction) unless the net proceeds (after tax) of such disposal
are less than DEM 300,000,000 and such member of the Group
reinvests the proceeds of such disposal in an equivalent asset
within six (6) months of such disposal;
13.4.2 receives purchase price reimbursement, proceeds from breach of
warranty or other claims under the Acquisition Documents;
13.4.3 sells the whole or substantially the whole business or assets of
the Group;
13.4.4 receives proceeds from any securities issued by any member of the
Group into the capital or credit markets provided that the Tranche
A Loan and Tranche B Loan have not been repaid in full; or
13.4.5 has any amount standing to the credit of the Escrow Account after
the end of the Availability Period:
an amount corresponding to any net proceeds received in respect thereof
must be deposited into the Holding Account and then must be applied to
repayment of amounts outstanding under the Loan on the last day(s) of the
then current Interest Period(s). In the case of any change of control of
the Original Borrower, the Original Borrower shall immediately deposit into
the Holding Account for prepayment the entire amount of the Loan
outstanding. Any prepayment so made shall be applied to satisfying pro
tanto
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such Borrower's obligations first under Clause 10 (Repayment of the Tranche
A Facility), then under Clause 11 (Repayment of the Tranche B Facility) and
then under Clause 12 (Repayment of the Tranche C Facility.
13.5 Application of Funds
Amounts prepaid pursuant to Clause 13.3 (Voluntary Prepayment) and Clause
13.4 (Mandatory Prepayment) shall be applied:
13.5.1 first, in or toward repayment of the Tranche A Loan;
13.5.2 secondly in or toward repayment of the Tranche B Loan; and
13.5.3 thirdly, in or toward payment of the Tranche C Loan (beginning with
the last Tranche C Repayment Date and moving forward to the first
Tranche C Repayment Date).
Any prepayment shall be applied pro rata against amounts outstanding in
Deutsche Mark and United States Dollars as the relevant Borrower shall
specify in its notice of prepayment.
13.6 Notice of Cancellation or Prepayment
Any notice of cancellation or prepayment given by the relevant Borrower
pursuant to Clause 13.1 (Cancellation of the Loan), Clause 13.3 (Voluntary
Prepayment) or Clause 13.4 (Mandatory Prepayment) shall be irrevocable,
shall preclude the amounts cancelled or prepaid from being re-drawn and
shall specify the date upon which such cancellation or prepayment is to be
made and the amount of such cancellation or prepayment.
14. TAXES
14.1 Tax Gross-up
All payments to be made by an Obligor to any Finance Party hereunder shall
be made free and clear of and without deduction for or on account of tax
unless such Obligor is required to make such a payment subject to the
deduction or withholding of tax, in which case the sum payable by such
Obligor (in respect of which such deduction or withholding is required to
be made) shall be increased to the extent necessary to ensure that such
Finance Party receives a sum net of any deduction or withholding equal to
the sum which it would have received if no such deduction or withholding
had been made or required to be made.
If any payments under this Agreement are or become subject to VAT, the VAT
shall be borne by the relevant Obligor.
14.2 Tax Indemnity
Without prejudice to Clause 14.1 (Tax Gross-up), if any Finance Party is
required to make any payment of or on account of tax on or in relation to
any sum received or receivable hereunder or if any liability in respect of
any such payment is asserted, imposed, levied or assessed against any
Finance Party, the relevant Obligor shall, upon demand of the Agent,
promptly indemnify the Finance Party which suffers a loss or liability as a
result
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against such payment or liability, together with any interest, penalties,
costs and expenses payable or incurred in connection therewith, provided
that this Clause 14.2 shall not apply to:
14.2.1 any tax imposed on and calculated by reference to the overall net
income of such Finance Party by the jurisdiction in which such
Finance Party is incorporated; or
14.2.2 any tax imposed on and calculated by reference to the net income of
the Facility Office of such Finance Party by the jurisdiction in
which its Facility Office is located.
14.3 Claims by Banks
A Bank intending to make a claim pursuant to Clause 14.2 (Tax Indemnity)
shall notify the Agent of the event giving rise to the claim, whereupon the
Agent shall notify the relevant Borrower and the Guarantor thereof.
15. TAX RECEIPTS
15.1 Notification of Requirement to Deduct Tax
If, at any time, an Obligor is required by law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there
is any change in the rates at which or the manner in which such deductions
or withholdings are calculated), such Obligor shall promptly notify the
Agent.
15.2 Evidence of Payment of Tax
If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full amount
required to be deducted or withheld to the relevant taxation or other
authority within the time allowed for such payment under applicable law and
shall deliver to the Agent for each Bank, within thirty days after it has
made such payment to the applicable authority, an original receipt (or a
certified copy thereof) issued by such authority evidencing the payment to
such authority of all amounts so required to be deducted or withheld in
respect of that Bank's share of such payment.
15.3 Tax Credit Payment
If an additional payment is made under Clause 14 (Taxes) by an Obligor for
the benefit of any Finance Party and such Finance Party, in its sole
discretion, determines that it has obtained (and has derived full use and
benefit from) a credit against, a relief or remission for, or repayment of,
any tax, then, if and to the extent that such Finance Party, in its sole
opinion, determines that:
15.3.1 such credit, relief, remission or repayment is in respect of or
calculated with reference to the additional payment made pursuant
to Clause 14 (Taxes); and
15.3.2 its tax affairs for its tax year in respect of which such credit,
relief, remission or repayment was obtained have been finally
settled,
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such Finance Party shall, to the extent that it can do so without prejudice
to the retention of the amount of such credit, relief, remission or
repayment, pay to such Obligor such amount as such Finance Party shall, in
its sole opinion, determine to be the amount which will leave such Finance
Party (after such payment) in no worse after-tax position than it would
have been in if the additional payment in question had not been required to
be made by such Obligor.
15.4 Tax Credit Clawback
If any Finance Party makes any payment to an Obligor pursuant to Clause
15.3 (Tax Credit Payment) and such Finance Party subsequently determines,
in its reasonable opinion, that the credit, relief, remission or repayment
in respect of which such payment was made was not available or has been
withdrawn or that it was unable to use such credit, relief, remission or
repayment in full, such Obligor shall reimburse such Finance Party such
amount as such Finance Party determines, in its reasonable opinion, is
necessary to place it in the same after-tax position as it would have been
in if such credit, relief, remission or repayment had been obtained and
fully used and retained by such Finance Party.
15.5 Tax and Other Affairs
No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner it
thinks fit, oblige any Finance Party to claim any credit, relief, remission
or repayment in respect of any payment under Clause 14.1 (Tax Gross-up) in
priority to any other credit, relief, remission or repayment available to
it or oblige any Finance Party to disclose any information relating to its
tax or other affairs or any computations in respect thereof.
16. INCREASED COSTS
16.1 Increased Costs
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any request or requirement
relating to the maintenance of capital or any other request from or
requirement of any central bank or other fiscal, monetary or other
authority:
16.1.1 a Bank or any holding company of such Bank is unable to obtain the
rate of return on its capital which it would have been able to
obtain but for such Bank's entering into or assuming or maintaining
a commitment or performing its obligations under this Agreement;
16.1.2 a Bank or any holding company of such Bank incurs a cost as a
result of such Bank's entering into or assuming or maintaining a
commitment or performing its obligations under this Agreement; or
16.1.3 there is any increase in the cost to a Bank or any holding company
of such Bank of funding or maintaining such Bank's share of the
Advances or any Unpaid Sum,
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including any such circumstance which results from the introduction of, the
changeover to or the operation of the Euro in any Participating Member
State or Subsequent Participant, then the relevant Borrower shall, from
time to time on demand of the Agent, promptly pay to the Agent for the
account of that Bank amounts sufficient to indemnify that Bank or to enable
that Bank to indemnify its holding company from and against, as the case
may be, (i) such reduction in the rate of return of capital, (ii) such cost
or (iii) such increased cost.
16.2 Increased Costs Claims
A Bank intending to make a claim pursuant this Clause 16.1 (Increased
Costs) shall notify the Agent of the event giving rise to such claim,
whereupon the Agent shall notify without undue delay the relevant Borrower
thereof setting forth such costs in reasonable detail.
16.3 Exclusions
Notwithstanding the foregoing provisions of this Clause 16, no Bank shall
be entitled to make any claim under this Clause 16 in respect of any cost,
increased cost or liability compensated by Clause 14 (Taxes).
17. ILLEGALITY
If, at any time, it is or will become unlawful for a Bank to make, fund or
allow to remain outstanding all or part of its share of the Advances, then
that Bank shall, promptly after becoming aware of the same, deliver to the
relevant Borrower through the Agent a notice to that effect and:
17.1.1 such Bank shall not thereafter be obliged to participate in the
making of any Advances and the amount of its Commitment shall be
immediately reduced to zero; and
17.1.2 if the Agent on behalf of such Bank so requires, the relevant
Borrower shall and the Original Borrower shall procure that such
Borrower shall on such date as the Agent shall have specified repay
such Bank's share of any outstanding Advances together with accrued
interest thereon and all other amounts owing to such Bank
hereunder.
18. MITIGATION
If, in respect of any Bank, circumstances arise which would or would upon
the giving of notice result in:
18.1.1 an increase in any sum payable to it or for its account pursuant to
Clause 14.1 (Tax Gross-up);
18.1.2 a claim for indemnification pursuant to Clause 14.2 (Tax Indemnity)
or Clause 16.1 (Increased Costs); or
18.1.3 the reduction of its Available Commitment to zero or any repayment
to be made by any Borrower pursuant to Clause 17 (Illegality)
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then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of the Obligors under any of the
Clauses referred to in sub-clauses 0, 0 and 0, such Bank shall promptly
upon becoming aware of such circumstances notify the Agent thereof and, in
consultation with the Agent and the relevant Borrower and to the extent
that it can do so lawfully and without prejudice to its own position, take
reasonable steps (including a change of location of its Facility Office or
the transfer of its rights, benefits and obligations hereunder to another
financial institution acceptable to the relevant Borrower and willing to
participate in the Facility) to mitigate the effects of such circumstances,
provided that such Bank shall be under no obligation to take any such
action if, in the opinion of such Bank, to do so might have any adverse
effect upon its business, operations or financial condition (other than any
minor costs and expenses of an administrative nature).
19. REPRESENTATIONS
Each Obligor makes the representations and warranties set out in Clause
19.1 (Status) to Clause 19.25 (Information Memorandum) on its own behalf
and the Guarantor makes the representations and warranties on behalf of the
members of the Group and acknowledges that the Finance Parties have entered
into this Agreement in reliance on those representations and warranties
provided that the representation set out in Clause 19.25 (Information
Memorandum) shall be made by the Guarantor on the Syndication Date only.
19.1 Status
Each Obligor is a corporation duly organised under the laws of its
jurisdiction of incorporation.
19.2 Governing Law and Judgments
In any proceedings taken in its jurisdiction of incorporation in relation
to any Finance Document, the choice of German law as the governing law of
the Finance Documents and any judgment obtained in Germany will be
recognised and enforced.
19.3 Binding Obligations
The obligations expressed to be assumed by any of the Obligors in the
Finance Documents are legal and valid obligations binding on it and
enforceable against it in accordance with the terms thereof.
19.4 Execution of the Finance Documents
The Obligors' execution of the Finance Documents and the Acquisition
Documents to which they are a party and the exercise of their rights and
their performance of their obligations thereunder (including, without
limitation, borrowing thereunder and giving the guarantees contemplated
hereunder) do not and will not:
19.4.1 conflict with any agreement, mortgage, bond or other instrument to
which any Obligor (with the exception of change of ownership
clauses in existing documentation of Indebtedness) is a party or
which is binding upon any Obligor or any of its assets;
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19.4.2 conflict with its constitutive documents; or
19.4.3 conflict with any applicable law.
Each Obligor has the power to enter into and perform its obligations under
the Finance Documents and the Acquisition Documents to which it is a party
and all corporate and other action required to authorise the execution and
performance of the Finance Documents to which it is a party and the
performance of its obligations thereunder has been duly taken subject to
Clause 2.6 (Original Borrower's Approval).
19.5 No Winding-up
No member of the Group has taken any corporate action nor have any other
steps been taken or legal proceedings been started or (to the best of its
knowledge and belief) threatened against any Obligor for its winding-up,
dissolution or administration or for the enforcement of an Encumbrance over
any of its revenues or assets or the appointment of a receiver,
administrator, administrative receiver, conservator, custodian, trustee or
similar officer of it or of any or all of its assets or revenues.
19.6 Insolvency in Germany
No German member of the Group is unable to pay its debts as they fall due
(Zahlungsunfahigkeit), commences negotiations with any one or more of its
creditors with a view to a general readjustment or rescheduling of its
indebtedness of or, for any of the reasons set out in sections 17 - 19 of
the German Insolvency Code (Insolvenzordnung), the Original borrower or any
other German Principal Group Member files for insolvency (Antrag auf
Eroffnung eines Insolvenzverfahrens) or the board of directors of the
Original Borrower or any other German Principal Group Members is required
by law to file for insolvency or the competent court takes any of the
actions set out in section 21 of the Insolvenzordnung or the competent
court institutes insolvency proceedings against the Original Borrower or
any other German Principal Group Member (Eroffnung des
Insolvenzverfahrens).
19.7 No Material Defaults
No member of the Group is in breach of or in default under any agreement to
which it is a party or which is binding on it or any of its assets to an
extent or in a manner which could have a Material Adverse Effect.
19.8 No Event of Default
No Event of Default or Potential Event of Default has occurred and is
continuing.
19.9 No Material Proceedings
No action or administrative proceeding of or before any court, arbitrator
or agency (including, but not limited to, investigative proceedings) which
could have a Material Adverse Effect is pending or has been started or
threatened against any Obligor or its assets.
19.10 Audited Financial Statements
The Reference Financial Statements and the most recent audited
consolidated, partially consolidated and unconsolidated financial
statements of each Obligor:
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19.10.1 were prepared in accordance with accounting principles generally
accepted in the Federal Republic of Germany (Grundsatze
ordnungsgemaer Buchfuhrung) or in its respective jurisdiction of
incorporation (as the case may be) and consistently applied and are
consistent with accounting principles applied in the preparation of
the Original Borrower's financial statements for the previous three
financial years;
19.10.2 disclose all liabilities (contingent or otherwise) and all
unrealised or anticipated losses required to be disclosed by the
accounting principles generally accepted in the relevant
jurisdiction of incorporation;
19.10.3 save as disclosed therein, give a true and fair view of the
financial condition and operations of such Obligor or, as the case
may be, the Group during the relevant financial year; and
19.10.4 are the basis upon which the Initial Financial Projections were
prepared.
19.11 No Material Adverse Change
Since the date as at which the Reference Financial Statements were
prepared, there has been no event or occurrence which could have a
Material Adverse Effect on the Group taken as a whole.
19.12 Due Diligence Reports
The Due Diligence Reports have been prepared after due and careful
consideration and the Original Borrower having made all reasonable
enquiries is not aware of any inaccuracy or omission as to any factual
matter contained therein which could have a Material Adverse Effect.
19.13 ERISA
No member of the Group nor any of its ERISA Affiliates are making or
accruing an obligation to make contributions or has within any of the five
calendar years immediately preceding the date of this Agreement made or
accrued an obligation to make contributions to any Multiemployer Plan the
withdrawal from which could have a Material Adverse Effect on Lone Star;
each Employee Plan is in compliance in all material respects in form and
operation with ERISA and the Code and all other applicable laws and
regulations; each Employee Plan which is intended to be qualified under
Section 401(a) of the Code has been determined by the IRS to be so
qualified, and, to the knowledge of each member of the Group and its ERISA
Affiliates, nothing has occurred since the date of such determination that
would adversely affect such determination; the fair market value of the
assets of each Employee Plan subject to Title IV of ERISA is at any
determination date sufficient that the plan may be terminated in a
standard termination under Section 4041(b) of ERISA; there are no material
actions, suits or claims pending against an Employee Plan (other than
routine claims for benefits) or to the knowledge of any member of the
Group or any ERISA Affiliate, which could reasonably be expected to be
asserted successfully against any Employee Plan; each member of the Group
and its ERISA Affiliates has made all material contributions to or under
each such Employee Plan required by law within the
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applicable time limits prescribed thereby, the terms of such Employee
Plan, or any contract or agreement requiring contributions to an Employee
Plan; no member of the Group nor any ERISA Affiliate has ceased operations
at a facility so as to become subject to the provisions of Section 4068(a)
of ERISA, withdrawn as a substantial employer so as to become subject to
the provisions of Section 4063 of ERISA or ceased making contributions to
any Employee Plan subject to Section 4064(a) of ERISA to which it made
contributions; and no member of the Group nor any of the ERISA Affiliates
has incurred or reasonably expects to incur any material liability to
PBGC.
19.14 Validity and Admissibility in Evidence
All acts, conditions and things required to be done, fulfilled and
performed in order (a) to enable any Obligor lawfully to enter into,
exercise its rights under and perform and comply with the obligations
expressed to be assumed by it in the Finance Documents, (b) to ensure that
the obligations expressed to be assumed by it in the Finance Documents are
legal, valid, binding and enforceable and (c) to make the Finance
Documents admissible in evidence in its jurisdiction of incorporation have
been done, fulfilled and performed.
19.15 Claims Pari Passu
Under the laws of any Obligor's jurisdiction of incorporation in force at
the date hereof, the claims of the Finance Parties against it under the
Finance Documents will rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors save those whose claims are
preferred solely by any bankruptcy, insolvency, liquidation or other
similar laws of general application.
19.16 No Filing or Stamp Taxes
Under the laws of any Obligor's jurisdiction of incorporation in force at
the date hereof, it is not necessary that the Finance Documents be filed,
recorded or enrolled with any court or other authority in such
jurisdiction or that any stamp, registration or similar tax be paid on or
in relation to the Finance Documents.
19.17 Encumbrances
Save for Permitted Encumbrances, no Encumbrance exists over all or any of
the present or future revenues or assets of any member of the Group. The
execution of the Finance Documents and the exercise by any Obligor of its
rights thereunder will not result in the existence or imposition of nor
will oblige any Group member to create any Encumbrance (save for Permitted
Encumbrances) in favour of any person over any of the present or future
revenues and assets of any member of the Group.
19.18 No Deduction or Withholding
Under the laws of any Obligor's jurisdiction of incorporation in force at
the date hereof other than disclosed, it will not be required to make any
deduction or withholding from any payment it may make hereunder.
19.19 Environmental Compliance
To the best of its knowledge and belief, each member of the Group has duly
performed and observed in all material respects all Environmental Laws,
Environmental Permits
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and all other material covenants, conditions, restrictions or agreements
directly or indirectly concerned with any contamination, pollution or
waste or the release or discharge of any toxic or hazardous substance in
connection with any real property which is or was at any time owned,
leased or occupied by any member of the Group or on which any member of
the Group has conducted any activity where failure to do so could have a
Material Adverse Effect.
19.20 Environmental Claims
No Environmental Claim has been commenced or (to the best of the Original
Borrowers' knowledge and belief) is threatened against any member of the
Group where such claim may, if determined against such member of the
Group, have a Material Adverse Effect.
19.21 Ownership of the Additional Borrower
The Original Borrower will maintain during the lifetime of the Facilities
a majority stake within the meaning of Section 16 of the German Stock
Corporation Act (Aktiengesetz - "AktG") in the Additional Borrower, unless
it is to be disposed of in compliance with Clause 0 (No Disposals).
19.22 Year 2000 Compliant
All material Computer Systems used by the Original Borrower, and the
Original Borrower represents that all material Computer Systems used by
any member of the Group, are Year 2000 Compliant or that reasonable steps
have been taken to make them Year 2000 Compliant.
19.23 No Tax Claims
Each member of the Group has duly and punctually paid and discharged all
material taxes, assessments and governmental charges imposed upon it or
its assets within the time period allowed therefor without imposing tax
penalties or creating any Encumbrance with priority to the Banks which
could have a Material Adverse Effect (save to the extent payment thereof
is being contested in good faith by the relevant member of the Group and
where payment thereof can be lawfully withheld and would not result in an
Encumbrance).
19.24 Acquisition
The Purchaser or relevant member of the Group has obtained, or shall have
obtained when necessary, any consent, licenses and other approval or
authorisation (including but not being limited to approval from all
applicable cartel regulating authorities) and complied with any regulation
reasonably necessary (including but not being limited to disclosure and
filing requirements of the Securities and Exchange Commission in the
United States) for the Acquisition and the execution of the Finance
Documents and material for the conduct of the business of the Group as
carried on at the date hereof, the terms and conditions of any such
consent, license or other approval or authorisation have been complied
with in all material respects and they have not been and, so far as it is
aware, will not be revoked or otherwise terminated.
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19.25 Information Memorandum
The factual information contained in the Information Memorandum is true,
complete and accurate in all material respects as at the date of the
Information Memorandum, the financial projections contained therein have
been prepared on the basis of recent historical information and on the
basis of reasonable assumptions and, so far as the Original Borrower is
aware (or should have been aware), nothing has occurred or been omitted
that renders the information contained in the Information Memorandum
untrue or misleading in any material respect. In the case of any
projections or forecasts and assumptions on which such projections or
forecasts are based (or will have been based), such projections or
forecasts were arrived at by careful consideration and the Obligors are
not aware of any material facts or circumstances that have not been
disclosed to the Arrangers and which if disclosed would, or would
reasonably be expected to, adversely affect the decision of a person
considering whether or not to provide finance to the Borrowers.
19.26 Repetition of Representations
The Repeated Representations shall be deemed to be repeated by the
relevant Borrower and the Guarantor by reference to the facts and
circumstances then existing on each date of drawdown and on the first day
of each Interest Period.
20. FINANCIAL INFORMATION
20.1 Annual Statements
Beginning with statements for the year ending on 31 December 1999, each
Obligor shall as soon as the same become available, but in any event
within one hundred and fifty (150) days after the end of each of its
financial years, deliver to the Agent in sufficient copies for the Banks
its financial statements (or, in the case of the Original Borrower, its
financial statements and the consolidated financial statements of the
Group) for such financial year, audited by the Original Borrower's
existing auditors or another internationally recognised firm of
independent auditors reasonably acceptable to the Agent.
20.2 Quarterly Statements
Beginning with statements for the quarter ending on 31 March 2000, the
Original Borrower shall as soon as the same become available, but in any
event within ninety (90) days after the end of each of its financial
quarters, deliver to the Agent in sufficient copies for the Banks its
unaudited consolidated financial statements.
20.3 Requirements as to Financial Statements
Each Obligor shall ensure that each set of financial statements delivered
by it pursuant to this Clause 20 is certified by an Authorised Signatory
of such Obligor as giving a true and fair view of its financial condition
(or, in the case of the consolidated financial statements of the Group,
the financial condition of the Group as at the end of the period to which
those financial statements relate and of the results of its (or, as the
case may be, the Group's) operations during such period.
20.4 Auditor's Opinion
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Each Obligor shall ensure that each set of annual financial statements
delivered by it pursuant to this Clause 20 is accompanied by an
unqualified opinion of the relevant auditor.
20.5 Accounting Policies
Each Obligor shall ensure that each set of financial statements delivered
pursuant to this Clause 20 is prepared using accounting policies,
practices, procedures and reference periods consistent with those applied
in the preparation of the Reference Financial Statements unless, in
relation to any such set of financial statements, the relevant Obligor,
notifies the Agent that there have been one or more changes in any such
accounting policies, practices, procedures or reference period and the
auditors of such Obligor provide sufficient information, in such detail
and format as may be reasonably required by the Agent, to enable the
Banks to make an accurate comparison between the financial position
indicated by those financial statements and the Reference Financial
Statements, and any reference in this Agreement to those financial
statements shall be construed as a reference to those financial
statements as adjusted to reflect the basis upon which the Reference
Financial Statements were prepared.
20.6 Shareholder Information
The Obligors shall, as soon as reasonably practicable, after the same are
supplied and made available, furnish the Agent with such general
information as is required by law to be supplied or made available to all
shareholders (in their capacity as such) of the relevant Obligor
generally or any class thereof.
20.7 Financial Projections
The Original Borrower shall thirty (30) days after the beginning of the
financial year furnish the Agent Financial Projections of such year and
the following four years.
20.8 Compliance Certificates
The Original Borrower shall ensure that each set of financial statements
delivered by it pursuant to Clause 20.1 (Annual Statements) and each set
of financial statements delivered by it pursuant Clause 20.2 (Quarterly
Statements) is accompanied by a Compliance Certificate signed by its
auditors (in the case of a Compliance Certificate delivered with its
annual financial statements) or by any Authorised Signatory of the
Original Borrower (in the case of an Compliance Certificate delivered
with its quarterly financial statements).
20.9 Other Information
The Original Borrower shall provide any other information about the Group
which the Agent or the Banks may reasonably require, including providing
the Agent with any information or documents which may be required under
Sections 13, 13(a) and 18 of the German Banking Act (Gesetz uber das
Kreditwesen - "KWG") including information on environmental matters
included in updated Due Diligence Reports.
21. FINANCIAL CONDITION
The Original Borrower shall ensure that the financial condition of the
Group shall be such that:
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21.1 Group's Net Debt/EBITDA-Ratio
The Group's Net Debt/EBITDA ratio shall not be higher than:
(a) 3.8:1 for any Relevant Period ending in the year 2000;
(b) 3.5:1 for any Relevant Period ending in the year 2001; and
(c) 3.0:1 for any Relevant Period ending thereafter
provided that the Margin will increase for the last quarter of any
Relevant Period by 0.1 per cent. if the Group's Net Debt/EBITDA ratio
exceeds:
(a) 3.5:1 for any Relevant Period ending in the year 2000;
(b) 3.0:1 for any Relevant Period ending in the year 2001; and
(c) 2.5:1 for any Relevant Period ending thereafter.
provided further that no such increase will be incurred if the Margin has
already been increased in accordance with Clause 21.2 (Group's Interest
Cover).
"Group's Net Debt" means at any time the aggregate amount of all
obligations of the Group for or in respect of Financial Indebtedness but
excluding any such obligation to any other member of the Group, adjusted
to take account of the aggregate amount of freely available cash and cash
equivalents held by any member of the Group (and so that no amount shall
be included or excluded more than once).
"EBITDA" means, for any Relevant Period, EBIT before any amount
attributable to the amortisation of intangible assets and depreciation of
tangible assets.
21.2 Group's Interest Cover
The Group's EBITA/Consolidated Net Finance Charges ratio shall not be
lower than:
(a) 2.2:1 for any Relevant Period ending in the year 2000;
(b) 2.2:1 for any Relevant Period ending in the year 2001; and
(c) 2.5:1 for any Relevant Period ending thereafter
provided that the Margin will increase for the last quarter of any
Relevant Period by 0.1 per cent. if the Group's EBITA/Consolidated Net
Finance Charges ratio falls below:
(a) 2.75:1 for any Relevant Period ending in the year 2000;
(b) 3.0:1 for any Relevant Period ending in the year 2001; and
(c) 3.5:1 for any Relevant Period ending thereafter.
"Consolidated Net Finance Charges" means, in respect of any Relevant
Period, the aggregate amount of the interest (including the interest
element of leasing and hire
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purchase payments and capitalised interest), commission, fees, discounts
and other finance payments payable by any member of the Group (including
any commission, fees, discounts and other finance payments payable by any
member of the Group under any interest rate hedging arrangement but
deducting any commission, fees, discounts and other finance payments
receivable by any member of the Group under any interest rate hedging
instrument) but deducting any other interest receivable by any member of
the Group on any deposit or bank account.
"EBITA" means, for any Relevant Period, EBIT before any amount
attributable to the amortisation of intangible assets.
21.3 Consolidated Net Worth
Consolidated Net Worth shall not at any time be lower than:
(a) DEM 1,400,000,000 from the date hereof up to and including 29 June
2001; and
(b) DEM 1,700,000,000 thereafter.
Consolidated Net Worth" means at any time the aggregate of the amounts
paid up or credited as paid up on the issued share capital of the
Original Borrower (other than any redeemable shares) and the aggregate
amount of the reserves of the Group including:
(a) any amount credited to the share premium account;
(b) any capital redemption reserve fund; and
(c) any balance standing to the credit of the consolidated profit and
loss account of the Group,
but deducting:
(i) any debit balance on the consolidated profit and loss account of
the Group;
(ii) (to the extent included) any amount set aside for taxation,
deferred taxation or bad debts;
(iii) (to the extent included) any amounts arising from an upward
revaluation of assets made at any time after 31 December 1999; and
(iv) any dividend or distribution declared, recommended or made by any
member of the Group to the extent payable to a person who is not a
member of the Group and such distribution is not provided for in
the most recent financial statements,
and so that no amount shall be included or excluded more than once.
21.4 Financial Testing
The financial covenants set out in this Clause 21 shall be tested as of
the last day of the relevant Relevant Period on a Rolling Basis by
reference to each of the financial
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statements and/or each Compliance Certificate delivered pursuant to
Clause 20 (Financial Information), and the covenant contained in Clause
21.3 (Consolidated Net Worth) shall be complied with at all times
provided that up to and including the third quarter of 2000 the financial
covenants set out in this Clause 21 shall be calculated on a pro forma
basis as if Lone Star had been a member of the Group.
21.5 Accounting Terms
All accounting expressions which are not otherwise defined herein shall
be construed in accordance with International Accounting Standards.
22. COVENANTS
22.1 Positive Covenants
Each Obligor on its own behalf shall and the Original Borrower shall
procure that each other member of the Group which is not an Obligor
shall:
22.1.1 Maintenance of Legal Validity
Do all such things as are necessary to maintain its existence as a legal
person and comply with the terms of and do all that is necessary to
maintain in full force and effect all authorisations, approvals, licences
and consents required in or by the laws of its jurisdiction of
incorporation to enable it lawfully to enter into and perform its
obligations under the Finance Documents and to ensure the legality,
validity, enforceability or admissibility in evidence in its jurisdiction
of incorporation of the Finance Documents and, on request of the Agent,
supply copies (certified by any Director of the relevant Obligor member
as true, complete and up to date) of any such authorisations, approvals,
licences, consents and exemptions.
22.1.2 Insurance
Maintain insurances on and in relation to its business and assets against
such risks and to such extent as is usual for companies carrying on a
business such as that carried on by it.
22.1.3 Environmental Compliance
Comply in all material respects with all Environmental Laws and obtain
and maintain any Environmental Permits and take all reasonable steps in
anticipation of known or expected future changes to or obligations under
the same, breach of which (or failure to obtain, maintain or take which)
could have a Material Adverse Effect.
22.1.4 Environmental Claims
Inform the Agent in writing as soon as reasonably practicable upon
becoming aware of the same if any Environmental Claim has been commenced
or (to the best of the relevant Obligor's knowledge and belief) is
threatened against any member of the Group in any case where such claim
could have a Material Adverse Effect.
22.1.5 Notification of Events of Default
Promptly upon becoming aware of the same, inform the Agent of the
occurrence of any Event of Default or Potential Event of Default and,
upon receipt of a written request to that effect from the Agent, confirm
to the Agent that, save as previously notified to the
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Agent or as notified in such confirmation, no Event of Default or
Potential Event of Default has occurred.
22.1.6 Claims Pari Passu
Ensure that at all times the claims of the Finance Parties against it
under the Finance Documents rank at least pari passu with the claims of
all its other unsecured and unsubordinated creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation or other
similar laws of general application.
22.1.7 Shareholder Loans Subordination
Ensure that at all times claims for indebtedness of amounts of any
Shareholder Loans (if any) are subordinated to the claims of the Finance
Parties under the Finance Documents.
22.1.8 Consents and Approvals
Comply with all applicable laws, rules, regulations and orders and obtain
and maintain all governmental and regulatory consents and approvals the
failure to comply with which could have a Material Adverse Effect.
22.1.9 Litigation
Advise the Agent promptly of the details of each litigation, arbitration
or administrative proceeding pending or threatened after the date hereof
against any member of the Group which could have a Material Adverse
Effect.
22.1.10 Year 2000
Procure that all Computer Systems used by any member of the Group are or
will be Year 2000 Compliant prior to the earliest date on which any such
non-compliance could have a Material Adverse Effect on the business or
operation of any member of the Group.
22.1.11 ERISA
(a) as soon as practicable after the filing thereof with the
Internal Revenue Service of the United States, deliver to the
Agent copies of each Schedule B (Actuarial Information) to the
Annual Report (IRS Form 5500 Series) with respect to each
applicable Employee Plan;
(b) promptly and in any event within ten days after it or any ERISA
Affiliate becomes aware that any ERISA Event (a) has occurred or
(b) will occur in the case of any ERISA Event which requires
advance notice under Section 4043(b)(3) of ERISA (without regard
to Section 4043(b)(2) or waiver under Section 4043(b)(4),
deliver to the Agent a statement of its chief financial officer
or that of the ERISA Affiliate describing such ERISA Event and
the action, if any, which it or such ERISA Affiliate proposes to
take with respect thereto; provided, however, that no such
notice shall be required unless the unfunded liability in
connection with the ERISA Event would exceed USD 50,000 (or its
equivalent);
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(c) promptly and in any event within five business days after
receipt thereof by it or any ERISA Affiliate or any
administrator of an Employee Plan, deliver to the Agent copies
of each notice from PBGC stating its intention to terminate any
Employee Plan or to have a trustee appointed to administer any
Employee Plan;
(d) ensure that, during the term of this Agreement, neither it nor
any ERISA Affiliate shall agree to contribute, or assume any
obligation to contribute, to any Multiemployer Plan the
withdrawal from which could have a Material Adverse Effect on
Lone Star;
(e) pay and discharge when due any material liability imposed by it
pursuant to Title IV of ERISA other than premium payments to the
PBGC;
(f) promptly upon becoming aware of any event or condition which
would in all reasonable likelihood constitute grounds for the
termination of (or the appointment of a trustee to administer)
any Employee Plan, an explanation of such event or condition is
given by its chief financial officer or the chief financial
officer of the ERISA Affiliate affected by such event or
condition;
(g) ensure that neither it nor any ERISA Affiliate shall adopt an
amendment to an Employee Plan requiring the provision of
security under Section 307 of ERISA or Section 401(a)(29) of the
Code;
(h) ensure that no Employee Plan is terminated under Section 4041 of
ERISA unless such termination would not be reasonably likely to
have a Material Adverse Effect; and
(i) use the proceeds of, or made available by virtue of, the
Facilities without violating Regulations G, U, T and X.
22.1.12 Insurance Proceeds
Apply any proceeds received from any insurance claim made by any
Principal Group Member toward repair of the asset which is the subject of
the insurance claim or toward the acquisition of an equivalent asset, or
if such asset is obsolete, the acquisition of any other asset relevant to
and to be used in connection with the business of the Group at the date
hereof.
22.1.13 Acquisition
Complete the Acquisition to include obtaining any consent, license or
other approval or authorisation necessary for the Acquisition and
complying with the terms and conditions of any such consent licence or
other approval or authorisation.
22.1.14 Syndication
Provide reasonable assistance to the Arrangers in the Syndication of the
Facilities (including without limitation, by making senior management
available for the purpose of making
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presentations to, or meeting potential lending institutions) and will
comply with all reasonable requests for information from potential
syndicate members.
22.2 Negative Covenants
None of the Obligors shall and the Original Borrower shall procure that:
22.2.1 Negative Pledge
No member of the Group shall create or permit to subsist any Encumbrance
over all or any of its present or future revenues or assets other than a
Permitted Encumbrance; provided, however, that this provision shall not
apply to the shares of Lone Star held by any member of the Group until
such shares cease to be margin stock as defined in Regulation U of the
United States Federal Reserve Board;
22.2.2 Loans and Guarantees
No member of the Group shall make or permit to subsist any loans, grant
or permit to subsist any credit or financial accommodation or give or
permit to subsist or have outstanding any guarantee or indemnity (except
as required by the Finance Documents) to or for the benefit of any person
or otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person except trade
credit or indemnities granted in the ordinary course of business, intra-
group financing and financing not to exceed in aggregate DEM 50,000,000
(or its equivalent);
22.2.3 No Disposals
No member of the Group shall, except for Permitted Disposals, sell,
lease, transfer or otherwise dispose of, by one or more transactions or a
series of transactions (whether related or not), the whole or any part of
its revenues or its assets or its business or undertaking;
22.2.4 Change of Business
No member of the Group shall make any material changes to the general
nature of the business of the Group as carried on as of the date hereof.
23. EVENTS OF DEFAULT
Each of Clause (Failure to Pay) to Clause 0 (Litigation) describes
circumstances which constitute an Event of Default for the purposes of
this Agreement.
23.1 Failure to Pay
An Obligor fails to pay (i) any principal or interest due from it
hereunder at the time, in the currency and in the manner specified herein
unless such failure to pay is caused by technical or administrative
failure and payment is made within three (3) Business Days of the due
date or (ii) any other sum due under any other Finance Document within
ten (10) Business Days of the due date.
23.2 Misrepresentation
Any representation or statement made by an Obligor in this Agreement or
in any notice or other document, certificate or statement delivered by it
pursuant hereto or in connection herewith is or proves to have been
incorrect or misleading in any material respect when made and such
misrepresentation, if capable of remedy, is not remedied
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within ten (10) Business Days after the Agent has given notice thereof to
the relevant Obligor.
23.3 Specific Covenants
An Obligor fails duly to perform or comply with any of the obligations
expressed to be assumed by it in Clause 20 (Financial Information),
Clause 21 (Financial Condition) or Clause 22 (Covenants) provided,
however, that non-compliance with the financial conditions as set out in
the proviso of Clause 0 (Group's Net Debt/EBITDA-Ratio) and the proviso
of Clause 21.2 (Group's Interest Cover) does not constitute an Event of
Default.
23.4 Other Obligations
An Obligor fails duly to perform or comply with any other obligation
expressed to be assumed by it in the Finance Documents and such failure,
if capable of remedy, is not remedied within ten (10) Business Days after
the Agent has given notice thereof to such Obligor.
23.5 Cross Default
Any Financial Indebtedness of any member of the Group is not paid when
due nor within any applicable grace period in any agreement relating to
such Financial Indebtedness or any Financial Indebtedness of any member
of the Group is declared to be or otherwise becomes due and payable prior
to its originally specified maturity by reason of default, any commitment
for any Financial Indebtedness of any member of the Group is cancelled or
suspended by a creditor of any member of the Group or any creditor of any
member of the Group becomes entitled to declare any Financial
Indebtedness of any member of the Group due and payable prior to its
specified maturity, provided that it shall not constitute an Event of
Default if the aggregate amount (or its equivalent in United States
Dollar) of all such Financial Indebtedness of the Group is less than DEM
40,000,000.
23.6 Insolvency or Rescheduling of Debt in Germany
Any Principal Group Member whose jurisdiction of incorporation is Germany
(the "German Principal Group Member") is unable to pay its debts as they
fall due (Zahlungsunfuhigkeit), commences negotiations with any one or
more of its creditors with a view to a general readjustment or
rescheduling of its indebtedness of or, for any of the reasons set out in
sections 17 - 19 of the German Insolvency Code (Insolvenzordnung), the
Original Borrower or any other German Principal Group Member files for
insolvency (Antrag auf Eroffnung eines Insolvenzverfahrens) or the board
of directors of the Original Borrower or any other German Principal Group
Members is required by law to file for insolvency or the competent court
takes any of the actions set out in section 21 of the Insolvenzordnung or
the competent court institutes insolvency proceedings against the
Original Borrower or any other German Principal Group Member (Eroffnung
des Insolvenzverfahrens).
23.7 Insolvency and Rescheduling of Debt outside of Germany
Any Principal Group Member whose jurisdiction of incorporation is outside
of Germany (the "non-German Principal Group Member") ceases to pay or
suspends
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generally payment of its debts or announces its intention to do so (or is
deemed for the purposes of any law applicable to it to be) unable to pay
its debts as they fall due, commences negotiations with or makes a
proposal to any one or more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with its creditors or a
moratorium is declared in respect of the indebtedness of any non-German
Principal Group Member.
23.8 Winding-up
Any Principal Group Member takes any corporate action or other steps are
taken or legal proceedings are started for its winding-up, dissolution or
administration or for the appointment of a liquidator, receiver,
administrator, administrative receiver, conservator, custodian, trustee
or similar officer of it or of any or all of its revenues and assets (or
any action or proceedings are taken with respect to any Principal Group
Member which has a similar or equivalent effect to any of the foregoing
in this Clause 0 (except for the solvent voluntary winding-up of a
company (other than the Original Borrower) in connection with the
transfer of its business and assets to another Principal Group Member).
23.9 Execution or Distress
Any execution or distress is levied against, or an encumbrancer takes
possession of, the whole or any part of the property, undertaking or
assets of any Principal Group Member or any event occurs which under the
laws of any jurisdiction has a similar or analogous effect in respect of
indebtedness and which, in any case, is not stayed or discharged within
fourteen days after such levy, taking of possession or effect and during
such fourteen day period is contested in good faith by appropriate means
diligently pursued.
23.10 Change of Control
Any person, or group of persons acting together in concert (which does
not have control at the date hereof) acquires control of any Obligor.
23.11 Failure to Comply with Final Judgment
Any member of the Group fails to comply with or pay any sum due from it
under any final judgment or order made or given by any court of competent
jurisdiction.
23.12 The Group's Business
Any Principal Group Member ceases to carry on the business it carries on
as of the date hereof.
23.13 Repudiation
Any Finance Document is repudiated by any person (other than a Finance
Party) or any Finance Document is not or ceases to be in full force and
effect or the validity or applicability thereof to any sums due or to
become due thereunder is disaffirmed by or on behalf of any Obligor.
23.14 Illegality
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At any time it is or becomes unlawful for an Obligor to perform or comply
with any or all of its obligations under any Finance Document to which it
is a party or any of the obligations of an Obligor thereunder are not or
cease to be legal, valid, binding and enforceable (other than as
described in the qualifications of the Bank's legal opinion setting out
the law in existence on the date hereof).
23.15 Material Adverse Change
Any event or circumstance occurs which could have a Material Adverse
Effect or a material adverse effect on the validity and enforceability on
the Acquisition Documents.
23.16 Auditor's Qualification
The auditors of the Original Borrower qualify their annual audit report
on the consolidated accounts of the Group or the unconsolidated accounts
of any Principal Group Member in a manner which is, in the reasonable
opinion of the Majority Banks, material in the context of the Facility.
23.17 Environmental Claim
Any member of the Group breaches any Environmental Law or any
Environmental Claim is made or threatened against any member of the Group
which, in either case, could have a Material Adverse Effect.
23.18 Litigation
Any litigation, arbitration, administrative proceedings or governmental
or regulatory investigations, proceedings or disputes are commenced or
threatened against any member of the Group or its assets or revenues or
there are any circumstances likely to give rise to any such litigation,
arbitration, administrative proceedings or governmental or regulatory
investigations, proceedings or disputes which, if likely to be adversely
determined, could have a Material Adverse Effect.
23.19 Acceleration and Cancellation
Upon the occurrence of an Event of Default, the Original Borrower shall
notify the Agent in writing forthwith of such occurrence and at any time
thereafter while such Event of Default is continuing, the Agent may (and,
if so instructed by the Majority Banks, shall) by written notice to the
relevant Borrower:
23.19.1 declare all or any part of the Advances to be immediately due
and payable (whereupon the same shall become so payable together
with accrued interest thereon and any other sums then owed by
the relevant Borrower hereunder) or declare all or any part of
the Advances to be due and payable on demand of the Agent;
and/or
23.19.2 declare that the Facility shall be cancelled, whereupon the same
shall be cancelled and the Commitment of each Bank shall be
reduced to zero, provided that, notwithstanding the foregoing,
upon the occurrence of an Event of Default specified in Clause
23.8 (Winding-up), the Available Commitment of each Bank shall
be immediately reduced to zero and all Advances, interest
thereon and other sums then owed by the relevant Borrower
hereunder shall become
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immediately due and payable, in each case without declaration,
notice or demand by or to any person.
23.20 Advances Due on Demand
If, pursuant to Clause 23.19 (Acceleration and Cancellation),
the Agent declares all or any part of the Advances to be due and
payable on demand of the Agent, then, and at any time
thereafter, the Agent may (and, if so instructed by the Majority
Banks, shall) by written notice to the relevant Borrower:
23.20.1 require repayment of all or such part of the Advances
on such date as it may specify in such notice
(whereupon the same shall become due and payable on the
date specified together with accrued interest thereon
and any other sums then owed by the relevant Borrower
hereunder) or withdraw its declaration with effect from
such date as it may specify; and/or
23.20.2 declare that the Facility shall be cancelled, whereupon
the same shall be cancelled and the Commitment of each
Bank reduced to zero; and/or
23.20.3 select as the duration of an Interest Period which
begins while such declaration remains in effect a
period of six months or less.
24. GUARANTEE
24.1 Guarantee
The Guarantor irrevocably and unconditionally guarantees by way of an
independent guarantee ("Garantie") to the Agent and each Bank the payment
of all amounts expressed to be payable by the Additional Borrower (other
than the Guarantor) under this Agreement in the currency and at the place
provided in this Agreement at its stated or accelerated maturity
irrespective of the factual or legal consequences and motives by reason
of which the Additional Borrower may fail to pay such amount.
The Guarantor shall effect payment hereunder immediately upon first
demand of the Agent (or any Bank through the Agent) and confirmation that
the amount claimed from the Guarantor equals the amount which the
Additional Borrower (other than the Guarantor) has not paid when due.
This guarantee constitutes the Guarantor's primary and independent
obligation to make payment to the Agent and the Banks in accordance with
the terms hereof, under any and all circumstances, regardless of the
validity, legality or enforceability of the obligations of the Additional
Borrowers hereunder and irrespective of all objections, exceptions or
defences from the Additional Borrower or third parties.
24.2 Exercise of Rights
The Agent and the Banks shall not be required first to claim payment
from, to proceed against, or enforce any claims on the Additional
Borrower or any other person before making demand from the Guarantor
hereunder.
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24.3 Continuing Obligations
The obligations of the Guarantor hereunder shall not be contingent upon
the legal relationship between the Agent and the Banks on the one hand and
the Additional Borrower on the other hand and shall be independent of and
enforceable notwithstanding:
24.3.1 any defect in any provision of this Agreement;
24.3.2 any absence or insufficiency of corporate resolutions relating to
the indebtedness of the Additional Borrower hereunder;
24.3.3 any inadequate representation of the Additional Borrower;
24.3.4 any absence of any licence or other authorisation or factual or
legal restriction or limitation existing or introduced in the
jurisdiction of incorporation of the Additional Borrower;
24.3.5 any agreement made between the Agent, the Banks and the Additional
Borrower concerning its obligations hereunder, including any
extension of the term of payment and any rescheduling or
restructuring of its indebtedness, whether or not the Guarantor
shall have given its consent thereto;
24.3.6 the taking, existence, variation or release of any other
collateral provided to the Agent and the Banks for the obligations
of the Additional Borrower hereunder and the Agent's and the
Banks' legal relationship with any provider of such other
collateral;
24.3.7 any right of the Additional Borrower to rescind the Agreement; and
24.3.8 any right that the Agent and the Banks may have to set-off the
indebtedness against a counterclaim of the Additional Borrower.
24.4 Obligations not Discharged and Deferral of Guarantor Rights
So long as any sum remains payable under this Agreement, the Guarantor
undertakes not to assert any claim it may have against the Additional
Borrower by reason of the performance of the Guarantor's obligations
hereunder whether on contractual grounds or on any other legal basis,
until all amounts payable to the Agent and the Banks under this Agreement
have been fully and irrevocably received or recovered; any amount received
or recovered by the Guarantor from the Additional Borrower shall be held
in trust for and immediately paid to the Agent and the Banks. If the
Guarantor makes any payment to the Agent and the Banks hereunder, the
Guarantor may only be entitled to require the assignment of the respective
claims against the Additional Borrower by the Agent and/or the Banks to it
once all amounts payable to the Agent and the Banks under this Agreement
have been fully and irrevocably received or recovered by them.
The obligations of the Guarantor hereunder shall remain in force
notwithstanding any dissolution or change in the structure or legal form
of the Additional Borrower.
24.5 Expiry
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The obligations of the Guarantor hereunder are effective as of the date
hereof and shall expire once:
24.5.1 the Commitments hereunder have irrevocably been reduced to zero;
and
24.5.2 all amounts expressed to be payable by the Additional Borrower to
the Agent and the Banks under this Agreement have been fully and
irrevocably received by the Agent and the Banks. However, should
the Agent and the Banks thereafter become liable to return monies
received in payment of the indebtedness as a result of any
bankruptcy, composition or similar proceedings affecting the
Additional Borrower, the obligations shall be reinstated and
become effective again notwithstanding such expiration.
24.6 Enforcement
The obligations of the Guarantor hereunder may be enforced against the
Guarantor by each Bank or by the Agent as agent for the Banks in any
proceedings including enforcement proceedings.
25. COMMITMENT COMMISSION AND FEES
25.1 Commitment Commission on the Facilities
The Original Borrower shall pay to the Agent for the account of each Bank
a commitment commission on the amount of such Bank's Available Commitment
from day to day during the Availability Period, such commitment commission
to be calculated at the rate of 50 per cent. of the applicable Margin and
payable in arrears on the last day of each successive period of three
months which ends during such period and on the last day of the
Availability Period.
25.2 Arrangement Fee
The Original Borrower shall pay to the Agent for the account of the
Arrangers the fees specified in the letter of even date herewith from the
Arrangers to the Original Borrower at the times, and in the amounts,
specified in such letter.
25.3 Agency Fee
The Original Borrower shall pay to the Agent for its own account the
agency fees specified in the letter of even date herewith from the Agent
to the Original Borrower at the times, and in the amounts, specified in
such letter.
26. COSTS AND EXPENSES
26.1 Expenses
Each Obligor shall promptly reimburse the Agent and the Arrangers and any
of their affiliates (on a full indemnity basis whether or not the
Facilities are used), for reasonable documented expenses and legal costs
properly incurred by them in reviewing and negotiating the documentation
for the Finance Documents and for legal costs and expenses, incurred in
connection with amendments, waivers and consents requested by the
Borrowers in connection with the Finance Documents and, following an Event
of
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Default, legal costs and expenses, incurred in connection with the
enforcement of the Finance Parties' rights under the Finance Documents.
26.2 Stamp Taxes
Each Obligor shall pay all stamp, registration and other taxes to which
the Finance Documents, any other document referred to in the Finance
Documents or any judgment given in connection therewith is or at any time
may be subject and shall, from time to time on demand of the Agent,
indemnify the Finance Parties against any liabilities, costs, claims and
expenses resulting from any failure to pay or any delay in paying any such
tax.
26.3 Banks' Liabilities for Costs
If any Obligor fails to perform any of its obligations under this Clause
30, each Bank shall, in its Proportion, indemnify each of the Agent and
the Arrangers against any loss incurred by any of them (or their
affiliates in the case of costs and expenses referred to in Clause 0
(Expenses)) as a result of such failure.
27. DEFAULT INTEREST AND BREAK COSTS
27.1 Default Interest Periods
If any sum due and payable by an Obligor under any Finance Document is not
paid on the due date therefor in accordance with Clause 30 (Payments) or
the provisions of the relevant Finance Document or if any sum due and
payable by an Obligor under any judgment of any court in connection
herewith is not paid on the date of such judgment, the period beginning on
such due date or, as the case may be, the date of such judgment and ending
on the date upon which the obligation of such Obligor to pay such sum is
discharged shall be divided into successive periods, each of which (other
than the first) shall start on the last day of the preceding such period
and the duration of each of which shall (except as otherwise provided in
this Clause 27) be selected by the Agent.
27.2 Default Interest
During each such period relating thereto as is mentioned in Clause 27.1
(Default Interest Periods) an Unpaid Sum shall bear interest or, insofar
as it relates to unpaid interest, shall give rise to a claim for lump sum
damages, at the rate per annum which is the sum from time to time of the
Margin and the Mandatory Cost Rate plus 1 per cent. per annum and the
relevant interbank rate on the Quotation Date therefor (provided that, in
the case of lump sum damages, the relevant Obligor shall be free to prove
that no damage has arisen, or that damage has not arisen in the asserted
amount, whereas the Finance Party shall be entitled to assert further
damages), provided that:
27.2.1 if, for any period, the interbank rate cannot be determined, the
rate of interest, or, as the case may be, lump sum damages
applicable to such Unpaid Sum shall be the sum from time to time
of the Margin plus 1 per cent. per annum and the rate per annum
determined by the Agent to be the arithmetic mean (rounded
upwards, if not already such a multiple, to the nearest four
decimal places) of the rates notified by each Reference Bank to
the Agent before the last day of such period to be those which
express as a percentage rate per annum the cost
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to it of funding from whatever source it may select of such
Unpaid Sum for such period; and
27.2.2 if such Unpaid Sum is all or part of an Advance which became due
and payable on a day other than the last day of the Interest
Period in respect thereof, the first such period applicable to
such Unpaid Sum shall be of a duration equal to the unexpired
portion of the current Interest Period relating to that Advance;
and
27.2.3 the percentage rate of interest or, as the case may be, lump sum
damages applicable thereto from time to time during such period
shall be that which exceeds by 1 per cent. the rate which would
have been applicable to it if it had not so fallen due.
27.3 Payment of Default Interest
Any interest or lump sum damages which accrue under Clause 27.2 (Default
Interest) in respect of an Unpaid Sum shall be due and payable and shall
be paid by the Obligor owing such Unpaid Sum on the last day of its
Interest Period or on such other date as the Agent may specify by notice
to such Obligor.
27.4 Break Costs
If any Bank or the Agent on its behalf receives or recovers all or any
part of such Bank's share of an Advance or Unpaid Sum otherwise than on
the last day of the Interest Period relating thereto, the relevant
Borrower shall pay to the Agent on demand for account of such Bank an
amount equal to the amount (if any) by which (a) the additional interest
which would have been payable on the amount so received or recovered if it
had been received or recovered on the last day of that Interest Period
exceeds (b) the amount of interest which in the reasoned opinion of the
Agent would have been payable to the Agent on the last day of that
Interest Period in respect of a deposit in the currency of the amount so
received or recovered equal to the amount so received or recovered placed
by it with a prime bank in the relevant interbank market for a period
starting on the third Business Day following the date of such receipt or
recovery and ending on the last day of that Interest Period.
28. GUARANTOR'S INDEMNITIES
28.1 Guarantor's Indemnity
The Guarantor undertakes to indemnify:
28.1.1 each Finance Party against any reasonable cost, claim, loss,
expense (including legal fees) or liability together with any VAT
thereon, whether or not reasonably foreseeable, which it may
sustain or incur as a consequence of the occurrence of any Event
of Default or any default by any Obligor in the performance of
any of the obligations expressed to be assumed by it in any
Finance Document;
28.1.2 each Bank against any cost or loss it may suffer under Clause 0
(Banks' Liabilities for Costs) or Clause 0 (Indemnification);
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28.1.3 each Bank against any cost or loss it may suffer or incur as a
result of its funding or making arrangements to fund its portion
of an Advance requested by a Borrower hereunder but not made by
reason of the operation of any one or more of the provisions
hereof;
28.1.4 each Finance Party and in each case each of their affiliates and
each of their respective officers, directors, employees, agents,
advisors and representatives (each an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities,
costs and expenses (including, without limitation, fees and
disbursements of legal counsel), joint or several, that may be
incurred by or asserted or awarded against any Indemnified Party,
in each case arising out of or in connection with or relating to
any investigation, litigation or proceeding or the preparation of
any defence with respect thereto, arising out of or in connection
with or relating to the Finance Documents or the transactions
contemplated thereby or any use made or proposed to be made of
the proceeds of the Facility, whether or not such investigation,
litigation or proceeding is brought by any member of the Group,
any of shareholders or creditors of any member of the Group, an
Indemnified Party or any other person, except to the extent that
such claim, damage, loss, liability, cost or expense results from
such Indemnified Party's gross negligence or wilful misconduct.
28.2 Currency Indemnity
If any sum (a "Sum") due from an Obligor under the Finance Documents or
any order, judgment, award or decision given or made in relation thereto
has to be converted from the currency (the "First Currency") in which such
Sum is payable into another currency (the "Second Currency") for the
purpose of:
28.2.1 making or filing a claim or proof against such Obligor;
28.2.2 obtaining an order, judgment, award or decision in any court,
arbitral proceedings or other tribunal; or
28.2.3 enforcing any order, judgment, award or decision given or made in
relation hereto,
the Guarantor shall indemnify each person to whom such Sum is due from and
against any loss suffered or incurred as a result of any discrepancy
between (a) the rate of exchange used for such purpose to convert such Sum
from the First Currency into the Second Currency and (b) the rate or rates
of exchange available to such person at the time of receipt of such Sum.
29. CURRENCY OF ACCOUNT
The United States Dollar is the currency of account and payment for each
and every sum at any time due from an Obligor hereunder, provided that:
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29.1 each repayment of an Advance or Unpaid Sum or a part thereof shall be made
in the currency in which such Advance or Unpaid Sum is denominated at the
time of that repayment;
29.2 each payment of interest shall be made in the currency in which the sum in
respect of which such interest is payable is denominated;
29.3 each payment in respect of costs and expenses shall be made in the
currency in which the same were incurred;
29.4 each payment pursuant to Clause 14.2 (Tax Indemnity) or Clause 16.1
(Increased Costs) shall be made in the currency specified by the party
claiming thereunder; and
29.5 any amount expressed to be payable in a currency other than the United
States Dollar shall be paid in that other currency.
30. PAYMENTS
30.1 Payments to the Agent
On each date on which this Agreement requires an amount to be paid by an
Obligor or a Bank, such Obligor or, as the case may be, such Bank shall
make the same available to the Agent for value on the due date at such
time and in such funds and to such account with such bank as the Agent
shall specify from time to time.
30.2 Payments by the Agent
Save as otherwise provided herein, each payment received by the Agent
pursuant to Clause 30.1 (Payments to the Agent) shall:
30.2.1 in the case of a payment received for the account of an Obligor,
be made available by the Agent to the relevant Obligor by
application:
(a) first, in or towards payment (on the date, and in the
currency and funds, of receipt) of any amount then due from
the relevant Obligor hereunder to the person from whom the
amount was so received or in or towards the purchase of any
amount of any currency to be so applied; and
(b) secondly, in or towards payment (on the date, and in the
currency and funds, of receipt) to such account with such
bank in the principal financial centre of the country of the
currency of such payment as the relevant Obligor shall have
previously notified to the Agent for this purpose; and
30.2.2 in the case of any other payment, be made available by the Agent
to the person entitled to receive such payment in accordance with
this Agreement (in the case of a Bank, for the account of its
Facility Office) for value the same day by transfer to such
account of such person with such bank in the principal financial
centre of the country of the currency of such payment as such
person shall have previously notified to the Agent.
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30.3 Payments by the Agent to the Banks
Any amount payable by the Agent to the Banks under this Agreement in the
currency of a Participating Member State shall be paid in the Deutsche
Mark unit.
30.4 Payments Systems and the Agent
In relation to the payment of any amount, the Agent shall not be liable to
an Obligor or any of the Banks for any delay, or the consequences of any
delay, in the crediting to any account of any amount required by this
Agreement to be paid by the Agent if the Agent has taken all relevant
steps to achieve, on the date required by this Agreement, the payment of
such amount in immediately available, freely transferable, cleared funds
to the account with the bank in the principal financial centre which the
Borrowers or, as the case may be, any Bank shall have specified for such
purpose. In this Clause 30.4, "all relevant steps" means all such steps as
may be prescribed from time to time by the regulations or operating
procedures of such clearing or settling payments as the Agent may from
time to time determine for the purpose of clearing or settling payments.
30.5 No Set-off
All payments required to be made by an Obligor hereunder shall be
calculated without reference to any set-off or counterclaim and shall be
made free and clear of and without any deduction for or on account of any
set-off or counterclaim.
30.6 Clawback
Where a sum is to be paid under a Finance Document to the Agent for
account of another person, the Agent shall not be obliged to make the same
available to that other person or to enter into or perform any exchange
contract in connection therewith until it has been able to establish to
its satisfaction that it has actually received such sum, but if it does so
and it proves to be the case that it had not actually received such sum,
then the person to whom such sum or the proceeds of such exchange contract
was so made available shall on request refund the same to the Agent
together with an amount sufficient to indemnify the Agent against any cost
or loss it may have suffered or incurred by reason of its having paid out
such sum or the proceeds of such exchange contract prior to its having
received such sum.
30.7 Partial Payments
If and whenever a payment is made by an Obligor hereunder and the Agent
receives an amount less than the due amount of such payment the Agent may
apply the amount received towards the obligations of the Obligors under
this Agreement in the following order (thereby explicitly deviating from
Sections 366 and 367 of the German Civil Code):
30.7.1 first, in or towards payment of any unpaid costs and expenses of
each of the Agent and the Arrangers;
30.7.2 secondly, in or towards payment pro rata of any accrued fees due
but unpaid under Clause 25 (Commitment Commissions and Fees);
30.7.3 thirdly, in or towards payment pro rata of any accrued interest
due but unpaid;
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30.7.4 fourthly, in or towards payment pro rata of any principal due but
unpaid; and
30.7.5 fifthly, in or towards payment pro rata of any other sum due but
unpaid.
30.8 Variation of Partial Payments
The order of payments set out in Clause 30.7 (Partial Payments) shall
override any appropriation made by the Obligor to which the partial
payment relates but the order set out in sub-clauses 30.7.2, 30.7.3 and
30.7.4 of Clause 30.7 (Partial Payments) may be varied if agreed by all
the Banks.
31. SET-OFF
31.1 Contractual Set-off
Each Obligor authorises each Bank to apply any credit balance to which
such Obligor is entitled on any account of such Obligor with such Bank in
satisfaction of any sum due and payable from such Obligor to such Bank
under the Finance Documents but unpaid. For this purpose, each Bank is
authorised to purchase with the moneys standing to the credit of any such
account such other currencies as may be necessary to effect such
application.
31.2 Set-off not Mandatory
No Bank shall be obliged to exercise any right given to it by Clause 31.1
(Contractual Set-off).
32. SHARING
32.1 Payments to Banks
If a Bank (a "Recovering Bank") applies any receipt or recovery from an
Obligor to a payment due under this Agreement and such amount is received
or recovered other than in accordance with Clause 30 (Payments), then such
Recovering Bank shall:
32.1.1 notify the Agent of such receipt or recovery;
32.1.2 at the request of the Agent, promptly pay to the Agent an amount
(the "Sharing Payment") equal to such receipt or recovery less
any amount which the Agent determines may be retained by such
Recovering Bank as its share of any payment to be made in
accordance with Clause 30.7 (Partial Payments).
32.2 Redistribution of Payments
The Agent shall treat the Sharing Payment as if it had been paid by the
relevant Obligor and distribute it between the Finance Parties (other than
the Recovering Bank) in accordance with Clause 30.7 (Partial Payments).
32.3 Recovering Bank's Rights
The Recovering Bank will be subrogated into the rights of the parties
which have shared in a redistribution pursuant to Clause 32.2
(Redistribution of Payments) in respect of the Sharing Payment (and the
relevant Obligor shall be liable to the Recovering Bank in an amount equal
to the Sharing Payment).
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32.4 Repayable Recoveries
If any part of the Sharing Payment received or recovered by a Recovering
Bank becomes repayable and is repaid by such Recovering Bank, then:
32.4.1 each party which has received a share of such Sharing Payment
pursuant to Clause 32.2 (Redistribution of Payments) shall, upon
request of the Agent, pay to the Agent for account of such
Recovering Bank an amount equal to its share of such Sharing
Payment; and
32.4.2 such Recovering Bank's rights of subrogation in respect of any
reimbursement shall be cancelled and the relevant Obligor will be
liable to the reimbursing party for the amount so reimbursed.
32.5 Exception
This Clause 32 shall not apply if the Recovering Bank would not, after
making any payment pursuant hereto, have a valid and enforceable claim
against the relevant Obligor
32.6 Recoveries Through Legal Proceedings
If any Bank intends to commence any action in any court it shall give
prior notice to the Agent and the other Banks. If any Bank commences any
action in any court to enforce its rights hereunder and, as a result
thereof or in connection therewith, receives any amount, then such Bank
shall not be required to share any portion of such amount with any Bank
which has the legal right to, but does not, join in such action or
commence and diligently prosecute a separate action to enforce its rights
in another court.
33. THE AGENT, THE ARRANGERS AND THE BANKS
33.1 Appointment of the Agent
Each of the Arrangers and the Banks hereby appoints the Agent to act as
its agent in connection with the Finance Documents and authorises the
Agent to exercise such rights, powers, authorities and discretions as are
specifically delegated to the Agent by the terms thereof together with all
such rights, powers, authorities and discretions as are reasonably
incidental thereto provided that the Agent shall not start or commence any
legal action on behalf of any Bank without such Bank's prior written
consent. The Agent shall be released from the restrictions set out in
Section 181 of the German Civil Code (Burgerliches Gesetzbuch). The Agent
may grant substitute powers of attorney and release any sub-agent from
such restrictions and revoke such substitute powers of attorney.
33.2 Agent's Discretions
The Agent may:
33.2.1 assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto, that
(a) any representation made or deemed to be made by an Obligor in
connection herewith is true, (b) no Event of Default or Potential
Event of Default has occurred, (c) no Obligor is in breach of or
default under its obligations under the Finance Documents and (d)
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any right, power, authority or discretion vested hereunder in the
Banks or any other person or group of persons has not been
exercised;
33.2.2 assume that each Bank's Facility Office is that identified with
its signature below (or, in the case of a Transferee, at the end
of the Transfer Certificate to which it is a party as Transferee)
until it has received from such Bank a notice designating some
other office of such Bank to replace such Facility Office and act
upon any such notice until the same is superseded by a further
such notice;
33.2.3 engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem reasonably necessary, expedient or desirable and
rely upon any advice so obtained;
33.2.4 rely as to any matters of fact which might reasonably be expected
to be within the knowledge of an Obligor upon a certificate
signed by or on behalf of such Obligor;
33.2.5 rely upon any communication or document believed by it to be
genuine;
33.2.6 notwithstanding Clause 33.1, refrain from exercising any right,
power or discretion vested in it as agent hereunder unless and
until instructed by the Majority Banks as to whether or not such
right, power or discretion is to be exercised and, if it is to be
exercised, as to the manner in which it should be exercised;
33.2.7 refrain from acting in accordance with any instructions of the
Majority Banks to begin any legal action or proceeding arising
out of or in connection with any Finance Documents until it has
received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, losses,
expenses (including legal fees) and liabilities together with any
VAT thereon which it will or may expend or incur in complying
with such instructions; and
33.2.8 for the avoidance of doubt, exercise any right, power or
discretion vested in it as agent hereunder without a prior
written consent of the Majority Banks (as requested hereunder) if
the Agent determines, in its absolute discretion, that to acquire
such prior written consent would materially impair any rights of
the Banks in connection with the Finance Documents or would for
any other reason in the best interest of all parties hereto not
be feasible.
33.3 Agent's Obligations
The Agent shall:
33.3.1 promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from an Obligor
under any Finance Document;
33.3.2 promptly notify each Bank of the occurrence of any Event of
Default or any default by an Obligor in the due performance of or
compliance with its
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obligations under any Finance Document of which the Agent has
notice from any other party hereto;
33.3.3 save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by the Majority
Banks, which instructions shall be binding on the Arrangers and
the Banks; and
33.3.4 if so instructed by the Majority Banks, refrain from exercising,
and in exercising its discretion pursuant to Clause 33.28 shall
not be under any obligation whatsoever to exercise, any right,
power or discretion vested in it as agent under any Finance
Document.
The Agent's duties under the Finance Documents are solely mechanical and
administrative in nature.
33.4 Excluded Obligations
Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent nor the Arrangers shall:
33.4.1 be bound to enquire as to (a) whether or not any representation
made by an Obligor in connection herewith is true, (b) the
occurrence or otherwise of any Event of Default or Potential
Event of Default, (c) the performance by an Obligor of its
obligations hereunder or (d) any breach of or default by an
Obligor of or under its obligations hereunder;
33.4.2 be bound to account to any Bank for any sum or the profit element
of any sum received by it for its own account;
33.4.3 be bound to disclose to any other person any information relating
to any member of the Group if (a) such person, on providing such
information, expressly stated to the Agent or, as the case may
be, the Arrangers, that such information was confidential or (b)
such disclosure would or might in its opinion constitute a breach
of any law or be otherwise actionable at the suit of any person;
33.4.4 be under any obligations other than those for which express
provision is made in any Finance Document; or
33.4.5 be or be deemed to be a fiduciary for any other party hereto.
33.5 Indemnification
Each Bank shall, in its Proportion, from time to time on demand by the
Agent, indemnify the Agent against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as agent
under any Finance Document (other than any which have been reimbursed by
the Guarantor pursuant to Clause 28.1 (Guarantor's Indemnity)).
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33.6 Exclusion of Liabilities among the Agent and the Arrangers
Except in the case of gross negligence or wilful misconduct, neither of
the Agent nor any of the Arrangers accepts any responsibility:
33.6.1 for the adequacy, accuracy and/or completeness of any information
supplied by the Agent or the Arrangers, by an Obligor or by any
other person in connection with any Finance Document, the
transactions herein contemplated or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document;
33.6.2 for the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document; or
33.6.3 for the exercise of, or the failure to exercise, any judgment,
discretion or power given to any of them by or in connection with
any Finance Document or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with any Finance Document.
Accordingly, neither the Agent nor any of the Arrangers shall be under any
liability (whether in negligence or otherwise) in respect of such matters,
save in the case of gross negligence or wilful misconduct.
33.7 No Actions
Each of the Banks agrees that it will not assert or seek to assert against
any director, officer or employee of the Agent or the Arrangers any claim
it might have against any of them in respect of the matters referred to in
Clause 33.6 (Exclusion of Liabilities among the Agent and the Arrangers).
33.8 Business with the Group
The Agent and the Arrangers may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any member
of the Group.
33.9 Resignation
The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior
notice to that effect to each of the other parties hereto, provided that
no such resignation shall be effective until a successor for the Agent is
appointed in accordance with the succeeding provisions of this Clause 33.
33.10 Revocation by the Majority Banks
The Majority Banks may revoke the appointment of the Agent by giving no
less than thirty days' prior notice to that effect to the Agent. Such
revocation shall take effect only when a successor to the Agent is
appointed in accordance with the terms hereof.
33.11 Successor Agent
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If the Agent gives notice of its resignation pursuant to Clause 33.9
(Resignation) or it is removed pursuant to Clause 33.10 (Revocation by the
Majority Banks), then any reputable and experienced bank or other
financial institution may be appointed as a successor to the Agent by the
Majority Banks (which shall consult with the Original Borrower) during the
period of such notice but, if no such successor is so appointed, the Agent
may appoint such a successor itself.
33.12 Rights and Obligations
If a successor to the Agent is appointed under the provisions of Clause
33.11 (Successor Agent), then (a) the retiring or departing Agent shall be
discharged from any further obligation hereunder but shall remain entitled
to the benefit of the provisions of this Clause 33 and (b) its
successor and each of the other parties hereto shall have the same rights
and obligations amongst themselves as they would have had if such
successor had been a party hereto.
33.13 Own Responsibility
It is understood and agreed by each Bank that at all times it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and investigation into all risks arising under or
in connection with the Finance Documents including, but not limited to:
33.13.1 the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group;
33.13.2 the legality, validity, effectiveness, adequacy and
enforceability of any Finance Documents and any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Documents;
33.13.3 whether such Bank has recourse, and the nature and extent of that
recourse, against an Obligor or any other person or any of their
respective assets under or in connection with any Finance
Documents, the transactions herein contemplated or any other
agreement, arrangement or document entered into, made or executed
in anticipation of, pursuant to or in connection with any Finance
Documents; and
33.13.4 the adequacy, accuracy and/or completeness of any information
provided by the Agent or the Arrangers, an Obligor or by any
other person in connection with any Finance Documents, the
transactions contemplated therein or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Documents.
Accordingly, each Bank acknowledges to the Agent and the Arrangers that it
has not relied on and will not hereafter rely on the Agent and the
Arrangers or any of them in respect of any of these matters.
33.14 Agency Division Separation
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In acting as agent under the Finance Documents for the Banks, the Agent
shall be regarded as acting through its agency division which shall be
treated as a separate entity from any other of its divisions or
departments and, notwithstanding the foregoing provisions of this Clause
0, any information received by some other division or department of the
Agent may be treated as confidential and shall not be regarded as having
been given to the Agent's agency division.
33.15 Reliance and Engagement Letters
Each Finance Party confirms that the Agent has authority to accept on its
behalf any reports or letters provided by accountants in connection with
the Finance Documents or the transactions contemplated therein and to
bind it in respect of such reports or letters and to sign such letters on
its behalf and further confirms that it accepts the terms and
qualifications set out in such letter.
33.16 Confidential Information
Notwithstanding anything to the contrary expressed or implied herein and
without prejudice to the provisions of Clause 33.14 (Agency Division
Separation), the Agent shall not as between itself and the Banks be bound
to disclose to any Bank or any other person any information which is
supplied by any Obligor to the Agent other than in its capacity as agent
hereunder.
34. ASSIGNMENTS AND TRANSFERS
34.1 Binding Agreement
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent successors and Transferees.
34.2 No Assignments and Transfers by the Obligors
No Obligor shall be entitled to assign or transfer all or any of its
rights, benefits and obligations under the Finance Documents.
34.3 Assignments and Transfers by Banks
Any Bank may, at any time, assign all or any of its rights and benefits
hereunder or transfer in accordance with Clause 34.3 (Transfers by Banks)
all or any of its rights, benefits and obligations hereunder to a bank or
financial institution after due consultation with the Guarantor.
34.4 Deemed Consent
Any consent required to be given by a party under Clause 34.3
(Assignments and Transfers by Banks) shall be deemed to have been given
unless such party has notified the requesting party to the contrary
within ten (10) Business Days of the request for such consent.
34.5 Assignments by Banks
If any Bank assigns all or any of its rights and benefits under the
Finance Documents in accordance with Clause 34.3 (Assignments and
Transfers by Banks), then, unless and until the assignee has delivered a
notice to the Agent confirming in favour of the Agent, the Arrangers and
the other Banks that it shall be under the same obligations towards each
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of them as it would have been under if it had been an original party to
the Finance Documents as a Bank (whereupon such assignee shall become a
party hereto as a "Bank"), the Agent, the Arrangers and the other Banks
shall not be obliged to recognise such assignee as having the rights
against each of them which it would have had if it had been such a party
to the Finance Documents.
34.6 Transfers by Banks
If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations under the Finance Documents as contemplated in Clause 34.3
(Assignments and Transfers by Banks), then such transfer may be effected
by the delivery to the Agent of a duly completed Transfer Certificate
executed by such Bank and the relevant Transferee in which event, on the
later of the Transfer Date specified in such Transfer Certificate and the
fifth Business Day after (or such earlier Business Day endorsed by the
Agent on such Transfer Certificate falling on or after) the date of
delivery of such Transfer Certificate to the Agent:
34.6.1 to the extent that in such Transfer Certificate the Bank which is
a party thereto seeks to transfer by transfer and assumption its
rights, benefits and obligations hereunder, each of the Obligors
and such Bank shall be released from further obligations towards
one another under the Finance Documents and their respective
rights against one another shall be cancelled (such rights and
obligations being referred to in this Clause 34.6 as "discharged
rights and obligations");
34.6.2 each of the Obligors and the Transferee party which is a party
thereto shall assume obligations towards one another and/or
acquire rights against one another which differ from such
discharged rights and obligations only insofar as such Obligor
and such Transferee have assumed and/or acquired the same in
place of such Obligor and such Bank;
34.6.3 the Agent, the Arrangers, such Transferee and the other Banks
shall acquire the same rights and benefits and assume the same
obligations between themselves as they would have acquired and
assumed if such Transferee had been an original party to the
Finance Documents as a Bank with the rights, benefits and/or
obligations acquired or assumed by it as a result of such
transfer and to that extent the Agent, the Arrangers and the
relevant Bank shall each be released from further obligations to
each other under the Finance Documents; and
34.6.4 such Transferee shall become a party hereto as a "Bank".
34.7 On the date upon which a transfer takes effect pursuant to Clause 34.5
(Assignments by Banks), the Transferee in respect of such transfer shall
pay to the Agent for its own account a transfer fee of DEM 1,000.
34.8 Disclosure of Information
34.8.1 Any Bank may disclose to any person:
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(i) to (or through) whom such Bank assigns or transfers (or may
potentially assign or transfer) all or any of its rights,
benefits and obligations any under the Finance Documents;
(ii) with (or through) whom such Bank enters into (or may
potentially enter into) any sub-participation in relation
to, or any other transaction under which payments are to be
made by reference to, any Finance Document or any Obligor;
or
(iii) to whom information may be required to be disclosed by any
applicable law or regulatory authority,
such information about any Obligor or the Group and the Finance Documents
as such Bank considers appropriate, provided that in relation to sub-
clauses 0 and 0, the person to whom such information is to be given has
entered into a confidentiality obligation to such Bank.
34.8.2 Neither the Borrowers nor the Guarantor shall, and shall procure
that no other person shall, without the prior written consent of
the Arrangers, the Underwriters and the Agent, make in connection
with the tender offer, the Acquisition or otherwise any statement
or other reference to the Arrangers, the Underwriters, the Banks
and/or the transaction contemplated hereunder which may lead to
any liability for the Arrangers, the Underwriters, the Agent, or
the Banks.
35. CALCULATIONS AND EVIDENCE OF DEBT
35.1 Basis of Accrual
Any interest, commission or fee accruing hereunder shall accrue from day
to day and shall be calculated on the basis of a year of 360 days and the
actual number of days elapsed (or if in the Agent's discretion, market
practise differs, such basis as the Agent shall reasonably determine).
35.2 Quotations
If on any occasion a Reference Bank or a Bank fails to supply the Agent
with a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be
determined from those quotations which are supplied to the Agent,
provided that, in relation to determining the relevant interbank rate,
this Clause 0 shall not apply if only one Reference Bank supplies a
quotation.
35.3 Evidence of Debt
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder.
35.4 Control Accounts
The Agent shall maintain on its books a control account or accounts in
which shall be recorded (a) the amount of any Advance or Unpaid Sum and
each Bank's share therein, (b) the amount of all principal, interest and
other sums due or to become due from an
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Obligor and each Bank's share therein and (c) the amount of any sum
received or recovered by the Agent hereunder and each Bank's share
therein.
35.5 Prima Facie Evidence
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clause 35.3 (Evidence of Debt) and Clause 35.4 (Control Accounts) shall
be prima facie evidence of the existence and amounts of the specified
obligations of the Obligors.
35.6 Certificates of Banks
A certificate of a Bank as to (a) the amount by which a sum payable to it
hereunder is to be increased under Clause 14.1 (Tax Gross-up), (b) the
amount for the time being required to indemnify it against any such cost,
payment or liability as is mentioned in Clause 14.2 (Tax Indemnity) or
Clause 16.1 (Increased Costs) or (c) the amount of any credit, relief,
remission or repayment as is mentioned in Clause 15.3 (Tax Credit
Payment) or Clause 15.4 (Tax Credit Clawback) shall be prima facie
evidence of the existence and amounts of the specified obligations of the
Obligors.
36. REMEDIES AND WAIVERS, PARTIAL INVALIDITY
36.1 Remedies and Waivers
No failure to exercise, nor any delay in exercising, on the part of any
Finance Party, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
prevent any further or other exercise thereof or the exercise of any
other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
36.2 Partial Invalidity
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or
impaired thereby.
37. NOTICES
37.1 Communications in Writing
Each communication to be made hereunder shall be made in writing and,
unless otherwise stated, shall be made by fax or letter.
37.2 Addresses
Any communication or document to be made or delivered pursuant to this
Agreement shall (unless the recipient of such communication or document
has, by fifteen (15) days' written notice to the Agent, specified another
address or fax number) be made or delivered to the address or fax number:
37.2.1 in the case of the Obligors and the Agent, identified with its
name below; and
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37.2.2 in the case of each Bank, notified in writing to the Agent prior
to the date hereof (or, in the case of a Transferee, at the end
of the Transfer Certificate to which it is a party as
Transferee);
provided that not more than one address may be specified by each party
pursuant to this Clause 37.2 at any time.
37.3 Delivery
Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall:
37.3.1 if by way of fax, be deemed to have been received when
transmission has been completed; and
37.3.2 if by way of letter, be deemed to have been delivered when left
at the relevant address or, as the case may be, ten (10) days
after being deposited in the post postage prepaid in an envelope
addressed to it at such address,
provided that any communication or document to be made or delivered to
the Agent shall be effective only when received by its agency division
and then only if the same is expressly marked for the attention of the
department or officer identified with the Agent's signature below (or
such other department or officer as the Agent shall from time to time
specify for this purpose) and (b) any document to be delivered pursuant
to Clause 2.5 (Conditions Precedent) shall be delivered in the original
form and any Notice of Drawdown shall be confirmed by letter, although
failure to confirm shall not invalidate the original request made
thereunder.
37.4 Notification of Changes
Promptly upon receipt of notification of a change of address or fax
number pursuant to Clause 37.2 (Addresses) or changing its own address or
fax number, the Agent shall notify the other parties hereto of such
change.
37.5 English Language
Each communication and document made or delivered by one party to another
pursuant to any Finance Documents shall be in the English language or
accompanied by a translation thereof into English certified (by an
officer of the person making or delivering the same) as being a true and
accurate translation thereof.
38. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
39. AMENDMENTS, MISCELLANEOUS
39.1 Amendments
The Agent, if it has the prior consent of the Majority Banks, and the
Obligors may from time to time agree in writing to amend the Finance
Documents or to waive, prospectively or retrospectively, any of the
requirements of the Finance Documents and
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any amendments or waivers so agreed shall be binding on all the Finance
Parties and the Obligors, provided that no such waiver or amendment shall
subject any party hereto to any new or additional obligations without the
consent of such party.
39.2 Amendments Requiring the Consent of all the Banks
An amendment or waiver which relates to:
39.2.1 Clause 2.7 (Banks' Obligations Several), Clause 2.8 (Banks'
Rights Several), Clause 22.2.1 (Negative Pledge), Clause 32
(Sharing), Clause 24 (Guarantee) or this Clause 39;
39.2.2 a change in the principal amount of or currency of any Advance,
or extending the term of the Facility;
39.2.3 a change in the Margin or the amount or currency of any payment
of interest, fees or any other amount payable hereunder to any
Finance Party or deferral of the date for payment thereof;
39.2.4 the conditions set out in sub-clause 3.1 (Drawdown Conditions for
Tranche A Advances), Clause 4.1 (Drawdown Conditions for Tranche
B Advances) and Clause 5.1 (Drawdown Conditions for Tranche C
Advances) if an Event of Default or Potential Event of Default
which relates to a Repeated Representation or Clause 0 (Negative
Pledge) is continuing;
39.2.5 the definition of Event of Default, Majority Banks, Potential
Event of Default, Permitted Encumbrance, Encumbrance or Financial
Indebtedness; or
39.2.6 any provision which contemplates the need for the consent or
approval of all the Banks,
shall not be made without the prior consent of all the Banks.
39.3 Exceptions
Notwithstanding any other provisions hereof, the Agent shall not be
obliged to agree to any such amendment or waiver if the same would:
39.3.1 amend or waive this Clause 39, Clause 26 (Costs and Expenses) or
Clause 33 (The Agent, the Arrangers and the Banks); or
39.3.2 otherwise amend or waive any of the Agent's rights hereunder or
subject the Agent or the Arrangers to any additional obligations
hereunder or under any other Finance Document.
40. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
German law.
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41. JURISDICTION
41.1 District Court of Frankfurt am Main
Each of the Obligors hereby agrees to the benefit of the Finance Parties
that the district court (Landgericht) of Frankfurt am Main shall have
non-exclusive jurisdiction to settle any dispute (a "Dispute") arising
out of or in connection with this Agreement (including a dispute
regarding the existence, validity or termination of this Agreement or the
consequences of its nullity).
41.2 Non-Exclusive Jurisdiction
The submission to the jurisdiction of the courts referred to in Clause 0
(District Court of Frankfurt am Main) shall not (and shall not be
construed as to) limit the right of the Finance Parties or any of them to
take proceedings against any of the Obligors in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted
by applicable law.
41.3 Process Agent for the Additional Borrowers
Each Obligor whose jurisdiction of incorporation is not Germany hereby
agrees that documents which start any legal proceeding which are required
to be served in relation to those legal proceedings may be served on it
by serving it on the Original Borrower.
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THE FIRST SCHEDULE
The Banks
<TABLE>
<CAPTION>
Bank Tranche A Commitment Tranche B Commitment Tranche C Commitment
(USD) (USD) (USD)
<S> <C> <C> <C>
Dresdner Bank AG in Wiesbaden 480,000,000 120,000,000 180,000,000
Deutsche Bank Luxembourg S.A. 320,000,000 80,000,000 120,000,000
</TABLE>
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THE SECOND SCHEDULE
Form of Transfer Certificate
To: [ ]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Facilities Agreement" dated 1 September 1999 whereby USD
1,300,000,000 term loan facilities, arranged by Deutsche Bank AG and Dresdner
Bank AG, were made available, inter alia, to Dyckerhoff Aktiengesellschaft and
certain of its subsidiaries by a group of banks on whose behalf Dresdner Bank
Luxembourg S.A. acted as agent in connection therewith.
1. Terms defined in the Facilities Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank and Transferee
and Portion Transferred are defined in the schedule hereto.
2. The Bank (a) confirms that the details in the schedule hereto under the
heading "Bank's Commitment" or "Advance(s)" accurately summarises its
Commitment and/or, as the case may be, its participation in, and the Term
and Repayment Date of, one or more existing Advances and (b) requests the
Transferee to accept and procure the transfer by transfer and assumption to
the Transferee of the Portion Transferred of, as the case may be, its
Commitment and/or its participation in such Advance(s) by counter-signing
and delivering this Transfer Certificate to the Agent at its address for
the service of notices specified in the Facilities Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the
purposes of Clause 34.6 (Transfers by Banks) of the Facility Agreement so
as to take effect in accordance with the terms thereof on the Transfer Date
or on such later date as may be determined in accordance with the terms
thereof.
4. The Transferee confirms that it has received a copy of the Facilities
Agreement together with such other information as it has required in
connection with this transaction and that it has not relied and will not
hereafter rely on the Bank to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or completeness of
any such information and further agrees that it has not relied and will not
rely on the Bank to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of the
Obligors.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Facilities Agreement that it will perform in accordance with
their terms all those obligations which by the terms of the Facilities
Agreement will be assumed by it after
-68-
<PAGE>
delivery of this Transfer Certificate to the Agent and satisfaction of the
conditions (if any) subject to which this Transfer Certificate is expressed
to take effect.
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Facilities Agreement or any document relating thereto
and assumes no responsibility for the financial condition of the Obligors
or for the performance and observance by the Obligors of any of its
obligations under the Facilities Agreement, the Finance Documents or any
document relating thereto and any and all such conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facilities
Agreement or the Finance Documents (or any document relating thereto) shall
oblige the Bank to (a) accept a re-transfer from the Transferee of the
whole or any part of its rights, benefits and/or obligations under the
Facilities Agreement or the Finance Documents transferred pursuant hereto
or (b) support any losses directly or indirectly sustained or incurred by
the Transferee for any reason whatsoever including the non-performance by
an Obligor or any other party to the Facilities Agreement or the Finance
Documents (or any document relating thereto) of its obligations under any
such document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (a) or (b).
8. This Transfer Certificate and the rights, benefits and obligations of the
parties hereunder shall be governed by and construed in accordance with
German law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Commitment:
Bank's Tranche A Commitment Portion Transferred
Bank's Tranche B Commitment Portion Transferred
Bank's Tranche C Commitment Portion Transferred
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<PAGE>
5. Advance(s):
Amount of Term and
Bank's Participation Repayment Date Portion Transferred
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address:
Contact Name:
Account for Payments
in United States Dollars:
Telex:
Fax:
Telephone:
-70-
<PAGE>
THE THIRD SCHEDULE
Conditions Precedent
(A) Corporate Documents
(7) a copy, certified by an Authorised Signatory of each Obligor as being at
the date of this Agreement a true, complete and up-to-date copy of the
constitutional documents of such Obligor;
(8) a copy, certified by an Authorised Signatory of each Obligor as being at
the date of this Agreement a true, complete and up-to-date copy of the
extract from the commercial or company register of such Obligor;
(9) a certificate of an Authorised Signatory of each Obligor confirming that
any necessary board or shareholders resolution of each Obligor authorising
the execution, delivery and performance of the Finance Documents and the
terms and conditions hereof and authorising a named person or persons to
sign each Finance Document and any documents to be delivered by such
Obligor pursuant hereto have been passed;
(10) a certificate of an Authorised Signatory of each Obligor setting out the
names and signatures of the persons authorised to sign as of the date
hereof, on behalf of such Obligor, each Finance Document to which it is or
is to be party and each Notice of Drawdown which may be delivered by such
Obligor.
(11) a copy, certified by an Authorised Signatory of each Obligor as being at
the date of this Agreement or any relevant date thereafter a true, complete
and up-to-date copy of each approval (including cartel or tender offer)
which the Original Borrower has already obtained or will obtain and which
is required either for the completion of the Acquisition or to make the
Finance Documents and the Acquisition Documents valid and enforceable.
(B) Legal Opinions
(12) Opinion of Clifford Chance, the Banks' Counsel, satisfactory in form and
substance to the Agent.
(13) Opinion of Borrower's U.S. Counsel, satisfactory in form and substance to
the Agent regarding the validity and enforceability of the Acquisition
Documents and the Finance Documents and stating that the Borrowers have
obtained all required approvals for the Acquisition other than any approval
which is a condition precedent to the tender offer (including disclosure
and filing requirements for the Acquisition with the SEC).
-71-
<PAGE>
(C) Miscellaneous
(14) Receipt by the Agent, Arrangers and the Banks of all fees required to be
paid and all reasonable expenses for which invoices have been presented.
(15) a copy certified by an Authorised Signatory of the Original Borrower as
being at the date of this Agreement a true, complete and up-to-date copy
of:
(a) the tender offer documents relating to the Acquisition in the form to be
filed;
(b) the signed Acquisition Documents;
(c) (i) audited accounts of the Group, the Original Borrower, the
Additional Borrower and Lone Star for the two most recent fiscal years
ended prior to the date of the signing of the Facilities Agreement in
a form satisfactory to the Agent and (ii) unaudited interim accounts
of the Group and Lone Star for each quarterly period ending after the
date of the latest accounts delivered pursuant to Clause (i) of this
paragraph for which such accounts are available. Each such financial
statement shall include a balance sheet, income statement, cash flow
statement and explanatory notes to the accounts and be in a form
satisfactory to the Agent;
(d) the Initial Financial Projections;
(e) any such information about the Original Borrower, the Group or Lone
Star as may be deemed necessary by the Arrangers to complete their
internal due diligence, including the Due Diligence Reports some of
which will be updated in the course of accomplishment of the
Acquisition;
(f) evidence that any drawdown will be applied in full in compliance with
the conditions set-out herein;
(g) a letter satisfactory in substance to the Agent describing the
Original Borrower's interest and currency hedging strategies;
(h) evidence that the Purchaser has received acceptance of at least 50
per cent, plus one share of its tender offer; and
(i) evidence that the Escrow Account and the Holding Account have been
opened and pledged to the Banks.
-72-
<PAGE>
THE FOURTH SCHEDULE
Notice of Drawdown
From: [Borrower]
To: [Agent]
Dated:
Dear Sirs,
(16) We refer to the agreement (the "Facilities Agreement") dated 1 September
1999 and made between, inter alia, Dyckerhoff Aktiengesellschaft as
Borrower, Dresdner Bank Luxembourg S.A. as Agent and the financial
institutions named therein as banks. Terms defined in the Facilities
Agreement shall have the same meaning in this notice.
(17) This notice is irrevocable.
(18) We hereby give you notice that, pursuant to the Facilities Agreement and
on [date of proposed Advance], we wish to borrow a [Tranche A]/[Tranche
B]/[Tranche C] Advance [currency and amount] upon the terms and subject to
the conditions contained therein.
[We would like this Advance to have an Interest Period of [number of months'
duration]]
(19) We confirm that, at the date hereof, the Repeated Representations are true
in all material respects and no Event of Default or Potential Event of
Default is continuing.
(20) The proceeds of this drawdown should be credited to [account details].
Yours faithfully
_____________________________
Authorised Signatory
for and on behalf of
[Name of Borrower]
-73-
<PAGE>
THE FIFTH SCHEDULE
Existing Emcumbrances
-74-
<PAGE>
THE SIXTH SCHEDULE
FORM OF COMPLIANCE CERTIFICATE
To: [Agent]
Date:
Dear Sirs,
We refer to an agreement (the "Facilities Agreement") dated 1 September 1999
whereby term loan facilities were made available to a group of borrowers
including Dyckerhoff Aktiengesellschaft. Terms defined in the Facilities
Agreement shall bear the same meaning herein.
We confirm that: [insert details of Financial Covenants]
_____________________________
Authorised Signatory
for and on behalf of
the Guarantor
or
_____________________________
for and on behalf of
[name of auditors of the Guarantor]
-75-
<PAGE>
THE SEVENTH SCHEDULE
Mandatory costs rate
For the purposes of this Agreement, the cost of compliance with existing
requirements of the Bank of England and/or the Financial Services Authority
(or, in either case, any other authority which replaces all or any of its
functions) will be calculated by the Agent in relation to each Advance on
the basis of the Agent's own rates (or the rates of such Bank as it may
from time to time specify) by reference to the circumstances existing on
the first day of each Interest Period or Term in respect of such Advance in
accordance with the following formulae:
(uuu) in relation to sterling Advances:
AB + C(B - D) + E x 0.01
------------------------per cent. per annum
100 - (A + C)
(vvv) in relation to Advances in any currency other than sterling:
E x 0.01
--------per cent. per annum.
300
Where:
A is the percentage of eligible liabilities (assuming these to be in
excess of any stated minimum) which the Agent (or such Bank as it may
determine) is from time to time required to maintain as an interest
free cash ratio deposit with the Bank of England to comply with cash
ratio requirements.
B is the percentage rate per annum at which sterling deposits are
offered by the Agent (or such Bank as it may determine) in accordance
with its normal practice, for a period equal to the relevant
[Interest Period]/[Term] to a leading bank in the London interbank
market at or about 11.00 a.m. in a sum approximately equal to the
amount of such Advance.
C is the percentage of eligible liabilities which the Agent (or such
Bank as it may determine) is required from time to time to maintain
as interest bearing special deposits with the Bank of England.
D is the percentage rate per annum payable by the Bank of England to
the Agent (or such Bank as it may determine) on interest bearing
special deposits.
E is the rate payable by the Agent (or such Bank as it may determine)
to the Financial Services Authority pursuant to the Fee Regulations
(but, for this purpose, ignoring any minimum fee required pursuant to
the Fee Regulations)
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<PAGE>
and expressed in pounds per (Pounds)1,000,000 of the Fee Base of the
Agent (or such Bank as it may determine).
For the purposes of this Schedule:
(a) "eligible liabilities" and "special deposits" shall bear the
meanings given to them from time to time under or pursuant to the
Bank of England Act 1998 or (as may be appropriate) by the Bank of
England;
(b) "Fee Regulations" means the Banking Supervision (Fees) Regulations
1999 or such other law as may be in force from time to time in
respect of the payment of fees for banking supervision; and
(c) "Fee Base" shall bear the meaning given to it, and shall be
calculated in accordance with, the Fee Regulations.
The percentages used in A and C above shall be those required to be
maintained on the first day of the relevant period as determined in
accordance with B above.
In application of the above formulae, A, B, C and D will be included in the
formulae as figures and not as percentages e.g. if A is 0.5 per cent, and B
is 12 per cent, AB will be calculated as 0.5 x 12 and not as 0.5 per cent,
x 12 per cent.
Calculations will be made on the basis of a 365 day year (or, if market
practice differs, in accordance with market practice).
A negative result obtained by subtracting D from B shall be taken as zero.
The resulting figures shall be rounded to four decimal places.
Additional amounts calculated in accordance with this Schedule are payable
on the last day of the Interest Period or Term to which they relate.
The determination of the Mandatory Cost Rate by the Agent in relation to
any period shall, in the absence of manifest error, be conclusive and
binding on all of the parties hereto.
The Agent may from time to time, after consultation with the Original Borrower
and the Banks, determine and notify to all parties any amendments or variations
which are required to be made to any of the formulae set out above in order to
comply with any requirements from time to time imposed by the Bank of England or
the Financial Services Authority (or, in either case, any other authority which
replaces all or any of its functions) and any such determination shall, in the
absence of manifest error, be conclusive and binding on all the parties hereto
-77-
<PAGE>
SIGNATURES
As Original Borrower and Guarantor
DYCKERHOFF AKTIENGESELLSCHAFT
By: ____________________ By: ______________________
Name: Name:
Address: Biebricher Strasse 69
D-63203 Wiesbaden
Telephone: +49 611 676 1440
Fax: +49 611 676 1445
Attention: Luis Rauch, Esq.
LEVEL ACQUISITION CORP.
By: _____________________ By: ______________________
Name: Name:
Address: 1209 Orange Street
City of Wilmington, County of Newcastle, DE, 19801 U.S.A.
Telephone: 1-508-693-4164
Fax: 1-508-693-4164
Attention: Felix Pardo, President
As Underwriter
DEUTSCHE BANK LUXEMBOURG S.A.
-78-
<PAGE>
By: ________________________ By: _______________________
Name: Name:
Address: 2, boulevard Konrad Adenauer
L-1115 Luxembourg
Telephone: +352 421 22 295
Fax: +352 421 22 287
Attention: Loan Department
As Arranger
DEUTSCHE BANK AG
By: ________________________ By: _______________________
Name: Name:
Address: Taunusanlage 12
D-60325 Frankfurt am Main
Telephone: +49 69 910 39283
Fax: +49 69 910 38793
Attention: Christof Murb
As Underwriter and Arranger
DRESDNER BANK AG in Wiesbaden
By: ________________________ By: _______________________
Name: Name:
-79-
<PAGE>
Address: Wilhelmstrasse 7,
D-65185 Wiesbaden
Telephone: +49 611 358 250
Fax: +49 611 358 695
Attention: Heinz Honing
As Agent
DRESDNER BANK LUXEMBOURG S.A.
By: _________________________ By: __________________________
Name: Name:
Address: Boite Postale 355
L-2097 Luxembourg
Telephone: +352 4760 423
Fax: +352 4760 565
Attention: Andrea Stockemer
As Bank
DEUTSCHE BANK LUXEMBOURG S.A.
By: _____________________ By: __________________________
Name: Name:
Address: 2, boulevard Konrad Adenauer
L-1115 Luxembourg
Telephone: +352 421 22 295
-80-
<PAGE>
Fax: +352 421 22 287
Attention: Loan Department
As Bank
DRESDNER BANK AG in Wiesbaden
By: _____________________ By: __________________________
Name: Name:
Address: Wilhelmstrasse 7,
D-65185 Wiesbaden
Telephone: +49 611 358 250
Fax: +49 611 358 695
Attention: Heinz Honing
For the purposes of the Protocol annexed to the Convention on Jurisdiction and
the Enforcement in Civil and Commercial Matters signed at Brussels on 27
September 1968 (as amended) we hereby expressly and specially confirm our
agreement with the provisions of Clause 40 of the Facilities Agreement which
provides for our submission to the non-exclusive jurisdiction of the courts of
Germany.
_______________________________
Deutsche Bank Luxembourg S.A.
_______________________________
Dresdner Bank Luxembourg S.A.
-81-
<PAGE>
==========================================
AGREEMENT AND PLAN OF MERGER
AMONG
DYCKERHOFF AKTIENGESELLSCHAFT
LEVEL ACQUISITION CORP.
AND
LONE STAR INDUSTRIES, INC.
Dated as of September 2, 1999
==========================================
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS IS AN AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of September 2, 1999 (the "Agreement Date") among Dyckerhoff Aktiengesellschaft,
a corporation organized under the laws of the Federal Republic of Germany
("Parent"), Level Acquisition Corp., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Purchaser"), and Lone Star Industries, Inc.,
a Delaware corporation (the "Company").
Background
----------
WHEREAS, the Board of Directors of the Company has determined that it
is fair to, advisable and in the best interests of the Company and the
shareholders of the Company to enter into and consummate this Agreement with
Purchaser, providing for the merger of Purchaser with and into the Company, with
the Company as the Surviving Corporation (provided that, at the election of
-------- ----
Parent, the Company shall merge with and into Purchaser, with the Purchaser as
the Surviving Corporation) (in either case, the "Merger"), in accordance with
the Delaware General Corporation Law (the "DGCL") and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of Purchaser has approved the Merger
of Purchaser with and into the Company and such other transactions in accordance
with the DGCL upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (as amended or supplemented in accordance with this Agreement, the
"Offer") to purchase for cash (i) all of the issued and outstanding shares of
common stock, par value $1.00 per share (referred to herein as either the
"Shares" or "Company Common Stock"), of the Company together with the attached
Rights (as defined herein), at a price per share of $50.00, net to the seller in
cash (the "Share Price") and (ii) all of the outstanding Common Stock Purchase
Warrants (the "Warrants") issued pursuant to the Warrant Agreement dated as of
April 13, 1994 between the Company and Chemical Bank, as Warrant Agent (the
"Warrant Agreement"), for $81.25 per Warrant, net to the seller in cash (the
"Warrant Price") (the Common Stock (and attached Rights (as defined herein)) and
the Warrants being collectively referred to as the "Securities").
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Security in the Offer and the Merger is fair
to the holders of such Security and has resolved to recommend that the holders
of such Securities tender their Securities pursuant to the Offer and approve and
adopt this Agreement and the Merger upon the terms and subject to the conditions
set forth herein;
<PAGE>
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, and certain stockholders of the Company ("Certain Stockholders"),
have executed and delivered to Parent and Purchaser an agreement (the "Tender
Agreement") pursuant to which the Certain Stockholders have agreed to take
specified actions in furtherance of the transactions contemplated by this
Agreement, including tendering their Securities into the Offer;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
---------
(a) Subject to the provisions of this Agreement, and provided that
-------- ----
this Agreement shall not have been terminated in accordance with Section 8.1 and
so long as none of the events or circumstances set forth in Annex A hereto shall
have occurred or be existing, not later than the fifth business day from the
date of public announcement of the execution of this Agreement, Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer at (i) a price of $50.00 per
Share net to the seller in cash and (ii) a price of $81.25 per Warrant net to
the seller in cash. The obligation of Purchaser to consummate the Offer, to
accept for payment and to pay for any Securities tendered pursuant to the Offer
shall be subject to those conditions set forth in Annex A and the other
conditions to the Offer set forth in this Agreement. Purchaser expressly
reserves the right, in its sole discretion, to waive any such condition provided
--------
that, without the consent of the Company, Parent or Purchaser shall not waive
- ----
the Minimum Condition (as defined in Annex A). The initial expiration date of
the Offer shall be the 20th business day following the commencement of the
Offer (determined using Rule 14d-1(c)(6) under the Exchange Act).
(b) Purchaser expressly reserves the right, in its sole discretion, to
modify and make changes to the terms and conditions of the Offer, provided that
-------- ----
without the prior consent of the Company, no modification or change may be made
which (i) decreases the consideration payable in the Offer, (ii) changes the
form of consideration payable in the Offer (other than by adding consideration),
(iii) changes the Minimum Condition, (iv) decreases the maximum number of
Securities sought pursuant to the Offer, (v) adversely changes the conditions to
the Offer, (vi) imposes additional conditions to the Offer (other than in
respect of any consideration which is payable in addition to the Share Price and
Warrant Price), or (vii) except as provided in
-2-
<PAGE>
the next sentence, extend the Offer. Notwithstanding the foregoing, Purchaser
may (but shall not be required under this Agreement or otherwise to), without
the consent of the Company, (i) extend the Offer on one or more occasions for
such period as may be determined by Purchaser in its sole discretion (each such
extension period not to exceed 10 business days at a time), if at the then
scheduled expiration date of the Offer any of the conditions to Purchaser's
obligations to accept for payment and pay for Securities shall not be satisfied
or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (iii) extend the Offer
on one or more occasions for an aggregate period of not more than five business
days if the Minimum Condition has been satisfied but less than 90% of the Fully
Diluted Shares have been validly tendered and not properly withdrawn, and (iv)
extend the Offer for any reason on one or more occasions for an aggregate period
of not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (i), (ii) or (iii) of this sentence,
notwithstanding the prior satisfaction of the conditions to the Offer set forth
on Annex A. Without limiting the right of Purchaser to extend the Offer pursuant
-------
to the immediately preceding sentence, in the event that the condition set forth
in paragraph (d) of Annex A with respect to the HSR Act (as defined herein) or
with respect to an action or proceeding by a Governmental Entity that shall not
have been satisfied or waived at the scheduled or any extended expiration date
of the Offer (and such condition is the sole remaining condition to be satisfied
or waived if the Offer were to be consummated on that date), at the request of
the Company, Purchaser shall, and Parent shall cause Purchaser to, extend the
expiration date of the Offer, in 5 business day increments, up to November 30,
1999, unless Parent determines in good faith that such condition can not be
satisfied prior to November 30, 1999, subject to the terms of Section 6.4. It is
agreed that the conditions to the Offer set forth on Annex A are for the benefit
-------
of Purchaser and may be asserted by Purchaser or, except with respect to the
Minimum Condition as set forth in Section 1.1(a), may be waived by Purchaser, in
whole or in part at any time and from time to time, in its sole discretion. On
the terms and subject to the conditions of the Offer and this Agreement,
promptly after expiration of the Offer, Purchaser shall accept for payment and
pay for, and Parent shall cause Purchaser to accept for payment and pay for, all
Securities validly tendered and not withdrawn pursuant to the Offer that
Purchaser becomes obligated to purchase pursuant to the Offer. Parent shall
provide, or cause to be provided, on a timely basis the funds necessary to
purchase any and all of the Securities that Purchaser becomes obligated to
purchase pursuant to the Offer in accordance with the terms of this Agreement.
(c) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC with respect to the Offer a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1") with respect to the Offer
which will comply in all material respects with the provisions of applicable
federal securities laws, and will contain the offer to purchase relating to the
Offer (the "Offer to Purchase") and forms of related letters of transmittal and
summary advertisement (which documents, together with any supplements or
amendments thereto and including the exhibits thereto, are referred to herein
collectively as the "Offer Documents"). Parent shall deliver copies of the
proposed forms of the Schedule 14D-1 and the Offer Documents to the Company
within a reasonable time prior to the commencement of the Offer for review and
-3-
<PAGE>
comment by the Company and its counsel. Parent agrees to provide the Company and
its counsel in writing any comments that Purchaser, Parent or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt thereof. The Company, Parent and Purchaser shall promptly
correct any information provided by it for use in the Schedule 14D-1 or the
Offer Documents that shall have become false or misleading in any material
respect and Parent and Purchaser further agree to take all steps necessary to
cause such Schedule 14D-1 or Offer Documents as so corrected to be filed with
the SEC and disseminated to the shareholders of the Company, as and to the
extent required by applicable federal securities laws.
Section 1.2 Company Actions.
---------------
(a) The Company hereby consents to the Offer and represents and
warrants that (i) its Board of Directors, at a meeting duly called and held on
September 2, 1999, has duly and by unanimous vote adopted resolutions approving
the Offer, the Merger and this Agreement and the other transactions contemplated
hereby and thereby (collectively, the "Transactions"), determining that the
terms of the Offer and the Merger are fair to, and in the best interests of, the
Company's shareholders and warrantholders and recommending acceptance of the
Offer and adoption of the Merger and this Agreement by the shareholders and
warrantholders of the Company, (ii) (A) the Offer and Merger are "Permitted
Offers" under the Rights Agreement, dated as of November 10, 1994, between the
Company and Chemical Bank, as Rights Agent (the "Rights Agreement"), (B) each
right to purchase Shares pursuant to the Rights Agreement ("Rights") is
represented by the certificate representing the associated Share and is not
exercisable or transferable apart from the associated Share, (C) there has not
been a "Distribution Date" or "Shares Acquisition Date" under the Rights
Agreement, (D) the Company has taken all necessary actions so that the execution
of and delivery of this Agreement and the Tender Agreement and the consummation
of the Offer, the Merger and the other Transactions will not result in the
triggering of the provisions of Sections 11 or 13 of the Rights Agreement or the
occurrence of a "Distribution Date" or "Shares Acquisition Date" under the
Rights Agreement and will not result in Parent, Purchaser or any of their
affiliates or associates becoming an "Acquiring Person" under the Rights
Agreement, and (E) upon consummation of the Merger the former holders of the
Rights will not have any claims or rights thereunder (without any necessity to
redeem the Rights to effectuate the foregoing), and (iii) Merrill Lynch & Co.
(the "Company Financial Advisor") has delivered to the Company's Board of
Directors its opinion (the "Fairness Opinion") that the consideration to be
received by the Company's shareholders and warrantholders is fair, from a
financial point of view, to such shareholders and warrantholders as of the date
of the opinion and a complete and correct signed copy of such opinion has been
delivered by the Company to Parent. The Company has been authorized by the
Company Financial Advisor to permit the inclusion of the Fairness Opinion (and,
subject to prior review and consent by such Company Financial Advisor, a
reference thereto) in the Offer Documents and in the Schedule 14D-9 referred to
below and the Proxy Statement. The Company hereby consents to the inclusion in
the Offer Documents of the recommendations of the Company's Board of Directors
described in this Section 1.2. The Company has been advised that all of its
directors and executive officers who are knowledgeable of the Transactions
intend
-4-
<PAGE>
either to tender their Securities pursuant to the Offer or (solely in the case
of directors and executive officers who would as a result of the tender incur
liability under Section 16(b) of the Exchange Act) to vote in favor of the
Merger.
(b) The Company shall file with the SEC on the date of the
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall comply in all material
respects with the provisions of applicable federal securities laws, and will,
subject to Section 6.1 hereof, contain such recommendations of the Board in
favor of the Offer and the Merger, and shall disseminate the Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Exchange Act and shall mail such
Schedule 14D-9 together with the Offer Documents. The Company shall deliver the
proposed forms of the Schedule 14D-9 and the exhibits thereto to Parent within a
reasonable time prior to the commencement of the Offer for review and comment by
Parent and its counsel. Parent and its counsel shall be given a reasonable
opportunity to review any amendments and supplements to the Schedule 14D-9 prior
to their filing with the SEC or dissemination to shareholders of the Company.
The Company agrees to provide Parent and its counsel in writing any comments
that the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt thereof. Each of the
Company, Parent and Purchaser shall promptly correct any information provided by
it for use in the Schedule 14D-9 that shall have become false or misleading in
any material respect and the Company further agrees to take all steps necessary
to cause such Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the shareholders of the Company, as and to the extent required
by applicable federal securities laws.
Section 1.3 Securitiesholder Lists. In connection with the Offer, the
----------------------
Company shall promptly furnish to, or cause to be furnished to, Parent and
Purchaser mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listing or computer file containing the
names and addresses of the record holders of the Securities as of a recent date
and of those Persons becoming record holders subsequent to such date (to the
extent available), together with all other information in the Company's
possession or control regarding the beneficial owners of Securities and shall
furnish Parent and Purchaser with such information and assistance as Parent,
Purchaser or their respective agents may reasonably request in communicating the
Offer to the record and beneficial holders of Securities. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Merger,
Parent and Purchaser shall, and shall cause each of their affiliates to, hold
the information contained in any of such labels and lists in confidence, use
such information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, deliver to the Company all copies of such information
or extracts therefrom then in their possession or under their control.
Section 1.4 Directors; Section 14(f).
------------------------
(a) Immediately upon the acceptance for payment of and payment for any
Securities by Purchaser pursuant to the Offer, Purchaser shall be entitled to
designate such
-5-
<PAGE>
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company equal to the product of (i) the total number of directors on the
Board of Directors of the Company (giving effect to the increase in the size of
such Board pursuant to this Section 1.4) and (ii) the percentage that the number
of votes represented by Shares beneficially owned by Purchaser and its
affiliates (including Shares so accepted for payment and purchased and any
Warrants so accepted for payment and purchase and converted by Purchaser into
Shares) bears to the number of votes represented by Shares then outstanding. In
furtherance thereof, concurrently with such acceptance for payment and payment
for such Securities the Company shall, upon request of Parent and in compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
use its best efforts promptly either to increase the size of its Board of
Directors or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be so
elected or appointed to the Company's Board of Directors, and the Company shall
take all actions available to the Company to cause such designees of Parent to
be so elected or appointed. At such time, the Company shall, if requested by
Parent, also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number) as
is on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) each board of directors (or similar body) of each
subsidiary of the Company and (iii) each committee (or similar body) of each
such board.
(b) Notwithstanding the foregoing, the Company shall use its best
efforts to ensure that, in the event that Purchaser's designees are elected to
the Board of Directors of the Company, such Board of Directors shall have, at
all times prior to the Effective Time, at least two directors who are directors
on the date of this Agreement and who are not officers or affiliates of the
Company (it being understood that for purposes of this sentence, a director of
the Company shall not be deemed an affiliate of the Company solely as a result
of his status as a director of the Company), Parent or any of their respective
subsidiaries (the "Independent Directors"); and provided further, that, in such
-------- -------
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever the remaining Independent Director may designate a person to
fill such vacancy who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors may designate two persons to fill such vacancies who shall not be
officers or affiliates of the Parent or any of its subsidiaries (other than the
Company), and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Subject to applicable law, the Company shall
promptly take all action requested by Parent necessary to effect any such
election, including mailing to its shareholders and warrantholders the
information required by Section 14(f) of the Exchange Act and Rule 14(f)-1
promulgated thereunder (or, at Parent's request, furnishing such information to
Parent for inclusion in the Offer Documents initially filed with the SEC and
distributed to the stockholders and warrantholders of the Company) as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors. Each of Parent and Purchaser shall furnish to the Company, and be
solely responsible for, any information with respect to itself and its nominees,
directors and affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.
-6-
<PAGE>
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors and prior to the
Effective Time, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder, any waiver of any material
condition to the Company's obligations hereunder or any of the Company's rights
hereunder or other material action by the Company hereunder may be effected only
by the action of a majority of the Independent Directors of the Company, which
action shall be deemed to constitute the action of any committee specifically
designated by the Board of Directors of the Company to approve the actions
contemplated hereby and the full Board of Directors of the Company; provided
--------
that, if there shall be no Independent Directors, such actions may be effected
- ----
by majority vote of the entire Board of Directors of the Company, except that no
such action shall amend the terms of this Agreement or modify the terms of the
Offer or the Merger in a manner materially adverse to the holders of Securities.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
----------
hereof, and in accordance with the relevant provisions of the DGCL, Purchaser
shall be merged with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII. Following
the Merger, the Company shall continue as the surviving corporation (the
"Surviving Corporation") under the name "Lone Star Industries, Inc." and shall
continue its existence under the laws of the State of Delaware, and the separate
corporate existence of Purchaser shall cease. At the election of Parent, any
direct or indirect wholly owned subsidiary of Parent may be substituted for
Purchaser as a constituent corporation in the Merger. Notwithstanding the
foregoing, Parent may elect at any time prior to the meeting of shareholders of
the Company to consider approval of the Merger and this Agreement (the
"Shareholder Meeting") is first given to the Company's shareholders that instead
of merging Purchaser into the Company as hereinabove provided, to merge the
Company into Purchaser or another direct or indirect wholly owned subsidiary of
Parent. In such event the parties shall execute an appropriate ministerial
amendment to this Agreement in order to reflect the foregoing and to provide
that Purchaser or such other subsidiary of Parent shall be the Surviving
Corporation and shall continue under the name "Lone Star Industries, Inc." In
addition, in such event, assuming Purchaser, Parent or any other subsidiary of
Parent meets the requirements of Section 1504(a)(2) of the Internal Revenue Code
of 1986, as amended (the "Code"), at Parent's election, the Company shall in
connection with the Merger adopt a plan of liquidation under Section 332 of the
Code in form and substance reasonably satisfactory to Parent (a "Plan of
Liquidation"). None of the Company's, Parent's or Purchaser's representations,
warranties or covenants shall be affected by whether the Company or Purchaser is
the Surviving Corporation in the Merger.
Section 2.2 Effective Time. As soon as practicable after the
--------------
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of
-7-
<PAGE>
State of the State of Delaware (the "Delaware Secretary"), in such form as
required by and executed in accordance with the relevant provisions of the DGCL
(the date and time of the filing of the Certificate of Merger with the Delaware
Secretary (or such later time as is specified in the Certificate of Merger)
being the "Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4 Certificate of Incorporation; Bylaws. (a) At the Effective
------------------------------------
Time and without any further action on the part of the Company and Purchaser,
the Certificate of Incorporation of Purchaser (the "Certificate of
Incorporation"), as in effect immediately prior to the Effective Time until
thereafter further amended as provided therein and under the DGCL, shall be the
certificate of incorporation of the Surviving Corporation following the Merger.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the Bylaws of Purchaser shall be the Bylaws of the
Surviving Corporation and thereafter may be amended or repealed in accordance
with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
Section 2.5 Directors and Officers. The directors of Purchaser
----------------------
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 2.6 Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(i) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
(ii) Each Share held in the treasury of the Company and each
Share owned by Purchaser or any direct or indirect subsidiary of the
Company, in each case immediately prior to the Effective Time, shall be
cancelled and retired without any conversion thereof and no payment or
distribution shall be made with respect thereto.
-8-
<PAGE>
(iii) Each issued and outstanding Share (other than Shares
cancelled pursuant to Section 2.6(ii) and any Dissenting Shares (as defined
in Section 2.7(a))) shall be converted into the right to receive $50.00 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such share in the
manner provided in Section 2.8, less any required withholding taxes.
(iv) Each Warrant issued and outstanding immediately prior to
the Effective Time (other than Warrants held in the treasury of the
Company, which shall be cancelled) shall remain outstanding following, and
be unaffected by, the Merger, except that, to the extent provided in
Section 10.5 of the Warrant Agreement, from and after the Effective Time
each holder of Warrants shall have the right to obtain upon the exercise of
each Warrant, in lieu of each share of Company Common Stock theretofore
issuable upon exercise of such Warrant, the Merger Consideration without
interest thereon, net to the holder in cash.
Section 2.7 Dissenting Shares. (a) Notwithstanding anything in this
-----------------
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have not
voted such Shares in favor of the Merger (or consented thereto in writing), who
shall have delivered a written objection to the Merger and a demand for
appraisal of such Shares in accordance with Section 262 of the DGCL (insofar as
such Section is applicable to the Merger and provides for appraisal rights with
respect thereto) and who shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL (the "Dissenting Shares"), shall not be converted into the right to receive
the Merger Consideration, but shall instead entitle the holder thereof to
receive that consideration determined pursuant to Section 262 of the DGCL;
provided, however, that if such holder shall have failed to perfect or shall
- -------- -------
have effectively withdrawn such holder's right to appraisal and payment under
the DGCL, such holder's Shares shall thereupon be deemed to have been converted,
at the Effective Time, into the right to receive the Merger Consideration,
without any interest thereon. The Company represents and warrants that the
Warrants shall not entitle holders thereof to appraisal rights pursuant to the
DGCL in connection with the Merger.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to the applicable provisions of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands for appraisal or offer
to settle or settle any such demands.
Section 2.8 Surrender of Shares. (a) Prior to the mailing of the Proxy
-------------------
Statement, Parent shall appoint a bank or trust company which is reasonably
satisfactory to the Company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration. Prior to
- 9 -
<PAGE>
the Effective Time, Parent shall deposit, or shall cause to be deposited, with
the Paying Agent for the benefit of former holders of Shares sufficient funds to
make all payments pursuant to this Section 2.8. Such funds shall be invested by
the Paying Agent as directed by the Surviving Corporation. Any net profit
resulting from, or interest or income produced by, such investments will be
payable to the Surviving Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
aggregate amount of Merger Consideration into which the number of Shares
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. If any Merger Consideration is
to be remitted to a person whose name is other than that in which the
Certificate for Shares surrendered for exchange is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form for transfer,
and that the person requesting such exchange shall have paid any transfer and/or
other taxes required by reason of the remittance of Merger Consideration to a
person whose name is other than that of the registered holder of the Certificate
surrendered, or the person requesting such exchange shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. No interest shall be paid or accrued, upon the surrender
of the Certificates, for the benefit of holders of the Certificates on any
Merger Consideration.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) and only as general creditors thereof for payment of their
claim for Merger Consideration to which such holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificates
representing Shares shall not have been surrendered prior to six months after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any governmental entity), any such cash shall, to the
extent permitted by
- 10 -
<PAGE>
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of Shares such amounts as Parent (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under the Code
(as defined herein), or any provision of any applicable state, local or foreign
law, rule or regulation. To the extent that amounts are so withheld by Parent
and paid by Parent to the applicable taxing authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of Shares in respect of which such deduction and withholding was
made by Parent.
Section 2.9 No Further Transfer or Ownership Rights. After the Effective
---------------------------------------
Time, there shall be no further transfer on the records of the Company (or the
Surviving Corporation) or its transfer agent of certificates representing Shares
which have been converted pursuant to this Agreement into the right to receive
Merger Consideration, and if such certificates are presented to the Company for
transfer, they shall be cancelled against delivery of Merger Consideration. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law. All Merger Consideration paid upon the surrender
for exchange of Certificates representing Shares in accordance with the terms of
this Article II shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the Shares exchanged for Merger
Consideration theretofore represented by such Certificates.
Section 2.10 Treatment of Options. Prior to the date of this Agreement,
--------------------
the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary to provide that (A) effective on the date of this Agreement, no
further grants shall be made under the Company's Directors Stock Option Plan,
dated July 1, 1996 (the "Directors Plan"), the Company's Management Stock Option
Plan, dated April 14, 1994 (the "Management Plan") or the Company's 1996 Long
Term Incentive Plan (the "1996 Plan") (collectively, the "Company Stock Option
Plans"), (B) effective at the Effective Time, each outstanding stock option,
stock appreciation right (an "SAR"), or any other award providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary (each an "Option") heretofore granted under any of the
Company's Stock Option Plans, whether or not then vested or exercisable, shall,
at the Effective Time, be cancelled, and each holder thereof (all of whom are
listed in Section 2.10 of the Company Disclosure Schedule) shall be entitled to
-----------------------------------------------
receive a payment in cash from the Company (which amount shall be subject to any
applicable withholding taxes and shall be paid without interest, the "Cash
Payment"), upon cancellation, equal to the product of (x) the total number of
Shares subject or related to such Option, whether or not then vested or
exercisable, and (y) the excess, if any, of the Merger Consideration over the
exercise price or purchase price, as the case may be, per Share subject or
related to such Option, each such Cash Payment to be paid to each holder of an
outstanding Option upon cancellation. Except as specifically set forth in
Section 6.8(e), the
- 11 -
<PAGE>
Company Stock Option Plans (and any Benefit Plan or other plan, program or
arrangement) providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary shall terminate as
of the Effective Time. Within 5 business days following the date of this
Agreement, the Company will have obtained the consent of each of the holders of
the Options as shall be necessary to effectuate the transactions contemplated by
this Section 2.10. Notwithstanding anything to the contrary contained in this
Agreement, payment shall, at Parent's request, be withheld in respect of any
Option until all necessary consents are obtained, and in any event all such
consents, if any, must be obtained prior to Purchaser's acceptance for payment
of any Securities pursuant to the Offer.
Section 2.11 Closing. Upon the terms and subject to the conditions
-------
hereof, as soon as practicable after consummation of the Offer (and in any event
within two business days after the satisfaction or waiver of the conditions set
forth in Section 7.1), and to the extent required by the DGCL after the vote of
the shareholders of the Company in favor of the approval of the Merger and this
Agreement has been obtained, the Company and Purchaser (or Parent if
appropriate) shall execute and file with the Delaware Secretary the Certificate
of Merger, and the parties shall take all such other and further actions as may
be required by law to make the Merger effective. Prior to the filing referred to
in this Section 2.11, a closing (the "Closing") will be held at the offices of
Dechert Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street,
Philadelphia, PA 19103-2793 (or such other place as the parties may agree) for
the purpose of confirming all of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization and Qualification.
------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority and possesses all governmental franchises and
Permits (as defined herein) necessary to enable it to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted,
except where the failure to possess such franchises and Permits has not had and
could not be reasonably expected to have a Material Adverse Effect on the
Company. The Company is duly qualified as a foreign corporation or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed or in good standing, individually or in the aggregate, has
not had and could not reasonably be expected to have a Material Adverse Effect
on the Company.
(b) The only subsidiaries of the Company are those set forth on
Section 3.1(b) of the Company Disclosure Schedule. None of such subsidiaries is
- -------------------------------------------------
a "Significant Subsidiary"
- 12 -
<PAGE>
within the meaning of Rule 1-02 of Regulation S-X of the SEC. Each subsidiary of
the Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority and possesses all governmental
franchises and Permits necessary to enable it to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted,
except where the failure to possess such franchises and Permits has not had and
could not be reasonably expected to have a Material Adverse Effect on the
Company. Each subsidiary of the Company is duly qualified as a foreign
corporation or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed or in good standing, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company.
(c) All of the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and non-assessable and,
except as set forth in Section 3.1(b) of the Company Disclosure Schedule, are
-------------------------------------------------
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another such wholly owned subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, rights of first refusal,
"tag" or "drag" along rights, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for the capital stock of its
subsidiaries and ownership of 25% of the KC Joint Venture (as hereafter
defined), the Company does not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, limited liability
company, joint venture or other entity. The Company has delivered to Parent
complete and correct copies of its Amended and Restated Certificate of
Incorporation, as amended, and Amended and Restated Bylaws.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 75,000,000
Shares. All of the issued and outstanding Shares have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to
preemptive rights. As of September 1, 1999, 19,296,793 Shares were issued and
outstanding, 5,666,582 Shares were reserved for issuance pursuant to outstanding
Warrants issued (each Warrant representing the right to purchase two Shares at
an exercise price of $18.75 per Warrant), 72,000 Shares were reserved for
issuance pursuant to outstanding Options issued under the Directors Plan, and
238,500 Shares were reserved for issuance pursuant to outstanding Options issued
under the Management Plan. Such Shares reserved for issuance under the Company
Stock Option Plans have not been issued and will not be issued prior to the
Effective Time, and no commitment has been or will be made for their issuance,
other than under the Options described in the preceding sentence and issued and
outstanding under the Company Stock Option Plans as of the date of this
Agreement. Except as otherwise provided in Section 2.10 of this Agreement, at
the Effective Time, each Option shall be cancelled and the holder thereof shall
not be entitled to receive any consideration therefor other than the cash
payments provided by Section 2.10 of this Agreement. Section 3.2(a) of the
---------------------
Company Disclosure Schedule sets forth the exercise prices and number of Shares
- ---------------------------
in respect of
- 13 -
<PAGE>
all outstanding Options, under the Company Stock Option Plans and no option or
SAR has been granted under the Company's 1996 Long Term Incentive Plan (the
"1996 Plan"). There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of the
Company may vote ("Voting Company Debt"). Except as set forth above or in
-----
Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding
- --------------------------------------------------
securities, options, warrants, calls, rights, convertible or exchangeable
securities, "phantom" stock rights, SARs, stock-based performance units,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is 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 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, unit, commitment, agreement,
arrangement or undertaking. There are not any outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire, or providing preemptive or, except as set forth in
Section 3.2(a) of the Company Disclosure Schedule, registration rights with
- -------------------------------------------------
respect to, any shares of, or any outstanding options, warrants or rights of any
kind to acquire any shares of, or any outstanding securities that are
convertible into or exchangeable for any shares of, capital stock of the Company
or any of its subsidiaries. The Company and its subsidiaries do not have
outstanding any loans to any person in respect of the purchase of securities
issued by the Company and its subsidiaries.
(b) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or any of
its subsidiaries or, except as set forth in Section 3.2(b) of the Company
-----------------------------
Disclosure Schedule, with respect to the registration of the offering, sale or
- -------------------
delivery of any shares of capital stock of the Company or any of its
subsidiaries under the Securities Act of 1933, as amended (the "Securities
Act").
Section 3.3 Authority Relative to this Agreement. (a) The Company has
------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by
the Company prior to or at the Effective Time, to perform its obligations
hereunder and thereunder, and to consummate the Transactions (subject to the
Company Shareholder Approval (as defined herein) with respect to the Merger).
The execution and delivery of this Agreement and each instrument required hereby
to be executed and delivered by the Company prior to or at the Effective Time
and the performance of its obligations hereunder and thereunder and the
consummation by the Company of the Transactions have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the Transactions (other than the Company Shareholder Approval
and the filing and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly and validly executed and delivered by
the Company, and, assuming
- 14 -
<PAGE>
this Agreement constitutes a valid and binding obligation of Parent and
Purchaser, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The only vote of holders of any class or series of capital
stock of the Company or any of its subsidiaries necessary to adopt or approve
this Agreement and the Merger is the adoption of this Agreement by the holders
of a majority of the outstanding Shares (the "Company Shareholder Approval"),
subject to Section 6.9(c). The affirmative vote of the holders of any capital
stock or other securities of the Company or any of its subsidiaries, or any of
them, is not necessary to consummate the Offer or any Transaction other than as
set forth in the preceding sentence.
Section 3.4 Absence of Certain Changes. Except as specifically disclosed
--------------------------
in the Company's filings and reports under the Exchange Act filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in Section 3.4 of the Company Disclosure Schedule,
----------------------------------------------
since December 31, 1998, the Company and its subsidiaries have conducted their
business only in the ordinary course, and during such period there has not been
any event, change, effect or development that, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect on the
Company and the Company and its subsidiaries are not aware of any event, change,
effect or development which may reasonably be expected to occur or exist that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company. Except as disclosed in the Filed Company SEC Documents or as set forth
in Section 3.4 of the Company Disclosure Schedule, since December 31, 1998 there
----------------------------------------------
has not been (a) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company or any
redemption or other acquisition by the Company of any capital stock of the
Company; (b) any damage, destruction or loss, whether or not covered by
insurance, that, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect on the Company; or (c) any change
in accounting methods, principles or practices by the Company materially
affecting the consolidated assets, liabilities, results of operations or
business of the Company, except insofar as may have been required by a change in
generally accepted accounting principles.
Section 3.5 Reports. (a) Since January 1, 1998, the Company has timely
-------
filed all required forms, reports and documents with the SEC required to be
filed by it pursuant to the federal securities laws and the SEC rules and
regulations thereunder (collectively, the "Company SEC Documents"), all of which
have complied as of their respective filing dates in all material respects with
all applicable requirements of the Securities Act and the Exchange Act, and the
rules promulgated thereunder. None of such forms, reports or documents at the
time filed 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. The financial statements of the Company included in the Company
SEC Documents (including the notes thereto) at the time filed complied as to
form in all material respects with applicable accounting requirements and the
published rules and
- 15 -
<PAGE>
regulations of the SEC with respect thereto, were 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 in all material respects 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 (and include, in the case of any unaudited interim financial statements,
reasonable accruals for normal year-end adjustments). No subsidiaries of the
Company are required to file periodic reports with the SEC under the Exchange
Act.
(b) To the knowledge of the Company, the financial statements for
the KC Joint Venture for the year ended December 31, 1998 and six months ended
June 30, 1999 previously provided to Parent, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the financial position of the KC Joint Venture as of the date
thereof and the results of its operations and cash flows for the periods then
ended except where any such failure to comply with the foregoing, individually
or in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company. To the knowledge of the Company, since
the date of the June 30, 1999 financial statements, there has been no material
adverse change in the liabilities of the KC Joint Venture other than in the
ordinary course of its businesses. For purposes of this Section 3.5(b), the
knowledge of the Company shall be solely the knowledge of members of the KC
Joint Venture Management Committee appointed by the Company under Article VIII
of the KC Joint Venture Partnership Agreement (as hereafter defined).
(c) Since January 1, 1998, the Company and its subsidiaries have
filed all reports required to be filed with any Governmental Entity (as
hereafter defined) other than the SEC, including state securities
administrators, except where the failure to file any such reports of the Company
and its subsidiaries, individually or in the aggregate, has not had and could
not reasonably be expected to have a Material Adverse Effect on the Company.
Such reports of the Company and its subsidiaries, including all those filed
after the date of this Agreement and prior to the Effective Time, were prepared
in accordance with the requirements of applicable law except where the failure
to prepare any such reports in accordance with the requirements of applicable
law, individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.6 Proxy Statement. If a Proxy Statement is required for the
---------------
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, except that no representation is
made by the Company with respect to information supplied by or on behalf of
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company specifically for
inclusion in the Proxy Statement shall, at the time the Proxy Statement is
mailed or at the time of the Shareholder Meeting or at the Effective Time,
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
- 16 -
<PAGE>
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no representation or
-------- -------
warranty as to any of the information relating to and supplied by or on behalf
of Parent and Purchaser specifically for inclusion in the Proxy Statement. The
letter to shareholders and warrantholders, notice of meeting, proxy statement
and form of proxy, or the information statement, as the case may be, to be
distributed to shareholders and warrantholders in connection with the Merger, or
any schedule required to be filed with the SEC in connection therewith, together
with any amendments or supplements thereto, are collectively referred to herein
as the "Proxy Statement." If, at any time prior to the Effective Time, any event
relating to the Company or any of its affiliates, officers or directors is
discovered by the Company that shall be set forth in a supplement to the Proxy
Statement, the Company will promptly inform Parent and Purchaser and prepare,
file and disseminate such supplement as may be required by applicable law.
Section 3.7 Consents and Approvals; No Violation. Subject to obtaining
------------------------------------
the Company Shareholder Approval (if required under the DGCL) and the taking of
the actions described in the immediately succeeding sentence, the execution,
delivery and performance of this Agreement do not, and the consummation of the
Transactions (including the changes in ownership of Securities or the
composition of the Board of Directors of the Company) and compliance with the
provisions of this Agreement will not, conflict with, or result in any material
violation of, or default (with or without notice or lapse to time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or loss of a material benefit under, or result in the
creation of any Lien upon any of the material properties or material assets of
the Company or any of its subsidiaries under, or result in the termination of,
or require that any consent be obtained or any notice be given with respect to,
(i) the Certificate of Incorporation or Bylaws of the Company or the comparable
charter or organizational documents of any of its subsidiaries, (ii) except as
set forth in Section 3.7 of the Company Disclosure Schedule, any loan or credit
----------------------------------------------
agreement note, bond, mortgage, indenture, lease, license or other agreement,
instrument, Contract or Permit applicable to the Company or any of its
subsidiaries or their respective properties or assets, (iii) any judgment,
order, writ, injunction, decree, law, statute, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their respective
properties or assets or (iv) any licenses to which the Company or any of its
subsidiaries is a party, other than, in the case of clauses (ii), (iii) or (iv),
any such conflicts, violations, defaults, rights, Liens, losses of a material
benefit, consents or notices that, individually or in the aggregate, have not
and could not reasonably be expected to have a Material Adverse Effect on the
Company. 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 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, except for (i) 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"), (ii) the filing with the SEC of (x) the
Schedule 14D-9, (y) if required, the Proxy Statement relating to the approval by
the Company's shareholders of this Agreement and (z) such reports under Section
13(a) of the Exchange Act as
-17-
<PAGE>
may be required in connection with this Agreement and the Transactions
contemplated by this Agreement, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.8 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to the Company Financial Advisor pursuant to the letter
agreement, dated August 6, 1999, no person is entitled to receive any investment
banking, brokerage or finder's fee or commission in connection with this
Agreement or the Transactions based upon arrangements made by or on behalf of
the Company or any of its subsidiaries or by any affiliate of the Company or any
of its subsidiaries. A copy of the above agreement has previously been delivered
to Parent. The estimated fees and expenses incurred and to be incurred by the
Company for counsel, accountants, investment bankers, financial printers,
experts and consultants in connection with this Agreement and the Transactions
are set forth in Section 3.8 of the Company Disclosure Schedule.
----------------------------------------------
Section 3.9 Schedule 14D-9; Offer Documents. Neither the Schedule 14D-9,
-------------------------------
any other document required to be filed by the Company with the SEC in
connection with the Transactions, nor any information supplied by the Company in
writing for inclusion in the Offer Documents or the Schedule 14D-1 shall, at the
respective times the Schedule 14D-9, any other filings by the Company, the
Schedule 14D-1, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9 and any other document
required to be filed by the Company with the SEC in connection with the
Transactions will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by or on behalf of Parent or Purchaser
specifically for inclusion or incorporation by reference therein.
Section 3.10 Litigation. Except as specifically disclosed in the Filed
----------
Company SEC Documents, there is no claim, suit, action or proceeding (including
arbitration proceedings) pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that, individually or in the
aggregate, has or could reasonably be expected to have a Material Adverse Effect
on the Company, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or any of
its subsidiaries which, individually or in the aggregate, has or could
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.11 Absence of Changes in Benefit Plans. Except as disclosed in
-----------------------------------
the Filed Company SEC Documents or Section 3.11 of the Company Disclosure
--------------------------------------
Schedule, there are no
- --------
-18-
<PAGE>
material employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings between either of the Company or any
of its subsidiaries and any current or former employee, officer or director of
either of the Company or any of its subsidiaries or for which either of the
Company or any of its subsidiaries is liable.
Section 3.12 ERISA Compliance. (a) Section 3.12(a) of the Company
----------------
Disclosure Schedule sets forth a complete list of all material "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") including without limitation, all material
"multiemployer pension plans" as defined in Section 3(37) of ERISA), employment
contracts, bonus, pension, profit sharing, deferred compensation, incentive
compensation, excess benefit, stock, stock option, severance, termination pay,
change in control or other material employee benefit plans, programs or
arrangements, including, but not limited to, those providing medical, dental,
vision, disability, life insurance and vacation benefits (other than those
required to be maintained by law), whether written or unwritten, qualified or
nonqualified, funded or unfunded, foreign or domestic currently maintained, or
contributed to, or required to be maintained or contributed to, by the Company
or any other person or entity that, together with the Company, is treated as a
single employer under Section 414 of the Code or Section 4001 of ERISA (each a
"Commonly Controlled Entity") for the benefit of any current or former
employees, officers or directors of the Company or any of its subsidiaries or
with respect to which the Company or any of its subsidiaries has any liability
(collectively, the "Benefit Plans"). As applicable with respect to each Benefit
Plan, the Company has delivered to Purchaser, true and complete copies of each
Benefit Plan, including all amendments thereto, and in the case of an unwritten
Benefit Plan, a written description thereof.
(b) Except as set forth in Section 3.12(b) of the Company Disclosure
Schedule, no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any Commonly Controlled Entity could be subject to any liability under ERISA,
or, with respect to any Benefit Plan, under the Code or any other applicable
law, rule or regulation, domestic or foreign, other than any condition or set of
circumstances that, individually or in the aggregate has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any Commonly Controlled Entity has incurred or would reasonably
be expected to incur any liability in respect of any employee benefit plan
maintained by any person other than the Company or any Commonly Controlled
Entity other than any liability that, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse Effect on
the Company.
(c) The Benefit Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are intended to meet the
tax qualification requirements of Section 401(a) of the Code (each a "Pension
Plan") have been determined by the IRS to satisfy such requirements, and their
related trusts have been determined to be exempt from taxation under Section
501(a) of the Code. All Pension Plans have received current determination
letters from the IRS and no determination letter with respect to any Pension
Plan has been revoked nor, to the best knowledge of the Company is there any
reason for such
-19-
<PAGE>
revocation except where the same has not had and could not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) The funding information set forth in footnote 12 of the financial
statements of the Company for the period ending December 31, 1998 that are
contained in the Filed Company SEC Documents fairly report in all material
respects the information contained therein concerning: (i) the excess of the
liabilities, determined using the accumulated benefit obligation methodology of
Statement of Financial Accounting Standards No. 87, of each Benefit Plan subject
to Title IV of ERISA over the fair market value of such Benefit Plan's assets
and (ii) the actuarially determined present value of any obligation to provide
retiree medical or life insurance benefits determined in accordance with
Statement of Financial Accounting Standard No. 106 and, with respect to any
Benefit Plan providing such benefits, the current fair market value of any
assets held by the Company to satisfy such liabilities (including without
limitation any amounts held in one or more trusts intended to be qualified under
Section 501(c)(9) of the Code). The present value of any unfunded benefits
payable under those Benefit Plans identified on Section 3.12(d) of the Company
------------------------------
Disclosure Schedule determined using reasonable actuarial methods and
- -------------------
assumptions does not exceed the amount set forth on Section 3.12(d) of the
----------------------
Company Disclosure Schedule.
- ---------------------------
(e) Multiemployer Plans.
(i) Section 3.12(e)(i) of the Company Disclosure Schedule lists
each Benefit Plan that is a multiemployer pension plan.
(ii) All required contributions, withdrawal liability payments
or other payments of any type that the Company or any ERISA Affiliate have
been obligated to make to any multiemployer pension plan have been duly and
timely made. Any withdrawal liability incurred with respect to any
multiemployer pension plan has been fully paid as of the date hereof.
(iii) Neither the Company nor any Commonly Controlled Entity has
undertaken any course of action that could reasonably be expected to lead
to a complete or partial withdrawal from any multiemployer pension plan.
(f) Except as set forth on Section 3.12(f) of the Company Disclosure
-----------------------------------------
Schedule, the execution and delivery of this Agreement do not, and the
- --------
consummation of the Transactions will not (i) require the Company, any Commonly
Controlled Entity or any of the Company's subsidiaries to pay greater
compensation or make a larger contribution to, or pay greater benefits or
accelerate payment or vesting of a benefit under, any Benefit Plan or any other
program, agreement, policy or arrangement or (ii) create or give rise to any
additional vested rights or service credits under any Benefit Plan or any other
program, agreement, policy or arrangement.
(g) Except as set forth in Section 3.12(g) of the Company Disclosure
-----------------------------------------
Schedule, no Benefit Plan provides benefits, including without limitation, death
- --------
or medical
-20-
<PAGE>
benefits, beyond termination of employment or retirement other than (A) coverage
mandated by law or (B) death or retirement benefits under a Benefit Plan
qualified under Section 401(a) of the Code. Neither the Company nor any Commonly
Controlled Entity or any of the Company's subsidiaries is obligated (whether or
not in writing) to provide any person with life, medical, dental or disability
benefits for any period of time beyond retirement or termination of employment,
other than as set forth in Section 3.12(g) of the Company Disclosure Schedule or
as required by the provisions of Sections 601 through 608 of ERISA and Section
4980B of the Code.
(h) With respect to any Benefit Plan that is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA), (i) except as set forth in
Section 3.12(h) of the Company Disclosure Schedule, no such Benefit Plan is
funded through a "welfare benefit fund", as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a "group health plan",
as such term is defined in Section 5000(b)(l) of the Code, complies in all
material respects with the applicable requirements of Sections 601 through 608
of ERISA and Section 4980B(f) of the Code, and (iii) except as set forth in
Section 3.12(h) of the Company Disclosure Schedule, each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the Company or any Commonly
Controlled Entity or any of the Company's subsidiaries on or at any time after
the consummation of the Offer.
Section 3.13 Taxes. (a) (i) All federal income Tax Returns and all
-----
other material Tax Returns (as defined herein) that are required to be filed by
or with respect to the Company or any of its subsidiaries have been timely
filed, and all such Tax Returns are true, complete and accurate in all material
respects and correctly reflect the income, or other measure of Tax (as defined
herein), required to be shown thereon in all material respects, (ii) all Taxes
shown as due on such returns have been paid in full, and (iii) the most recent
financial statements contained in the Filed Company SEC Documents reflect an
adequate reserve for all Taxes of the Company and its subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure
-----------------------------------------
Schedule, no material Tax Return of the Company or any of its subsidiaries is
- --------
under audit or examination by any taxing authority, and no written notice of
such an audit or examination has been received by the Company or a subsidiary.
(c) Except as set forth in Section 3.13(c) of the Company Disclosure
-----------------------------------------
Schedule, there is not in force any extension of time with respect to the due
- --------
date for the filing of any Tax Return or any waiver or agreement for any
extension of time for the assessment or payment of any Tax due with respect to
the period covered by any Tax Return.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure
-----------------------------------------
Schedule, there is no material issue raised or claim against the Company or any
- --------
of its subsidiaries for any Taxes, and no assessments, deficiency or adjustment
has been asserted or proposed with
-21-
<PAGE>
respect to any Tax Return and no material issues relating to Taxes were raised
in writing by a taxing authority in a completed audit or examination that can
reasonably be expected to arise in a later taxable period.
(e) Except as set forth in Section 3.13(e) of the Company Disclosure
-----------------------------------------
Schedule, since January 1, 1993, none of the Company and its subsidiaries has
- --------
been a member of an affiliated group filing a consolidated federal income Tax
Return other than the affiliated group of which the Company is the common parent
corporation.
(f) There are no material Liens for Taxes on the assets of the
Company or any of its subsidiaries other than Liens for Taxes not yet due and
payable.
(g) Except as set forth in Section 3.13(g) of the Company Disclosure
-----------------------------------------
Schedule, neither the Company nor any of its subsidiaries is bound by any
- --------
material tax sharing, tax indemnity or similar agreement with respect to Taxes.
(h) No record owner of the Company's Common Stock is a non-resident
alien individual or foreign corporation (within the meaning of Section 897(a)(1)
of the Code) that has held more than 5% of the Company's Common Stock at any
time during the five-year period ending on the date of this Agreement.
As used herein, "Tax Returns" shall mean all material returns and
reports of or with respect to any Tax which are required to be filed by or with
respect to the Company or any of its subsidiaries other than returns or reports
of or with respect to Benefit Plans, and "Taxes" shall mean (i) all taxes,
charges, imposts, tariffs, fees, levies or other similar assessments or
liabilities, including income taxes, ad valorem taxes, excise taxes, withholding
taxes, stamp taxes or other taxes of or with respect to gross receipts,
premiums, real property, personal property, windfall profits, sales, use,
transfers, licensing, employment, payroll and franchises imposed by or under any
statute, law, rule or regulation, and such terms shall include any interest,
fines, penalties, assessments or additions to tax resulting from, attributable
to or incurred in connection with any such tax or any contest or dispute
thereof; (ii) liability of the Company or any fiduciary for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, combined consolidated or unitary group for any taxable period; and
(iii) liability of the Company or any subsidiary for the payment of any amounts
of the type described in clauses (i) or (ii) as a result of any express or
implied obligation to indemnify any other person.
Section 3.14 No Excess Parachute Payments; Termination Payments; Section
-----------------------------------------------------------
162(m) of the Code. Except pursuant to the agreements listed in Section 3.14 of
- ------------------ ---------------
the Company Disclosure Schedule, any amount that could be received (whether in
- -------------------------------
cash or property or the vesting of property) as a result of any of the
Transactions by any employee, officer or director of either of the Company or
any of their affiliates who is a "disqualified individual" (as is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan would
not be characterized as an "excess parachute payment" (as is defined in Section
280G(b)(1) of the Code). Except pursuant to the agreements listed in Section
-------
3.14 of the Company Disclosure
- ------------------------------
-22-
<PAGE>
Schedule, there are no payments that the Company or any of its subsidiaries, or
- --------
the Surviving Corporation is or would be required to make to any of the
Company's current or former employees or to any third party which payment is
contingent upon a change of control of the Company or any of its subsidiaries or
payable as a result of the Transactions, including, without limitation, the
termination of any of the Company's or any of its subsidiaries' employees after
the Effective Time. 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 with respect to any Options referred to
in Section 2.10 of this Agreement.
Section 3.15 Compliance with Applicable Laws. Except for any of the
-------------------------------
following which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and except as
disclosed on Section 3.15(a) of the Company Disclosure Schedule:
--------------------------------------------------
(a) the Company and its subsidiaries has in effect all Federal,
state, local and foreign governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits (including Environmental Permits
(as defined herein)) and rights ("Permits") and all patents, trademarks,
tradenames, service marks, copyright, know-how, processes and all agreements and
other rights with respect to intellectual property ("Intellectual Property")
necessary for it to own, lease or operate its properties and assets and to carry
on its business as now conducted, there has occurred no default under any such
Permit and, any such patents, trademarks and copyrights owned by the Company are
valid and enforceable and do not infringe on the rights of any person.
"Environmental Permit" means any permit, license, approval or other
authorization issued under any applicable law, regulation and other requirement
of any country, state, municipality or other subdivision thereof relating to
pollution or protection of health or the environment, including laws,
regulations or other requirements governing discharges, releases of Hazardous
Materials into ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials;
(b) each of the Company and its subsidiaries is in compliance with
all applicable Environmental Laws (as hereafter defined);
(c) each of the Company and its subsidiaries and their respective
properties, assets, businesses and operations is, and has been, and each of the
Company's former subsidiaries, while subsidiaries of the Company and their
respective properties, assets, businesses and operations, was, in compliance
with all applicable Environmental Laws (as defined herein) and Environmental
Permits. The term "Environmental Laws" means any federal, state, local or
foreign statute, code, ordinance, rule, regulation, written policy or guideline,
judgment, order, writ, decree, or injunction, including the requirement to
register underground storage tanks, relating to: (i) emissions, discharges,
releases or threatened releases of Hazardous Material (as defined herein) into
the environment, including, without limitation, into ambient air, soil,
sediments, land surface or subsurface, buildings or facilities, surface water,
groundwater, publicly-owned treatment works, septic systems or land; or (ii) the
generation, treatment, storage,
-23-
<PAGE>
recycling, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material; including without limitation, the following statutes, their
implementing regulations and any state corollaries: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
------
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
------
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
------
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Clean
------
Water Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
------
Section 7401 et seq.;
------
(d) during the period of ownership or operation by the Company and
its subsidiaries of any of their respective current or previously-owned or
operated properties, to the Company's knowledge there has been no Release (as
defined herein) of Hazardous Material in, on, under, from or affecting such
properties, any surrounding site or any off-site location. Prior to the period
of ownership or operation by the Company and its subsidiaries of any of their
respective current or previously-owned or operated properties, to the Company's
knowledge there were no releases of Hazardous Material in, on, under or
affecting any such property, any surrounding site or any off-site location,
"Hazardous Materials" means (l) hazardous materials, pollutants or contaminants,
medical, hazardous or infectious wastes, hazardous waste constituents, hazardous
chemicals, hazardous or toxic pollutants, and hazardous or toxic substances as
those terms are defined in or regulated by any Environmental Law, (2) petroleum,
including crude oil and any fractions thereof, (3) natural gas, synthetic gas
and any mixtures thereof, (4) radioactive materials including, without
limitation, source byproduct or special nuclear materials and (5) pesticides.
"Releases" means spills, leaks, discharges, disposal, pumping, pouring,
emissions, injection, emptying, leaching, dumping or allowing to escape; and
(e) (i) to the Company's knowledge, the Company and its subsidiaries
and their respective properties, assets, businesses and operations are not
subject to any Environmental Claims (direct or contingent) or Environmental
Liabilities (as such terms are defined herein) arising from or based upon any
act, omission, event, condition or circumstance occurring or existing on or
prior to the date hereof or for which the Company and its subsidiaries are
responsible, including without limitation, any such Environmental Claims or
Environmental Liabilities arising from or based upon the ownership or operation
of assets, businesses or properties of the Company or any subsidiary or their
respective predecessors, and (ii) neither the Company nor any of its
subsidiaries has received any notice of any violation of any Environmental Law
or Environmental Permit or any Environmental Claim in connection with their
respective assets, properties, businesses or operations, or, in each case, those
of their respective predecessors. The term "Environmental Claim" means any third
party (including governmental agencies, regulatory agencies, employees or other
private parties) action, lawsuit, claim, investigation proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability for (i)
noise; (ii) pollution or contamination of the air, surface water, ground water,
land or structure; (iii) solid (including hazardous, waste), gaseous or liquid
waste (including hazardous waste) generation, handling, treatment, storage,
disposal or transportation; (iv) exposure to hazardous or toxic substances; (v)
the safety or health of employees; or (vi) the manufacture,
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<PAGE>
processing, distribution in commerce, use, or storage of chemical or other
Hazardous Materials. An "Environmental Claim" includes, but is not limited, to,
a common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit of the Company or any of its subsidiaries, or to adopt or
amend a regulation to the extent that such a proceeding attempts to redress
violations of such an Environmental Permit as alleged by a federal, state or
local executive, legislative, judicial, regulatory or administrative agency,
board or authority. The term "Environmental Liabilities" includes all costs
arising from any Environmental Claim or violation or alleged violation or
circumstance or condition which would give rise to a violation or liability
under any Environmental Permit or Environmental Law under any theory of
recovery, at law or in equity, and whether based on negligence, strict liability
or otherwise, including but not limited to: remedial, removal, response,
abatement, investigative, monitoring, personal injury and damage to property,
and any other related costs, expenses, losses, damages, penalties, fines,
liabilities and obligations, including reasonable attorney's fees and court
costs.
Section 3.16 State Takeover Statutes. The Company has taken all action
-----------------------
necessary to render Section 203 of the DGCL inapplicable to Parent, Purchaser
and their respective affiliates, and to the Offer, the Merger, this Agreement,
and the Tender Agreement, and the other Transactions. No other "fair price,"
"moratorium," "control share acquisition," "business combination," or other
state takeover statute or similar statute or regulation applies or purports to
apply to the Company, Parent, Purchaser, affiliates of Parent or Purchaser, the
Offer, the Merger, this Agreement, and the Tender Agreement or any of the other
Transactions. As a result of the foregoing actions, the only action required to
authorize the Merger is the Company Shareholder Approval and no further action
is required to authorize the other Transactions.
Section 3.17 Contracts. Section 3.17 to the Company Disclosure Schedule
---------- -----------------------------------------------
lists, under the relevant heading, all oral or written contracts, agreements,
guarantees, leases and executory commitments (each a "Contract"), other than
Benefit Plans, agreements disclosed on Section 3.11 to the Company Disclosure
--------------------------------------
Schedule and any Contracts heretofore filed as an exhibit to or described within
- --------
any Filed Company SEC Document, that exist as of the date hereof to which the
Company or any of its subsidiaries is a party or by which it is bound and which
fall within any of the following categories: (a) Contracts (other than for
capital expenditures). not entered into in the ordinary course of the Company's
and its subsidiaries' businesses other than those that individually or in the
aggregate are not material to the business of the Company and its subsidiaries,
taken as a whole, (b) joint venture and partnership agreements (including in
respect of the KC Joint Venture), (c) Contracts containing covenants purporting
to limit the freedom of the Company or any of its subsidiaries to compete in any
line of business in any geographic area or to hire any individual or group of
individuals, (d) Contracts which after the consummation of any of the
Transactions would have the effect of limiting the freedom of Parent or any of
its subsidiaries to compete in any line of business in any geographic area or to
hire any individual or group of individuals, (e) Contracts which contain terms
that restrict or limit the purchasing or distribution relationships of the
Company or its affiliates (including after consummation of any of the
Transactions), Parent or any of its affiliates, or any customer, licensee or
lessee thereof, (f) Contracts relating to any outstanding commitment for capital
expenditures in excess of $1,000,000 (which are not otherwise reflected in the
budget referred to in Section 5.2(n)), (g)
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<PAGE>
indentures, mortgages, promissory notes, loan agreements or guarantees of
borrowed money in excess of $1,000,000 in the aggregate, mortgages on vessels,
letters of credit or other agreements or instruments of the Company or its
subsidiaries or commitments for the borrowing or the lending by the Company of
amounts in excess of $1,000,000 in the aggregate or providing for the creation
of any charge, security interest, encumbrance or lien upon any of the assets of
the Company with an aggregate value in excess of $1,000,000, (h) Contracts
providing for "earn-outs" or other contingent payments by the Company involving
more than $1,000,000 per Contract over the terms of such Contracts, (i)
Contracts associated with off balance sheet financing in excess of $1,000,000 in
the aggregate, including but not limited to arrangements for the sale of
receivables, (j) licenses or similar agreements granting the right to use any
material Intellectual Property which are material to the Company, (k) stock
purchase agreements, asset purchase agreements or other acquisition or
divestiture agreements where the consideration in any individual transaction
exceeds $10,000,000 since January 1, 1996, or (l) any agreement which is
material to the business of the Company and its subsidiaries taken as a whole,
irrespective of amount. All Contracts to which the Company or any subsidiary is
a party or by which it is bound are valid and binding obligations of the Company
or such subsidiary and, to the knowledge of the Company, the valid and binding
obligation of each other party thereto except such Contracts which if not so
valid and binding could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor, to the knowledge of the Company, any other party thereto is in violation of
or in default in respect of, nor has there occurred an event or condition which
with the passage of time or giving of notice (or both) would constitute a
default under or permit the termination of, any such Contract except such
violations or defaults under or terminations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.18 Labor Matters. Except to the extent set forth in Section
------------- -------
3.18 of the Company Disclosure Schedule, (a) no employee of the Company or any
- ---------------------------------------
of its subsidiaries is represented by any union or other labor organization; (b)
there is no material unfair labor practice complaint against the Company or any
of its subsidiaries pending or, to the knowledge of the Company, threatened by
or before the National Labor Relations Board or any other Governmental Entity;
(c) there is no labor strike, or material dispute, slowdown, representation
campaign or work stoppage pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries; (d) no
material grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending and no claim therefor has been asserted against
the Company or its subsidiaries; and (e) neither the Company or any of its
subsidiaries has experienced any material work stoppage since January 1, 1998.
Section 3.19 Title to Properties. (a) The Company has good, valid and
-------------------
marketable title to, or leasehold interests in, its material properties
sufficient to operate such properties and to conduct its business in the
ordinary course and except for any defects in such titles, or any easements,
restrictive covenants or similar encumbrances which, in the aggregate, do not
materially interfere with its ability to conduct its business as currently
conducted.
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<PAGE>
(b) The Company is not a bareboat or demise charterer of vessels
operating in the coastwise trade of the United States. Schedule 3.19 of the
--------------------
Company Disclosure Schedule contains a complete and correct list of the vessels
- ---------------------------
owned by the Company.
Section 3.20 Undisclosed Liabilities. Except as and to the extent
-----------------------
specifically disclosed in the Filed Company SEC Documents or accrued on the June
30, 1999 balance sheet included in the Filed Company SEC Documents, or as set
forth in Section 3.20 of the Company Disclosure Schedule, and except for
-----------------------------------------------
liabilities incurred in the ordinary course of business and otherwise not in
contravention of this Agreement which individually and in the aggregate are not
material, the Company and each of its subsidiaries does not have any liabilities
or obligations of any nature (whether absolute, contingent or otherwise) that
would be required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles other than liabilities or obligations
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
Section 3.21 Opinion of Company Financial Advisor. The Company has
------------------------------------
received the Fairness Opinion, to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by the
Company's stockholders and warrantholders is fair to the Company's stockholders
and warrantholders from a financial point of view, a signed copy of which
opinion has been delivered to Parent, and such opinion has not been amended,
modified or revoked in a manner adverse to Parent or Purchaser. The Company has
been authorized by the Company Financial Advisor to permit the inclusion of the
Fairness Opinion (and, subject to prior review and consent by such Company
Financial Advisor, a reference thereto) in the Offer Documents and in Schedule
14D-9 and the Proxy Statement.
Section 3.22 Insurance. The Company and its subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance (other
than insurance under any Benefit Plans set forth in Section 3.12(a) of the
----------------------
Company Disclosure Schedule) in such amounts, with such deductibles and against
- ---------------------------
such risks and losses as are, in the Company's judgment, reasonable for the
assets and properties of the Company and its subsidiaries and customary in the
Company's industry. As of the date of this Agreement, except as set forth in
Section 3.22 of the Company's Disclosure Schedule, all such policies are in full
- -------------------------------------------------
force and effect, all premiums due and payable thereon have been paid, and no
notice of cancellation or termination has been received with respect to any such
policy.
Section 3.23 Indemnification Claims. Other than as set forth on Section
---------------------- -------
3.23 of the Company Disclosure Schedule, the Company is not aware of any
- ---------------------------------------
indemnification, breach of contract or similar claims by or against the Company
or any of its subsidiaries which are pending or threatened (or which could be
reasonably expected to be made in the future), in each case in excess of
$100,000 in amount, with respect to any acquisition or disposition by the
Company of any assets or businesses.
Section 3.24 Year 2000. The expenses incurred by the Company to become
---------
Year 2000 Compliant have not been material, and issues with respect to Year 2000
Compliance have
-27-
<PAGE>
had no material effect on the Company. Future costs with respect to Year 2000
Compliance are not expected to be material. For purposes of this Agreement,
"Year 2000 Compliant" means the ability to process (including calculate,
compare, sequence, display or store), transmit or receive data or data/time data
from, into and between the twentieth and twenty-first centuries, and the years
1999 and 2000, and leap year calculations without error or malfunction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1 Organization and Qualification. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of Parent and Purchaser is duly qualified as a foreign corporation or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing could not reasonably be expected
to preclude the consummation of the Offer or the Merger.
Section 4.2 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and each instrument required hereby to be executed and delivered
by Parent or Purchaser prior to or at the Effective Time, to perform its
obligations hereunder and thereunder, and to consummate the Transactions. The
execution and delivery by Parent and Purchaser of this Agreement and each
instrument required hereby to be exercised and delivered by Parent or Purchaser
prior to or at the Effective Time and the performance of their respective
obligations hereunder and thereunder, and the consummation by Parent and
Purchaser of the Transactions have been duly and validly authorized by the
respective Boards of Directors (or similar organizational bodies) of Parent and
Purchaser, the Supervisory Board of Parent and the shareholder of Purchaser, and
no other corporate proceedings on the part of Parent or Purchaser are necessary
to authorize this Agreement, or commence the Offer or to consummate the
Transactions (including the Offer) other than filing and recordation of
appropriate merger documents as required by the DGCL or by the German Federal
Cartel Authority and publication after consummation of the Offer of an ad-hoc
disclosure pursuant to Section 15 of the German Securities Trading Act. This
Agreement has been duly and validly executed and delivered by each of Parent and
Purchaser and, assuming this Agreement constitutes a valid and binding
obligation of the Company, this Agreement constitutes a valid and binding
agreement of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms.
Section 4.3 Proxy Statement. None of the information supplied in writing
---------------
by Parent, Purchaser and their respective affiliates specifically for inclusion
in the Proxy Statement, if
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<PAGE>
required, shall, at the time the Proxy Statement is mailed, at the time of the
Shareholder Meeting or at the Effective Time, 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 were made, not misleading; provided, however,
-------- -------
that Parent and Purchaser make no representation or warranty as to any of the
information relating to and supplied by or on behalf of the Company specifically
for inclusion in the Proxy Statement. If, at any time prior to the Effective
Time, any event relating to Parent or any of its affiliates, officers or
directors is discovered by Parent that should be set forth in a supplement to
the Proxy Statement, Parent will promptly inform the Company.
Section 4.4 Consents and Approvals; No Violation. Subject to the taking
------------------------------------
of the actions described in the immediately succeeding sentence, the execution
and delivery of this Agreement do not, and the consummation of the Transactions
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, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
material properties or assets of Parent under (i) the certificate of
incorporation or bylaws (or similar organizational documents) of Parent or
Purchaser, (ii) any loan or credit agreement, note, bond, indenture, lease or
other agreement, instrument or Permit applicable to Parent or Purchaser or their
respective properties or assets, (iii) any judgment, order, writ, injunction,
decree, law, statute, ordinance, rule or regulation applicable to Parent or
Purchaser or their respective properties or assets, other than, in the case of
clause (ii) and (iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not (x) impair in any material
respect the ability of Parent and Purchaser to perform their respective
obligation under this Agreement or (y) prevent or impede the consummation of any
of the Transactions. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
person is required by Parent or Purchaser in connection with the execution and
delivery of this Agreement or the consummation by Parent or Purchaser, as the
case may be, of any of the Transactions, except (A) in connection with the HSR
Act, (B) pursuant to the Securities Act, and the Exchange Act, (C) the filing of
the Certificate of Merger pursuant to the DGCL, (D) such filings and approvals
as may be required under the takeover or securities laws of various states, (E)
the filing of reports with the U.S. Department of Commerce regarding foreign
direct investment in the United States, (F) the filing of documentation with the
United States Coast Guard in connection with the eligibility of vessels owned by
the Company to operate in the coastwise trade of the United States, (G)
publication after consummation of the Offer of an ad-hoc disclosure pursuant to
Section 15 of the German Securities Trading Act, or (H) where the failure to
obtain any such consent, approval, authorization or permit, or to make any such
filing or notification, would not preclude consummation of the Offer or the
Merger or would not otherwise prevent Parent from performing its obligations
under this Agreement or where the requirement to obtain such consent, approval,
authorization or permit, or to make such filing or notification arises from the
regulatory status of the Company or its subsidiaries.
Section 4.5 Financing. Parent will have at each of (i) the time of
---------
acceptance for purchase by Purchaser of Shares pursuant to the Offer and (ii)
the Effective Time, and will make
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<PAGE>
available to Purchaser, the funds necessary to consummate the Offer and the
Merger on the terms contemplated by this Agreement. Purchaser has provided to
the Company true and correct copies of commitments entered into by Parent as of
the date hereof in connection with all required financing for purposes of the
Offer and the Merger.
Section 4.6 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to Morgan Stanley & Co. Incorporated, and excluding financing
fees, no person is entitled to receive any investment banking brokerage or
finder's fee or commission in connection with this Agreement or the Transactions
based upon arrangements may by or on behalf of Parent or Purchaser.
Section 4.7 Schedule 14D-1; Offer Documents. Neither the Schedule 14D-1,
-------------------------------
the Offer Documents nor any information supplied by Parent or Purchaser in
writing for inclusion in the Schedule 14D-9 shall, at the respective times the
Schedule 14D-9, the Schedule 14D-1, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders and warrantholders of the Company, as the case may be, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-1 and the Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent or Purchaser with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business of the Company Pending the Merger. The
-----------------------------------------------------
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use its reasonable efforts to preserve intact its business
organization, maintain its rights and franchises, retain the services of its
respective key employees and maintain its relationships with its respective
customers and suppliers and others having business dealings with it to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time;
-30-
<PAGE>
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain supplies
and inventories in quantities consistent with its customary business practice;
and
(d) use its reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that currently
maintained.
Section 5.2 Prohibited Actions by the Company. Without limiting the
---------------------------------
generality of Section 5.1, except as set forth in Section 5.2 of the Company
--------------------------
Disclosure Schedule, the Company covenants and agrees that, except as expressly
- -------------------
contemplated by this Agreement or otherwise consented to in writing by Parent
(which consent shall not be unreasonably withheld or delayed), from the date of
this Agreement until the Effective Time, it will not do, and will not permit any
of its subsidiaries to do, any of the following:
(a) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) grant any severance or termination pay (other than pursuant to
the severance policy or practice of the Company or its subsidiaries as disclosed
in Section 3.12 of the Company Disclosure Schedule and in effect on the date of
-----------------------------------------------
this Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish, adopt,
enter into or amend in any material respect any collective bargaining agreement
or any Benefit Plan of the Company or any Commonly Controlled Entity; or (iv)
take any action to accelerate any rights or benefits, or make any determinations
not in the ordinary course of business consistent with past practice, under any
collective bargaining agreement or Benefit Plan of the Company or any Commonly
Controlled Entity; provided that the Company may amend the Company Stock Option
-------- ----
Plans to accelerate the vesting of any unvested Options and to permit employees
and directors to tender any shares acquired upon exercise of any Option into the
Offer in accordance with the terms of this Agreement;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for (i) dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the Company
and (ii) regular quarterly cash dividends by the Company consistent with past
practices (including as to declaration, record and payment dates) in no event to
exceed $0.05 per Share per fiscal quarter;
(c) redeem, purchase or otherwise acquire, or offer or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned subsidiaries directly from any wholly owned subsidiary of the
Company in exchange for capital contributions
-31-
<PAGE>
or loans to such subsidiary, or (ii) any purchase, forfeiture or retirement of
shares of Company Common Stock or the Options occurring pursuant to the terms
(as in effect on the date of this Agreement) of any existing Benefit Plan of the
Company or any of its subsidiaries, in a manner otherwise consistent with the
terms of this Agreement);
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in, the
Company or any of its subsidiaries or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for, shares
of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize or propose the
offering, sale, issuance or grant of, any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any Voting Company Debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, SARs or stock-based performance units, other than issuances of shares of
Company Common Stock upon the exercise of the Options and Warrants outstanding
at the date of this Agreement in accordance with the terms thereof (as in effect
on the date of this Agreement);
(f) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets of any
other person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past practice);
(g) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for dispositions of excess
or obsolete assets and sales of inventories in the ordinary course of business
and consistent with past practice;
(h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of December 31, 1998 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may be
required by a change in generally accepted accounting principles;
(j) (i) incur any indebtedness for borrowed money, 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 such indebtedness or debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person
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<PAGE>
or enter into any arrangement having the economic effect of any of the
foregoing, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or any direct
or indirect wholly owned subsidiary of the Company;
(k) 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 the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Filed Company SEC Documents or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice;
(l) settle the terms of any material litigation affecting the Company
or any of its subsidiaries;
(m) make any Tax election except in a manner consistent with past
practice, change any method of accounting for Tax purposes, or settle or
compromise any material Tax liability;
(n) make or agree to make any new capital expenditures which
individually are in excess of $1,000,000 or which in the aggregate are in excess
of $3,000,000 except in accordance with the Company's budget, dated August 31,
1999, previously furnished to Parent; or
(o) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement untrue or incorrect or cause any condition set forth in Annex A to
occur or any condition in Article VII to be unsatisfied.
ARTICLE VI
COVENANTS
Section 6.1 No Solicitation.
---------------
(a) From and after the date hereof until the Effective Time or the
termination of this Agreement in accordance with Section 8.1, the Company and
its subsidiaries shall not, and the Company shall use its reasonable best
efforts to cause their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or the making or
submission of any Acquisition Proposal (as defined herein) or enter into or
maintain or continue discussions or negotiate with any person or group in
furtherance of such inquiries or to obtain or induce any person or group to make
or submit an Acquisition Proposal or agree to or endorse any
-33-
<PAGE>
Acquisition Proposal or assist or participate in, facilitate or knowingly
encourage, any effort or attempt by any other person or group to do or seek any
of the foregoing or authorize any of its officers, directors or employees or any
of its subsidiaries or affiliates or any investment banker, financial advisor,
attorney, accountant or other representative or agent retained by it or any of
its subsidiaries to take any such action; provided, however, that nothing
-------- -------
contained in this Agreement shall prohibit the Company or the Board of Directors
of the Company from, prior to the earlier to occur of payment for the Securities
pursuant to the Offer or adoption of this Agreement by the requisite vote of the
stockholders of the Company, (i) furnishing information to or (ii) entering into
discussions or negotiations with any person or entity that makes an unsolicited
written Acquisition Proposal, if, and only to the extent that (x) in each case
referred to in (i) and (ii) above, the Board of Directors of the Company, with
the advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), determines in good faith that the failure to
do so would result in a breach of the fiduciary duty of the Board of Directors
of the Company to stockholders of the Company under applicable law and (y) in
the case referred to in (ii), the Board of Directors of the Company determines
in good faith that such Acquisition Proposal is reasonably likely to lead to a
Superior Proposal and (z) prior to taking such action the Company (A) delivers
to Parent and Purchaser the notice required pursuant to Section 6.1(c) stating
that it is taking such action and (B) receives from such person or group an
executed confidentiality agreement that is not, in any material respect, less
restrictive (including in respect of confidentiality and standstill
restrictions) as to such person or entity than the Confidentiality Agreement.
(b) Except as expressly permitted by this Section 6.1, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw,
modify or fail to make, or propose to withdraw, modify or fail to make its
approval or recommendation of the Offer or the Merger or of this Agreement, the
Tender Agreement, and the other Transactions, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, (iii) take any action
to render the provisions of any anti-takeover statute, rule or regulation
(including Section 203 of the DGCL) inapplicable to any person (other than
Parent, Purchaser or their affiliates) or group or to any Acquisition Proposal
or redeem the Rights or otherwise modify the Rights Agreement to facilitate any
Acquisition Proposal or purchase of Shares by any Person other than Parent and
Purchaser, or (iv) cause the Company to accept such Acquisition Proposal and/or
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal; provided, however, that prior to the earlier to occur of
-------- -------
acceptance for payment of Shares pursuant to the Offer or adoption of this
Agreement by the requisite vote of the stockholders of the Company, the Board of
Directors of the Company may terminate this Agreement if, and only to the extent
that (A) such Acquisition Proposal is a Superior Proposal, (B) the Board of
Directors of the Company, with the advice of independent legal counsel (who may
be the Company's regularly engaged independent counsel), determines in good
faith that the failure to do so would result in a breach of the fiduciary duty
of the Board of Directors of the Company to the stockholders of the Company
under applicable law, (C) the Company shall, prior to or simultaneously with the
taking of such action, have paid or pay to Parent or Purchaser or their designee
the Termination Fee referred to in Section 8.3, (D) the Company is not in
material breach of this Section 6.1
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<PAGE>
which material breach has resulted in a Superior Proposal, and (E) the Company
shall have complied with its obligations under Section 8.1(d)(ii).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, the Company shall promptly advise Parent of any
request for information or the submission or receipt of any Acquisition
Proposal, or any inquiry with respect to or which could lead to any Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the person making any such request,
Acquisition Proposal or inquiry and its response or responses thereto. The
Company will keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request, Acquisition Proposal or
inquiry. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(d) "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the Transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 15% or more of the assets of the Company and its
subsidiaries, taken as a whole, or of any Material Business (as defined herein)
or of any subsidiary or subsidiaries responsible for a Material Business in a
single transaction or series of related transactions; (iii) any tender offer
(including a self tender offer) or exchange offer that, if consummated, would
result in any person or group beneficially owning more than 15% of the
outstanding shares of any class of equity securities of the Company or its
subsidiaries or the filing of a registration statement under the Securities Act
in connection therewith; (iv) any acquisition of 15% or more of the outstanding
shares of capital stock of the Company or the filing of a registration statement
under the Securities Act in connection therewith or any other acquisition or
disposition the consummation of which would prevent or materially diminish the
benefits to Parent of the Merger; or (v) any public announcement by the Company
or any third party of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing. "Superior Proposal" means
any proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction, for at least a majority of the Fully Diluted Shares,
or at least 51% of the consolidated assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be superior to the
Company's stockholders (taking into account any changes to the terms of this
Agreement and the Offer that have been proposed by Parent in response to such
proposal) and to be more favorable to the Company and the Company's stockholders
(taking into account relevant considerations, including relevant legal,
financial, regulatory and other aspects of such proposal and the third party
making such proposal and the conditions and prospects for completion of such
proposal) than the Offer, the Merger and the other Transactions taken as a
whole. "Material Business" means any business (or the assets needed to carry out
such business) that contributed or represented 15% or more of the net sales, the
net income or the assets (including equity
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securities) of the Company and its subsidiaries taken as a whole, or the
Company's interest in the KC Joint Venture .
(e) Nothing contained in this Section 6.1 shall prohibit the Company
or the Board of Directors of the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if the
Board of Directors of the Company, with the advice of independent legal counsel
(who may be the Company's regularly engaged independent counsel), determines in
good faith that the failure to take such action would result in a breach of the
fiduciary duty of the Board of Directors to the stockholders of the Company
under applicable law; provided that neither the Board of Directors of the
-------- ----
Company nor any committee thereof withdraws or modifies, or proposes to withdraw
or modify, the approval or recommendation of the Board of Directors of the
Company of the Offer or the Merger or approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company and
the Board of Directors of the Company have complied in all material respects
with all the provisions of this Section 6.1.
Section 6.2 Access to Information. Between the date of this Agreement
---------------------
and the Effective Time, the Company shall, and shall cause its subsidiaries to
(a) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full access during
normal business hours and at all other reasonable times to the officers,
employees, agents, properties, (provided that any access for environmental due
diligence shall be limited to conducting an environmental assessment consistent
with ASTM standards and a compliance audit ("Phase I"); and provided further,
that if the results of the Phase I or Purchaser's other due diligence recommends
Phase II investigations including testing and/or sampling of soil, water, air,
building materials or other environmental media, Purchaser may conduct such
reasonable investigations) offices and other facilities of the Company and its
subsidiaries and to their books and records (including all Tax Returns and all
books and records related to Taxes and such returns and including any
information related to any vessels owned or chartered by the Company or
reasonably related to any filings with the United States Coast Guard prepared by
Parent or Purchaser relating to the continued operation of vessels in the
coastwise trade of the United States), (b) permit Parent to make such
inspections as it may require (and the Company shall cooperate with Parent in
any inspections, including, without limitation, environmental due diligence),
and (c) furnish promptly to Parent and its representatives a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws and
such other information concerning the business, properties, contracts, records
and personnel of the Company and its subsidiaries (including financial,
operating and other data and information) in the possession of the Company or
the Company's counsel, accountants or other consultants or agents as may be
reasonably requested, from time to time, by or on behalf of Parent.
Section 6.3 Confidentiality Agreement. The parties agree that the
-------------------------
provisions of the Confidentiality Agreement dated July 8, 1999 between Parent,
Dyckerhoff, Inc., a Delaware corporation, and the Company (the "Confidentiality
Agreement") shall remain binding and in full
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force and effect; provided, however, that any consents from the Company
-------- -------
necessary under the Confidentiality Agreement for Parent and Purchaser to
consummate the Transactions and the Tender Agreement shall be deemed to have
been made and provided that the provisions of the sixth paragraph of the
-------- ----
Confidentiality Agreement shall terminate and be of no further force and effect
after the date of the consummation of the Offer. The parties shall comply with,
and shall cause their respective Representatives (as defined in the
Confidentiality Agreement) to comply with, all of their respective obligations
under the Confidentiality Agreement until Parent or Purchaser purchases at least
a majority of the outstanding Shares pursuant to the Offer, at which time the
Confidentiality Agreement shall terminate and be of no further force and effect.
Section 6.4 Reasonable Best Efforts. (a) Subject to the terms and
-----------------------
conditions herein (including Section 6.1), each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as soon as reasonably practicable the Transactions contemplated by this
Agreement and the Tender Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement and the Tender Agreement, the proper officers and directors of each
party to this Agreement and the Tender Agreement shall take all such necessary
action. Such reasonable best efforts shall include, without limitation, (i)
using such efforts to obtain all necessary consents, approvals or waivers from
third parties and Governmental Entities necessary to the consummation of the
Transactions contemplated by this Agreement and the Tender Agreement and (ii)
opposing vigorously any litigation or administrative proceeding relating to this
Agreement or the Tender Agreement, including, without limitation, promptly
appealing any adverse court or agency order. Notwithstanding the foregoing or
any other provisions contained in this Agreement and the Tender Agreement to the
contrary, (i) neither Parent nor the Company nor any of their respective
affiliates shall be under any obligation of any kind to enter into any
negotiations or to otherwise agree with or litigate against any Governmental
Entity, including but not limited to any governmental or regulatory authority
with jurisdiction over the enforcement of any applicable federal, state, local
and foreign antitrust, competition or other similar laws and (ii) neither Parent
or any of its affiliates shall be under any obligation to otherwise agree with
any Governmental Entity or any other party to sell or otherwise dispose of,
agree to any limitations on the ownership or control of, or hold separate
(through the establishment of a trust or otherwise) particular assets or
categories of assets or businesses of any of the Company, its subsidiaries,
Parent or any of Parent's affiliates. The Company shall give and make all
required notices and reports to the appropriate persons with respect to the
Permits and Environmental Permits that may be necessary for the sale and
purchase of the business and the ownership, operation and use of the assets of
Surviving Corporation by Parent and Purchaser after the Effective Time. Subject
to the other terms of this Agreement, each of the Company, Parent and Purchaser
shall cooperate and use their respective reasonable best efforts to make all
filings, to obtain all actions or nonactions, waivers, Permits and orders of
Governmental Entities necessary to consummate the Transactions contemplated by
this Agreement and the Tender Agreement and to take 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. Each of the parties hereto will furnish
to the other parties such necessary information and
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<PAGE>
reasonable assistance as such other parties may reasonably request in connection
with the foregoing. Parent has advised the Company that if the Company is the
Surviving Corporation in the Merger, Parent may (in its discretion) elect to
merge the Surviving Corporation into another direct or indirect subsidiary of
Parent after the Effective Time, and cause the Company to adopt a Plan of
Liquidation in connection therewith. The Company agrees to use its reasonable
best efforts to accommodate such merger and Plan of Liquidation and not to take
any action prior to the Effective Time which could impair or delay such
transactions. Parent and the Company agree that such merger and Plan of
Liquidation shall not affect the terms of this Agreement, including with respect
to the Offer and the Merger.
(b) The Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Tender Agreement or any of the other Transactions contemplated by the
foregoing and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, this Agreement, the
Tender Agreement or any other Transactions, take all action necessary to ensure
that the Offer, the Merger and the other Transactions, including the
Transactions contemplated by this Agreement and the Tender Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Tender Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger and the other Transactions.
Section 6.5 Indemnification of Directors and Officers.
-----------------------------------------
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Effective Time existing as of the date hereof
in favor of the current or former directors or officers, employees and agents of
the Company and its subsidiaries as provided in their respective certificates of
incorporation, bylaws or agreements listed on Section 3.17 of the Company's
-----------------------------
Disclosure Schedule as in effect on the date hereof shall survive the Merger and
- -------------------
shall continue in full force and effect in accordance with their terms for a
period of six years from the Effective Time. Parent shall cause to be
maintained, if available, for a period of six years from the Effective Time the
Company's current directors' and officers' insurance and indemnification policy
and fiduciary liability policy (the "D&O Insurance") (provided that Parent may
-------- ----
substitute therefor, at its election, policies or financial guarantees with the
same carriers or other reputable and financially sound carriers of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous than the existing D&O Insurance) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who are directors and officers of the Company on the date of this
Agreement (or were prior to the date of this Agreement), so long as the annual
premium to be paid by the Company after the date of this Agreement for such D&O
Insurance during such six-year period would not exceed 200% of the annual
premium as of the date of this Agreement. If, during such six-year period, such
insurance coverage cannot be obtained at all or can only be obtained for an
amount in excess of 200% of the annual premium therefor as of the date of this
Agreement, Parent shall use reasonable best efforts to cause insurance coverage
to be obtained for an amount equal to 200% of the current annual premium
therefor, on terms and
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<PAGE>
conditions substantially similar to the existing D&O Insurance. Set forth in
Section 6.5(a) to the Company Disclosure Schedule is the amount of the annual
- -------------------------------------------------
premium currently paid by the Company for its directors' and officers' liability
insurance.
(b) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made in writing against any present or former
director or officer of the Company based on or arising out of the services of
such person prior to the Effective Time in the capacity of such person as a
director or officer of the Company (and such director or officer shall have
given Parent written notice of such claim or claims within such six year
period), the provisions of subsection (a) of this Section respecting the rights
to indemnify the current or former directors or officers under the certificate
of incorporation and bylaws of the Company and its subsidiaries shall continue
in effect until the final disposition of all such claims.
(c) Notwithstanding anything to the contrary in this Section 6.5,
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
(d) The provisions of this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder and the heirs and representatives of such person.
Section 6.6 Event Notices and Other Actions. (a) From and after the date
-------------------------------
of this Agreement until the Effective Time, the Company shall promptly notify
Parent and Purchaser of (i) the occurrence or nonoccurrence of any event, the
occurrence or nonoccurrence of which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied, (ii) the
Company's failure to comply with any covenant or agreement to be complied with
by it pursuant to this Agreement which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied and (iii)
any representation or warranty made by the Company 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 as to
materiality becoming untrue or inaccurate in any material respect. The Company's
delivery of any notice pursuant to this Section 6.6(a) shall not cure any breach
of any representation or warranty of the Company contained in this Agreement or
otherwise limit or affect the remedies available hereunder to Parent or
Purchaser.
(b) The Company shall not, and shall not permit any of its
subsidiaries to, knowingly take any action or nonaction within its reasonable
control that will, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in this Agreement
that is qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) except as otherwise permitted by Section 6.1 and
subject to Section 6.4(a), any condition to
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<PAGE>
the Offer set forth in Annex A, or any condition to the Merger set forth in
Article VII, not being satisfied.
Section 6.7 Third Party Standstill Agreements. During the period from the
---------------------------------
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill or similar agreement to which the Company or any of its subsidiaries
is a party (other than any involving Parent). Subject to the foregoing, during
such period, the Company agrees to enforce and agrees to permit Parent and
Purchaser to enforce on its behalf and as third party beneficiaries thereof, to
the fullest extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court or other tribunal having jurisdiction. Notwithstanding the foregoing,
nothing in this Section 6.7 is intended to prevent the Company from exercising
its rights under Section 6.1 in accordance with the provisions of such Section.
In addition, the Company hereby waives any rights the Company may have under any
standstill or similar agreements to object to the transfer to Purchaser of all
Securities held by securityholders covered by such standstill or similar
agreements and hereby covenants not to consent to the transfer of any Securities
held by such securityholders to any other person unless (i) the Company has
obtained the specific, prior written consent of Parent with respect to any such
transfer or (ii) this Agreement has been terminated pursuant to Article VIII.
Section 6.8 Employee Stock Options; Employee Plans and Benefits and
-------------------------------------------------------
Employment Contracts.
- --------------------
(a) Executive Agreements and Accrued Benefits. From and after the
-----------------------------------------
Effective Time, the Surviving Corporation agrees to honor in accordance with
their terms (i) all existing employment, change of control agreements and other
arrangements between the Company or any of its subsidiaries and any current or
former officer of the Company or any of its subsidiaries which are specifically
disclosed on Section 6.8(a) of the Company Disclosure Schedule, (ii) with
--------------------------------------------------
respect to all employees, officers and directors of the Company, all benefits or
other amounts earned or accrued through the Effective Time under the Benefit
Plans disclosed in Schedule 3.12(a) of the Company Disclosure Schedule (or not
---------------------------------------------------
required to be disclosed in such schedule) and (iii) the obligations relating to
retiree medical benefits under the agreements identified in Section 6.8(a)(iii)
-------------------
of the Company Disclosure Schedule.
- ----------------------------------
(b) Post-Closing Benefits. For a period of not less than one year
---------------------
following the Effective Time, the Company and the Surviving Corporation, as the
case may be, shall establish or maintain a compensation structure and benefit
plans for employees of the Company (other than its officers and/or directors)
who remain employees of the Surviving Corporation ("Transferred Employees") with
terms that, in the aggregate, are substantially comparable to the compensation
structure and Benefit Plans currently in place for such employees; provided,
that nothing herein shall require Parent, Purchaser, the Company and/or the
Surviving Corporation to have any obligation to (i) include any individual in
any stock option or other equity-based compensation or benefit plan or
arrangement, (ii) include any such Transferred Employee in any
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<PAGE>
benefit plan of Parent or any related entity (other than the Surviving
Corporation) or (iii) provide any individual with benefits resulting from any
change of control of Parent, the Company or the Surviving Corporation that
occurs after the Effective Time but the Company or the Surviving Corporation, as
the case may be, shall honor the Special Severance Plan identified on Section
3.12(a) of the Company Disclosure Schedule. From and after the Effective Time,
for eligibility and vesting purposes (but not for benefit accrual purposes)
under any severance, welfare, pension or other benefit plan or arrangement
sponsored by the Company and/or the Surviving Corporation, as the case may be,
that are made available to Transferred Employees, service with the Company
and/or the Surviving Corporation, as the case may be (whether before or after
the Effective Time) shall be credited as if such services had been rendered to
Parent or any related entity.
(c) Executive Incentive Plan. As soon as administratively feasible
------------------------
following the consummation of the Offer, any bonuses or other incentive
compensation due under the Company's Executive Incentive Plan shall be paid by
the Company to any officer, director or employee of the Company entitled thereto
in accordance with the terms of such Plan. In addition, the Company or
Surviving Corporation, as the case may be, shall make certain bonus payments to
salaried employees to the extent disclosed on Schedule 6.8(c) in respect of the
fiscal year 1999.
(d) Supplemental Executive Retirement Plan. Unless otherwise agreed
--------------------------------------
in writing between the Company and any affected participant prior to the date on
which Securities are first purchased pursuant to the Offer, the Company will
distribute to each such participant the benefit to which he is entitled under
the Supplemental Executive Retirement Plan pursuant to the terms of that Plan.
(e) Directors' Compensation Plans. On the Effective Time, the Company
-----------------------------
shall terminate all plans, programs and/or arrangements providing compensation
and/or benefits to the directors of the Company (the "Directors' Compensation
Plans'"). All benefits accrued under the Directors' Compensation Plans on or
prior to the Effective Time shall be paid to current or former directors in
accordance with the terms of such Plans.
(f) Stock Purchase Plan. Effective on the date of this Agreement, the
-------------------
Company shall amend the Company's Employee Stock Purchase Plan (the "Stock
Purchase Plan") to provide (A) that no individual eligible to participate in the
Stock Purchase Plan will be permitted to increase the rate or level of his or
her participation in the Stock Purchase Plan (including without limitation
changing the amount of his or her contributions to the Stock Purchase Plan or
enrolling to participate in the Stock Purchase Plan following the date of this
Agreement), (B) no further purchases of Securities shall occur pursuant to the
Stock Purchase Plan after the date immediately preceding the date that
Securities are first purchased pursuant to the Offer and (C) effective on the
date that Securities are first purchased pursuant to the Offer, the Stock
Purchase Plan shall terminate.
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<PAGE>
(g) No Right to Employment. Nothing contained in this agreement shall
----------------------
confer upon any employee of the Company, any Commonly Controlled Entity or any
of the Company's subsidiaries any right with respect to employment by the
Parent, the Purchaser or any of the Parent's subsidiaries or affiliates, nor
shall anything herein interfere with the right of Parent, the Purchaser or any
of the Parent's subsidiaries or affiliates to terminate the employment of any
such employee at anytime, with or without cause, or, except as provided in
Sections 6.8(a), (b) and (c), restrict Parent, the Purchaser or any of the
Parent's subsidiaries or affiliates in the exercise of their independent
business judgment in modifying any other terms and conditions of the employment
of any such employee.
Section 6.9 Meeting of the Company's Shareholders.
-------------------------------------
(a) To the extent required by applicable law, the Company shall
promptly after consummation of the Offer take all action necessary in accordance
with the DGCL and its Certificate of Incorporation and Bylaws to convene a
Shareholder Meeting to consider and vote on the Merger and this Agreement. At
the Shareholder Meeting, all of the Shares then owned by Parent, Purchaser or
any other subsidiary of Parent shall be voted to approve the Merger and this
Agreement. The Board of Directors of the Company shall recommend that the
Company's shareholders vote to approve the Merger and this Agreement if such
vote is sought, shall use its best efforts to solicit from shareholders of the
Company proxies in favor of the Merger and shall take all other action in its
judgment necessary and appropriate to secure the vote of shareholders required
by the DGCL to effect the Merger.
(b) Parent and Purchaser shall not, and they shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the Shares acquired pursuant to the Offer or otherwise prior to the Shareholder
Meeting; provided, however, that this Section 6.9(b) shall not apply to the
-------- -------
sale, transfer, assignment, encumbrance or other disposition of any or all such
Shares in transactions involving solely Parent, Purchaser and/or one or more of
their subsidiaries.
(c) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties hereto agree,
at the request of Purchaser, to take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 253 (in lieu of
Section 251) of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the shareholders of the Company.
Section 6.10 Proxy Statement. If required under applicable law, the
---------------
Company and Parent shall prepare the Proxy Statement, file it with the SEC under
the Exchange Act as promptly as practicable after Purchaser purchases Shares
pursuant to the Offer, and use all reasonable efforts to have it cleared by the
SEC. As promptly as practicable after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the shareholders of the
Company as of the record date for the Shareholder Meeting.
Section 6.11 Public Announcements. Parent and the Company shall to the
--------------------
fullest extent practicable consult with each other before issuing any press
release or otherwise making
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<PAGE>
any public statement with respect to the Offer, the Merger and the other
Transactions and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law.
Section 6.12 Shareholder Litigation. The Company shall give Parent the
----------------------
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any of the
Transactions; provided, however, that no such settlement shall be agreed to
-------- -------
without Parent's consent, which consent shall not be unreasonably withheld.
Section 6.13 Post Merger Treatment of Warrants. Following the Effective
---------------------------------
Time and subject to the terms and conditions of the Warrant Agreement, the
Parent will cause the Surviving Corporation to make available, as necessary,
sufficient funds to pay, and will pay, to holders of Warrants, upon the exercise
thereof, the amount of cash, without interest, to which such holders would have
been entitled pursuant to the Merger if such holders had exercised their
Warrants and acquired shares of Common Stock immediately prior to the Effective
Time.
Section 6.14 Rights Agreement. At the election of the Parent or
----------------
Purchaser, the Company will redeem the Rights immediately prior to the
Purchaser's acceptance for payment of Securities pursuant to the Offer and will
not otherwise redeem the Rights, or amend or terminate the Rights Agreement
unless required to do so by a court of competent jurisdiction or in connection
with the termination of this Agreement pursuant to Section 8.1(d)(ii) hereof.
Section 6.15 FIRPTA. The Company shall deliver to Purchaser prior to the
------
expiration of the Offer a certified statement, prepared in accordance with
Sections 897 and 1445 of the Code, that the Securities are not "United States
real property interests" within the meaning of Section 897 of the Code.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) if required by the DGCL, this Agreement shall have been approved
by the affirmative vote of the shareholders of the Company by the requisite vote
in accordance with applicable law; provided, that this Section 7.1(a) shall not
-------- ----
affect the obligations contained in Section 6.9(a); and
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that each of the parties shall have used its
-------- -------
reasonable best efforts to prevent the entry of any such injunction
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<PAGE>
or other order and to appeal, subject to the other terms of this Agreement
(including Section 6.4), as promptly as possible any injunction or other order
that may be entered.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time (notwithstanding approval
thereof by the shareholders of the Company) prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to the occurrence and continued
existence of any of the conditions set forth in Annex A hereto, Purchaser shall
have (i) failed to commence the Offer within the time required by Regulation 14D
under the Exchange Act, (ii) terminated the Offer without purchasing any
Securities pursuant to the Offer or (iii) failed to accept for payment
Securities pursuant to the Offer prior to November 30, 1999;
(d) by the Company (i) if there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company, and Purchaser shall have (A) failed to commence the Offer within the
time required by Regulation 14D under the Exchange Act, (B) terminated the Offer
without purchasing any Securities pursuant to the Offer, or (C) failed to accept
for payment Securities pursuant to the Offer prior to November 30, 1999;
provided further that the applicable date pursuant to this clause (C) shall also
- -------- -------
be extended to the extent that the four business day notice period in Section
8.1(d)(ii)(y) is applicable and has not yet expired and also to the extent the
Expiration Date of the Offer is required to be extended by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to a
modification to the Offer by Purchaser in response to the Superior Proposal
which give rise to the notice period in Section 8.1(d)(ii)(y), or (ii) prior to
the purchase of Securities pursuant to the Offer, concurrently with the
execution of an Acquisition Agreement under the circumstances permitted by
Section 6.1 in connection with a Superior Proposal, provided that such
-------- ----
termination under this clause (ii) shall not be effective unless (x) the Company
and its Board of Directors shall have complied in all material respects with
their obligations under Section 6.1 in connection with such Superior Proposal
and the Company shall have paid the Termination Fee pursuant to Section 8.3 and
(y) the Company provides Parent and Purchaser with at least four business days'
written notice prior to terminating this Agreement, which notice shall be
accompanied by (1) a copy of the proposed Acquisition Agreement with respect to
the Superior Proposal that the
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<PAGE>
Company proposes to accept and (2) the Company's written certification that it
has made the determinations with respect to such Superior Proposal set forth in
clauses (A) and (B) of the proviso in Section 6.1(b) and the representation that
the Company will, in the absence of any other superior Acquisition Proposal,
execute such Acquisition Agreement unless Parent or Purchaser modifies the Offer
or this Agreement such that the Company's Board of Directors reasonably believes
in good faith after consultation with its independent legal counsel and
financial advisors that the Offer and the Merger (as so modified) are at least
as favorable as such Superior Proposal;
(e) by Parent or Purchaser prior to the purchase of Securities
pursuant to the Offer, if (i) any representations or warranties of the Company
(without reference to any materiality qualifications therein) contained in this
Agreement shall not be true and correct at any time prior to the acceptance for
payment of Securities pursuant to the Offer, except where the failure to be true
and correct would not have a Material Adverse Effect on the Company (other than
to the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall not be true and
correct as of such date except where the failure to be true and correct would
not have a Material Adverse Effect on the Company), or (ii) the Company shall
not have performed and complied with, in all material respects (without
reference to any materiality qualifications therein), each material covenant or
agreement contained in the Agreement and required to be performed or complied
with by it, and which breach, in the case of clause (i) and (ii) above, shall
not have been cured prior to the earlier of (A) 15 days following notice of such
breach and (B) two business days prior to the date on which the Offer expires,
provided, however, (x) that in the event of a material breach of Section 6.1 the
- -------- -------
Company shall have 3 days following notice of such breach in order to cure and
(y) in the event of a willful or intentional breach Parent and Purchaser may
immediately terminate this Agreement, provided further there shall be no right
-------- -------
to cure breaches which are non-curable, or (iii) the Board of Directors of the
Company or any committee thereof shall have withdrawn, or modified, amended or
changed (including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, the Merger, any
of the Transactions or this Agreement, or shall have approved or recommended to
the Company's stockholders an Acquisition Proposal or any other acquisition of
Securities other than the Offer and the Merger, or shall have adopted any
resolutions to effect any of the foregoing or the Company shall have taken
action to redeem the Rights or otherwise modify the Rights Agreement to
facilitate an Acquisition Proposal or purchase of Securities by any person other
than Parent or Purchaser, or (iv) the Company Financial Advisor shall have
withdrawn, or modified or qualified in any manner adverse to Parent or
Purchaser, its Fairness Opinion;
(f) by the Company prior to the purchase of any Securities pursuant to
the Offer if (i) there shall have been a material breach of any representation
or warranty in this Agreement on the part of Parent or Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) Parent or Purchaser shall not have performed or complied with, in
all material respects (without reference to any materiality qualifications
therein), each covenant or agreement contained in this Agreement and required to
be performed or complied with by them, and such breach materially adversely
affects (or materially delays) the
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<PAGE>
consummation of the Offer, and which breach, in the case of clause (i) and
clause (ii) above, shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the date on
which the Offer expires; provided, however, that Parent and Purchaser shall have
-------- -------
no right to cure such breach and the Company may immediately terminate this
Agreement in the event that such breach by Parent or Purchaser was willful or
intentional, provided further there shall be no right to cure breaches which are
non-curable; or
(g) by Parent or Purchaser prior to the purchase of Securities
pursuant to the Offer if any person or group (which includes a "person" or
"group" as such terms are defined in Section 13(d)(3) of the Exchange Act) other
than Parent, Purchaser, or any of their affiliates, shall have acquired
beneficial ownership of more than 51% of the Shares outstanding or shall have
consummated or entered into a definitive agreement with the Company with respect
to an Acquisition Proposal, or consummates an Acquisition Proposal pursuant to a
definitive agreement with the Company.
Section 8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of Sections 6.3, 8.2, 8.3, 9.3, 9.4 and 9.7, shall forthwith
become void and have no effect, without any liability on the part of any party
or its affiliates, directors, officers or shareholders. Subject to Section 8.3
below, no termination of this Agreement shall relieve any party to this
Agreement of liability for breach of this Agreement. Notwithstanding anything
herein to the contrary, to the extent the Company owes Parent a Termination Fee,
termination by the Company pursuant to Section 8.1 shall not be effective unless
prior to or simultaneously therewith such Termination Fee are paid to Parent.
Section 8.3 Termination Fee.
---------------
(a) Except as provided in Section 8.3(b) and (c), all fees and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(c) or the Company terminates pursuant to Section 8.1(d)(i), in
either case due to a failure to achieve the Minimum Condition and Parent
and Purchaser are not in material breach of this Agreement, Parent or
Purchaser terminates pursuant to Section 8.1(c) because of the occurrence
and continued existence of the conditions set forth in paragraph (a) or (b)
of Annex A or Parent or Purchaser terminates pursuant to Sections 8.1(e)(i)
or (ii), in each case set forth in this clause (i), in circumstances when,
prior to such termination any third party shall have acquired beneficial
ownership of 51% or more of the outstanding Shares or made or consummated
or announced an intention to make or consummate an Acquisition Proposal for
51% or more of the consolidated assets of the Company or a majority of the
outstanding Shares of the Company (or with respect to any such proposal
that may be existing on the date hereof, not withdrawn such Acquisition
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<PAGE>
Proposal), and, in the case of such an Acquisition Proposal which has not
been consummated prior to such termination, within 12 months thereafter
such Acquisition Proposal (or, in the case Parent or Purchaser terminates
this Agreement pursuant to Section 8.1(c) due to a failure to achieve the
Minimum Condition, any other Acquisition Proposal for 51% or more of the
consolidated assets of the Company or a majority of the outstanding Shares
of the Company) has been consummated for consideration per Share higher
than the per Share consideration in the Offer or for an aggregate
consideration, including the retention of any equity by shareholders, of
more than the aggregate consideration of the Offer and the Merger;
(ii) Parent or Purchaser terminates this Agreement pursuant to
Sections 8.1(e)(iii) or (iv), pursuant to Section 8.1(c) because of the
occurrence and continued existence of the conditions set forth in paragraph
(g) or (i) of Annex A, pursuant to Section 8.1(g), because of a material
breach of Section 6.1, or a willful or intentional breach of the Company's
covenants and agreements which materially interferes with the consummation
of the Transactions;
(iii) the Company terminates this Agreement pursuant to Section
8.1(d)(ii); or
(iv) the Company terminates this Agreement pursuant to Section
8.1(f) in circumstances when Parent or Purchaser shall also have the right
to terminate this Agreement in the circumstances where Parent or Purchaser
would have been entitled to a Termination Fee pursuant to Section 8.3(b)(i)
or (ii) above;
then, in any such case, the Company shall pay to Parent, within one
business day following the date on which Parent becomes entitled to a
Termination Fee (but subject to earlier payment pursuant to Section 8.2, if
applicable), a fee (a "Termination Fee"), in cash, equal to $42,250,000;
provided that the Company in no event shall be obligated to pay more than one
- -------- ----
such Termination Fee with respect to all such agreements and occurrences and
such termination. Any payment required to be made pursuant to this subsection
(b) shall be made to Parent by wire transfer of immediately available funds to
an account designated by Parent. The provisions of this Section 8.3, subject to
Section 8.3(c), shall not derogate from any rights or remedies which Parent,
Purchaser or the Company may possess under this Agreement (including as provided
in Section 9.3) or the Tender Agreement or under applicable law, as the case may
be, including with respect to any breach of the representations, warranties,
agreements or covenants contained in this Agreement, provided that,
notwithstanding the foregoing, the Termination Fee shall be the sole and
exclusive remedy of Parent unless the Parent elects to forego the Termination
Fee in such circumstances and pursue other rights and remedies in such
circumstances.
(c) If this Agreement is terminated by Parent or Purchaser pursuant to
Section 8.1(c) because of the occurrence and continued existence of the
conditions set forth in paragraph (a) of Annex A or pursuant to Sections
8.1(e)(i) and the condition does not result from a willful breach, promptly upon
demand the Company shall reimburse Parent and Purchaser for
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<PAGE>
all their reasonable documented out-of-pocket fees and expenses incurred by
Parent, Purchaser and their respective affiliates in connection with this
Agreement, the Offer, the Merger, the Tender Agreement and the other
Transactions, including all such fees and expenses of counsel, accountants,
investment bankers, experts and consultants to each of Parent and Purchaser and
their respective affiliates, commitment and other reasonable documented fees and
expenses payable to financing sources and the expenses of the preparation,
printing, filing and mailing of the Offer Documents and any other related costs
and expenses (the "Expenses"). Other than as provided in Section 9.3, payment of
Expenses shall be the sole and exclusive remedy of Parent and Purchaser for such
a breach, provided that Purchaser shall also be entitled to a Termination Fee to
the extent Section 8.3(b)(i) is applicable to the termination (in which event
the payment of Expenses shall be returned).
(d) For purposes of this Section 8.3, "willful" shall mean that the
Agreement is terminated as a result of one or more representations and
warranties not being true when made and one or more of the persons listed on
Schedule 8.3(d)(i) of the Company Disclosure Schedules had knowledge at that
time of events, facts, circumstances or conditions not disclosed hereunder which
caused such representations and warranties to be false or misleading.
Section 8.4 Amendment. To the extent permitted by applicable law and
---------
subject to Section 1.4(c), this Agreement may be amended by action taken by or
on behalf of the Boards of Directors of the Company, Parent and Purchaser at any
time before or after approval of this Agreement by the shareholders of the
Company but, after any such shareholder approval, no amendment shall be made
that by law requires the further approval of such shareholders without the
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time,
-----------------
subject to Section 1.1(b), a party may (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties of the other parties
contained herein or in any documents, certificate or writing delivered pursuant
hereto, or (c) waive compliance with any of the agreements or conditions of the
other parties hereto contained herein; provided that after the approval of the
-------- ----
Merger by the shareholders of the Company, no extensions or waivers shall be
made that by law require further approval by such shareholders without the
approval of such shareholders. Any agreement on the part of any 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.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Non-Survival of Representations and Warranties. None of the
----------------------------------------------
representations and warranties made in this Agreement shall survive after the
Effective Time. This Section 9.1
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<PAGE>
shall not limit any covenant or agreement of the parties hereto which by its
terms contemplates performance after the Effective Time.
Section 9.2 Entire Agreement; Assignment. This Agreement (including the
----------------------------
Company Disclosure Schedule), the Tender Agreement and, to the extent
contemplated in Section 6.3(b), the Confidentiality Agreement, (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise, provided that
-------- ----
Parent or Purchaser may assign any of their rights and obligations to any direct
or indirect wholly owned subsidiary of Parent, but no such assignment shall
relieve Parent or Purchaser of its obligations hereunder. Any of Parent,
Purchaser or any direct or indirect wholly owned subsidiary of Parent may
purchase Securities under the Offer. Any attempted assignment in violation of
this Section 9.2 shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.3 Enforcement of the Agreement. The Company agrees that
----------------------------
irreparable damage would occur to Parent and Purchaser in the event that any of
the provisions of this Agreement were not performed by the Company in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that Parent and Purchaser shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are
entitled at law or in equity including those set forth in Section 8.3 of this
Agreement. The Company further agrees to waive any requirement for the securing
or posting of any bond in connection with obtaining any such injunction or other
equitable relief.
Section 9.4 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that Transactions are fulfilled to the extent possible. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
Section 9.5 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing (including telecopy or
similar writing) and shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 9.5 and
the appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 9.5 (or at such
other address for a party as shall be specified by like notice):
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<PAGE>
if to Parent or Purchaser:
Dyckerhoff Aktiengesellschaft
Biebriener Strasse 69
65203 Wiesbaden
Germany
Attn: Dr. Peter Rohde
Peter Steiner
Telecopy: 49-611-676-1413
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Thomas A. Ralph
William G. Lawlor
Telecopy: 215-994-2222
if to the Company:
Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912
Attn: General Counsel
Telecopy: 203-969-8686
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Peter G. Samuels
Lawrence H. Budish
Telecopy: 212-969-2900
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
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<PAGE>
Section 9.7 Governing Law; Consent to Jurisdiction. This Agreement shall
--------------------------------------
be governed by and construed in accordance with the substantive laws of the
State of New York regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto. In addition, the Company,
Parent and Purchaser hereby (i) consent to submit to the personal jurisdiction
of any Federal court located in the State of New York or any New York state
court in the event any dispute arises out of this Agreement or any of the
Transactions, (ii) agree not to attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agree not to bring any action relating to this Agreement or any of the
Transactions in any court other than a Federal court located in the State of New
York or a New York state court and (iv) waive any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the Transactions. The Company, Parent and Purchaser hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the Transactions
in the courts of the State of New York or of the United States of America
located in the State of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.8 Descriptive Headings. The descriptive headings herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9 Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Sections 6.5 and 6.8(a)(i), the first sentence of Section 6.8(c) and
Section 6.8(d) (which are intended to be for the benefit of the persons entitled
to therein, and may be enforced by such persons).
Section 9.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.11 Certain Definitions. For purposes of this Agreement
-------------------
(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "affiliate" of a person shall mean (i) a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first-mentioned person and (ii) an
"associate", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act.
(b) "beneficial owner" (including the term "beneficially own" or
correlative terms) shall have the meaning ascribed to such term under Rule 13d-
3(a) under the Exchange Act.
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(c) "business day" shall have the meaning ascribed to such term under
Rule 14d-1 of the Exchange Act.
(d) "Company Disclosure Schedule" shall mean a letter dated the date
of the Agreement delivered by the Company to Parent and Purchaser concurrently
with the execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in Article
III and covenants contained in Article V by specific section and subsection
references.
(e) "control" (including the terms "controlling," "controlled by" and
"under common control with" or correlative terms) shall mean the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities or as trustee or executor, by contract or credit
arrangement, or otherwise.
(f) "Fully Diluted Shares" means all outstanding securities entitled
generally to vote in the election of directors of the Company on a fully diluted
basis, after giving effect to the exercise or conversion of all options
excluding the Options which shall be cashed out pursuant to Section 2.10 hereof,
warrants (including the Warrants) and securities exercisable or convertible into
such voting securities, other than the Rights to the extent not then
exercisable.
(g) "group" shall have the meaning ascribed to such term under Rule
13d-3(a) under the Exchange Act.
(h) "KC Joint Venture" shall mean the general partnership organized
under Kentucky law known as the Kosmos Cement Company established pursuant to
the KC Joint Venture Partnership Agreement.
(i) "KC Joint Venture Partnership Agreement" shall mean the Kosmos
Cement Company Partnership Agreement between Kosmos Cement Company, Inc. and the
Company (as successor to Lone Star Cement, Inc.), dated March 7, 1998, as
supplemented and amended.
(j) "Material Adverse Effect" shall mean any change or effect that is
(after giving effect to any appropriate reserves for such matter on the
financial statements included in the Filed Company SEC Documents) materially
adverse to the business, results of operations, assets, liabilities or financial
condition of the Company and its subsidiaries, taken as a whole, or any event,
matter, condition or effect which precludes the Company from performing its
obligations under this Agreement or the consummation of the Transactions;
provided, however, that in determining whether there has been a Material Adverse
- -------- -------
Effect, any adverse effect directly attributable to the following shall be
disregarded: (i) general economic or business conditions; (ii) general industry
conditions; (iii) the taking of any action permitted or required by this
Agreement or the Tender Agreement; (iv) the announcement or pendency of the
Offer, the Merger or any of the other Transactions; (v) the breach by Parent or
Purchaser of this Agreement; and (vi) a decline in the Company's stock price
(provided, however, that any adverse
-------- -------
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<PAGE>
effect attributable to the factors identified in clause (i) or (ii) of this
Section 9.11(j) shall not be disregarded to the extent that the impact on the
Company is greater than that on similarly situated companies).
(k) "person" shall mean a natural person, company, corporation,
partnership, association, trust or any unincorporated organization.
(l) "subsidiary" shall mean, when used with reference to a person
means any corporation or other business entity of which such person directly or
indirectly owns (i) the majority of the outstanding voting securities or (ii)
voting securities or equity interests which give such person the power to elect
a majority of the board of directors or similar governing body of such entity.
Section 9.12 Interpretation. (a) The words "hereof," "herein" and
--------------
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such 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 and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns. References to the "Company" or any of
its "subsidiaries" shall include, without limitation, the Company or any of its
subsidiaries in its capacity, status or operation as a partner in the KC Joint
Venture or any other joint venture or partnership.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, on the day
and year first above written.
DYCKERHOFF AKTIENGESELLSCHAFT
/s/Peter Rohde
By:_____________________________
Name: Peter Rohde
Title:Chief Executive Officer
/s/Peter Steiner
By:_____________________________
Name: Peter Steiner
Title:Chief Financial Officer
LEVEL ACQUISITION CORP.
/s/Felix Pardo
By:_____________________________
Name: Felix Pardo
Title:President
LONE STAR INDUSTRIES, INC.
/s/David W. Wallace
By:_____________________________
Name: David W. Wallace
Title:Chairman of the Board
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<PAGE>
ANNEX A
to
Agreement and Plan of Merger
----------------------------
Conditions to the Offer. Notwithstanding any other provision of the
Offer or this Agreement, in addition to (and not in limitation of) Purchaser's
rights pursuant to the Agreement to extend and amend the Offer at any time, in
its sole discretion, to the extent permitted by Section 1.1 of the Merger
Agreement, Purchaser shall not be required to accept for payment or, subject to
Rule 14e-1(c) of the Exchange Act, pay for and may delay the acceptance for
payment of or, subject to Rule 14e-1(c) of the Exchange Act, the payment for,
any Securities not theretofore accepted for payment or paid for, and Purchaser
may terminate or amend the Offer if (i) a number of Securities representing at
least a majority of the Fully Diluted Shares shall not have been validly
tendered and not withdrawn immediately prior to the expiration of the Offer
("Minimum Condition") or (ii) at any time on or after the date of the Merger
Agreement and prior to the time of acceptance of such Securities for payment or
the payment therefor, any of the following conditions has occurred and continues
to occur:
(a) any representation and warranty of the Company in the Agreement
(without reference to any materiality qualifier therein other than the
representations and warranties in Section 3.2, which must be true and correct in
all material respects) shall not be true and correct as of such time, except
where the failure to be so true and correct (other than the representations and
warranties in Section 3.2) would not have a Material Adverse Effect on the
Company, (other than to the extent any such representation and warranty
expressly relates to an earlier date, in which case such representation and
warranty shall not be true and correct as of such date, except where the failure
to be so true and correct would not have a Material Adverse Effect on the
Company) and which breach shall not have been cured prior to the earlier of (i)
15 days following notice of such breach and (ii) two business days prior to the
date on which the Offer expires; provided, however, that the Company shall have
-------- -------
no right to cure such breach in the event that such breach by the Company was
willful or intentional, provided further, there shall be no right to cure
-------- -------
breaches which are non-curable);
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications therein),
each covenant or agreement contained in the Agreement and required to be
performed or complied with by it and which breach shall not have been cured
prior to the earlier of (i) 15 days following notice of such breach and (ii) two
business days prior to the date on which the Offer expires; provided, however,
-------- -------
(x) that in the event of a material breach of Section 6.1 the Company shall have
3 days following notice of such breach in order to cure and (y) in the event of
a willful or intentional
<PAGE>
breach Parent and Purchaser may immediately terminate this Agreement, provided
--------
further, there shall be no right to cure breaches which are non-curable;
- -------
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered as a
result of a specified decrease in a market index) related to market conditions,
(ii) any extraordinary adverse change in the financial markets in the United
States or the Federal Republic of Germany, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or the Federal Republic of Germany by any Governmental Entity, (iv) any
material mandatory limitation by any Governmental Entity on the extension of
credit by banks or other lending institutions, or (v) a commencement of a war,
armed hostilities or other national or international calamity directly or
indirectly involving the United States or the Federal Republic of Germany;
(d) any applicable waiting period under the HSR Act shall not have
expired or been terminated or there shall be threatened or pending any suit,
action, investigation or proceeding by any Governmental Entity, or pending any
suit by any other person which has a reasonable possibility of success, (i)
challenging the acquisition by Parent or Purchaser of any Securities, seeking to
make illegal, materially delay, make materially more costly or otherwise
directly or indirectly restrain or prohibit the making or consummation of the
Offer and the Merger or the performance of any of the other Transactions or
seeking to obtain from the Company, Parent or Purchaser any damages that are
material in relation to the Company and its subsidiaries taken as whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent
or any of their respective subsidiaries or affiliates of any of the businesses
or assets of the Company, Parent or any of their respective subsidiaries or
affiliates, or to compel the Company, Parent or any of their respective
subsidiaries or affiliates to dispose of or hold separate any of the businesses
or assets of the Company, Parent or any of their respective subsidiaries or
affiliates, as a result of the Offer, the Merger or any of the other
Transactions, (iii) seeking to impose limitations on the ability of Parent or
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Securities accepted for payment pursuant to the Offer including, without
limitation, the right to vote the Shares accepted for payment by it on all
matters properly presented to the shareholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect the business or operations of the Company or
its subsidiaries, (v) requiring divestiture by Purchaser or any of its
affiliates of any Securities or (vi) which otherwise is reasonably likely to
have a Material Adverse Effect on the Company or Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters)
threatened, proposed or sought (which in each case Parent believes in good faith
is reasonably likely to become effective), enacted, entered, enforced,
promulgated or issued with respect to or deemed applicable to, or any consent or
approval withheld with respect to (i) Parent, the Company or any of their
respective subsidiaries or affiliates or (ii) the Offer or the Merger or any of
the other Transactions by any
-2-
<PAGE>
Governmental Entity or court, that has resulted or is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) though (v) of paragraph (d) above;
(f) since the date of the Agreement there shall have occurred any
events, changes, effects or developments that, individually or in the aggregate,
have had or are reasonably likely to have, a Material Adverse Effect on the
Company;
(g) (1) the Board of Directors of the Company or any other committee
thereof shall have (i) withdrawn, or modified, amended or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Parent or Purchaser, its
approval or recommendation of the Offer, the Merger, any of the other
Transactions or this Agreement, (ii) approved or recommended to the Company's
stockholders an Acquisition Proposal or any other acquisition of Securities
other than the Offer and the Merger or (iii) adopted any resolution to effect
any of the foregoing, or the Company shall have taken action to redeem the
Rights or otherwise modify the Rights Agreement to facilitate an Acquisition
Proposal or purchase of Securities by any person other than Parent or Purchaser,
or (2) the Company Financial Advisor shall have withdrawn, or modified or
qualified in any manner adverse to Parent or Purchaser, its Fairness Opinion;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser, any of their
affiliates, or any group of which any of them is a member, shall have acquired
beneficial ownership of more than 51% of the Shares or shall have consummated or
entered into a definitive agreement with the Company with respect to an
Acquisition Proposal.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition and, subject to Section 1.1, may
be waived by Purchaser or Parent, in whole or in part, at any time and from time
to time, in the sole discretion of Purchaser or Parent. The failure by
Purchaser or Parent or any of their respective affiliates at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right,
the waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
-3-
<PAGE>
[LETTERHEAD OF LONE STAR INDUSTRIES, INC. APPEARS HERE]
July 8, 1999
Dyckerhoff AG
- -and-
Dyckerhoff, Inc.
c/o Dyckerhoff, Inc.
33 Washington Ave.
Cambridge, MA 02140
Attention: Mr. Felix Pardo
Gentlemen:
CONFIDENTIALITY AGREEMENT
Lone Star Industries, Inc. (the "Company") is prepared to furnish you
certain information which is either confidential, proprietary or otherwise not
generally available to the public to assist you in making an evaluation (the
"Evaluation") of the business and prospects of the Company for a possible
negotiated transaction consisting of the purchase by you of the Company (the
"Transaction"). The information so furnished to you, together with analyses,
compilations, studies or other documents prepared by or for partners, directors,
officers, employees, agents or representatives (including without limitation
accountants, attorneys and financial advisors)(collectively, "Representatives")
of you or any of your affiliates, is hereinafter referred to as the
"Information."
As a condition to, and in consideration of, the Company furnishing the
Information, you agree as follows:
1. Nondisclosure of Information. The Information will be kept confidential
----------------------------
by you, will not be used by you in any way
<PAGE>
detrimental to the Company, will not be used other than in connection with the
Evaluation, and you will safeguard the Information from unauthorized disclosure.
You may, however disclose the Information to your Representatives, but only if
such Representatives need to know the Information in connection with the
Evaluation. You will (i) inform each such Representative of the confidential
nature of the Information and of this letter agreement, (ii) cause such
Representatives to treat the Information confidentially and not to use it other
than in connection with the Evaluation, and (iii) be responsible for any
improper use of the information by you or any such Representatives (including,
without limitation, Representatives who, subsequent to the first date of
disclosure of Information hereunder, become former Representatives). Without the
prior written consent of the Company, you will not, and will cause your
affiliates and associates and the Representatives of you and your affiliates and
associates not to, disclose to any person (a) that the Information has been made
available to you, (b) that investigations, discussions or negotiations are
taking or have taken place, (c) any of the terms, conditions or other facts with
respect to any such possible Transaction, including the status thereof, or (d)
any other facts with respect to the discussions between you and the Company.
2. Notice Preceding Compelled Disclosure. If you or any of your
-------------------------------------
Representatives are requested to disclose any Information, you will promptly
notify the Company to permit the Company to seek a protective order or take
other appropriate action. You will also cooperate in the Company's efforts to
obtain a protective order or other reasonable assurance that confidential
treatment will be accorded the Information. If, in the absence of a protective
order, you or any of your Representatives are, in the written opinion of your
counsel addressed to the Company, compelled as a matter of law to disclose the
Information, you may disclose to the party compelling disclosure only the part
of the Information as is required by law to be disclosed; provided that you
shall exercise your best efforts to cooperate with the Company to obtain an
order of reasonable assurance that confidential treatment shall be accorded
such Information.
3. Treatment of Information. Any Information furnished to you or any of
------------------------
your Representatives by a Representative of the Company will be deemed for
purposes of this agreement to have been furnished by the Company. You will keep
a record in reasonable
2
<PAGE>
detail of the Information furnished to you and of the location of the
Information. As soon as possible upon the Company's written request or upon the
termination of the Evaluation, you will return to the Company all written
Information which has been provided to you and will destroy (or, at your option,
return to the Company) all written documentation prepared by you or your
Representatives based in whole or in part on any Information. Compliance with
this paragraph 3 will be confirmed in writing to the Company. Notwithstanding
the return or destruction of any Information, or documents or materials
containing or reflecting any Information, you will continue to be bound by your
obligations of confidentiality and other obligations hereunder.
4. Public Information. This agreement will be inoperative as to such
------------------
portions of the Information which (i) are or become generally available to the
public through no fault or action by you or your Representatives; (ii) are or
become available to you on a nonconfidential basis from a source, other than the
Company or its Representatives, provided that such source is not to your
knowledge prohibited from disclosing such portions to you by a contractual,
legal or fiduciary obligation to the Company; or (iii) was independently
developed by you or your Representatives without access to or benefit of the
Information.
5. No Warranty of Accuracy. You understand that the Company will
-----------------------
endeavor to include in the Information, materials which it believes to be
reliable and relevant for the Evaluation, but you acknowledge that neither the
Company nor any Representative of the Company makes any representation or
warranty as to the accuracy or completeness of any Information. You agree that
neither the Company nor any Representative of the Company will have any
liability to you or your Representatives resulting from the use of the
Information by you or your Representatives.
6. No Purchase of Securities; Other Actions. You agree that for a
----------------------------------------
period of three years from the date of this agreement, none of you, your
affiliates or the associates of you or your affiliates will, in any manner,
alone or in concert with others (whether or not pursuant to any legally binding
agreement or commitment), without the prior written approval of the Board of
Directors of the Company, (i) acquire, or offer to acquire, or negotiate with
respect to the acquisition of, directly or indirectly, record or beneficial
ownership of any capital stock, debt securities, indebtedness or any securities
of the Company or
3
<PAGE>
of any subsidiary of the Company or any other interest in, or claims relating
to, the Company or any subsidiary thereof, (ii) acquire or offer to acquire, or
negotiate with respect to the acquisition of, directly or indirectly, any
options or other rights to acquire any capital stock, debt securities,
indebtedness or any securities of the Company or of any subsidiary of the
Company (whether or not exercisable only after the passage of time or the
occurrence of any event), (iii) acquire or offer to acquire or negotiate with
respect to the acquisition of, directly or indirectly, any assets of the Company
or any subsidiary of the Company, (iv) offer to enter into any acquisition or
other business combination transaction relating to the Company or to any
subsidiary of the Company (or hold negotiations with respect to the foregoing),
(v) directly or indirectly participate in or encourage the formation of any
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934) which owns or seeks or offers to acquire record or beneficial
ownership of voting securities of the Company or any subsidiary of the Company
(including rights to acquire such voting securities) or which seeks or offers to
affect control of the Company, (vi) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Securities and Exchange Commission) to vote, or seek to
advise or influence any person with respect to the voting of any voting
securities of the Company or any subsidiary of the Company, (vii) otherwise act
alone or in concert with others, to seek to control or influence the
management, the Board of Directors or the policies of the Company or of any
subsidiary of the Company, (viii) propose, or publicly announce or otherwise
disclose an intent to propose or publicly announce or otherwise disclose any
request for permission or any consent in respect of, any of the foregoing, or
(ix) advise, assist or encourage any other persons in connection with any of the
foregoing. You also agree during such period not to (x) request the Company (or
its directors, officers, employees or agents), directly or indirectly, to amend
or waive any provision of this paragraph (including this sentence) or (y) take
any action which might require the Company to make a public announcement
regarding the possibility of a business combination or merger. If, however, a
third party, without the approval of the Company's Board of Directors, makes a
cash tender offer for 50% or more of the common stock of the Company, the
foregoing provisions of this Section 6 shall not preclude you from making a cash
tender offer for all (but not less then all) of the common stock of the Company
at a price per
4
<PAGE>
share which is more favorable to the Company's stockholders than the third
party's offer. In addition, if the Company enters into a definitive agreement
with a third party pursuant to which such third party will make a tender or
exchange offer for, or otherwise acquire (by merger, consolidation, purchase or
otherwise), all or substantially all of the common stock or assets of the
Company, to the extent (and only to the extent) allowed by such definitive
agreement with the third party (which agreement may be on such terms and
conditions as are acceptable to the Company in its sole and absolute discretion)
you may submit to the Chairman of the Board of Directors of the Company a
confidential written offer to acquire all (but not less then all) of the common
stock of the Company. While you must keep this offer strictly confidential, it
is agreed to by you that the Chairman of the Board of Directors of the Company
may, in his sole and absolute discretion, provide a copy of such offer to any
person or persons (including, without limitation, the third party offerer and
the Company's Board of Directors and representatives) as he in his sole and
absolute discretion deems appropriate. Nothing contained in the immediately
preceding three sentences shall require the Company or any of its officers,
directors, employees or representatives to negotiate with you, to provide you
any time periods during which to submit such offers, to study, deliberate or
otherwise contemplate such offers, or to provide you any information with
respect to formulating such offers. In addition, none of the foregoing shall in
any manner affect the Company's ability to defend against such offer pursuant to
any means available to it including, without limitation, those available to it
under its Certificate of Incorporation, by-laws, applicable law and/or its
"poison pill".
7. No Obligation with Respect to Transaction. You also understand and agree
-----------------------------------------
that no contract or agreement providing for a Transaction with the Company shall
be deemed to exist between you and the Company unless and until a Definitive
Transaction Agreement has been executed and delivered, and you hereby waive, in
advance, any claims (including, without limitation, breach of contract) in
connection with a possible Transaction unless and until you shall have entered
into a Definitive Transaction Agreement. You also agree that unless and until a
Definitive Transaction Agreement between the Company and you has been executed
and delivered, the Company has no legal obligation of any kind whatsoever with
respect to any such Transaction by virtue of this agreement or any other written
or oral expression with
5
<PAGE>
respect to such Transaction except, in the case of this agreement, for the
matters specifically agreed to herein. For purposes of this paragraph, the term
"Definitive Transaction Agreement" does not include an executed letter of intent
or any other preliminary written agreement nor does it include any written or
verbal acceptance of an offer or bid on the Company's part. You further
understand that (i) the Company shall be free to act in connection with a
possible Transaction with the Company as we in our sole discretion shall
determine (including, without limitation, negotiating with any prospective
parties and entering into a Definitive Transaction Agreement without prior
notice to you or any other person), (ii) any procedures relating to such
possible Transaction may be changed at any time without notice to you or any
other person, (iii) the Company reserves the right, in its sole and absolute
discretion, to reject any and all proposals and to terminate discussions and
negotiations with you, or directly or indirectly involving you, at any time, and
(iv) you shall not have any claims whatsoever against the Company or any of its
directors, officers, stockholders, owners, affiliates or agents arising out of
or relating to a possible Transaction with the Company (other than those against
the parties to a Definitive Transaction Agreement with you in accordance with
the terms thereof). This paragraph cannot be waived or amended except by
written consent of the Company.
8. Miscellaneous. No failure or delay in exercising any right, power or
-------------
privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder. This agreement will be
binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. This agreement has been entered into for the benefit of
the Company and its successors and assigns, and it is understood that the
Company and its successors and assigns may institute appropriate proceedings
against you to enforce its rights hereunder. Money damages would not be a
sufficient remedy for any violation of the terms of this agreement and,
accordingly, the Company will be entitled to specific performance and injunctive
relief as remedies for any violation without proof of inadequacy of damages as a
remedy. These remedies will not be exclusive remedies but will be in addition
to all other remedies available to the COmpany at law or equity. This agreement
will be governed by and construed in accordance with the laws of the State of
New York, without giving effect to
6
<PAGE>
the principles of conflict of laws thereof. As used herein, (i) the terms "you"
and "your" will refer to and mean the addressees, any direct or indirect parent
company of either addressee and any subsidiary of which either addressee
beneficially owns at least 50% of the voting stock and (ii) the terms
"affiliates" and "associates" will have the meanings given to such terms under
Rule 405, as presently in effect, under the Securities Act of 1933, whether or
not such rule is applicable to any such person.
9. Notices. Any communications called for by this agreement shall be in
-------
writing or by means of an electronic communication method which produces a
written record and if sent to the Company shall be sent to Lone Star Industries,
Inc., 300 First Stamford Place, Stamford, CT 06912, Attention: Corporate
Secretary and if sent to you shall be sent to the address first set out above.
7
<PAGE>
Please sign and return one copy of this agreement to evidence your
acceptance of and agreement to the foregoing, whereupon this agreement will
constitute our agreement with respect to the subject matter hereof.
LONE STAR INDUSTRIES, INC.
By: /s/James W. Langham
--------------------
Name: James W. Langham
Title: Vice President and
General Counsel
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET OUT ABOVE:
DYCKERHOFF AG
By: /s/Peter Steiner
-----------------------------------
Name: Peter Steiner
-----------------------------------
Title: MEMBER OF BOARD OF MGT. DIRECTORS
-----------------------------------
DYCKERHOFF INC.
By: /s/Felix Pardo
-----------------------------------
Name: Felix Pardo
-----------------------------------
Title: Chairman
-----------------------------------
8
<PAGE>
TENDER AGREEMENT
------ ---------
TENDER AGREEMENT, dated as of September 2, 1999 (the "Agreement"),
among Dyckerhoff Aktiengesellschaft, a corporation organized under the laws of
the Federal Republic of Germany ("Parent"), Level Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Purchaser") and the
persons listed on Schedule A hereto (each a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS, Parent, Purchaser and Lone Star Industries, Inc., a Delaware
corporation (the "Company") propose to enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement") providing for, among other things, the making of a cash
tender offer (as such offer may be amended from time to time as permitted under
the Merger Agreement, the "Offer") by Purchaser for (i) all of the issued and
outstanding shares of common stock, par value $1.00 per share, of the Company
(referred to herein as either the "Shares" or "Company Common Stock") and (ii)
all of the outstanding warrants to purchase Company Common Stock (the
"Warrants") and the merger of the Company and Purchaser on the terms and
conditions set forth in the Merger Agreement (the "Merger");
WHEREAS, each Stockholder is the beneficial owner of the Shares and
Warrants set forth opposite such Stockholder's name on Schedule A hereto; such
Shares and Warrants, as may be adjusted by stock or warrant dividend, stock or
warrant split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with Shares and Warrants that may be acquired after the date
hereof by such Stockholder, including Shares issuable upon the exercise of
options (including the Options set forth in Schedule A), being collectively
referred to herein as the "Securities" of such Stockholder; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
Section 1. Certain Definitions. Capitalized terms used but not
---------- -------------------
otherwise defined herein have the meanings ascribed to such terms in the Merger
Agreement.
Section 2. Representations and Warranties of the Stockholders. Each
---------- --------------------------------------------------
Stockholder, severally and not jointly, represents and warrants to Parent and
Purchaser, as of the date hereof and as of the Closing (as defined herein), as
follows:
<PAGE>
(a) The Stockholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which meaning will apply for all purposes of this Agreement) of, and has good
title to, all of the Securities, free and clear of any mortgage, pledge,
hypothecation, rights of others, claim, security interest, charge, encumbrance,
title defect, title retention agreement, voting trust agreement, interest,
option, lien, charge or similar restriction or limitation, including any
restriction on the right to vote, sell or otherwise dispose of the Securities
(each, a "Lien"), except as set forth in this Agreement.
(b) The Securities constitute all of the securities (as defined in
Section 3(a)(10) of the Exchange Act, which definition will apply for all
purposes of this Agreement) of the Company beneficially owned, directly or
indirectly, by the Stockholder.
(c) Except for the Securities, the Stockholder does not, directly or
indirectly, other than as disclosed on Schedule A, beneficially own or have any
option, warrant or other right to acquire any securities of the Company that are
or may by their terms become entitled to vote or any securities that are
convertible or exchangeable into or exercisable for any securities of the
Company that are or may by their terms become entitled to vote, nor is the
Stockholder, other than disclosed on Schedule A, subject to any Contract,
commitment, arrangement, understanding, restriction or relationship (whether or
not legally enforceable), other than this Agreement, that provides for such
Stockholder to vote or acquire any securities of the Company. The Stockholder
holds exclusive power to vote the Shares and has not granted a proxy to any
other person (as defined in the Merger Agreement, which meaning will apply for
all purposes of this Agreement) to vote the Shares, subject to the limitations
set forth in this Agreement.
(d) This Agreement has been duly executed and delivered by the
Stockholder and, assuming due authorization, execution and delivery of this
Agreement by Parent and Purchaser, is a valid and binding obligation of the
Stockholder enforceable against the Stockholder in accordance with its terms.
(e) Neither the execution and delivery of this Agreement nor the
performance by the Stockholder of the Stockholder's obligations hereunder will
conflict with, result in a violation or breach of, or constitute a default (or
an event that, with notice or lapse of time or both, would result in a default)
or give rise to any right of termination, amendment, cancellation, or
acceleration or result in the creation of any Lien on any Securities under, (i)
any Contract, commitment, agreement, understanding, arrangement or restriction
of any kind to which the Stockholder is a party or by which the Stockholder is
bound or (ii) any injunction, judgment, writ, decree, order or ruling applicable
to the Stockholder; except for conflicts, violations, breaches, defaults,
terminations, amendments, cancellations, accelerations or Liens that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by such Stockholder of the transactions
contemplated hereby.
(f) Neither the execution and delivery of this Agreement nor the
performance by the Stockholder of the Stockholder's obligations hereunder will
violate any law, decree,
-2-
<PAGE>
statute, rule or regulation applicable to the Stockholder or require any order,
consent, authorization or approval of, filing or registration with, or
declaration or notice to, any court, administrative agency or other governmental
body or authority, other than any required notices or filings pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR Act") or the federal securities
laws.
(g) Except as set forth in Section 3.8 of the Merger Agreement, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement or the Merger Agreement based upon arrangements made by or on behalf
of the Stockholder that is or will be payable by the Company or any of its
subsidiaries.
(h) The Stockholder understands and acknowledges that Parent is
entering into, and causing Purchaser to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this Agreement.
Section 3. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser represent and warrant to the Stockholders, as of the date
hereof and as of the Closing, as follows:
(a) Each of Parent and Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of their respective
jurisdiction of incorporation, has the requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery of this
Agreement by the Company and the Stockholders, is a valid and binding obligation
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms.
(c) Neither the execution and delivery of this Agreement nor the
performance by Parent and Purchaser of their respective obligations hereunder
will conflict with, result in a violation or breach of, or constitute a default
(or an event that, with notice or lapse of time or both, would result in a
default) or give rise to any right of termination, amendment, cancellation, or
acceleration under, (i) their respective certificates of incorporation or bylaws
(or similar organizational documents), (ii) any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which Parent or
Purchaser is a party or by which Parent or Purchaser is bound or (iii) any
judgment, writ, decree, order or ruling applicable to Parent or Purchaser;
except in the case of clauses (ii) and (iii) for conflicts, violations, breaches
or defaults that would not individually or in the aggregate be reasonably
expected to prevent or materially
-3-
<PAGE>
impair or delay the consummation by Parent or Purchaser of the transactions
contemplated hereby.
(d) Neither the execution and delivery of this Agreement nor the
performance by Parent and Purchaser of their respective obligations hereunder
will violate any law, decree, statute, rule or regulation applicable to Parent
or Purchaser or require any order, consent, authorization or approval of, filing
or registration with, or declaration or notice to, any court, administrative
agency or other governmental body or authority, other than any required notices
or filings set forth in Section 4.4 of the Merger Agreement.
Section 4. Transfer of the Shares. During the term of this Agreement,
----------------------
except as otherwise expressly contemplated herein and in the Merger Agreement,
each Stockholder agrees that such Stockholder will not (a) tender into any
tender or exchange offer or otherwise sell, transfer, pledge, assign,
hypothecate or otherwise dispose of, or encumber with any Lien, any of the
Securities, except for (i) transfers to any spouse or descendant (including by
adoption) of such Stockholder, or any trust or retirement plan or account for
the benefit of such Stockholder, spouse or descendant; provided that any such
transferee agrees in writing to be bound by the terms of this Agreement and (ii)
transfers by operation of law provided that any such transferee shall be bound
by the terms of this Agreement, (b) acquire any shares of Company Common Stock
or other securities of the Company (otherwise than in connection with a
transaction of the type described in Section 6 or by exercising any of the
Options or Warrants), (c) deposit the Securities into a voting trust, enter into
a voting agreement or arrangement with respect to the Securities or grant any
proxy or power of attorney with respect to the Shares, (d) enter into any
Contract, option or other arrangement (including any profit sharing arrangement)
or undertaking with respect to the direct or indirect acquisition or sale,
transfer, pledge, assignment, hypothecation or other disposition of any interest
in or the voting of any Securities or any other securities of the Company or (e)
take any other action that would in any way restrict, limit or interfere with
the performance of such Stockholder's obligations hereunder or the transactions
contemplated hereby or which would otherwise diminish the benefits of this
Agreement to Parent or Purchaser.
Section 5. Adjustments.
-----------
(a) In the event (i) of any stock or warrant dividend, stock or
warrant split, recapitalization, reclassification, combination or exchange of
shares of capital stock or other securities of the Company on, of or affecting
the Securities or the like or any other action that would have the effect of
changing a Stockholder's ownership of the Company's capital stock or other
securities or (ii) a Stockholder becomes the beneficial owner of any additional
Securities of or other securities of the Company, then the terms of this
Agreement will apply to the shares of capital stock or other securities held by
such Stockholder immediately following the effectiveness of the events described
in clause (i) or such Stockholder becoming the beneficial owner thereof, as
described in clause (ii), as though they were Securities hereunder.
-4-
<PAGE>
(b) Each Stockholder hereby agrees, while this Agreement is in effect,
to promptly notify Parent and Purchaser of the number of any new Securities
acquired by such Stockholder, if any, after the date hereof.
Section 6. Tender of Securities. Each Stockholder hereby agrees that
--------------------
such Stockholder will validly tender (or cause the record owner of such shares
to validly tender) and sell pursuant to and in accordance with the terms of the
Offer not later than the tenth business day after commencement of the Offer (or
the earlier of the expiration date of the offer and the tenth business day after
such Shares or Warrants, as the case may be, are acquired by such Stockholder if
the Stockholder acquires Shares or Warrants after the date hereof), or, if the
Stockholder has not received the Offer Documents by such time, within two
business days following receipt of such documents, all of the then outstanding
shares of Company Common Stock and Warrants beneficially owned by such
Stockholder (including the shares of Company Common Stock and Warrants
outstanding as of the date hereof and set forth on Schedule A opposite such
Stockholder's name). Subject to the terms hereof, upon the purchase by
Purchaser of all of such then outstanding shares of Company Common Stock and
Warrants beneficially owned by such Stockholder pursuant to the Offer in
accordance with this Section 6, this Agreement will terminate as it relates to
such Stockholder. Each Stockholder acknowledges that Purchaser's obligation to
accept for payment and pay for the shares of Company Common Stock and Warrants
tendered in the Offer is subject to all the terms and conditions of the Offer
and the Merger Agreement.
Section 7. Termination. This Agreement will terminate as to any
-----------
Stockholder upon the earlier of (a) the purchase of all the Securities
beneficially owned by such Stockholder pursuant to the Offer in accordance with
Section 6 and (b) the date the Merger Agreement is terminated in accordance with
its terms.
Section 8. Expenses. Except as otherwise expressly provided herein
--------
or in the Merger Agreement, all costs and expenses incurred by any of the
parties hereto will be borne by the party incurring such costs and expenses.
Parent and Purchaser, on the one hand, and the Stockholders, severally and not
jointly, on the other hand, will indemnify and hold harmless the other from and
against any and all claims or liabilities for finder's fees or brokerage
commissions or other like payments incurred by reason of action taken by them or
him, respectively.
Section 9. Further Assurances. Each party hereto will execute and
------------------
deliver all such further documents and instruments and take all such further
action as may be reasonably necessary in order to consummate the transactions
contemplated hereby.
Section 10. Publicity. Each of the parties hereto agrees that it
---------
shall not issue any press release or otherwise make any public statements with
respect to this Agreement or the Merger Agreement or the other Transactions
without the consent of the other parties, except as may be required by law or
applicable stock exchange rules.
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<PAGE>
Section 11. Stockholder Capacity. No person executing this Agreement
--------------------
makes any agreement or understanding herein in such Stockholder's capacity as a
director or officer of the Company or any subsidiary of the Company. Each
Stockholder signs solely in such Stockholder's capacity as the beneficial owner
of such Stockholder's Securities and nothing herein shall limit or affect any
actions taken by a Stockholder in such Stockholder's capacity as an officer or
director of the Company or any subsidiary of the Company to the extent
specifically permitted by the Merger Agreement.
Section 12. Enforcement. Each stockholder acknowledges that
-----------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Parent and Purchaser will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party further
agrees to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.
The provisions of this paragraph are without prejudice to any other rights that
another party hereto may have against the another party hereto for any failure
to perform its obligations under this Agreement. In addition, each party hereby
(i) consents to submit such party to the personal jurisdiction of any Federal
court located in the State of New York or any New York state court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees not to attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, (iii) agrees not to
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court located in the State
of New York or a New York state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby. Each party hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or of the United
States of America located in the State of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
Section 13. Miscellaneous.
-------------
(a) All representations, warranties, covenants and agreements made
herein will survive until the earlier of (a) the payment by Purchaser for the
Securities purchased pursuant to the Offer or (b) the termination of the Merger
Agreement in accordance with its terms.
(b) Any provision of this Agreement may be waived at any time by the
party that is entitled to the benefits thereof. No such waiver, amendment or
supplement will be
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<PAGE>
effective unless in writing and signed by the party or parties sought to be
bound thereby. Any waiver by any party of a breach of any provision of this
Agreement will not operate as or be construed to be a waiver of any other breach
of such provision or of any breach of any other provision of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
or one or more sections hereof will not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement.
(c) This Agreement, together with the Merger Agreement and the other
agreements referred to therein, constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements among the parties with respect to such matters. This Agreement
may not be amended, changed, supplemented, waived or otherwise modified, except
upon the delivery of a written agreement executed by the parties hereto.
(d) This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of laws
principles thereof.
(e) The descriptive headings contained herein are for convenience and
reference only and will not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Words in the singular include the plural, and words in
the plural include the singular.
(f) All notices and other communications hereunder will be in writing
and will be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by telecopy, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to Parent or Purchaser to:
Dyckerhoff Aktiengesellschaft
Biebricher Strasse 69
65203 Wiesbaden
Germany
Attn: Dr. Peter Rohde
Peter Steiner
Telecopy: 49-611-676-1413
with copies to:
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<PAGE>
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Thomas A. Ralph
William G. Lawlor
Telecopy: 215-994-2222
If to a Stockholder, at the address set forth on Schedule A hereto.
if to the Company:
Lone Star Industries, Inc.
300 First Stamford Place
Stamford, CT 06912
Attn: General Counsel
Telecopy: 203-969-8686
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Peter G. Samuels
Lawrence H. Budish
Telecopy: 212-969-2900
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
(g) This Agreement may be executed in any number of counterparts, each
of which will be deemed to be an original, but all of which together will
constitute one agreement.
(h) This Agreement is binding upon and is solely for the benefit of
the parties hereto and their respective successors, legal representatives and
assigns. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that Purchaser will have the
right to assign to any direct or indirect wholly owned subsidiary of Parent or
Purchaser any and all rights and obligations of Purchaser under this Agreement,
provided that any such assignment will not relieve Purchaser from any of its
obligations hereunder.
-8-
<PAGE>
(i) In the event any term or provision of this Agreement is determined
to be invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect. Upon any such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto will negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are consummated to the fullest extent possible.
(j) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity will be cumulative and
not alternative, and the exercise of any thereof by either party will not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
-9-
<PAGE>
IN WITNESS WHEREOF, each of the Parent and Purchaser has caused this
Agreement to be signed by its officer or director thereunto duly authorized and
each Stockholder has signed this Agreement, all as of the date first written
above.
DYCKERHOFF AKTIENGESELLSCHAFT
/s/ Peter Rohde
By: ________________________
Name: Peter Rohde
Title:Chief Excutive Officer
/s/ Peter Steiner
By: ________________________
Name: Peter Steiner
Title:Chief Financial Officer
LEVEL ACQUISITION CORP.
/s/ Felix Pardo
By: ________________________
Name: Felix Pardo
Title:
THE ROBERT R. YOUNG FOUNDATION
/s/ David W. Wallace
By: ________________________
Name:David W. Wallace
Title:
/s/ Roger J. Campbell
_______________________________
ROGER J. CAMPBELL
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<PAGE>
/s/ William J. Caso
_______________________________
WILLIAM J. CASO
/s/ Thomas S. Hoelle
_______________________________
THOMAS S. HOELLE
/s/ James W. Langham
_______________________________
JAMES W. LANGHAM
/s/ Harry M. Philip
_______________________________
HARRY M. PHILIP
/s/ William E. Roberts
_______________________________
WILLIAM E. ROBERTS
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<PAGE>
Schedule A
----------
Stockholder Number of Shares
----------- ----------------
The Robert R. Young Foundation 1,234,000
Roger J. Campbell 3,826*
William J. Caso 11,096*
Thomas S. Hoelle 3,984*
James W. Langham 13,264*
Harry M. Philip 4,742*
William E. Roberts 49,958*
_________________
* Numbers do not include shares purchased under the Employee Stock Purchase
Plan ("ESPP") during 1999. No ESPP shares are covered hereunder (whether
or not set forth in the number of shares herein), however, each
Stockholder will use his best efforts to have such shares tendered in the
Offer by such plan. Numbers also do not include Options owned by the
Stockholder which are covered by Section 2.10 of the Merger Agreement,
provided that notwithstanding Section 2.10 of the Merger Agreement, if a
Stockholder acquires any Shares pursuant to an exercise of such
Stockholder's Options, such Shares shall be subject to this Agreement.
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