SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 15, 1997
LUKENS INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-3258 23-2451900
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
50 South First Avenue, Coatesville, PA 19320-0911
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code (610) 383-2000
Item 5. Other Events.
On December 15, 1997, Lukens Inc. ("Lukens") entered
into a definitive Agreement and Plan of Merger (the
"Merger Agreement") with Bethlehem Steel Corporation
("Bethlehem") providing for, among other things, the
merger of a wholly owned subsidiary of Bethlehem with and
into Lukens with Lukens becoming a wholly owned
subsidiary of Bethlehem (the "Merger"). In the Merger,
holders of shares of common stock, par value $.01 per
share, of Lukens ("Lukens Common Stock") can elect to
receive for each such share either (i) $25 in cash,
without interest thereon, or (ii) a number, not less than
2.797 or greater than 3.62, of shares of common stock,
par value $1.00 per share, of Bethlehem ("Bethlehem
Common Stock") based on the average of the daily closing
price per share of Bethlehem Common Stock as reported on
the New York Stock Exchange ("NYSE") Composite
Transactions Tape for the 15 consecutive NYSE trading
days immediately preceding the third full NYSE trading
day prior to the effective time of the Merger (the
"Effective Time"), subject to the limitation that the
amount of cash to be paid and the amount of Bethlehem
Common Stock to be delivered in the Merger will not
exceed 62% and 38%, respectively, of the total value of
the consideration to be paid or delivered by Bethlehem in
the Merger. In the Merger, holders of shares of Series
B ESOP Convertible Preferred Stock, par value $.01 per
share, of Lukens ("Lukens Preferred Stock") will receive
for each such share the amount of cash and the number of
shares of Bethlehem Common Stock they would be entitled
to receive had they converted such shares of Lukens
Preferred Stock into shares of Lukens Common Stock
immediately prior to the Effective Time and did not make
an election to receive cash in the Merger.
Consummation of the Merger is subject to certain
conditions, including approval of the Merger by
stockholders of Lukens and the receipt of regulatory
approvals, including the expiration of the applicable
waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
The foregoing discussion of the Merger Agreement is
a summary only and is qualified in its entirety by
reference to the full text of the Merger Agreement, a
copy of which is filed as an exhibit hereto and
incorporated by reference herein.
A joint press release, dated December 15, 1997,
announcing the Merger Agreement was issued by Lukens and
Bethlehem and is filed as an exhibit hereto and
incorporated by reference herein.
Prior to the execution and delivery of the Merger
Agreement, the Board of Directors of Lukens took all
actions necessary, including the adoption and approval of
an amendment to the Renewed Rights Agreement, dated as of
September 25, 1996 (the "Amendment"), between Lukens and
American Stock Transfer and Trust Company (the "Rights
Agreement"), to render the Rights Agreement inapplicable
to the Merger. A copy of the Amendment is filed as an
exhibit hereto and incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of
December 15, 1997 between Bethlehem Steel
Corporation and Lukens Inc.
4.1 Amendment to the Renewed Rights Agreement dated
as of December 15, 1997 between Lukens Inc. and
American Stock Transfer and Trust Company
99.1 Joint Press Release of Lukens Inc. and Bethlehem
Steel Corporation dated December 15, 1997
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
LUKENS INC.
Dated: December 18, 1997 By: /s/ William D. Sprague
William D. Sprague
Vice President, General
Counsel and Secretary
Index to Exhibits
Exhibit Exhibit
Number
2.1 Agreement and Plan of Merger dated as of December
15, 1997 between Bethlehem Steel Corporation and
Lukens Inc.
4.1 Amendment to the Renewed Rights Agreement dated as
of December 15, 1997 between Lukens Inc. and
American Stock Transfer and Trust Company
99.1 Joint Press Release of Lukens Inc. and Bethlehem
Steel Corporation dated December 15, 1997
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of December 15, 1997,
between
BETHLEHEM STEEL CORPORATION
And
LUKENS INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger........................................ 2
SECTION 1.02. Closing........................................... 2
SECTION 1.03. Effective Time.................................... 2
SECTION 1.04. Effects of the Merger............................. 2
SECTION 1.05. Certificate of Incorporation
and By-laws..................................... 2
SECTION 1.06. Directors......................................... 3
SECTION 1.07. Officers.......................................... 3
ARTICLE II
Effect of the Merger on the Capital Stock
of the Constituent Corporations
SECTION 2.01. Effect on Capital Stock........................... 3
SECTION 2.02. Cash Elections.................................... 7
SECTION 2.03. Proration......................................... 8
SECTION 2.04. Exchange of Certificates..........................10
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company.....................................15
SECTION 3.02. Representations and Warranties of
Bethlehem.......................................34
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business...............................42
SECTION 4.02. No Solicitation.................................. 45
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement/Prospectus;
Company Shareholders Meeting....................48
SECTION 5.02. Letters of the Company's Accountants..............48
SECTION 5.03. Letters of Bethlehem's Accountants................49
SECTION 5.04. Access to Information;
Confidentiality.................................49
SECTION 5.05. Reasonable Efforts................................49
SECTION 5.06. Employee Matters..................................50
SECTION 5.07. Employee Stock Options............................52
SECTION 5.08. Rights Agreement..................................53
SECTION 5.09. Continuance of Existing Indemnification
Rights..........................................53
SECTION 5.10. Fees and Expenses.................................55
SECTION 5.11. Public Announcements..............................56
SECTION 5.12. Affiliates........................................56
SECTION 5.13. Stock Exchange Listings...........................56
SECTION 5.14. Shareholder Litigation............................56
SECTION 5.15. Merger Sub........................................57
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
To Effect the Merger............................57
SECTION 6.02. Conditions to Obligations of Bethlehem
and Merger Sub..................................58
SECTION 6.03. Conditions to Obligation of the
Company.........................................59
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.......................................60
SECTION 7.02. Effect of Termination.............................61
SECTION 7.03. Amendment.........................................62
SECTION 7.04. Extension; Waiver.................................62
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver.............................62
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties......................................62
SECTION 8.02. Notices...........................................63
SECTION 8.03. Definitions.......................................64
SECTION 8.04. Interpretation....................................65
SECTION 8.05. Counterparts......................................65
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries...................................65
SECTION 8.07. Governing Law.....................................65
SECTION 8.08. Assignment........................................66
SECTION 8.09. Disclosure Schedules..............................66
SECTION 8.10. Severability......................................66
SECTION 8.11. Enforcement.......................................66
EXHIBIT A Affiliate Letter
AGREEMENT AND PLAN OF MERGER dated as of
December 15, 1997, between BETHLEHEM STEEL
CORPORATION, a Delaware corporation
("Bethlehem"), and LUKENS INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Bethlehem and
the Company have approved the merger of a subsidiary of Bethlehem with
and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and
outstanding share of Common Stock, par value $.01 per share, of the
Company ("Company Common Stock"), other than shares owned by the Company
and other than Dissenting Shares (as defined in Section 2.01(e)), will be
converted into the right to receive, at the election of the holder
thereof and subject to the terms hereof, shares of Common Stock, par
value $1.00 per share, of Bethlehem ("Bethlehem Common Stock") or cash,
and each issued and outstanding share of Series B ESOP Convertible
Preferred Stock, par value $.01 per share of the Company ("Company Series
B Preferred Stock"), other than shares owned by the Company and other
than Dissenting Shares, will be converted into the right to receive,
subject to certain rights of redemption, the number of shares of
Bethlehem Common Stock and the amount of cash that a holder of the number
of shares of Company Common Stock into which such share of Company Series
B Preferred Stock could have been converted immediately prior to the
Effective Time (as defined in Section 1.03) would receive in the Merger
if such holder failed to exercise the right of election set forth in
Section 2.02 hereof;
WHEREAS, Bethlehem and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger; and
WHEREAS, following the Effective Time, Bethlehem intends to
cause the Company to be merged with and into Bethlehem.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), a subsidiary of Bethlehem
("Merger Sub") shall be merged with and into the Company at the Effective
Time (as defined in Section 1.03). Following the Effective Time, the
separate corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation")
and shall succeed to and assume all the rights and obligations of Merger
Sub in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which (subject to satisfaction or waiver of
the conditions set forth in Sections 6.01, 6.02 and 6.03) shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Section 6.01, at the offices of Cravath, Swaine &
Moore unless another time, date or place is agreed to in writing by the
parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the
parties shall file a certificate of merger (the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall
make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such subsequent time as
Bethlehem and the Company shall agree and as is specified in the
Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have
the effects specified in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a)
The Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The By-laws of the Company as in effect at
the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.06. Directors. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as
the case may be. The Company will obtain such resignations as may be
necessary to effect the foregoing.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as
the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock
of the Constituent Corporations
SECTION 2.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock or Company Series B
Preferred Stock:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and
become one fully paid and nonassessable share of Common Stock of
the Surviving Corporation.
(b) Cancelation of Treasury Stock. Each share of Company
Common Stock and Company Series B Preferred Stock that is owned by
the Company shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Except as otherwise
provided herein and subject to Sections 2.03 and 2.04(e), each
issued and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 2.01(b) and other
than Dissenting Shares) shall be converted into the following (the
"Common Merger Consideration"):
(i) for each such share of Company Common Stock with
respect to which an election to receive cash ("Cash
Consideration") has been effectively made and not revoked
pursuant to Section 2.02 ("Electing Shares"), the right to
receive in cash from Bethlehem an amount equal to $25 (the
"Cash Election Price"); and
(ii) for each such share of Company Common Stock other
than Electing Shares, the right to receive from Bethlehem a
number of duly authorized, validly issued, fully paid and
nonassessable shares of Bethlehem Common Stock ("Stock
Consideration") equal to the Conversion Number. The
"Conversion Number" means the quotient, rounded to the
nearest thousandth, or if there shall not be a nearest
thousandth, the next higher thousandth, obtained by dividing
the Cash Election Price by the average of the daily closing
prices per share of Bethlehem Common Stock (the "Average
Market Price") as reported on the New York Stock Exchange
("NYSE") Composite Transactions Tape (as reported in The Wall
Street Journal or, if not reported therein, in another
authoritative source mutually selected by Bethlehem and the
Company) for the 15 consecutive full NYSE trading days
immediately preceding the third full NYSE trading day prior
to the Effective Time (the "Averaging Period"); provided that
the Conversion Number shall not be greater than 3.62 or less
than 2.797. Notwithstanding the foregoing, (a) if the Board
of Directors of Bethlehem declares a dividend on the
outstanding shares of Bethlehem Common Stock having a record
date after the Effective Time but an ex-dividend date (based
on "regular way" trading on the NYSE of shares of Bethlehem
Common Stock (the "Ex-Date")) that occurs during the
Averaging Period, then for purposes of computing the Average
Market Price, the closing price on the Ex-Date and any
trading day in the Averaging Period after the Ex-Date will be
adjusted by adding thereto the amount of such dividend and
(b) if the Board of Directors of Bethlehem declares a
dividend on the outstanding shares of Bethlehem Common Stock
having a record date before the Effective Time and an Ex-Date
that occurs during the Averaging Period, then for purposes of
computing the Average Market Price, the closing price on any
trading day before the Ex-Date will be adjusted by subtracting
therefrom the amount of such dividend. For purposes of the
immediately preceding sentence, the amount of any noncash dividend
will be the fair market value thereof on the payment date for
such dividend as determined in good faith by mutual agreement
of Bethlehem and the Company.
(d) Conversion of Company Series B Preferred Stock
Each issued and outstanding share of Company Series B
Preferred Stock (other than Dissenting Shares) shall be
converted into the right to receive the number of shares of
Bethlehem Common Stock and, in accordance with Sections
2.03(c) and (d), the amount of cash, that a holder of the
number of shares of Company Common Stock into which such
share of Company Series B Preferred Stock could have been
converted immediately prior to the Effective Time would have
the right to receive pursuant to Sections 2.01(c) and 2.03(c)
and (d) if such holder did not make a Cash Election with
respect to such shares. The consideration issuable pursuant
to this paragraph is referred to herein as the "Preferred
Merger Consideration", and together with the Common Merger
Consideration, as the "Merger Consideration".
(e) Shares of Dissenting Shareholders. Notwithstanding
anything in this Agreement to the contrary, any issued and
outstanding shares of Company Series B Preferred Stock and, if a
Stock Proration Event (as hereinafter defined) shall have occurred,
any issued and outstanding shares of Company Common Stock, in
either case held by a person (a "Dissenting Shareholder") who shall
not have voted to adopt this Agreement or consented thereto in
writing and who shall have properly demanded appraisal for such
shares in accordance with Section 262 of the DGCL ("Dissenting
Shares") shall not be converted as described in Section 2.01(c) and
(d), unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If, after the Effective Time, such
Dissenting Shareholder fails to perfect or withdraws or loses his
right to appraisal, such Dissenting Shareholder's shares of Company
Common Stock or Company Series B Preferred Stock shall no longer be
considered Dissenting Shares for the purposes of this Agreement and
shall thereupon be deemed to have been converted into and to have
become exchangeable for, at the Effective Time, (x) in the case of
Company Common Stock, the right to receive for each such share the
amount in cash (and, if applicable, the number of shares of
Bethlehem Common Stock), without interest, that a holder of a share
who had not demanded appraisal (a "Nondissenting Share") of Company
Common Stock and who had made a Cash Election (as defined below)
with respect to such Nondissenting Share pursuant to Section 2.02
prior to the Election Date (as defined below) would have received
with respect to such Nondissenting Share after giving effect to
Section 2.03 (it being understood that no adjustment shall be made
to the proration computation (if any) made following the Election
Date to give effect to the withdrawal of, or the failure to
perfect, the demand for appraisal with respect to such Dissenting
Shares) and (y) in the case of Company Series B Preferred Stock,
the right to receive for each such share the number of shares of
Bethlehem Common Stock and the amount of cash that a holder of the
number of Nondissenting Shares of Company Common Stock into which
such share of Company Series B Preferred Stock could have been
converted immediately prior to the Effective Time who had not made
a Cash Election with respect to such Nondissenting Shares pursuant
to Section 2.02 prior to the Election Date would have received
after giving effect to Section 2.03. The Company shall give
Bethlehem (i) prompt notice of any demands for appraisal of shares
of Company Common Stock or Company Series B Preferred Stock
received by the Company and (ii) the opportunity to participate in
and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written
consent of Bethlehem, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
(f) Cancelation of Company Common Stock and Company Series B
Preferred Stock. As of the Effective Time, all shares of Company
Common Stock and Company Series B Preferred Stock shall no longer
be outstanding and shall automatically be canceled and shall cease
to exist, and each holder of a certificate that immediately prior
to the Effective Time represented any such shares of Company Common
Stock or Company Series B Preferred Stock (a "Certificate") shall
cease to have any rights with respect thereto, except the right to
receive the applicable Merger Consideration and any cash in lieu of
fractional shares to be issued or paid in consideration therefor
upon surrender of such Certificate in accordance with Section 2.02
or 2.04, without interest, or, in the case of Dissenting
Shareholders, if any, the rights, if any, accorded under Section
262 of the DGCL.
SECTION 2.02. Cash Elections. (a) Each person who, on or
prior to the Election Date referred to in Section 2.02(c) below, is a
record holder of shares of Company Common Stock will be entitled, with
respect to all or any portion of his shares, to make an unconditional
election (a "Cash Election") on or prior to such Election Date to receive
the Cash Consideration, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement/Prospectus
(as defined in Section 3.01(d)), Bethlehem shall enter into an agreement
with a bank or trust company mutually acceptable to the Company and
Bethlehem to act as exchange agent (the "Exchange Agent") for the payment
of the Merger Consideration.
(c) Bethlehem shall prepare and mail a form of election,
which form shall be subject to the reasonable approval of the Company
(the "Form of Election"), with the Proxy Statement/Prospectus to the
record holders of Company Common Stock as of the record date for the
Company Shareholders Meeting (as defined in Section 5.01(b)), which Form
of Election shall be used by each record holder of shares of Company
Common Stock who wishes to elect to receive the Cash Consideration for
any or all shares of Company Common Stock held by such holder. Bethlehem
and the Company will use reasonable efforts to make the Form of Election
and the Proxy Statement/Prospectus available to all persons who become
record holders of Company Common Stock during the period between such
record date and the Election Date referred to below. Any shareholder's
election to receive the Cash Consideration shall have been properly made
only if the Exchange Agent shall have received at its designated office,
by 5:00 p.m., New York City time, on the business day (the "Election
Date") next preceding the date of the Company Shareholders Meeting, a
Form of Election properly completed and signed and accompanied by
Certificates for the shares of Company Common Stock to which such Form of
Election relates, properly endorsed or otherwise in proper form for
transfer (or accompanied by an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, provided
such Certificates are in fact delivered to the Exchange Agent within three
NYSE trading days after the date of execution of such guarantee of
delivery). Failure to deliver Certificates covered by any guarantee of
delivery within three NYSE trading days after the date of execution of
such guarantee of delivery shall be deemed to invalidate any otherwise
properly made Cash Election.
(d) Any Form of Election may be revoked by the shareholder
submitting it to the Exchange Agent only by written notice received by
the Exchange Agent prior to 5:00 p.m., New York City time, on the
Election Date. In addition, all Forms of Election shall automatically be
revoked if the Exchange Agent is notified in writing by Bethlehem and the
Company that the Merger has been abandoned. If a Form of Election is
revoked, the Certificate or Certificates (or guarantees of delivery, as
appropriate) for the shares of Company Common Stock to which such Form of
Election relates shall be promptly returned to the shareholder submitting
the same to the Exchange Agent.
(e) The determination of the Exchange Agent whether or not
Cash Elections have been properly made or revoked pursuant to this
Section 2.02 and when Cash Elections and revocations were received by it
shall be binding. If the Exchange Agent determines that any Cash Election
was not properly made with respect to shares of Company Common Stock,
such shares shall be treated by the Exchange Agent as shares that were
not Electing Shares at the Effective Time, and such shares shall be
converted in the Merger into the right to receive Stock Consideration
pursuant to Section 2.01(c)(ii). The Exchange Agent shall also make all
computations as to the proration contemplated by Section 2.03, and any
such computation shall be conclusive and binding on the holders of shares
of Company Common Stock and on the holders of Company Series B Preferred
Stock. The Exchange Agent may, with the mutual agreement of Bethlehem and
the Company, make such rules as are consistent with this Section 2.02 for
the implementation of the elections provided for herein as shall be
necessary or desirable fully to effect such elections.
SECTION 2.03. Proration. (a) Notwithstanding anything in this
Agreement to the contrary, the maximum aggregate amount of cash that may
be paid to holders of Company Common Stock and Company Series B Preferred
Stock pursuant to this Article II (the "Cash Cap") shall be equal to the
product of (x) the Cash Election Price, (y) the number of Outstanding
Shares and (z) .62; provided, however, that the number in clause (z)
shall be increased by an amount equal to any reduction required to the
number in clause (z) of Section 2.03(c) pursuant to the proviso to Section
2.03(c). As used herein, the term "Outstanding Shares" shall mean the sum of
(x) the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time plus (y) the number of shares of Company
Common Stock into which the outstanding shares of Company Series B
Preferred Stock could have been converted immediately prior to the
Effective Time.
(b) If the product of (x) the number of Electing Shares and
(y) the Cash Election Price (such product, the "Requested Cash Amount")
exceeds the Cash Cap, then each Electing Share shall be converted into
the right to receive cash and shares of Bethlehem Common Stock in
accordance with the terms of Section 2.01 in the following manner:
(i) a cash proration factor (the "Cash Proration Factor")
shall be determined by dividing the Cash Cap by the Requested Cash
Amount; and
(ii) each Electing Share shall be converted into the right to
receive (x) cash in an amount equal to the product of (A) the Cash
Election Price and (B) the Cash Proration Factor (such product, the
"Prorated Cash Amount") and (y) a number of shares of Bethlehem
Common Stock equal to the product of (A) the excess of (1) 1 over
(2) the Cash Proration Factor and (B) the Conversion Number.
(c) Notwithstanding anything in this Agreement to the
contrary, the maximum number of shares of Bethlehem Common Stock that may
be issued to holders of Company Common Stock and Company Series B
Preferred Stock pursuant to this Article II (the "Stock Cap") shall be
equal to the product of (x) the Conversion Number, (y) the number of
Outstanding Shares and (z) .38; provided, however, that the number in
clause (z) shall be reduced to the extent necessary to ensure that the
sum of (A) the Stock Cap and (B) the aggregate number of shares of
Bethlehem Common Stock issuable upon conversion or exercise of all
securities of the Company outstanding immediately prior to the Effective
Time (other than Company Common Stock and Company Series B Preferred
Stock) shall not exceed the product of (i) the number of outstanding
shares of Bethlehem Common Stock immediately prior to the Effective Time
and (ii) .199.
(d) If the product of (x) the difference between (A) the
number of Outstanding Shares minus (B) the number of Electing Shares
(such difference, the "Deemed Stock Electing Shares") and (y) the
Conversion Number (such product, the "Requested Stock Amount") exceeds
the Stock Cap (a "Stock Proration Event"), then each Deemed Stock
Electing Share shall be converted into the right to receive cash and
shares of Bethlehem Common Stock in accordance with the terms of Section
2.01 in the following manner:
(i) a stock proration factor (the "Stock Proration Factor")
shall be determined by dividing the Stock Cap by the Requested
Stock Amount; and
(ii) each Deemed Stock Electing Share shall be converted into
the right to receive (x) a number of shares of Bethlehem Common
Stock equal to the product of (A) the Conversion Number and (B) the
Stock Proration Factor (such product, the "Prorated Stock Amount")
and (y) cash in an amount equal to the product of (A) the excess of
(1) 1 over (2) the Stock Proration Factor and (B) the Cash Election
Price.
SECTION 2.04. Exchange of Certificates. (a) Deposit with the
Exchange Agent. As of the Effective Time, Bethlehem shall deposit with
the Exchange Agent, for the benefit of the holders of shares of Company
Common Stock and Company Series B Preferred Stock, for exchange through
the Exchange Agent, the cash and certificates representing shares of
Bethlehem Common Stock representing the Merger Consideration (such cash
and shares of Bethlehem Common Stock together with any dividends or
distributions with respect to such shares with a record date after the
Effective Time, and any cash payable in lieu of any fractional shares
pursuant to Section 2.04(e) being hereinafter referred to as the
"Exchange Fund") payable and issuable pursuant to Section 2.01 in
exchange for outstanding shares of Company Common Stock and shares of
Company Series B Preferred Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of
record of a Certificate or Certificates, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to such Certificates shall pass, only upon delivery of such
Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Bethlehem and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of such
Certificates in exchange for the Merger Consideration. Upon surrender of
such a Certificate for cancelation to the Exchange Agent or to such other
agent or agents as may be appointed by Bethlehem, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Bethlehem Common
Stock and cash, if any, which such holder has the right to receive
pursuant to this Article II, and the Certificate so surrendered shall
forthwith be canceled. No letter of transmittal will be required with
respect to Certificates previously surrendered with a Form of Election
(unless such Form of Election was duly and timely revoked). In the event
of a transfer of ownership of Company Common Stock or Company Series B
Preferred Stock that is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of
Bethlehem Common Stock may be issued (and, if applicable, cash may be
paid) to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the person requesting
such issuance shall pay any transfer or other Taxes (as defined in
Section 3.01(k)) required by reason of the issuance of shares of
Bethlehem Common Stock (and, if applicable, the payment of cash) to a
person other than the registered holder of such Certificate or establish
to the satisfaction of Bethlehem that such Tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.04(b),
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration which the holder thereof has the right to receive in
respect of such Certificate pursuant to the other provisions of this
Article II. No interest will be paid or will accrue on any cash payable
to holders of Certificates pursuant to the provisions of this Article II.
Bethlehem shall pay the charges and expenses of the Exchange Agent.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Bethlehem Common Stock
with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Bethlehem
Common Stock issuable hereunder in respect thereof, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.04(e), and all such dividends, other distributions and cash in
lieu of fractional shares of Bethlehem Common Stock shall be paid by
Bethlehem to the Exchange Agent and shall be included in the Exchange
Fund, in each case until the surrender of such Certificate in accordance
with this Article II. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of
the certificate representing whole shares of Bethlehem Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share
of Bethlehem Common Stock to which such holder is entitled pursuant to
Section 2.04(e) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to
such whole shares of Bethlehem Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such
whole shares of Bethlehem Common Stock.
(d) No Further Ownership Rights in Company Common Stock and
Company Series B Preferred Stock. All cash paid and shares of Bethlehem
Common Stock issued upon the surrender of Certificates in accordance with
the terms of this Article II (including any cash paid pursuant to Section
2.04(e)) shall be deemed to have been paid and issued in full
satisfaction of all rights pertaining to the shares of Company Common
Stock and Company Series B Preferred Stock theretofore represented by
such Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock or Company
Series B Preferred Stock in accordance with the terms of this Agreement
or prior to the date of this Agreement and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock and Company Series B Preferred Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II, except as otherwise provided by
law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Bethlehem Common Stock shall be issued
upon the surrender for exchange of Certificates, no dividend or
distribution of Bethlehem shall relate to such fractional share interests
and such fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Bethlehem.
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent will determine the excess of (A)
the number of whole shares of Bethlehem Common Stock delivered to
the Exchange Agent by Bethlehem pursuant to Section 2.04(a) over (B) the
aggregate number of whole shares of Bethlehem Common Stock to be
distributed to holders of Company Common Stock and Company Series B
Preferred Stock pursuant to Section 2.01 and Section 2.03 (such excess
being herein called the "Excess Common Shares"). Following the Effective
Time, the Exchange Agent will sell the Excess Common Shares at
then-prevailing prices on the NYSE, all in the manner provided in Section
2.04(e)(iii).
(iii) The sale of the Excess Common Shares by the Exchange
Agent will be executed on the NYSE through one or more member firms of
the NYSE and will be executed in round lots to the extent practicable.
The Exchange Agent will use reasonable efforts to complete the sale of
the Excess Common Shares as promptly following the Effective Time as, in
the Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing market
conditions. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates, the Exchange Agent will hold
such proceeds in trust for the holders of Certificates (the "Common Share
Trust"). The Surviving Corporation will pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such
sale of the Excess Common Shares. The Exchange Agent will determine the
portion of the Common Shares Trust to which each holder of Certificates
is entitled, if any, by multiplying the amount of the aggregate proceeds
comprising the Common Shares Trust by a fraction, the numerator of which
is the amount of the fractional share interest to which such holder of
Certificates is entitled (after taking into account all shares of Company
Common Stock and Company Series B Preferred Stock held at the Effective
Time by such holder) and the denominator of which is the aggregate amount
of fractional share interests to which all holders of Certificates are
entitled.
(iv) Notwithstanding the provisions of Section 2.04(e)(ii)
and (iii), the Surviving Corporation may elect at its option, in lieu of
the issuance and sale of Excess Common Shares and the making of the
payments hereinabove contemplated, to pay each holder of Certificates an
amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder (after taking into account
all shares of Company Common Stock and Company Series B Preferred Stock
held at the Effective Time by such holder) would otherwise be entitled by
(B) the closing price for a share of Bethlehem Common Stock as reported
on the NYSE Composite Transactions Tape (as reported in The Wall Street
Journal, or, if not reported therein, in any other authoritative source)
on the trading day immediately preceding the Closing Date, and, in such
case, all references herein to the cash proceeds of the sale of the
Excess Common Shares and similar references will be deemed to mean and
refer to the payments calculated as set forth in this Section
2.04(e)(iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates with
respect to any fractional share interests, the Exchange Agent will make
available such amounts to such holders of Certificates subject to and in
accordance with the terms of Section 2.04(c).
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of the Certificates for
six months after the Effective Time shall be delivered to Bethlehem, upon
demand, and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to Bethlehem for
payment of their claim for any cash, any shares of Bethlehem Common
Stock, any cash in lieu of fractional shares and any dividends or
distributions with respect to Bethlehem Common Stock.
(h) No Liability. None of Bethlehem, the Company or the
Exchange Agent shall be liable to any person in respect of any shares of
Bethlehem Common Stock or any cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(i) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Bethlehem,
on a daily basis. Any interest and other income resulting from such
investments shall be paid to Bethlehem.
(j) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such person
of a bond in such reasonable amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration
and any cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Bethlehem Common Stock deliverable in respect
thereof, pursuant to this Agreement.
(k) Withholding Rights. Bethlehem or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company
Common Stock or Company Series B Preferred Stock such amounts as
Bethlehem or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld and paid over to the appropriate taxing authority by Bethlehem
or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock or Company Series B Preferred Stock in
respect of which such deduction and withholding was made by Bethlehem or
the Exchange Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.
Except as set forth with respect to a specifically identified
representation and warranty on the Disclosure Schedule delivered by the
Company to Bethlehem prior to the execution of this Agreement (the
"Company Disclosure Schedule"), the Company represents and warrants to
Bethlehem as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and each of its subsidiaries (as defined in Section 8.03)
is a corporation duly organized, validly existing and in good
standing (with respect to jurisdictions which recognize such
concept) under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company
and each of its subsidiaries is duly qualified or licensed to do
business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the
nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or
licensed or to be in good standing individually or in the aggregate
would not have a material adverse effect (as defined in Section 8.03)
on the Company.
(b) Subsidiaries. The Company Disclosure Schedule sets forth
a true and complete list of each subsidiary of the Company. All the
outstanding shares of capital stock of each such subsidiary have
been validly issued and are fully paid and nonassessable and are
owned directly or indirectly by the Company, free and clear of all
pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens").
Except for the capital stock of its subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, limited liability company,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock and
1,000,000 shares of series preferred stock, par value $.01 per
share ("Company Preferred Stock"). At the close of business on
November 28, 1997, (i) 14,941,227 shares of Company Common Stock
were issued and outstanding, (ii) 470,300 shares of Company Series
B Preferred Stock were issued and outstanding (and 1,410,900 shares
of Company Common Stock were reserved for issuance upon the
conversion thereof), (iii) 872,032 shares of Company Common Stock
were held by the Company in its treasury, (iv) 1,378,847 shares of
Company Common Stock were reserved for issuance pursuant to Lukens
Inc. 1985 Stock Option and Appreciation Plan and Lukens Inc. Stock
Option Plan for Non-Employee Directors (collectively, the "Stock
Plans"), and (v) 200,000 shares of Company Series A Preferred Stock
were reserved for issuance in connection with the rights (the
"Rights") to purchase shares of Company Series A Preferred Stock
issued pursuant to the Renewed Rights Agreement dated September 25,
1996 (as amended from time to time, the "Rights Agreement") between
the Company and American Stock Transfer and Trust Company, as
rights agent. Except as set forth above, at the close of business
on December 14, 1997, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or
outstanding (except for shares of Company Common Stock issued upon
conversion of shares of Company Series B Preferred Stock since
November 28, 1997). At the close of business on December 14, 1997,
there were no outstanding stock appreciation rights or rights
(other than outstanding employee stock options to purchase shares
of Company Common Stock ("Employee Stock Options")) to receive
shares of Company Common Stock on a deferred basis granted under
the Stock Plans or otherwise. All outstanding shares of capital
stock of the Company are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no
notes, bonds, debentures or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as set forth above, at
the close of business on December 14, 1997, there were no
outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its subsidiaries was a party or by
which any of them was bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. At the
close of business on December 14, 1997, and except as provided
pursuant to the terms of the Company Series B Preferred Stock there
were no outstanding contractual obligations of the Company or any
of its subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries.
At the close of business on December 14, 1997, there were no
outstanding contractual obligations of the Company to vote or to
dispose of any shares of the capital stock of any of its
subsidiaries. The Company has delivered to Bethlehem a complete and
correct copy of the Rights Agreement.
(d) Authority; Noncontravention. The Company has all
requisite corporate power and authority to enter into this
Agreement and, subject to the Company Shareholder Approval (as
defined in Section 3.01(m)), to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the
Company, subject, in the case of the adoption of this Agreement, to
the Company Shareholder Approval. This Agreement has been duly
executed and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable against the Company
in accordance with their terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation
or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its subsidiaries
under, (i) the Certificate of Incorporation or By-laws of the
Company or the comparable organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any
of its subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the
Company or any of its subsidiaries or their respective properties
or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a material
adverse effect on the Company, (y) impair the ability of the
Company to perform its obligations under this Agreement in any
material respect or (z) prevent or materially delay the
consummation of any of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state or
local government or any court, administrative or regulatory agency
or commission or other governmental authority or agency, domestic
or foreign (a "Governmental Entity"), is required by or with
respect to the Company or any of its subsidiaries in connection
with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated by
this Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"); (2) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the
Company Shareholders Meeting (such proxy statement, (as defined in
Section 5.01(c)), in each case as amended or supplemented from time
to time, the "Proxy Statement/Prospectus"), and (B) such reports
under Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated by
this Agreement; (3) the filing of the Certificate of Merger with
the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is
qualified to do business; (4) such filings and consents as may be
required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required
approval necessitated by the Merger or the transactions
contemplated by this Agreement; (5) such filings with and approvals
of the NYSE to permit the shares of Company Common Stock that are
to be issued pursuant to the terms of this Agreement to be listed
on the NYSE and; (6) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure
to make or obtain which would not reasonably be expected to have a
material adverse effect on the Company or impair the ability of the
Company to perform its obligations under this Agreement in any
material respect.
(e) SEC Documents; Undisclosed Liabilities. The Company has
filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1996 (the "SEC Documents").
As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, as
the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none
of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any
SEC Document has been revised or superseded by a later Filed SEC
Document (as defined in Section 3.01(g)), none of the SEC Documents
contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed SEC Documents,
neither the Company nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the
Company.
(f) Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC by Bethlehem in connection with
the issuance of Bethlehem Common Stock in the Merger (the "Form
S-4") will, at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading or (ii) the Proxy
Statement/Prospectus will, at the date it is first mailed to the
Company's shareholders or at the time of the Company Shareholders
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material
respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by
Bethlehem specifically for inclusion or incorporation by reference
in the Proxy Statement/Prospectus.
(g) Absence of Certain Changes or Events. Except as disclosed
in the SEC Documents filed and publicly available prior to the date
of this Agreement (as amended to the date of this Agreement, the
"Filed SEC Documents"), since the date of the most recent audited
financial statements included in the Filed SEC Documents, the
Company has conducted its business only in the ordinary course, and
there has not been (i) any material adverse change (as defined in
Section 8.03) in the Company, (ii) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital
stock, other than regular quarterly cash dividends, (iii) any
split, combination or reclassification of any of the Company's
capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in
substitution for shares of the Company's capital stock, (iv) (x)
any granting by the Company or any of its significant subsidiaries
to any executive officer or other employee of the Company or any of
its significant subsidiaries of any increase in compensation,
except for normal increases in the ordinary course of business
consistent with past practice or as was required under employment
agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents or (y) any
granting by the Company or any of its significant subsidiaries to
any such executive officer or other employee of any increase in
severance or termination pay, (v) any damage, destruction or loss,
whether or not covered by insurance, that has or would reasonably
be expected to have a material adverse effect on the Company, (vi)
except as may have been required by a change in generally accepted
accounting principles, any change in accounting methods, principles
or practices by the Company materially affecting its assets,
liabilities or business or (vii) any Tax election that would
reasonably be expected to have a material adverse effect on the
Company, or any settlement or compromise of any material Tax
liability.
(h) Litigation. Except as disclosed in the Filed SEC
Documents, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries that individually or in the
aggregate would reasonably be expected to have a material adverse
effect on the Company, nor is there any judgment, order, decree,
statute, law, ordinance, rule or regulation of any Governmental
Entity outstanding against the Company or any of its subsidiaries
having, or which would reasonably be expected to have, such a
material adverse effect.
(i) Absence of Changes in Benefit Plans. Subject to Section
5.06 and except as disclosed in the Filed SEC Documents, since the
date of the most recent audited financial statements included in
the Filed SEC Documents, there has not been any adoption or
amendment in any material respect (or any agreement to adopt or
amend in any material respects) by the Company or any of its
subsidiaries of any collective bargaining agreement or employment
contract or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former director,
officer or employee of the Company or any of its subsidiaries
("Company Plans"). Without limiting the foregoing, except as
disclosed in the Filed SEC Documents, since the date of the most
recent audited financial statements included in the Filed SEC
Documents, there has not been any change in any actuarial or other
assumption used to calculate funding obligations with respect to
any Pension Plan (as defined in Section 3.01(j)), or in the manner
in which contributions to any Pension Plan are made or the basis on
which such contributions are determined. Except as disclosed in the
Filed SEC Documents, there exist no employment, consulting,
severance, termination or indemnification agreements, arrangements
or understandings between the Company or any of its subsidiaries
and any current or former director, officer or employee of the
Company or any of its subsidiaries.
(j) ERISA Compliance. (i) The Company Disclosure Schedule
contains a list of each "employee pension benefit plan" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to herein as a
"Pension Plan"), each "employee welfare benefit plan" (as defined
in Section 3(1) of ERISA) (sometimes referred to herein as a
"Welfare Plan"), each employment contract, stock option, stock
purchase, deferred compensation plan or arrangement and each
other employee fringe benefit plan or arrangement maintained,
contributed to or required to be maintained or contributed to by
the Company, any of its subsidiaries or any other person or entity
that, together with the Company, is or was treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity") for the benefit of any current or
former directors, officers, employees or independent contractors of
the Company or any of its subsidiaries (collectively, "Company
Benefit Plans"). The Company has delivered or made available to
Bethlehem true, complete and correct copies of (v) each Company
Benefit Plan (or, in the case of any unwritten Company Benefit
Plans, descriptions thereof), (w) the two most recent annual
reports on Form 5500 filed with the Internal Revenue Service with
respect to each Company Benefit Plan (if any such report was
required), (x) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description is
required, (y) each currently effective trust agreement, insurance
or group annuity contract and each other funding or financing
arrangement relating to any Company Benefit Plan and (z) the most
recent actuarial and financial valuation prepared with respect to
each Company Benefit Plan.
(ii) Each Company Benefit Plan has been administered in all
respects in accordance with its terms and the Company, its
subsidiaries and all the Company Benefit Plans are in compliance in
all respects with the applicable provisions of ERISA, the Code and
all other applicable laws and the terms of all applicable
collective bargaining agreements except, in each case, for any
failure to administer or any non-compliance that would not
reasonably be expected to have a material adverse effect on the
Company. To the knowledge of the Company, there are no
investigations by any Governmental Entity, termination proceedings
or other claims (except routine claims for benefits payable under
the Company Benefit Plans), suits or proceedings against or
involving any Company Benefit Plan or asserting any rights or
claims to benefits under any Company Benefit Plan that would
reasonably be expected to have a material adverse effect on the
Company. To the knowledge of the Company, there are no facts or
circumstances that could give rise to any liability that would
reasonably be expected to have a material adverse effect on the
Company in the event of any such investigation, claim, suit or
proceeding.
(iii) (1) All contributions to, and payments from, the
Company Benefit Plans that may have been required to be made in
accordance with the terms of the Company Benefit Plans, any
applicable collective bargaining agreement and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely
made, (2) there has been no application for waiver or waiver of the
minimum funding standards imposed by Section 412 of the Code with
respect to any Pension Plan, (3) no Pension Plan has or had at any
time during the current plan year an "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code and
(4) there is no liability under Title IV of ERISA with respect to
any Company Benefit Plan (except for insurance premiums payable to
the Pension Benefit Guaranty Corporation which are not yet due)
that has not been satisfied as of the date hereof, except, in each
case, for contributions, payments, applications, deficiencies or
liabilities that would not reasonably be expected to have a
material adverse effect on the Company.
(iv) Each Pension Plan that is intended to be a tax-qualified
plan has been the subject of a determination letter from the
Internal Revenue Service to the effect that such Pension Plan and
related trust is qualified and exempt from U.S. Federal income
Taxes under Sections 401(a) and 501(a), respectively, of the Code;
no such determination letter has been revoked, and, to the
knowledge of the Company, revocation has not been threatened; and
no such Pension Plan has been amended since the effective date of
its most recent determination letter in any respect that would
adversely affect in any material respect its qualification,
materially increase its costs or require security under Section 307
of ERISA. The Company has delivered or made available to Bethlehem
a copy of the most recent determination letter received with
respect to each Pension Plan for which such a determination letter
has been issued, as well as a copy of any pending application for a
determination letter.
(v) (1) No "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) has occurred that
involves the assets of any Company Benefit Plan and (2) none of the
Company, any of its subsidiaries or, to the knowledge of the
Company, any non-employee trustee, administrator or other fiduciary
of any Company Benefit Plan or any agent of any of the foregoing
has engaged in any transaction or acted in a manner that could, or
failed to act so as to, subject the Company or any trustee,
administrator or other fiduciary to any liability for breach of
fiduciary duty under ERISA or any other applicable law, except, in
each case, for "prohibited transactions" or liabilities that would
not reasonably be expected to have a material adverse effect on the
Company.
(vi) Each Welfare Plan may be amended or terminated without
material liability to the Company at any time after the Effective
Time.
(vii) No employee of the Company will be entitled to any
additional benefits or any acceleration of the time of payment or
vesting of any benefits under any Company Benefit Plan as a result
of the transactions contemplated by this Agreement.
(k) Taxes. (i) Each of the Company and its subsidiaries has
filed all Tax Returns required to be filed by it or requests for
extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such
failures to file or to have extensions granted that remain in
effect individually or in the aggregate would not have a material
adverse effect on the Company. All returns filed by the Company and
each of its subsidiaries are complete and accurate in all material
respects to the knowledge of the Company. The Company and each of
its subsidiaries has paid (or the Company has paid on its behalf)
all Taxes shown as due on such returns and all material Taxes
otherwise due, and the most recent financial statements contained
in the Filed SEC Documents adequately provide for all Taxes payable
by the Company and its subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial
statements, except where the failure to have such an adequate
liability would not have a material adverse effect on the Company.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries
that are not adequately provided for on the financial statements,
except for deficiencies that individually or in the aggregate would
not have a material adverse effect on the Company, and no requests
for waivers of the time to assess any such Taxes have been granted
or are pending. The U.S. Federal income Tax returns of the Company
and each of its subsidiaries consolidated in such returns have been
either examined by and settled with the U.S. Internal Revenue
Service or closed by virtue of the applicable statute of
limitations. There is no audit, examination, deficiency or refund
litigation pending with respect to Taxes and during the past three
years no taxing authority has given written notice of the intent to
commence any such examination, audit deficiency or refund
litigation. None of the assets or properties of the Company or any
of its subsidiaries is subject to any material Tax lien, other than
any such liens for Taxes which are not due and payable, which may
thereafter be paid without penalty or the validity of which are
being contested in good faith by appropriate proceedings and for
which adequate provisions are being maintained in accordance with
generally accepted accounting principles ("Permitted Tax Liens").
(iii) The Company and its subsidiaries shall not be required
to include in a taxable period ending after the Effective Time any
taxable income attributable to income that economically accrued in
a prior taxable period as a result of Section 481 of the Code, the
installment method of accounting or any comparable provision of
state or local Tax law.
(iv) As used in this Agreement, "Taxes" shall include all
Federal, state and local income, franchise, use, property, sales,
excise and other taxes, tariffs or governmental charges of any
nature whatsoever, domestic or foreign, including any interest,
penalties or additions with respect thereto.
(l) No Excess Parachute Payments; Section 162(m) of the Code.
(i) Any amount that could be received (whether in cash or property
or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any director, officer or employee
of the Company or any of its affiliates (as defined in Section
8.03) who is a "disqualified individual" (as such term is defined
in Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement
or Company Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(ii) The disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount
paid or payable by the Company or any of its subsidiaries under any
contract, plan, program, arrangement or understanding.
(m) Voting Requirements. The affirmative vote of the holders
of outstanding shares of the Company Common Stock and Company
Series B Preferred Stock, voting together as a single class,
representing a majority of the voting power of the outstanding
shares of Company Common Stock and Company Series B Preferred Stock
(the "Company Shareholder Approval") is the only vote of the
holders of any class or series of the Company's capital stock
necessary to adopt this Agreement and to approve the transactions
contemplated by this Agreement. The provisions of Section A of
Article ELEVENTH of the Company's Restated Certificate of
Incorporation are inapplicable to the Merger and the other
transactions contemplated by this Agreement.
(n) State Takeover Statutes. The Board of Directors of the
Company has approved the terms of this Agreement and the
consummation of the Merger and the other transactions contemplated
by this Agreement and such approval constitutes approval of this
Agreement, the Merger and the other transactions contemplated by
this Agreement under the provisions of Section 203(a)(l) of the
DGCL. To the best of the Company's knowledge, no other state
takeover statute or similar statute or regulation applies or
purports to apply to this Agreement or any of the transactions
contemplated by this Agreement.
(o) Rights Agreement. The Rights Agreement will be amended as
of the date hereof (the "Rights Plan Amendment") (i) to render the
Rights Agreement inapplicable to this Agreement, the Merger and the
other transactions contemplated by this Agreement and (ii) to
ensure that (y) neither Bethlehem nor any of its wholly owned
subsidiaries is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement and (z) a Stock
Acquisition Date, Distribution Date or Triggering Event (in each
case as defined in the Rights Agreement) does not occur solely by
reason of the execution of this Agreement or the consummation of
the Merger or the other transactions contemplated by this
Agreement.
(p) Brokers. No broker, investment banker, financial advisor
or other person, other than Credit Suisse First Boston Corporation,
is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
(q) Opinion of Financial Advisor. The Company has received
the opinion of Credit Suisse First Boston Corporation, as of the
date of this Agreement, to the effect that, as of such date, the
Merger Consideration is fair to the holders of the Company's Common
Stock from a financial point of view.
(r) Compliance with Applicable Laws. Each of the Company and
its subsidiaries has in effect all Federal, state and local
governmental approvals, authorizations, certificates, permits,
filings, franchises, licenses, notices and rights, domestic or
foreign ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit,
except for the lack of Permits and for defaults under Permits which
lack or default individually or in the aggregate would not have a
material adverse effect on the Company. Except as disclosed in the
Filed SEC Documents, the Company and its subsidiaries are in
compliance with all applicable judgments, orders, decrees,
statutes, laws, ordinances, rules and regulations of any
Governmental Entity, except for possible noncompliance which
individually or in the aggregate would not have a material adverse
effect on the Company.
(s) Environmental Laws and Regulations. Except as described
in the Filed SEC Documents, to the knowledge of the Company (a) the
Company and each of its subsidiaries is in compliance with all
applicable Federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance
that would not, individually or in the aggregate, have a material
adverse effect on the Company, which compliance includes, but is
not limited to, the possession by the Company and each of its
subsidiaries of permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with
the terms and conditions thereof; (b) neither the Company nor any
of its subsidiaries has received written notice of, or, to the
knowledge of the Company, is the subject of, any actions, causes of
action, claims, investigations, demands or notices by any person
alleging liability under or non-compliance with any Environmental
Law ("Environmental Claims") that would, individually or in the
aggregate, have a material adverse effect on the Company; and (c)
there has been no treatment, storage, disposal or release of any
hazardous or toxic material, substance or waste or petroleum, or
any fractions or by-products thereof, at any property or facility
currently or, to the knowledge of the Company, formerly owned,
leased or operated by the Company in a manner or at levels that
require or could require investigation, removal or remediation
under Environmental Laws that would either individually or in the
aggregate reasonably be expected to lead to a material adverse
effect on the Company.
(t) Contracts; Indebtedness. (a) Except as disclosed in the
Filed SEC Documents, there are no contracts or agreements that are
material to the business, properties, assets, financial condition
or results of operations of the Company and its subsidiaries taken
as a whole. Neither the Company nor any of its subsidiaries is in
violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice
would cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it
or any of its properties or assets is bound, except for violations
or defaults that would not reasonably be expected to result in a
material adverse effect on the Company.
(b) The Company Disclosure Schedule sets forth (i) a list of
all agreements, instruments and other obligations pursuant to which
any indebtedness of the Company or any of its subsidiaries in an
aggregate principal amount in excess of $3,000,000 is outstanding
or may be incurred and (ii) the respective principal amounts
outstanding thereunder as of December 13, 1997.
(u) Intellectual Property. The Company and its subsidiaries
own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade names, service marks,
copyrights, know how and other proprietary intellectual property
rights and computer programs (collectively, "Intellectual Property
Rights") that are material to the conduct of the business of the
Company and its subsidiaries taken as a whole. The Company
Disclosure Schedule sets forth a description of all Intellectual
Property Rights that are material to the conduct of the business of
the Company and its subsidiaries taken as a whole. No claims are
pending or, to the knowledge of the Company, threatened that the
Company or any of its subsidiaries is infringing or otherwise
adversely affecting the rights of any person with regard to any
Intellectual Property Right so as to materially adversely affect
any of the Company's material Intellectual Property Rights, and the
Company is not aware of any basis for any such claims. To the
knowledge of the Company, no person is infringing the rights of the
Company or any of its subsidiaries with respect to any material
Intellectual Property Right so as to materially adversely effect
such Intellectual Property Right.
(v) Labor Matters. Except as disclosed in the Filed SEC
Documents, neither the Company nor any of its subsidiaries is party
to any collective bargaining agreement, memorandum of
understanding, settlement or other labor agreement with any union
or labor organization and no union or labor organization has been
recognized by the Company or any of its subsidiaries as an
exclusive bargaining representative for employees of the Company or
any of its subsidiaries. Except as disclosed in the Filed SEC
Documents, to the Company's knowledge, there is no current union
representation question involving employees of the Company or any
of its subsidiaries, nor does the Company have knowledge of any
significant activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any such
employees. Except as disclosed in the Filed SEC Documents, neither
the Company nor any of its subsidiaries has made any commitment
that would require the application of the terms of any collective
bargaining agreements entered into by the Company or any of its
subsidiaries to Bethlehem, to any joint venture of Bethlehem, or to
any subsidiary of Bethlehem.
Except as disclosed in the Filed SEC Documents there is no
material labor dispute, strike, picketing or work stoppage, or any
lockout, involving employees of the Company or any of its
subsidiaries pending or, to the Company's knowledge, threatened
against or involving the Company or any of its subsidiaries.
Except as disclosed in Filed SEC Documents, (i) there is no
grievance, arbitration, unfair labor practice, investigation,
employment discrimination or other labor or employment related
charge, complaint or claim against the Company or any of its
subsidiaries pending before any court, arbitrator, mediator or
governmental agency or tribunal, or, to the Company's knowledge,
threatened, and (ii) there has been no adjudication by any court,
arbitrator, mediator or governmental agency or tribunal that, in
the case of either (i) or (ii), has or that would reasonably be
expected to have a material adverse effect on the Company or
otherwise limit or affect the business operations of the Company.
(w) Assets Other than Real Property Interests. The Company or
a subsidiary has good and valid title to all material assets
reflected on the most recent balance sheet included in the Filed
SEC Documents (the "Balance Sheet") or thereafter acquired, except
those sold or otherwise disposed of for fair value since the date
of the Balance Sheet in the ordinary course of business consistent
with past practice and not in violation of this Agreement, in each
case free and clear of all mortgages, liens, security interests or
encumbrances of any kind except (i) mechanics', carriers',
workmen's , repairmen's or other like liens arising or incurred in
the ordinary course of business, liens arising under original
purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business
and liens for Taxes which are not due and payable or which may
thereafter be paid without penalty, (ii) mortgages, liens, security
interests and encumbrances which secure debt that is reflected as a
liability on the Balance Sheet and the existence of which is
indicated in the notes thereto and (iii) other imperfections of
title or encumbrances, if any, which do not, individually or in the
aggregate, materially impair the continued use and operation of the
assets to which they relate in the business of the Company and the
subsidiaries as presently conducted (the mortgages, liens, security
interests, encumbrances and imperfections of title described in
clauses (i), (ii) and (iii) above are hereinafter referred to
collectively as "Permitted Liens").
All the material tangible personal property of the Company
and the subsidiaries has been maintained in all material respects
in accordance with the past practice of the Company and the
subsidiaries and generally accepted industry practice. Each item of
material tangible personal property of the Company and the
subsidiaries is in all material respects in good working order and
is adequate and sufficient for the Company's intended purposes,
ordinary wear and tear excepted. All leased personal property of
the Company and the subsidiaries is in all material respects in the
condition required of such property by the terms of the lease
applicable thereto during the term of the lease and upon the
expiration thereof.
This Section 3.01(w) does not relate to real property or
interests in real property, such items being the subject of Section
3.01(x).
(x) Title to Real Property. Schedule 3.01(x) sets forth a
complete list of all real property owned in fee by the Company and
the subsidiaries (individually, an "Owned Property") and identifies
any material reciprocal easement or operating agreements relating
thereto. Schedule 3.01(x) sets forth a complete list of all real
property and interests in real property leased by the Company and
the subsidiaries (individually, a "Leased Property") and identifies
any material base leases and reciprocal easement or operating
agreements relating thereto. The Company or a subsidiary has (i)
good and marketable fee title to all Owned Property insurable at
regular rates and (ii) good and valid title to the leasehold
estates in all Leased Property (an Owned Property or Leased
Property being sometimes referred to herein, individually, as a
"Company Property" and, collectively, as "Company Properties"), in
each case free and clear of all mortgages, liens, security
interests, encumbrances, leases, assignments, subleases, easements,
covenants, rights-of-way and other similar restrictions of any
nature whatsoever, except (A) leases, subleases and similar
agreements set forth in Schedule 3.02(x), (B) Permitted Liens, (C)
easements, covenants, rights-of-way and other similar restrictions
of record, (D) any conditions that may be shown by a current,
accurate survey or physical inspection of any Company Property made
prior to Closing and (E) (I) zoning, building and other similar
restrictions, (II) mortgages, liens, security interests,
encumbrances, easements, covenants, rights-of-way and other similar
restrictions that have been placed by any developer, landlord or
other third party on property over which the Company or any
subsidiary has easement rights or on any Leased Property and
subordination or similar agreements relating thereto, and (III)
unrecorded easements, covenants, rights-of-way and other similar
restrictions, none of which items set forth in clauses (C), (D) and
(E), individually or in the aggregate, materially impair the value
or the continued use and operation of the property to which
they relate in the business of the Company and the subsidiaries as
presently conducted. To the knowledge of the Company, the current
use by the Company and the subsidiaries of the plants, offices and
other facilities located on Company Property does not violate any
local zoning or similar land use or government regulations in any
material respect.
(y) Insurance. The Company and the subsidiaries maintain
policies of fire and casualty, liability and other forms of
insurance in such amounts, with such deductibles and against such
risks and losses as are, in the Company's judgment, reasonable for
the business and assets of the Company and the subsidiaries. The
insurance policies owned and maintained by the Company and the
subsidiaries are listed in Schedule 3.01(y). All such policies are
in full force and effect, all premiums due and payable thereon have
been paid (other than retroactive or retrospective premium
adjustments that are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date under
comprehensive general liability and workmen's compensation
insurance policies), and no notice of cancelation or termination
has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of
such cancelation. To the knowledge of the Company, the activities
and operations of the Company and the subsidiaries have been
conducted in a manner so as to conform in all material respects to
all applicable provisions of such insurance policies.
(z) Transactions with Affiliates. Except as set forth in the
Filed SEC Documents, there is no agreement, contract or other
arrangement between the Company or any subsidiary, on the one hand,
and any affiliate (other than the Company or a subsidiary), on the
other hand, that will continue in effect subsequent to the Closing.
After the Closing no affiliate of the Company or any subsidiary
(other than the Company or any subsidiary) will have any material
interest in any property (real or personal, tangible or intangible)
or contract used in or pertaining to the business of the Company or
a subsidiary. No affiliate of the Company or any subsidiary (other
than the Company or any subsidiary) has any direct or indirect
ownership interest in any person in which the Company or a
subsidiary has any direct or indirect ownership interest or with
which the Company or a subsidiary competes or has a business
relationship.
(aa) Books and Records. The Company has delivered to
Bethlehem prior to the execution of this Agreement complete and
correct copies of its Restated Certificate of Incorporation and
By-laws and the articles of incorporation and by-laws (or
comparable organizational documents) of its significant
subsidiaries, in each case as amended to date. The books of
account, minute books, stock record books, and other records of the
Company and its subsidiaries, are complete and correct and have
been maintained in accordance with sound business practices. The
minute books of the Company and its subsidiaries contain accurate
and complete records of all meetings held of, and corporate action
taken by, the stockholders, the Boards of Directors, and committees
of the Boards of Directors of the Company and its subsidiaries, and
no meeting prior to November 30, 1997 of any such stockholders,
Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
At the Closing, all of those books and records will be in the
possession of the Company and its subsidiaries.
SECTION 3.02. Representations and Warranties of Bethlehem.
Except as set forth with respect to a specifically identified
representation and warranty on the Disclosure Schedule delivered by
Bethlehem to the Company prior to the execution of this Agreement (the
"Bethlehem Disclosure Schedule"), Bethlehem represents and warrants to
the Company as follows:
(a) Organization, Standing and Corporate Power. Bethlehem is
a corporation duly organized, validly existing and in good standing
under the laws of Delaware and has the requisite corporate power
and authority to carry on its business as now being conducted.
Bethlehem is duly qualified or licensed to do business and is in
good standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed or
to be in good standing individually or in the aggregate would not
have a material adverse effect on Bethlehem. Bethlehem has
delivered to the Company complete and correct copies of its
Restated Certificate of Incorporation and By-laws as amended to the
date hereof.
(b) Capital Structure. The authorized capital stock of
Bethlehem consists of 250,000,000 shares of Bethlehem Common Stock,
20,000,000 shares of preferred stock, par value $1.00 per share
("Bethlehem Preferred Stock") and 20,000,000 shares of preference
stock, par value $1.00 per share ("Bethlehem Preference Stock"). At
the close of business on December 12, 1997, (i) 112,931,683 shares
of Bethlehem Common Stock were issued and outstanding, (ii)
2,500,000 shares of $5.00 Cumulative Convertible Preferred Stock,
4,000,000 shares of $2.50 Cumulative Convertible Preferred Stock,
and 5,123,200 shares of Bethlehem $3.50 Cumulative Convertible
Preferred Stock were issued and outstanding, (iii) 1,703,849 shares
of Bethlehem Series A Preference Stock and 706,254 shares of
Bethlehem Series B Preference Stock were issued and outstanding,
(iv) 2,051,583 shares of Bethlehem Common Stock were held by
Bethlehem in its treasury, (v) 7,716,693 shares of Bethlehem Common
Stock were reserved for issuance pursuant to the 1994 Stock
Incentive Plan of Bethlehem Steel Corporation, the 1988 Stock
Incentive Plan of Bethlehem Steel Corporation, the 1994
Non-Employee Directors Stock Plan of Bethlehem Steel Corporation,
and the Savings Plan for Salaried Employees of Bethlehem Steel
Corporation and Subsidiary Companies (collectively, the "Bethlehem
Stock Plans") and (vi) 1,500,000 shares of Series A Junior
Participating Preference Stock are reserved for issuance in
connection with the rights (the "Bethlehem Rights") to purchase
shares of Series A Junior Participating Preference Stock issued
pursuant to the Rights Agreement dated as of September 28, 1988 (as
amended from time to time, the "Bethlehem Rights Agreement")
between Bethlehem and Morgan Shareholder Services Trust Company, as
Rights Agent. Except as set forth above, at the close of business
on December 12, 1997, no shares of capital stock or other voting
securities of Bethlehem were issued, reserved for issuance or
outstanding. At the close of business on December 12, 1997, there
were no outstanding stock appreciation rights or rights (other than
employee stock options to purchase shares of Bethlehem Common
Stock) to receive shares of Bethlehem Common Stock on a deferred
basis granted under the Bethlehem Stock Plans or otherwise. All
outstanding shares of capital stock of Bethlehem are, and all
shares which may be issued pursuant to this Agreement will be, when
issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no
notes, bonds, debentures or other indebtedness of Bethlehem having
the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of Bethlehem may vote. Except as set forth above, at
the close of business on December 12, 1997, there were no
outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind
to which Bethlehem or any of its subsidiaries was a party or by
which any of them was bound obligating Bethlehem or any of its
subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other
voting securities of Bethlehem or any of its subsidiaries or
obligating Bethlehem or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. At the
close of business on December 12, 1997, there were no outstanding
contractual obligations of Bethlehem or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock
of Bethlehem or any of its subsidiaries.
(c) Authority; Noncontravention. Bethlehem has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Bethlehem and the
consummation by Bethlehem of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate
action on the part of Bethlehem. This Agreement has been duly
executed and delivered by Bethlehem and constitutes a valid and
binding obligation of Bethlehem, enforceable against Bethlehem in
accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
of this Agreement by Bethlehem will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon
any of the properties or assets of Bethlehem under, (i) the
Restated Certificate of Incorporation or By-laws of Bethlehem, (ii)
any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise
or license applicable to Bethlehem or its properties or assets or
(iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Bethlehem
or its properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate would not (x)
have a material adverse effect on Bethlehem, (y) impair the ability
of Bethlehem to perform its obligations under this Agreement in any
material respect or (z) prevent or materially delay the
consummation of any of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity
is required by or with respect to Bethlehem in connection with the
execution and delivery of this Agreement by Bethlehem or the
consummation by Bethlehem of the transactions contemplated by this
Agreement, except for (1) the filing of a premerger notification
and report form by Bethlehem under the HSR Act; (2) the filing with
the SEC of the Form S-4 and such reports under Section 13(a),
13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement; (3) the filing of the Certificate
of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which
Bethlehem is qualified to do business; (4) such filings and
consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; (5) such filings with and approvals
of the NYSE and the Chicago Stock Exchange (the "CSE") to permit
the shares of Bethlehem Common Stock that are to be issued in the
Merger and under the Stock Plans to be listed on the NYSE and the
CSE; and (6) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure to make or
obtain which would not reasonably be expected to have a material
adverse effect on Bethlehem or impair the ability of Bethlehem to
perform its obligations under this Agreement in any material
respect.
(d) SEC Documents; Undisclosed Liabilities. Bethlehem has
filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1996 (the "Bethlehem SEC
Documents"). As of their respective dates, the Bethlehem SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder
applicable to such Bethlehem SEC Documents, and none of the
Bethlehem SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in
any Bethlehem SEC Document has been revised or superseded by a
later Filed Bethlehem SEC Document (as defined in Section 3.02(f)),
none of the Bethlehem SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Bethlehem included in
the Bethlehem SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial
position of Bethlehem and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except
as set forth in the Filed Bethlehem SEC Documents, neither
Bethlehem nor any of its subsidiaries has any material liabilities
or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on
Bethlehem.
(e) Information Supplied. None of the information supplied or
to be supplied by Bethlehem specifically for inclusion or
incorporation by reference in the Form S-4 will, at the time the
Form S-4 becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading. The Form S-4 will comply as to
form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except
that no representation or warranty is made by Bethlehem with
respect to statements made or incorporated by reference therein
based on information supplied by the Company specifically for
inclusion or incorporation by reference in the Proxy Statement/
Prospectus or the Form S-4.
(f) Absence of Certain Changes or Events. Except as disclosed
in the Bethlehem SEC Documents filed and publicly available prior
to the date of this Agreement (as amended to the date of this
Agreement, the "Filed Bethlehem SEC Documents"), since the date of
the most recent audited financial statements included in the Filed
Bethlehem SEC Documents, Bethlehem has conducted its business only
in the ordinary course, and there has not been (i) any material
adverse change in Bethlehem, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of Bethlehem's capital
stock, other than regular quarterly cash dividends, (iii) any
split, combination or reclassification of any of Bethlehem's
capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in
substitution for shares of Bethlehem's capital stock, (iv) any
damage, destruction or loss, whether or not covered by insurance,
that has or would reasonably be expected to have a material adverse
effect on Bethlehem, (v) except as may have been required by a
change in generally accepted accounting principles, any change in
accounting methods, principles or practices by Bethlehem materially
affecting its assets, liabilities or business or (vi) any Tax
election that would reasonably be expected to have a material
adverse effect on Bethlehem, or any settlement or compromise of any
material Tax liability.
(g) Litigation. Except as disclosed in the Filed Bethlehem
SEC Documents, there is no suit, action or proceeding pending or,
to the knowledge of Bethlehem, threatened against or affecting
Bethlehem or any of its subsidiaries that individually or in the
aggregate would reasonably be expected to have a material adverse
effect on Bethlehem, nor is there any judgment, order, decree,
statute, law, ordinance, rule or regulation of any Governmental
Entity outstanding against Bethlehem or any of its subsidiaries
having, or which would reasonably be expected to have, any such
material adverse effect.
(h) ERISA Compliance. With respect to each "employee benefit
plan" (as defined in Section 3(1) of ERISA) and each other
employment, compensation, deferred compensation, change in control,
termination or equity-based plan, program, agreement or arrangement
entered into, maintained or contributed to by Bethlehem or a
Commonly Controlled Entity of Bethlehem ("Bethlehem Benefit Plan"),
no event has occurred and, to the knowledge of Bethlehem, no
condition or set of circumstances exists, in connection with which
Bethlehem or any of its subsidiaries could be subject to any
liabilities (except liabilities for benefits claims and funding
obligations payable in the ordinary course) under ERISA, the Code
or any other applicable law that are individually or in the
aggregate reasonably likely to have a material adverse effect on
Bethlehem.
(i) Taxes. (i) Each of Bethlehem and its subsidiaries has
filed all Tax Returns required to be filed by it or requests for
extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such
failures to file or to have extensions granted that remain in
effect individually or in the aggregate would not have a material
adverse effect on Bethlehem. All returns filed by Bethlehem and
each of its subsidiaries are complete and accurate in all material
respects to the knowledge of Bethlehem. Bethlehem and each of its
subsidiaries has paid (or Bethlehem has paid on its behalf) all
Taxes shown as due on such returns and all material Taxes otherwise
due, and the most recent financial statements contained in the
Filed Bethlehem SEC Documents reflect an adequate liability for all
Taxes payable by Bethlehem and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such
financial statements, except where the failure to have such an
adequate liability would not have a material adverse effect on
Bethlehem.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed against Bethlehem or any of its subsidiaries
that are not adequately reflected on the financial statements,
except for deficiencies that individually or in the aggregate would
not have a material adverse effect on Bethlehem, and no requests
for waivers of the time to assess any such Taxes have been granted
or are pending. The U.S. Federal income Tax returns of Bethlehem
and each of its subsidiaries consolidated in such returns have
either been examined by and settled with the U.S. Internal Revenue
Service or closed by virtue of the applicable statute of
limitations. There is no audit, examination, deficiency or refund
litigation pending with respect to Taxes and during the past three
years no taxing authority has given written notice of the intent to
commence any such examination, audit, deficiency or refund
litigation. None of the assets or properties of Bethlehem or any of
its subsidiaries is subject to any material Tax lien other than
Permitted Tax Liens.
(j) Brokers. No broker, investment banker, financial advisor
or other person, other than J.P. Morgan Securities Inc., the fees
and expenses of which will be paid by Bethlehem, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of
Bethlehem.
(k) Opinion of Financial Advisor. Bethlehem has received the
opinion of J.P. Morgan Securities Inc., dated the date of this
Agreement, to the effect that, as of such date, the Merger
Consideration is fair to Bethlehem from a financial point of view.
(l) Compliance with Applicable Laws. Each of Bethlehem and
its significant subsidiaries has in effect all Permits necessary
for it to own, lease or operate its properties and assets and to
carry on its business as now conducted, and there has occurred no
default under any such Permit, except for the lack of Permits and
for defaults under Permits which lack or default individually or in
the aggregate would not have a material adverse effect on
Bethlehem. Except as disclosed in the Filed Bethlehem SEC
Documents, Bethlehem and its significant subsidiaries are in
compliance with all applicable judgments, orders, decrees,
statutes, laws, ordinances, rules and regulations of any
Governmental Entity, except for possible noncompliance which
individually or in the aggregate would not have a material adverse
effect on Bethlehem.
(m) Bethlehem Rights Agreement. Under the terms of the
Bethlehem Rights Agreement, the transactions contemplated by this
Agreement will not cause a Distribution Date (as such term is
defined in the Bethlehem Rights Agreement) to occur or cause the
Bethlehem Rights to become exercisable.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
the Company. Except as set forth in Section 4.01 of the Company
Disclosure Schedule or Section 5.06 hereof, and except with the consent
of Bethlehem, during the period from the date of this Agreement to the
Effective Time, the Company shall, and shall cause its subsidiaries to,
carry on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and
preserve their relationships with those persons having business dealings
with them to the end that their goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Except as set forth in Section 4.01 of
the Company Disclosure Schedule or Section 5.06 hereof, without limiting
the generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, the Company shall not, and shall not
permit any of its subsidiaries to, without the consent of Bethlehem:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock,
other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent and other than
regular quarterly cash dividends of $.25 on Company Common Stock
and $1.20 on Company Series B Preferred Stock, (y) split, combine
or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or
other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible
securities (other than the issuance of Company Common Stock upon
the exercise of Employee Stock Options outstanding on the date of
this Agreement and in accordance with their present terms or in
accordance with the present terms of the Stock Plans);
(iii) amend its Restated Certificate of Incorporation,
by-laws, articles of incorporation, code of regulations or other
comparable organizational documents, as applicable;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
limited liability company, partnership, joint venture or other
entity or division thereof or (y) any assets that individually or
in the aggregate are material to the Company and its subsidiaries
taken as a whole, except for purchases of inventory in the ordinary
course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties
or assets other than in the ordinary course of business consistent
with past practice;
(vi) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell
any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past
practice, or (z) make any loans, advances or capital contributions
to, or investments in, any other person, other than to the Company
or any direct or direct subsidiary of the Company or to officers
and employees of the Company or any of its subsidiaries for travel,
business or relocation expenses in the ordinary course of business;
(vii) make or agree to make any new capital expenditure or
capital expenditures which individually is in excess of $1,000,000
or in the aggregate are in excess of $10,000,000;
(viii) make any Tax election that could reasonably be
expected to have a material adverse effect on the Company or settle
or compromise any material Tax liability;
(ix) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements
(or the notes thereto) of the Company included in the Filed SEC
Documents, incurred since the date of such financial statements in
the ordinary course of business consistent with past practice or
which do not in the aggregate have a material adverse effect on the
Company;
(x) (x) amend (other than as required by applicable law) any
Company Benefit Plan in any material respect, (y) increase the
compensation or bonus opportunity of any employee of the Company or
its subsidiaries, except for any increases in the ordinary course
of business consistent with past practice, or (z) grant any
additional equity based compensation to any employee of the Company
or its subsidiaries, except for grants in the ordinary course of
business consistent with past practice;
(xi) except in the ordinary course of business or except as
could not reasonably be expected to have a material adverse effect
on the Company, modify, amend or terminate any material contract or
agreement to which the Company or any of its subsidiaries is a
party or waive, release or assign any material rights or claims
thereunder;
(xii) make any change to its accounting methods, principles
or practices, except as may be required by generally accepted
accounting principles; or
(xiii) authorize, or commit or agree to take, any of
the foregoing actions.
(b) Conduct of Business by Bethlehem. During the period from
the date of this Agreement to the Effective Time, Bethlehem shall not (i)
amend its Restated Certificate of Incorporation or by-laws, (ii) make any
Tax election that could reasonably be expected to have a material adverse
effect on Bethlehem or settle or compromise any material Tax liability or
(iii) authorize, or commit or agree to take, any of the foregoing
actions.
(c) Other Actions. The Company and Bethlehem shall not, and
shall not permit any of their respective subsidiaries to, take any action
that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any
of such representations and warranties that are not so qualified becoming
untrue in any material respect or (iii) any of the conditions to the
Merger set forth in Article VI not being satisfied.
(d) Advice of Changes. The Company and Bethlehem shall
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement or
(iii) any change or event having, or which could reasonably be expected
to have, a material adverse effect on such party or on the truth of their
respective representations and warranties or the ability of the
conditions set forth in Article VI to be satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by it or any of its subsidiaries to, directly or indirectly
through another person, (i) solicit or initiate (including by way of
furnishing information), or take any other action designed to facilitate,
any inquiries or the making of any proposal that constitutes any takeover
proposal (as defined below) or (ii) participate in any discussions or
negotiations regarding any takeover proposal; provided, however, that if,
at any time prior to the adoption of this Agreement by the holders of
Company Common Stock, the Board of Directors of the Company determines in
good faith, after consultation with outside counsel, that it is necessary
to do so in order to comply with its fiduciary duties to the Company's
shareholders under applicable law, the Company may, in response to a
takeover proposal that was not solicited by it, and subject to compliance
with Section 4.02(c), (x) furnish information with respect to the Company
and its subsidiaries to any person pursuant to a customary
confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in
negotiations regarding such takeover proposal. For purposes of this
Agreement, "takeover proposal" means any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of
20% or more of the assets of the Company and its subsidiaries or 20% or
more of any class of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class
of equity securities of the Company or any of its subsidiaries, or any
merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or
any of its subsidiaries, other than the transactions contemplated by this
Agreement.
(b) Except as expressly permitted by this Section 4.02,
neither the Board of Directors of the Company nor any committee thereof
shall (i) (unless it determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with
its fiduciary duties to the Company's shareholders under applicable law)
withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Bethlehem, the approval or recommendation by such Board
of Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
takeover proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any takeover
proposal. Notwithstanding the foregoing, in the event that prior to the
adoption of this Agreement by the holders of Company Common Stock the
Board of Directors of the Company receives a superior proposal (as
defined below), the Board of Directors of the Company may (x) (if it
determines in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its fiduciary duties to
the Company's shareholders under applicable law) withdraw or modify its
approval or recommendation of the Merger or this Agreement or (y) approve
or recommend such superior proposal or terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause the
Company to enter into any Acquisition Agreement with respect to any
superior proposal) but only at a time that is after the fifth business
day following Bethlehem's receipt of written notice from the Company
advising Bethlehem that the Board of Directors of the Company has
received a superior proposal, specifying the terms and conditions of such
superior proposal and identifying the person making such superior
proposal. For purposes of this Agreement, a "superior proposal" means any
proposal or offer made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the shares of Company Common
Stock then outstanding or a substantial portion of the assets of the
Company and its subsidiaries and otherwise on terms which the Board of
Directors of the Company determines in its good faith judgment to be more
favorable to the Company's shareholders than the Merger and for which
financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company, is
reasonably capable of being obtained by such third party.
(c) In addition to the obligations of the Company set forth
in paragraphs (a) and (b) of this Section 4.02, the Company shall
immediately advise Bethlehem of any takeover proposal, the material terms
and conditions of such takeover proposal and the identity of the person
making such request or takeover proposal. The Company will keep Bethlehem
reasonably informed of the status and details (including amendments) of
any such takeover proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's shareholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation
with outside counsel, failure so to disclose would be inconsistent with
its fiduciary duties to the Company's shareholders under applicable law;
provided, however, that neither the Company nor its Board of Directors
nor any committee thereof shall, except as permitted by Section 4.02(b),
withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, a takeover
proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy
Statement/Prospectus; Company Shareholders Meeting. (a) As soon as
practicable following the date of this Agreement, the Company and
Bethlehem shall prepare and file with the SEC the Proxy
Statement/Prospectus and Bethlehem shall prepare and file with the SEC
the Form S-4, in which the Proxy Statement/Prospectus will be included as
a prospectus. Each of the Company and Bethlehem shall use all reasonable
efforts to have the Form S-4 declared effective under the Securities Act
as promptly as practicable after such filing. The Company will use all
reasonable efforts to cause the Proxy Statement/Prospectus to be mailed
to the Company's shareholders as promptly as practicable after the Form
S-4 is declared effective under the Securities Act. Bethlehem shall also
take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to
service of process) required to be taken under any applicable state
securities laws in connection with the issuance of Bethlehem Common Stock
in connection with the Merger and the Company shall furnish all
information concerning the Company and the holders of the Company Common
Stock as may be reasonably requested in connection with any such action.
(b) Subject to the fiduciary duties of the directors under
applicable law, the Company will, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Company Shareholders Meeting") for the
purpose of obtaining the Company Shareholder Approval. Subject to the
fiduciary duties of the directors under applicable law, the Company will,
through its Board of Directors, recommend to its shareholders the
adoption of this Agreement and the approval of the transactions
contemplated hereby.
SECTION 5.02. Letters of the Company's Accountants. The
Company shall use all reasonable efforts to cause to be delivered to
Bethlehem a letter of Arthur Andersen LLP, the Company's independent
public accountants, dated a date within two business days before the date
on which the Form S-4 shall become effective and a letter of Arthur
Andersen LLP dated a date within two business days before the Closing
Date, each addressed to Bethlehem, in form and substance reasonably
satisfactory to Bethlehem and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.03. Letters of Bethlehem's Accountants. Bethlehem
shall use all reasonable efforts to cause to be delivered to the Company
a letter of Price Waterhouse LLP, Bethlehem's independent public
accountants, dated a date within two business days before the date on
which the Form S-4 shall become effective and a letter of Price
Waterhouse LLP dated a date within two business days before the Closing
Date, each addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality. Each of
the Company and Bethlehem shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers,
employees, financial advisors, attorneys, accountants and other
representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and
records and, during such period, each of the Company and Bethlehem shall,
and shall cause each of its respective subsidiaries to, furnish promptly
to the other party (a) a copy of each report, schedule, form, statement
and other document filed by it during such period pursuant to the
requirements of U.S. Federal or state securities laws and (b) all other
information concerning its business, properties and personnel as such
other party may reasonably request. Each of the Company and Bethlehem
will hold, and will cause its respective officers, employees, financial
advisors, attorneys, accountants and other representatives and affiliates
to hold, any nonpublic information in accordance with the terms of the
Confidentiality Agreement between Bethlehem and the Company (the
"Confidentiality Agreement").
SECTION 5.05. Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper
or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by
this Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities
and the making of all necessary registrations and filings (including
filings with Governmental Entities, such as those referred to in Sections
3.01(d)(1)-(5) and 3.02(c)(1)-(5)) and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary waivers, consents or approvals from third parties, (iii)
the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed and (iv)
the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement. Notwithstanding the foregoing, in connection
with any filing or submission required or action to be taken by either
Bethlehem or the Company to effect the Merger and to consummate the other
transactions contemplated hereby, the Company shall not, without
Bethlehem's prior written consent, commit to any divestiture transaction,
and neither Bethlehem nor any of its affiliates shall be required to
divest or hold separate or otherwise take or commit to take any action
that limits its freedom of action with respect to, or its ability to
retain, the Company or any of its businesses, product lines or assets or
any of the businesses, product lines or assets of Bethlehem or any of its
affiliates or that otherwise would have a material adverse effect on
Bethlehem.
(b) In connection with and without limiting the foregoing,
the Company and its Board of Directors shall (i) take all reasonable
action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to the Merger, this
Agreement, or any of the other transactions contemplated by this
Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement, or any other
transaction contemplated by this Agreement, take all action necessary to
ensure that the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger and the other transactions
contemplated by this Agreement.
SECTION 5.06. Employee Matters. (a) Bethlehem agrees that the
Company shall honor in accordance with their respective terms and, on and
after the Effective Time, Bethlehem shall cause the Surviving Corporation
to honor, without offset, deduction, counterclaim, interruption or
deferment, all Company Plans and all other written employment, severance,
termination and retirement agreements to which the Company is a party as
of the Effective Time, including those Company Plans set forth in the
Company Disclosure Schedule. Bethlehem acknowledges that, for the
purposes of certain of such Company Plans and certain of such other
employment, severance, termination and retirement agreements to which the
Company is currently a party, the consummation or shareholder approval
(depending upon the terms of the applicable plan or agreement) of the
Merger will constitute a "change in control" of the Company (as such term
is defined in such plans and agreements) at the Effective Time and "Good
Reason" (as such term is defined in the Severance Agreements referred to
in Section 3.01(j) of the Company Disclosure Schedule) with respect to
the 12 executive officers of the Company identified in Section 3.01(j) of
the Company Disclosure Schedule at, and subject to, the times specified
therein. Subject to the preceding sentence, Bethlehem agrees to cause the
Surviving Corporation, after consummation of the Merger, to pay all
amounts provided under such Company Plans and agreements in accordance
with their respective terms and to honor, and to cause the Surviving
Corporation to honor, all rights, privileges and modifications to or with
respect to any such Company Plans or agreements that become effective as
a result of such change in control.
(b) Bethlehem agrees that, for a period of no less than one
year after the Effective Time, it shall, or shall cause the Surviving
Corporation to, provide employee pension and welfare plans for the
benefit of employees and former employees of the Company, that, in the
aggregate, are not materially less favorable than the Company Plans in
effect immediately prior to the Effective Time. To the extent any benefit
plan of Bethlehem (or any plan of the Surviving Corporation) shall be
made applicable to any employee or former employee of the Company,
Bethlehem shall, or shall cause the Surviving Corporation to, grant to
employees and former employees of the Company credit for service with the
Company prior to the Effective Time for the purposes of determining
eligibility to participate and the employee's nonforfeitable interest in
benefits thereunder and, unless a duplication of benefits would thereby
result, for calculating benefits (including benefits the amount or level
of which is determined by reference to an employee's vesting service)
thereunder. In addition, to the extent any Bethlehem Plan (or any plan of
the Surviving Corporation) that constitutes a "welfare plan," as defined
in Section 3.01(j) hereof, shall be made applicable to any employee or
former employee of the Company, Bethlehem shall, or shall cause the
Surviving Corporation to, (i) waive all preexisting condition exclusions
and waiting periods otherwise applicable to employees and former
employees of the Company, except to the extent any such limitations or
waiting periods in effect under comparable Company Plans have not been
satisfied as of the date such plan is made so applicable and (ii) credit
each employee and former employee of the Company for any co-payments and
deductibles paid by such employee or former employee under comparable
Company Plans prior to the date such plan is made so applicable. Nothing
in this Agreement shall be interpreted as limiting the power of the
Surviving Corporation to amend or terminate any Company Plan or any other
employee benefit plan, program, agreement or policy or as requiring the
Surviving Corporation or Bethlehem to offer to continue (other than as
required by its terms) any written employment contract.
SECTION 5.07. Employee Stock Options. At the Effective Time
or such earlier time as is provided in the applicable stock option plan
or employee or director stock option or agreement as in effect on the
date hereof all Employee Stock Options shall become vested and
exercisable in full. At the Effective Time, each of the Employee Stock
Options which is outstanding and unexercised at the Effective Time shall
be converted automatically into an option to purchase shares of Bethlehem
Common Stock in an amount and at an exercise price determined as provided
below (and otherwise subject to the terms of the stock option plans of
the Company governing the Employee Stock Options (the "Company Stock
Option Plans")):
(1) The number of shares of Bethlehem Common Stock to be
subject to the new option shall be equal to the product of the number of
shares of Company Common Stock subject to the original option and the
Conversion Number; provided, however, that any fractional shares of
Bethlehem Common Stock resulting from such multiplication shall be
rounded down to the nearest share; and
(2) The exercise price per share under the new option shall
be equal to (a) the aggregate exercise price of the original option
divided by (b) the total number of shares of Bethlehem Common Stock
subject to the option; provided, however, that such exercise price shall
be rounded up to the nearest cent.
The adjustment provided herein with respect to any incentive
stock options shall be and is intended to be effected in a manner that is
consistent with Section 424(a) of the Code. The duration and other terms
of the new option shall be the same as that of the original option,
except that all references to the Company shall be deemed to be
references to Bethlehem and the vesting of all options shall be
accelerated to the Effective Time. Bethlehem shall file with the SEC a
registration statement on Form S-8 (or other appropriate form) or a
post-effective amendment to the Registration Statement as promptly as
practicable after the date hereof for purposes of registering all shares
of Bethlehem Common Stock issuable after the Effective Time upon exercise
of the Employee Stock Options, and shall have such registration statement
or post-effective amendment become effective and comply, to the extent
applicable, with state securities or blue sky laws with respect thereto
at the Effective time.
SECTION 5.08. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 3.01(o)) reasonably requested in writing by Bethlehem (including
redeeming the Rights immediately prior to the Effective Time or amending
the Rights Agreement) in order to render the Rights inapplicable to the
Merger and the other transactions contemplated by this Agreement.
SECTION 5.09. Continuance of Existing Indemnification Rights.
(a) For six years after the Effective Time, Bethlehem shall, or shall
cause the Surviving Corporation to, indemnify, defend and hold harmless
any person who is now, or has been at any time prior to the date hereof,
or who becomes prior to the Effective Time, a director, officer, employee
or agent (an "Indemnified Person") of the Company or any of its
subsidiaries against all losses, claims, damages, liabilities, costs and
expenses (including attorneys' fees and expenses), judgments, fines,
losses and amounts paid in settlement in connection with any actual or
threatened action, suit, claim, proceeding or investigation (each a
"Claim") to the extent that any such Claim is based on, or arises out of:
(i) the fact that such Indemnified Person is or was a director, officer,
employee or agent of the Company or any of its subsidiaries or is or was
serving at the request of the Company or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise; or (ii) this Agreement or any
of the transactions contemplated hereby, in each case to the extent that
any such Claim pertains to any matter or fact arising, existing or
occurring prior to or at the Effective Time, regardless of whether such
Claim is asserted or claimed prior to, at or after the Effective Time, to
the full extent permitted under the DGCL, the Company's Restated
Certificate of Incorporation or By-laws or any indemnification agreement
in effect at the date hereof, including provisions relating to
advancement of expenses incurred in the defense of any such Claim;
provided, however, that neither Bethlehem nor the Surviving Corporation
shall be required to indemnify any Indemnified Person in connection with
any proceeding (or portion thereof) involving any Claim initiated by such
Indemnified Person unless the initiation of such proceeding (or portion
thereof) was authorized by the Board of Directors of Bethlehem or unless
such proceeding is brought by an Indemnified Person to enforce rights
under this Section 5.09. Without limiting the generality of the preceding
sentence, in the event any Indemnified Person becomes involved in any
Claim, after the Effective Time, Bethlehem shall, or shall cause the
Surviving Corporation to, periodically advance to such Indemnified Person
its legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the providing
by such Indemnified Person of an undertaking to reimburse all amounts so
advanced in the case of a final nonappealable determination by a court of
competent jurisdiction that such Indemnified Person is not entitled to be
indemnified therefor.
(b) Bethlehem and the Company agree that all rights to
indemnification or liabilities, and all limitations with respect thereto,
existing in favor of any Indemnified Person, as provided in the Company's
Restated Certificate of Incorporation or By-laws and any indemnification
agreement in effect at the date hereof, shall survive the Merger and
shall continue in full force and effect, without any amendment thereto,
for a period of six years from the Effective Time to the extent such
rights, liabilities and limitations are consistent with the DGCL;
provided, however, that in the event any Claim is asserted or made within
such six-year period, all such rights, liabilities and limitations in
respect of any such Claim shall continue until disposition thereof;
provided further that any determination required to be made with respect
to whether an Indemnified Person's conduct complies with the standards
set forth under the DGCL, the Company's Restated Certificate or
Incorporation or By-laws or any such agreement, as the case may be, shall
be made by independent legal counsel selected by such Indemnified Person
and reasonably acceptable to Bethlehem; provided further that nothing in
this Section 5.09 shall impair any rights or obligations of any current
or former director or officer of the Company; and provided further that
nothing in this Section 5.09 shall require Bethlehem to amend its
certificate of incorporation or by-laws.
(c) Bethlehem or the Surviving Corporation shall maintain the
company's existing directors' and officers' liability insurance policy
("D&O Insurance") for a period of not less than six years after the
Effective Time; provided, however, that Bethlehem may substitute therefor
policies of substantially similar coverage (including pursuant to
Bethlehem's own policy) and amounts containing terms no less advantageous
to such former directors or officers; provided further that, subject to
the preceding proviso, if the existing D&O Insurance expires or is
canceled during such period, Bethlehem or the Surviving Corporation shall
use their best efforts to obtain substantially similar D&O Insurance; and
provided further that neither Bethlehem nor the Surviving Corporation
shall be required to pay an annual premium for D&O Insurance in excess of
200% of the last annual premium paid prior to the date hereof, but in
such case shall purchase as much coverage as possible for such amount.
SECTION 5.10. Fees and Expenses. (a) Except as set forth in
this Section 5.10, all fees and expenses incurred in connection with the
Merger, this Agreement and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated. Bethlehem shall file any return
with respect to and shall pay, any state or local taxes (including any
penalties or interest with respect thereto), if any, which are
attributable to the transfer of the beneficial ownership of the Company's
real property (collectively, the "Real Estate Transfer Taxes") as a
result of the Merger. The Company shall cooperate with Bethlehem in the
filing of such returns including, in the case of the Company, supplying
in a timely manner a complete list of all real property interests held by
the Company and any information with respect to such property that is
reasonably necessary to complete such returns. The fair market value of
any real property of the Company subject to Real Property Transfer Taxes
shall be determined by Bethlehem.
(b) In the event that (i) a takeover proposal shall have been
made known to the Company or any of its subsidiaries or has been made
directly to its shareholders generally or any person shall have publicly
announced an intention (whether or not conditional) to make a takeover
proposal and thereafter this Agreement is terminated by either Bethlehem
or the Company pursuant to Section 7.01(b)(i) (including without
limitation because of the failure to satisfy the condition set forth in
Section 6.03(c)), Section 7.01(b)(ii) or Section 7.01(d) or (ii) this
Agreement is terminated by the Company pursuant to Section 7.01(c) then
the Company shall promptly pay Bethlehem a fee equal to $13.5 million
(the "Termination Fee") payable by wire transfer of same day funds;
provided, however, that no Termination Fee shall be payable to Bethlehem
pursuant to clause (i) of this paragraph (b) unless and until within 12
months of such termination the Company or any of its subsidiaries enters
into any Acquisition Agreement or consummates any takeover proposal (for
the purposes of the foregoing proviso the terms "Acquisition Agreement"
and "takeover proposal" shall have the meanings assigned to such terms in
Section 4.02).
SECTION 5.11. Public Announcements. Bethlehem and the Company
will consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release or
other public statements with respect to the transactions contemplated by
this Agreement, including the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national
securities exchange. The parties agree that the initial press release to
be issued with respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the parties.
SECTION 5.12. Affiliates. Prior to the Closing Date, the
Company shall deliver to Bethlehem a letter identifying all persons who
are, at the time this Agreement is submitted for adoption to the
shareholders of the Company, "affiliates" of the Company for purposes of
Rule 145 under the Securities Act. The Company shall use all reasonable
efforts to cause each such person to deliver to Bethlehem on or prior to
the Closing Date a written agreement substantially in the form attached
as Exhibit A hereto.
SECTION 5.13. Stock Exchange Listings. Bethlehem shall use
all reasonable efforts to cause the shares of Bethlehem Common Stock to
be issued in the Merger and under the Stock Plans to be approved for
listing on the NYSE and the CSE, subject to official notice of issuance,
prior to the Closing Date.
SECTION 5.14. Shareholder Litigation. The Company shall give
Bethlehem the opportunity to participate in the defense or settlement of
any shareholder litigation against the Company and its directors relating
to the transactions contemplated by this Agreement; provided, however,
that no such settlement shall be agreed to without Bethlehem's consent,
which consent shall not be unreasonably withheld.
SECTION 5.15. Merger Sub. Promptly, but in no event later
than three business days after the date hereof, (a) Bethlehem shall cause
Merger Sub to be formed as a Delaware corporation and its wholly owned
subsidiary; (b) Bethlehem shall cause Merger Sub to adopt and execute and
become a party to this Agreement, all in accordance with Section 251 of
the DGCL; and (c) Bethlehem shall notify the Company of its compliance
with the foregoing by written notice delivered in accordance with Section
8.02 hereof.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger
is subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Shareholder Approvals. The Company Shareholder Approval
shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(c) No Injunctions or Restraints. No judgment, decree,
statute, law, ordinance, rule, regulation, temporary restraining
order, preliminary or permanent injunction or other order enacted,
entered, promulgated, enforced or issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint
or prohibition (collectively, "Restraints") preventing the
consummation of the Merger shall be in effect; provided, however,
that each of the parties shall have used all reasonable efforts to
prevent the entry of any such Restraints and to appeal as promptly
as possible any such Restraints that may be entered.
(d) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order
or proceedings seeking a stop order, and Bethlehem shall have
received all state securities or "blue sky" authorizations
necessary to issue the Bethlehem Common Stock issuable pursuant
to this Agreement.
(e) Stock Exchange Listings. The shares of Bethlehem Common
Stock issuable to the Company's shareholders pursuant to this
Agreement and under the Stock Plans shall have been approved for
listing on the NYSE and the CSE, subject to official notice of
issuance.
SECTION 6.02. Conditions to Obligations of Bethlehem and
Merger Sub. The obligations of Bethlehem and Merger Sub to effect the
Merger are further subject to satisfaction or waiver (by Bethlehem) on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true
and correct (without regard to any materiality qualifications or
references to material adverse effect contained in any specific
representation or warranty), as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing
Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such
date); provided that this paragraph (a) shall be deemed satisfied
so long as the failure of all such representations and warranties
to be true and correct would not have a material adverse effect on
the Company, and Bethlehem shall have received a certificate signed
on behalf of the Company by the chief executive officer and the
chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to
the Closing Date, and Bethlehem shall have received a certificate
signed on behalf of the Company by the chief executive officer and
the chief financial officer of the Company to such effect.
(c) No Litigation. There shall not be pending or threatened
by any Governmental Entity any suit, action or proceeding, (i)
challenging the acquisition by Bethlehem of any shares of capital
stock of the Company or the Surviving Corporation, seeking to
restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or seeking to
obtain from the Company or Bethlehem any damages that are material
in relation to the Company and its subsidiaries taken as a whole or
Bethlehem and its subsidiaries taken as a whole, as applicable,
(ii) seeking to prohibit or limit the ownership or operation by the
Company, Bethlehem or any of their respective subsidiaries of any
material portion of the business or assets of the Company,
Bethlehem or any of their respective subsidiaries, or to compel the
Company, Bethlehem or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or
assets of the Company, Bethlehem or any of their respective
subsidiaries, as a result of the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to
impose limitations on the ability of Bethlehem to acquire or hold,
or exercise full rights of ownership of, any shares of capital
stock of the Company or the Surviving Corporation, (iv) seeking to
prohibit Bethlehem or any of its subsidiaries from effectively
controlling in any material respect the business or operations of
the Company or its subsidiaries or (v) which otherwise would
reasonably be expected to have a material adverse effect on the
Company or Bethlehem. In addition, there shall not be any judgment,
order, decree, statute, law, ordinance, rule or regulation,
enacted, entered, promulgated or enforced that is reasonably likely
to result, directly or indirectly, in any of the consequences
referred to in clauses (ii) through (v) above.
(d) No Material Adverse Change. At any time after
the date of this Agreement there shall not have
occurred any material adverse change relating to the
Company.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Bethlehem set forth in this Agreement shall be true
and correct (without regard to any materiality qualifications or
references to material adverse effect contained in any specific
representation or warranty) as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date,
except to the extent such representations expressly relate to an
earlier date (in which case as of such date); provided that this
paragraph (a) shall be deemed satisfied so long as the failure of
all such representations and warranties to be true and correct
would not have a material adverse effect on Bethlehem, and the
Company shall have received a certificate signed on behalf of
Bethlehem by the chief executive officer of Bethlehem and the chief
financial officer of Bethlehem to such effect.
(b) Performance of Obligations of Bethlehem. Bethlehem shall
have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of Bethlehem by the chief executive officer of Bethlehem and
the chief financial officer of Bethlehem to such effect.
(c) Average Market Price. The Average Market
Price shall be greater than or equal to $6.906.
(d) No Material Adverse Change. At any time after
the date of this Agreement there shall not have
occurred any material adverse change relating to
Bethlehem.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after the Company Shareholder Approval:
(a) by mutual written consent of Bethlehem and the
Company;
(b) by either Bethlehem or the Company:
(i) if the Merger shall not have been consummated on or
before June 30, 1998, unless the failure to consummate the
Merger is the result of a willful and material breach of this
Agreement by the party seeking to terminate this Agreement;
provided, however, that the passage of such period shall be
tolled for any part thereof (but not exceeding 30 calendar
days in the aggregate) during which any party shall be
subject to a nonfinal order, decree, ruling, injunction or
action restraining, enjoining or otherwise prohibiting the
consummation of the Merger or the calling or holding of the
Company Shareholders Meeting;
(ii) if the Company Shareholder Approval shall not have
been obtained at a Company Shareholders Meeting duly convened
therefor;
(iii) if any Governmental Entity shall have issued an
order, decree, ruling or injunction or taken any other action
permanently enjoining, restraining or otherwise prohibiting
the Merger and such order, decree, ruling, injunction or
other action shall have become final and nonappealable; or
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement
contained in this Agreement which (A) would give rise to the
failure of a condition set forth in Section 6.02(a) or (b) or
Section 6.03(a) or (b), as applicable, and (B) cannot be or
has not been cured within 30 days after the giving of written
notice to the breaching party of such breach (a "Material
Breach") (provided that the terminating party is not then in
Material Breach of any representation, warranty, covenant or
other agreement contained in this Agreement);
(c) by the Company in accordance with Section 4.02(b);
provided that it has complied with all provisions thereof and that
it complies with the applicable requirements of Section 5.10; or
(d) by Bethlehem if (i) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified in a
manner adverse to Bethlehem its approval or recommendation of the
Merger or this Agreement, or approved or recommended any superior
proposal or (ii) the Board of Directors of the Company or any
committee thereof shall have resolved to take any of the foregoing
actions.
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Bethlehem as
provided in Section 7.01, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of
Bethlehem, Merger Sub or the Company, other than the provisions of
Section 3.01(p), Section 3.02(j), the last sentence of Section 5.04,
Section 5.10, this Section 7.02 and Article VIII and except to the extent
that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after the Company Shareholder Approval;
provided, however, that after any such approval, there shall not be made
any amendment that by law requires further approval by the stockholders
of the Company without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 7.03, waive compliance
by the other parties with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.01, an
amendment of this Agreement pursuant to Section 7.03 or an extension or
waiver pursuant to Section 7.04 shall, in order to be effective, require
action by its Board of Directors or, with respect to any amendment to
this Agreement, to the extent permitted by applicable law, a duly
authorized committee of its Board of Directors.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance
after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to Bethlehem or Merger Sub, to
Bethlehem Steel Corporation
1170 Eighth Avenue
Bethlehem, PA 18016
Fax: (610) 694-1500
Attention: Stephen J. Selden
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Robert A. Kindler
Fax: (212) 474-3700; and
(b) if to the Company, to
Lukens Inc.
50 South First Avenue
Coatesville, PA 19320
Fax: (610) 383-2004
Attention: William D. Sprague, Vice
President and General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
Attention: Steven J. Rothschild
Fax: (302) 651-3001
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person;
(b) "material adverse change" or "material adverse effect"
means, when used in connection with the Company or Bethlehem, any
change, effect, event or occurrence that is materially adverse to
the business, financial condition or results of operations of such
party and its subsidiaries taken as a whole, other than any change,
effect, event or occurrence relating to the United States economy
in general or to the Company's or Bethlehem's, as applicable,
industry or industries in general;
(c) "person" means an individual, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by such first
person;
(e) a "significant subsidiary" of any person means any
subsidiary of such person that constitutes a significant subsidiary
within the meaning of Rule 1-02 of Regulation S-X promulgated by
the SEC;
(f) "takeover proposal" has the meaning assigned thereto in
Section 4.02(a);
(g) "superior proposal" has the meaning assigned thereto in
Section 4.02(b); and
(h) "Taxes" has the meaning assigned thereto in
Section 3.01(k)(iv).
SECTION 8.04. Interpretation. When a reference is made in
this Agreement to an Article, Section, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined herein. The definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement, instrument or statute as
from time to time amended, modified or supplemented, including (in the
case of agreements or instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to
herein) and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement and (b) except for the provisions of Article II, Section
5.06(a) and Section 5.09, are not intended to confer upon any person
other than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement
shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of
conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by either
party without the prior written consent of the other party. Any
assignment in violation of the preceding sentence shall be void. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 8.09. Disclosure Schedules. Matters reflected on the
Company Disclosure Schedule and the Bethlehem Disclosure Schedule are not
necessarily limited to matters required by this Agreement to be reflected
therein and the inclusion of such matters shall not be deemed an
admission that such matters were required to be reflected on the Company
Disclosure Schedule or the Bethlehem Disclosure Schedule, as the case may
be. Such additional matters are set forth for informational purposes only
and do not necessarily include other matters of a similar nature.
SECTION 8.10. Severability. If any provision of this
Agreement or the application thereof to any person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which
it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby.
Upon any such determination, the parties shall negotiate in good faith in
an effort to agree upon a suitable and equitable substitute provision to
effect the original intent of the parties.
SECTION 8.11. Enforcement. The parties agree that irreparable
damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties will be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in
Delaware state court, the foregoing being in addition to any other remedy
to which they are entitled at law or in equity.
IN WITNESS WHEREOF, Bethlehem and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
BETHLEHEM STEEL CORPORATION
by
/s/ Curtis H. Barnette
__________________________________
Name:
Title:
LUKENS INC.
by
/s/ R.W. Van Sant
__________________________________
Name: R.W. Van Sant
Title: Chairman, President and
Chief Executive Officer
AMENDMENT TO THE RENEWED RIGHTS AGREEMENT
Amendment, dated as of December 15, 1997, to
the Renewed Rights Agreement, dated as of September 25,
1996 ("The Rights Agreement"), between Lukens Inc. (the
"Company") and American Stock Transfer and Trust Company
(the "Rights Agent").
WHEREAS, on December 14, 1997, the Board of
Directors resolved that the Rights Agreement be amended
as set forth below (the "Amendment"); and
WHEREAS, the Amendment is in compliance with
the terms set forth in Section 26 of the Rights Agreement
regarding supplements and amendments to the Rights
Agreement.
NOW THEREFORE, in consideration of the premises
and the mutual agreements set forth herein and in the
Rights Agreement, the parties hereby agree as follows:
That the definition of "Exempt Person" set
forth in Section 1(s) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(s) "Exempt Person" shall mean (i) the
Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company
or of any Subsidiary of the Company, (iv) any
Person or entity organized, appointed or
established by the Company for or pursuant to
the terms of any such plan, (v) any Person or
group of Persons (as determined pursuant to
Section 13(d)(3) of the Exchange Act) which
was, as of the date of this Agreement, the
Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding, (vi) any
Person who (A) is the Beneficial Owner of less
than 25% of the Common Stock of the Company
then outstanding and has reported such
ownership on Schedule 13G under the Exchange
Act (or any comparable or successor report) or
on Schedule 13D under the Exchange Act (or any
comparable or successor report) which Schedule
13D, as amended from time to time, does not
state any intention to or reserve the right to
control or influence the management or
policies of the Company or engage in any of
the actions specified in Item 4 of Schedule
13D (other than the disposition of the Common
Stock of the Company), (B) within 10 Business
Days of being requested by the Company to
advise the Company regarding its intentions,
certifies to the Company that such Person
acquired shares of Common Stock of the Company
in excess of 14.99% inadvertently or without
knowledge of the terms of the Rights, (C) the
Company determines acquired shares of Common
Stock of the Company in excess of 14.99%
inadvertently or without knowledge of the
terms of the Rights and (D) together with its
Affiliates and Associates, thereafter does not
acquire additional shares of Common Stock of
the Company while the Beneficial Owner of 15%
or more of the shares of Common Stock of the
Company then outstanding or (vii) any Person
who acquires 15% or more of the shares of
Common Stock then outstanding solely as a
result of a transaction approved by the
Board."
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have
caused this amendment to the Rights Agreement to be duly
executed and their respective seals to be hereunto affixed
and attested, all as of the day and year first above
written.
Attest: LUKENS INC.
By /s/ William D. Sprague By /s/ R.W. Van Sant
Name: William D. Sprague Name: R.W. Van Sant
Title: Vice President, General Title: Chairman, President and
Counsel and Secretary Chief Executive Officer
Attest: AMERICAN STOCK TRANSFER AND
TRUST COMPANY
By /s/ Susan Silber By /s/ Herbert J. Lemmer
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
Bethlehem Steel Corporation Lukens Inc.
Bethlehem, Pa Coatesville, Pa
610-694-3711 610-383-3393
Sotto Kovach Rick Whitmyre
FOR IMMEDIATE RELEASE
BETHLEHEM, Pa., December 15, 1997 - Bethlehem Steel Corporation
and Lukens Inc. announced today their signing of a definitive merger
agreement in which Bethlehem would acquire the Coatesville, Pa.-based
steelmaker in a transaction valued at about $650 million, including the
assumption of about $250 million of debt. The equity value of about $400
million is based on Bethlehem paying $25 for each share of Lukens' common
stock outstanding on the date of closing by issuing Bethlehem common
stock for 38 percent of the total equity value and paying cash for the
remaining 62 percent. The amount of Bethlehem common stock per Lukens
share will be based on the 15-day closing average prior to closing, but
not less than 2.797 Bethlehem shares or more than 3.62 Bethlehem shares.
Curtis H. Barnette, chairman and chief executive officer of
Bethlehem said, "This transaction has significant strategic benefits to
Bethlehem and will establish the premier plate business in North America
by combining the strengths of each company to create a more globally
competitive and customer-focused plate business with the broadest range
of plate products in the industry. It will also result in better
utilization of the best facilities of both companies and will result in
significant synergies, improved customer satisfaction and overall lower
costs."
Mr. R.W. Van Sant, chairman and chief executive officer, Lukens
Inc., said, "Over the last five years, we have generated considerable
strategic value in our company. Bethlehem Steel's offer recognized the
role this value can play in its plans for building the world's premier
plate steel business. We believe that this combination will yield highly
attractive benefits for all stakeholders, and we look forward to working
with the Bethlehem team to meet these goals in the future."
Bethlehem said that after a transition period required to
integrate the operations of the two companies, it expects that the
combination will increase its earnings per share. The transaction is
expected to close by early Second Quarter 1998, subject to approval of
Lukens' shareholders and government regulators.
Bethlehem said that it is actively studying options for
maximizing the value of Lukens' light flat rolled stainless business and
its Washington Specialty Metals business, a leading distributor of
stainless steel products. Bethlehem said that these operations are not
part of its core business strategy and therefore plans to divest these
assets. Mr. Van Sant said, "These assets are well managed businesses with
strong management teams and good potential for significant value."
In announcing the agreement, Bethlehem said that it would act
promptly after closing to combine the plate businesses of both companies
to take full and immediate advantage of the merged facilities'
capabilities. "We are planning to have the Bethlehem and Lukens plate
operations function as a separate Division of Bethlehem, headquartered in
Coatesville, with consolidated operations and marketing resources. This
will allow the newly created Business Division, to be called the
Bethlehem-Lukens Plate Division, to concentrate solely on the plate
business and to provide its customers a greater level of quality and
service," said Mr. Barnette.
Bethlehem's three plate mills - Burns Harbor's 160" and 110"
sheared plate mills and Sparrows Point's 180" sheared plate mill - have
annual shipments of about 1.5 million tons. Lukens ships approximately
750,000 tons of carbon and alloy plate and 260,000 tons of stainless
steel products from its Coatesville 140" and 206" plate mills, its
Conshohocken 110" combination Steckel/sheared mill and its stainless
facilities in Pennsylvania and Ohio.
After an appropriate period of transition, the new Division will
operate four of the present six plate mills now operated by both
companies. Bethlehem indicated that the business of the Coatesville 206"
plate mill and Sparrows Point's 160" plate mill will be consolidated with
the other four mills. These two mills will be closed at a future time to
be established, and a restructuring charge of about $50 million will be
incurred.
In addition to complementing Bethlehem's carbon and alloy plate
business, Lukens' stainless plate capabilities will allow the new
Division to provide its customers an even broader product line. The
combined business will produce the widest range of plate gages and grades
in North America, including carbon, alloy, resulphurized, high
strength-low alloy, normalized, quenched and tempered, clad and stainless
plate.
The combination should significantly reduce costs by improving
utilization of the four remaining mills. Lukens has also just completed a
major $350-million modernization program to enhance melting, rolling and
certain finishing capabilities, which will enhance the new Division's
strengths. Bethlehem said that the combined plate businesses would cause
it to be one of the lowest cost carbon plate producers, improve the
utilization of its raw steelmaking capabilities and reduce administration
and associated costs.
The principal consuming markets for plate products are service
centers, construction, industrial machinery, farm equipment,
transportation, railroad cars, pipe and tube, oil and gas pipeline, and
shipbuilding industries. The total domestic market for both cut and coil
plate was about twelve million tons in 1996, including about 25 percent
imports.
Bethlehem Steel, with current annual sales of about $4.7 billion,
is the second largest steel company in the United States. Bethlehem
produces plate at its Burns Harbor, Ind., and Sparrow Point, Md.,
facilities, and consumes plate at its Pennsylvania Steel Technologies'
pipe mill in Steelton, Pa. Lukens, which currently has sales of about
$1.0 billion per year, is the only steelmaker in North America that
produces carbon, alloy and stainless steels on a flexible, fully
integrated manufacturing system. Lukens presently has major steelmaking
and finishing facilities in Coatesville, Conshohocken, Houston and
Washington, Pa. and in Massillon, Ohio.
After the combination of the two companies, Bethlehem's annual
sales, excluding Lukens' stainless sheet and distribution businesses,
will be about $5.5 billion per year, with annual shipments of about ten
million tons. Bethlehem currently has about 15,500 employees and Lukens
has about 3,400 employees.
Following the combination, Mr. Barnette will continue as Chairman
and Chief Executive Officer of Bethlehem Steel Corporation. Mr. Van Sant
will serve as the President of the Bethlehem-Lukens Plate Division.
J.P. Morgan acted as financial adviser to Bethlehem on this
transaction, and Credit Suisse First Boston was the adviser to Lukens.
