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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 17, 1998
MEDUSA CORPORATION
(Exact name of registrant as specified in its charter)
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OHIO 1-1274-2 34-0394630
(State or other jurisdiction of (Commission file number) (IRS employer identification no.)
incorporation)
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3008 MONTICELLO BOULEVARD 44118-1308
CLEVELAND HEIGHTS, OHIO
(Address of principal executive (Zip code)
offices)
Registrant's telephone number, including area code: (216) 371-4000
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ITEM 1. CHANGE IN CONTROL OF REGISTRANT.
On March 18, 1998, Medusa Corporation issued a press release, a copy of
which is filed as Exhibit 99.1 hereto and incorporated herein by this reference.
The definitive agreement referred to in such press release is filed as Exhibit
2.1 hereto.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following material is filed as an exhibit to
this Current Report on Form 8-K:
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Agreement and Plan of Merger dated as of March 17, 1998
between Medusa Corporation, Bedrock Merger Corp., and
Southdown, Inc.
99.1 Press Release dated March 18, 1998
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SIGNATURE
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 thereunto duly authorized.
MEDUSA CORPORATION
By: /s/ ROBERT D. VILSACK
-----------------------------
Robert D. Vilsack
Title: Vice President, Secretary
and General Counsel
Dated: March 18, 1998
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Merger dated as of March 17, 1998
between Medusa Corporation, Bedrock Merger Corp., and
Southdown, Inc.
99.1 Press Release dated March 18, 1998
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
MEDUSA CORPORATION,
BEDROCK MERGER CORP.,
AND
SOUTHDOWN, INC.
MARCH 17, 1998
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Articles of Incorporation and Code of Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Directors and Officers of Subcorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Treatment of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
3.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Capitalization of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Authorization of Additional Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Conflicts, Consents and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Brokerage and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Parent SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Board Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13 Operation of Parent's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Company Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Parent Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.18 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Antitakeover Statutes Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
4.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Capitalization of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Conflicts, Consents and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Brokerage and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.12 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.15 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.16 Board Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.17 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.18 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.19 Operation of Company's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.20 Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.22 Company Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.23 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.24 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.25 Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.26 Antitakeover Statutes Not Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Mutual Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Covenants of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE VI
CONDITIONS
6.1 Mutual Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.2 Conditions to Obligations of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.3 Conditions to Obligations of Parent and Subcorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.3 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.4 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.6 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.8 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.9 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.10 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.12 Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.14 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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EXHIBIT INDEX
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Exhibit A Form of Parent Affiliate Letter
Exhibit B Form of Company Affiliate Letter
Exhibit C Form of Letter Agreement and Irrevocable Proxy
Exhibit D Form of Incentive Plan Letter Agreement
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INDEX OF DEFINED TERMS
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Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alternative Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Beneficially Own . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Class C Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Common Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Company Articles and Code of Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Competing Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Company Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Company Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Company Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Company Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Company Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Company Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Controlled Group Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Former Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
J.P. Morgan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Justice Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Lehman Brothers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Multiple Employer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
National Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
OGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Ohio Secretary of State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Parent Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent Articles and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Parent Exchange Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Parent Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
-vi-
<PAGE> 8
<TABLE>
<S> <C>
Parent Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Parent Series C Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent Shareholder Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Parent Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Peer Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Peer Group Composite Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Prior Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Qualified Company Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subcorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Test Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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<PAGE> 9
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made and entered
into as of the 17th day of March, 1998, among Medusa Corporation, an Ohio
corporation ("Company"), Southdown, Inc., a Louisiana corporation ("Parent"),
and Bedrock Merger Corp., a newly formed Ohio corporation and wholly owned
subsidiary of Parent ("Subcorp").
RECITALS
WHEREAS, the Boards of Directors of Company and Parent have
unanimously determined that the combination of Company and Parent is in the
best interests of the shareholders of Company and Parent, respectively;
WHEREAS, Company and Parent desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement;
WHEREAS, Company and Parent intend that the Merger constitute a
tax-free "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended ("Code");
WHEREAS, Company and Parent intend that the Merger be accounted for as
a pooling-of-interests for financial accounting purposes;
WHEREAS, the Boards of Directors of Company, Parent and Subcorp by
resolutions duly adopted, have unanimously approved and adopted this Agreement;
and
WHEREAS, by resolutions duly adopted, the Board of Directors of the
Parent has unanimously recommended that the Parent Shareholders approve the
Parent Shareholder Authorizations and the Board of Directors of the Company has
unanimously recommended that the Company Shareholders vote in favor of the
Merger; and
WHEREAS, certain terms capitalized herein have the meanings given to
therein in Section 8.14 of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the mutual and
dependent promises hereinafter set forth, the parties hereto agree as follows:
<PAGE> 10
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the provisions of the Ohio General Corporation
Law ("OGCL"), on the Effective Date (as hereinafter defined), Subcorp shall be
merged ("Merger") with and into Company, whereupon the separate corporate
existence of Subcorp shall cease and Company shall continue its existence under
the laws of the State of Ohio. Company, in its capacity as the corporation
surviving the Merger, is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to satisfaction or, to the extent permitted hereunder,
waiver (where applicable) of the conditions set forth in Article VI, the
closing of the Merger ("Closing") will take place at the offices of Bracewell &
Patterson, L.L.P., South Tower Pennzoil Place, Suite 2900, 711 Louisiana
Street, Houston, Texas 77002-2781, at 10:00 a.m., local time, on the third
business day following satisfaction of the conditions set forth in Sections
6.1(b), (c) and (d) and the satisfaction or waiver of the conditions set forth
in Section 6.3(d), unless another date, time or place is agreed to in writing
by the parties hereto, which agreement will not be unreasonably withheld
("Closing Date"). At the Closing there shall be delivered to Parent, Subcorp
and Company the certificates and other documents and instruments required to be
delivered under Article VI.
1.3 Effective Date. As soon as practicable after satisfaction or,
to the extent permitted hereunder, waiver of all conditions to the Merger set
forth herein, but in no event sooner than the Closing, the Merger shall be
consummated by filing with the Secretary of State of the State of Ohio ("Ohio
Secretary of State") a certificate of merger in such form as is required by and
executed in accordance with Section 1701.81 of the OGCL ("Certificate of
Merger") and by making all other filings or recordings required by Ohio law in
connection with the Merger. The Merger shall become effective when the
Certificate of Merger has been filed with the Ohio Secretary of State or at
such later date as may be agreed in writing by the parties hereto and specified
in the Certificate of Merger ("Effective Date").
1.4 Effect of the Merger. From and after the Effective Date, the
Surviving Corporation shall possess all rights, assets, powers, privileges and
franchises and shall be subject to all obligations, liabilities, restrictions
and disabilities of Company and Subcorp, all as provided under Ohio law.
1.5 Articles of Incorporation and Code of Regulations. The
Certificate of Merger shall provide that on the Effective Date (i) the Articles
of Incorporation of the Surviving Corporation, as
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<PAGE> 11
in effect immediately prior to the Effective Date, shall be the Articles of
Incorporation of Company, except for Article I thereof which shall read "The
name of the corporation is '[_________]'", and (ii) the Code of Regulations of
the Surviving Corporation in effect immediately prior to the Effective Date
shall be in the Code of Regulations of Company immediately prior thereto; in
each case until amended in accordance with applicable law.
1.6 Directors and Officers of Subcorp. From and after the
Effective Date, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Subcorp on the date of
execution of this Agreement shall be the directors of the Surviving Corporation
and (ii) the officers of Subcorp on the date of execution of this Agreement
shall be the officers of the Surviving Corporation, subject to the exclusive
right of the Parent to remove or replace any such directors or officers.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. On the Effective Date, by virtue
of the Merger and without any action on the part of Parent, Subcorp or Company:
(a) Conversion of Company Common Shares. Each common
share, without par value, of Company ("Company Common Shares") outstanding
immediately prior to the Effective Date shall (other than shares to be canceled
in accordance with the last sentence of this paragraph (a) and other than
Company Dissenting Shares) be converted into the right to receive 0.88 fully
paid and non-assessable shares of common stock ("Exchange Ratio"), $1.25 par
value, of Parent ("Common Stock") ("Merger Consideration"). The Merger
Consideration is subject to appropriate adjustment in the event of any change
in Common Stock during the period between the date of this Agreement and the
Effective Date, by reason of any reclassification, recapitalization, stock
split or combination, exchange or adjustment of issued and outstanding shares,
or any stock dividend thereon with a record date during such period. Each
Company Common Share, if any, owned by Parent or any subsidiary of Parent or
held in treasury by the Company or any subsidiary of the Company immediately
prior to the Effective Date shall be canceled, and no consideration shall be
paid in exchange therefor and shall cease to exist from and after the Effective
Date.
(b) Conversion of Subcorp Shares. Each common share of
Subcorp outstanding immediately prior to the Effective Date shall be converted
into and become one common share of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation.
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<PAGE> 12
2.2 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Date,
Parent shall deposit with an exchange agent designated by Parent and reasonably
acceptable to Company ("Exchange Agent"), for the benefit of Company
Shareholders and for exchange in accordance with this Section 2.2,
certificates representing shares of Common Stock issuable pursuant to Section
2.1 in exchange for outstanding Company Common Shares.
(b) Exchange Procedures. Promptly and, in any event,
within three (3) business days after the Effective Date, Parent shall cause the
Exchange Agent to mail to each holder of record of a certificate or
certificates ("Certificates") that immediately prior to the Effective Date
represented outstanding Company Common Shares, whose shares were converted into
the right to receive shares of Common Stock pursuant to Section 2.1, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify), and (ii) instructions for
effecting the surrender of the Certificates in exchange for certificates
representing shares of Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor (i) a certificate representing that whole number of shares of
Common Stock which such holder has the right to receive pursuant to Section
2.1, and (ii) cash in lieu of any fractional shares in the manner and amount as
determined pursuant to Section 2.2(c).
(c) No Fractional Shares. No certificates or scrip
representing fractional Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote, to receive dividends or to any other rights of a
shareholder of the Parent. Notwithstanding any other provision of this
Agreement, each holder of a Certificate exchanged in the Merger who would
otherwise have been entitled to receive a fraction of a share of Common Stock
shall receive, from the Exchange Agent in accordance with the provisions of
this Section 2.2(c), a cash payment in lieu of such fractional share of Common
Stock representing such holder's proportionate interest, if any, in the net
proceeds from the sale by the Exchange Agent in one or more transactions (which
sale transactions shall be made at such time or times, in such manner and on
such terms as the Exchange Agent shall determine in its sole discretion are
reasonable) on behalf of all such holders of the aggregate of the fractional
shares of Common Stock which would otherwise have been issued ("Fractional
Shares"). The sale of the Fractional Shares by the Exchange Agent shall be
executed on the New York Stock Exchange ("NYSE") or such other nationally
recognized securities exchange (collectively, a "National Exchange") on which
the Common Stock is traded through one or more member firms of the NYSE or a
National Exchange and shall be executed in round lots to the extent
practicable. Until the net proceeds of
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<PAGE> 13
such sale or sales shall have been distributed to the holders of fractional
shares, the Exchange Agent will hold such proceeds in trust ("Exchange Trust")
for the holders of fractional shares. The Parent shall pay all commissions,
transfer taxes and other out-of-pocket transactions costs, including the
expenses and compensation of the Exchange Agent, incurred in connection with
the sale of the Fractional Shares. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
fractional shares in lieu of any fractional shares of Common Stock, the
Exchange Agent shall make available such amounts to such holders of fractional
shares without interest.
(d) Unregistered Transfers. In the event of a transfer
of ownership of shares of Company Common Shares which is not registered on the
transfer records of Company, a certificate representing the proper number of
shares of Common Stock, together with cash in lieu of fractional shares, if
any, or any unpaid dividends and distributions may be issued to such transferee
if the Certificate representing such Company Common Shares held by such
transferee is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Date to represent only the right to receive upon surrender
a certificate representing shares of Common Stock and cash in lieu of any
fractional share, if any, or any unpaid dividends and distributions as provided
in this Article II.
(e) Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions declared or made after the Effective Date with respect to shares
of Common Stock and having a record date after the Effective Date shall be paid
to the holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder, until the holder shall
surrender such Certificate as provided in this Section 2.2. Subject to the
effect of Applicable Laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Date theretofor payable with respect to such whole
shares of Common Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other distributions with a
record date after the Effective Date but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Common
Stock, less the amount of any withholding taxes which may be required thereon.
(f) No Further Ownership Rights in Company Common Shares.
All shares of Common Stock issued upon surrender of Certificates in accordance
with the terms hereof (including any cash paid pursuant to this Article II)
shall be deemed to have been issued in full satisfaction of
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<PAGE> 14
all rights pertaining to such Company Common Shares represented thereby, and
from and after the Effective Date there shall be no further registration of
transfers on the stock transfer books of Company of Company Common Shares. If,
after the Effective Date, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section 2.2.
(g) Lost Certificate. 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 with respect to such Certificate, Parent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration to be paid in respect of the Company Common Shares
represented by such Certificates as contemplated by this Article II.
(h) Termination of Exchange Trust. Any portion of the
Exchange Trust which remains undistributed to Company Shareholders for one (1)
year after the Effective Date shall be delivered to Parent, upon demand
thereby, and holders of Company Common Shares who have not theretofor complied
with this Section 2.2 shall thereafter look only to Parent for payment of any
claim to shares of Common Stock, cash in lieu of fractional shares thereof, or
dividends or distributions, if any, in respect thereof.
(i) No Liability. None of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any Company Common Shares (or, in each case, dividends or distributions with
respect thereto) or cash from the Exchange Trust delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to seven years after the
Effective Date of the Merger (or immediately prior to such earlier date on
which any cash, any cash in lieu of fractional shares or any dividends or
distributions with respect to whole Company Common Shares in respect of such
Certificate would otherwise escheat to or become the property of any court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory body, agency, instrumentality or authority) ("Governmental
Authority"), any such cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by Applicable Law, become the
property of Parent, free and clear of all claims or interest of any person
previously entitled thereto.
(j) Investment of Exchange Trust. The Exchange Agent
shall invest any cash included in the Exchange Trust, as directed by Parent, on
a daily basis. Any interest and other income resulting from such investments
shall be paid to Parent upon termination of the Exchange Trust pursuant to
Section 2.2(h).
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<PAGE> 15
(k) Dissenters' Rights. The holder of any Company Common
Shares outstanding immediately prior to the Merger that has validly exercised
such holder's dissenters' rights under the OGCL ("Company Dissenting Shares")
shall not be entitled to receive Common Stock, in respect of Company Dissenting
Shares as to which such holder has validly exercised dissenters' rights, unless
and until such holder shall have failed to perfect, shall have validly
withdrawn or shall have lost or had terminated such holder's right to payment
for such holder's Company Dissenting Shares as provided by the OGCL. In such
event, such holder shall be entitled to receive, without interest, the Common
Stock such holder would have been entitled to receive had such holder not
exercised dissenters' rights.
(l) Parent Rights. Each share of Common Stock issued to
holders of Company Common Shares in the Merger shall be issued together with
one associated Parent Right in accordance with the Parent Rights Agreement.
References herein to the shares of Common Stock issuable in the Merger shall be
deemed to include the associated Parent Rights.
2.3 Treatment of Stock Options.
(a) Prior to the Effective Date, Company and Parent shall
take all such actions as may be necessary to cause each unexpired and
unexercised option or right to purchase shares of Company Common Shares under
stock option plans and stock purchase plans of Company in effect on the date
hereof which has been granted by Company to current or former directors,
officers or Employees of Company or its subsidiaries (each, a "Company Option")
to be automatically converted on the Effective Date into an option (each, a
"Parent Exchange Option") to purchase that number of shares of Common Stock
equal to the number of shares of Company Common Shares issuable immediately
prior to the Effective Date upon exercise of the Company Option (without regard
to actual restrictions on exercisability) multiplied by the Exchange Ratio,
with an exercise price equal to the exercise price which existed under the
corresponding Company Option divided by the Exchange Ratio, and with other
terms and conditions that are the same as the terms and conditions of such
Company Option immediately before the Effective Date (including, without
limitation, the acceleration of the exercisability of each such option upon the
consummation of the Merger and the length of the period of continuing
exercisability of each such option after any termination of the employment of
the respective optionee); provided that with respect to any Company Option that
is an "incentive stock option" within the meaning of Section 422 of the Code,
the foregoing conversion shall be carried out in a manner satisfying the
requirements of Section 424(a) of the Code. In connection with the issuance of
Parent Exchange Options, Parent shall (i) reserve for issuance the number of
shares of Common Stock that will become subject to Parent Exchange Options
pursuant to this Section 2.3, and (ii) from and after the Effective Date, upon
exercise of Parent Exchange Options, make available for issuance all shares of
Common Stock covered thereby, subject to the terms and conditions applicable
thereto. Each director, officer or
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<PAGE> 16
Employee of Company who is required to execute and who executes the letter
agreement contemplated in Section 5.3(e) and whose employment is terminated
following the Merger shall have the expiration date of his Parent Exchange
Option extended until the 90th day following the date that such director,
officer or Employee of Company is first permitted to sell, transfer or
otherwise dispose of Common Stock under the terms of such letter agreement.
Parent shall cause the committee administering its stock incentive plan to
grant Parent Exchange Options in accordance with this Section 2.3.
(b) Company agrees to issue treasury shares of Company,
to the extent available, upon the exercise of Company Options prior to the
Effective Date.
(c) Parent agrees to file with the Securities and
Exchange Commission ("Commission") as soon as reasonably practicable after the
Closing Date a registration statement on Form S-8 or other appropriate form
under the Securities Act to register shares of Common Stock issuable upon
exercise of the Parent Exchange Options and use its best efforts to cause such
registration statement to remain effective until the exercise or expiration of
such options.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents, warrants, covenants and agrees as follows:
3.1 Organization and Standing. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana with full power and authority (corporate and other) to own, lease,
use and operate its properties and to conduct its business as and where now
owned, leased, used, operated and conducted. Parent is duly qualified to do
business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so qualified or in good
standing in such jurisdiction would not have a Parent Material Adverse Effect.
Neither Parent nor any of its subsidiaries is in default in the performance,
observance or fulfillment of any provision of, in the case of Parent, its
Articles of Incorporation, as amended and restated, or Bylaws ("Parent Articles
and Bylaws"), or, in the case of any subsidiary of Parent, its Articles of
Incorporation, Bylaws or other organizational documents.
3.2 Subsidiaries. Section 3.2 of the Parent Disclosure Schedule
lists the name and jurisdiction of organization of each subsidiary of Parent
and the jurisdictions in which each such subsidiary is qualified or holds
licenses to do business as a foreign corporation or other organization as of
the date hereof. Each of Parent's subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a
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<PAGE> 17
foreign entity and is in good standing in the jurisdictions set forth in
Section 3.2 of the Parent Disclosure Schedule, which includes each jurisdiction
in which the character of such subsidiary's properties owned or leased by it or
the nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not,
individually or in the aggregate, result in a Parent Material Adverse Effect.
Each of Parent's subsidiaries has all requisite corporate (or other
organizational) power and authority to own, use or lease its properties and to
carry on its business as it is now being conducted. Parent has made available
to Company a complete and correct copy of the charter documents and bylaws (or
similar organizational documents) of each of Parent's subsidiaries, each as
amended to date, and the charter documents and bylaws (or similar
organizational documents) as so delivered are in full force and effect.
3.3 Capitalization of Parent. As of February 28, 1998, Parent's
authorized capital stock consisted of (i) 40,000,000 shares of common stock,
$1.25 par value per share of which (a) 23,607,047 shares were issued and
outstanding, (b) 1,166,100 shares were issued and held in treasury (which does
not include the shares reserved for issuance as set forth in clause (i)(c)
below) and (c) 1,622,935 shares were reserved for issuance upon the exercise or
conversion of options, warrants or convertible securities granted or issuable
by Parent, and (ii) 10,000,000 shares of preferred stock, $.05 par value per
share ("Parent Preferred Stock"), none of which are outstanding or designated
except as provided in the next sentence. As of the date hereof, 400,000 shares
are designated Preferred Stock, Cumulative Junior Participating Series C
("Parent Series C Preferred Stock") and are reserved for issuance in accordance
with the Rights Agreement dated as of March 4, 1991, by and between Parent and
Chase Mellon Shareholder Services, L.L.C., as Rights Agent ("Parent Rights
Agreement"), pursuant to which Parent has issued rights ("Parent Rights") to
purchase shares of Parent Series C Preferred Stock. Each outstanding share of
Parent capital stock is, and all shares of Common Stock to be issued in
connection with the Merger will be, duly authorized and validly issued, fully
paid and nonassessable, and no outstanding share of Parent capital stock has
been, and no shares of Common Stock to be issued in connection with the Merger
will be issued in violation of any preemptive or similar rights. As of the date
hereof, other than as set forth in the Parent SEC Documents, pursuant to the
Parent Rights Agreement or in Section 3.3 to the Parent Disclosure Schedule,
there are no outstanding subscriptions, options, warrants, puts, calls,
agreements, understandings, claims or other commitments or rights of any type
relating to the issuance, sale or transfer by Parent or any of its subsidiaries
of any securities of Parent, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of Parent, and
Parent has no obligation of any kind to issue any additional securities or to
pay for securities of Parent or any predecessor. Parent has no outstanding
bonds, debentures, notes or other similar obligations the holders of which have
the right to vote generally with holders of Parent Common Stock.
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<PAGE> 18
3.4 Authorization of Additional Common Stock. The Board of
Directors, at a meeting duly called and held, has by the required vote of the
directors then in office, approved the authorization of an additional 160
million shares of Common Stock ("Parent Amendment"), adopted a resolution
declaring the advisability of such action and directed that such action be
submitted for consideration by the Parent Shareholders. Subject to
authorization by the holders of Common Stock ("Parent Shareholders") ("Common
Stock Authorizations"), Parent will obtain all necessary consents, approvals or
authorizations necessary to effect the Parent Amendment.
3.5 Corporate Power and Authority. Each of Parent and Subcorp has
all requisite corporate power and authority to enter into this Agreement and,
subject to the Common Stock Authorizations and the authorization of the
issuance of shares of Common Stock in connection with the Merger as required by
the NYSE (collectively, "Parent Shareholder Authorizations") by the Parent
Shareholders, to consummate the transactions contemplated by this Agreement and
no other corporate proceedings on the part of either of Parent or Subcorp or
their stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by Parent and Subcorp and the consummation by
Parent and Subcorp of the transactions contemplated hereby, other than
obtaining the Parent Shareholder Authorizations. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of each
of Parent and Subcorp, subject to the Parent Shareholder Authorizations. This
Agreement has been duly executed and delivered by each of Parent and Subcorp,
and constitutes the legal, valid and binding obligation of each of Parent and
Subcorp enforceable against each of them in accordance with its terms.
3.6 Conflicts, Consents and Approval. Neither the execution and
delivery of this Agreement by Parent or Subcorp nor the consummation of the
transactions contemplated hereby will:
(a) conflict with, or result in a breach of any provision
of the Parent Articles and Bylaws or the Articles of Incorporation or Code of
Regulations of Subcorp;
(b) except as disclosed in Section 3.6(b) to the Parent
Disclosure Schedule, violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
termination, acceleration or cancellation of, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its subsidiaries under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, undertaking,
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agreement, lease or other instrument or obligation to which Parent or any of
its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute,
rule or regulation, applicable to Parent or any of its subsidiaries or their
respective properties or assets; or
(d) require any action or consent or approval of, or
review by, or registration or filing by Parent or any of its affiliates with
any third party or any Governmental Authority other than: (i) the Parent
Shareholder Authorizations; (ii) actions required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder ("HSR Act"); and (iii) registrations or other actions
required under federal and state securities laws as are contemplated by this
Agreement; all except for any of the foregoing that are set forth in Section
3.6(d) to the Parent Disclosure Schedule and, in the case of (b), (c) and (d),
any of the foregoing that would not, individually or in the aggregate, have a
Parent Material Adverse Effect.
3.7 Brokerage and Finder's Fees. Except for Parent's obligation to
Lehman Brothers Inc. ("Lehman Brothers"), Parent has not incurred and will not
incur, directly or indirectly, any brokerage, finder's or similar fee in
connection with the transactions contemplated by this Agreement. Other than the
foregoing obligation to Lehman Brothers, Parent is not aware of any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments payable by Parent and its affiliates in connection with the
negotiation of this Agreement or in connection with the transactions
contemplated hereby.
3.8 Opinion of Financial Advisor. Parent has received the opinion
of Lehman Brothers to the effect that, as of the date hereof, the Exchange
Ratio is fair to the Parent from a financial point of view, and a true and
complete copy of such opinion has been delivered to Company prior to the
execution of this Agreement.
3.9 Accounting Matters. To the best Knowledge of Parent, neither
Parent nor any of its Affiliates has taken, agreed to take or failed to take
any action that (without giving effect to any actions taken or agreed to be
taken by Company or any of its affiliates) would prevent Parent from accounting
for the business combination to be effected by the Merger as a
pooling-of-interests for financial accounting purposes in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases issued
pursuant thereto, and the pronouncements of the Commission thereon.
3.10 Parent SEC Documents. Parent has timely filed with the
Commission all forms, registrations and proxy statements, reports, schedules
and statements required to be filed by it since December 31, 1996 under the
Securities Exchange Act of 1934, as amended (together with the rules
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<PAGE> 20
and regulations thereunder, "Exchange Act") or the Securities Act of 1933, as
amended ("Securities Act") (all documents filed since such date, collectively,
"Parent SEC Documents"). The Parent SEC Documents, including, without
limitation, any financial statements or schedules included therein, at the time
filed (in the case of registration statements and proxy statements, solely on
the dates of effectiveness and the dates of mailing, respectively) (i) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be.
The financial statements of Parent included in the Parent SEC Documents at the
time filed (and, in the case of registration statements and proxy statements,
on the date of effectiveness and the date of mailing, respectively) complied as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Form 10-Q of the Commission), and fairly present (subject in
the case of unaudited statements to normal, recurring and year-end audit
adjustments) in all material respects the consolidated financial position of
Parent at the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended.
3.11 Registration Statement. The information provided by Parent for
inclusion in the registration statement on Form S-4 to be filed with the
Commission by Parent under the Securities Act, including the prospectus (as
amended, supplemented or modified, "Prospectus") relating to shares of Common
Stock to be issued in the Merger and the joint proxy statement and form of
proxies relating to the vote of Company Shareholders with respect to the Merger
and the vote of Parent Shareholders with respect to the Parent Shareholder
Authorizations (collectively and as amended, supplemented or modified, "Joint
Proxy Statement") contained therein (such registration statement as amended,
supplemented or modified, "Registration Statement"), at the time the
Registration Statement becomes effective or, in the case of the Joint Proxy
Statement, at the date of mailing, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading in light of
the circumstances under which they are made. Each of the Registration
Statement and Joint Proxy Statement, except for such portions thereof that
relate to Company and its subsidiaries, will comply as to form in all material
respects with the provisions of the Securities Act and Exchange Act.
3.12 Board Meeting. The Board of Directors of Parent, at a meeting
duly called and held, has by the required vote of the directors then in office
determined that this Agreement and the
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<PAGE> 21
transactions contemplated hereby, including the Merger and the Parent
Amendment, taken together, are fair to and in the best interests of Parent and
the Parent Shareholders.
3.13 Operation of Parent's Business. Since December 31, 1997
through the date of this Agreement, none of Parent or any of its subsidiaries
has engaged in any transaction which, if closed after execution of this
Agreement, would violate Section 5.2(c) hereof except as described or reflected
in the Parent SEC Documents or as set forth in Section 3.13 to the Parent
Disclosure Schedule.
3.14 Company Stock Ownership. Except as set forth in Section 3.14
to the Parent Disclosure Schedule, neither Parent nor any of its subsidiaries
owns any Company Common Shares or other securities convertible into Company
Common Shares.
3.15 Vote Required. The affirmative vote of the holders of record
of at least a majority of the outstanding shares of Common Stock with respect
to the adoption of the Parent Amendment and the affirmative vote of at least a
majority of the votes cast by the holders of record of shares of Common Stock
with respect to the approval of the issuance of Common Stock (provided that the
total votes cast on the proposal represents more than 50% of the outstanding
shares of Common Stock entitled to vote thereon) in connection with the Merger
are the only votes of the holders of any class or series of the capital stock
of Parent required to approve the Merger and the other transactions
contemplated hereby.
3.16 Parent Rights Agreement. As of the date hereof and after
giving effect to the execution and delivery of this Agreement, each Parent
Right is represented by the certificate representing the associated share of
Common Stock and is not exercisable or transferable apart from the associated
share of Common Stock, and the consummation of the transactions contemplated by
this Agreement will not result in a "Distribution Date" or a "Triggering Event"
(as defined in the Parent Rights Agreement), assuming that no "Person,"
together with all "Affiliates" and "Associates" of such Person, shall be the
"Beneficial Owner" (as such terms are defined in the Parent Rights Agreement)
of 15% or more of the shares of Common Stock issuable in the Merger.
3.17 No Material Adverse Change. Except as set forth in or
contemplated by the Parent SEC Documents filed with the Commission as of the
date hereof or in Section 3.17 to the Parent Disclosure Schedule, since
December 31, 1997, each of Parent and its subsidiaries has conducted its
business in the ordinary course, consistent with past practice, and there has
been no: (i) material adverse change in the business or financial condition of
Parent and its subsidiaries taken as a whole, other than those occurring as a
result of general economic or financial conditions or other developments which
are not unique to Parent and its subsidiaries but also affect other Persons who
participate or are engaged in the lines of business of which Parent and its
subsidiaries participate or
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<PAGE> 22
are engaged; (ii) material adverse effect on the ability of Parent to
consummate the transactions contemplated hereby; (iii) declaration, setting
aside or payment of any dividend or other distribution with respect to its
capital stock; or (iv) material change in its accounting principles, practices
or methods.
3.18 Undisclosed Liabilities. Except: (i) as and to the extent
disclosed or reserved against on the consolidated balance sheet of Parent as of
December 31, 1997 or the notes thereto included in the Parent SEC Documents or
otherwise disclosed in the Parent SEC Documents filed with the Commission as of
the date hereof; (ii) as incurred after the date thereof in the ordinary course
of business consistent with prior practice and not prohibited by this
Agreement; or (iii) as set forth in Section 3.18 to the Parent Disclosure
Schedule, neither Parent nor any of its subsidiaries have any liabilities or
obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due that would be required
by generally accepted accounting principles to be disclosed and that,
individually or in the aggregate, have or would reasonably be expected to have
a Parent Material Adverse Effect.
3.19 Antitakeover Statutes Not Applicable. Parent has taken all
necessary actions so that no "fair price", "moratorium", "control share
acquisition" or other similar antitakeover statute or regulation will apply to
this Agreement, the Merger or the other transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents, warrants, covenants and agrees as follows:
4.1 Organization and Standing. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio with full power and authority (corporate and other) to own, lease, use and
operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted. Company is duly qualified to do business
and in good standing in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so qualified or in good
standing in such jurisdiction would not have a Company Material Adverse Effect.
Neither Company nor any of its subsidiaries is in default in the performance,
observance or fulfillment of any provision of, in the case of Company, its
Articles of Incorporation, as amended and restated or Code of Regulations
("Company Articles and Code of Regulations"), or, in the case of any subsidiary
of Company, its Articles of Incorporation, Bylaws or other organizational
documents.
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<PAGE> 23
4.2 Subsidiaries. Section 4.2 of the Company Disclosure Schedule
lists the name and jurisdiction of organization of each subsidiary of Company
and the jurisdictions in which each such subsidiary is qualified or holds
licenses to do business as a foreign corporation or other organization as of
the date hereof. Each of Company's subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a foreign entity and is in
good standing in the jurisdictions set forth in Section 4.2 of the Company
Disclosure Schedule, which includes each jurisdiction in which the character of
such subsidiary's properties owned or leased by it or the nature of its
business makes such qualification necessary, except in jurisdictions, if any,
where the failure to be so qualified would not, individually or in the
aggregate, result in a Company Material Adverse Effect. Each of Company's
subsidiaries has all requisite corporate (or other organizational) power and
authority to own, use or lease its properties and to carry on its business as
it is now being conducted. Company has made available to Parent a complete and
correct copy of the charter documents and bylaws (or similar organizational
documents) of each of Company's subsidiaries, each as amended to date, and the
charter documents and bylaws (or similar organizational documents) as so
delivered are in full force and effect. Other than Company subsidiaries,
Company does not beneficially own or control, directly or indirectly, any class
of equity or similar securities of any corporation or other organization,
whether incorporated or unincorporated.
4.3 Capitalization of Company. As of February 28, 1998, Company's
authorized capital shares consisted of (i) 50,000,000 shares of common stock,
without par value, of which (a) 16,672,757 shares were issued and outstanding,
(b) 1,962,656 shares were issued and held in treasury (which does not include
the shares reserved for issuance as set forth in clause (i)(c) below) and (c)
625,025 shares were reserved for issuance upon the exercise or conversion of
options, warrants or convertible securities granted or issuable by Company
pursuant to the Company's Incentive Plan, and (ii) 3,000,000 shares of
preferred stock, without par value ("Company Preferred Shares"). As of the
date of this Agreement, Company has designated as to series: (i) 1,000,000
shares of "Class A Serial Preferred", none of which is issued and outstanding;
(ii) 1,000,000 shares of "Class B Serial Preferred", none of which is issued
and outstanding; and (iii) 1,000,000 shares of "Class C Preferred", none of
which is issued and outstanding. As of the date hereof, the series of "Class C
Preferred" ("Class C Preferred Shares") is reserved for issuance in accordance
with the Rights Agreement, dated as of October 13, 1988, as amended, by and
between Company and First Chicago Trust Company of New York (successor to
Society National Bank, successor to National City Bank), as Rights Agent
("Company Rights Agreement"), pursuant to which Company has issued rights
("Company Rights") to purchase shares of Class C Preferred Shares. Each
outstanding share of Company capital stock is a common share, duly authorized
and validly issued, fully paid and nonassessable, and no outstanding share of
Company capital stock has been issued in violation of any preemptive or similar
rights. As of the date hereof, other than as set forth in the Company SEC
Documents, pursuant to the Company Rights Agreement or in Section 4.3 to the
Company
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<PAGE> 24
Disclosure Schedule, there are no outstanding subscriptions, options, warrants,
puts, calls, agreements, understandings, claims or other commitments or rights
of any type relating to the issuance, sale or transfer by Company or any of its
subsidiaries of any securities of Company, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of capital
stock of Company, and Company has no obligation of any kind to issue any
additional securities or to pay for securities of Company or any predecessor.
Company has no outstanding bonds, debentures, notes or other similar
obligations the holders of which have the right to vote generally with holders
of Company Common Shares.
4.4 Corporate Power and Authority. Company has all requisite
corporate power and authority to enter into this Agreement and, subject to
authorization of the Merger and the transactions contemplated hereby by the
holders of Company Common Shares ("Company Shareholders"), to consummate the
transactions contemplated by this Agreement and no other corporate proceedings
on the part of either Company or Company Shareholders are necessary to
authorize the execution, delivery and performance of this Agreement by Company
and the consummation by Company of the transactions contemplated hereby, other
than obtaining the affirmative vote of Company shareholders owning a majority
of the Company Common Shares. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Company, subject to
authorization of the Merger and the transactions contemplated hereby by Company
Shareholders. This Agreement has been duly executed and delivered by Company,
and constitutes the legal, valid and binding obligation of Company enforceable
against Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
4.5 Conflicts, Consents and Approval. Neither the execution and
delivery of this Agreement by Company nor the consummation of the transactions
contemplated hereby will:
(a) conflict with, or result in a breach of any provision
of the Company Articles or Code of Regulations;
(b) except as disclosed in Section 4.5(b) to the Company
Disclosure Schedule, violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving of
notice, the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or otherwise)
to terminate, accelerate, modify or call a default under, or result in the
termination, acceleration or cancellation of, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Company or any of its subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking,
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<PAGE> 25
agreement, lease or other instrument or obligation to which Company or any of
its subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute,
rule or regulation, applicable to Company or any of its subsidiaries or their
respective properties or assets; or
(d) require any action or consent or approval of, or
review by, or registration or filing by Company or any of its Affiliates with
any third party or any Governmental Authority other than: (i) authorization of
the Merger and the transactions contemplated hereby by Company Shareholders;
(ii) actions required by the HSR Act; and (iii) registrations or other actions
required under federal and state securities laws as are contemplated by this
Agreement; except for any of the foregoing that are set forth in Section 4.5(d)
to the Company Disclosure Schedule and, in the case of (b), (c) and (d), any of
the foregoing that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
4.6 Brokerage and Finder's Fees. Except for Company's obligation
to J. P. Morgan ("J.P. Morgan") (a copy of the written agreement relating to
such obligation having previously been provided to Parent), Company has not
incurred and will not incur, directly or indirectly, any brokerage, finder's or
similar fee in connection with the transactions contemplated by this Agreement.
Other than the foregoing obligation to J.P. Morgan, Company is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments payable by Company and its Affiliates in connection with
the negotiation of this Agreement or in connection with the transactions
contemplated hereby.
4.7 Opinion of Financial Advisor. Company has received the opinion
of J.P. Morgan to the effect that, as of the date hereof, the Exchange Ratio is
fair to the Company Shareholders from a financial point of view, and a true and
complete copy of such opinion has been delivered to Parent prior to the
execution of this Agreement.
4.8 Accounting Matters. To the best Knowledge of Company, neither
Company nor any of its Affiliates has taken, agreed to take or failed to take
any action that (without giving effect to any actions taken or agreed to be
taken by Parent or any of its Affiliates) would prevent Parent from accounting
for the business combination to be effected by the Merger as a
pooling-of-interests for financial accounting purposes in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases issued
pursuant thereto, and the pronouncements of the Commission thereon.
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<PAGE> 26
4.9 Employee Benefit Plans.
(a) Section 4.9(a) to the Company Disclosure Schedule
lists all Company Plans. With respect to each Company Plan, Company has made
available to Parent a true, correct and complete copy of: (i) each writing
constituting a part of such Company Plan, including without limitation all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, include if any; (iii) the current summary plan
description, if any; (iv) the most recent annual financial report, if any; and
(v) the most recent determination letter from the Internal Revenue Service, if
any.
(b) Company has made available each favorable
determination letter from the Internal Revenue Service with respect to each
Company Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("Qualified Company Plan") and, to the Knowledge of
Company, there are no existing circumstances nor any events that have occurred
that would be likely to adversely affect the qualified status of any Qualified
Company Plan or the related trust.
(c) All contributions required to be made to any Company
Plan by Applicable Laws or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Company Plan, for any period through the date hereof have been
timely made or paid in full and through the Closing Date will be timely made or
paid in full or, to the extent not required to be made or paid on or before the
date hereof or the Closing Date, as applicable, have been or will be reflected
in accordance with generally accepted accounting principles in the Company SEC
Documents filed or to be filed with the Commission.
(d) Company and its subsidiaries have complied, and are
now in compliance, in all material respects, with all provisions of ERISA, the
Code and all laws and regulations applicable to the Company Plans (except where
the failure to do so would not have a Company Material Adverse Effect). There
is not now, and, to the Knowledge of the Company, there are no existing
circumstances that could give rise to, any requirement for the posting of
security with respect to a Company Plan or the imposition of any material lien
on the assets of Company or any of its subsidiaries under ERISA or the Code.
(e) Except as set forth in Section 4.9(e) to the Company
Disclosure Schedule, no Company Plan is subject to Title IV or Section 302 of
ERISA or Section 412 of the Code, nor has Company or any of its subsidiaries or
any of their respective ERISA Affiliates, at any time within the last five
years before the date hereof, contributed to or been obligated to contribute to
any employee pension benefit plan subject to Title IV of ERISA or Section 302
of ERISA or Section 412
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<PAGE> 27
of the Code. Except as set forth in Section 4.9(e) to the Company Disclosure
Schedule, no Company Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA ("Multiemployer Plan") or a plan that has two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4001(a)(3) of ERISA ("Multiple Employer Plan"),
nor has Company or any of its subsidiaries or any of their respective ERISA
Affiliates, at any time within five years before the date hereof, contributed
to or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan.
(f) All Company Plans which are employee pension benefit
plans, within the meaning of Section 3(2) of ERISA ("Pension Plans") have been
funded, where required by applicable law, in compliance with the minimum
funding standards of ERISA, and Company has not sought a waiver of the minimum
funding standards under Code Section 412.
(g) With respect to each Pension Plan which is not a
Multiemployer Plan but which is subject to the provisions of Title IV of ERISA,
to the Company's Knowledge, there exists no ground upon which the Pension
Benefit Guaranty Corporation ("PBGC") would demand termination of such plan or
appointment of itself or its nominee as trustee thereunder.
(h) As of the Closing Date, except as set forth in
Section 4.9(h) to the Company Disclosure Schedule, no liability to the PBGC has
been incurred with respect to the Pension Plans other than premiums due and not
yet payable. All premiums due and payable to the PBGC with respect to the
Pension Plans have been paid in full. The PBGC has not instituted proceedings
to terminate any of the Pension Plans.
(i) No notice of a reportable event has been required to
be filed with the PBGC under Section 4043 of ERISA and the regulations
thereunder with respect to any of the Pension Plans, other than those waived,
and except as set forth in Section 4.9(i) to the Company Disclosure Schedule,
there has been no event described in Section 4062(e) of ERISA which would have
a Company Material Adverse Effect.
(j) Except as set forth in Section 4.9(j) to the Company
Disclosure Schedule, none of the Pension Plans have been terminated or
partially terminated nor have the contributions to any Pension Plans been
discontinued, within the meaning of Section 411(d)(3) of the Code, nor, to the
Knowledge of the Company, have there been any events with regard to such
Pension Plans or their related funding instruments which constitutes grounds
for such a termination, partial termination or discontinuance of contributions.
(k) Except as set forth in Section 4.9(k) to the Company
Disclosure Schedule, as of December 31, 1997, and using reasonable actuarial
assumptions, the fair market value of assets
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<PAGE> 28
for each Pension Plan which is subject to Title IV of ERISA (other than
Multiemployer Plans) and which constitute a "single plan" (as defined in
Treasury Regulation Section 1.414(l)--1(b)(1)) exceeds the present value of
benefits on a projected benefit obligation basis.
(l) Except as set forth in Section 4.9(l) to the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has
incurred, within 5 years before the date hereof, any withdrawal liability
under Title IV of ERISA with respect to any Multiemployer Plan.
(m) Neither Company nor any of its subsidiaries nor any
of their respective ERISA Affiliates has engaged in any transaction described
in Section 4204 of ERISA within six (6) years before the date hereof which
would have a Company Material Adverse Effect.
(n) Except as disclosed in Section 4.9(n) of the Company
Disclosure Schedule, or in the Company SEC Documents filed with the Commission
as of the date hereof, and except for health continuation coverage as required
by Section 4980B of the Code or Part 6 of Title I of ERISA, neither Company nor
any of its subsidiaries has any liability for life, health, medical or other
welfare benefits to former Employees or beneficiaries or dependents thereof
which would have a Company Material Adverse Effect. Except as set forth in
Section 4.9(n) to the Company Disclosure Schedule, each Company Plan disclosed
in Section 4.9(a) of the Company Disclosure Schedule provides that it may be
amended or terminated in accordance with its terms.
(o) Except as set forth in Section 4.9(o) of the
Company's Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in, cause the accelerated vesting or delivery of, or increase the amount
or value of, any payment or benefit to any Employee of Company or any of its
subsidiaries. Without limiting the generality of the foregoing and except as
set forth in Section 4.9(o) to the Company Disclosure Schedule, no amount paid
or payable by Company or any of its subsidiaries in connection with the
transactions contemplated hereby either solely as a result thereof or as a
result of such transactions in conjunction with any other events will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(p) There are no pending or, to the Knowledge of the
Company, threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations which have been asserted or instituted
against the Company Plans, any fiduciaries thereof with respect to their duties
to the Company Plans or the assets of any of the trusts under any of the
Company Plans which could reasonably be expected to result in any material
liability of Company or any of its subsidiaries to the PBGC, the Department of
Treasury, the Department of Labor or any Multiemployer Plan.
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(q) With respect to each Company Plan which is an
employee benefit plan under Section 3(3) of ERISA, no prohibited transaction
(as defined in Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary duty has occurred which would be a material liability of Company or
any of its subsidiaries following the Closing.
4.10 Company SEC Documents. Company has timely filed with the
Commission all forms, registrations and proxy statements, reports, schedules
and statements required to be filed by it since December 31, 1996 under the
Exchange Act or the Securities Act (all documents filed since such date,
collectively "Company SEC Documents"). The Company SEC Documents, including,
without limitation, any financial statements or schedules included therein, at
the time filed (in the case of registration statements and proxy statements,
solely on the dates of effectiveness and the dates of mailing, respectively)
(i) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be.
The financial statements of Company included in the Company SEC Documents at
the time filed (and, in the case of registration statements and proxy
statements, on the date of effectiveness and the date of mailing, respectively)
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission
with respect thereto, were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the Commission), and fairly present
(subject in the case of unaudited statements to normal, recurring and year-end
audit adjustments) in all material respects the consolidated financial position
of Company as at the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended.
4.11 Taxes. Except as set forth in Section 4.11 to the Company
Disclosure Schedule: (i) Company has duly filed all federal, state, local and
foreign income, franchise, excise, sales, use, gross receipts, severance, real
and personal property and other Tax returns and reports (including, but not
limited to, those filed on a consolidated, combined or unitary basis) required
to have been filed by Company prior to the date hereof, taking into account
applicable extensions, except for such failures to file as would not have a
Company Material Adverse Effect; (ii) all of the foregoing returns and reports
are true and correct in all respects except as would not have a Material
Adverse Effect, and Company has paid or, prior to the Effective Date, will pay
all Taxes required to be paid in respect of the periods covered by such returns
or reports to any federal, state, foreign, local or other taxing authority;
(iii) Company has paid or made adequate provision (in accordance with generally
accepted accounting principles) in the financial statements of Company included
in the Company SEC Documents for all Taxes payable in respect of all periods
ending on or prior to September 30, 1997; (iv) neither Company nor any of its
subsidiaries will have any material liability for any Taxes
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in excess of the amounts so paid or reserves so established; (v) no
deficiencies for any Tax, assessment or governmental charge have been proposed
in writing, asserted or assessed (tentatively or definitely), in each case, by
any Taxing authority, against Company or any of its subsidiaries for which
there are not adequate reserves (in accordance with generally accepted
accounting principles) except for those that would not have a Material Adverse
Effect; (vi) as of the date of this Agreement, there are no pending requests
for waivers of the time to assess any such Tax, other than those made in the
ordinary course and for which payment has been made or there are adequate
reserves (in accordance with generally accepted accounting principles); (vii)
the federal income Tax returns of Company and its subsidiaries have been
audited by the Internal Revenue Service through the fiscal year ending December
31, 1992; (viii) Company has not filed an election under Section 341(f) of the
Code to be treated as a consenting corporation; and (ix) Company Plans, to the
extent intended by their express terms to provide compensation that qualifies
as "performance-based compensation" within the meaning of Section 162(m) of the
Code meet the requirements for such treatment under Section 162(m) of the Code.
4.12 Registration Statement. None of the information provided by
Company for inclusion in the Registration Statement, including the Prospectus,
and relating to the Joint Proxy Statement with respect to the Merger and the
vote of Company Shareholders with respect to the Merger contained therein at
the time the Registration Statement becomes effective or, in the case of the
Joint Proxy Statement, at the date of mailing, will 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. Each of the
Registration Statement and Joint Proxy Statement, except for such portions
thereof that relate only to Parent and its subsidiaries, will comply as to form
in all material respects with the provisions of the Securities Act and Exchange
Act.
4.13 Compliance with Law. Except as set forth in Section 4.13 to
the Company Disclosure Schedule, each of Company and its subsidiaries is in
compliance with all applicable laws, statutes, orders, rules, regulations,
policies or guidelines promulgated, or judgments, decisions or orders entered
by any Governmental Authority (collectively, "Applicable Laws"), relating to it
or its business or properties, except for any such failures to be in compliance
therewith which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect and its subsidiaries taken
as a whole.
4.14 Litigation. Except as set forth in Section 4.14 to the Company
Disclosure Schedule or in the Company SEC Documents, there is no suit, claim,
action, proceeding or investigation ("Action") pending or, to the Knowledge of
Company, threatened against Company or any of its subsidiaries which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Company or a material adverse effect on the ability
of Company to consummate
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the transactions contemplated hereby. Neither Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, insofar as can be reasonably foreseen,
would have a Company Material Adverse Effect or a material adverse effect on
the ability of Company to consummate the transactions contemplated hereby.
4.15 No Material Adverse Change. Except as set forth in or
contemplated by the Company SEC Documents filed with the Commission as of the
date hereof or in Section 4.15 to the Company Disclosure Schedule, since
September 30, 1997, each of Company and its subsidiaries has conducted its
business in the ordinary course, consistent with past practice, and there has
been no: (i) material adverse change in the business or financial condition of
Company and its subsidiaries taken as a whole, other than those occurring as a
result of general economic or financial conditions or other developments which
are not unique to Company and its subsidiaries but also affect other Persons
who participate or are engaged in the lines of business of which Company and
its subsidiaries participate or are engaged; (ii) material adverse effect on
the ability of Company to consummate the transactions contemplated hereby;
(iii) declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock; or (iv) material change in its
accounting principles, practices or methods.
4.16 Board Meeting. The Board of Directors of Company, at a meeting
duly called and held, has by the required vote of the directors then in office
determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together, are fair to and in the best interests of
Company and the Company Shareholders.
4.17 Undisclosed Liabilities. Except: (i) as and to the extent
disclosed or reserved against on the consolidated balance sheet of Company as
of September 30, 1997 or the notes thereto included in the Company SEC
Documents or otherwise disclosed in the Company SEC Documents filed with the
Commission as of the date hereof; (ii) as incurred after the date thereof in
the ordinary course of business consistent with prior practice and not
prohibited by this Agreement; or (iii) as set forth in Section 4.17 to the
Company Disclosure Schedule, neither Company nor any of its subsidiaries have
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
and that would be required by generally accepted accounting principles to be
disclosed and that, individually or in the aggregate, have or would reasonably
be expected to have a Company Material Adverse Effect.
4.18 Labor Relations. There is no unfair labor practice complaint
against Company or any of its subsidiaries pending before the NLRB and there is
no labor strike, dispute, slowdown or stoppage, or any union organizing
campaign, actually pending or, to the Knowledge of Company, threatened against
Company or any of its subsidiaries, except for any such proceedings which would
not reasonably be expected to have a Company Material Adverse Effect. Except
as disclosed in the
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Company SEC Documents or as set forth in Section 4.18 to the Company Disclosure
Schedule, neither Company nor any of its subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. To the Knowledge of
Company, there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
Employees of Company.
4.19 Operation of Company's Business. Since September 30, 1997
through the date of this Agreement, none of Company or any of its subsidiaries
has engaged in any transaction which, if closed after execution of this
Agreement, would violate Section 5.3(c) hereof except as described or reflected
in the Company SEC Documents or as set forth in Section 4.19 to the Company
Disclosure Schedule.
4.20 Permits; Compliance. Each of Company and its subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
(collectively, "Permits") necessary to own, lease and operate its properties
and to carry on its business as it is now being conducted, except for any such
Permits the failure of which to possess, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect.
4.21 Environmental Matters.
(a) As used herein, the term "Environmental Laws" means
all federal, state, local or foreign laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(b) Except as set forth in the Company SEC Documents
filed with the Commission as of the date hereof or in Section 4.21(b) to the
Company Disclosure Schedule, there are, with respect to Company, its
subsidiaries or any predecessor of the foregoing, no past or present violations
of Environmental Laws, releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental liability or
any liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or foreign laws,
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other than those which, individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect, and none of Company and
its subsidiaries has received any notice with respect to any of the foregoing,
nor is any Action pending or the Company's Knowledge threatened in connection
with any of the foregoing.
(c) To Company's Knowledge, except as set forth in the
Company SEC Documents filed with the Commission as of the date hereof or in
Section 4.21(c) to the Company Disclosure Schedule, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by
Company or any of its subsidiaries and no Hazardous Materials were released on
or about any real property previously owned, leased or used by Company or any
of its subsidiaries during the period the property was so owned, leased or
used, except in the normal course of Company's business except, in any case, as
could reasonably be expected not to have a Company Material Adverse Effect.
4.22 Company Stock Ownership. Except as set forth in Section 4.22
to the Company Disclosure Schedule, neither Company nor any of its subsidiaries
owns any shares of Common Stock or other securities convertible into Common
Stock.
4.23 Contracts. Except as set forth in Section 4.23 to the Company
Disclosure Schedule, none of Company, any of its subsidiaries, or, to the
Knowledge of Company, any other party thereto is in violation of or in default
in respect of, nor has there occurred an event or condition which with the
passage of time or giving of notice (or both) would constitute a default by
Company under, any contract, agreement, guarantee, lease or executory
commitment ("Company Contract") to which it is a party, except such violations
or defaults under such Company Contracts which, individually or in the
aggregate, would not have a Company Material Adverse Effect.
4.24 Vote Required. The affirmative vote of the holders of record
of at least a majority of the outstanding Company Common Shares with respect to
the Merger are the only votes of the holders of any class or series of the
capital stock of Company required to approve the Merger and the other
transactions contemplated hereby.
4.25 Company Rights Agreement. As of the date hereof and after
giving effect to the execution and delivery of this Agreement, each Company
Right is represented by the certificate representing the associated Company
Common Share and is not exercisable or transferable apart from the associated
share of Company Common Share, and the execution and delivery of this Agreement
will not result in Parent becoming an "Acquiring Person" and the execution and
delivery of, and the consummation of the transactions contemplated by, this
Agreement will not result in a "Distribution Date" or a "Shares Acquisition
Date" (each, as defined in the Company Rights Agreement).
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4.26 Antitakeover Statutes Not Applicable. Company has taken all
necessary actions so that no "fair price", "moratorium", "control share
acquisition" or other similar antitakeover statute or regulation will apply to
this Agreement, the Merger or the other transactions contemplated hereby.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from
and after the execution of this Agreement.
5.1 Mutual Covenants.
(a) General. Company and Parent shall use, respectively,
their best commercial efforts to take all action and to do all things
necessary, proper or advisable to consummate the Merger and the transactions
contemplated by this Agreement; including, without limitation, using,
respectively, their best efforts to cause the conditions set forth in Article
VI to the other's obligations to be satisfied as soon as reasonably practicable
and will not take or fail to take any action that could reasonably be expected
to result in nonfulfillment of such condition, and to prepare, execute and
deliver such further instruments and take or cause to be taken such other and
further action as any other party hereto shall reasonably request to consummate
the Merger.
(b) HSR Act. Within ten (10) Business Days after the
date hereof, Company and Parent will make such filings as may be required by
the HSR Act with respect to the consummation of the transactions contemplated
by this Agreement and will use best efforts to obtain early termination of any
waiting period under the HSR Act. Company and Parent will file or cause to be
filed as promptly as practicable with the United States Department of Justice
("Justice Department") any supplemental information which may be requested
pursuant to the HSR Act. All filings referred to in this Section 5.1(b) will
comply in all material respects with the requirements of the respective laws
pursuant to which they are made.
Without limiting the generality or effect of the foregoing,
and notwithstanding any provision herein to the contrary, Company and Parent
will: (i) use best efforts to comply as expeditiously as possible with all
lawful requests of Governmental Authorities for additional information and
documents pursuant to the HSR Act; (ii) not (A) extend any waiting period under
the HSR Act or (B) enter into any voluntary agreement with any Governmental
Authorities not to consummate the transactions contemplated by this Agreement,
except with the prior consent of the other; and (iii) cooperate with each other
and use best efforts to obtain the requisite approval of the FTC and Justice
Department, including, without limitation, (A) the removal, dissolution, stay,
or dismissal of any temporary restraining order which prevents the consummation
of the transactions
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contemplated by this Agreement or requires as a condition thereto that all or
any part of the Business be held separate, or (B) the pursuit of necessary
litigation or administrative proceedings (including, if necessary,
participation in proceedings through the trial court level).
(c) Other Governmental Matters. Company and Parent shall
use their best efforts to take any additional action that may be necessary,
proper or advisable in connection with any other notices to, filings with, and
authorizations, consents and approvals of any Governmental Authority and any
third parties that it may be required to give, make or obtain.
(d) Pooling-of-Interests. Company and Parent shall not
knowingly take or fail to take any action that would cause the Merger not to
qualify for pooling-of-interests accounting treatment for financial reporting
purposes.
(e) Tax-Free Treatment. Company and Parent shall not take
or fail to take any action that would cause the Merger not to constitute a
Tax-free "reorganization" under Section 368(a) of the Code.
(f) Public Announcements. Unless otherwise required by
Applicable Laws or requirements of the National Association of Securities
Dealers or the NYSE (and in that event only if time does not permit), at all
times prior to the earlier of the Effective Date or termination of this
Agreement pursuant to Section 7.1, Company and Parent shall not issue any press
release with respect to the Merger without the consent of the other, whose
consent shall not be unreasonably withheld.
(g) Access. From and after the date of this Agreement
until the Effective Date (or the termination of this Agreement), Company and
Parent shall permit representatives of the other to have appropriate access at
all reasonable times to the other's premises, properties, books, records,
contracts, tax records, documents, customers and suppliers in a manner that
will not unreasonably interfere with the other operations. Information obtained
by Parent and Company pursuant to this Section 5.1(g) shall be subject to the
provisions of the confidentiality agreement between them dated January 20, 1998
("Confidentiality Agreement"), which agreement remains in full force and
effect.
(h) Certain Actions. Without limiting the generality of,
with respect to Company, Section 5.3(c), and with respect to Parent, Section
5.2(c), during the period from the date of this Agreement to the Effective Date
or the earlier termination of this Agreement pursuant to Section 7.1, neither
Company nor Parent shall, except as otherwise expressly contemplated by this
Agreement and the transactions contemplated hereby or as set forth in Section
5.1(h) to each of the parties respective disclosure schedules, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld:
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(i) do or effect any of the following actions
with respect to its securities: (A) adjust, split, combine or
reclassify its capital stock; (B) make, declare or pay any dividend or
distribution (except for the declaration and payment of regular
quarterly cash dividends on Company Common Shares and Common Stock,
respectively, in each case with usual record and payment dates for
such dividends in accordance with past dividend practices) on, or
directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock
(except in connection with the use of shares of capital stock to pay
the exercise price or tax withholding in connection with stock-based
employee benefit plans of the parties or any of their respective
subsidiaries); (C) grant any person any right or option to acquire any
shares of its capital stock other than pursuant to a currently
authorized stock option plan; (D) issue, deliver or sell or agree to
issue, deliver or sell any additional shares of its capital stock or
such securities (except pursuant to the exercise of outstanding
convertible securities, warrants, options or rights to purchase Common
Stock or Company Common Shares and other than the issuance of Parent
Rights and reservation of Parent Series C Preferred Stock pursuant to
the Parent Rights Agreement in accordance with the terms thereof); or
(E) enter into any agreement, understanding or arrangement with
respect to the sale or voting of its capital stock other than pursuant
to the provisions of this Agreement.
(ii) sell, transfer, lease, pledge, mortgage,
encumber or otherwise dispose of any of its property or assets which
are material, individually or in the aggregate, other than in the
ordinary course of business consistent with past practice;
(iii) make or propose any changes in its Articles
of Incorporation or Bylaws (or other similar organizational
documents), each as amended and restated, or other organizational
documents, other than the Parent Amendment;
(iv) merge or consolidate with any other person or
acquire a material amount of assets or capital stock of any other
person other than in connection with this Agreement and the
transactions contemplated hereby;
(v) incur, create, assume or otherwise become
liable for indebtedness for borrowed money, other than in the ordinary
course of business consistent with past practice, or assume,
guarantee, endorse or otherwise as an accommodation become responsible
or liable for obligations of any other individual, corporation or
other entity, other than in the ordinary course of business consistent
with past practice;
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(vi) enter into or modify any employment,
severance, termination or similar agreements or arrangements with, or
grant any bonuses, salary increases, severance or termination pay to,
any officer, director, consultant or employee other than salary
increases and bonuses granted, or modifications made, in the ordinary
course of business consistent with past practice, or otherwise
increase the compensation or benefits provided to any officer,
director, consultant or employee except as may be required by
Applicable Law, this Agreement, any applicable collective bargaining
agreement or a binding written contract in effect on the date of this
Agreement;
(vii) materially change its method of doing
business or materially change any method or principle of accounting in
a manner that is inconsistent with past practice;
(viii) settle any Actions, whether now pending or
hereafter made or brought involving an amount in excess of $250,000;
(ix) except in the ordinary course of business,
modify, amend or terminate, or waive, release or assign any material
rights or claims with respect to, any material contract to which
either is a party or any confidentiality agreement to which either is
a party;
(x) incur or commit to any capital expenditures,
obligations or liabilities in respect thereof, other than in the
ordinary course of business consistent with past practice or pursuant
to a capital expenditure program previously approved by the Board of
Directors or otherwise currently underway;
(xi) take any action to exempt under or make not
subject to any applicable state takeover law or state law that
purports to limit or restrict business combinations or the ability to
acquire or vote shares, any person or entity (other than between the
parties or their subsidiaries) or any action taken thereby, which
person, entity or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom;
(xii) permit or cause any subsidiary to do any of
the foregoing or agree or commit to do any of the foregoing; or
(xiii) agree in writing or otherwise to take any of
the foregoing actions.
(i) Brokers or Finders. Each of Parent and Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any brokerage, finders or similar
fee or commission or expenses related to Lehman Brothers, in the case
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of Parent, and J.P. Morgan, in the case of Company, or asserted by any person
on the basis of any act or statement alleged to have been made by such party or
its Affiliate.
5.2 Covenants of Parent.
(a) Parent Shareholders Meeting. Parent shall take all
action in accordance with Applicable Laws and the Parent Articles and Bylaws
necessary to convene a meeting of Parent Shareholders as promptly as
practicable to consider and vote upon the Parent Shareholder Authorizations.
(b) Preparation of Joint Proxy Statement. Parent shall
cooperate with Company to, and shall, as soon as is reasonably practicable,
prepare and file a Joint Proxy Statement and Registration Statement and all
required amendments and supplements with the Commission and shall cooperate
with Company to, and shall, use all reasonable efforts to respond to comments
and to have the Registration Statement declared effective by the Commission as
promptly as practicable and to maintain the effectiveness of the Registration
Statement through the Effective Date. Parent shall use its best commercial
efforts to mail at the earliest practicable date to Parent Shareholders the
Joint Proxy Statement, which shall include all information required under
Applicable Laws to be furnished to Parent Shareholders in connection with the
Merger, the transactions contemplated thereby and the authorization of
additional shares. Parent shall advise Company promptly after it receives
notice of (i) the Registration Statement being declared effective or any
supplement or amendment thereto being filed with the Commission, (ii) the
issuance of any stop order in respect of the Registration Statement, and (iii)
the receipt of any correspondence, comments or requests from the Commission in
respect of the Registration Statement (copies of which it shall furnish to
Company). Parent shall give Company and its counsel the opportunity to review
the Joint Proxy Statement and the Registration Statement and all responses to
requests for additional information by and replies to comments of the SEC
before their being filed with or sent to the SEC. Parent also shall cooperate
with Company to, and shall, take such other reasonable actions (other than
qualifying to do business in any jurisdiction in which it is not so qualified)
required to be taken under any applicable state securities laws in connection
with the issuance of shares of Parent Common Stock in the Merger.
(c) Conduct of Parent's Operations. During the period
from the date of this Agreement to the Effective Date, and except as set forth
in Section 5.2(c) to the Parent Disclosure Schedule, Parent shall conduct its
operations in the ordinary course except as expressly contemplated by this
Agreement and the transactions contemplated hereby and shall use its best
commercial efforts to maintain and preserve its business organization and its
material rights and franchises and to retain the services of its officers and
key Employees and maintain relationships with customers, suppliers and other
third parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect.
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(d) Indemnification. Parent shall cause the Surviving
Corporation to keep in effect provisions in its Articles of Incorporation and
Code of Regulations providing for exculpation of director and officer liability
and indemnification of the Indemnified Parties to the fullest extent permitted
under Applicable Law, which provisions shall not be amended except as required
by Applicable Law or except to make changes permitted by law that would enlarge
the Indemnified Parties' right of indemnification and shall cause the Surviving
Corporation to indemnify in accordance therewith. In the event of any actual or
threatened claim, action, suit, proceeding or investigation in respect of such
acts or omissions, (i) Parent shall cause the Surviving Corporation to pay the
reasonable fees and expenses of counsel selected by the indemnified party,
which counsel shall be reasonably acceptable to Parent, in advance of the final
disposition of any such action to the full extent permitted by Applicable Law,
upon receipt of any undertaking required by Applicable Law, and (ii) Parent
shall cause the Surviving Corporation to cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall
not be unreasonably withheld).
(e) Directors' and Officers' Insurance. Parent agrees to
use its best commercial efforts to cause the Surviving Corporation to maintain
in effect for not less than six years after the Effective Date the current
policies of directors' and officers' liability insurance maintained by Company
with respect to matters occurring prior to the Effective Date; provided,
however, that (i) the Surviving Corporation may substitute therefor policies of
comparable coverage containing terms and conditions which, when taken as a
whole, are no less advantageous to the covered officers and directors and (ii)
the Surviving Corporation shall not be required to pay an annual premium for
such insurance coverage in excess of 200% of the current annual premium paid by
Company for its existing coverage, but in such case shall purchase as much
coverage as possible for such amount.
(f) Employee Benefits. Without limiting the effect of
Section 2.3 Parent covenants and agrees that, from and after the Effective
Date, it will cause the Surviving Corporation and its subsidiaries to provide
for the benefit of employees of the Surviving Corporation and its subsidiaries
either (i) benefits that are no less favorable, in the aggregate, as those
provided to Employees or Former Employees of Company or its subsidiaries
immediately prior to the date of this Agreement, or (ii) benefits that are no
less favorable, in the aggregate, as those provided to employees of Parent or
its subsidiaries after the Effective Date. If any Employee (as defined below)
becomes a participant in any employee benefit or compensation plan of Parent, a
Parent subsidiary (other than the Surviving Corporation) or a Parent affiliate,
such Employee shall be given credit under such plan for all service with
Company and its subsidiaries, affiliates and predecessors which is recognized
by Company under a similar Company Plan and is rendered prior to the time the
Employee becomes such a participant, for all purposes; provided, however, such
service credit shall not result in a duplication of benefits. To the extent
employee benefit plans of Parent or its subsidiaries or affiliates
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provide medical or dental welfare benefits to Employees or Former Employees (as
defined below) after the Effective Date, such plans shall waive any preexisting
conditions, medical certifications and actively-at-work exclusions and shall
provide that any expenses incurred on or before the Effective Date shall be
taken into account under such plans for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions. For purposes of
the foregoing, (i) "Employees" shall mean the employees of Company or a
subsidiary of Company whose terms of employment are not subject to a collective
bargaining agreement immediately prior to the Effective Date, including,
without limitation, any employee who is absent at the Effective Date on
short-term disability, long-term disability, Workers' Compensation or an
authorized leave (such as maternity, military, family and medical leaves or
other leaves where return to work is subject to statutory requirements), and
(ii) "Former Employees" shall mean any former Employees of Company or a Company
subsidiary whose employment terminated prior to the Effective Date (whether by
retirement or otherwise).
Parent shall cause the Surviving Corporation and its
subsidiaries to honor all Company's existing agreements with any Employee.
(g) Notification of Certain Matters. Parent shall give
prompt notice to Company of and will use all commercially reasonable efforts to
cure (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any Parent or Subcorp representation or
warranty contained in this Agreement to be untrue or inaccurate at or prior to
the Effective Date and (ii) any material failure of Parent to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.2(g) shall not limit or otherwise affect the remedies available
hereunder to Company.
(h) Parent Shareholders' Approvals. Parent shall, as
promptly as practicable, submit the issuance of Parent Common Stock in the
Merger as required by the NYSE for the approval of its shareholders at a
meeting of its shareholders ("Parent Shareholders' Meeting") and shall, subject
to the fiduciary duties of the Board of Directors of Parent under Louisiana
Law, use its reasonable best efforts to obtain the Parent Shareholder
Authorizations. Parent shall, through its Board of Directors (i) subject to
the fiduciary duties of the members thereof under Louisiana Law, recommend to
its shareholders approval of Parent Shareholder Authorizations and (ii)
authorize and cause an officer of Parent to vote Parent's shares of common
stock of the Subcorp for approval and adoption of this Agreement and the
transactions contemplated hereby and shall take all additional actions as the
sole shareholder of Subcorp necessary to approve and adopt this Agreement and
the transactions contemplated hereby.
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(i) Affiliates of Parent. The Persons named in Section
5.2(i) to the Parent Disclosure Schedule are, to Parent's Knowledge, the only
Persons who may be deemed Affiliates of Parent under Rule 145 of the 1933 Act.
Each person named in Section 5.2(i) to the Parent Disclosure Schedule has
executed a written agreement substantially in the form of Exhibit A. At least
30 days prior to the Effective Date, Parent shall deliver to the Company a list
of names and addresses of those Persons who were, in Parent's reasonable
judgment, at the record date for the Parent Shareholders' Meeting, Affiliates
of Parent within the meaning of Rule 145 of the 1933 Act (each such person,
"Parent Affiliate"). Parent shall use all reasonable efforts to deliver or
cause to be delivered to the Company, prior to the Effective Date, from each of
the Parent Affiliates identified in the foregoing list, a written agreement
substantially in the form of Exhibit A.
(j) Change in Control. Parent agrees that the
consummation of the Merger shall constitute a "Change in Control" of Company
for all purposes within the meaning of all compensation or benefit plans or
agreements of Company and its subsidiaries.
(k) Directors of Parent. Parent shall cause its Board of
Directors to take such action as may be necessary to increase the size of
Parent's Board of Directors from ten (10) to thirteen (13) members and shall
cause to be appointed to the Board of Directors of Parent Robert S. Evans and
George E. Uding, Jr., effective immediately following the Effective Date. At
the next annual meeting of Parent Shareholders thereafter, the Board of
Directors of Parent shall cause to be nominated (i) George E. Uding, Jr. for
election as a Class III Director with a term of office expiring in 2000, and
(ii) Robert S. Evans for election as a Class I Director with a term of office
expiring in 2001.
5.3 Covenants of Company.
(a) Company Shareholders' Meeting. Company shall take all
action in accordance with Applicable Laws and its Articles of Incorporation and
Code of Regulations, each as amended and restated, necessary to convene a
meeting of Company Shareholders as promptly as practicable to consider and vote
upon the approval of the Merger, this Agreement and the transactions
contemplated hereby.
(b) Information for the Registration Statement and
Preparation of Joint Proxy Statement. Company shall promptly furnish Parent
with all information concerning it as may be required for inclusion in the
Registration Statement. Company shall cooperate with Parent in the preparation
of the Registration Statement in a timely fashion and in Parent's efforts to
have the Registration Statement declared effective by the Commission as
promptly as practicable. If at any time prior to the Effective Date, any
information pertaining to Company contained in or omitted from the Registration
Statement makes such statements contained in the Registration Statement false
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or misleading, Company shall promptly so inform Parent and provide Parent with
the information necessary to make statements contained therein not false and
misleading. Company shall use all reasonable efforts to mail at the earliest
practicable date to Company Shareholders the Joint Proxy Statement, which shall
include all information required under Applicable Laws to be furnished to
Company Shareholders in connection with the Merger and the transactions
contemplated thereby.
(c) Conduct of Company's Operations. During the period
from the date of this Agreement to the Effective Date, Company shall conduct
its operations in the ordinary course except as expressly contemplated by this
Agreement and the transactions contemplated hereby and shall use its best
commercial efforts to maintain and preserve its business organization and its
material rights and franchises and to retain the services of its officers and
key employees and maintain relationships with customers, suppliers and other
third parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect.
(d) No Solicitation. Company agrees that, during the term
of this Agreement, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to: (i) solicit, initiate,
encourage or facilitate, or furnish or disclose non-public information in
furtherance of, any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination involving
Company, or acquisition of 10% or more of the capital stock or any material
portion of the assets (except as set forth in Section 5.3(d) to the Company
Disclosure Schedule and except for acquisition of assets in the ordinary course
of business consistent with past practice) of Company, or any combination of
the foregoing ("Company Competing Transaction"); (ii) negotiate, explore or
otherwise engage in discussions with any person (other than Parent, Subcorp or
their respective directors, officers, employees, agents and representatives)
with respect to any Company Competing Transaction; or (iii) enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transactions contemplated by this
Agreement; provided, however, that nothing contained in this Section 5.3(d)
shall prohibit the Board of Directors of Company from (i) furnishing
information to (but only pursuant to a confidentiality agreement in customary
form and having terms and conditions no less favorable to Company than the
Confidentiality Agreement) or entering into discussions or negotiations with
any person or group that makes an unsolicited bona fide written proposal for a
Company Competing Transaction (an "Alternative Proposal"), if, and only to the
extent that, (A) the Board of Directors of Company, based upon the written
opinion of outside counsel (a copy of which shall be provided promptly to
Parent), determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties to shareholders imposed by law,
(B) such Alternative Proposal is not conditioned on the receipt of financing,
the Board of Directors has reasonably concluded in good faith that the person
or group making such Alternative Proposal will have adequate sources of
financing to consummate such Alternative Proposal and that such
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Acquisition Proposal is more favorable to the Company's shareholders than the
Merger, and the Board of Directors has received a written opinion from a
nationally-recognized investment banking firm (a copy of which shall be
provided promptly to Parent) to the effect that the consideration to be
received by shareholders of Company in connection with such Alternative
Proposal is superior, from a financial point of view, to the consideration to
be received by them in the Merger, (C) prior to furnishing such information to,
or entering into discussions or negotiations with, such person or entity,
Company provides written notice to Parent to the effect that it is furnishing
information to, or entering into negotiations with, such Person, and (D)
Company keeps Parent informed of the status and all material information with
respect to any such discussions or negotiations, and (ii) to the extent
applicable, complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Proposal.
(e) Affiliates of Company. The Persons named in Section
5.3(e) to the Company Disclosure Schedule are, to Company's Knowledge, the only
Persons who may be deemed Affiliates of Company under Rule 145 of the 1933 Act.
Each person in Section 5.3(e) to the Company Disclosure Schedule has executed a
written agreement substantially in the form of Exhibit B. At least 30 days
prior to the Effective Date, Company shall deliver to Parent a list of names
and addresses of those Persons who were, in Company's reasonable judgment, at
the record date for the Company's Shareholders' Meeting, affiliates of Company
within the meaning of Rule 145 of the 1933 Act (each such person, "Company
Affiliate"). Company shall use all reasonable efforts to deliver or cause to
be delivered to the Parent, prior to the Effective Date, from each of the
Company Affiliates identified in the foregoing list, a written agreement
substantially in the form of Exhibit B.
(f) Notification of Certain Matters. Company shall give
prompt notice to Parent of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would cause any Company
representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Date and (ii) any material failure of
Company to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.3(f) shall not limit or
otherwise affect the remedies available hereunder to Parent.
(g) Letter Agreement and Irrevocable Proxy. Each of
Robert S. Evans, George E. Uding, Jr., Robert J. Kane, R. Breck Denny, and each
other person who is a member of the Board of Directors of Company (other than
Mone Anathan III and Jean Gaulin), shall have executed as of the date of this
Agreement a letter in the form attached hereto as Exhibit C.
(h) Incentive Plan Letter Agreement. Each person who is
a participant in Company's 1991 Long-Term Incentive Plan ("Incentive Plan") and
who is subject to the provisions
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of Section 16(b) of the Exchange Act shall have executed as of the date of this
Agreement a letter in the form attached as Exhibit D to the effect that such
person has waived his or her right, as contemplated in Section 6.05 of the
Incentive Plan, to surrender for cancellation following the Change of Control
(as defined in the Incentive Plan) contemplated by this Agreement any Option
(as defined in the Incentive Plan) held by such person and to receive a cash
payment therefor.
(i) Company Rights Agreement. The Board of Directors of
Company has approved and Company has executed, and promptly after the execution
of this Agreement the Company will cause the Rights Agent under the Company
Rights Agreement to execute and deliver, an amendment to the Company Rights
Agreement which provides and specifically confirms that: (i) neither this
Agreement, the Merger nor any of the other transactions contemplated hereby (A)
will cause Parent to become an "Acquiring Person," or result in the occurrence
of a "Shares Acquisition Date" or the occurrence of a "Distribution Date" (as
defined in the Company Rights Agreement), (B) will permit any Person to have
the right under the Company Rights Agreement to acquire, or to make the Company
Rights ever exercisable for, any securities of Parent, or (C) will require the
sending of any notices under the Company Rights Agreement; (ii) the Rights (as
such term is defined in the Company Rights Agreement) will expire immediately
prior to or simultaneously with the Effective Date; and (iii) this Agreement,
the Merger, the other transactions and all actions of Parent and its Affiliates
contemplated hereby will be excluded and exempt from the operation of and will
not trigger the provisions of the Company Rights Agreement (including, without
limitation, Sections 11(a) and 13 and all similar provisions).
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. The obligations of the parties to
consummate the Merger shall be subject to fulfillment of the following
conditions:
(a) No temporary restraining order, preliminary or
permanent injunction or other order or decree which prevents the consummation
of the Merger shall have been issued and remain in effect, and no statute, rule
or regulation shall have been enacted by any Governmental Authority which
prevents the consummation of the Merger.
(b) All waiting periods applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated and all
other consents, approvals, permits or authorizations required to be obtained
prior to the Effective Date from any Governmental Authority in connection with
the execution and delivery of this Agreement and the consummation of the
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transactions contemplated hereby shall have been obtained, failure to obtain
which would reasonably be expected to have a Parent Material Adverse Effect
following the Effective Date.
(c) The Merger and the transactions contemplated hereby
shall have been approved by the Company Shareholders in the manner required by
any Applicable Law.
(d) The Parent Shareholder Authorizations shall have been
approved by the Parent Shareholders in the manner required by any Applicable
Law.
(e) The Commission shall have declared the Registration
Statement effective. On the Closing Date and at the Effective Date, no stop
order or similar restraining order shall have been threatened by the Commission
or entered by the Commission or any state securities administrator prohibiting
the Merger.
(f) Parent shall have received an opinion of Bracewell &
Patterson, L.L.P. and Company shall have received an opinion of Milbank, Tweed,
Hadley & McCloy substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of the facts then existing, under Applicable Law, for Federal
income tax purposes, the Merger will constitute a reorganization under Section
368(a) of the Code. In rendering such opinions, Bracewell & Patterson, L.L.P.
and Milbank, Tweed, Hadley & McCloy may require and rely on representations
contained in certificates of Parent, Company, Subcorp and others, as they deem
reasonably appropriate.
(g) Parent shall have received a letter, in form and
substance reasonably satisfactory to Parent, from Deloitte and Touche LLP,
dated the Closing Date, stating that Deloitte & Touche LLP concurs with the
Parent's conclusion that, as of the date of their report, no conditions exist
that would preclude the Parent's accounting for the Merger as a pooling of
interests.
(h) Company shall have received a letter, in form and
substance reasonably satisfactory to Company, from Deloitte & Touche LLP, dated
the Closing Date, stating that Deloitte & Touche LLP concurs with the Company's
conclusion that, as of the date of their report, no conditions exist that would
preclude the Company's ability to be a party in a business combination to be
accounted for as a pooling of interests.
(i) The shares of Parent Common Stock to be issued in the
Merger shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
6.2 Conditions to Obligations of Company. The obligations of
Company to consummate the Merger and the transactions contemplated hereby shall
be subject to the fulfillment of the following conditions unless waived by
Company:
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(a) The representations and warranties of each of Parent
and Subcorp set forth in Article IV shall be true and correct on the date
hereof and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date), except as
affected by the transactions contemplated by this Agreement and except for such
inaccuracies which have not had and would not reasonably be expected to have in
the reasonably foreseeable future a Parent Material Adverse Effect.
(b) Each of Parent and Subcorp shall have performed in
all material respects each obligation and agreement and shall have complied in
all material respects with each covenant to be performed and complied with by
it hereunder at or prior to the Effective Date.
(c) Each of Parent and Subcorp shall have furnished
Company with a certificate dated the Closing Date signed on behalf of it by the
Chairman, President or any Vice President to the effect that the conditions set
forth in Sections 6.2(a) and (b) have been satisfied.
(d) On or prior to the Closing Date, the Parent Rights
shall not have become exercisable or transferable apart from the associated
shares of Common Stock, no "Stock Acquisition Date" or "Distribution Date"
(each as defined in the Parent Rights Agreement) shall have occurred and the
Parent Rights shall not have become nonredeemable, in each case other than as a
result of actions by Company or any of its Affiliates.
6.3 Conditions to Obligations of Parent and Subcorp. The
obligations of Parent to consummate the Merger and the other transactions
contemplated hereby shall be subject to the fulfillment of the following
conditions unless waived by each of Parent and Subcorp:
(a) The representations and warranties of Company set
forth in Article III shall be true and correct on the date hereof and on and as
of the Closing Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except as affected by the
transactions contemplated by this Agreement and except for such inaccuracies
which have not had and would not reasonably be expected to have in the
reasonably foreseeable future a Company Material Adverse Effect.
(b) Company shall have performed in all material respects
each obligation and agreement and shall have complied in all material respects
with each covenant to be performed and complied with by it hereunder at or
prior to the Effective Date.
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(c) Company shall have furnished Parent with a
certificate dated the Closing Date signed on its behalf by its Chairman,
President or any Vice President to the effect that the conditions set forth in
Sections 6.3(a), (b) and (d) have been satisfied.
(d) Company shall not have received, prior to the end of
the ten (10) day period set out in section 1701.85(A)(2) of the OGCL, notice
from the holder or holders of more than five percent (5%), on a fully diluted
common stock basis, of the Company Shares issued and outstanding on the record
date for the determination of Company Shareholders entitled to vote on the
Merger who have not voted in favor of the Merger, have perfected their
appraisal rights under the OGCL and have not withdrawn or lost such rights that
such holders have exercised or intend to exercise their appraisal rights under
Sections 1701.84 and 1701.85 of the OGCL. Company will give prompt notice to
Parent of any such notice and deliver copies to Parent the next business day
after any such notice is received.
(e) On or prior to the Closing Date, the Company Rights
shall not have become exercisable or transferable apart from the associated
shares of Company Common Shares, no "Shares Acquisition Date" or "Distribution
Date" (each as defined in the Company Rights Agreement) shall have occurred and
the Company Rights shall not have become nonredeemable, in each case other than
as a result of actions by Parent or any of its Affiliates.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Date, whether before or after approval and adoption of
this Agreement by Company Shareholders and approval of the Parent Shareholder
Authorizations:
(a) by mutual consent of Company and Parent;
(b) by either Company or Parent if any permanent
injunction or other order or decree of a court or other competent Governmental
Authority preventing the consummation of the Merger shall have become final and
nonappealable, provided that the party seeking to terminate this Agreement
under Section 7.1(b) shall have used its best commercial efforts to remove such
injunction, order or decree;
(c) by either Company or Parent if the Merger shall not
have been consummated before September 30, 1998, unless extended by the Boards
of Directors of both Company and Parent (provided that the right to terminate
this Agreement under this Section 7.1(c) shall not be available
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to any party whose failure or whose affiliate's failure to perform any material
covenant or obligation under this Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date);
(d) by either Company or Parent if at the meeting of
Company Shareholders held for such purpose (including any adjournment or
postponement thereof) the requisite vote of the Company Shareholders to approve
the Merger and the transactions contemplated hereby shall not have been
obtained;
(e) by either Company or Parent if at the meeting of
Parent Shareholders held for such purpose (including any adjournment or
postponement thereof) the requisite vote of the Parent Shareholders to approve
the Parent Shareholder Authorizations shall not have been obtained;
(f) by either Company or Parent (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within thirty (30) days following
written notice given by the terminating party to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the Closing;
(g) by Company if its Board of Directors shall in good
faith determine that a competing transaction is more favorable to its
shareholders in the aggregate and from a financial point of view than the
transactions contemplated by this Agreement and there shall be delivered to
Parent written notice of the determination by the party's Board of Directors to
terminate this Agreement pursuant to this Section 7.1(g); provided, however,
that neither party may terminate this Agreement pursuant to this Section 7.1(g)
unless (i) five business days shall have elapsed after delivery of the notice
referred to above, and (ii) at the end of such five business-day period the
party's Board of Directors shall continue to believe that such competing
transaction is more favorable to such party's shareholders in the aggregate and
from a financial point of view than the transactions contemplated by this
Agreement; or
(h) by the Company in the event that the volume weighted
average trading price of Common Stock, rounded to the nearest three decimal
places, for the fifteen consecutive trading days ending on and including the
third trading day prior to the Closing Date ("Test Period"), as reported by
Bloomberg Financial Markets, is less than $57.50, and that the Peer Group
Composite Index outperforms the Common Stock Index by more than 20 percentage
points.
7.2 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after adoption of this
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Agreement by Company Shareholders or authorization of issuance of shares of
Common Stock in the Merger by Parent Shareholders, but after each such approval
or authorization, no amendment shall be made which by law requires further
approval or authorization by the Company Shareholders or Parent Shareholders,
as the case may be, without such further approval or authorization.
Notwithstanding the foregoing, this Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
7.3 Extension; Waiver. At any time prior to the Effective Date,
Company (with respect to Parent) and Parent (with respect to Company) by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed: (i) extend the time for the performance of any of the
obligations or other acts of such party; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
7.4 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that (i) the
confidentiality provisions in Sections 5.1(g) and Sections 5.1(i), 8.7, 8.8,
8.9 and 8.12 shall survive the termination of this Agreement and (ii) such
termination shall not relieve any party hereto of any liability for any willful
breach by that party of its covenants, agreements or other obligations under
this Agreement occurring prior to such termination.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations and Warranties. The
representations and warranties made herein by the parties hereto shall not
survive the Effective Date. This Section 8.1 shall not limit any covenant or
agreement of the parties hereto, which by its terms contemplates performance
after the Effective Date or the termination of this Agreement.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(delivery of which is confirmed) or received through a nationally recognized
overnight courier service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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(a) if to Parent or Subcorp:
Southdown, Inc.
1200 Smith Street
Suite 2400
Houston, Texas 77002-4486
Attention: Patrick S. Bullard
Telecopy No.: (713) 653-8010
with a copy to
John L. Keffer
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place, Suite 2900
Houston, Texas 77002-2781
Telecopy No.: (713) 221-1212
(b) if to Company:
Medusa Corporation
3008 Monticello Blvd.
Cleveland Heights, Ohio 44118
Attention: Robert D. Vilsack
Telecopy No.: (216) 371-4562
with a copy to
Lawrence Lederman
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Telecopy No.: (212) 530-5219
8.3 Interpretation. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The headings and the table of contents
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
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8.4 Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same Agreement. The parties may
execute more than one copy of the Agreement, each of which shall constitute an
original.
8.5 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein), the disclosure schedules of the Company
and Parent and the Confidentiality Agreement constitute the entire agreement
among the parties and supersede all contemporaneous oral and all prior
agreements and understandings, agreements or representations by or among the
parties, written and oral, with respect to the subject matter hereof and
thereof. Each of Company and Parent expressly warrants and represents and does
hereby state that no promise or agreement which is not herein expressed has
been made in executing this Agreement, and that neither Company nor Parent is
relying on any statement or representation of any agent of the parties to this
Agreement.
8.6 Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended or shall be construed to create any third party
beneficiaries, except for the provisions of Sections 2.3, 5.2(d), 5.2(e),
5.2(f), 5.2(j) and 5.2(k), which may be enforced by the beneficiaries thereof
(the expenses, including reasonable attorneys' fees, that may be incurred
thereby in enforcing such provisions to be paid by Parent).
8.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW EXCEPT TO THE EXTENT THE OGCL IS MANDATORILY
APPLICABLE TO THE MERGER.
8.8 Jurisdiction. Any legal action, suit, or proceeding in law or
equity arising out of or relating to this Agreement and transactions
contemplated by this Agreement may be instituted in any state or federal court
(or if subject matter jurisdiction is unavailable in such court, then in state
court) in Cleveland, Ohio or Harris County, Houston, Texas, and each party
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit, or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper or that this Agreement, or the subject matter hereof or thereof may
not be enforced in or by such court. Each party further irrevocably submits to
the jurisdiction of any such court in any such action, suit, or proceeding.
Any and all service of process and any other notice in any such action, suit,
or proceeding shall be effective against any party if given by registered or
certified mail, return receipt requested, or by any other means of mail which
requires a signed receipt, postage prepaid, mailed to such party at the address
listed in Section 8.2. Nothing herein contained shall be deemed to affect the
right of any party to serve
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process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction other than Ohio
or Texas.
8.9 Waiver of Jury Trial. COMPANY, PARENT AND SUBCORP HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
8.10 Specific Performance. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of
the parties hereto is entitled to a decree of specific performance, provided
that such party is not in material default hereunder.
8.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
8.12 Expenses and Fees.
(a) Company and Parent shall pay their own costs and
expenses associated with the transactions contemplated by this Agreement,
except that Company and Parent shall share equally: (i) the filing fees in
connection with the filing of the Joint Proxy Statement and Registration
Statement with the Commission; (ii) the expenses incurred in connection with
printing and mailing the Joint Proxy Statement to the Company Shareholders and
Parent Shareholders; and (iii) any filing fees incurred pursuant to Section
5.1(b).
(b) If this Agreement is terminated: (i) by Company
pursuant to Section 7.1(g); (ii) by Parent pursuant to Section 7.1(f) if
Company's material breach of any representation, warranty, covenant or other
agreement under this Agreement is the basis for such termination and a Prior
Event shall have occurred prior thereto; (iii) by Company or Parent pursuant to
Section 7.1(d) if a Prior Event shall have occurred prior to such termination;
or (iv) by Company pursuant to Section 7.1(h); then Company will, in the case
of a termination under clauses (i) or (ii) of this paragraph, within three
business days following such termination, or in the case of a termination under
clause (iii) of this paragraph, within three business days following the
consummation of a Company Competing Transaction, pay to Parent a termination
fee in the amount of $30,000,000, and in the case of a termination under clause
(iv) of this paragraph, within three business days following
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such termination, pay to Parent a termination fee in the amount of $15,000,000,
in each case payable in cash by wire transfer in immediately available funds to
an account designated by Parent.
(c) As used herein, the terms "Beneficial Ownership" and
"Beneficially Own" shall have the meanings ascribed to them in Rule 13d-3 under
the Exchange Act; the term "person" shall have the meaning specified in
sections 3(a)(9) and 13(d)(3) of the Exchange Act. A "Prior Event" shall mean
any of the following events:
(i) any person (other than Parent or its
subsidiaries) shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act) or shall have filed a registration statement under the
Securities Act, with respect to, a tender offer or exchange offer to purchase
any shares of Company Common Shares such that, upon consummation of such offer,
such person would Beneficially Own or control 15% or more of the then
outstanding Company Common Shares; or
(ii) Company or any of its subsidiaries shall have
entered into, authorized, recommended, proposed, or publicly announced an
intention to enter into, authorize, recommend or propose an agreement,
arrangement or understanding with any person (other than Parent or any of its
subsidiaries) to, or any person (other than Parent or any of its subsidiaries)
shall have publicly announced an intention to (A) effect any Company Competing
Transaction, (B) purchase, lease or otherwise acquire 15% or more of the assets
of Company or any of its subsidiaries or (C) purchase or otherwise acquire
(including by way of merger, consolidation, tender or exchange offer or other
similar transaction) Beneficial Ownership of securities representing 15% or
more of the voting power of Company or any of its subsidiaries; or (iii) any
person (other than Parent or its subsidiaries) shall have acquired Beneficial
Ownership of a number of shares of Company Common Shares in addition to the
number of shares of Company Common Shares Beneficially Owned by such person on
the date hereof equal to 15% or more of the voting power of Company.
8.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.14 Definitions and Usage. For the purposes of this Agreement:
"Action" shall have the meaning specified in Section 4.14.
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<PAGE> 54
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Agreement" shall have the meaning specified in the introductory
paragraph of this Agreement and Plan of Merger.
"Alternative Proposal" shall have the meaning specified in Section
5.3(d).
"Applicable Laws" shall have the meaning specified in Section 4.13.
"Beneficial Ownership" and "Beneficially Own" shall have the meanings
specified in Section 8.12(c).
"Business Day" shall mean any day other than a Saturday, Sunday or
legal holiday recognized by banking institutions in the State of Texas.
"Certificate of Merger" shall have the meaning specified in Section
1.3.
"Certificates" shall have the meaning specified in Section 2.2(b).
"Change in Control" shall have the meaning specified in Section
5.2(j).
"Class C Preferred" shall have the meaning specified in Section 4.3.
"Closing" shall have the meaning specified in Section 1.2.
"Closing Date" shall have the meaning specified in Section 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"Commission" shall have the meaning specified in Section 2.3(c).
"Common Stock" shall have the meaning specified in Section 2.1(a).
"Common Stock Authorizations" shall have the meaning specified in
Section 3.4.
"Common Stock Index" is defined as the percentage change (expressed in
positive or negative percentage points) in the volume weighted average trading
prices of Common Stock, as
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reported by Bloomberg Financial Markets, from the date of this Agreement to the
last day of the Test Period.
"Company" shall have the meaning specified in the introductory
paragraph of this Agreement and Plan of Merger.
"Company Affiliate" shall have the meaning set forth in Section
5.3(e).
"Company Articles and Code of Regulations" shall have the meaning
specified in Section 4.1.
"Company Common Shares" shall have the meaning specified in Section
2.1(a).
"Company Competing Transaction" shall have the meaning specified in
Section 5.3(d).
"Company Contract" shall have the meaning specified in Section 4.23.
"Company Dissenting Shares" shall have the meaning specified in
Section 2.2(k).
"Company Material Adverse Effect" shall mean any Material Adverse
Effect with respect to the Company and any of its subsidiaries when taken as a
whole.
"Company Option" shall have the meaning specified in Section 2.3(a).
"Company Plan" means all employee benefit plans, programs, policies,
practices, and other arrangements providing benefits which includes, but is not
limited to incentive compensation programs, stock incentive programs, employment
contracts, retention agreements and employee fringe benefit programs to any
Employee or former Employee or beneficiary or dependent thereof, whether or not
written, and whether covering one person or more than one person, sponsored or
maintained by Company or any of its subsidiaries or to which Company or any of
its subsidiaries contributes or is obligated to contribute. Without limiting the
generality of the foregoing, the term "Company Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of ERISA and all
employee pension benefit plans within the meaning of Section 3(2) of ERISA.
"Company Preferred Shares" shall have the meaning specified in Section
4.3.
"Company Rights" shall have the meaning set forth in Section 4.3.
"Company Rights Agreement" shall have the meaning set forth in Section
4.3.
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<PAGE> 56
"Company SEC Documents" shall have the meaning specified in Section
4.10.
"Company Shareholders" shall have the meaning specified in Section
4.4.
"Confidentiality Agreement" shall have the meaning specified in
Section 5.1(g).
"Control" means (including the terms "controlling", "controlled by",
and "under common control with") the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting shares, by contract, or
otherwise.
"Controlled Group Liability" means any and all liabilities under: (i)
Title IV of ERISA; (ii) section 302 of ERISA; (iii) sections 412 and 4971 of
the Code; (iv) the continuation coverage requirements of section 601 et seq. of
ERISA and section 4980B of the Code; and (v) corresponding or similar
provisions of foreign laws or regulations, in each case other than pursuant to
the Parent Plans as defined below.
"Effective Date" shall have the meaning specified in Section 1.3.
"Employees" shall mean the employees of the Parent or the Company, as
the context may require, except as otherwise defined in Section 5.2(f).
"Environmental Laws" shall have the meaning specified in Section
4.21(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
"Exchange Act" shall have the meaning specified in Section 3.10.
"Exchange Agent" shall have the meaning specified in Section 2.2(a).
"Exchange Ratio" shall have the meaning specified in Section 2.1(a).
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"Exchange Trust" shall have the meaning specified in Section 2.2(c).
"Former Employees" shall have the meaning specified in Section 5.2(f).
"Fractional Shares" shall have the meaning specified in Section
2.2(c).
"Governmental Authority" shall have the meaning specified in Section
2.2(i).
"Hazardous Materials" shall have the meaning specified in Section
4.21(a).
"HSR Act" shall have the meaning specified in Section 3.6(d).
"Incentive Plan" shall have the meaning specified in Section 5.3(h).
"Indemnified Liabilities" shall have the meaning set forth in Section
5.2(d).
"Indemnified Parties" shall mean each person who is now, or has been
at any time prior to the date hereof, an officer, director, employee, trustee
or agent of Company (or any subsidiary or division thereof), including, without
limitation, each person controlling any of the foregoing persons
(individually,"Indemnified Party" and collectively, "Indemnified Parties")
"Indemnified Party" shall have the meaning set forth in Section
5.2(d).
"J.P. Morgan" shall have the meaning specified in Section 4.6.
"Joint Proxy Statement" shall have the meaning specified in Section
3.11.
"Justice Department" shall have the meaning specified in Section
5.1(b).
"Knowledge" when used in relation to any Person shall mean the actual
(but not constructive) knowledge of such Person's executive officers.
"Lehman Brothers" shall have the meaning specified in Section 3.7.
"Material Adverse Effect" means a material adverse effect on the
assets, liabilities, results of operations, business or financial condition of
such party and its subsidiaries, taken as a whole.
"Merger" shall have the meaning specified in Section 1.1.
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<PAGE> 58
"Merger Consideration" shall have the meaning specified in Section
2.1(a).
"Multiemployer Plan" shall have the meaning specified in Section
4.9(e).
"Multiple Employer Plan" shall have the meaning specified in Section
4.9(e).
"National Exchange" shall have the meaning specified in Section
2.2(c).
"NYSE" shall have the meaning specified in Section 2.2(c).
"Officer" means in the case of Parent and Company, any executive
officer of Parent or the Company, as applicable, within the meaning of Rule
3b-7 of the 1934 Act.
"OGCL" shall have the meaning specified in Section 1.1.
"Ohio Secretary of State" shall have the meaning specified in Section
1.3.
"Parent" shall have the meaning specified in the introductory
paragraph of this Agreement and Plan of Merger.
"Parent Affiliate" shall have the meaning specified in Section 5.2(i).
"Parent Amendment" shall have the meaning set forth in Section 3.4.
"Parent Articles and Bylaws" shall have the meaning specified in
Section 3.1.
"Parent Exchange Option" shall have the meaning specified in Section
2.3(a).
"Parent Material Adverse Effect" shall mean any Material Adverse
Effect with respect to the Parent and any of its subsidiaries when taken as a
whole.
"Parent Preferred Stock" shall have the meaning specified in Section
3.3.
"Parent Rights" shall have the meaning set forth in Section 3.3.
"Parent Rights Agreement" shall have the meaning set forth in Section
3.3.
"Parent SEC Documents" shall have the meaning specified in Section
3.10.
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"Parent Series C Preferred Stock" shall have the meaning set forth in
Section 3.3.
"Parent Shareholder Authorizations" shall have the meaning specified in
Section 3.5.
"Parent Shareholders" shall have the meaning specified in Section 3.4.
"Parent Shareholders' Meeting" shall have the meaning specified in
Section 5.2(h).
"PBGC" shall have the meaning specified in Section 4.9(g)(ii).
"Peer Group" shall mean the following companies: Giant Cement Holding,
Inc., Lafarge Corporation, Lone Star Industries, Inc. and Centex Construction
Products, Inc.
"Peer Group Composite Index" is defined as the percentage change
(expressed in positive or negative percentage points) in the average of the
volume weighted average trading prices of the common stock of each of the
companies in the Peer Group, as reported by Bloomberg Financial Markets,
weighted by the market capitalization of each such company, from the date of
this Agreement to the last day of the Test Period. For this purpose, the
market capitalization of each such company on a given date shall be determined
by multiplying the number of outstanding shares of common stock of such
company, as reflected in the most recently available filings with the
Commission (with appropriate adjustments for any stock splits, stock dividends
or similar events), times the volume weighted average trading price of such
common stock on the such date.
"Pension Plans" shall have the meaning specified in Section 4.9(f).
"Permits" shall have the meaning specified in Section 4.20.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other legal entity of
any kind.
"Prior Event" shall have the meaning specified in Section 8.12(c).
"Prospectus" shall have the meaning specified in Section 3.11.
"Qualified Company Plan" shall have the meaning specified in Section
4.9(b).
"Registration Statement" shall have the meaning specified in Section
3.11.
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"Securities Act" shall have the meaning specified in Section 3.10.
"Separation Date" shall have the meaning specified in Section 6.2(d).
"Stock Acquisition Date" shall have the meaning specified in Section
6.2(d).
"Subcorp" shall have the meaning specified in the initial paragraph of
this Agreement and Plan of Merger.
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are at any time directly or indirectly owned by such Person.
"Surviving Corporation" shall have the meaning specified in Section
1.1.
"Tax" or "Taxes" shall mean all federal, state, local and foreign
taxes including interest and penalties thereon (including, without limitation,
income, franchise, excise, sales, use, gross receipt, severance, real and
personal property taxes).
"Test Period" shall have the meaning specified in Section 7.1(h).
A reference in this Agreement to any statute shall be to such statute
as amended from time to time, and the rules and regulations promulgated
thereunder.
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IN WITNESS WHEREOF, Company, Parent and Subcorp have signed this
Agreement as of the date first written above.
MEDUSA CORPORATION
By: /s/ ROBERT S. EVANS
-----------------------------------
Robert S. Evans
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
----------------------------------
Clarence C. Comer
BEDROCK MERGER CORP.
By: /s/ CLARENCE C. COMER
----------------------------------
Clarence C. Comer
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Exhibit 99.1
Contact: Thomas E. Daman
Dennis M. Thies
Southdown, Inc.
(713) 650-6200
George E. Uding, Jr.
R. Breck Denny
Medusa Corporation
(216) 371-4000
FOR IMMEDIATE RELEASE
- ---------------------
SOUTHDOWN, INC. AND MEDUSA CORPORATION AGREE TO MERGE
------------------------------------------------------
IN $1 BILLION TRANSACTION
-------------------------
- Combination Creates Second-Largest Cement Producer in the U.S. -
- Transaction is Expected to be Accretive -
HOUSTON, TEXAS AND CLEVELAND HEIGHTS, OHIO -- March 18, 1998 --
Southdown, Inc., (NYSE:SDW) and Medusa Corporation (NYSE:MSA), leading U.S.
producers of cement, today announced that they have signed a definitive
agreement under which Southdown and Medusa will merge in a stock-for-stock
transaction that will make Southdown the second-largest producer of cement in
the United States with 10.8 million tons of capacity. The combined company
will be well-positioned to capitalize on strong industry dynamics and will
have strong prospects for future growth.
Under the terms of the agreement, which has been approved by the
boards of directors of both companies, Medusa shareholders will receive .88
shares of Southdown for each Medusa
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share. Based on the closing prices of Southdown and Medusa common stock on
Tuesday, March 17, 1998, the transaction results in an implied value for Medusa
common stock of $61.22 per share and a 17% premium for Medusa shares. On that
basis, the total value of the proposed transaction is $1 billion. The
transaction will be tax-free to shareholders and is intended to be accounted
for by Southdown as a pooling of interests. Excluding one-time costs directly
related to the transaction, Southdown expects the merger to be accretive to
1998 earnings with anticipated overhead and distribution cost savings.
Clarence C. Comer, President and Chief Executive Officer of Southdown
said, "The merger with Medusa further establishes Southdown as the largest
domestically owned cement manufacturer in the U.S. This transaction should
give Southdown a greater opportunity to capitalize on current strong industry
fundamentals and the expected growth in cement consumption as a result of the
proposed increases in Federal and state infrastructure spending. The expanded
network of preheater/precalciner facilities created by this combination will be
the most modern and efficient plant system in the U.S. and should have the
ability to cost-effectively expand capacity and increase earnings."
"The combination will create a significantly larger company with
greater financial flexibility, a stronger balance sheet, higher market
capitalization and greater earnings and cash flows," Mr. Comer continued, "all
of which should enhance our ability to realize our growth potential and pursue
attractive business opportunities in the future. Medusa's operations
complement our existing asset base and the combined network of plants and
distribution
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terminals provides broad coverage of the market east of the Mississippi, as
well as significant distribution flexibility to reduce shipping costs. The
broader geographic scope should lessen the company's exposure to regional
cyclical downturns. Moreover, we believe that there are potentially
significant cost savings to be realized by reducing corporate overhead."
Robert S. Evans, Medusa's Chairman and Chief Executive Officer, said,
"This transaction provides increased value to Medusa shareholders. In
addition, Medusa shareholders will have an ongoing equity interest in a larger
and stronger company with improved long-term growth potential and investment
liquidity. The combined company should also benefit from Medusa's expertise in
its construction aggregates and specialty limestone businesses, which provides
an enhanced platform for future growth. We look forward to working with
Clarence Comer and his management team to successfully integrate our two
companies for the benefit of our shareholders, customers and employees."
The combined company will have a market capitalization of
approximately $2.7 billion (based on Southdown's 3/17/98 closing stock price);
combined 1997 revenues of approximately $1.1 billion and net income of
approximately $154 million, excluding one time charges directly related to the
transaction. Following the completion of the transaction, Southdown will
continue to be headquartered in Houston, Texas, and Mr. Comer will continue to
serve as President and Chief Executive Officer. Mr. Evans will join
Southdown's Board of Directors along with Medusa's President and Chief
Operating Officer, George E. Uding, Jr. Certain of
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<PAGE> 4
Medusa's executive officers and directors, including Mr. Evans and Mr. Uding,
have given Southdown their irrevocable proxies to vote in favor of the
transaction.
Completion of the transaction is subject to required approvals by
shareholders of both companies, the expiration of applicable waiting periods
under the antitrust laws, registration of the shares of Southdown's stock
issuable in the transaction under the securities laws, and other customary
closing conditions. Southdown and Medusa have both cancelled their existing
stock repurchase programs as previously approved by their respective boards of
directors. This transaction is expected to close by the end of June 1998.
Southdown was advised by Lehman Brothers with respect to this
transaction which included rendering a fairness opinion. Medusa was advised by
J.P. Morgan, which also provided a fairness opinion.
Medusa Corporation produces and sells portland and masonry cements;
mines, processes, and sells aggregates, home and garden and industrial
limestone products; and provides construction services for highway safety.
Medusa's operations are principally in the eastern half of the United States.
Southdown, Inc. is one of the leading U.S. cement and ready-mixed
concrete companies. The Company manufactures cement in eight plants located in
Southern California, Colorado, Florida,
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Kentucky, Ohio, Pennsylvania, Tennessee and Texas. The Company markets
ready-mixed concrete products in its two largest markets, Florida and Southern
California.
This document includes forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are based on
current expectations, estimates and projections about the general economy and
Southdown's and Medusa's lines of business and are generally identifiable by
statements containing words such as "expects," "believes," "estimates" or
similar expressions. Statements related to future performance involve certain
assumptions, risks and uncertainties, many of which are beyond the control of
Southdown or Medusa, and cannot be guaranteed. Although Southdown and Medusa
believe that their respective expectations reflected in such forward looking
statements are based upon reasonable assumptions, they can give no assurance
that those expectations will be achieved. Important factors that could cause
actual results to differ materially from those expectations include, among
others, foreign and domestic price competition, cost effectiveness, changes in
environmental regulation, and general economic and market conditions such as
interest rates, the availability of capital and the cyclical nature of the
construction industry. The reader is cautioned to consider such disclosures in
conjunction with the forward looking statements included herein ("Cautionary
Disclosures"). Subsequent written and oral forward looking statements
attributable to Southdown or Medusa or persons acting on their behalf are
expressly qualified in their entirety by reference to these Cautionary
Disclosures.
# # #
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