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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 11, 2000,
AMONG
PREMIER CONSTRUCTION PRODUCTS STATUTORY TRUST,
PREMIER CONSTRUCTION PRODUCTS ACQUISITION CORP.
AND
REPUBLIC GROUP INCORPORATED
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of August 11, 2000, is among
PREMIER CONSTRUCTION PRODUCTS STATUTORY TRUST, a statutory trust ("the Trust"),
PREMIER CONSTRUCTION PRODUCTS ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of the Trust ("Acquisition Sub"), and REPUBLIC GROUP
INCORPORATED, a Delaware corporation (the "Company").
RECITALS:
WHEREAS, the beneficiary of the Trust and the Boards of Directors of
Acquisition Sub and the Company have approved the merger (the "Merger") of
Acquisition Sub with and into the Company upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding share of
common stock, par value $1.00 per share (other than shares owned by the Company
and other than Dissenting Shares (as defined in Section 2.1(d)) and the
associated Right (as defined herein) ("Company Common Stock"; shares of Company
Common Stock being hereinafter collectively referred to as the "Shares") will
be converted into the right to receive in cash $19.00 per Share, without
interest; and
WHEREAS, the beneficiary of the Trust and the respective Boards of Directors
of Acquisition Sub and the Company have each approved and adopted this Agreement
and the Merger upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the Trust and Acquisition Sub have agreed to cause the Letter of
Credit (as defined below) to be issued on the date hereof as set forth in
Section 7.2(b) and have delivered same to the Company; and
WHEREAS, the Company's Board of Directors has unanimously determined that
the consideration to be paid for each Share in the Merger is fair to the
holders of such Shares and recommends that the holders of such Shares approve
and adopt this Agreement, the Merger and the other transactions contemplated
hereby; and
WHEREAS, as an inducement to the willingness of each of the Trust and
Acquisition Sub to enter into this Agreement, each of the Company's executive
officers and directors (collectively, the "Officers and Directors") have
entered into an agreement with the Trust and Acquisition Sub (individually, a
"Stockholder Agreement" and collectively, the "Stockholders Agreements")
pursuant to which each such person (and any entity controlled by such person)
has agreed, among other things, (i) to vote their Shares for approval and
adoption of this Agreement and the transactions contemplated hereby at the
Company Stockholder Meeting (as defined below), (ii) to grant a proxy to
certain designated persons to so vote their Shares and (iii) to certain
restrictions on the transfer of their Shares; and
WHEREAS, the Trust, Acquisition Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE 1
The Merger
Section 1.1 The Merger.
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"), at
the Effective Time (as defined in Section 1.3)
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Acquisition Sub shall be merged with and into the Company and the separate
corporate existence of Acquisition Sub shall cease. The Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall possess
all the rights, powers, privileges and franchises, and be subject to all of the
obligations, liabilities, restrictions and disabilities, of the Company and
Acquisition Sub in accordance with the DGCL.
Section 1.2 Closing.
Subject to the provisions of this Agreement, the closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article 6, at
the offices of Andrews & Kurth L.L.P., 4200 Chase Tower, Houston, Texas 77002,
unless another time, date or place is agreed to in writing by the parties
hereto.
Section 1.3 Effective Time.
Subject to the provisions of this Agreement, on the Closing Date, the
Company and Acquisition Sub shall file a certificate of merger (the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such
subsequent time as the Trust and the Company shall agree and as is specified in
the Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
Section 1.4 Effects of the Merger.
The Merger shall have the effects specified in Section 259 of the DGCL.
Section 1.5 Certificate of Incorporation and By-laws.
(a) The certificate of incorporation of Acquisition Sub, as in effect
immediately prior to the Effective Time, shall be the certificate
of incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law, except
that (i) the name of the Surviving Corporation shall continue to be
Republic Group Incorporated and (ii) the terms of Article TENTH of
the Company's Second Restated Certificate of Incorporation shall be
included in the certificate of incorporation of the Surviving
Corporation (and shall supersede and replace in its entirety any
provision in the certificate of incorporation of Acquisition Sub
with respect to indemnification of directors or officers or former
directors or officers).
(b) The by-laws of Acquisition Sub as in effect immediately prior to
the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein
or by applicable law, except that at the Effective Time Article VI
of the Company's by-laws shall replace the provision(s), if any, on
indemnification included in the by-laws of Acquisition Sub.
Section 1.6 Directors.
From and after the Effective Time, the directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be. Each
of the members of the Board of Directors of the Company shall tender his
resignation to be effective immediately at the Effective Time.
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Section 1.7 Officers.
From and after the Effective Time, the officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE 2
Effect of the Merger on the
Capital Stock of the Constituent Corporations
Section 2.1 Effect on Capital Stock.
As of the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock:
(a) Capital Stock of Acquisition Sub. Each issued and outstanding share
of capital stock of Acquisition Sub shall be converted into and
become one fully paid and non-assessable share of Common Stock of
the Surviving Corporation with the same rights, powers and
privileges as the share so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of Company Common Stock
owned by the Company or any subsidiary of the Company shall
automatically be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Except as otherwise provided
herein, each share of Company Common Stock outstanding immediately
prior to the Effective Time (other than shares to be cancelled in
accordance with Section 2.1(b) and other than Dissenting Shares)
shall be cancelled and automatically converted into the right to
receive $19.00 in cash, without interest, from the Trust or, in
accordance with Section 2.1(f), the Surviving Corporation.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary but only to the extent required by the
DGCL, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and held by a
person (a "Dissenting Stockholder") who shall not have voted to
approve and adopt this Agreement or consented thereto in writing
and who shall have complied with all of the provisions of the DGCL
to dissent from the Merger and to demand appraisal for such shares
in accordance with Section 262 of the DGCL ("Dissenting Shares")
shall not be converted as described in Section 2.1(c), unless such
holder fails to perfect or withdraws or otherwise loses his right
to appraisal, but shall instead become the right to receive such
consideration as may be determined to be due such Dissenting
Stockholder pursuant to the DGCL. If, after the Effective Time,
such Dissenting Stockholder fails to perfect or withdraws or
otherwise loses his right to appraisal, then such Dissenting
Stockholder's shares of Company Common Stock shall no longer be
considered Dissenting Shares for the purposes of this Agreement and
shall thereupon be deemed to have been converted into and to have
become exchangeable for, at the Effective Time, the right to
receive for each such share the amount in cash, without interest,
that a holder of a share (a "Nondissenting Share") of Company
Common Stock who had not demanded appraisal would have received
with respect to such Nondissenting Share. The Company shall give
Acquisition Sub (i) prompt notice of any demands for appraisal of
shares of Company Common Stock received by the Company and (ii) the
opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall
not, without the prior written consent of Acquisition Sub, make any
payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands, or agree or commit to do any of the
foregoing.
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(e) Cancellation of Company Common Stock. As of the Effective Time, all
shares of Company Common Stock outstanding immediately prior to the
Effective Time shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder
of a certificate that immediately prior to the Effective Time
represented any such shares of Company Common Stock (a
"Certificate") shall cease to have any rights with respect thereto,
except the right to receive the amount per Share specified in
Section 2.1(c) upon surrender of such Certificate in accordance
with Section 2.2, without interest, or, in the case of Dissenting
Stockholders, if any, the rights, if any, accorded under Section
262 of the DGCL.
Section 2.2 Exchange of Certificates.
(a) Prior to the mailing of the Proxy Statement (as defined in Section
3.1(d)), the Trust shall enter into an agreement with a bank or
trust company mutually acceptable to the Company and the Trust, to
act as Paying Agent (the "Paying Agent") for the payment of the
amount per share specified in Section 2.1(c).
(b) Stock Options.
(i) At or immediately prior to the Effective Time, each employee or
director stock option to purchase Company Common Shares
outstanding under any stock option or compensation plan or
arrangement of the Company shall be cancelled, and the Company
or the Surviving Corporation shall pay each holder of any such
option at or promptly after the Effective Time for each such
option an amount in cash determined by multiplying (A) the
excess, if any, of $19.00 over the applicable exercise price of
such option by (B) the number of shares of Company Common Stock
such holder could have purchased (assuming full vesting and
exercisability of all options) had such holder exercised such
option in full immediately prior to the Effective Time.
(ii) Prior to the Effective Time, the Company shall (A) use its best
efforts to obtain any consents from holders of options to
purchase Company Common Stock granted under the Company's stock
option or compensation plans or arrangements and (B) make any
amendments to the terms of such stock option or compensation
plans or arrangements that, in the case of either clauses (A)
or (B), are necessary to give effect to the transactions
contemplated by part (b)(i) of this Section. Notwithstanding
any other provision of this Section, payment may be withheld in
respect of any employee stock option until such necessary
consents are obtained. Except as provided in part (b)(i) of
this Section 2.2, the Company shall not make any payment in
respect of or in connection with the cancellation of any stock
option.
(c) Deposit with the Paying Agent. Promptly after the Effective Time,
the Trust shall deposit with the Paying Agent, for the benefit of
the holders of shares of Company Common Stock, for payment through
the Paying Agent, cash in such amounts and at times necessary for
the prompt payment of the per Share amount specified in Section
2.1(c) (such cash being hereinafter referred to as the "Exchange
Fund") pursuant to Section 2.1 in exchange for outstanding shares
of Company Common Stock upon surrender of Certificates therefor.
(d) Exchange Procedures. As soon as reasonably practical after the
Effective Time, the Paying Agent shall mail to each holder of
record of a Certificate or Certificates, (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to such Certificates shall pass, only
upon delivery of such Certificates to the Paying Agent, and which
letter shall be in such form and have such other provisions as the
Trust and the Company may reasonably specify) and (ii) instructions
for use in effecting the surrender of such Certificates in exchange
for the amount per Share specified in Section 2.1(c). Upon
surrender of such a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the
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Trust, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor cash which such holder has the right to receive
pursuant to this Article 2, and the Certificate so surrendered shall
forthwith be cancelled. Upon a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the
Company, cash may be paid to a person other than the person in whose
name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such cash to be paid shall (i)
have paid any transfer or other Taxes (as defined in Section 3.1(m))
required by reason of the payment of cash to a person other than the
registered holder of such Certificate or (ii) establish to the
satisfaction of the Trust that such Tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2(d),
each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the amount
per Share specified in Section 2.1(c) which the holder thereof has
the right to receive in respect of such Certificate pursuant to the
other provisions of this Article 2. No interest will be paid or will
accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article 2. The Trust shall pay the charges and
expenses of the Paying Agent and of such other agent or agents as it
may appoint.
(e) No Further Ownership Rights in Company Common Stock. All cash paid
shall be deemed to have been paid and issued in full satisfaction of
all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective
Time that may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and as of the Effective Time, the
stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers of the shares of Company
Common Stock. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any
reason, then they shall be canceled and exchanged as provided in
this Article 2, except as otherwise provided by law.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Certificates for nine
months after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of the Certificates who
have not theretofore complied with this Article 2 shall thereafter
look only to the Surviving Corporation for payment of the cash
amount per Share due pursuant to this Article 2. Any amounts
remaining unclaimed by holders of Company Common Stock three years
after the Effective Time (or such earlier date immediately prior to
such time when the amounts would otherwise escheat to or become
property of any governmental authority) shall become, to the extent
permitted by applicable law, the property of the Surviving
Corporation free and clear of any claims or interest of any person
previously entitled thereto. Any cash amounts made available to the
Paying Agent pursuant to Section 2.2(c) (or otherwise constituting a
part of the Exchange Fund) to pay for shares of Company Common Stock
constituting Dissenting Shares for which appraisal rights have been
perfected shall be returned to the Surviving Corporation upon
demand.
(g) No Liability. Notwithstanding any other provision of this Agreement,
none of the Trust, the Company or the Paying Agent shall be liable
to any person in respect of any amount paid to a public official
pursuant to any applicable abandoned property, escheat or similar
law.
(h) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by the Trust, on a daily
basis. Any interest and other income resulting from such investments
shall be paid to the Trust.
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(i) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, then upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the
posting by such person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against any claim
that may be made against the Surviving Corporation with respect to
such Certificate, the Paying Agent will pay in exchange for such
lost, stolen or destroyed Certificate the amount per share to be
paid pursuant to Section 2.1(c) in respect of the shares of Company
Common Stock represented by such Certificate, as contemplated by
this Agreement.
(j) Withholding Rights. Each of the Trust, the Surviving Corporation
and the Paying Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to a
holder of shares of Company Common Stock such amounts as the Trust,
the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to such consideration under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of
Federal, state, local or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing
authority by the Trust, the Surviving Corporation or the Paying
Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and
withholding was made by the Trust, the Surviving Corporation or the
Paying Agent, as the case may be.
ARTICLE 3
Representations and Warranties
Section 3.1 Representations and Warranties of the Company.
Except as set forth with respect to an identified representation and
warranty on the Disclosure Schedule delivered by the Company to the Trust at
the execution of this Agreement (the "Company Disclosure Schedule"), the
Company represents and warrants to the Trust and Acquisition Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as now being
conducted. The Company is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed or
to be in good standing individually or in the aggregate would not
reasonably be expected to have a material adverse effect (as
defined in Section 9.3) on the Company. The Company has heretofore
made available to the Trust true and correct copies of the
certificate of incorporation and by-laws of the Company, as
currently in effect.
(b) Subsidiaries. The Company Disclosure Schedule sets forth a true and
complete list of each subsidiary of the Company and its respective
jurisdiction of incorporation. Each such subsidiary is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to carry on its
business as now being conducted. Each such subsidiary is duly
qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not reasonably be expected
to have a material adverse effect on the Company. All the
outstanding shares of capital stock of each such subsidiary have
been validly issued and are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of all
pledges, claims, mortgages, liens, charges,
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encumbrances, adverse claims and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for the capital
stock of its subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any
corporation, limited liability company, partnership, joint venture
or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 35,000,000 shares of Company Common Stock, par value
$1.00 per share, and 487,410 shares of Preferred Stock, without par
value. At the close of business on August 9, 2000, (i) 11,846,837
shares of Company Common Stock were issued and outstanding, (ii) no
shares of Company Common Stock were held by the Company in its
treasury, (iii) 1,811,307 shares of Company Common Stock were
reserved for issuance pursuant to the Company's 1989 Long-Term
Incentive Plan (as amended effective August 16, 1996), the
Company's Non-Employee Director Stock Option Plan, the Company's
Employee Stock Purchase Plan and the Company's Dividend
Reinvestment Plan (collectively, the "Company Stock Plans"), (iv)
employee and director stock options to purchase an aggregate of
600,843 shares of Company Common Stock ("Outstanding Stock
Options") were outstanding, (v) rights (the "Rights") to purchase
shares of Company Common Stock (and in certain instances to receive
fractional shares of Preferred Stock of the Company in lieu of
shares of Company Common Stock) issuable pursuant to the Amended
and Restated Rights Agreement dated September 19, 1996 (as amended
from time to time, the "Rights Agreement") between the Company and
UMB Bank, N.A., as rights agent, were outstanding and (vi) 47,250
shares of Series C Junior Participating Preferred Stock,
constituting a series of Preferred Stock, have been designated and
authorized for issuance pursuant to the Rights Agreement, but no
shares of Preferred Stock were outstanding. Except as set forth
above, and for changes since the close of business on August 9,
2000 resulting from the exercise or vesting of employee and
director stock options outstanding on such date, (i) no shares of
capital stock or other voting securities, of or ownership interests
in the Company were issued, reserved for issuance or outstanding,
(ii) there were no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities and
(iii) there were no outstanding stock appreciation rights, stock
options or rights to receive shares of Company Common Stock on a
deferred basis granted under the Company Stock Plans or otherwise.
All outstanding shares of capital stock of the Company are, and all
shares issuable upon exercise of outstanding employee or director
stock options will be, when issued, duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive
rights. There are no notes, bonds, debentures or other indebtedness
of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except as
set forth above and except for the Company's Dividend Reinstatement
Plan and Employee Stock Purchase Plan, as to which purchases of
Shares shall have been suspended pursuant to Section 4.1(d) hereof,
there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings to
which the Company or any of its subsidiaries was a party or by
which any of them was bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. There are
no outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its subsidiaries. There
are no outstanding contractual obligations of the Company to vote
or to dispose of any shares of the capital stock of any of its
subsidiaries.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and,
subject to the Company Stockholder Approval (as defined in
Section 3.1(n)), to consummate the transactions contemplated by
this Agreement. The execution, delivery and performance of this
Agreement by the Company and the consummation by the
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Company of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of the approval and adoption of this
Agreement, to the Company Stockholder Approval. This Agreement has
been duly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The execution,
delivery and performance of this Agreement and the Stockholders
Agreements do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of
this Agreement and the Stockholders Agreements will not, conflict
with, or result in any violation of, breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation or
imposition of any Lien upon any of the properties or assets of the
Company or any of its subsidiaries under, (i) the certificate of
incorporation or by-laws of the Company or the comparable
organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license
applicable to the Company or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate would not have
a material adverse effect on the Company. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Federal, state or local government or any court, administrative or
regulatory agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of its subsidiaries in
connection with the execution, delivery and performance of the
Stockholders Agreements by the Officers and Directors or of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (1) the
filing of a premerger notification and report form by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (2) the filing with the Securities and
Exchange Commission (the "SEC") of (A) a proxy statement relating to
the Company Stockholders Meeting (such proxy statement (as provided
for in Section 5.1(a)), as amended or supplemented from time to time,
being the "Proxy Statement"), and (B) such reports under Section
13(a), 13(d) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with
the Stockholders Agreements and this Agreement and the transactions
contemplated by this Agreement; (3) the filing of the Certificate of
Merger with the Delaware Secretary of State and appropriate documents
with the relevant authorities of other states in which the Company is
qualified to do business; (4) such filings as are listed on Schedule
3.1(d) of the Company Disclosure Schedule; and (5) such consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure to make or obtain which would not reasonably be
expected to have a material adverse effect on the Company.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since
July 1, 1997 (the "SEC Documents"). As of their respective dates,
the SEC Documents complied or will comply in all material respects
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents, and, as of their respective dates, none of
the SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to
the extent that information contained in any SEC Document has been
revised or superseded by a later Filed
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SEC Document, none of the SEC Documents contains, and no SEC
Documents filed after the date of this Agreement and prior to the
Effective Time will contain, any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents
(including, in each case, any notes thereto) comply or will comply as
to form in all material respects with applicable accounting
requirements of the SEC with respect thereto, have been prepared or
will be prepared in accordance with generally accepted accounting
principles as in effect at the time of application thereof ("GAAP")
(except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC and other SEC rules and regulations) applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material
respects, or will fairly present in all material respects, the
consolidated financial position of the Company and its subsidiaries
as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(f) Other Financial Statements. The consolidated financial statements as
of and for the year ended June 30, 2000 furnished by the Company to
the Trust and Acquisition Sub, which consist of a balance sheet as
of such date (the "Company Balance Sheet") and a statement of
operations and a statement of cash flows for the year then ended
(including the notes thereto), and the report of Arthur Andersen LLP
with respect thereto, was prepared in accordance with GAAP applied
on a consistent basis during the periods involved and fairly
presents in all material respects the consolidated financial
position of the Company and its subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for
the period then ended.
(g) No Undisclosed Material Liabilities. At the date of this Agreement,
there are no liabilities or obligations of the Company or any of its
subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than (i)
liabilities or obligations disclosed in or reserved against in the
Company Balance Sheet, (ii) liabilities and obligations of a type
not required to be disclosed in or reserved against in the Company
Balance Sheet that are (A) referred to in the Company's Annual
Report on Form 10-K for the year ended June 30, 1999 or any SEC
Documents filed thereafter (including obligations under agreements,
plans and other documents filed therewith or incorporated by
reference therein) or (B) contained in the Disclosure Schedule, and
(iii) liabilities or obligations incurred in the ordinary course of
business consistent with past practice that would not reasonably be
expected to have, individually or in the aggregate, a material
adverse effect on the Company.
(h) Information Supplied. None of the information included or
incorporated by reference in any documents filed or to be filed with
the Commission or any other Governmental Entity in connection with
the transactions contemplated hereby, including in the Proxy
Statement will, the respective times such documents are filed or are
first published, sent or given to stockholders, and also, in the
case of the Proxy Statement, at the date such document is first
mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
are made, not misleading, and the Proxy Statement and any such
information statement will comply at all relevant times in all
material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied to
the Company by the Trust or Acquisition Sub in writing specifically
for inclusion or incorporation by reference in the Proxy Statement.
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(i) Absence of Certain Changes or Events. Except as disclosed in the
Company Disclosure Schedule and the SEC Documents filed and
publicly available after the date of the Company Balance Sheet,
since the date of the Company Balance Sheet, the Company has
conducted its business only in the ordinary course, consistent with
past practice and there has not been (i) any event, occurrence,
development or state of circumstances or facts that has had or is
reasonably likely to have a material adverse effect on the Company,
except for any such event, occurrence, development or state of
facts or circumstances attributable to conditions affecting the
paperboard or wallboard industries or the U.S. economy as a whole,
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock, (iii) any granting
by the Company or any of its subsidiaries to any director, officer
or other employee of the Company or any of its subsidiaries of (x)
any options or rights to acquire equity securities of the Company,
(y) any increase in compensation, bonuses or other benefits, except
the vesting of benefits and for normal awards, increases and other
payments in the ordinary course of business consistent with past
practice or as was required under employment agreements and Company
Plans in effect as of the date of the most recent audited financial
statements included in the Filed SEC Documents or (z) severance or
termination pay or increase thereof, (iv) any incurrence,
assumption or guarantee by the Company or any of its subsidiaries
of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past
practice (it being agreed that the aggregate indebtedness for
borrowed money of the Company and its subsidiaries at any time will
be no more than $215 million), (v) any creation or other incurrence
by the Company or any of its subsidiaries of any Lien on any
material asset other than in the ordinary course of business
consistent with past practice, (vi) any damage, destruction or
other casualty loss (whether or not covered by insurance) affecting
the business or the assets of the Company or any of its
subsidiaries that has had or would reasonably be expected to have a
material adverse effect on the Company, (vii) any material labor
dispute involving the employees of the Company or any of its
subsidiaries, (viii) any transaction or commitment made, or any
contract or arrangement entered into, by the Company or any of its
subsidiaries (including the acquisition or disposition of any
assets) other than in the ordinary course of business consistent
with past practice except for the disposition of certain assets of
the Company as set forth on the Company Disclosure Schedule, or
(ix) any amendment of any term of any outstanding security of the
Company or any of its subsidiaries.
(j) Litigation. There is no suit, action, investigation or proceeding
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries or any of their
respective properties before any court or arbitrator or before any
foreign or domestic Governmental Entity that individually or in the
aggregate would reasonably be expected to have a material adverse
effect on the Company, nor is there any judgment, order or decree
of any Governmental Entity outstanding against the Company or any
of its subsidiaries having, or which would reasonably be expected
to have, such a material adverse effect on the Company.
(k) Absence of Changes in Benefit Plans. Except as disclosed in the
Company Disclosure Schedule, since the date of the Company Balance
Sheet there has not been any adoption or amendment in any material
respect (except as required by applicable law), or any agreement to
adopt or amend in any material respect, by the Company or any of
its subsidiaries of any collective bargaining agreement or
employment contract or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former director,
officer or employee of the Company or any of its subsidiaries (the
"Company Plans"). Without limiting the foregoing, except as
disclosed in the Company Disclosure Schedule, since the date of the
Company Balance Sheet, there has not been any change in any
actuarial or other assumption used to calculate funding obligations
with respect to
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any Pension Plan (as defined in Section 3.1(l)) of the Company, or
in the manner in which contributions to any Pension Plan of the
Company are made or the basis on which such contributions are
determined. Except as disclosed in the Company Disclosure Schedule,
there exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between
the Company or any of its subsidiaries and any current or former
director, officer or employee of the Company or any of its
subsidiaries.
(l) ERISA Compliance.
(i) The Company Disclosure Schedule contains a list of each
"employee pension benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as a "Pension Plan"),
each "employee welfare benefit plan" (as defined in Section 3(1)
of ERISA) (sometimes referred to herein as a "Welfare Plan"),
each employment contract, stock option, stock purchase, deferred
compensation plan or arrangement and each other employee fringe
benefit plan or arrangement maintained, contributed to or
required to be maintained or contributed to by the Company, any
of its subsidiaries or any other person or entity that, together
with the Company, is or was treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (each, a "Commonly
Controlled Entity") for the benefit of any current or former
directors, officers, employees or independent contractors of the
Company or any of its subsidiaries (collectively, "Company
Benefit Plans"). The Company has delivered or made available to
the Trust true, complete and correct copies of (w) each Company
Benefit Plan, (x) the two most recent annual reports on Form
5500 filed with the Internal Revenue Service with respect to
each Company Benefit Plan (if any such report was required), (y)
the most recent summary plan description for each Company
Benefit Plan for which such summary plan description is
required, and (z) each currently effective trust agreement,
insurance or group annuity contract and each other funding or
financing arrangement relating to any Company Benefit Plan.
(ii) Except as disclosed on the Company Disclosure Schedule, (1)
each Company Benefit Plan has been administered in accordance
with its terms and the Company, its subsidiaries and all the
Company Benefit Plans are in compliance with the applicable
provisions of ERISA, the Code and all other applicable laws and
the terms of all applicable collective bargaining agreements,
except for any failure to so administer or any non-compliance
that has not and, if continued, would not, individually or in
the aggregate, have a material adverse effect on the Company,
(2) there are no pending or, to the Company's knowledge,
threatened, (A) investigations by any Governmental Entity, (B)
termination proceedings or other claims (except routine claims
for benefits payable under the Company Benefit Plans), (C)
suits or (D) proceedings against or involving any Company
Benefit Plan or asserting any rights or claims to benefits
under any Company Benefit Plan, and (3) all reports, returns
and similar documents with respect to the Company Benefit Plans
required to be filed with any governmental agency or
distributed to any Company Benefit Plan Participant have been
duly, timely, and accurately filed or distributed.
(iii) Except as described on Schedule 3.1(l) of the Company
Disclosure Schedule, (1) all contributions to, and payments
from, the Company Benefit Plans that may have been required to
be made in accordance with the terms of the Company Benefit
Plans, any applicable collective bargaining agreement and,
when applicable, Section 302 of ERISA or Section 412 of the
Code, have been timely made, except for any such untimely
payment that has not and, if continued, would not,
individually or in the aggregate, have a material adverse
effect on the Company, (2) there has been no application for
waiver or waiver of the minimum funding standards imposed by
Section 412 of the Code with respect to any Pension Plan of
the Company, (3) no Pension Plan of the Company has or had at
any time during the current plan year an "accumulated funding
deficiency" within the meaning of
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Section 412(a) of the Code and (4) there is no liability under
Title IV of ERISA with respect to any Company Benefit Plan
(except for insurance premiums payable to the Pension Benefit
Guaranty Corporation which are not yet due) that has not been
satisfied as of the date hereof.
(iv) Each Pension Plan of the Company that is intended to be a tax-
qualified plan has been the subject of a determination letter
from the Internal Revenue Service to the effect that such
Pension Plan and related trust is qualified and exempt from
U.S. Federal income Taxes under Sections 401(a) and 501(a),
respectively, of the Code; no such determination letter has
been revoked; and, to the knowledge of the Company, no such
revocation has been threatened. No such Pension Plan has been
amended since the effective date of its most recent
determination letter in any respect that would adversely affect
its qualification, materially increase its costs or require
security under Section 307 of ERISA. Furthermore, each Pension
Plan of the Company that is intended to be tax qualified has
been timely and properly amended since each respective Pension
Plan's effective date to comport with any changes in the Code,
ERISA, or other applicable federal or state law which might
otherwise effect such Pension Plan's tax qualified status. The
Company has delivered or made available to the Trust a copy of
the most recent determination letter received with respect to
each Pension Plan of the Company.
(v) Each Welfare Plan of the Company may be amended or terminated
without material liability to the Surviving Corporation at any
time after the Effective Time.
(vi) Except as disclosed in Schedule 3.1(l) of the Company
Disclosure Schedule, no director, independent contractor or
employee of the Company will be entitled to any additional
benefits or any acceleration of the time of payment or vesting
of any benefits under any Company Benefit Plan as a result of
the transactions contemplated by this Agreement.
(vii) Schedule 3.1(l) of the Company Disclosure Schedule contains a
list of all Company Benefit Plans which provide for
accelerated vesting or payment of any benefits as a result of
a change in control.
(m) Taxes.
(i) Each of the Company and its subsidiaries has filed all Federal
and all material state and local Tax returns and reports
required to be filed by it or requests for extensions to file
such returns or reports have been timely filed, granted and have
not expired. All Federal and all material state and local Tax
returns and reports filed by the Company and each of its
subsidiaries are complete and accurate in all material respects.
The Company and each of its subsidiaries has paid (or the
Company has paid on its behalf) all Taxes shown as due on such
returns and reports and all material Taxes otherwise due, and
the Company Balance Sheet adequately provides for Taxes payable
by the Company and its subsidiaries for taxable periods and
portions thereof accrued through the date of such financial
statements.
(ii) No deficiencies for any Taxes have been proposed, asserted or
assessed against the Company or any of its subsidiaries that
are not adequately provided for on the financial statements,
and no requests for waivers of the time to assess any such
Taxes have been granted or are pending. There is no audit,
examination, deficiency or refund litigation pending with
respect to Taxes and during the past three years no taxing
authority has given written notice of the intent to commence
any such examination, audit deficiency or refund litigation.
None of the assets or properties of the Company or any of its
subsidiaries is subject to any material Tax lien, other than
any such liens for Taxes which are not due and payable, which
may thereafter be paid without penalty or the validity of which
are being contested in good faith by appropriate proceedings
and for which adequate provisions are being maintained in
accordance with generally accepted accounting principles
("Permitted Tax Liens").
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(iii) Schedule 3.1(m) of the Company Disclosure Schedule lists all
federal, state, local, and foreign income Tax returns for
which an extension to file has filed and for which the related
Tax return has not been filed.
(iv) None of the payments or benefits which may be triggered under
any Company Benefit Plan or other agreement or arrangement by
the Merger or the other transactions contemplated hereby
(either alone or in combination with a second event following
the Merger such as termination of employment) will not be
deductible under Code (S)280G.
(v) As used in this Agreement, "Taxes" shall include all Federal,
state and local income, franchise, use, property, sales, excise
and other taxes, tariffs or governmental charges of any nature
whatsoever, domestic or foreign, including any interest,
penalties or additions with respect thereto.
(n) Inapplicability of DGCL Section 203 and Article THIRTEENTH of the
Company Charter; Voting Requirements. The Company's Board of
Directors (including, without limitation the requisite approval of
"Continuing Directors" to the extent necessary under Article
THIRTEENTH of the Company's Second Restated Certificate of
Incorporation) has taken all actions necessary and appropriate to
render the limitations on business combinations contained in
Section 203 of the DGCL and the 66 2/3% voting provisions in
Article THIRTEENTH of the Company's Second Restated Certificate of
Incorporation inapplicable to this Agreement, the Stockholders
Agreements and the consummation of the Merger and the other
transactions contemplated hereby and thereby. The affirmative vote
of the holders of a majority of the outstanding shares of the
Company Common Stock (the "Company Stockholder Approval") is the
only vote of the holders of any class or series of the Company's
capital stock necessary to approve and adopt this Agreement, the
Merger and the other transactions contemplated by this Agreement,
and the Stockholders Agreements.
(o) Rights Agreement. The Rights Agreement has been amended as of the
date hereof (the "Rights Amendment") to the extent necessary (i) to
render the Rights Agreement inapplicable to this Agreement, the
Stockholders Agreements, the Merger, and the other transactions
contemplated by this Agreement and the Stockholders Agreements (ii)
to ensure that (y) neither the Trust nor any of its subsidiaries
(including Acquisition Sub) is an Acquiring Person (as defined in
the Rights Agreement) pursuant to the Rights Agreement and (z) a
Stock Acquisition Date or Distribution Date (in each case as
defined in the Rights Agreement) does not occur solely by reason of
the execution of this Agreement or the Stockholders Agreements or
the consummation of the Merger or the other transactions
contemplated by this Agreement and the Stockholders Agreements and
(iii) to terminate the Rights Agreement effective as of the
Effective Time.
(p) Brokers. No broker, investment banker, financial advisor or other
person, other than J.P. Morgan & Co., Incorporated (copies of whose
engagement agreement have been provided to the Trust), is entitled
to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
Company.
(q) Opinion of Financial Advisor; Board Findings and
Recommendation. The Company has received the opinion of J.P. Morgan
& Co. Incorporated, dated as of the date of this Agreement, to the
effect that, as of such date, the cash amount per Share specified
in Section 2.1(c) to be paid in accordance with Article 2 is fair
to the holders of the Company's Common Stock from a financial point
of view. A copy of such opinion has heretofore been delivered to
the Trust. The Company has been authorized by J.P. Morgan & Co.
Incorporated to permit the inclusion of such opinion in its
entirety in the Proxy Statement, so long as such inclusion is in
form and substance reasonably satisfactory to J.P. Morgan & Co.
Incorporated and its counsel. The Company's Board of Directors (i)
has unanimously approved and adopted the Stockholders Agreements,
this Agreement and the transactions contemplated hereby, including
the Merger, and thereby, (ii) has
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unanimously determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable, fair to and
in the best interests of the stockholders of the Company and (iii)
unanimously recommends (subject to Section 4.2(b)) that the
stockholders of the Company approve and adopt this Agreement and the
transactions contemplated hereby, including the Merger.
(r) Compliance with Applicable Laws. Each of the Company and its
subsidiaries holds all Federal, state and local governmental
approvals, authorizations, certificates, permits, filings,
franchises, licenses, notices and rights, domestic or foreign
("Permits") necessary for it to own, lease or operate its properties
and assets and to carry on its business as now conducted, and all
such Permits are valid and in full force and effect, except where
the failure to have, or the suppression or cancellation of, or the
failure of any such Permits to be valid and in full force and effect
individually or in the aggregate would not have a material adverse
effect on the Company. The Company and each of its subsidiaries are
in compliance with all applicable judgments, orders, decrees,
statutes, laws, ordinances, rules and regulations of any
Governmental Entity, except for possible noncompliance which
individually or in the aggregate would not have a material adverse
effect on the Company. As of the date hereof, no investigation or
review by any Governmental Entity with respect to the Company or any
of its subsidiaries is pending, or to the Company's knowledge
threatened, other than those which individually or in the aggregate
would not have a material adverse effect on the Company.
(s) No Default. Neither the Company nor any of its subsidiaries is in
breach, default or violation (and no event has occurred, which, with
notice or the lapse of time or both, would constitute a breach,
default or violation) of any term, condition or provision of (i) the
certificate of incorporation or by-laws of the Company or the
comparable organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its subsidiaries or
their respective properties or assets, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its subsidiaries or their respective
properties or assets, except in the case of clauses (ii) and (iii)
for breaches, defaults or violations which individually or in the
aggregate would not have a material adverse effect on the Company.
(t) Environmental Laws and Regulations. Except as described in Schedule
3.1(t) of the Company Disclosure Schedule, the Company and each of
its subsidiaries are in compliance with all applicable Federal,
state and local laws and regulations (including common law) relating
to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface or
subsurface strata) (collectively, "Environmental Laws"), which,
except for any such non-compliance as has not and, if continued,
would not, individually or in the aggregate, have a material adverse
effect on the Company. For purposes of the immediately preceding
sentence, compliance with Environmental Laws includes, but is not
limited to, the possession by the Company and each of its
subsidiaries of all permits and other governmental authorizations
required under applicable Environmental Laws. The Company is in
material compliance with the terms and conditions thereof. Except as
described in Schedule 3.1(t) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries has received written
notice of, or is the subject of any facts, circumstances or
conditions that could reasonably be expected to result in, any
actions, causes of action, claims, investigations, demands or
notices by any person alleging liability under or non-compliance
with any Environmental Law ("Environmental Claims") that has had or,
if continued, would have, individually or in the aggregate, a
material adverse effect on the Company.
(u) Contracts; Indebtedness. (a) Except as disclosed in Schedule 3.1(u)
of the Company Disclosure Schedule, there are no contracts,
agreements that are material to the business, properties, assets,
financial condition or results of operations of the Company and its
subsidiaries
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taken as a whole. All of such disclosed contracts are valid and
legally binding obligations of the Company or its subsidiaries, as
the case may be, and, to the knowledge of the Company, of each of the
other parties thereto, and are enforceable in accordance with the
terms thereof. No such contract contains any provision which
prohibits or restricts, or provides that the other party thereto may
terminate such contract in the event or by reason of, the Merger or
the other transactions contemplated by this Agreement, or contains
any other provision that would be altered or otherwise become
applicable by reason of such transaction. The Company has provided
true and correct copies of all such contracts to the Trust. Schedule
3.1(u) of the Company Disclosure Schedule sets forth (i) a list of
each agreement, instruments and other obligation pursuant to which
any indebtedness of the Company or any of its subsidiaries in a
principal amount in excess of $1,000,000 is outstanding or may be
incurred other than any that may be entered into after the date of
this Agreement in compliance with Sections 4.1(a) and (ii) the
respective principal amounts outstanding thereunder as of June 30,
2000.
(v) Intellectual Property. The Company and its subsidiaries (i) own, or
are validly licensed or otherwise have the right to use, all
patents, patent rights, trademarks, trade names, service marks,
copyrights, know how and other proprietary intellectual property
rights and computer programs (collectively, "Intellectual Property
Rights") that are material to the conduct of the business of the
Company and its subsidiaries taken as a whole, and (ii) has taken
such steps to preserve such Intellectual Property Rights as the
Company has determined to be appropriate. Schedule 3.1(v) of the
Company Disclosure Schedule sets forth a description of all
Intellectual Property Rights that are material to the conduct of the
business of the Company and its subsidiaries taken as a whole, and,
to the Company's knowledge, all such Intellectual Property Rights
are valid and enforceable. No claims are pending or, to the
knowledge of the Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely affecting the
intellectual property rights of any person, and the Company is not
aware of any basis for any such claims. To the knowledge of the
Company, no person is infringing the rights of the Company or any of
its subsidiaries with respect to any Intellectual Property Right.
None of the Company's Intellectual Property Rights are licensed to
any third party. Except as disclosed in the Company Disclosure
Schedule, no material Intellectual Property Right is subject to any
outstanding judgment, injunction, order, decree, or agreement
restricting the use thereof by the Company or any of its
subsidiaries or restricting the licensing thereof by the Company or
any of its subsidiaries.
(w) Labor Matters. Except as disclosed in Section 3.1(w) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries
is party to any collective bargaining agreement, memorandum of
understanding, settlement or other labor agreement with any union or
labor organization and no union or labor organization has been
recognized by the Company or any of its subsidiaries as an exclusive
bargaining representative for employees of the Company or any of its
subsidiaries. Except as disclosed in Section 3.1(w) of the Company
Disclosure Schedule, to the Company's knowledge, there is no current
union representation question involving employees of the Company or
any of its subsidiaries, nor does the Company have knowledge of any
significant activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any such
employees. Except as disclosed in Section 3.1(w) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries
has made any commitment that would require the application of the
terms of any collective bargaining agreements entered into by the
Company or any of its subsidiaries to the Trust, to any joint
venture of the Trust, or to any subsidiary of the Trust.
Except as disclosed in Section 3.1(w) of the Company Disclosure
Schedule there is no material labor dispute, strike, picketing or
work stoppage, or any lockout, involving employees of the Company or
any of its subsidiaries pending or, to the Company's knowledge,
threatened against or involving the Company or any of its
subsidiaries.
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Except as disclosed in Section 3.1(w) of the Company Disclosure
Schedule, (i) there is no grievance, arbitration, unfair labor
practice, investigation, employment discrimination or other labor or
employment related charge, complaint or claim against the Company or
any of its subsidiaries pending before any court, arbitrator,
mediator or governmental agency or tribunal, or, to the Company's
knowledge, threatened, and (ii) there has been no adjudication by
any court, arbitrator, mediator or governmental agency or tribunal
that, in the case of either (i) or (ii), has or that would
reasonably be expected to have a material adverse effect on the
Company or otherwise limit or affect the business operations of the
Company.
To the knowledge of the Company, none of the Company, any of its
subsidiaries or any of their respective representatives or employees
has committed any unfair labor practice in connection with the
operation of the respective businesses of the Company or any of its
subsidiaries that has not been resolved, and there is no charge or
complaint against the Company or any of its subsidiaries.
As of the date of this Agreement, (i) the Company is in
compliance with all applicable laws relating to the employment of
labor, including those related to wages, hours, collective
bargaining worker classification and the payment and withholding of
taxes and other sums as required by the appropriate governmental
authority and has withheld and paid to the appropriate governmental
authority or is holding for payment not yet due to such governmental
authority all amounts required to be withheld from employees of the
Company and is not liable for any arrears of wages, taxes, penalties
or other sums for failure to comply with any of the foregoing; (ii)
the Company has paid in full to all employees, or adequately accrued
for in accordance with GAAP, consistently applied, all wages,
salaries, commissions, bonuses, benefits and other compensation due
to or on behalf of such employees; (iii) there is no claim with
respect to payment of wages, salary or overtime pay that has been
asserted or is now pending or threatened before any governmental
authority with respect to any persons currently or formerly employed
by the Company; (iv) the Company is not a party to, or otherwise
bound by, any consent decree with, or citation by, any governmental
authority relating to employees or employment practices; and (v)
there is no charge of discrimination in employment or employment
practices, for any reason, including, without limitation, age,
gender, race, religion or other legally protected category, which
has been asserted or is now pending or threatened before the United
States Equal Employment Opportunity Commission, or any other
governmental authority in any jurisdiction in which the Company has
employees except in the case of clauses (i), (iii) and (v) above,
where the same would not, individually or in the aggregate, have a
material adverse effect on the Company.
(x) Assets Other than Real Property Interests. The Company or a
subsidiary of the Company has good and valid title to all material
assets owned by them, in each case free and clear of all pledges,
claims, charges, mortgages, liens, security interests or
encumbrances of any kind except (i) mechanics', carriers',
workmen's, repairmen's or other like liens arising or incurred in
the ordinary course of business, liens arising under original
purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business
if the underlying obligations are not overdue for a period of more
than 90 days, and liens for Taxes which are not yet due and
payable, (ii) mortgages, liens, security interests and encumbrances
which secure debt that is reflected as a liability on the Balance
Sheet and the existence of which is indicated in the notes thereto
and (iii) other imperfections of title or encumbrances, if any,
which do not, individually or in the aggregate, materially impair
the continued use and operation or the marketability of the assets
to which they relate in the business of the Company and its
subsidiaries as presently conducted (the mortgages, liens, security
interests, encumbrances and imperfections of title described in
clauses (i), (ii) and (iii) above are hereinafter referred to
collectively as "Permitted Liens").
All the material tangible personal property of the Company and
its subsidiaries has been maintained in all material respects in
accordance with the past practice of the Company and its
17
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subsidiaries and generally accepted industry practice. Each item of
material tangible personal property of the Company and its
subsidiaries is in all material respects in good working order and
is adequate and sufficient for the Company's intended purposes,
ordinary wear and tear excepted.
This Section 3.1(x) does not relate to real property or
interests in real property, such items being the subject of Section
3.1(y).
(y) Title to Real Property. Schedule 3.1(y) sets forth a complete list
of all real property owned in fee by the Company and its
subsidiaries other than any real property disposed of after the
date of this Agreement in compliance with Section 4.1(a)
(individually, an "Owned Property"). Schedule 3.1(y) sets forth a
complete list of all real property and interests in real property
leased by the Company and its subsidiaries (other than any real
property disposed of after the date of this Agreement in compliance
with Section 4.1(a) (individually, a "Leased Property") and
identifies any material leases relating thereto. The Company or a
subsidiary has (i) good and marketable fee title to all Owned
Property insurable at regular rates and (ii) good and valid title
to the leasehold estates in all Leased Property (an Owned Property
or Leased Property being sometimes referred to herein,
individually, as a "Company Property" and, collectively, as
"Company Properties"), in each case free and clear of all
mortgages, liens, security interests, encumbrances, leases,
assignments, subleases, easements, covenants, rights-of-way and
other similar restrictions of any nature whatsoever, except (A)
leases, subleases and similar agreements set forth in Schedule
3.1(y), (B) Permitted Liens, (C) easements, covenants, rights-of-
way and other similar restrictions of record, (D) any conditions
that would be shown by a current, accurate survey or physical
inspection of any Company Property made prior to Closing and (E)
(I) zoning, building and other similar restrictions, (II)
mortgages, liens, security interests, encumbrances, easements,
covenants, rights-of-way and other similar restrictions that have
been placed by any developer, landlord or other third party on
property over which the Company or any subsidiary thereof has
easement rights or on any Leased Property and subordination or
similar agreements relating thereto, and (III) unrecorded
easements, covenants, rights-of-way and other similar restrictions,
none of which items set forth in clauses (C), (D) and (E),
individually or in the aggregate, materially impair the value or
the continued use and operation of the property to which they
relate in the business of the Company and its subsidiaries as
presently conducted. No local zoning or similar land use or
government regulations materially impairs the current use by the
Company and its subsidiaries of the plants, offices and other
facilities located on Company Property.
(z) Insurance. The Company and its subsidiaries maintain policies of
directors' and officers' liability insurance, fire and casualty,
liability and other forms of insurance (including self-insurance)
in such amounts, with such deductibles and against such risks and
losses as are reasonable for the operation of the business and
ownership of assets of the Company and its subsidiaries. The
insurance policies owned and maintained by the Company and its
subsidiaries are listed in Schedule 3.1(z). All such policies are
in full force and effect, all premiums due and payable thereon have
been paid (other than retroactive or retrospective premium
adjustments that are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date under
comprehensive general liability and workmen's compensation
insurance policies), and no notice of cancellation or termination
has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of
such cancellation. To the knowledge of the Company, the activities
and operations of the Company and its subsidiaries have been
conducted in a manner so as to conform in all material respects to
all applicable provisions of such insurance policies. The coverages
provided by such policies of insurance with respect to events
occurring prior to the Effective Time will not be affected in any
manner by, and will not terminate or lapse by reason of, any of the
Merger or any other transaction contemplated by this Agreement.
(aa) Transactions with Affiliates. Except as set forth in Sections
3.1(k), 3.1(l), 3.1(u) and 3.1(aa) of the Company Disclosure
Schedule, there is no material agreement, contract or other
arrangement between the Company or any subsidiary, on the one
hand, and any officer, director or affiliate
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(other than the Company or a subsidiary), on the other hand. Officer,
director or affiliate of the Company or any subsidiary (other than
the Company or any subsidiary) has any material interest in any
property (real or personal, tangible or intangible) or contract used
in or pertaining to the business of the Company or a subsidiary. No
affiliate of the Company or any subsidiary (other than the Company or
any subsidiary) has any direct or indirect ownership interest in any
person in which the Company or a subsidiary has any direct or
indirect ownership interest or with which the Company or a subsidiary
competes or has a business relationship.
(bb) State Takeover Statutes. Except for Section 203 of the DGCL (which,
as described in Section 3.1(n), the Board of Directors of the
Company has taken all actions to render the limitations on business
combinations therein inapplicable to this Agreement, the
Stockholders Agreements and the consummation of the Merger and the
other transactions contemplated hereby and thereby), no other state
takeover statute or similar statute or regulation applies or
purports to apply to this Agreement, the Stockholders Agreements,
the Merger or the other transactions contemplated hereby or
thereby.
Section 3.2 Representations and Warranties of the Trust.
Except as set forth with respect to an identified representation and
warranty on the Disclosure Schedule delivered by the Trust to the Company upon
the execution of this Agreement (the "Trust Disclosure Schedule"), the Trust
represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. The Trust is a statutory
trust duly formed and validly existing under the laws of Connecticut
and has the requisite power and authority to carry on its business
as now being conducted. Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Trust and
Acquisition Sub is duly qualified or licensed to do business and is
in good standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not have a material adverse
effect on the Trust.
(b) Authority; Noncontravention. Each of the Trust and Acquisition Sub
has all requisite trust or corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution, delivery and performance of this
Agreement by the Trust and Acquisition Sub and the consummation by
the Trust and Acquisition Sub of the transactions contemplated by
this Agreement have been duly authorized by all necessary trust or
corporate action (as the case may be) on the part of such person.
This Agreement has been duly executed and delivered by each of the
Trust and Acquisition Sub and constitutes the legal, valid and
binding obligation of such persons, enforceable against each such
person in accordance with its terms. The execution, delivery and
performance of this Agreement and the Stockholders Agreements do
not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement and
the Stockholders Agreements by the Trust and Acquisition Sub will
not, conflict with, or result in any violation of, breach of, or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under (i) trust
agreement of the Trust or the certificate of incorporation or by-
laws of Acquisition Sub, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Trust or
Acquisition Sub or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Trust or Acquisition
Sub or their respective properties or assets,
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other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not have a material adverse
effect on the Trust. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Trust or Acquisition
Sub in connection with the execution, delivery and performance of
this Agreement or the Stockholders Agreements by the Trust or
Acquisition Sub or the consummation by the Trust and Acquisition Sub
of the transactions contemplated by this Agreement or the
Stockholders Agreements, except for (1) the filing of a premerger
notification and report form by the Trust or Acquisition Sub under
the HSR Act, to the extent required thereby; (2) the filing of the
Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states
in which the Trust is qualified to do business; and (3) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure to make or obtain which would
not reasonably be expected to have a material adverse effect on the
Trust.
(c) Information Supplied. None of the information supplied or to be
supplied by the Trust or Acquisition Sub in writing specifically
for inclusion or incorporation by reference in any documents filed
or to be filed with the SEC or any other governmental entity in
connection with the transactions contemplated hereby, including the
Proxy Statement will, at the respective times such document is
filed, and also, in the case of the Proxy Statement, at the date
the Proxy Statement is first mailed to the Company's stockholders
or at the time of the meeting of the Company's stockholders held to
vote upon the approval and adoption of this Agreement, 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 (or necessary to correct any
statement in any earlier communication).
(d) Brokers. No broker, investment banker, financial advisor or other
person, other than Salomon Smith Barney, the fees and expenses of
which will be paid by the Trust, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Trust.
(e) Financing Commitment. The Trust has received an executed letter,
dated as of August 8, 2000 (the "Lender Letter"), from Cooperative
Centrale Raiffeisen--Boeremleembank B.A., "Rabobank--Nederland",
New York (the "Lender"), a true and correct copy of which has been
furnished to the Company, indicating that the Lender, subject to
obtaining internal credit approval, is confident that it can
provide the funds necessary to fund in full the payment of the
merger consideration payable by the Trust in accordance with
Article 2. The Trust agrees that within 30 days after the execution
of this Agreement it will furnish to the Company an executed
commitment (the "Commitment") from the Lender or from another
financial institution(s) reasonably acceptable to the Company in a
form customary for a financial buyer under similar circumstances
with respect to the funds required by the Trust to consummate the
transactions contemplated hereby, subject to customary conditions
precedent for such a commitment, including, without limitation, the
negotiation and execution of definitive documentation for such
funding and final Lender approvals. Concurrently with the execution
of this Agreement, the Trust has caused the Lender to issue an
irrevocable direct draw letter of credit in the form attached
hereto as Annex I (the "Letter of Credit"), pursuant to which the
Company shall have the right, on the terms and subject to the
conditions set forth therein, to draw in full to receive payment of
$12,000,000 in accordance with Section 7.2(b).
(f) No Prior Activities of the Trust and Acquisition Sub. Each of the
Trust and Acquisition Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, and has engaged
in no other business activities and has conducted its operations
only as contemplated hereby.
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ARTICLE 4
Covenants Relating to Conduct of Business
Section 4.1 Conduct of Business.
(a) Conduct of Business by the Company. Except as set forth in Section
4.1 of the Company Disclosure Schedule, and except with the written
consent of the Trust, during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause
its subsidiaries to, carry on their respective businesses in the
usual, and ordinary course consistent with past practice and in
compliance in material respects with all applicable laws and
regulations and use reasonable best efforts to preserve intact
their current business organizations, keep available the services
of their current officers and employees and preserve their
relationships with those persons having business dealings with
them. Except as set forth in Section 4.1 of the Company Disclosure
Schedule, without limiting the generality of the foregoing, during
the period from the date of this Agreement to the Effective Time,
the Company shall not, and shall not permit any of its subsidiaries
to, without the written consent of the Trust:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock,
other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent, (y) split,
combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or
(z) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire
any such shares or other securities (except for the redemption
of the Rights (as defined in the Rights Agreement) as and in the
manner provided for in the Rights Agreement);
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible
securities (other than the issuance of Company Common Stock
upon the exercise of stock options outstanding on the date of
this Agreement and in accordance with their present terms or in
accordance with the present terms of the Stock Plans);
(iii) amend its certificate of incorporation, by-laws, articles of
incorporation, or other comparable organizational documents,
as applicable;
(iv) merge or consolidate with any other person or acquire any
interest in material assets of any other person other than
pursuant to existing contract or commitments which have been
disclosed to the Trust on the Company Disclosure Schedule;
(v) sell, lease, license, mortgage or otherwise encumber or subject
to, or permit the creation or other incurrence of, any material
Lien or otherwise dispose of any material properties or assets;
(vi) (x) incur indebtedness for borrowed money, assume or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee
any debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for
working capital borrowings or general corporate purpose
borrowings under the Bank Credit Agreement, in either case
incurred in the ordinary course of business in an aggregate
amount not in excess of $115 million less outstanding
borrowings under the Bank Credit Agreement, or (y) make any
loans, advances or capital contributions to, or investments in,
any other person, other than to the Company
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or any direct or indirect subsidiary of the Company or to
officers and employees of the Company or any of its subsidiaries
for travel, business or relocation expenses in the ordinary
course of business and for computer loans to employees in the
ordinary course of business pursuant to existing programs;
(vii) make or agree to make any new capital expenditure or capital
expenditures other than capital expenditures which (a) are the
subject of contractually committed purchase orders as of the
date hereof with the Company or any of its subsidiaries, or
(b) individually are not in excess of $250,000 and in the
aggregate are not in excess of $3,000,000, provided that at
any time aggregate capital expenditures exceed $1,000,000 the
Company shall give written notice to the Trust at least 14
days in advance prior to the commitment for any capital
expenditures that individually will exceed $100,000, or (c)
constitute reasonable expenditures not to exceed $80,000 made
by the Company or any of its subsidiaries in connection with
any emergency or other force majeure events affecting the
Company or any of its subsidiaries;
(viii) make any Tax election or settle or compromise any material
Tax liability or take any action with respect to the
computation of Taxes or the preparation of Tax returns or
reports that is inconsistent with past practice;
(ix) pay, discharge, settle or satisfy material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their
terms, of liabilities (x) reflected or reserved against in, or
contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in
the Filed SEC Documents or (y) incurred since the date of such
financial statements in the ordinary course of business
consistent with past practice;
(x) (x) enter into or adopt any new Company Benefit Plan or amend
(other than as required by applicable law) any Company Benefit
Plan in any material respect, (y) increase the compensation or
bonus opportunity of any officer or employee of the Company or
its subsidiaries, except for increases in the ordinary course of
business consistent with past practice and except for benefits
required to be paid under Company Benefit Plans as in effect on
the date of this Agreement, or (z) grant additional equity-based
compensation to any officer or employee of the Company or its
subsidiaries;
(xi) enter into any contracts or agreements in the ordinary course
of business requiring the payment, or receipt of payment, of
consideration in excess of $300,000, or modify, amend or
terminate any existing material contract that is material to
the business of the Company and its subsidiaries, taken as a
whole, other than (a) modifications, amendments or terminations
in the ordinary course of business consistent with past
practice, (b) contracts, agreements or purchase orders for
capital expenditures permitted under this Section 4.1(a), and
(c) contracts, agreements or purchase orders entered into in
the ordinary course of business with customers and suppliers
for the sale of the Company's or any of its subsidiary's
products or the purchase of raw materials, supplies, fuel,
utilities and other goods or services, used or consumed in the
ordinary course of business.
(xii) settle any material action, suit, investigation or proceeding
other than any action, suit, investigation or proceeding which
involves only the payment of damages in an immaterial amount
and does not involve injunctive or other equitable relief;
(xiii) fail to maintain with financially responsible insurers
insurance in such amounts and against such risks and losses
as are customary for companies engaged in their respective
businesses;
(xiv) fail to maintain in full force and effect all material Permits
that are required in connection with the conduct of the
businesses of the Company and its subsidiaries or sell,
transfer, license or otherwise dispose of any rights or
interests under such Permits;
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(xv) make any change to its accounting methods, tax accounting or
accounting principles or practices, except as may be required
by GAAP; or
(xvi) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Other Actions. The Company and the Trust shall not, and shall not
permit any of their respective subsidiaries to, take any action
that would, or that could reasonably be expected to, result in (i)
any of the representations and warranties of such party set forth
in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that are
not so qualified becoming untrue in any material respect or (iii)
any of the conditions to the Merger set forth in Article 6 not
being satisfied.
(c) Advice of Changes. The Company and the Trust shall promptly advise
the other party orally and in writing of (i) any representation or
warranty made by it contained in this Agreement becoming untrue or
inaccurate (ii) the failure by it to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it under this Agreement or (iii) any change or event having, or
which could reasonably be expected to have, a material adverse
effect on such party or on the truth of their respective
representations and warranties or the ability of the conditions set
forth in Article 6 to be satisfied; provided, however, that no such
notification shall affect the representations, warranties,
covenants, Disclosure Schedules or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(d) DRIP; ESPP. On the date of this Agreement, the Company shall cause
purchases of Company Common Stock under the Dividend Reinvestment
Plan and its Employee Stock Purchase Plan to be suspended or
terminated and to continue such suspension or termination while
this Agreement is in effect. In connection with any such suspension
or termination, the Company may return any unspent contributed
funds to the contributing participants in such plans.
Section 4.2 No Solicitation.
(a) From the date hereof until the Effective Time, the Company shall
not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its directors, officers or employees or
any investment banker, financial advisor, attorney, accountant or
other representative retained by it or any of its subsidiaries (the
"Representatives") to, directly or indirectly through another
person, (i) solicit or initiate (including by way of furnishing
information), or take any other action designed and intended to
facilitate or encourage, any inquiries or the making of any
proposal that constitutes any Takeover Proposal (as defined below),
(ii) participate or engage in any discussions or negotiations
regarding any Takeover Proposal, or (iii) disclose any nonpublic
information relating to the Company or any of its subsidiaries to
any person; provided, however, that if, at any time prior to the
approval and adoption of this Agreement by the holders of
outstanding shares of Company Common Stock, the Board of Directors
of the Company determines in good faith, (i) after consultation
with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders
under applicable law and (ii) after consultation with the Company's
financial advisors, that such Takeover Proposal, if consummated,
would be a Superior Proposal (as defined below), then the Company
may, in response to a bona fide written Takeover Proposal that was
not solicited by it, and subject to compliance with Section 4.2(c),
(x) furnish information with respect to the Company and its
subsidiaries to any person submitting such Takeover Proposal (which
person may also be a person who participated in discussions with
the Company prior to the execution of this Agreement and with whom
the Company ceased discussions in accordance with Section 4.2(e)),
provided such information is furnished pursuant to an existing
confidentiality agreement or a confidentiality agreement with terms
no less favorable to the Company than those contained in the
Confidentiality Agreement, dated as of August 3, 2000, between the
Company and Integrated Capital Associates, Inc., (including,
without limitation, the standstill provisions thereof) and (y)
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participate in negotiations regarding such Takeover Proposal. For
purposes of this Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company
and its subsidiaries or 15% or more of any class of equity securities
of the Company or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of
the Company or any of its subsidiaries, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its subsidiaries,
in all cases other than the transactions contemplated by this
Agreement.
(b) Except as expressly permitted by this Section 4.2, neither the Board
of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to the Trust, the approval or recommendation by such
Board of Directors or such committee of this Agreement, the
Stockholders Agreements, the Merger and the other transactions
contemplated hereby or thereby, (ii) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar
agreement or fee arrangement or other agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, if prior to the approval and adoption
of this Agreement by the holders of Company Common Stock, the Board
of Directors of the Company receives an unsolicited Takeover
Proposal which the Board of Directors determines in good faith (i)
after consultation with the Company's financial advisors,
constitutes a Superior Proposal, and (ii) after consultation with
outside counsel, that it is necessary to do so in order to comply
with its fiduciary duties to the Company's stockholders under
applicable law, the Board of Directors of the Company may (x)
withdraw or modify its approval or recommendation of this Agreement,
the Stockholders Agreements, the Merger or the transactions
contemplated hereby or thereby, (y) approve or recommend such
Superior Proposal or (z) terminate this Agreement and concurrently
with or after such termination, if it so chooses, cause the Company
to enter into any Acquisition Agreement with respect to any Superior
Proposal subject to payment of the Termination Fee prior to or
concurrently with the termination hereof, but only (i) if the
Company has complied with Section 4.2(a), (ii) if such action is
taken at a time that is after the third business day following the
Trust's receipt of written notice from the Company advising the
Trust that the Board of Directors of the Company has received a
Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such
Superior Proposal and (iii) the Trust does not make prior to the
lapse of such time period a definitive, binding offer which provides
equal or greater value to the stockholders of the Company as the
Superior Proposal. For purposes of this Agreement, a "Superior
Proposal" means any bona fide written Takeover Proposal made by a
third party on terms that the Board of Directors of the Company
determines in its good faith judgment, after consultation with its
financial advisors and after taking into account all the terms and
conditions of such proposal, provides greater value to the Company's
stockholders than the Merger and for which financing, to the extent
required, is then committed or which the Board of Directors of the
Company has reasonably determined can be obtained by such third
party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.2, the Company shall
immediately (within 24 hours) advise the Trust of any Takeover
Proposal or Superior Proposal, the material terms and conditions
known to the Company of such Takeover Proposal or Superior Proposal,
a copy of any offer or other written communications and the identity
of the person making such request, Takeover Proposal or Superior
Proposal. The Company shall keep the Trust fully informed of the
status and details of any such request or proposal and the status of
any discussions and negotiations in relation thereto.
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(d) Nothing contained in this Section 4.2 shall prohibit the Company
from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to the Company's stockholders if, in the
good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure so to disclose would be
a breach of its fiduciary duties to the Company's stockholders
under applicable law; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except
as permitted by Section 4.2(b), withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this
Agreement, the Merger or approve or recommend, or propose publicly
to approve or recommend, a Takeover Proposal.
(e) Without the prior consent of the Trust, the Company shall not (i)
except to the extent contemplated by this Agreement, amend or
modify the Rights Agreement or redeem or terminate the Rights
Agreement or (ii) modify or release any person from any
confidentiality or standstill agreement to which the Company is a
party if such action would have the purpose or effect of permitting
or facilitating the submission of a Takeover Proposal by such
person. Immediately upon the execution of this Agreement, the
Company shall, and the Company shall cause its subsidiaries and
Representatives to, cease and cause to be terminated all
activities, discussions and negotiations, if any, with any person
conducted prior to the date hereof with respect to, or seeking to
obtain, any Takeover Proposal.
ARTICLE 5
Additional Agreements
Section 5.1 Preparation of the Proxy Statement; Company Stockholders
Meeting. The Company, acting through its Board of Directors, shall, in
accordance with applicable law, its Second Amended and Restated Certificate of
Incorporation and its Bylaws:
(a) As promptly as practicable following the date of this Agreement,
the Company shall prepare and file with the SEC the Proxy
Statement, use its reasonable best efforts to have the Proxy
Statement cleared by the SEC and thereafter mailed to the Company's
stockholders at the earliest practical date. The Trust and its
counsel shall be given the reasonable opportunity to review and
comment upon the Proxy Statement (and any supplements thereto)
prior to the time they are filed with the SEC. The Company shall
provide the Trust and its counsel with a copy of any written
comments or telephonic notification of any verbal comments that are
received by the Company from the SEC or its staff with respect to
the Proxy Statement and shall further provide the Trust and its
counsel with a copy of any written response and telephonic
notifications of any verbal responses by the Company. If at any
time prior to the Closing Date any fact, event or development is
discovered by the Company which is required under applicable law to
be set forth in a supplement to the Proxy Statement, the Company
shall prepare and file with the SEC any such supplement or
amendment and shall disseminate the same to its stockholders in the
manner required by applicable law.
(b) As promptly as practicable following the date of this Agreement,
subject to Section 4.2, the Company will, as soon as practicable
following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of obtaining the Company
Stockholder Approval. Subject to Section 4.2(b), the Company will,
through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement, the Merger and the
consummation of the other transactions contemplated hereby and
shall use its reasonable best efforts to obtain such approval by
its stockholders.
(c) The Trust shall vote, or cause to be voted, all of the Shares then
owned by it, Acquisition Sub or any of its other subsidiaries in
favor of the approval and adoption of this Agreement, the Merger
and the transactions contemplated hereby.
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Section 5.2 Access to Information; Confidentiality.
From the date of this Agreement until the Closing Date, the Company shall,
and shall cause each of its respective subsidiaries (i) to afford to the Trust
and to its officers, employees, financial advisors, attorneys, accountants and
other representatives and to any other person that the Trust or the Acquisition
Sub has advised the Company is or may be interested in purchasing from the
Surviving Corporation after the Merger any of the assets, facilities or
operations of the Company, or any of its subsidiaries, reasonable access during
normal business hours during the period prior to the Effective Time to all
their respective properties, books, contracts, commitments, personnel and
records, (ii) instruct its counsel, financial advisors, auditors and other
authorized representatives of the Company and its subsidiaries to cooperate
with the Trust in its investigation of the Company and its subsidiaries, and
(iii) to furnish promptly to the Trust (a) a copy of each report, schedule,
form, statement and other document filed by it during such period pursuant to
the requirements of U.S. Federal or state securities laws and (b) other
information concerning its business, properties and personnel as such other
party may reasonably request. The Trust will hold, and will cause its officers,
employees, financial advisors, attorneys, accountants and other representatives
and affiliates to hold, any nonpublic information in accordance with the terms
of that certain Confidentiality Agreement dated August 3, 2000 by and between
Integrated Capital Associates, Inc. and the Company (the "Confidentiality
Agreement").
Section 5.3 Reasonable Best Efforts.
Subject to Section 4.2(b), upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practical, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, such as those referred to in Sections
4.1(d)(1)-(4) and 4.2(b)(1)-(3)) and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
waivers, consents or approvals from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.
Without limiting the generality of the foregoing, each of the Company and
the Trust shall, to the extent required under the HSR Act, promptly file or
cause to be filed with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division")
notification and report forms pursuant to the HSR Act relating to the merger
and the other transactions contemplated in this Agreement. The Company and the
Trust shall promptly respond to any request for additional information or
documenting material by the FTC or Antitrust Division and shall cooperate with
each other to effect the expiration of any waiting periods applicable thereto
as promptly as practicable. The Company and the Trust shall each consult with
the other and use their reasonable best efforts to coordinate any
communications or filings with the FTC and the Antitrust Division.
In connection with and without limiting the foregoing, the Company and its
Board of Directors shall (i) take all reasonable action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement, the Stockholders Agreements, the Merger or any of
the other transactions contemplated hereby or thereby and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to this
Agreement, the Stockholders Agreements, the Merger or any other transaction
contemplated hereby or thereby, take all action necessary to ensure that the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreements may be consummated as promptly as
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practical on the terms contemplated herein and therein and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreements.
In addition, the Trust undertakes and agrees to use its reasonable best
efforts and to take all reasonable actions necessary to obtain the Commitment
within the 30-day period specified in Section 3.2(e), to finalize the
definitive documentation as promptly as practicable thereafter for the funding
in full of the merger consideration that will become payable at the Effective
Time and to cause the conditions to funding thereunder to be satisfied.
Section 5.4 Employee Matters
(a) The Trust agrees that the Company shall honor in accordance with
their respective terms and, on and after the Effective Time, the
Trust shall cause the Surviving Corporation to honor all Company
Benefit Plans and all other written employment, severance,
termination and retirement agreements to which the Company is a
party as of the Effective Time, and which are set forth on the
Company Disclosure Schedule. Subject to the preceding sentence, the
Trust agrees to cause the Surviving Corporation, after consummation
of the Merger, to pay all amounts provided under such Company
Benefit Plans and agreements in accordance with their respective
terms and to honor, and to cause the Surviving Corporation to
honor, all rights and privileges to or with respect to any such
Company Benefit Plans or agreements that are vested at the
Effective Time or vested as a result of the Merger.
(b) The Trust agrees that, for a period of no less than one year after
the Effective Time, it shall, and shall cause the Surviving
Corporation to, provide employee pension and welfare plans (other
than stock options, restricted stock units and other equity-based
or phantom equity-based awards) for the benefit of employees and
former employees of the Company, that, in the aggregate, are not
materially less favorable than the Pension Plans and Welfare Plans
in effect immediately prior to the Effective Time. To the extent
any benefit plan of the Trust (or any plan of the Surviving
Corporation) shall be made applicable to any employee or former
employee of the Company, the Trust shall, or shall cause the
Surviving Corporation to, grant to employees and former employees
of the Company credit for service with the Company prior to the
Effective Time for the purposes of determining eligibility to
participate and the employee's nonforfeitable interest in benefits
thereunder. In addition, to the extent any benefit plan of the
Trust (or any plan of the Surviving Corporation) that constitutes a
"Welfare Plan," as defined in Section 4.1(l) hereof, shall be made
applicable to any employee or former employee of the Company, the
Trust shall, or shall cause the Surviving Corporation to, (i) waive
all preexisting condition exclusions and waiting periods otherwise
applicable to employees and former employees of the Company, except
to the extent any such limitations or waiting periods in effect
under comparable Welfare Plans have not been satisfied as of the
date such plan is made so applicable and (ii) credit each employee
and former employee of the Company for any co-payments and
deductibles paid by such employee or former employee under
comparable Welfare Plans during the current year. Nothing in this
Agreement shall be interpreted as limiting the power of the
Surviving Corporation to amend or terminate any Company Benefit
Plan or any other employee benefit plan, program, agreement or
policy or as requiring the Surviving Corporation or the Trust to
continue (other than as required by its terms) any written
employment contract.
Section 5.5 Rights Agreement.
The Board of Directors of the Company shall take all further action (in
addition to that referred to in Section 3.1(o)) necessary (including redeeming
the Rights immediately prior to the Effective Time or amending the Rights
Agreement) in order to render the Rights inapplicable to the execution of this
Agreement and the Stockholders Agreements and the consummation of the Merger
and the other transactions contemplated hereby and thereby.
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Section 5.6 Continuance of Existing Indemnification Rights.
(a) For six years after the Effective Time, and during the pendency
thereafter of any Claim (as defined below) asserted or made within
such six year period, the Surviving Corporation shall indemnify,
defend and hold harmless any person who is now, or has been at any
time prior to the date hereof, or who becomes prior to the
Effective Time, a director or officer (an "Indemnified Person") of
the Company or any of its subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorneys' fees
and expenses), judgments, fines, losses and amounts paid in
settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each a "Claim") to the
extent that any such Claim directly or indirectly is based on, or
arises out of the fact that: such Indemnified Person is or was a
director or officer of the Company or any of its subsidiaries,
including any claim based in whole or in part on this Agreement or
any of the transactions contemplated hereby, in each case, to the
extent that any such Claim pertains to any matter or fact arising,
existing or occurring prior to or at the Effective Time, regardless
of whether such Claim is asserted or claimed prior to, at or after
the Effective Time, to the fullest extent permitted under the DGCL,
the Company's Second Restated Certificate of Incorporation and by-
laws and any indemnification agreement to which the Company and an
Indemnified Party are parties, including provisions relating to
advancement of expenses incurred in the defense of any such Claim;
provided, however, that the Surviving Corporation shall not be
required to indemnify any Indemnified Person in connection with any
proceeding (or portion thereof) involving any Claim initiated by
such Indemnified Person unless the initiation of such proceeding
(or portion thereof) was authorized by the Board of Directors of
the Surviving Corporation or unless such proceeding is brought by
an Indemnified Person to enforce rights under this Section 5.6 and
provided, further, that the Surviving Corporation shall not be
liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld). Any
Indemnified Party wishing to claim indemnification under this
Section 5.6 upon learning of any such Claim shall notify the
Company (or after the Effective Time, the Surviving Corporation),
but the failure to so notify shall not relieve a party from any
liability that it may have under this Section 5.6, except to the
extent that such failure prejudices such party. The Indemnified
Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict or a potential
conflict on any significant issue between the positions of any two
or more Indemnified Parties. Without limiting the generality of the
foregoing, if any Indemnified Person becomes involved in any Claim,
after the Effective Time, then the Surviving Corporation shall
periodically advance to such Indemnified Person its legal and other
expenses (including the cost of any investigation and preparation
incurred in connection therewith), subject to such Indemnified
Person providing an undertaking to reimburse all amounts so
advanced in the case of a final nonappealable determination by a
court of competent jurisdiction that such Indemnified Person is not
entitled to be indemnified therefor.
(b) The Trust and the Company agree that all rights to indemnification,
to defense, and being held harmless (including rights to
advancement of expenses), existing in favor of any Indemnified
Person, as provided in the Company's Second Restated Certificate of
Incorporation or by-laws and any indemnification agreement in
effect at the date hereof, shall survive the Merger and shall
continue in full force and effect, without any amendment thereto
that would be adverse to any Indemnified Person unless, as to any
such Indemnified Person, such Indemnified person consents thereto.
The obligations of the Surviving Corporation pursuant to Section
5.6(a) and this Section 5.6(B) shall be assigned in accordance with
Section 8.10.
(c) The Surviving Corporation shall maintain the Company's existing
directors' and officers' liability insurance policy (the "D&O
Insurance") for a period of not less than six years after the
Effective Time; provided, however, that (i) upon the sale by the
Surviving Corporation of all or substantially all of its assets to
an unaffiliated person, which person provides a substitute policy
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of similar coverage and amounts containing terms no less advantageous
to such former directors or officers than the D&O Insurance and
agrees to maintain such coverage for a period of not less than six
years after the Effective Time, the Surviving Corporation's
obligation hereunder shall cease, (ii) the Company or such
unaffiliated person, as the case may be, may substitute therefor
policies of similar coverage and amounts containing terms no less
advantageous to such former directors or officers and (iii) if the
existing D&O Insurance expires or is canceled during such period,
then the Surviving Corporation or such unaffiliated person, as the
case may be, shall use its reasonable best efforts to obtain a
directors' and officers' liability insurance policy substantially
similar to the D&O Insurance; provided, further, that if the
aggregate annual premiums for such insurance pursuant to this Section
5.6(c) at any time during such period shall exceed 100% of the per
annum rate of premium paid by the Company and its subsidiaries as of
the date hereof for such insurance, the Surviving Corporation shall
provide only such coverage as shall then be available for such
amount.
Section 5.7 Fees and Expenses.
(a) Except as set forth in this Section 5.7, all fees and expenses
incurred in connection with the Merger, this Agreement and the other
transactions contemplated by this Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger is
consummated.
(b) If this Agreement is terminated by (i) either the Trust or the
Company pursuant to Section 7.1(b)(i) or Section 7.1(b)(ii) and
prior to the termination hereof a Takeover Proposal has been made by
any person or any person publicly announces its intent to make a
Takeover Proposal, unless, in the case of a termination by the
Company, the failure to consummate the Merger is the result of a
material breach of this Agreement by the Trust or Acquisition Sub or
a material failure by the Trust or Acquisition Sub to fulfill any
obligation under this Agreement, (ii) the Trust pursuant to Section
7.1(b)(iv), 7.1(d), 7.1(e) or 7.1(h), or (iii) the Company pursuant
to Section 7.1(c), then the Company shall promptly pay the Trust a
fee equal to $10,000,000 (the "Termination Fee"), which Termination
Fee shall be payable by wire transfer of same day funds not later
than the date of termination of this Agreement.
Section 5.8 Public Announcements.
The Trust and the Company will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, stock exchange
requirements or court process. If either the Company or the Trust determines
that a public announcement is required by applicable law, stock exchange
requirement or court process, prior to making such announcement, it will
consult and coordinate with the other party regarding the substance thereof.
The parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement shall be in the form
heretofore agreed upon by the parties.
Section 5.9 Stockholder Litigation.
The Company shall give the Trust the opportunity to participate in the
defense or settlement of any stockholder litigation against the Company and
its directors relating to the transactions contemplated by this Agreement;
provided, however, that no such settlement shall be agreed to without the
Trust's consent, which consent shall not be unreasonably withheld.
Section 5.10 Bank Credit Agreement and Indenture.
The Surviving Corporation shall honor, on and after the Effective Time, the
obligations of the Company under the Bank Credit Agreement and the Indenture.
The Trust acknowledges that (a) under the Bank Credit
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Agreement the change in beneficial ownership of the Company resulting from the
Merger will constitute an Event of Default (as defined in the Bank Credit
Agreement) and (b) for purposes of the Indenture, the Merger will constitute a
Change of Control (as such term is defined in Section 3.17 of the Indenture).
The Surviving Corporation shall, after consummation of the Merger, pay, as and
when due, all amounts provided for under the Bank Credit Agreement and the
Senior Subordinated Note Indenture in accordance with their respective terms
(including by making a Change of Control Offer (as defined in Section 3.17 of
the Indenture) under the Indenture, to the extent such offer is required by the
Indenture).
Section 5.11 Amendment of Disclosure Schedules.
Each party agrees that, with respect to the representations and warranties
of such party contained in this Agreement, such party shall have the continuing
obligation until the Effective Time to supplement or amend promptly the
Schedules to such party's Disclosure Schedule with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in such
party's Disclosure Schedule. For all purposes of this Agreement, including for
purposes of determining whether the conditions set forth in Article 6 have been
fulfilled, the Schedules to a party's Disclosure Schedule shall be deemed to
include only that information contained therein on the date of this Agreement
and shall be deemed to exclude all information contained in any supplement or
amendment thereto, but if the Effective Time shall occur, then all matters
disclosed pursuant to any such supplement or amendment at or prior to the
Effective Time shall be waived and no party shall be entitled to make a claim
thereon pursuant to the terms of this Agreement.
ARTICLE 6
Conditions Precedent
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger is subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. The Company Stockholder Approval shall have
been obtained to the extent required by the DGCL, the Company's
Second Restated Certificate of Incorporation and the Company's by-
laws.
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) No Injunctions or Restraints. No judgment, decree, statute, law,
ordinance, rule, regulation, temporary restraining order,
preliminary or permanent injunction or other order enacted,
entered, promulgated, enforced or issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint
or prohibition (collectively, "Restraints") preventing the
consummation of the Merger shall be in effect; provided, however,
that each of the parties shall have used all reasonable best
efforts to prevent the enactment, promulgation, entry, issuance or
enforcement of any such Restraints and to appeal as promptly as
possible any such Restraints that may be entered or issued.
Section 6.2 Conditions to Obligations of the Trust and Acquisition Sub.
The obligations of the Trust and Acquisition Sub to effect the Merger are
further subject to satisfaction or waiver (by the Trust) on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and
correct (without regard to any materiality qualifications or
references to material adverse effect contained in any specific
representation or warranty) as of
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the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date
(in which case as of such date); provided, however, that this
paragraph (a) shall be deemed satisfied so long as the failure of all
such representations and warranties to be true and correct would,
collectively, not result in a material adverse effect on the Company,
and the Trust shall have received a certificate signed on behalf of
the Company by its chief executive officer and chief financial
officer to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and the Trust shall have received a certificate signed on
behalf of the Company by its chief executive officer and chief
financial officer to such effect.
(c) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding (i) challenging
the acquisition by the Trust or Acquisition Sub of any shares of
capital stock of the Company or the Surviving Corporation, seeking
to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement, (ii) seeking to
prohibit or limit the ownership or operation by the Trust or any of
its subsidiaries of any material portion of the business or assets
of the Company, or any of its subsidiaries, or to compel the Trust
or any of its subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company or any of
its subsidiaries, as a result of the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of the Trust to acquire or hold, or
exercise full rights of ownership of, any shares of capital stock of
the Company or the Surviving Corporation, or (iv) seeking to
prohibit the Trust or any of its subsidiaries from effectively
controlling in any material respect the business or operations of
the Company or its subsidiaries. In addition there shall not be any
judgment, order, decrees, statute, law, ordinance, rule or
regulation, enacted, entered, promulgated or enforced that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (ii) through (iv) of the
immediately preceding sentence.
(d) Commercial Production at Lawton Mill. On or before October 1, 2000,
the Company or its subsidiary Republic Paperboard Company ("RPC")
shall have delivered to James Hardie Gypsum, Inc. ("Hardie"), the
"Commencement Notice" (as such term is defined in Section 3(b) of
the Paperboard Supply Agreement dated as of May 14, 1998, among RPC,
the Company and Hardie (the "Hardie Contract")).
Section 6.3 Conditions to Obligation of the Company.
The obligation of the Company to effect the Merger is further subject to
satisfaction or waiver (by the Company) on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of the Trust set forth in this Agreement shall be true and correct
(without regard to any materiality qualifications or references to
material adverse effect contained in any specific representation or
warranty) as of the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case as of
such date); provided, however, that this paragraph (a) shall be
deemed satisfied so long as the failure of all such representations
and warranties to be true and correct would, collectively, not
result in a material adverse effect on the Trust, and the Company
shall have received a certificate signed on behalf of the Trust by
its trustee to such effect.
(b) Performance of Obligations of the Trust. The Trust shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of the Trust by its trustee to such effect.
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ARTICLE 7
Termination, Amendment and Waiver
Section 7.1 Termination.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after the Company Stockholder Approval:
(a) by mutual written consent of the Trust and the Company; or
(b) by either the Trust or the Company if:
(i) the Merger shall not have been consummated on or before January
31, 2001, unless the failure to consummate the Merger is the
result of a material breach of this Agreement or a material
failure to fulfill any obligation under the Agreement by the
party seeking to terminate this Agreement; provided, however,
that the passage of such period shall be tolled for any part
thereof (but not exceeding 20 calendar days in the aggregate)
during which any party shall be subject to a nonfinal order,
decree, ruling, injunction or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger or the
calling or holding of the Company Stockholder Meeting;
(ii) the Company Stockholder Meeting has been duly convened but the
Company Stockholder Approval shall not have been obtained at
such Company Stockholder Meeting (or any adjournment thereof);
(iii) any Governmental Entity shall have issued an order, decree,
ruling or injunction or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling, injunction or other action shall
have become final and nonappealable;
(iv) the other party breaches any covenant or other agreement
contained in this Agreement that (A) would give rise to the
failure of such party to satisfy any condition set forth in
Section 6.2(a) or (b) or Section 6.3(a) or (b), as applicable,
and (B) cannot be or has not been cured within 45 days after
the giving of written notice to the breaching party of such
breach (a "Material Breach") (provided that the terminating
party is not then in breach in any material respect of any
obligation, covenant or other agreement contained in this
Agreement or in Material Breach of any representation or
warranty contained in this Agreement); or
(c) by the Company in accordance with Section 4.2(b), provided that it
has complied with all provisions thereof and that it complies with
the requirements, if then applicable, of Section 5.7; or
(d) by the Trust if (i) the Board of Directors of the Company or any
committee thereof shall have failed to recommend, withdrawn, or
modified in a manner adverse to the Trust, its approval or
recommendation of this Agreement, the Merger and the other
transactions contemplated hereby or approved or recommended any
Superior Proposal, (ii) the Board of Directors of the Company or
any committee thereof shall have resolved to take any of the
foregoing actions or (iii) failed to affirm its recommendation of
this Agreement, the Merger or the other transactions contemplated
hereby within three Business Days of a request to do so by the
Trust; or
(e) by the Trust, if the Company shall have entered into, or publicly
announced its intention to enter into, a definitive agreement or an
agreement in principle with respect to a Takeover Proposal or a
Superior Proposal; or
(f) by the Company if (i) the Trust fails to deliver a copy of the
Commitment to the Company during the 30-day period specified in
Section 3.2(e) (provided that as of the time of such termination
pursuant to this clause (f)(i) such failure is continuing); or (ii)
as of the date of the
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Company Stockholder Meeting, (A) the Trust has not finalized the
definitive loan agreements pursuant to which the Trust will obtain
the funds for the payment in full of the merger consideration in
accordance with Article 2 (and such loan documents are not finalized
as of the time of such termination pursuant to this clause (f)(ii)),
and (B) the Company is not then in breach of any of its obligations,
covenants or agreements hereunder, which breach has had or, if
continued, is likely to have a material adverse effect on the
Company; or (iii) not later than 48 hours after the Company's
stockholders have approved and adopted this Agreement, the Merger and
the consummation of the other transactions contemplated hereby at the
Company Stockholder Meeting, all conditions (other than consummation
of the Closing) to the Trust obtaining the funds necessary to pay in
full the merger consideration in accordance with Article 2 have not
been satisfied, provided that as of the time of such termination (A)
such conditions to obtaining the funds remain unsatisfied, (B) all of
the conditions to Closing set forth in Sections 6.1 and 6.2 have been
satisfied (and the officers of the Company specified in Section
6.2(a) and (b) are prepared to deliver the certificates required
thereby) and (C) the Company is not then in breach of any of its
obligations, covenants or agreements hereunder, which breach has had
or, if continued, is likely to have a material adverse effect on the
Company; or
(g) by the Company if the Trust fails to close after the second business
day after (1) all of the conditions set forth in Sections 6.1 and
6.2 have been satisfied (and the officers of the Company specified
in Sections 6.2(a) and (b) are prepared to deliver the certificates
required thereby), (2) the Company is not then in breach in any
material respect of any of its obligations, covenants or agreements
hereunder and (3) the Company gives 2 business days' prior written
notice of its satisfaction of all obligations under Sections 6.1 and
6.2 and the waiver by the Company of any obligations of the Trust
not satisfied under Section 6.3; or
(h) by the Trust if the Company fails to close after the second business
day after (1) all of the conditions set forth in Sections 6.1 and
6.3 have been satisfied (and the officers of the Trust specified in
Sections 6.3(a) and (b) are prepared to deliver the certificates
required thereby), (2) the Trust is not then in breach in any
material respect of any of its obligations, covenants or agreements
hereunder and (3) the Trust gives 2 business days' prior written
notice of its satisfaction of all obligations under Sections 6.1 and
6.3 and the waiver by the Trust of any obligations of the Company
not satisfied under Section 6.2; or
(i) by the Trust at any time after October 1, 2000 if the "Commencement
Notice" (as such term is defined in Section 3(b) of Hardie Contract)
was not given in accordance with the Hardie Contract on or before
October 1, 2000.
Section 7.2 Effect of Termination.
(a) Upon termination of this Agreement by either the Company or the
Trust as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation
on the part of the Trust, Acquisition Sub or the Company, other than
the provisions of Section 3.1(p), Section 3.2(d), the last sentence
of Section 5.2, Section 5.7, this Section 7.2 and Article 8.
(b) The Trust and Acquisition Sub agree that if this Agreement is
terminated by the Company in accordance with the terms of Section
7.1(b)(iv), Section 7.1(f) or Section 7.1(g), the Trust shall be
obligated to pay to the Company $12,000,000 as liquidated damages,
which payment (i) shall be funded by the Company drawing such amount
under the Letter of Credit, (ii) shall constitute the exclusive
remedy available to the Company at law or in equity in respect of
any such termination by the Company or any breach of this Agreement
by the Trust or Acquisition Sub, and (iii) shall constitute payment
for all claims, damages, out-of-pocket expenses and fees arising out
of or incurred by the Company in connection with this transaction.
The Letter of Credit furnished to the Company by the Trust
concurrently with the execution of this Agreement shall constitute
the source for funding the $12,000,000 payment required from the
Trust pursuant to this Section 7.2(b).
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Section 7.3 Amendment.
This Agreement may be amended by the parties at any time before or after the
Company Stockholder Approval; provided, however, that after any such approval,
there shall not be made any amendment which by law requires further approval by
the stockholders of the Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
Section 7.4 Extension; Waiver.
At any time prior to the Effective Time, a party may (a) extend the time for
the performance of any of the obligations or other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.3, waive compliance
by the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
ARTICLE 8
General Provisions
Section 8.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
that by its terms contemplates performance after the Effective Time.
Section 8.2 Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed), sent by overnight courier
(providing proof of delivery) or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Trust or Acquisition Sub, to
Premier Construction Products Statutory Trust
c/o First Union National Bank, as trustee
10 State House Square
Hartford, CT 06103
Fax: (860) 247-1356
Attention: W. Jeffrey Kramer
with a copy to:
Premier Construction Products Acquisition Corp.
220 Jackson Street
San Francisco, California 94111
Fax: (415) 986-5511
Attention: General Counsel
and
Andrews & Kurth L.L.P.
4200 Chase Tower
Houston, Texas 77002
Fax: (713) 220-4285
Attention: G. Michael O'Leary
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if to the Company, to
Republic Group Incorporated
811 East 30th Avenue
Hutchinson, Kansas 67502
Fax: (316) 727-2727
Attention: Doyle R. Ramsey
with a copy to:
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Fax: (214) 740-8800
Attention: Bryan E. Bishop
Except as provided below, all such notices, requests and other communications
shall be deemed received on the date of receipt by the recipient thereof if
actually received prior to 5 p.m. in the place of receipt and such day is a
business day in the place or receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt. Any notice given exclusively
by registered or certified mail as provided above shall be deemed received on
the fifth business day.
Section 8.3 Definitions.
For purposes of this Agreement:
(a) "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "Bank Credit Agreement" means that certain Credit Agreement dated
as of July 15, 1998 among the Company, the banks party thereto, and
Bank of America, N.A., as Administrative Agent, as amended;
(c) "Filed SEC Documents" means SEC Documents filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended;
(d) "Indenture" means that certain Indenture dated as of July 15, 1998
between the Company and UMB Bank, N.A., as Trustee;
(e) "material adverse effect" means, when used in connection with a
party to this Agreement, any change, effect, event or occurrence
that (i) is or would reasonably be expected to be materially
adverse to the assets, business, condition (financial or otherwise)
or results of operations of such party and its subsidiaries taken
as a whole; (ii) impairs, or would reasonably be expected to
impair, the ability of such party to perform its obligations under
this Agreement in any material respect or (iii) prevents or
materially delays, or would reasonably be expected to prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement.
(f) "person" means an individual, corporation, limited liability
company, partnership, joint venture, association, trust,
unincorporated organization or other entity;
(g) "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of
its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests, the
holders of which are generally entitled to vote for the election of
the board of directors or other governing body) is owned directly
or indirectly by such first person;
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(h) "significant subsidiary" of any person means any subsidiary of such
person that constitutes a significant subsidiary within the meaning
of Rule 1-02 of Regulation S-X promulgated by the SEC;
(i) "Takeover Proposal" has the meaning assigned thereto in Section
4.2(a);
(j) "Superior Proposal" has the meaning assigned thereto in Section
4.2(b); and
(k) "Taxes" has the meaning assigned thereto in Section 3.1(m)(iii).
Section 8.4 Interpretation.
When a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference shall be to an Article or Section of, or an Exhibit
or Schedule to, this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. All terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
herein. All monetary sums herein are in United States of America dollars. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
Section 8.5 Counterparts.
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
(including by facsimile transmission) to the other parties.
Section 8.6 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein),
the Stockholders Agreements and the Confidentiality Agreement (a) constitute
the entire agreement, and supersede all prior written or oral and all
contemporaneous oral agreements and understandings, among the parties with
respect to the subject matter of this Agreement and (b) except for the
provisions of Article 2 and Section 5.6, are not intended to confer upon any
person other than the parties any rights or remedies.
Section 8.7 Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
Section 8.8 Jurisdiction.
Any suit, action or proceeding seeking to enforce any provision of, or based
on any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any federal court located
in the State of Delaware or any Delaware state court, and each of the parties
hereby consents to
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the exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 8.2 shall be deemed effective service of process on such
party.
Section 8.9 Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.10 Assignment.
Neither this Agreement nor any of the rights, interests or obligations under
this Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by a party without the prior written consent of each other party,
except that either the Trust or Acquisition Sub may transfer or assign, in
whole or from time to time in part, to one or more of its affiliates, the right
to enter into the transactions contemplated by this Agreement, but no such
transfer or assignment will relieve the Trust or Acquisition Sub of its
obligations hereunder. Notwithstanding the foregoing, the parties hereto agree
that (i) the Surviving Corporation shall, and the Trust shall cause the
Surviving Corporation to, assign the obligations of the Trust or the Surviving
Corporation, as the case may be, under Sections 5.4 and 5.6 to any person who
acquires all or substantially all of the assets of the Surviving Corporation,
and the Surviving Corporation shall cause, and the Trust shall cause the
Surviving Corporation to cause, such person to assume the obligations of the
Surviving Corporation, and any such assignment and assumption shall relieve the
Trust and Surviving Corporation of their obligations under Sections 5.4 and
5.6, or (ii) if the Surviving Corporation sells or otherwise disposes of
substantially all of its assets in a manner or manners such that no person
acquires all or substantially all of such assets, then the Surviving
Corporation shall, and the Trust shall cause the Surviving Corporation to, make
such provisions for the obligations of the Trust and the Surviving Corporation
under Sections 5.4 and 5.6 as the Surviving Corporation and a majority of the
persons presently serving as the Chief Executive Officer, Chief Financial
Officer and Vice President-Finance (or, if any such person is unavailable due
to illness or death, a majority of the specified persons then available)
determine to be appropriate, and upon making such provisions the Trust and the
Surviving shall be relieved of their obligations under Sections 5.4 and 5.6.
Any assignment in violation of the first sentence of this Section 8.10 shall be
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
Section 8.11 Disclosure Schedules.
Matters reflected on the Company Disclosure Schedule and the Trust
Disclosure Schedule are not necessarily limited to matters required by this
Agreement to be reflected therein and the inclusion of such matters shall not
be deemed an admission that such matters were required to be reflected on the
Company Disclosure Schedule or the Trust Disclosure Schedule, as the case may
be. Such additional matters are set forth for informational purposes only and
do not necessarily include other matters of a similar nature.
Section 8.12 Severability.
If any provision of this Agreement or the application thereof to any person
or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as
to which it has been held
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invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby. Upon any such determination,
the parties shall negotiate in good faith in an effort to agree upon a mutually
acceptable, suitable and equitable substitute provision to effect the original
intent of the parties.
Section 8.13 Payments Constitute Liquidated Damages.
The parties agree that the dollar amounts provided in Sections 5.7(b) and
7.2(b) payable upon the occurrence of the events specified therein have been
determined by negotiation and reflect their best estimate and judgement of the
monetary value of the losses and damages to be incurred in connection with, and
the time, effort, expense and cost of opportunity associated with, the
transactions contemplated in this Agreement, and the parties agree to accept
payment of such amount as liquidated damages in full and complete satisfaction
of all claims and expenses arising from the occurrence of such events
(including, but not limited to, claims for specific performance).
Section 8.14 Enforcement.
The parties agree that irreparable damage would occur and that the parties
would not have any adequate remedy at law if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties will be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any Federal
court located in the State of Delaware or in Delaware state court, the
foregoing being in addition to any other remedy to which they are entitled at
law or in equity.
IN WITNESS WHEREOF, the Trust, Acquisition Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
PREMIER CONSTRUCTION PRODUCTS
STATUTORY TRUST
By: First Union National Bank, not in
its individual capacity, but soley as
Trustee
By: /s/ W. Jeffrey Kramer
_________________________________
W. Jeffrey Kramer
Vice President
PREMIER CONSTRUCTION PRODUCTS
ACQUISITION CORP.
By: /s/ Douglas H. Wolf
_________________________________
Douglas H. Wolf
President
REPUBLIC GROUP INCORPORATED
By: /s/ Phil Simpson
_________________________________
Phil Simpson Chairman, President and
Chief Executive Officer
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