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As filed with the Securities and Exchange Commission on July 1, 1999.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 24, 1999
Citation Corporation
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
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Delaware 0-24492 63-0828225
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(State of Incorporation) Commission (I.R.S. Employer
File Number Identification No.)
2 Office Park Circle, Suite 204
Birmingham, Alabama 35223
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (205) 871-5731
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Item 5. Other Events.
On June 24, 1999, the registrant issued a press release announcing the
execution of a definitive agreement to merge with an affiliate of Kelso &
Company. A copy of the merger agreement and related press release are attached
as Exhibits 2.1 and 99.1, respectively, to this Form 8-K and incorporated herein
by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description of Document
---------- -----------------------
2.1 Agreement and Plan of Merger and Recapitalization,
dated June 29, 1999.
99.1 Press release dated June 24, 1999 issued by the
registrant.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Dated June 30, 1999
CITATION CORPORATION
By: /s/ Frederick F. Sommer
------------------------
Frederick F. Sommer
President and CEO
2
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION
by and between
RSJ ACQUISITION CO.
and
CITATION CORPORATION
Dated as of June 24, 1999
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TABLE OF CONTENTS
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ARTICLE I
The Merger................................................................................ 1
SECTION 1.01. The Merger.................................................................. 1
SECTION 1.02. Closing..................................................................... 1
SECTION 1.03. Effective Time.............................................................. 2
SECTION 1.04. Effects of the Merger....................................................... 2
SECTION 1.05. Certificate of Incorporation and By-laws.................................... 2
SECTION 1.06. Board of Directors.......................................................... 2
SECTION 1.07. Officers.................................................................... 2
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations................. 3
SECTION 2.01. Effect on Capital Stock..................................................... 3
SECTION 2.02. Company Common Stock Elections.............................................. 4
SECTION 2.03. Proration................................................................... 5
SECTION 2.04. Exchange of Certificates.................................................... 6
SECTION 2.05. Shares of Dissenting Stockholders........................................... 8
ARTICLE III
Representations and Warranties............................................................ 10
SECTION 3.01. Representations and Warranties of the Company............................... 10
SECTION 3.02. Representations and Warranties of Merger Co................................. 23
ARTICLE IV
Covenants Relating to Conduct of Business................................................. 26
SECTION 4.01. Conduct of Business......................................................... 26
SECTION 4.02. Other Actions............................................................... 28
SECTION 4.03. Advice of Changes........................................................... 28
SECTION 4.04. No Solicitation by the Company.............................................. 28
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ARTICLE V
Additional Agreements..................................................................... 31
SECTION 5.01. Preparation of the Form S-4 and Proxy Statement;
Stockholder Meeting....................................................................... 31
SECTION 5.02. Access to Information; Confidentiality...................................... 31
SECTION 5.03. Filings; Other Action....................................................... 32
SECTION 5.04. Stock Options and Restricted Stock Units.................................... 32
SECTION 5.05. Indemnification, Exculpation and Insurance.................................. 33
SECTION 5.06. Fees and Expenses........................................................... 34
SECTION 5.07. Public Announcements........................................................ 35
SECTION 5.08. Stockholder Litigation...................................................... 35
SECTION 5.09. Employee Matters............................................................ 35
SECTION 5.10. Consummation of Financing................................................... 36
SECTION 5.11. Recapitalization............................................................ 37
SECTION 5.12. Transfer Taxes.............................................................. 37
SECTION 5.13. State Takeover Laws......................................................... 37
SECTION 5.14. The Company Rights Plan..................................................... 37
SECTION 5.15. Letter as to Solvency....................................................... 37
SECTION 5.16. Monetization of Non-Cash Election Shares.................................... 37
SECTION 5.17. Listing..................................................................... 38
ARTICLE VI
Conditions Precedent...................................................................... 39
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger.................. 39
SECTION 6.02. Conditions to Obligations of the Company.................................... 39
SECTION 6.03. Conditions to Obligations of Merger Co...................................... 40
SECTION 6.04. Frustration of Closing Conditions........................................... 41
ARTICLE VII
Termination, Amendment and Waiver......................................................... 42
SECTION 7.01. Termination................................................................. 42
SECTION 7.02. Effect of Termination....................................................... 43
SECTION 7.03. Amendment................................................................... 43
SECTION 7.04. Extension; Waiver........................................................... 43
ARTICLE VIII
General Provisions........................................................................ 44
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SECTION 8.01. Nonsurvival of Representations and Warranties............................... 44
SECTION 8.02. Notices..................................................................... 44
SECTION 8.03. Definitions................................................................. 45
SECTION 8.04. Interpretation.............................................................. 45
SECTION 8.05. Counterparts................................................................ 46
SECTION 8.06. Entire Agreement; Third-Party Beneficiaries................................. 46
SECTION 8.07. Governing Law............................................................... 46
SECTION 8.08. Assignment.................................................................. 46
SECTION 8.09. Enforcement; Waiver of Jury Trial........................................... 46
SECTION 8.10. Headings.................................................................... 47
SECTION 8.11. Severability................................................................ 47
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AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION (this "Agreement"), dated
as of June 24, 1999, by and between RSJ Acquisition Co., a Delaware corporation
("Merger Co."), and Citation Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Board of Directors of each of the Company and Merger Co. has
approved and declared advisable this Agreement and the merger of Merger Co. with
and into the Company (the "Merger"), with the Company as the surviving
corporation (the "Surviving Corporation"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.01 per share, of the Company ("Company Common
Stock"), other than shares directly or indirectly owned by Merger Co. or the
Company and other than Dissenting Shares (as hereinafter defined), will, at the
election of the holder thereof and subject to the terms hereof, be converted
into the right to receive either (i) cash or (ii) common stock, par value $.01
per share, of the Surviving Corporation (the "Non-Cash Election Shares");
WHEREAS, the Board of Directors of each of the Company (upon the
recommendation of its Special Committee) and Merger Co. has determined that the
Merger and the other transactions contemplated hereby are consistent with, and
in furtherance of, their respective business strategies and goals;
WHEREAS, Kelso & Company, L.P. ("Kelso & Company"), an affiliate of Merger
Co., has concurrently herewith delivered a letter to the Company (the "Equity
Commitment Letter"), which Equity Commitment Letter confirms Kelso & Company's
commitment, on the terms and subject to the conditions set forth therein, to
contribute or cause to be contributed to Merger Co. the equity financing
required for consummation of the Merger; and
WHEREAS, the Company and Merger Co. 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 I
The Merger
----------
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), Merger Co. shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the Company, as the
Surviving Corporation, shall succeed to and assume all the rights and
obligations of Merger Co. in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on the second business day after satisfaction or waiver of
the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the
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fulfillment or waiver of those conditions), unless another time or date is
agreed to by the parties hereto (the "Closing Date").
SECTION 1.03. Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date, the parties shall acknowledge and
file a certificate of merger (the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such subsequent date or time
as the Company and Merger Co. shall agree and specify in the Certificate of
Merger (the time the Merger becomes effective being hereinafter referred to as
the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The Certificate
of Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of the Company, as in effect 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.
SECTION 1.06. Board of Directors. The directors of Merger Co. immediately
before the Effective Time will be the initial directors of the Surviving
Corporation until their successors are elected or appointed and qualified.
SECTION 1.07. Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------
Constituent Corporations
---------------
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
the Company Common Stock or capital stock of Merger Co.:
(a) Cancellation of Company Stock. Each share of the Company Common Stock
that is owned by Merger Co. or the Company (or by any direct or indirect wholly-
owned subsidiary of Merger Co. or the Company) shall automatically be canceled
and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) Conversion of the Company Common Stock. Except as otherwise provided
herein and subject to Section 2.03 hereof, each share of the Company Common
Stock issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.01(a) and other than
Dissenting Shares) shall be converted into the following (the "Merger
Consideration"):
(i) for each such share of Company Common Stock with respect to which
an election to receive common stock in the Surviving Corporation has been
effectively made and not revoked or lost, pursuant to Section 2.02 (the
"Electing Shares"), the right to receive, subject to Section 2.04(d), one fully
paid and non-assessable Non-Cash Election Shares; and
(ii) for each such share of Company Common Stock (other than Electing
Shares), the right to receive $18.10 in cash (the "Cash Election Price").
(c) Cancellation of Company Common Stock. As of the Effective Time, all
shares of the Company Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented shares of
Company Common Stock (a "Certificate") shall cease to have any rights with
respect thereto, except (other than in the case of shares to be canceled in
accordance with Section 2.01(a)) the right to receive the Merger Consideration
and any cash in lieu of fractional shares pursuant to this Article II to be paid
in consideration therefor upon surrender of such Certificate in accordance with
Section 2.04, without interest, or, in the case of Dissenting Shares, the
rights, if any, accorded under Section 262 of the DGCL.
(d) Capital Stock of Merger Co. Each issued and outstanding share of
capital stock of Merger Co. shall be converted into and become such number of
fully paid and non-assessable Non-Cash Election Shares as is equal to (i) (x)
the aggregate amount of cash contributed as equity to Merger Co. in connection
with the consummation of the Merger and the other transactions contemplated
hereby, divided by (y) $18.10, with written notice of the exact number of such
Non-Cash Election Shares to be provided by Merger Co. to the Company no later
than three business days
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prior to the mailing of the Proxy Statement (such number, the "Parent Equity
Number"), divided by (ii) the aggregate number of shares of capital stock of
Merger Co. issued and outstanding immediately prior to the Effective Time.
SECTION 2.02. Company Common Stock Elections.
(a) Each person who, on or prior to the Election Date (as defined below),
is a record holder of shares of Company Common Stock shall be entitled, with
respect to all or any portion of such person's shares, to make an unconditional
election (a "Non-Cash Election") on or prior to such Election Date to receive
Non-Cash Election Shares, on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined below), Merger
Co. shall appoint a bank or trust company as may be approved by the Company
(which approval shall not be unreasonably withheld or delayed) to act as
exchange and paying agent (the "Exchange Agent") for the payment of the Merger
Consideration.
(c) Merger Co. shall, subject to applicable requirements of the United
States federal securities laws, prepare a form of election (the "Form of
Election") which Form of Election shall be subject to the approval of the
Company (which approval shall not be unreasonably withheld or delayed) to be
mailed by the Company with the Proxy Statement to the record holders of Company
Common Stock as of the record date for the Company Stockholders Meeting (as
defined below), which Form of Election shall be used by each record holder of
shares of Company Common Stock who wishes to elect to receive Non-Cash Election
Shares for any or all shares of Company Common Stock held by such holder,
subject to the provisions of Section 2.03. The Company shall use its reasonable
best efforts to make the Form of Election and the Proxy Statement available to
all persons who become holders of Company Common Stock during the period between
such record date and the Election Date referred to below. Any such holder's
election to receive Non-Cash Election Shares shall have been properly made only
if the Exchange Agent shall have received at its designated office, by 5:00
p.m., New York City time, on the business day that is five business days prior
to the date of the Company Stockholders Meeting (the "Election Date"), a Form of
Election properly completed and signed and accompanied by Certificates
representing the shares of Company Common Stock to which such Form of Election
relates, duly endorsed in blank or otherwise in form acceptable for transfer on
the books of the Company (or by an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is an
"eligible guarantor institution" (as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")); provided that
such Certificates are in fact delivered to the Exchange Agent within seven
business days after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the stockholder of the Company
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent prior to 5:00 p.m, New York City time, on the Election Date
(unless Merger Co. and the Company determine not less than two business days
prior to the Election Date that the Closing Date is not likely to occur within
five business days following the date of the Company Stockholders Meeting, in
which case any Form of Election will remain revocable until a subsequent date
which shall be a date prior to the Closing Date determined by Merger Co. and the
Company and, in such a case, the Company shall provide notice to the
stockholders of the Company of such date in such manner as it may reasonably
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determine). In addition, all Forms of Election shall automatically be revoked if
the Exchange Agent is notified in writing by Merger Co. and the Company that
this Agreement has been terminated. If a Form of Election is revoked, the
Certificate or Certificates (or guarantees of delivery, as appropriate) for the
shares of Company Common Stock to which such Form of Election relates shall be
promptly returned by the Exchange Agent to the stockholder of the Company
submitting the same.
(e) The determination of the Exchange Agent (or the mutual determination
of the Company and Merger Co. in the event that the Exchange Agent declines to
make any such determination) shall be binding as to whether or not elections to
receive Non-Cash Election Shares have been properly made or revoked pursuant to
this Section 2.02 with respect to shares of Company Common Stock and as to when
elections and revocations were received by it. If the Exchange Agent reasonably
determines in good faith that any election to receive Non-Cash Election Shares
was not properly made with respect to shares of Company Common Stock, such
shares shall be treated by the Exchange Agent as shares which were not Electing
Shares at the Effective Time, and such shares shall be converted in the Merger
into the right to receive cash pursuant to Section 2.01(b)(ii), subject to
proration as provided in Section 2.03. The Exchange Agent (or the Company and
Merger Co. by mutual agreement in the event that the Exchange Agent declines to
make any such determination) shall also make all computations as to the
allocation and the proration contemplated by Section 2.03, and any such
computation shall be conclusive and binding on the stockholders of the Company.
The Exchange Agent may, with the mutual written agreement of the Company and
Merger Co., make such rules as are consistent with this Section 2.02 for the
implementation of the elections provided for herein and as shall be necessary or
desirable fully to effect such elections.
SECTION 2.03. Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the
aggregate number of shares of Company Common Stock to be converted into the
right to receive Non-Cash Election Shares at the Effective Time (the "Non-Cash
Election Number") shall be equal to the Parent Equity Number, multiplied by
0.07, and divided by 0.93; provided, however, in the event Merger Co. notifies
the Company pursuant to Section 5.16 hereof that there is no longer a reason for
the stockholders of the Company to be stockholders of the Surviving Corporation,
(i) such aggregate number shall be 0, (ii) no shares of Company Common Stock
shall be converted into the right to receive Non-Cash Election Shares and (iii)
shares of Company Common Stock which would otherwise convert into the right to
receive the Non-Cash Election Shares shall be converted into the right to
receive the Cash Election Price in accordance with Section 2.01(b)(ii).
(b) If the number of Electing Shares exceeds the Non-Cash Election Number,
each Electing Share shall be converted into the right to receive Non-Cash
Election Shares or cash in accordance with the terms of Section 2.01(b) in the
following manner:
(i) a proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Election Number by the total number of
Electing Shares;
(ii) the number of Electing Shares covered by each Non-Cash Election
to be converted into the right to receive Non-Cash Election Shares shall be
determined by multiplying the
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Non-Cash Proration Factor by the total number of Electing Shares covered by such
Non-Cash Election; and
(iii) all Electing Shares, other than those shares converted into the
right to receive Non-Cash Election Shares in accordance with Section
2.03(b)(ii), shall be converted into the right to receive cash (on a consistent
basis among stockholders of the Company who made the election referred to in
Section 2.01(b)(i), pro rata to the number of shares of Company Common Stock as
to which they made such election) as if such shares were not Electing Shares in
accordance with the terms of Section 2.01(b)(ii).
(c) If the number of Electing Shares is less than the Non-Cash Election
Number:
(i) all Electing Shares shall be converted into the right to receive
Non-Cash Election Shares in accordance with the terms of Section 2.01(b)(i);
(ii) additional shares of Company Common Stock (other than Electing
Shares, Dissenting Shares and shares canceled pursuant to Section 2.01(a)) shall
be converted into the right to receive Non-Cash Election Shares in accordance
with the terms of Section 2.01(b)(i) in the following manner:
(A) a proration factor (the "Cash Proration Factor") shall be
determined by dividing (I) the difference between the Non-Cash Election Number
and the number of Electing Shares by (II) the total number of shares of Company
Common Stock outstanding at the Effective Time (other than Electing Shares,
Dissenting Shares and shares canceled pursuant to Section 2.01(a)); and
(B) the number of shares of Company Common Stock in addition to
Electing Shares to be converted into the right to receive Non-Cash Election
Shares shall be determined by multiplying the Cash Proration Factor by the total
number of shares of Company Common Stock outstanding at the Effective Time
(other than Electing Shares, Dissenting Shares and shares canceled pursuant to
Section 2.1(a)); and
(iii) shares of Company Common Stock subject to clause (ii) of this
paragraph (c) shall be converted into the right to receive Non-Cash Election
Shares in accordance with Section 2.01(b)(i) (on a consistent basis among
stockholders of the Company who held shares of Company Common Stock as to which
they did not make the election referred to in Section 2.01(b)(i), pro rata to
the number of shares as to which they did not make such election).
SECTION 2.04. Exchange of Certificates.
(a) Deposit with Exchange Agent. As of or as soon as reasonably
practicable after the Effective Time, the Company shall deposit with the
Exchange Agent, for the benefit of the stockholders of the Company, for exchange
in accordance with this Article II, the Merger Consideration.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, each holder of a Certificate shall, upon surrender to the
Exchange Agent of such Certificate or
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Certificates and acceptance thereof by the Exchange Agent, be entitled to a new
certificate or new certificates (the "New Certificates") representing the number
of full Non-Cash Election Shares, cash and cash payable in lieu of fractional
shares, in each case, if any, to be received by the holder thereof pursuant to
this Agreement. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time, there shall be no further transfer on the
records of the Company or its transfer agent of Certificates and, if
Certificates are presented to the Company for transfer, they shall be canceled
against delivery of the Merger Consideration. If any New Certificate for Non-
Cash Election Shares is to be issued in, or if cash is to be remitted to, a name
other than that in which the Certificate surrendered for exchange is registered,
it shall be a condition of such exchange that the Certificate so surrendered
shall be properly endorsed, with signature guaranteed, or otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to the
Company or its transfer agent any transfer or other taxes required by reason of
the issuance of New Certificates for such Non-Cash Election Shares in a name
other than that of the registered holder of the Certificate surrendered, or
establish to the satisfaction of the Company or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.04(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration as contemplated by Section 2.01.
(c) Distributions with Respect to Unexchanged Shares No dividends or other
distributions with respect to Non-Cash Election Shares with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the Non-Cash Election Shares to be received in respect thereof
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.04(d), in each case until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the New Certificate or New Certificates representing whole
Non-Cash Election Shares issued in connection therewith, without interest, (i)
at the time of such surrender, the amount of any cash payable in lieu of a
fractional Non-Cash Election Share to which such holder is entitled pursuant to
Section 2.04(d) and the proportionate amount of any dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole Non-Cash Election Shares, and (ii) at the appropriate
payment date, the proportionate amount of any dividends or other distributions
with a record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such whole
Non-Cash Election Shares.
(d) Fractional Shares. (i) No New Certificates or scrip representing
fractional Non-Cash Election Shares shall be issued in connection with the
Merger and such fractional share interests shall not entitle the owner thereof
to vote or to any rights of a stockholder of the Company after the Merger, and
(ii) notwithstanding any other provision of this Agreement, each holder of
shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a Non-Cash Election Share
(after taking into account all shares of Company Common Stock delivered by such
holder) shall receive, in lieu thereof, a cash payment (without interest)
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the Cash Election Price.
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(e) No Further Ownership Rights Shares. The Merger Consideration paid upon
the surrender for exchange of Certificates in accordance with the terms of this
Article II (including any cash paid pursuant to Section 2.04(d)) shall be deemed
to have been issued (and paid) in full satisfaction of all rights pertaining to
the shares of Company Common Stock so exchanged.
(f) Termination of Exchange Fund. Any portion of the Merger Consideration
that remains undistributed to the holders of the Certificates for one year after
the Effective Time shall be delivered to the Surviving Corporation, upon demand,
and any holders of Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation for payment
of their claim for any cash, if any, Non-Cash Election Shares, if any, any cash
in lieu of Non-Cash Election Shares and any dividends or distributions with
respect to Non-Cash Election Shares to which such holders may be entitled,
subject to escheat and similar abandoned property laws.
(g) No Liability. None of Merger Co., the Company or the Exchange Agent
shall be liable to any person in respect of any cash or Non-Cash Election Shares
(or dividends or distributions in respect thereof) deposited with the Exchange
Agent (the "Exchange Fund") delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund as directed by Merger Co.; provided that such
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investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $1 billion. Any net profit resulting
from, or interest or income produced by, such investments shall be payable to
Merger Co.
(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, deliverable in respect thereof, pursuant to this Agreement.
(j) Withholding Rights. The Surviving Corporation or the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of a Certificate such amounts
as the Surviving Corporation or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provisions of state, local or
foreign tax law. To the extent that amounts are so withheld and paid over to
the appropriate taxing authority by the Surviving Corporation or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Certificate in respect of which such
deduction and withholding was made by the Surviving Corporation or the Exchange
Agent.
SECTION 2.05. Shares of Dissenting Stockholders. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding shares of Company
Common Stock held by
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a person (a "Dissenting Stockholder") who shall not have voted to adopt this
Agreement and who properly demands appraisal for such shares in accordance with
Section 262 of the DGCL ("Dissenting Shares") shall not be converted as
described in Section 2.01, but shall be converted into the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the DGCL, unless such holder fails to perfect or withdraws or
otherwise loses his right to appraisal. If, after the Effective Time, such
Dissenting Stockholder fails to perfect or withdraws or loses his right to
appraisal, such Dissenting Stockholder's shares of Company Common Stock shall no
longer be considered Dissenting Shares for the purposes of this Agreement and
such holder's shares of Company Common Stock shall thereupon be treated as
shares that are not Electing Shares and shall be deemed to have been converted,
at the Effective Time, into the right to receive the Merger Consideration set
forth in Section 2.01(b)(ii). The Company shall give Merger Co. (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 all negotiations and
proceedings with respect to any such demands. The Company shall not, without the
prior written consent of Merger Co., make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
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ARTICLE III
Representations and Warranties
________________________
SECTION 3.01. Representations and Warranties of the Company. Except as
disclosed in the Company Filed SEC Documents (as defined in Section 3.01(g)) or
as set forth on the Disclosure Schedule dated the date hereof and delivered by
the Company to Merger Co. in connection with the execution of this Agreement
(the "Company Disclosure Schedule") (provided that the listing of an item in one
schedule of the Company Disclosure Schedule shall be deemed to be a listing in
each schedule of the Company Disclosure Schedule and to apply to any other
representation and warranty of the Company in this Agreement to the extent that
it is reasonably apparent from a reading of such disclosure item that it would
also qualify or apply to such other schedule or representation and warranty),
the Company represents and warrants to Merger Co. as follows:
(a) Organization, Standing and Corporate Power. Each of the Company and its
subsidiaries (as defined in Section 8.03) is duly organized, validly existing
and in good standing under the laws of the respective jurisdiction in which it
is incorporated and has the requisite power and authority to carry on its
business as now being conducted. Each of the Company and its subsidiaries 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,
individually or in the aggregate, would not have a material adverse effect (as
defined in Section 8.03) on the Company. The Company has made available to
Merger Co. prior to the date hereof complete and correct copies of its
Certificate of Incorporation and By-laws and the certificates of incorporation,
by-laws and other organizational documents of its subsidiaries, in each case as
amended to the date hereof.
(b) Subsidiaries. Exhibit 21 to the Company's Annual Report on Form 10-K
for the fiscal year ended September 27, 1998 (the "Company Form 10-K") or
Schedule 3.01(b) of the Company Disclosure Schedule lists each subsidiary of the
Company as of the date of this Agreement, together with the jurisdiction of
incorporation of each such subsidiary. All the outstanding shares of capital
stock of, or other ownership interests in, each such subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all liens (as defined in Section
8.03) and free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or such other ownership
interest). Except for the capital stock of, or other ownership interests in, its
subsidiaries noted above, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
limited liability company or other entity.
(c) Capital Structure.
(i) The authorized capital stock of the Company consists of
30,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share. At the close of business on May 31, 1999, (i)
17,893,113 shares of the Company Common Stock and no shares of preferred stock
were issued and outstanding, (ii) 59,663 shares of the Company Common
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Stock were held by the Company in its treasury and (iii) 300,000 shares of
Series A Junior Participating Preferred Stock, par value $.01 per share, of the
Company (the "Series A Junior Participating Preferred Stock") were reserved for
issuance in connection with the rights (the "Rights") to purchase shares of
Series A Junior Participating Preferred Stock, issued pursuant to the Rights
Agreement, dated as of November 25, 1998, as amended (the "Rights Agreement"),
between the Company and The Bank of New York, as Rights Agent. Since May 31,
1999, no shares of Company Common Stock have been issued, except in connection
with the Company Stock Plans, and no shares of Preferred Stock have been issued.
As of the date of this Agreement, no more than 825,432 shares of the Company
Common Stock were subject to options or other purchase rights (the "Company
Stock Options") granted under the Citation Corporation Non-Qualified Stock
Option Plan for Non-Employee Directors, the Citation Corporation Employee Stock
Purchase Plan (the "Stock Purchase Plan") and the Citation Corporation Incentive
Award Plan (collectively, the "Company Stock Plans"). As of the date of this
Agreement, no more than 114,794 shares of Company Common Stock have been
subscribed to by Company employees under the Stock Purchase Plan. As of the date
of this Agreement, there were 2,600,000 shares of the Company Common Stock
reserved for issuance under the Company Stock Plans. Except as set forth above,
at the close of business on the date of this Agreement, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding. There are no outstanding stock appreciation rights
("SARs"), phantom stock units, restricted stock grants, contingent stock grants
or like rights (other than the Company Stock Options) to receive shares of the
Company Common Stock on a deferred basis granted under the Company Stock Plans
or otherwise. Schedule 3.01(c) of the Company Disclosure Schedule sets forth a
true and complete list, as of May 31, 1999, of all the Company Stock Options,
the number of shares subject to each such option, the holder thereof, the grant
dates and the exercise prices thereof. All outstanding shares of capital stock
of the Company are, and all shares which may be issued pursuant to the Company
Stock Plans will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. As of the date of this
Agreement, no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote are issued or outstanding. Except as set forth above, as of the date of
this Agreement, there are no preemptive or other outstanding securities,
options, warrants, calls, rights, conversion rights, redemption rights,
repurchase rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its subsidiaries is a party or by which any
of them is bound obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or any of its
subsidiaries, or giving any person a right to subscribe for or acquire, any
securities of the Company or any of its subsidiaries or obligating the Company
or any of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, conversion right, redemption right,
repurchase 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.
(ii) Since September 27, 1998, the Company has not declared or paid
any dividend on, or declared or made any distribution with respect to, or
authorized or effected any split-up or any other recapitalization of, any of the
Company Common Stock, or directly or indirectly, redeemed,
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purchased or otherwise acquired any of its outstanding capital stock. As of the
date hereof, the Company Common Stock is traded, and meets the requirements for
inclusion and maintenance, on the NASDAQ Stock Market.
(iii) Schedule 3.01(c) of the Company Disclosure Schedule sets forth
the total amount of indebtedness for borrowed money as of May 30, 1999. All
such indebtedness is prepayable without more than two business days' notice and
without the payment of any penalty. Since May 30, 1999, no additional
indebtedness has been incurred by the Company other than in the ordinary course
of business consistent with past practice under existing lines of credit.
(d) Authority; Noncontravention.
(i) The Company has all requisite corporate power and authority to
enter into this Agreement and, subject to receipt of the Company Stockholder
Approval (as defined in Section 3.01(n)), to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation 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 Merger, to receipt of the
Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution and delivery of this
Agreement by Merger Co., constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms
subject to (i) applicable bankruptcy, insolvency, fraudulent transfer and
conveyance, moratorium, reorganization, receivership and similar laws relating
to or affecting the enforcement of the rights and remedies of creditors
generally, (ii) principles of equity (regardless of whether considered and
applied in a proceeding in equity or at law) and (iii) the discretion of the
court before which any proceeding in respect of this Agreement or the
transactions contemplated hereby may be brought. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this Agreement by the
Company will not, conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any lien upon any of the
properties or assets of the Company or any of its subsidiaries under (A) the
Certificate of Incorporation or By-laws of the Company or the certificate of
incorporation or organizational documents of any of its subsidiaries, (B) 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 (C) 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 (B) and (C),
any such conflicts, violations, defaults, obligations, losses, rights, liens,
judgments, orders, decrees, statutes, laws, ordinances, rules or regulations
that, individually or in the aggregate, would not have a material adverse effect
on the Company and other than as is provided for under Sections 3.01(g),
3.01(j), 3.01(l), 3.01(r), 5.04 and 5.09 of this Agreement relating to Company
Benefit Plans (as hereinafter defined) or Company Stock Options. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Federal, state or local government or any court, administrative agency
or commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required to be
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made or obtained by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Merger and any of the other transactions
contemplated by this Agreement, except for (A) 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"); (B) compliance
with and filings under, to the extent required, the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act and the rules and
regulations promulgated thereunder; (C) the filing with the Secretary of State
of the State of Delaware of the Certificate of Merger; (D) the filing of
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, and such filings with Governmental Entities
to satisfy the applicable requirements of state securities or "blue sky" laws;
(E) the filing of the registration statement on Form S-4, including the Proxy
Statement, with the Securities and Exchange Commission (the "SEC") by the
Company in connection with the issuance of Non-Cash Election Shares in
connection with the Merger (the "Form S-4"); and (F) such consents, approvals,
orders or authorizations the failure of which to be made or obtained,
individually or in the aggregate, would not have a material adverse effect on
the Company.
(ii) The Special Committee of the Company's Board of Directors (the
"Special Committee"), at a meeting duly called and held, has by unanimous vote
of all its members approved this Agreement and determined that it is advisable
and in the best interests of the Company to enter into the Merger and the other
transactions contemplated by this Agreement. The Board of Directors of the
Company at a meeting duly called and held pursuant to the recommendation of the
Special Committee (A) has approved and declared advisable this Agreement, the
Merger and the other transactions contemplated by this Agreement and (B) has
resolved to recommend that the holders of Company Common Stock approve and adopt
this Agreement and the Merger.
(e) SEC Documents; Undisclosed Liabilities. The Company has filed all
required reports, schedules, forms, statements and other documents with the SEC
since September 28, 1996 (including all filed reports, schedules, forms,
statements and other documents whether or not required, the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to the Company SEC Documents, and none of the
Company 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 Company SEC Document has been revised or superseded by a later filed
Company SEC Document, none of the Company SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents are true and
complete and comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with U.S. generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for
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the periods then ended (subject, in the case of unaudited statements, to normal
year-end adjustments). Except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the date of the
most recent consolidated balance sheet included in the Company SEC Documents and
except for liabilities and obligations which, individually or in the aggregate,
would not have a material adverse effect on the Company, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise).
(f) Information Supplied. No statement, certificate, instrument or other
writing furnished or to be furnished by the Company or any affiliate (as defined
in Section 8.03) thereof to Merger Co., or any affiliate thereof, pursuant to
this Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading and (ii) the proxy statement to be
sent to the stockholders of the Company in connection with the Company
Stockholders Meeting (such proxy statement, as amended or supplemented, is
herein referred to as the "Proxy Statement") will, at the date it is first
mailed to the stockholders of the Company and at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. The Form S-4 will, as of its effective date, and the
prospectus contained therein will, as of its date, comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder. The Proxy Statement will, at the time of the
Company Stockholders Meeting, comply as to form in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by
Merger Co. or any of its affiliates or representatives specifically for
inclusion in the Form S-4 or the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "Company Filed SEC
Documents"), since September 27, 1998, the Company and each of its subsidiaries
have conducted their respective businesses only in the ordinary course
consistent with past practice, and there has not been since such date, (i) any
material adverse change (as defined in Section 8.03) in the Company, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) (other than the Rights) with respect to any
of the Company's capital stock, (iii) any split, combination or reclassification
of any of the Company's capital stock or any issuance or the authorization of
any issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (iv) (x) any granting by the
Company or any of its subsidiaries to any director, executive officer or key
employee of the Company or any of its subsidiaries of any award or incentive
payment or increase in compensation or benefits, except in the ordinary course
of business consistent with past practice or as was required under employment
agreements in effect as of the date of this Agreement (copies of which have been
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made available to Merger Co.), (y) any granting by the Company or any of its
subsidiaries to any such director, executive officer or key employee of any
increase in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of the date of this
Agreement (copies of which have been made available to Merger Co.) or (z) any
entry by the Company or any of its subsidiaries into any employment, severance
or termination agreement with any such director, executive officer or key
employee, (v) any change in accounting methods, principles or practices by the
Company or any of its subsidiaries, (vi) any material labor dispute with respect
to the Company or any subsidiary, (vii) any entry by the Company or any of its
subsidiaries into any material commitment, agreement, license or transaction
(including, without limitation, any borrowing, capital expenditure, sale of
assets or any lien made on any of the properties of the Company or any of its
subsidiaries) other than in the ordinary course of business consistent with past
practice, (viii) any damage, destruction or loss to the properties of the
Company or any of its subsidiaries whether covered by insurance or not, which
has had or will have a material adverse effect on the Company or (ix) any
agreement by the Company or any of its subsidiaries to do any of the foregoing.
(h) Litigation. Except as disclosed in the Company SEC Documents, there is
no suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the Company, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries having, or which would reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the Company.
(i) Labor Relations. Schedule 3.01(i) of the Company Disclosure Schedule
contains a true and correct list of each collective bargaining agreement between
the Company or any of its subsidiaries and a labor union, the name of each such
union and the date of termination of each such collective bargaining agreement.
Neither the Company nor any of its subsidiaries is the subject of any suit,
action or proceeding which is pending or, to the knowledge of the Company,
threatened, asserting that the Company or any of its subsidiaries has committed
an unfair labor practice (within the meaning of the National Labor Relations Act
or applicable state statutes) or is seeking to compel it to bargain with any
labor union or labor organization, nor is there pending or, to the knowledge of
the Company, threatened, nor has there been for the past two years, any material
labor strike, dispute, walk-out, work stoppage, slow-down, lockout or
organizational effort involving the Company or any of its subsidiaries whether
or not such subsidiary was a subsidiary of the Company at such time.
(j) Benefit Plans.
(i) Schedule 3.01(j) contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
collectively referred to herein as the "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(l) of ERISA, hereinafter a
"Welfare Plan"), severance, termination, change in control, incentive
compensation profit sharing stock option, stock purchase, stock ownership,
phantom stock, deferred compensation plans, and other employee fringe benefit
plans or arrangements maintained, contributed to or required to be maintained or
contributed to by the Company or any of its subsidiaries for the benefit of any
present or former officers,
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employees, directors or independent contractors of the Company or any of its
subsidiaries (all the foregoing being herein called the "Company Benefit
Plans"). The Company has made available to Merger Co. true, complete and correct
copies of (1) each Company Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (2) the most recent annual report on Form
5500 filed with the Internal Revenue Service with respect to each Company
Benefit Plan (if any such report was required by applicable law), (3) the most
recent summary plan description for each Company Benefit Plan for which such a
summary plan description is required by applicable law and (4) each currently
effective trust agreement and insurance or annuity contract relating to any
Company Benefit Plan.
(ii) Each Company Benefit Plan has been administered in accordance
with its terms except for any failure so to administer as, individually or in
the aggregate, would not have a material adverse effect on the Company. To the
knowledge of the Company, the Company, its subsidiaries and all the Company
Benefit Plans are in compliance with the applicable provisions of ERISA, the
Code and other applicable laws as to the Company Benefit Plans except for any
failure so to be in compliance as, individually or in the aggregate, would not
have a material adverse effect on the Company.
(iii) With respect to the Company Benefit Plans, individually and in
the aggregate, no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances, in connection with which the
Company or any of its subsidiaries could be subject to any liability that would
have a material adverse effect on the Company under ERISA, the Code or any other
applicable law.
(iv) Each Company Pension Plan that is intended to comply with the
provisions of Section 401(a) of the Code has been the subject of a determination
letter from the Internal Revenue Service to the effect that such Company Pension
Plan is qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code; no such determination letter has been
revoked, and, to the knowledge of the Company, revocation has not been
threatened; and no amendment to such Company Pension Plan as to which the
remedial amendment period has expired would adversely affect its qualification
or materially increase its cost. The Company has made available to Merger Co. a
copy of the most recent determination letter received with respect to each
Company Pension Plan for which such a letter has been issued, as well as a copy
of any pending application for a determination letter. Schedule 3.01(j) lists
all the Company Pension Plan amendments as to which a favorable determination
letter has not yet been received.
(v) No employee of the Company will be entitled to any additional
benefits or any acceleration of the time of payment, funding or vesting of any
benefits under any Company Benefit Plan as a result of the Merger or the other
transactions contemplated by this Agreement.
(vi) Since the date of the most recent audited financial statements
included in the Company Filed SEC Documents, there has not been any adoption or
amendment by the Company or any of its subsidiaries of any collective bargaining
agreement or any Company Benefit Plan.
(vii) No Company Benefit Plan provides health, death or medical
benefits (whether or not insured) with respect to current or former employees of
the Company or its subsidiaries
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beyond their retirement or other termination of employment (other than (a)
coverage mandated by applicable law or (b) benefits the full cost of which is
borne by the current or former employee (or his or her beneficiary)).
(viii) There are no pending, anticipated or, to the knowledge of the
Company, threatened claims by or on behalf of any Company Benefit Plan, by any
employee or beneficiary covered under any such Company Benefit Plan, or
otherwise involving any such Benefit Plan (other than routine claims for
benefits) which would result in a material adverse effect on the Company.
(k) Taxes.
(i) Each of the Company and its subsidiaries has filed all material
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 returns filed by the Company and each of its subsidiaries are
complete and accurate in all material respects. The Company and each of its
subsidiaries have paid (or the Company has paid on its behalf) all material
taxes required to be paid by the Company or any of its subsidiaries, and the
most recent financial statements contained in the Company Filed SEC Documents
reflect an adequate reserve for all taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements.
(ii) No material deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries that are not
adequately reserved for, and no requests for waivers or extension of the time to
assess or collect any material taxes of the Company or any of its subsidiaries
have been granted or are pending
(iii) All material taxes required to be withheld by the Company or any
of its subsidiaries have been duly withheld and paid to the proper taxing
authority or properly set aside in accounts for such purpose.
(iv) No power of attorney with respect to any taxes of the Company or
any of its subsidiaries has been executed or filed with any taxing authority.
(v) Neither the Company nor any of its subsidiaries is or has been
at any time since January 1, 1993 for purposes of filing any income tax return a
member of any affiliated, consolidated, combined or unitary group of which a
corporation (other than the Company and its subsidiaries) is or was the common
parent.
(vi) No taxes of the Company or any of its subsidiaries are currently
under audit by any taxing authority, and no taxing authority is now asserting
against the Company or any of its subsidiaries any material deficiency or claim
for additional taxes or any material adjustment of taxes.
(vii) Neither the Company nor any of its subsidiaries is a party to or
bound by or has any obligation under any tax sharing agreement or arrangement
entered into with any person (other than the Company or any of its
subsidiaries).
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(l) No Excess Parachute Payments. No amount that could be received (whether
in cash or property or the vesting of property) as a result of the Merger or any
of the other transactions contemplated by this Agreement, either alone or
together with other events, by any employee, officer or director of the Company
or any of its affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or Company
Benefit Plan currently in effect would be characterized as an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code). Neither
the Company nor any of its subsidiaries is a party to any contract, agreement or
other arrangement which would result in the payment of amounts prior to the
Effective Time that will be nondeductible by reason of Section 162(m) of the
Code.
(m) Compliance with Applicable Laws.
(i) Each of the Company and its subsidiaries has in effect all
Federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate its assets and to carry on
its business as now conducted, and there has occurred no default under or
limitation with respect to any such Permit, except for the lack of Permits and
for defaults or limitations under Permits which, individually or in the
aggregate, would not have a material adverse effect on the Company. To the
knowledge of the Company, the Company and its subsidiaries are, and have been,
in compliance with all Permits and all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, except for instances
of noncompliance which, individually or in the aggregate, would not have a
material adverse effect on the Company. No investigation, examination or review
by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, nor has
any Governmental Entity indicated an intention to conduct the same, except for
those the outcome of which, individually or in the aggregate, would not have a
material adverse effect on the Company.
(ii) The Company and its subsidiaries are and have been in material
compliance in all respects with all applicable statutes, laws, ordinances,
rules, orders, regulations and other requirements of law regulating pollution or
the protection of human health and the environment or relating to the use,
handling, treatment, storage, disposal, release or threatened release of
Hazardous Materials (collectively, "Environmental Laws").
(iii) There is no suit, action, proceeding or inquiry pending or, to
the knowledge of the Company, threatened before any court, governmental agency
or authority or other forum in which the Company or any of its subsidiaries has
been or, with respect to threatened suits, actions and proceedings, may be named
as a defendant (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material (as hereinafter defined), whether or not occurring at,
on, under or involving a site owned, leased, operated or used by the Company or
any of its subsidiaries.
(iv) During the period of ownership or operation by the Company and
its subsidiaries of any of their respective current properties, there have been
no material releases of Hazardous Material in, on, under or affecting material
properties or, to the knowledge of the Company, any surrounding sites. Prior to
the period of ownership or operation by the Company and its subsidiaries
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of any of their respective current properties, to the knowledge of the Company,
there were no material releases of Hazardous Material in, on, under or affecting
any such property or any surrounding site. "Hazardous Material" shall mean any
waste or other substance that is classified or regulated under any Environmental
Law including any hazardous substance within the meaning of any Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls or
petroleum products or by-products.
(v) The Company is not subject to any material order, decree,
injunction or other material arrangement or obligation with any Governmental
Entity or any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to any Hazardous Material.
(vi) Neither the Company, nor to the knowledge of the Company, any
other person, has caused or taken any action that will result in any material
liability or obligation on the part of the Company or any of its subsidiaries
relating to (x) the environmental conditions on, under or about any properties
or assets currently or formerly owned, leased, operated or used by the Company,
or (y) the past or present use, management, handling, transport, treatment,
generation, storage, disposal, discharge, emission or release of any Hazardous
Materials.
(vii) The Company has made available to Merger Co. all material site
assessments, compliance audits, studies and analyses, in its possession, custody
or control relating to (x) the environmental conditions on, under or about the
properties or assets currently or formerly owned, leased, operated or used by
the Company or any of its subsidiaries and (y) any Hazardous Materials released
by the Company or any other person on, under, about or from any of the
properties currently or formerly owned, leased or used by the Company or any of
its subsidiaries.
(viii) Schedule 3.01(m)(viii) lists all capital expenditures in excess
of $50,000 made by the Company or any of its subsidiaries since January 1, 1999,
or presently planned to be made by the Company or any of its subsidiaries, in
order to address the Company's and its subsidiaries' compliance with
Environmental Laws.
(n) Voting Requirements. The affirmative vote at the Company Stockholders
Meeting of the holders of a majority in voting power of all outstanding shares
of the Company Common Stock to adopt this Agreement (the "Company Stockholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt this Agreement.
(o) State Takeover Statutes. No "fair price", "moratorium", "control share
acquisition" or other similar antitakeover statute or regulation enacted under
state or federal laws in the United States (with the exception of Section 203 of
the DGCL) applicable to the Company is applicable to the Merger or the other
transactions contemplated hereby. Assuming the accuracy of the representation
and warranty set forth in Section 3.02(f), the action of the Board of Directors
of the Company in approving this Agreement (and the transactions provided for
herein) is sufficient to render inapplicable to this Agreement (and the
transactions provided for herein) the restrictions on "business combinations"
(as defined in Section 203 of the DGCL) as set forth in Section 203 of the DGCL.
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(p) Brokers. No broker, investment banker, financial advisor or other
person, other than Bear, Stearns & Co. Inc., 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 or any of its affiliates. The Company has
provided Merger Co. true and correct copies of all agreements between the
Company and Bear Sterns & Co. Inc. providing for any such fee arrangements. Such
fees will be paid by the Company.
(q) Opinion of Financial Advisor. The Company has received an opinion of
Bear, Stearns & Co. Inc., dated as of the date hereof, that the Merger
Consideration is fair, from a financial point of view, to the holders of shares
of the Company Common Stock, a complete and correct copy of which opinion has
been, or promptly upon receipt thereof will be, delivered to Merger Co. The
Company has been authorized by Bear Stearns & Co. Inc. to permit the inclusion
of such opinion in its entirety in the Proxy Statement.
(r) Material Contracts.
(i) Except as set forth in the exhibit index to the Company's most
recent Form 10-K and subsequent Form 10-Qs included in the Company's SEC
Documents or as provided for in this Agreement, neither the Company nor any of
its subsidiaries is a party to or bound by any (i) "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) non-
competition agreement or any other agreement or obligation which purports to
limit in any respect the manner in which, or the localities in which, all or any
material portion of the business of the Company and its subsidiaries, taken as a
whole, may be conducted, (iii) transaction, agreement, arrangement or
understanding with any affiliate that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act, (iv) voting or other
agreement governing how any shares of Company Common Stock shall be voted, (v)
material agreement with any stockholders of the Company, (vi) acquisition,
merger, asset purchase or sale agreement related to the acquisition or sale of a
business or (vii) contract or other agreement which would prohibit or materially
delay the consummation of the Merger or any of the other transactions
contemplated hereby (all contracts of the type described in clauses (i) - (vii)
being referred to herein as "Material Contracts"). Except as would not,
individually or in the aggregate, have a material adverse effect on the Company,
each Material Contract is valid and binding on the Company (or, to the extent a
subsidiary of the Company is a party, such subsidiary) and is in full force and
effect. Neither the Company nor any such subsidiary is in default or knows of,
or has received notice of, any violation or default under (nor, to the knowledge
of the Company, does there exist any condition which with the passage of time or
the giving of notice or both would result in such a violation or default under)
any Material Contract, except as would not, individually or in the aggregate,
have a material adverse effect on the Company.
(ii) Except as disclosed in the Company's SEC Documents or as provided
for in this Agreement, neither the Company nor any of its subsidiaries is a
party to any oral or written (i) employment agreement or consulting agreement
(in excess of $100,000 per year) not terminable on 30 days' or less notice, (ii)
agreement with any executive officer or other key employee of the Company or any
of its subsidiaries the benefits of which are contingent or vest, or the terms
of which are materially altered, upon the occurrence of a transaction involving
the Company or any of its subsidiaries of the nature contemplated by this
Agreement or (iii) agreement with respect to any
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executive officer or other key employee of the Company or any of its
subsidiaries providing any term of employment or compensation guarantee (in
excess of $100,000).
(s) Intellectual Property. Except as, individually or in the aggregate,
would not have a material adverse effect on the Company: the Company does not
have knowledge of any valid grounds for any claims (A) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by the Company or any of its subsidiaries,
infringes on any Third Party Intellectual Property Rights; (B) against the use
by the Company or any of its subsidiaries of any Company Intellectual Property
Rights; (C) challenging the ownership, validity or effectiveness of any of the
Company Intellectual Property Rights or other trade secret material to the
Company; or (D) challenging the license or right to use of any Third-Party
Intellectual Property Rights by the Company or any of its subsidiaries. The
Company or the applicable subsidiary owns, or has the legal and valid right or
license to use, all Company Intellectual Property Rights, free and clear of all
liens, except as, individually or in the aggregate, would not have a material
adverse effect on the Company. Neither the Company nor any of its subsidiaries
has licensed or otherwise granted to any other person any rights in or to any
Company Intellectual Property Rights. As used in this Agreement, the term (x)
"Intellectual Property" means all patents, trademarks, trade names, service
marks, copyrights and any applications, therefor, technology, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or materials, trademarks, trade names, service marks and copyrights;
(y) "Third-Party Intellectual Property Rights" means Intellectual Property owned
by any third party; and (z) the "Company Intellectual Property Rights" means the
Intellectual Property used or held for use in connection with the business of
the Company or any of its subsidiaries as such business is currently conducted
or proposed to be conducted.
(t) Year 2000. All computer systems and computer software used by the
Company or any of its subsidiaries (i) recognize or are being adapted so that,
prior to December 31, 1999, they shall recognize the advent of the year A.D.
2000 without any adverse change in operation associated with such recognition,
(ii) can correctly recognize or are being adapted so that they can correctly
recognize and manipulate date information relating to dates before, on or after
January 1, 2000, including but not limited to accepting date input, performing
calculations on dates or portion of dates and providing date output, and the
operation and functionality of such computer systems and such computer software
will not be adversely affected by the advent of the year A.D. 2000 or any
manipulation of data featuring information relating to dates before, on or after
January 1, 2000, and (iii) can suitably interact with other computer systems and
computer software in a way that does not compromise (y) its ability to correctly
recognize the advent of the year A.D. 2000 or (z) its ability to correctly
recognize and manipulate date information relating to dates before, on or after
January 1, 2000 (the operations of clauses (i), (ii) and (iii) together,
"Millennium Functionality"), except in each case for such computer systems and
computer software, the failure of which to achieve Millennium Functionality,
individually or in the aggregate, would not have a material adverse effect on
the Company. Schedule 3.01(t) of the Company Disclosure Schedule sets forth the
Company's good faith estimate as of the date hereof of the costs to be incurred
after the date hereof by the Company and its subsidiaries in order to achieve
Millennium Functionality.
(u) Rights Agreement. The Company has amended the Rights Agreement to
ensure that (a) none of a "Flip-In Event", a "Distribution Date" or a "Stock
Acquisition Date" (in each case as defined in the Rights Agreement) will occur,
and none of Merger Co. or any of their "Affiliates" or
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"Associates" will be deemed to be an "Acquiring Person" (in each case as defined
in the Rights Agreement), by reason of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby; and (b)
the Rights will expire immediately prior to the Effective Time.
(v) Qualification. All products sold by the Company and its subsidiaries
pursuant to qualification or certification requirements established by the
Company's and its subsidiaries' customers were produced in a manner consistent
with the requirements of such qualification or certification, except for
individual defective products produced in the ordinary course of business
consistent with past practice, or where the failure to do so, individually or in
the aggregate, would not have a material adverse effect on the Company. Each of
the Company and its subsidiaries held all necessary qualifications or
certifications for its products from its customers pursuant to which sales were
made to such customers, except where the failure to do so, individually or in
the aggregate, would not have a material adverse effect on the Company. Except
for such revocations or terminations which, individually or in the aggregate,
would not have a material adverse effect on the Company, neither the Company nor
any of its subsidiaries have received notification that any qualifications or
certifications for its products as established by its customers have been
revoked or terminated, and to the knowledge of the Company, no such revocation
or termination is threatened or contemplated.
(w) Real Property Matters. Schedule 3.01(w) of the Company Disclosure
Schedule sets forth the street address of all real property (i) owned by the
Company or any of its subsidiaries (the "Owned Real Property") or (ii) leased by
the Company or any of its subsidiaries (the "Leased Real Property"). True and
complete copies of (i) all deeds and title insurance policies of the Owned Real
Property and (ii) all leases and any amendments thereto and assignments or
subleases thereof governing the Leased Real Property have been made available to
Merger Co. There are no proceedings, claims, disputes or conditions (except for
such conditions which, individually or in the aggregate, would not have a
material adverse effect on the Company) affecting the Owned Real Property or the
Leased Real Property (collectively, the "Real Property") that would interfere
with the use of such property. The Company and its subsidiaries own the Owned
Real Property, free and clear of all liens, and no other person has any option
to purchase any of the Owned Real Property. The Company and each applicable
subsidiary has a valid leasehold interest in the Leased Real Property leased by
it, free and clear of all liens, and each lease of Leased Real Property is in
full force and effect and no default exists by the Company or the applicable
subsidiary thereunder, except for such defaults which, individually or in the
aggregate, would not result in a material adverse effect on the Company.
(x) Insurance Policies. The Company currently has in effect insurance
policies covering itself, its subsidiaries, their respective assets and the
conduct of their respective businesses, which insurance has been written by
insurers unaffiliated with the Company in such amounts and against such losses
or casualties as is usually maintained by reasonably prudent managers of
companies engaged in the same or similar businesses and of similar size, and all
such policies are valid and enforceable for the benefit of the Company or its
subsidiaries, as the case may be, and are, and through the Effective Time will
continue to be, in full force and effect, except for such failures to be
enforceable or to be in full force and effect which, individually or in the
aggregate, would not result in a material adverse effect on the Company.
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SECTION 3.02. Representations and Warranties of Merger Co. Except as set
forth on the Disclosure Schedule dated the date hereof and delivered by Merger
Co. to the Company in connection with the execution of this Agreement (the
"Merger Co. Disclosure Schedule") (provided that the listing of an item in one
schedule of the Merger Co. Disclosure Schedule shall be deemed to be a listing
in each schedule of the Merger Co. Disclosure Schedule and to apply to any other
representation and warranty of Merger Co. in this Agreement to the extent that
it is reasonably apparent from a reading of such disclosure item that it would
also qualify or apply to such other schedule or representation and warranty),
Merger Co. represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Merger Co. and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the respective jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Merger Co. and its subsidiaries 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,
individually or in the aggregate, would not have a material adverse effect on
Merger Co. Merger Co. has made available to the Company prior to the date hereof
complete and correct copies of its Certificate of Incorporation and By-laws and
the certificates of incorporation and by-laws of its subsidiaries, in each case
as amended to the date hereof.
(b) Capitalization. All the outstanding shares of capital stock of, or
other ownership interests in, Merger Co. have been validly issued and are fully
paid and nonassessable and are owned free and clear of all liens and free of any
other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or such other ownership interest).
(c) Authority; Noncontravention.
(i) Merger Co. has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by Merger Co. and
the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of Merger Co. This
Agreement has been duly executed and delivered by Merger Co., and, assuming the
due execution and delivery of the Agreement by the Company, the Agreement
constitutes a legal, valid and binding obligation of Merger Co., enforceable
against Merger Co. in accordance with its terms subject to (i) applicable
bankruptcy, insolvency, fraudulent transfer and conveyance, moratorium,
reorganization, receivership and similar laws relating to or affecting the
enforcement of the rights and remedies of creditors generally, (ii) principles
of equity (regardless of whether considered and applied in a proceeding in
equity or at law) and (iii) the discretion of the court before which any
proceeding in respect of this Agreement or the transactions contemplated thereby
may be brought. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement by Merger Co. will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of
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Merger Co. or any of its subsidiaries under, (A) the Certificate of
Incorporation or By-laws of Merger Co. or the comparable certificate of
incorporation or organizational documents of any of its subsidiaries, (B) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Merger Co. or any of its subsidiaries or their respective properties or assets
or (C) 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 Merger Co. or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (B) and (C),
any such conflicts, violations, defaults, obligations, losses, rights, liens,
judgments, orders, decrees, statutes, laws, ordinances, rules or regulations
that, individually or in the aggregate, would not have a material adverse effect
on Merger Co. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be made or
obtained by or with respect to Merger Co. or any of its subsidiaries in
connection with the execution and delivery of this Agreement by Merger Co. or
the consummation by Merger Co. of any of the transactions contemplated by this
Agreement, except for (A) the filing of a premerger notification and report form
under the HSR Act; (B) compliance with and filings under, to the extent
required, the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder; (C) the filing with the Secretary of State of the State
of Delaware of the Certificate of Merger; (D) the filing of appropriate
documents with the relevant authorities of other states in which Merger Co. is
qualified to do business, and such filings with Governmental Entities to satisfy
the applicable requirements of state securities or "blue sky" laws; (E) the
filing of the Form S-4, including the Proxy Statement, with the SEC under the
Securities Act; and (F) such consents, approvals, orders or authorizations the
failure of which to be made or obtained, individually or in the aggregate, would
not have a material adverse effect on Merger Co. or any of its subsidiaries.
(ii) As of the date hereof, the Board of Directors Merger Co. has
approved and declared advisable this Agreement, the Merger and the other
transactions contemplated by this Agreement.
(d) Information Supplied. None of the information supplied or to be
supplied by Merger Co. specifically for inclusion in (i) the Form S-4 will, at
the time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading and (ii) the Proxy Statement will, at the date it is first mailed to
the stockholders of the Company and at the time of the Company Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. Notwithstanding the foregoing, Merger Co. makes no
representation or warranty with respect to any information not supplied by it or
any of its representatives specifically for inclusion in the Form S-4 or the
Proxy Statement.
(e) Financing. Merger Co. has previously delivered to the Company the
following: (a) a fully executed commitment letter (the "Senior Debt Letter")
from The Chase Manhattan Bank, DLJ Capital Funding, Inc. and First Union
National Bank (the "Bank") and accepted by Merger Co. providing the detailed
terms and conditions upon which the Bank has committed to provide the entire
senior debt
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and revolving credit portion of the financing required in connection with the
Merger, (b) a fully executed "highly confident" letter (the "Subordinated Debt
Letter") issued by Donaldson, Lufkin & Jenrette Securities Corporation and
accepted by Merger Co. with respect to the placement of subordinated debt of the
Surviving Corporation pursuant to a private offering under Rule 144A of the
Exchange Act and (c) the executed Equity Commitment Letter (together with the
Senior Debt Letter and the Subordinated Debt Letter, the "Financing Letters").
Each of the Financing Letters is in full force and effect on the date hereof and
has not been amended or modified, and there is no breach or default existing (or
which with notice or lapse of time or otherwise may exist) thereunder. The
aggregate proceeds of the financing contemplated by the Financing Letters are
sufficient to pay the cash portion of the Merger Consideration, to repay the
existing indebtedness of the Company and its subsidiaries (excluding any
indebtedness the parties agree shall not be repaid) and to pay all fees and
expenses to be paid by Merger Co. related to the transactions contemplated by
this Agreement.
(f) Company Stock. Merger Co. is not, nor at any time during the last three
years has it been, an "interested stockholder" of the Company as defined in
Section 203 of the DGCL. Merger Co. does not own (directly or indirectly,
beneficially or of record) and is not a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, any shares of capital stock of the Company (other than as
contemplated by this Agreement).
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ARTICLE IV
Covenants Relating to Conduct of Business
___________________________
SECTION 4.01. Conduct of Business. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable laws, and to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, licenses and authorizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors,
managers and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, except as set forth on the
Company Disclosure Schedule, as otherwise provided for in this Agreement or as
consented to by Merger Co. in writing, 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:
(a) (i) declare, set aside or pay any dividends payable in cash, stock
or property 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, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of or in substitution for shares of its capital
stock or (iii) 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;
(b) 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 (i) upon the exercise of the
Rights or (ii) in accordance with the terms thereof, the issuance of the Company
Common Stock (and corresponding Rights) upon the exercise of Company Stock
Options, in each case outstanding on the date of this Agreement and in
accordance with their present terms;
(c) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(d) acquire (i) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof or (ii) any assets, including real estate,
except acquisitions of assets in the ordinary course of business consistent with
past practice;
(e) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets, except sales
of assets in the ordinary course of business consistent with past practice;
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(f) (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for borrowings incurred in the ordinary course of
business consistent with past practice, under revolving credit agreements in
existence on the date hereof, (ii) permit any modifications or amendments of any
agreements related to any such indebtedness except for intercompany indebtedness
between the Company and any of its subsidiaries or between such subsidiaries, or
(iii) make any loans, advances or capital contributions to, or investments in,
any other person, other than to the Company or any direct or indirect wholly-
owned subsidiary of the Company and other than investments made in the ordinary
course of business consistent with past practice;
(g) except as set forth in the Company's business plan, the relevant
portion of which is set forth on Schedule 4.01(g) of the Company Disclosure
Schedule, make or agree to make any capital expenditure or expenditures, or
enter into any agreement or agreements providing for payments which, in the
aggregate, are in excess of $2,000,000;
(h) make any material tax election, settle or compromise any material
tax liability or file an amendment to any material tax return;
(i) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (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 without admission
of liability or in accordance with their terms, of liabilities recognized or
disclosed in the most recent consolidated financial statements (or the notes
thereto) of the Company included in the Company Filed SEC Documents or incurred
since the date of such financial statements or waive the benefits of, or agree
to modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(j) except as required by law or authorized hereunder and except for
labor agreements negotiated in the ordinary course, enter into, adopt, amend or
terminate any Company Benefit Plan or any other agreement, plan or policy
involving the Company or any of its subsidiaries, and one or more of its
directors, officers or employees, or materially change any actuarial or other
assumption used to calculate funding obligations with respect to any pension
plan, or change the manner in which contributions to any pension plan are made
or the basis on which such contributions are determined;
(k) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not materially increase
benefits or compensation expenses of the Company or any of its subsidiaries, or
as contemplated hereby or by the terms of any contract the existence of which
does not constitute a violation of this Agreement, increase the compensation of
any director, executive officer or other key employee or pay any benefit or
amount not required by a plan or arrangement as in effect on the date of this
Agreement to any such person;
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(l) enter into, or alter, amend, modify or exercise any material
option under any existing material contract (including any contract with an
affiliate of the Company or any subsidiary) or material supply or requirements
agreement or long-term purchase order, except in the ordinary course of business
consistent with past practice;
(m) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business consistent
with past practice;
(n) except as maybe required as a result of a change in law or
generally accepted accounting principles, change any of its accounting policies
or practices;
(o) hold any meeting of its stockholders, except to the extent
contemplated herein or required by the request of the stockholders entitled to
call a meeting under the By-laws of the Company or the DGCL; or
(p) authorize, or commit or agree to take, any of the foregoing
actions.
SECTION 4.02. Other Actions. Except as required by law, Merger Co. and the
Company shall not, and shall not permit any of their respective subsidiaries to,
voluntarily take any action that would, or that is reasonably likely to, result
in any of the conditions to the Merger set forth in Article VI not being
satisfied. Without limiting the generality of the foregoing, Merger Co. and the
Company shall not, and shall cause its subsidiaries not to, take any action that
would result in (i) any of its representations and warranties set forth in this
Agreement that are qualified as to materiality becoming untrue or (ii) any of
such representations and warranties that are not so qualified becoming untrue in
any material respect.
SECTION 4.03. Advice of Changes. Merger Co. and the Company shall promptly
advise the other party orally and in writing to the extent it has knowledge of
(i) any representation or warranty made by it contained in this Agreement,
becoming untrue or inaccurate in any respect where the failure of such
representation to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth therein),
individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect on it, (ii) the failure by it to comply in any material
respect with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement and (iii)
any change or event having, or which, insofar as can reasonably be foreseen,
would have a material adverse effect on such party or on the truth of their
respective representations and warranties or the ability of the conditions set
forth in Article VI to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement.
SECTION 4.04. No Solicitation by the Company. (a) The Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize any of
its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action to facilitate, any
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inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, a Company Takeover Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal or (iii) enter into any agreement with respect to any Company Takeover
Proposal or approve or resolve to approve any Company Takeover Proposal;
provided, however, that, at any time prior to obtaining the Company Stockholder
Approval (the "Company Applicable Period"), if, based upon the advice of the
Company's outside legal advisors, the Board of Directors determines in good
faith that failing to take such action would create a reasonable possibility of
a breach of its fiduciary duties under applicable law, the Company may, in
response to a Takeover Proposal which the Board of Directors of the Company
determines in good faith, based upon the advice of the Company's outside legal
advisors and the Company's financial advisors, would result in a Company
Superior Proposal (as defined in Section 4.04(b)) which was not solicited by it
and which did not otherwise result from a breach of this Section 4.04(a), and
subject to providing prior written notice of its decision to take such action to
Merger Co. (the "Company Notice") and compliance with Section 4.04(c), following
delivery of the Company Notice (x) furnish information with respect to the
Company and its subsidiaries to any person making such a Company Takeover
Proposal pursuant to a confidentiality agreement with terms not materially more
favorable to the person making the Company Takeover Proposal than those
applicable to Kelso & Company under the Confidentiality Agreement (as
hereinafter defined) and (y) participate in discussions or negotiations
regarding such Company Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director or officer of the Company or any of its subsidiaries or
any investment banker, financial advisor, attorney, accountant or other
representative of the Company or any of its subsidiaries shall be deemed to be a
breach of this Section by the Company. Upon execution of this Agreement, the
Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. For purposes of this Agreement, "Company Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 10% or more of the net
revenues, net income or the assets of the Company and its subsidiaries, taken as
a whole, or 10% 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 10% or more of any class of
equity securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.04, 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 Merger
Co., the approval or recommendation by such Board of Directors or such committee
of this Agreement or the Merger, (ii) approve or recommend, or propose publicly
to approve or recommend, any Company Takeover Proposal or (iii) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other agreement related to any Company Takeover Proposal (each, a
"Company Acquisition Agreement"). Notwithstanding anything in this Agreement to
the contrary, in response to a Company Superior Proposal which was not solicited
by the Company and which did not otherwise result from a breach of Section
4.04(a), the Board of Directors of the Company may (subject to this and the
following sentences) terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into any Company
Acquisition Agreement with respect to any Company
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Superior Proposal), but only (i) at a time that is during the Company Applicable
Period and is after the third business day following Merger Co.'s receipt of
written notice advising Merger Co. that the Board of Directors of the Company is
prepared to accept a Company Superior Proposal, specifying the material terms
and conditions of such Company Superior Proposal and identifying the person
making such Company Superior Proposal, (ii) if, based upon the advice of the
Company's outside legal advisors, the Board of Directors determines in good
faith that failing to take such action would create a reasonable possibility of
a breach of its fiduciary duties under applicable law and (iii) if the Company
shall have caused its financial and legal advisors to negotiate in good faith
with Merger Co. during such three business days to make such adjustments to the
terms and conditions of this Agreement as would enable the Company to proceed
with the Merger on such adjusted terms. For purposes of this Agreement, a
"Company Superior Proposal" means any proposal made by a third party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the voting power of the shares of the Company
Common Stock then outstanding or all or substantially all the assets of the
Company and its subsidiaries taken together and otherwise on terms which the
Board of Directors of the Company determines in good faith, based upon the
advice of the Company's outside legal advisors and the Company's financial
advisors, to be more favorable to the Company's stockholders than the Merger and
for which any necessary financing is then committed or which, in the good faith
judgment of the Company's Board of Directors, based upon the advice of the
Company's financial advisors, is reasonably capable of being obtained by such
third party.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 4.04, the Company shall promptly advise Merger Co.
orally and in writing of any request for information or of any Company Takeover
Proposal, the material terms and conditions of such request or the Company
Takeover Proposal and the identity of the person making such request or the
Company Takeover Proposal. The Company will keep Merger Co. reasonably informed
of the status and details (including amendments or proposed amendments) of any
such request or Company Takeover Proposal.
(d) Nothing contained in this Section 4.04 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act; provided, however, that neither the
Company nor its Board of Directors shall, except as permitted by paragraph (b)
of this section, propose to approve or recommend a Company Takeover Proposal.
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ARTICLE V
Additional Agreements
____________
SECTION 5.01. Preparation of the Form S-4 and Proxy Statement; Stockholder
Meeting.
(a) As soon as reasonably practicable following the date of this Agreement,
the Company shall prepare the Form S-4 and the Proxy Statement and shall file
with the SEC under the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder the Form S-4, in which the Proxy Statement
will be included. Merger Co. and the Company will cooperate with each other in
the preparation of the Form S-4 and the Proxy Statement. Without limiting the
generality of the foregoing, Merger Co. will furnish to the Company the
information relating to it or its affiliates required by the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder to be set
forth in the Form S-4 and the Proxy Statement. The Company shall use its
reasonable commercial efforts to have the Form S-4 declared effective under the
Securities Act as soon as reasonably practicable after it is filed with the SEC.
The Company shall use its reasonable commercial efforts to cause the Proxy
Statement to be mailed to the stockholders of the Company as soon as reasonably
practicable after the Form S-4 is declared effective under the Securities Act.
The Company shall also use its reasonable commercial efforts to take any action
required to be taken under any applicable state securities laws in connection
with the registration and qualification of the Non-Cash Election Shares
following the Merger. Each of Merger Co. and the Company agree to correct any
information specifically provided by it for use in the Form S-4 and the Proxy
Statement which shall have become false or misleading. The Company shall as soon
as reasonably practicable notify Merger Co. of (i) the effectiveness of the Form
S-4, (ii) the receipt of any comments from the SEC with respect to the Form S-4
and the Proxy Statement and (iii) any request by the SEC for any amendment to
the Form S-4 and the Proxy Statement or for additional information.
(b) The Company (i) shall 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 and (ii) shall, through its Board
of Directors, recommend to its stockholders the adoption of this Agreement,
unless, in the case of clauses (i) or (ii), the Board of Directors of the
Company shall have withdrawn or modified its approval or recommendation of this
Agreement or the Merger and terminated this Agreement in accordance with Section
4.04(b).
SECTION 5.02. Access to Information; Confidentiality. Subject to the
Confidentiality Agreement, dated as of March 16, 1999, between the Company and
Kelso & Company (the "Confidentiality Agreement") and except as otherwise
required by applicable law, each of Merger Co. and the Company shall, and shall
cause each of its respective subsidiaries to, afford to the other party and to
the officers, directors, employees, accountants, counsel, financial advisors and
other representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, each of Merger Co. and the Company shall, and shall cause
each of its respective subsidiaries to, furnish promptly to the other party (a)
a copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of Federal or state
securities laws, and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. No review
pursuant
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to this Section 5.02 shall have an effect for the purpose of determining the
accuracy of any representation or warranty given by either party hereto to the
other party hereto. Each of Merger Co. and the Company will hold, and will cause
its respective officers, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information in
accordance with the terms of the Confidentiality Agreement.
SECTION 5.03. Filings; Other Action. Subject to the terms and conditions
provided in this Agreement, each of the Company and Merger Co. shall (a)
promptly make their respective filings and thereafter make any other required
submissions under the HSR Act and other regulatory filings with any relevant
Governmental Entity with respect to the Merger and the transactions contemplated
by this Agreement; and (b) use their respective reasonable best efforts promptly
to take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate under this Agreement and
applicable laws and regulations to obtain as promptly as practicable all
consents, approvals, orders, authorizations, registrations and permits required
to be obtained by it from any Governmental Entity or third party in connection
with the execution and delivery of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement as soon as
practicable after the date hereof; provided, however, that neither Merger Co.
nor the Company will be required to agree to, or proffer to, (i) divest or hold
separate any of Merger Co.'s, the Company's or any of their respective
affiliates' businesses or assets or (ii) cease to conduct business or operations
in any jurisdiction in which Merger Co., the Company or any of their respective
subsidiaries conducts business or operations as of the date of this Agreement.
SECTION 5.04. Stock Options and Restricted Stock Units.
(a) As soon as practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any committee administering the
Company Stock Plans) shall adopt such resolutions or take such other actions as
may be required so that at the Effective Time each then outstanding Company
Stock Option to purchase or acquire shares of Company Common Stock under the
Company Stock Plans, whether or not then exercisable or vested, shall be
canceled and shall represent the right to receive the following consideration in
settlement thereof: for each share of Company Common Stock subject to such
Company Stock Option, including any additional shares subject thereto by reason
of their terms upon consummation of the "change of control" resulting from the
Merger, an amount (subject to any applicable withholding tax) in cash equal to
the difference between the Merger Consideration and the per share exercise price
of such Company Stock Option (or, in the case of the Stock Purchase Plan, the
difference between the Merger Consideration and the unpaid portion, if any, of
the per share subscription price) to the extent such difference is a positive
number (such amount in cash as described above being hereinafter referred to as
the "Option Consideration"); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such Option Consideration
shall not be payable until the first day payment can be made without liability
to such person under Section 16(b) of the Exchange Act, but shall be paid as
soon as practicable thereafter.
(b) The surrender of a Company Stock Option to the Company in exchange for
the Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Company Stock Option. Prior to the
Effective Time, the Company shall take all action necessary (including causing
the Board of Directors of the Company (or any committees
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thereof) to take such actions as are allowed by the Company Stock Option Plans)
to ensure that, following the Effective Time, no participant in any Company
Stock Plan shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
(c) Upon the Effective Time, the parties hereto agree that the Surviving
Corporation shall pay to each holder of a Company Stock Option the Option
Consideration in respect thereof. No interest shall be paid or accrued on the
Option Consideration. Until settled in accordance with the provisions of this
Section 5.04(c), each Company Stock Option shall be deemed at any time after the
Effective Time to represent for all purposes only the right to receive the
Option Consideration.
SECTION 5.05. Indemnification, Exculpation and Insurance.
(a) From the Effective Time through the sixth anniversary of the date on
which the Effective Time occurs, the Surviving Corporation shall indemnify and
hold harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a director, officer,
employee or agent of the Company or any of its subsidiaries (the "Covered
Parties"), against all claims, losses, liabilities, damages, judgments, fines
and reasonable fees, costs and expenses, including attorneys' fees and
disbursements (collectively, "Costs"), incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to (i) the fact
that the Covered Party is or was an officer, director, employee or agent of the
Company or any of its subsidiaries or (ii) matters existing or occurring at or
prior to the Effective Time (including this Agreement and the transactions and
actions contemplated hereby), whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent permitted under applicable law. Each
Covered Party will be entitled to advancement of expenses incurred in the
defense of any claim, action, suit, proceeding or investigation from the
Surviving Corporation within ten business days of receipt by the Surviving
Corporation from the Covered Party of a request therefor; provided that any
--------
person to whom expenses are advanced provides an undertaking, to the extent
required by the DGCL, to repay such advances if it is ultimately determined that
such person is not entitled to indemnification.
(b) The Certificate of Incorporation and by-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification, advancement of expenses and exculpation of present and former
directors, officers, employees and agents of the Company and its subsidiaries
than are presently set forth in the Certificate of Incorporation and By-laws of
the Company.
(c) Subject to the next sentence, the Surviving Corporation shall maintain,
at no expense to the beneficiaries, in effect for six years from the Effective
Time the current policies of the directors' and officers' liability insurance
maintained by the Company with respect to matters existing or occurring at or
prior to the Effective Time (including the transactions contemplated by this
Agreement), so long as the annual premium therefor would not be in excess of
200% of the last annual premium paid prior to the date of this Agreement (such
200%, the "Maximum Premium"). If the Company's existing insurance expires, is
terminated or canceled during such six-year period or exceeds the Maximum
Premium, the Surviving Corporation shall obtain as much directors' and officers'
liability insurance as can be obtained for the remainder of such period for an
annualized
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premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous to the Covered Parties than the Company's existing directors' and
officers' liability insurance. The Company represents to Merger Co. that the
Maximum Premium is $220,000.
(d) Notwithstanding anything herein to the contrary, if any claim, action,
suit, proceeding or investigation (whether arising before, at or after the
Effective Time) is made against any Covered Party, on or prior to the sixth
anniversary of the Effective Time, the provisions of this Section 5.05 shall
continue in effect until the final disposition of such claim, action, suit,
proceeding or investigation.
(e) The covenants contained in this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Covered Parties and their
respective heirs and legal representatives and shall not be deemed exclusive of
any other rights to which a Covered Party is entitled, whether pursuant to law,
contract or otherwise.
(f) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, proper provision shall be
made so that the successors or assigns of the Surviving Corporation shall
succeed to the obligations set forth in this Section 5.05
SECTION 5.06. Fees and Expenses. (a) All fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated, except that each of the Company and
Merger Co. shall bear and pay one-half of the costs and expenses incurred in
connection with (1) the filing, printing and mailing of the Form S-4 and the
Proxy Statement (including SEC filing fees) and (2) the filings of the premerger
notification and report forms under the HSR Act (including filing fees);
provided, however, that if the Non-Cash Election Number is 0 pursuant to the
proviso to Section 2.03(a) hereof, the costs and expenses of filing, printing
and mailing of the Proxy Statement (including SEC filing fees) shall be borne
and paid by the Company.
(b) If (x) Merger Co. terminates this Agreement pursuant to Section 7.01(f)
or Section 7.01(g) or (y) the Company terminates this Agreement pursuant to
Section 7.01(d), then in each case, the Company shall pay, or cause to be paid
to Merger Co. or its designated affiliate, an amount equal to $8,179,000 (the
"Termination Fee"), plus Expenses (as defined below). If (i) Merger Co. or the
Company terminates this Agreement pursuant to Section 7.01(b)(ii) hereof, (ii)
prior to the taking of such vote of the stockholders of the Company a Company
Takeover proposal shall have been made and remain pending and (iii) within
twelve months of such termination the Company enters into a definitive agreement
to consummate the transactions contemplated by the Company Takeover Proposal or
the Company Takeover Proposal is consummated, the Company shall pay, or cause to
be paid to Merger
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Co. or its designated affiliate, the Termination Fee, plus Expenses. If (i)
Merger Co. terminates this Agreement pursuant to Section 7.01(e) hereof as
result of a willful and material breach of this Agreement by the Company and
(ii) within twelve months of such termination the Company enters into a
definitive agreement to consummate a Company Takeover Proposal or a Company
Takeover Proposal is consummated, the Company shall pay, or cause to be paid to
Merger Co. or its designated affiliate, the Termination Fee, plus Expenses. Any
payments required to be made pursuant to this Section 5.06(b) shall be made by
wire transfer of same day funds on the date of termination (except that, in the
case of the two immediately preceding sentences, such payment shall be made on
the date of the execution of such definitive agreement or, if earlier, the
consummation of such transaction) to an account designated by Merger Co. For
purposes hereof, "Expenses" shall mean an amount equal to Merger Co.'s (and its
affiliates') actual and reasonably documented out-of-pocket expenses in
connection with the Merger, this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, all fees and
expenses of agents, counsel, commercial banks, investment banking firms,
accountants, experts and consultants to Merger Co. and its affiliates; provided,
however, in no event shall such amount exceed $1,500,000.
SECTION 5.07. Public Announcements. Each of the Company and Merger Co. will
consult with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation and concurrence, except as
either party may determine is required by applicable law, by court process or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case such party will use its reasonable best efforts to
consult with the other party prior to issuing a press release or public
statement. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
SECTION 5.08. Stockholder Litigation. Each of Merger Co. and the Company
shall give the other the reasonable opportunity to participate in the defense of
any stockholder litigation against Merger Co. or the Company, as applicable, and
its directors relating to the transactions contemplated by this Agreement.
SECTION 5.09. Employee Matters. (a) Merger Co. agrees that the Company
shall honor in accordance with their respective terms and, on and after the
Effective Time, the Surviving Corporation shall honor, without offset,
deduction, counterclaim, interruption or deferment, all Company Plans and all
other written employment, severance, termination and retirement agreements to
which the Company is a party as of the Effective Time and which are set forth in
the Company Disclosure Schedule. Merger Co. acknowledges that, for the purposes
of certain of such Company Plans and certain of such other employment,
severance, termination and retirement agreements to which the Company is
currently a party, the consummation or stockholder approval (depending upon the
terms of the applicable plan or agreement) of the Merger will constitute a
"change in control" of the Company at the Effective Time and may constitute
"Good Reason" (as such terms are defined in such plans and agreements). In
particular, and without limiting the generality of the foregoing, the parties
hereto acknowledge that the execution of this Agreement shall constitute a
"change in control" under the Change in Control and Severance Agreements
identified on Schedule 3.01(j). Merger Co. agrees that the Surviving Corporation
shall, after consummation of the Merger, pay all amounts provided under such
Company Plans and agreements in accordance with their respective terms and to
honor, and to cause the Surviving Corporation to honor, all rights, privileges
and modifications to or with respect to any such Company Plans or agreements
(other than those agreements which are superseded by employment agreements
entered into as of the Effective Time) that become effective as a result of such
change in control or Good Reason.
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(b) The Surviving Corporation shall provide employee pension and welfare
plans for the benefit of employees' and former employees of the Company that, in
the aggregate, are substantially comparable to the Company Plans in effect as of
the date hereof. To the extent any benefit plan of Merger Co. (or any plan of
the Surviving Corporation) shall be made applicable to any employee or former
employee of the Company, Merger Co. or the Surviving Corporation, as the case
may be, shall grant to employees and former employees of the Company credit for
service with the Company prior to the Effective Time for the purposes of
determining eligibility to participate and the employee's nonforfeitable
interest in benefits thereunder and, unless a duplication of benefits under two
or more defined benefit plans would result, for calculating benefits (including
benefits the amount or level of which is determined by reference to an
employee's vesting service) thereunder. In addition, to the extent any plan of
Merger Co. or any plan of the Surviving Corporation, as the case may be, which
constitutes a ''welfare plan," as defined in Section 3.01(j) hereof, shall be
made applicable to any employee or former employee of the Company, Merger Co. or
the Surviving Corporation, as the case may be, shall (i) waive all preexisting
condition exclusions and waiting periods otherwise applicable to employees and
former employees of the Company, except to the extent any such limitations or
waiting periods in effect under comparable Company Plans have not been satisfied
as of the date such plan is made so applicable and (ii) credit each employee and
former employee of the Company for any co-payments and deductibles paid by such
employee or former employee under comparable Company Plans prior to the date
such plan is made so applicable. Nothing in this Agreement shall be interpreted
as limiting the power of the Surviving Corporation to amend or terminate any
Company Plan or any other employee benefit plan, program, agreement or policy or
as requiring the Surviving Corporation to offer to continue (other than as
required by its terms) any written employment contract.
(c) "Company Plan" shall mean 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
providing benefits to any current or former director, officer or employee of the
Company or any of its subsidiaries.
SECTION 5.10. Consummation of Financing. (a) Merger Co. will use its
reasonable commercial efforts to obtain the financing required for the
consummation of the Merger pursuant to the Financing Letters and to satisfy all
conditions to funding as set forth in the Financing Letters. To the extent that
any portion of the financing contemplated by the Financing Letters becomes
unavailable, Merger Co. will use its reasonable commercial efforts to arrange
for alternative financing for the Merger.
(b) The Company agrees to provide and to cause its subsidiaries to provide
all reasonably necessary cooperation in connection with the arrangement of such
financing, it being understood that the financing shall close immediately prior
to the Effective Time. Such cooperation shall include, without limitation, (i)
making senior officers of the Company available for participation in meetings
and due diligence sessions and road shows, (ii) preparation of offering
memoranda, private placement memoranda and similar documents, including all
appropriate financial statements in connection therewith, (iii) execution and
delivery of commitment letters, underwriting or placement agreements, pledge and
security documents, other definitive financing documents or other requested
certificates or documents and (iv) providing Merger Co. and its representatives
with reasonable access to
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Company facilities such that Merger Co. can prepare environmental site
assessments for such facilities.
SECTION 5.11. Recapitalization. The Company shall cooperate with any
reasonable requests of Merger Co. or the SEC related to the reporting of the
transactions contemplated hereby as a recapitalization for financial reporting
purposes, including, without limitation, assisting Merger Co. with any
presentation to the SEC with regard to such reporting and including appropriate
disclosure with regard to such reporting in all filings with the SEC and
mailings to the Company's stockholders in connection with the Merger.
SECTION 5.12. Transfer Taxes. All liability for transfer or other similar
taxes arising out of or related to the Merger or the consummation of
transactions contemplated hereby, and due to the property owned by the Company
or any of its subsidiaries or affiliates ("Transfer Taxes") shall be borne by
the Company, and the Company shall file or cause to be filed all tax returns
relating to such Transfer Taxes which are due.
SECTION 5.13. State Takeover Laws. If any state takeover statute other
than Section 203 of the DGCL becomes or is deemed to become applicable to the
Merger or the other transactions contemplated hereby, the Company shall take all
reasonable action necessary to render such statute inapplicable to all of the
foregoing.
SECTION 5.14. The Company Rights Plan. The Company, acting through its
Board of Directors or otherwise, shall not, except as specifically provided
herein, (a) amend, alter or modify the Company Rights Plan or (b) take any
action with respect to, or make any determination under, the Company Rights
Plan, to facilitate another Company Takeover Proposal, except in connection with
the approval or recommendation of, or entering into of a Company Acquisition
Agreement with respect to, any Company Superior Proposal in accordance with
Section 4.04(b) hereof.
SECTION 5.15. Letter as to Solvency. The parties hereto shall engage, at
the expense of Merger Co., an appraisal firm to deliver a letter addressed to
the Board of Directors of the Company and the Company (and on which the Board of
Directors of the Company shall be entitled to rely) indicating that immediately
after the Effective Time, and after giving effect to the Merger and the
financing contemplated by this Agreement and any other transactions contemplated
in connection with the Merger, the Surviving Corporation (i) will not be
insolvent and will have assets sufficient to pay its debts and (ii) will not
have unreasonably small capital with which to engage in its business.
SECTION 5.16. Monetization of Non-Cash Election Shares. Consistent with
the qualifying the transactions contemplated hereby as a recapitalization for
financial accounting purposes, Merger Co. will use its reasonable commercial
efforts to cause there to be no reason for the stockholders of the Company to be
stockholders of the Surviving Corporation. In the event, Merger Co. is able to
cause such a result, Merger Co. shall give the Company prompt written notice
thereof. If Merger Co. gives the Company such a notice, the provisions of
Article II shall be deemed amended to provide for the Merger Consideration to be
paid entirely in cash and Sections 5.17 and 6.02(d) hereof and all references in
this Agreement to the Form S-4 (to the extent that such references do not apply
to the Proxy Statement), including, without limitation, those references (to the
extent that such references do not apply to the Proxy Statement) in Sections
3.01(f), 3.02(d), 5.01, 5.06 and
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6.01(d), and all obligations in connection therewith, shall be deemed eliminated
and to have no effect. Each of the Company and Merger Co. agree to amend this
Agreement, if necessary, to further implement the arrangements described in this
Section 5.16.
SECTION 5.17. Listing. The parties hereto shall use their reasonable best
efforts to have the Non-Cash Election Shares admitted for quotation on the
NASDAQ Stock Market (the "Listing"). Any fees in connection with the Listing
payable prior to the Effective Time shall be paid by Merger Co. Neither Merger
Co. nor the Company will take any action, for at least three years from the
Effective Time, to cause the Listing to be terminated, except with the approval
of a majority of the Non-Cash Election Shares not held of record or beneficially
by Kelso & Company or its affiliates or in connection with a transaction
pursuant to which the holders thereof receive cash or securities similarly
subject to a Listing; provided that nothing in this Section 5.17 shall (a)
require Merger Co. or the Company to take any affirmative action to prevent the
Listing from being terminated by the NASDAQ Stock Market in the event that the
Non-Cash Election Shares cease to meet the applicable Listing standards or (b)
preclude Merger Co. or the Company from causing Non-Cash Election Shares to be
exchanged for cash.
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ARTICLE VI
Conditions Precedent
______________
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall have been
obtained.
(b) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(c) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition (collectively, "Restraints") shall be in
effect preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement; provided, however, that each of the
parties shall have used its reasonable best efforts to prevent the entry of any
such Restraints and to appeal as promptly as practicable any such Restraints
that may be entered.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and any material "blue sky" and other state securities
laws applicable to the registration and qualification of the Non-Cash Election
Shares shall have been complied with in all material respects.
SECTION 6.02. Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver by
the Company of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Merger Co. set forth herein shall be true and correct both when
made and at and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), individually or
in the aggregate, does not have, and is not reasonably likely to have, a
material adverse effect on Merger Co., and the Company shall have received a
certificate signed on behalf of Merger Co. by an executive officer of Merger Co.
to such effect.
(b) Performance of Obligations of Merger Co. Merger Co. 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 Merger Co. by an executive
officer of Merger Co. to such effect.
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(c) The Company and its Board of Directors shall have received the
letter referred to in Section 5.15 or Merger Co. shall have provided to the
Company and its Board of Directors from another appraisal firm a comparable
letter in form and substance reasonably satisfactory to the Company.
(d) The Listing of the Non-Cash Election Shares shall have been
approved, subject only to official notice of issuance.
SECTION 6.03. Conditions to Obligations of Merger Co. The obligation of
Merger Co. to effect the Merger is further subject to satisfaction or waiver by
Merger Co. of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company set forth herein shall be true and correct both when made and at and
as of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein), individually or in the aggregate,
does not have, and is not reasonably likely to have, a material adverse effect
on the Company, and Merger Co. shall have received a certificate signed on
behalf of the Company by an executive officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Merger Co. shall
have received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
(c) Financing. The Company shall have received the financing proceeds
under the Senior Debt Letter and the Subordinated Debt Letter on the terms and
conditions set forth therein or upon terms and conditions which are
substantially equivalent thereto, and to the extent any of the terms and
conditions are not as so set forth or substantially equivalent, on terms and
conditions reasonably satisfactory to Merger Co.; provided that Merger Co. shall
have complied with the provisions of Section 5.10(a).
(d) No Injunctions or Restraints. No Restraint shall be in effect which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the combined businesses of the Company and Merger Co. (and
their subsidiaries) assuming for the purpose of this Section 6.03(e) that the
Merger is closed and consummated as contemplated by this Agreement; provided,
however, that Merger Co. shall have used its reasonable best efforts to prevent
the entry of any such Restraint and to appeal as promptly as practicable any
such Restraint that may be entered.
(e) Refinancing of Indebtedness. All of the Company's indebtedness and
other obligations under the Company's senior secured credit facility shall have
been repaid and discharged in full by the Company, using funds contemplated by
the Financing Letters or funds otherwise contemplated by Section 5.10(a) hereof.
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SECTION 6.04. Frustration of Closing Conditions. Neither the Company nor
Merger Co. may rely on the failure of any condition set forth in Section 6.01,
6.02 or 6.03, as the case may be, to be satisfied if such failure was caused by
such party's failure to comply with its obligations under this Agreement.
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ARTICLE VII
Termination, Amendment and Waiver
__________________
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval or adoption of this Agreement by the stockholders of Merger Co.:
(a) by mutual written consent of the Company and Merger Co.;
(b) by either the Company or Merger Co.:
(i) if the Merger shall not have been consummated by November 30,
1999; provided, however, that the right to terminate this Agreement pursuant to
this Section 7.01(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the failure of
the Merger to be consummated by such time;
(ii) if the Company Stockholder Approval shall not have been obtained
at the Company Stockholders Meeting duly convened therefor or at any adjournment
or postponement thereof at which a proper vote on such matters was taken; or
(iii) if any Restraint having any of the effects set forth in Section
6.01(c) shall be in effect and shall have become final and nonappealable;
provided that the party seeking to terminate this Agreement pursuant to this
Section 7.01(b)(iii) shall have used reasonable best efforts to prevent the
entry of and to remove such Restraint;
(c) by the Company, if Merger Co. shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in Section 6.02(a)
or (b) and (B) is incapable of being, or is not, cured by Merger Co., as the
case may be, within five business days of notice thereof;
(d) by the Company, prior to obtaining the Company Stockholder Approval,
in accordance with Section 4.04(b); provided that, in order for the termination
of this Agreement pursuant to this paragraph (d) to be deemed effective, the
Company shall have complied with all provisions contained in Section 4.04,
including the notice provisions therein, and shall have paid the Termination Fee
(plus Expenses) delineated in Section 5.06(b) hereof;
(e) by Merger Co., if the Company shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in Section 6.03(a)
or (b) and (B) is incapable of being, or is not, cured by the Company within
five business days of notice thereof;
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(f) by Merger Co., if the Board of Directors of the Company or any
committee thereof shall have withdrawn, modified or changed in a manner adverse
to Merger Co. its approval or recommendation of the Merger or this Agreement or
shall have recommended or approved another Company Takeover Proposal; or
(g) by Merger Co., if any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Merger Co. or its affiliates or any
group of which any of them is a member, shall, after the date of this Agreement,
acquire beneficial ownership (as determined pursuant to Rule 13d-3 promulgated
under the Exchange Act) of, or become the beneficial owner (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of, 30% or more of
the outstanding shares of Company Common Stock.
SECTION 7.02. Effect of Termination. In the event of termination of this
Agreement by either Merger Co. or the Company as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of the Company or Merger Co., other than the
provisions of the last sentence of Section 5.02 and the provisions of Section
5.06, this Section 7.02, Article VIII and the Confidentiality Agreement which
provisions and agreements shall survive such termination, and termination of
this Agreement will not relieve a breaching party from liability for any breach
by such party of any of its representations, warranties, covenants or agreements
set forth in this Agreement giving rise to such termination.
SECTION 7.03. Amendment. This Agreement may be amended by the parties
hereto at any time before or after the Company Stockholder Approval or the
adoption of this Agreement by the stockholders of Merger Co.; provided, however,
that after any such approval, there shall not be made any amendment that by law
requires the further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time,
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.03, waive compliance by the other party 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.
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ARTICLE VIII
General Provisions
____________
SECTION 8.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit (a) any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time or (b) the survival of the
last sentence of Section 5.02 and of Section 5.06, Section 7.02, this Article
VIII and the Confidentiality Agreement, as set forth in Section 7.02.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
reputable overnight courier 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 Company, to: Citation Corporation
2 Office Park Circle, Suite 204
Birmingham, Alabama 35233
Telecopy No.: (205) 871-5733
Attention: Stanley B. Atkins, Esq.
with copies to: Balch & Bingham LLP
1901 Sixth Avenue North, Suite 2600
P.O. Box 306
Birmingham, Alabama 35201
Telecopy No.: (205) 226-8799
Attention: Walter M. Beale, Jr., Esq.
and Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Telecopy No.: (302) 658-6548
Attention: Charles F. Richards, Jr., Esq.
(b) if to Merger Co., to: c/o Kelso & Company
320 Park Avenue, 24/th/ Floor
New York, NY 10022
Telecopy No.: (212) 223-2379
Attn: James J. Connors, II, Esq.
with a copy to: Debevoise and Plimpton
875 Third Avenue
New York, NY 10022
Telecopy No.: (212) 909-6836
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Attn: Richard D. Bohm, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise;
(b) "knowledge" of any person which is not an individual means the actual
knowledge, after due inquiry, of such person's executive officers;
(c) "lien" shall mean any mortgage, deed of trust, pledge, security
interest, title retention agreement, lien, charge, option, adverse claim, title
defect or encumbrance of any kind;
(d) "material adverse change" or "material adverse effect" means, when
used in connection with Merger Co. or the Company, any change, effect, event,
occurrence or state of facts that (x) would be materially adverse to the
business, assets, liabilities, financial condition or results of operations of
such party and its subsidiaries taken as a whole, (y) materially impairs or
delays the ability of such party to perform its obligations under this Agreement
or (z) prevents the consummation of any of the transactions contemplated by this
Agreement, other than any change, effect, event, occurrence or state of facts
(I) that occurs as a result of any act or omission of either party hereto that
has been previously consented to in writing by the other party hereto or (II)
relating to the United States economy or securities markets in general;
(e) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(f) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, at least a
majority or more of the equity interests of which is owned directly or
indirectly by such first person).
SECTION 8.04. Interpretation. When a reference is made in this Agreement
to an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated.
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 therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
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to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
SECTION 8.06. Entire Agreement; Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Article II, Section 5.04 and Section 5.05, are not intended to
confer upon any person other than the parties hereto any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other party. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.09. Enforcement; Waiver of Jury Trial.
(a) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to seek 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, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
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(b) Each party acknowledges and agrees that any controversy which may
arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each such party hereby irrevocably and unconditionally
waives any right such party may have to a trial by jury in respect of any
litigation directly or indirectly arising out of or relating to this Agreement
or the transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of the other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each party
understands and has considered the implications of this waiver, (iii) each party
makes this waiver voluntarily and (iv) each party has been induced to enter into
this Agreement by, among other things, the mutual waivers and certifications in
this Section 8.09(b).
SECTION 8.10. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, unless the effects of such invalidity, illegality or
unenforceability would prevent the parties from realizing the major portion of
the economic benefits of the Merger that they currently anticipate obtaining
therefrom, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, the Company and Merger Co. have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
CITATION CORPORATION
/s/ Frederick F. Sommer
----------------------------------------
Name: Frederick F. Sommer
Title: President & CEO
RSJ ACQUISITION CO.
________________________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the Company and Merger Co. have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
CITATION CORPORATION
________________________________________
Name:
Title:
RSJ ACQUISITION CO.
/s/ James J. Connors II
----------------------------------------
Name: James J. Connors, II
Title:
<PAGE>
Exhibit 99.1
------------
Citation Corporation Announces Definitive Agreement To Merge with Affiliate of
Kelso & Company
BIRMINGHAM, Alabama -- Citation Corporation (Nasdaq: CAST) today announced that
it has signed a definitive agreement to merge with RSJ Acquisition Co., a
corporation formed by Kelso & Company. Kelso is a private investment firm based
in New York City.
In connection with the merger, RSJ Acquisition Co. is offering $18.10 per share
for approximately 95.6% of the outstanding shares of Citation. Citation
stockholders will be entitled to elect to receive a combination of either $18.10
per share and/or shares of the surviving corporation up to the point that a
maximum of 790,000 Citation shares (approximately 4.4% of the outstanding
shares) are converted into the right to receive shares of the surviving
corporation. Shares of the surviving corporation will be issued on the basis of
one share of the surviving corporation for each share of Citation common stock.
Consistent with accounting for the transaction as a recapitalization, the merger
company also has the right to convert the transaction to an all cash
transaction, in which case Citation shareholders would receive $18.10 in cash
for 100% of their shares. Citation Corporation currently has approximately
17,889,113 shares of common stock outstanding, excluding outstanding options and
convertible securities.
The transaction is valued at approximately $643.8 million, inclusive of assumed
and refinanced debt. T. Morris Hackney, the Chairman, founder and largest
stockholder of Citation, has agreed to vote approximately 29.9% of the
outstanding shares of Citation common stock in favor of the proposed merger.
Citation will continue to operate as an independent company under its current
name.
Kelso, Citation's management, and Kelso's affiliates and designees will invest
approximately $190 million of equity in connection with the transaction and are
expected to own approximately 93 percent of the pro forma equity of the
surviving corporation immediately after the merger. Chase Securities, Inc.,
Donaldson, Lufkin & Jenrette, Inc., and First Union Capital Markets Corp are
providing the debt financing for the transaction.
Citation Corporation's Board of Directors has approved the transaction and
determined that it is in the best interests of the Company and its stockholders
to enter into the merger and recapitalization and the other transactions
contemplated by the definitive merger and recapitalization agreement. Bear,
Stearns & Co. Inc., which is serving as financial advisor to Citation, has
delivered an opinion to the Company that the merger consideration to be received
by Citation's stockholders in the merger is fair.
F.F."Rick" Sommer, President and CEO, said, "The Company believes that the
transaction is in the best interest of all shareholders, as well as its other
constituencies, its customers and employees. We are excited about the potential
for the Company and its employees down the road."
Mr. Sommer also stated that it was likely the Company would not meet analyst
projections for earnings per share (EPS) for the third fiscal quarter ending
June 27.
<PAGE>
The median analyst EPS estimate for the third quarter is $0.40. Mr. Sommer said
the Company expects to report EPS of approximately $0.28 for the quarter. Of
the $0.12 EPS shortfall below analyst expectations, approximately $0.10 are non-
recurring costs and approximately $0.02 are operations related.
The non-recurring expenses include approximately $0.08 attributable to the sale
of the Company's Oberdorfer Industries facility, which was completed in June and
approximately $0.02 attributable to a four-week strike at the Company's
Mansfield Foundry.
Approximately $0.02 of the total shortfall is related to lower than expected
performance in the Company's industrial groups.
The merger is expected to be completed before the end of the year and is subject
to approval by Citation's stockholders, the refinancing of Citation's existing
indebtedness, obtaining additional financing to pay the merger consideration,
the expiration of the applicable waiting period under the Hart-Scott Rodino Act
and other customary conditions.
A special meeting of Citation Corporation's stockholders will be scheduled as
soon as practical.
Citation Corporation is a producer of steel, iron and aluminum castings, steel
forgings, and machined and assembled components for durable goods and capital
goods producers. The Company employs more than 7,000 at its 21 divisions. Its
headquarters are in Birmingham, Alabama and will remain there after the merger.
# # #
Note: This press release contains certain forward-looking statements, which
Citation Corporation is making in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
all forward-looking statements involve risks and uncertainties. Actual results
could differ materially from those anticipated in the forward-looking statements
as a result of a number of factors, including, but not limited to, the
successful closing of the proposed transaction and risks associated with
acquisitions generally. Certain of these risks and uncertainties are described
in the Company's filings with the Securities and Exchange Commission.
Any offering of securities in connection with the merger will be made only by
means of a prospectus.
