EXHIBIT 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
MAGNA INTERNATIONAL INC.,
MAGNA MIRRORS ACQUISITION CORP.
AND
XXXXXXXX CORPORATION
DATED AS OF JUNE 25, 2002
TABLE OF CONTENTS
ARTICLE I
THE MERGER
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Section 1.1 The Merger......................................................................................2
Section 1.2 Effective Time..................................................................................2
Section 1.3 Effects of the Merger...........................................................................2
Section 1.4 Charter and By-laws; Directors; Officers........................................................2
Section 1.5 Conversion of Securities and Issuance of Surviving Corporation Stock............................3
Section 1.6 Parent to Make Certificates and Cash Available; Transfer Taxes; Withholding.....................4
Section 1.7 Dividends.......................................................................................5
Section 1.8 No Fractional Securities........................................................................5
Section 1.9 Return of Exchange Fund.........................................................................6
Section 1.10 Adjustment of Exchange Ratio....................................................................6
Section 1.11 No Further Ownership Rights in Company Common Stock; Company Stock Options......................6
Section 1.12 Closing of Company Transfer Books...............................................................7
Section 1.13 Lost Certificates...............................................................................7
Section 1.14 Further Assurances..............................................................................7
Section 1.15 Closing.........................................................................................7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 2.1 Organization, Standing and Power................................................................8
Section 2.2 Capital Structure...............................................................................8
Section 2.3 Authority.......................................................................................9
Section 2.4 Consents and Approvals; No Violation............................................................9
Section 2.5 Registration Statement and Proxy Statement/Prospectus..........................................10
Section 2.6 Absence of Certain Changes or Events...........................................................10
Section 2.7 No Required Vote of Parent Shareholders........................................................11
Section 2.8 Reorganization.................................................................................11
Section 2.9 Brokers........................................................................................11
Section 2.10 Accounting Controls............................................................................11
Section 2.11 Litigation.....................................................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power...............................................................12
Section 3.2 Capital Structure..............................................................................13
Section 3.3 Authority......................................................................................14
Section 3.4 Consents and Approvals; No Violation...........................................................15
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Section 3.5 SEC Documents and Other Reports................................................................15
Section 3.6 Registration Statement and Proxy Statement/Prospectus..........................................16
Section 3.7 Absence of Certain Changes or Events...........................................................16
Section 3.8 Permits and Compliance.........................................................................17
Section 3.9 Tax Matters....................................................................................18
Section 3.10 Actions and Proceedings........................................................................19
Section 3.11 Certain Agreements.............................................................................20
Section 3.12 ERISA..........................................................................................20
Section 3.13 Certain Liabilities............................................................................22
Section 3.14 Intellectual Property..........................................................................22
Section 3.15 Properties, Title and Related Matters..........................................................23
Section 3.16 Customer Warranties............................................................................24
Section 3.17 Environmental Matters..........................................................................25
Section 3.18 Insurance......................................................................................26
Section 3.19 Related Party Transactions.....................................................................26
Section 3.20 Parachute Payments to Disqualified Individuals.................................................27
Section 3.21 Opinion of Financial Advisor...................................................................27
Section 3.22 State Takeover Statutes........................................................................27
Section 3.23 Reorganization.................................................................................27
Section 3.24 Brokers........................................................................................27
Section 3.25 Votes Required.................................................................................27
Section 3.26 Disclosure.....................................................................................28
Section 3.27 Accounting Controls............................................................................28
Section 3.28 Accounting Matters.............................................................................28
Section 3.29 Labor Matters..................................................................................28
Section 3.30 Old Company Stock Options......................................................................28
Section 3.31 Subsidiaries and Joint Ventures................................................................29
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending the Merger..........................................29
Section 4.2 No Solicitation; Third Party Standstill Agreements.............................................32
Section 4.3 Reorganization.................................................................................33
Section 4.4 Redemption of Company 7 1/2% Preferred.........................................................33
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Special Meeting of Shareholders................................................................33
Section 5.2 Filings; Other Actions.........................................................................34
Section 5.3 Comfort Letters................................................................................35
Section 5.4 Access to Information..........................................................................35
Section 5.5 Compliance with the Securities Act.............................................................36
Section 5.6 Stock Exchange Listings........................................................................36
Section 5.7 Fees and Expenses..............................................................................36
Section 5.8 Reasonable Efforts.............................................................................37
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Section 5.9 Public Announcements...........................................................................37
Section 5.10 Real Estate Transfer and Gains Tax.............................................................37
Section 5.11 State Takeover Laws............................................................................38
Section 5.12 Indemnification; Directors and Officers Insurance..............................................38
Section 5.13 Notification of Certain Matters................................................................38
Section 5.14 Shareholder Litigation.........................................................................39
Section 5.15 Company Debt Agreements........................................................................39
Section 5.16 Company Stock Options..........................................................................39
Section 5.17 Xxxxxxxx Export................................................................................39
Section 5.18 Benefit Plans..................................................................................39
Section 5.19 Exercise of Hohe Call Options..................................................................42
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................42
Section 6.2 Conditions to Obligation of the Company to Effect the Merger...................................43
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger...............................44
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination....................................................................................46
Section 7.2 Effect of Termination..........................................................................47
Section 7.3 Amendment......................................................................................47
Section 7.4 Waiver.........................................................................................48
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.................................................48
Section 8.2 Notices........................................................................................48
Section 8.3 Interpretation.................................................................................49
Section 8.4 Counterparts...................................................................................50
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.................................................50
Section 8.6 Governing Law..................................................................................50
Section 8.7 Assignment.....................................................................................50
Section 8.8 Severability...................................................................................51
Section 8.9 Enforcement of this Agreement..................................................................51
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LOCATION OF DEFINED TERMS
DEFINED TERM SECTION
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Agreement...............................................................Recitals
Average Price.............................................................1.5(c)
Blue Sky Laws................................................................2.4
Certificate of Merger........................................................1.2
Certificates..............................................................1.6(b)
Chinese Joint Ventures.......................................................8.3
Closing.....................................................................1.15
Closing Date................................................................1.15
Code....................................................................Recitals
Commitments..................................................................3.8
Company.................................................................Recitals
Company Annual Report........................................................3.2
Company Articles of Incorporation.........................................1.4(a)
Company Class A Common Stock............................................Recitals
Company Class B Common Stock............................................Recitals
Company Closing Certificate...............................................6.3(a)
Company Common Stock....................................................Recitals
Company Debt................................................................5.15
Company Letter.......................................................Article III
Company Liability Policies..................................................3.18
Company Material Adverse Effect...........................................3.1(a)
Company Permits..............................................................3.8
Company Plan.............................................................3.12(h)
Company Policies............................................................3.18
Company Preferred Stock......................................................3.2
Company Required Vote.......................................................3.25
Company SEC Documents........................................................3.5
Company 7 1/2% Preferred.....................................................3.2
Company Stock Options........................................................3.2
Company Stock Plans..........................................................3.2
Confidentiality Agreement....................................................5.4
Constituent Corporations................................................Recitals
DOL......................................................................3.12(a)
Xxxxxxxx Export.........................................................Recitals
EBITDA.......................................................................2.1
EC Merger Regulation.........................................................2.4
Effective Time...............................................................1.2
Encumbrances.............................................................3.15(b)
Environmental Laws..........................................................3.17
Environmental Permits.......................................................3.17
ERISA....................................................................3.12(a)
ERISA Affiliate..........................................................3.12(h)
Exchange Act.................................................................2.4
Exchange Agent............................................................1.6(a)
Exchange Fund.............................................................1.6(a)
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Exchange Ratio............................................................1.5(c)
Filing Office................................................................1.2
Financial Statements.........................................................3.5
GAAP.........................................................................3.5
Gains Taxes.................................................................5.10
Governmental Entity..........................................................2.4
Hazardous Substances........................................................3.17
Hohe........................................................................3.31
Hohe Call Options...........................................................3.31
Hohe Call Option Closings...................................................5.19
Hohe Holders................................................................3.31
HSR Act......................................................................2.4
IRS..........................................................................3.9
Indemnified Parties.........................................................5.12
Intellectual Property....................................................3.14(b)
Joint Venture...............................................................3.31
Lien.........................................................................2.4
Mailing Date..............................................................5.2(a)
MBCA.........................................................................1.1
Market Price..............................................................1.5(c)
Marks....................................................................3.14(a)
Medical Benefits.........................................................5.18(d)
Merger..................................................................Recitals
Merger Consolidation Increase Notice......................................7.1(g)
Multiemployer Plan.......................................................3.12(h)
Multiple Employer Plan...................................................3.12(h)
New Company Stock Options....................................................3.2
Non-Controlled Subsidiaries..................................................8.3
non-wholly owned Subsidiary.................................................3.31
NYSE......................................................................1.5(c)
Old Company Stock Options....................................................3.2
Other Plans..................................................................3.2
Parent..................................................................Recitals
Parent Class B Stock.........................................................2.2
Parent Closing Certificate................................................6.2(a)
Parent Common Stock.....................................................Recitals
Parent Hohe Request.........................................................5.19
Parent Letter.........................................................Article II
Parent MAE Notice.........................................................6.2(d)
Parent Material Adverse Effect...............................................2.1
Parent Preferred Stock.......................................................2.2
Parent SEC Documents..................................................Article II
Parent Stock.................................................................2.2
Parent Stock Price........................................................1.5(c)
PBGC.....................................................................3.12(a)
Permits.....................................................................3.17
Principal Shareholders..................................................Recitals
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Proxy Statement/Prospectus...................................................2.5
Registration Statement.......................................................2.3
Rule 145 Affiliates..........................................................5.5
Xxxxxxx Xxxxx Xxxxxx........................................................3.21
SEC...................................................................Article II
Securities Act...............................................................2.3
Shareholders' Agreement.................................................Recitals
Special Meeting.........................................................Recitals
Special Meeting Resumption Date...........................................7.1(g)
Sub.....................................................................Recitals
Sub Common Stock..........................................................1.5(a)
Sub Preferred Stock.......................................................1.5(d)
Subsidiary...................................................................8.3
Subsidiary and Joint Venture Agreements.....................................3.31
Superior Proposal............................................................5.1
Surviving Corporation........................................................1.1
Takeover Proposal.........................................................4.2(a)
Taxes........................................................................3.9
Tax Return...................................................................3.9
Termination Fee...........................................................5.7(b)
TSE..........................................................................2.4
wholly owned Subsidiary......................................................8.3
1998 Plan....................................................................3.2
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 25, 2002 (this
"Agreement"), among
Magna International Inc., an Ontario corporation ("Parent"),
Magna Mirrors Acquisition Corp., a Michigan corporation and a wholly owned
subsidiary of Parent ("Sub"), and Xxxxxxxx Corporation, a Michigan corporation
(the "Company" and, together with Sub, the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding share of (a) Class A Common Stock, par value
$.10 per share, of the Company ("Company Class A Common Stock") and (b) Class B
Common Stock, par value $.10 per share, of the Company ("Company Class B Common
Stock" and, together with the Company Class A Common Stock, the "Company Common
Stock"), not owned by Parent, the Company or their respective wholly owned
Subsidiaries (as hereinafter defined) will be converted into the right to
receive a fraction of a Class A Subordinate Voting Share, without par value, of
Parent ("Parent Common Stock");
WHEREAS the Board of Directors of the Company has unanimously
approved this Agreement and intends to submit this Agreement to the holders of
the Company Common Stock for their consideration at a special meeting of
shareholders (the "Special Meeting") for the purpose of approving this Agreement
and the Merger;
WHEREAS Parent, Sub, Xxxxxxxx Export Corporation, a Michigan
corporation ("Xxxxxxxx Export"), and certain of the holders of the Company Class
B Common Stock (collectively, the "Principal Shareholders") have entered into a
Shareholders' Agreement (including an irrevocable proxy) of even date herewith
(the "Shareholders' Agreement"), pursuant to which, among other things, each
Principal Shareholder has agreed to vote the shares held or controlled by it in
favor of the Merger and this Agreement;
WHEREAS the Principal Shareholders in the aggregate hold or
control shares of Company Common Stock that, as of June 7, 2002, represented an
aggregate of approximately 72% of the total voting power of all currently
outstanding shares of voting stock of the Company with respect to approval of
the Merger;
WHEREAS the respective Boards of Directors of each of Parent,
Sub and, as of the date hereof, the Company have determined that the Merger upon
the terms and subject to the conditions of this Agreement would be advantageous
and beneficial to their respective corporations and that such transaction is
consistent with and in furtherance of such entities' respective long-term
business strategies; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the Michigan Business Corporation Act
(the "MBCA"), Sub shall be merged with and into the Company at the Effective
Time (as defined in Section 1.2). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the MBCA.
Section 1.2 EFFECTIVE TIME. Upon the terms and subject to the
conditions hereof, a Certificate of Merger (the "Certificate of Merger") shall
be duly prepared and executed by the Company and Sub and thereafter delivered to
the Department of Consumer and Industry Services, Bureau of Corporations,
Securities and Land Development of the State of Michigan (the "Filing Office")
for filing as provided in the MBCA as soon as practicable on the Closing Date
(as defined in Section 1.15). The Merger shall become effective upon the filing
of the Certificate of Merger with the Filing Office or at such other later date
or time as the Constituent Corporations shall agree as specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
Section 1.3 EFFECTS OF THE MERGER. The Merger will have the
effects set forth in this Agreement and the MBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
rights, privileges, immunities, powers and franchises of the Company and of Sub
and all the property (real, personal and mixed) of the Company and of Sub and
all debts due to either the Company or Sub on any account, and all choses in
action, and every other interest of or belonging to or due to either the Company
or Sub, will vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Sub shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation and may be enforced against the Surviving
Corporation to the same extent as if such debts, liabilities, obligations,
restrictions, disabilities and duties had been incurred or contracted by the
Surviving Corporation. The title to any real estate or any interest therein
vested, by deed or otherwise, in the Company or Sub shall not revert or in any
way become impaired by reason of the Merger.
Section 1.4 CHARTER AND BY-LAWS; DIRECTORS; OFFICERS.
(a) At the Effective Time, the Second Restated and Amended
Articles of Incorporation of the Company, as amended (the "Company Articles of
Incorporation"), shall be amended to be identical to the Articles of
Incorporation of Sub, as in effect immediately prior to the Effective Time, and
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law;
PROVIDED, HOWEVER, that, at the Effective Time, Article I of the Company
Articles of Incorporation shall be amended to read in its entirety as follows:
"The name of the corporation is Xxxxxxxx Corporation." At the
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Effective Time, the By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or in the Articles of
Incorporation of the Surviving Corporation or by applicable law.
(b) The directors of Sub at the Effective Time shall be the
directors of the Surviving Corporation, each to hold office from the Effective
Time in accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation until his or her successor is duly elected and qualified.
(c) The officers of Sub at the Effective Time shall be the
officers of the Surviving Corporation, each to hold office from the Effective
Time in accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation and until his or her successor is duly appointed and
qualified.
(d) At the Effective Time, the Surviving Corporation will
file with the Filing Office a certificate to do business as Magna Xxxxxxxx
Corporation.
Section 1.5 CONVERSION OF SECURITIES AND ISSUANCE OF
SURVIVING CORPORATION STOCK. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any securities of the
Constituent Corporations:
(a) Each share of Common Stock of Sub ("Sub Common Stock")
issued and outstanding immediately prior to the Effective Time shall be
converted into one newly issued, fully paid and nonassessable share of Preferred
Stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held by
Parent, Sub or any wholly owned subsidiary of the Company, Parent or Sub shall
be cancelled and no cash, capital stock of Parent or other consideration shall
be delivered in exchange therefor.
(c) Subject to Sections 1.8 and 1.10, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled as set forth in Section 1.5(b)) shall be
converted into the right to receive the Exchange Ratio (as hereinafter defined)
of validly issued, fully paid and nonassessable shares of Parent Common Stock.
The "Exchange Ratio" shall be a number equal to the quotient, rounded to the
nearest thousandth, or if there shall not be a nearest thousandth, the next
higher thousandth, of (x) $28.00 divided by (y) the Market Price (as hereinafter
defined) of a share of Parent Common Stock on the
New York Stock Exchange, Inc.
("NYSE") trading day immediately preceding the date of the Effective Time (the
"Parent Stock Price"); PROVIDED, HOWEVER, that in no event (except as set forth
in the next two provisos to this sentence) shall the Exchange Ratio be (A) less
than an amount equal to the quotient of $28.00 divided by $80.00 or (B) greater
than an amount equal to the quotient of $28.00 divided by $61.00; PROVIDED,
HOWEVER, that in the event that Parent delivers to the Company the Merger
Consideration Increase Notice pursuant to Section 7.1(g), the Exchange Ratio
shall instead be as set forth therein; and PROVIDED FURTHER, that, in the event
of any adjustment of the Exchange Ratio pursuant to Section 1.10, all such
dollar amounts shall be commensurately adjusted, as mutually agreed by Parent
and the Company, each acting reasonably and in good faith. All such shares of
Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically cease to exist and each holder thereof or of
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a Certificate (as hereinafter defined) representing any such shares shall cease
to have any rights with respect thereto, except that each holder of such a
Certificate shall have the right to receive (i) any dividends and other
distributions (paid with respect to shares of Parent Common Stock) in accordance
with Section 1.7, (ii) certificates representing the shares of Parent Common
Stock into which such shares are converted and (iii) any cash (without interest)
in lieu of fractional shares of Parent Common Stock to be issued or paid in
consideration therefor in accordance with Section 1.8, all upon the surrender of
such Certificate in accordance with Section 1.6. The "Market Price" on any date
means the average of the Average Prices (as hereinafter defined) for the 20
consecutive NYSE trading days immediately preceding such date. The "Average
Price" for any date means the average of the daily high and low prices per share
of Parent Common Stock as reported on the NYSE Composite Transactions reporting
system (as published in The Wall Street Journal or, if not published therein, in
another authoritative source reasonably selected by Parent).
(d) The Surviving Corporation shall issue at the Effective
Time to Parent 1,000 shares of Common Stock of the Surviving Corporation in
consideration for the issuance by Parent of Parent Common Stock contemplated by
Section 1.5(c) and payment by Parent of cash as contemplated by Section 1.8.
Section 1.6 PARENT TO MAKE CERTIFICATES AND CASH AVAILABLE;
TRANSFER TAXES; WITHHOLDING. (a) Parent shall authorize such person or persons
as shall be reasonably acceptable to the Company to act as Exchange Agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, Parent shall deposit with the Exchange Agent, in trust for the holders of
shares of Company Common Stock converted in the Merger, certificates
representing the shares of Parent Common Stock issuable and the cash then
payable pursuant to Sections 1.7 and 1.8 (such shares of Parent Common Stock and
cash, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Any interest or other income resulting from such investments shall be paid to
Parent.
(b) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each record holder of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted in the Merger (the
"Certificates"), a letter of transmittal in form reasonably acceptable to Parent
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon actual delivery of the Certificates to
the Exchange Agent, and shall contain instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock). Upon surrender for cancellation to the Exchange Agent
of all Certificates held by any record holder of a Certificate, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock into which the shares represented
by the surrendered Certificate shall have been converted at the Effective Time
pursuant to this Article I, and cash in lieu of any fractional shares of Parent
Common Stock in accordance with Section 1.8 and any dividends or other
distributions in accordance with Section 1.7, and any Certificate so surrendered
shall forthwith be cancelled by the Exchange Agent. No interest shall be paid or
shall accrue on any cash payable upon surrender of any Certificate.
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(c) Each share of Parent Common Stock into which a share of
Company Common Stock shall be converted shall be validly issued, fully paid and
nonassessable, and shall be deemed to have been issued at the Effective Time.
All shares of Parent Common Stock shall be issued directly by Parent and no
shares of Parent Common Stock shall at any time be held by the Surviving
Corporation. If any certificate representing shares of Parent Common Stock or
cash or other property is to be issued or delivered in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or under any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent or the Exchange Agent. The valuation of any such
deductions and withholdings shall be effected by the Exchange Agent in a manner
consistent with Section 1.8.
Section 1.7 DIVIDENDS. No dividends or other distributions
that are declared on or after the Effective Time on the shares of Parent Common
Stock, or are payable to the holders of record thereof on or after the Effective
Time, will be paid to any person entitled by reason of the Merger to receive a
certificate representing shares of Parent Common Stock until such person
surrenders the related Certificate or Certificates, as provided in this Article
I. Subject to the effect of applicable law, there shall be paid to each record
holder of a new certificate representing such shares of Parent Common Stock: (i)
at the time of such surrender or as promptly as practicable thereafter, the
amount, if any, of any dividends or other distributions theretofore paid with
respect to the shares of Parent Common Stock represented by such new certificate
and having a record date on or after the Effective Time and a payment date prior
to such surrender and (ii) at the appropriate payment date or as promptly as
practicable thereafter, the amount, if any, of any dividends or other
distributions payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender. In no event shall the
person entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions.
Section 1.8 NO FRACTIONAL SECURITIES. No certificates or
scrip representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates pursuant to this Article I, and no
Parent dividend or other distribution, stock split or reclassification shall
relate to any fractional share, and no fractional share shall entitle the owner
thereof to vote or to any other rights of a security holder of Parent. In lieu
of any such fractional share, each holder of Company Common Stock who would
otherwise have been entitled to a fraction of a share of Parent Common Stock
upon surrender of Certificates for exchange pursuant
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to this Article I will be paid an amount in cash (without interest), rounded to
the nearest cent, determined by multiplying (i) the Market Price of a share of
Parent Common Stock on the NYSE trading day immediately prior to the date of the
Effective Time by (ii) the fractional interest to which such holder would
otherwise be entitled. As promptly as practicable after the determination of the
amount of cash to be paid to holders of fractional share interests, the Exchange
Agent shall so notify Parent, and Parent shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to such
holders of fractional share interests subject to and in accordance with the
terms of this Article I. For purposes of paying such cash in lieu of fractional
shares, all Certificates surrendered for exchange by a Company shareholder shall
be aggregated, and no such Company shareholder will receive cash in lieu of
fractional shares in an amount equal to or greater than the value as so
determined of one full share of Parent Common Stock with respect to such
Certificates surrendered.
Section 1.9 RETURN OF EXCHANGE FUND. Any portion of the
Exchange Fund that remains undistributed to the former shareholders of the
Company for one year after the Effective Time shall be delivered to Parent and
any such former shareholders who have not theretofore complied with this Article
I shall thereafter look only to Parent for payment of their claim for shares of
Parent Common Stock into which such shares of Company Common Stock are
convertible, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions with respect to shares of Parent Common Stock.
Neither Parent nor Surviving Corporation shall be liable to any former holder of
Company Common Stock for any such shares of Parent Common Stock, dividends and
distributions held in the Exchange Fund which is delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 1.10 ADJUSTMENT OF EXCHANGE RATIO. In the event that,
prior to the Effective Time, Parent effects any reclassification,
reorganization, stock split, reverse stock split, combination, stock dividend or
other similar event with respect to shares of Parent Common Stock, any change or
conversion of Parent Common Stock into other securities or any cash dividend
(other than regular quarterly cash dividends of Parent) or other distribution
with respect to the shares of Parent Common Stock, appropriate and proportionate
adjustments shall be made to the Exchange Ratio (or, in the case of such a
reclassification, reorganization, combination, change, conversion or other
distribution, an equitable adjustment shall be made to the consideration to be
received by holders of Company Common Stock in the Merger), as mutually agreed
by Parent and the Company, each acting reasonably and in good faith, and all
references to the Exchange Ratio in this Agreement shall be deemed to be to the
Exchange Ratio as so adjusted.
Section 1.11 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON
STOCK; OLD COMPANY STOCK OPTIONS. All shares of Parent Common Stock and cash
issued or paid upon the surrender for exchange of Certificates in accordance
with the terms hereof (including any cash or other property paid pursuant to
Sections 1.7 and 1.8) shall be deemed to have been issued in full satisfaction
of all rights pertaining to the shares of Company Common Stock represented by
such Certificates, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of this Agreement or
prior to the date of this Agreement and which remain unpaid
-6-
at the Effective Time. As contemplated by Section 3.30, all Old Company Stock
Options (as defined in Section 3.2) that are not duly exercised by the holders
thereof prior to the Effective Time shall terminate and be of no further force
and effect and shall not give rise to any claim against the Surviving
Corporation by such holders.
Section 1.12 CLOSING OF COMPANY TRANSFER BOOKS. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Exchange Agent or Parent, such Certificates
shall be cancelled and exchanged as provided in this Article I.
Section 1.13 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 the
posting by such person of a bond, in such reasonable amount as Parent or the
Exchange Agent may direct (but consistent with the practices Parent applies to
its own shareholders) as indemnity against any claim that may be made against
them with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and/or cash or other property payable pursuant to this Article I.
Section 1.14 FURTHER ASSURANCES. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.15 CLOSING. The closing of the Merger (the
"Closing") and all actions contemplated by this Agreement to occur at the
Closing shall take place at the offices of Sidley Xxxxxx Xxxxx & Xxxx LLP, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m.,
New York City time, on a date
to be specified by the parties, which (subject to fulfillment or waiver of the
conditions set forth in Article VI) shall (subject to Sections 6.2(d) and (e))
be no later than the business day following the day on which the last of the
conditions set forth in Article VI shall have been fulfilled or waived (other
than those that this Agreement contemplates will be satisfied at or immediately
prior to the Effective Time) or at such other time and place as Parent and the
Company shall agree (the "Closing Date").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as disclosed in Parent's Annual Report on Form 40-F for
the year ended December 31, 2001 or Parent's Report on Form 6-K dated April 4,
2002, in each case in the form filed by Parent with the Securities and Exchange
Commission (the "SEC"), including the exhibits thereto (the "Parent SEC
Documents"), or in the letter dated the date hereof and delivered on the date
hereof by Parent to the Company, which letter relates to this Agreement and is
designated therein as the Parent Letter (the "Parent Letter"), each of Parent
and Sub represents and warrants to the Company as follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power and authority,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. For all purposes of this
Agreement, a "Parent Material Adverse Effect" shall mean a material adverse
effect on the assets, liabilities, equity, business, operations, results of
operations, condition (financial or otherwise) or prospects of Parent and its
Subsidiaries, taken as a whole, excluding such effects resulting from events or
occurrences related to general economic or market conditions or conditions
affecting the automotive industry in general; PROVIDED that, for all purposes of
this Agreement, and without limiting the generality of the foregoing, a Parent
Material Adverse Effect shall be deemed to have occurred in the event of any
liability of, effect on or claim against Parent or any of its Subsidiaries that,
individually or in the aggregate, has had or would reasonably be expected to
have a pre-tax effect of (i) in the case of any one-time effect, $500 million or
greater, and (ii) in the case of any recurring effect, an average of $100
million or greater per fiscal year for two or more years, in either case on the
consolidated assets, liabilities, equity, earnings before interest, taxes,
depreciation and amortization ("EBITDA") or net income of Parent in any one or
more fiscal quarters or other financial periods.
Section 2.2 CAPITAL STRUCTURE. At the date hereof, the
authorized stock of Parent consists of (i) an unlimited number of shares of
Parent Common Stock, (ii) 1,412,341 Class B Shares, without par value ("Parent
Class B Stock" and, together with the Parent Common Stock, the "Parent Stock"),
and (iii) 99,760,000 preference shares, without par value (the "Parent Preferred
Stock"). At the close of business on May 21, 2002, 82,633,675 shares of Parent
Common Stock, 1,096,509 shares of Parent Class B Stock and no shares of Parent
Preferred Stock were issued and outstanding. As of the close of business on June
21, 2002, except as set forth in Section 2.2 of the Parent Letter or as
disclosed in the Parent SEC Documents, there are no options, warrants, calls,
rights, securities or agreements to which Parent is a party or by which it is
bound obligating Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or obligating
Parent to grant, extend or enter into any such option, warrant, call, right,
security or agreement. At the date hereof, the capital stock of Sub consists of
1,000 shares of Sub Common Stock and 1,000 shares of Preferred Stock, par value
$.01 per share, of Sub ("Sub Preferred Stock"), of which, as of the date of this
Agreement,
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1,000 shares of Sub Common Stock were issued and outstanding, all of which
shares were owned directly by Parent and no shares of Sub Preferred Stock were
outstanding.
Section 2.3 AUTHORITY. Each of Parent and Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by each of Parent and Sub and the consummation
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of Parent and
Sub. This Agreement has been duly executed and delivered by each of Parent and
Sub and, assuming the due authorization, execution and delivery hereof by the
Company, constitutes a valid and binding obligation of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms, except to the
extent enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally or by
general principles governing the availability of equitable remedies. The filing
of a registration statement on Form F-4 with the SEC by Parent under the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), for the purpose of registering
the Parent Common Stock to be issued in connection with the Merger as
contemplated by this Agreement (together with any amendments or supplements
thereto, whether prior to or after the effective date thereof, and including all
information incorporated by reference therein, the "Registration Statement") has
been duly authorized by Parent's Board of Directors.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATION. No filing
or registration with, or authorization, consent or approval of, any domestic
(federal, state or local), foreign (federal, state, provincial, territorial or
local) or supranational court, governmental body, regulatory agency, authority,
commission, tribunal or securities exchange (a "Governmental Entity") is
required by or with respect to Parent, Sub or any of their respective
Subsidiaries in connection with the execution and delivery of this Agreement by
Parent or Sub or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except (i) the filing of a
premerger notification and report form by Parent under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and such filings
as are required under Council Regulation No. 4064/89 of the European Community,
as amended (the "EC Merger Regulation"), and under the respective antitrust
statutes in Brazil and Mexico, (ii) the filing of the Certificate of Merger with
the Filing Office and appropriate documents with the relevant authorities of
other states, if any, specified in Section 2.4 of the Parent Letter in which
Parent or any of its Subsidiaries is qualified to do business, (iii) such
filings as may be required in connection with the taxes described in Section
5.11, (iv) pursuant to applicable requirements, if any, of state securities or
"blue sky" laws ("Blue Sky Laws") and the NYSE, (v) the filing with the SEC by
Parent of the Registration Statement under the Securities Act and of such
reports as may be required by Sections 13 and 16(a) of the Securities Exchange
Act of 1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), or by The Toronto Stock Exchange (the "TSE") or
Canadian federal or provincial securities laws or regulations in connection with
this Agreement and the transactions contemplated hereby and (vi) such other
filings, approvals, orders, notices, registrations, declarations and consents as
may be required under any applicable state takeover or similar laws, and any
applicable state environmental laws or laws with respect to the ownership by a
foreign entity of real property, but with respect to this clause (vi), only as
specified in Section 2.4 of the
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Parent Letter. Neither the execution, delivery or performance of this Agreement
nor the consummation of the transactions contemplated hereby will (with or
without due notice or lapse of time or both) result in any violation of, or
default or the loss of a material benefit under, or give to others a right of
termination, cancellation or acceleration of any obligation under, or result in
the creation of any security interests, liens, claims, pledges, mortgages,
options, rights of first refusal, agreements, limitations on voting rights,
charges and other encumbrances of any nature whatsoever (each, a "Lien") upon,
any property or asset of Parent or any of its Subsidiaries under any provision
of (i) the respective certificates or articles of incorporation or bylaws or
comparable organizational documents of Parent or Sub, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, license, lease, contract, agreement
or other instrument, permit, concession, franchise or obligation to which Parent
or any of its Subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or affected or (iii) any judgment,
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Parent or any of its Subsidiaries or any of their respective properties, assets
or operations, other than, in the case of clause (ii) or (iii), for violations,
defaults, losses, rights or Liens that would not, individually or in the
aggregate, prevent, delay or impair the consummation of the Merger in any
respect and would not have a Parent Material Adverse Effect or materially impact
the ability of Parent and Sub to perform their respective obligations under this
Agreement.
Section 2.5 REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS. None of the information to be supplied by Parent or Sub
specifically for inclusion or incorporation by reference in the Registration
Statement or the proxy statement/prospectus included therein (together with any
amendments or supplements thereto, and including all information incorporated by
reference therein, the "Proxy Statement/Prospectus") relating to this Agreement
will (i) in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Proxy
Statement/Prospectus, at the time of the mailing of the Proxy
Statement/Prospectus to the Company's shareholders, at the time of the Special
Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event with respect to Parent, its officers and directors or any of its
Subsidiaries shall occur that is required to be described in the Proxy
Statement/Prospectus or the Registration Statement, such event shall be so
described and promptly disclosed to the Company, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company. The Registration Statement and
the Proxy Statement/Prospectus will comply (with respect to Parent) as to form
in all material respects with the provisions of the Securities Act.
Section 2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in Section 2.6 of the Parent Letter, from December 31, 2001 through
the date of this Agreement, (a) Parent and its Subsidiaries have not incurred
any material liability or obligation (indirect, direct or contingent), or
entered into any material oral or written agreement or other transaction, that
is not in the ordinary course of business or that has resulted in or would
reasonably be expected to result in a Parent Material Adverse Effect, (b) Parent
and its Subsidiaries have not
-10-
sustained any loss or interference with their business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had or would reasonably be expected to have a Parent
Material Adverse Effect, (c) there has been no change in the capital stock of
Parent and no dividend or distribution of any kind declared, paid or made by
Parent on any class of its stock, except for regular quarterly cash dividends
declared or paid on Parent Stock, and (d) there has been no other event causing
a Parent Material Adverse Effect, nor any development that, individually or in
the aggregate, has had or would reasonably be expected to have a Parent Material
Adverse Effect.
Section 2.7 NO REQUIRED VOTE OF PARENT SHAREHOLDERS. No vote
of the shareholders of Parent is required by law, the organization documents of
Parent or otherwise in order for Parent to consummate the Merger and the
transactions contemplated hereby.
Section 2.8 REORGANIZATION. To the knowledge of Parent,
neither Parent nor any of its Subsidiaries has taken any action or failed to
take any action which action or failure would jeopardize the qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the Code.
Section 2.9 BROKERS. No broker, investment banker or other
person is entitled to any broker's, finder'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 Parent.
Section 2.10 ACCOUNTING CONTROLS; FINANCIAL STATEMENTS. In
all material respects, Parent maintains a system of internal accounting controls
sufficient to provide reasonable assurances, to the extent required by Section
13(b)(2)(B) of the Exchange Act, that (a) transactions are executed in
accordance with management's general or specific authorization; (b) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (c) access to assets is permitted only in accordance
with management's general or specific authorization; and (d) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
consolidated financial statements (including, in each case, any notes thereto)
of the Company included in the Parent SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as of their respective
dates of filing, were prepared in accordance with accounting principles
generally accepted in Canada (except, in the case of the unaudited statements,
as permitted by Regulation S-X of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein).
Section 2.11 ACCOUNTING MATTERS. Parent has not been advised
by its independent accountants of any material accounting irregularities that
would reasonably be expected to require Parent to restate its consolidated
financial statements included in the Parent SEC
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Documents (other than as required by any change in accounting principles
generally accepted in Canada or the United States). To Parent's knowledge,
Parent is not subject to any material pending or threatened investigation by the
SEC concerning such consolidated financial statements.
Section 2.12 LITIGATION. As of the date of this Agreement,
there is no action, suit or proceeding pending or, to Parent's knowledge,
threatened before any Governmental Entity involving Parent or Sub (i) which, if
adversely determined, would prevent or materially delay the performance by
Parent and Sub of their obligations under this Agreement or (ii) which seeks to
enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby. As of the date of this Agreement, none of Parent, Sub or
any of their respective Subsidiaries or their assets is subject to any
outstanding orders, rulings, judgments or decrees which would prevent or
materially delay the performance by Parent and Sub of their obligations under
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company's Annual Report on Form
10-K for the year ended December 31, 2001, its Quarterly Report on Form 10-Q for
the quarter ended March 31, 2002, its Current Report on Form 8-K dated May 20,
2002, or its Proxy Statement dated April 5, 2002, in each case, in the form
filed by the Company with the SEC, or in the letter dated the date hereof and
delivered on the date hereof by the Company to Parent, which letter relates to
this Agreement and is designated therein as the Company Letter (the "Company
Letter"), the Company represents and warrants to each of Parent and Sub as
follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. (a) The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing or
in good standing or to have such power and authority, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect. For all purposes of this Agreement (including Section
6.3(a)), a "Company Material Adverse Effect" shall mean a material adverse
effect on the assets, liabilities, equity, business, operations, results of
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, taken as a whole, excluding (i) such effects resulting from
events or occurrences related to general economic or market conditions or
conditions affecting the automotive industry in general and (ii) any
development, related claims or other event solely to the extent arising out of
any facts expressly disclosed (including those disclosed in any pleadings) to
Parent by the Company prior to the date hereof in respect of any lawsuit,
potential claim or agreement specified in Section 3.1(a) of the Company Letter;
PROVIDED that, for all purposes of this Agreement (including Section 6.3(a)),
and without limiting the generality of the foregoing, a Company Material Adverse
Effect shall be deemed to have occurred in the event of any liability of, effect
on or claim against the Company or any of its Subsidiaries that, individually or
in the aggregate, has had or would reasonably be expected to have a pre-tax
effect of $30 million or greater, net of any insurance or similar recovery, on
the consolidated assets,
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liabilities, equity, EBITDA or net income of the Company in any one or more
fiscal quarters or other financial periods (with any such expected effect in any
financial period prior to 2006 to be added to any such expected effect in any
other financial period prior to 2006 for purpose of determining whether such $30
million threshold has been reached); PROVIDED FURTHER that (i) any individual
liabilities, effects or claims with such a pre-tax effect of $100,000 or less
and (ii) any failure, as a result of ordinary competitive pressures, by the
Company or any of its Subsidiaries to obtain new business after the date hereof,
regardless of whether such business was included in the business plan of the
Company previously delivered to Parent, shall be disregarded for purposes of
determining whether a Company Material Adverse Effect has occurred or will
occur.
(b) Each Subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate (in the case of a Subsidiary that is a
corporation) or other power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power or authority, individually and in the aggregate,
has not had and would not reasonably be expected to have a Company Material
Adverse Effect. The Company and each of its Subsidiaries are duly qualified to
do business, and are in good standing, in each jurisdiction where the character
of their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. Except as specified in
Section 3.1(b) of the Company Letter, the Company has heretofore made available
to Parent a complete and correct copy of the charter and by-laws or comparable
organization documents, each as amended to date, of the Company and each of its
Subsidiaries (other than its wholly owned Subsidiaries). The respective
charters, by-laws and comparable organizational documents of the Company and its
Subsidiaries are in full force and effect.
Section 3.2 CAPITAL STRUCTURE. At the date hereof, the
authorized capital stock of the Company consists of 30,000,000 shares of Company
Class A Common Stock, 15,000,000 shares of Company Class B Common Stock, 250,000
shares of 7 1/2% Cumulative Preferred Stock, par value $10 per share (the
"Company 7 1/2% Preferred") and 1,000,000 shares of preferred stock, no par
value ("Company Preferred Stock"). At the close of business on June 7, 2002, (i)
6,563,493 shares of Company Class A Common Stock, 4,081,321 shares of Company
Class B Common Stock, 53,112 shares of Company 7 1/2% Preferred and no shares of
Company Preferred Stock were issued and outstanding, (ii) no shares of Company
Common Stock or other securities of the Company were held in the treasury of the
Company or by its Subsidiaries and (iii) 442,962 shares and 408,953 shares of
Company Common Stock were reserved for issuance pursuant to options ("New
Company Stock Options") granted under the Company's 1998 Employee Stock Option
Plan (the "1998 Plan") and pursuant to options (the "Old Company Stock Options"
and, together with the New Company Stock Options, the "Company Stock Options")
granted under the Company's other stock option plans (the "Other Plans" and,
together with the 1998 Plan, the "Company Stock Plans"), respectively. Each
Company Stock Plan is listed in Section 3.2 of the Company Letter. Except as
specified in Section 3.2 of the Company Letter, true and complete copies of each
contract, agreement, instrument or document listed or referred to in any Section
of the Company Letter have been furnished by the Company to Parent. Except as
set forth above, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All the outstanding
shares of Company
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Common Stock are validly issued, fully paid and nonassessable and free of
preemptive rights. Except for Company Stock Options issued pursuant to the
Company Stock Plans covering not in excess of 851,915 shares of Company Common
Stock or as set forth in Section 3.2 of the Company Letter, there are no
options, warrants, calls, rights, securities or agreements 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 securities of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right, security or agreement. Each outstanding share of
capital stock of each Subsidiary of the Company that is a corporation is duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in Section 3.2 of the Company Letter, each such share is owned by the
Company or another Subsidiary of the Company, free and clear of all Liens,
except that each outstanding share of capital stock of Xxxxxxxx Export is owned
by a holder of Company Class B Common Stock, free and clear of all Liens. The
Company does not have outstanding any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as disclosed in Section 3.2 of the
Company Letter, 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. Except as set forth
in Section 3.2 of the Company Letter, Exhibit 21.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 2001, as filed with the SEC
(the "Company Annual Report"), is a true and correct statement of all the
information required to be set forth therein by the rules and regulations of the
SEC.
Section 3.3 AUTHORITY. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to, with respect to the Merger, the
approval and adoption of this Agreement and the Merger by the affirmative vote
by the holders of Company Common Stock entitled to vote not less than two-thirds
of the total number of votes entitled to be cast by holders of Company Common
Stock, with the holders of Company Class A Common Stock and Company Class B
Common Stock voting together as a single class. The Board of Directors of the
Company has approved and adopted this Agreement and, subject to the provisions
of Section 5.1, recommends this Agreement to the Company's shareholders. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby, other than, with respect to the Merger, the
approval and adoption of this Agreement and the Merger by the Company's
shareholders as described above and the filing of the Certificate of Merger with
the Filing Office. This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
Parent and Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally or by
general principles governing the availability of equitable remedies. The filing
of the Proxy Statement/Prospectus with the SEC (with respect to the Company) has
been duly authorized by the Company's Board of Directors.
-14-
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. No filing
or registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the Company,
is necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement or will be necessary to allow the Surviving
Corporation and its Subsidiaries to operate the business of the Company and its
Subsidiaries in substantially the same manner as operated immediately prior to
the Merger, except (i) the filing of a premerger notification and report form by
Parent under the HSR Act and such filings as are required under the EC Merger
Regulation, and under the respective antitrust statutes in Brazil and Mexico and
other applicable jurisdictions, (ii) the filing of the Certificate of Merger
with the Filing Office and appropriate documents with the relevant authorities
of other states, if any, specified in Section 3.4 of the Company Letter in which
the Company or any of its Subsidiaries is qualified to do business, (iii) such
filings as may be required in connection with the taxes described in Section
5.10, (iv) pursuant to applicable requirements, if any, of Blue Sky Laws and the
NYSE, (v) the filing with the SEC by the Company of the Proxy Statement/
Prospectus and of such reports as may be required by the Exchange Act in
connection with this Agreement and the transactions contemplated hereby and (vi)
such other filings, approvals, orders, notices, registrations, declarations and
consents under applicable state takeover or similar laws, and any applicable
state environmental laws or laws with respect to the ownership by a foreign
entity of real property, but with respect to this clause (vi), only as specified
in Section 3.4 of the Company Letter. Neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated hereby will (with or without notice or lapse of time, or both)
result in any violation of, or default or the loss of a material benefit under,
or give to others a right of termination, cancellation or acceleration of any
obligation under, or result in the creation of any Lien upon, any of the
properties, assets or operations of the Company or any of its Subsidiaries under
any provision of (i) the Company Articles of Incorporation or Bylaws of the
Company, (ii) any provision of the comparable charter or organization documents
of any Subsidiary of the Company, (iii) any loan or credit agreement, note,
bond, mortgage, indenture, license, lease, contract, agreement (other than stock
option agreements under the Company Stock Plans, which provide for accelerated
vesting of the underlying options upon the Effective Time, the Pension Plan for
Outside Directors, the Deferred Compensation Plan, the Supplemental Retirement
Plan and the Deferred Director Fee Plan, each of which plans accelerates or
could accelerate payment after the Effective Time) or other instrument, permit,
concession, franchise or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or affected or (iv) any judgment, order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its Subsidiaries or any of their respective properties, assets or
operations, other than, in the case of clauses (iii) or (iv), for violations,
defaults, losses, rights (including rights of acceleration of payments or
vesting) or Liens that are specified in Section 3.4 of the Company Letter and
that, individually and in the aggregate, would not prevent, delay or impair the
consummation of the Merger in any respect and would not have a Company Material
Adverse Effect or materially impact the ability of the Company to perform its
obligations under this Agreement.
Section 3.5 SEC DOCUMENTS AND OTHER REPORTS. The Company has
filed all required documents with the SEC since January 1, 1999 (the "Company
SEC Documents"). As of their respective dates, the Company SEC Documents, when
taken together with any amendment thereto filed prior to the date hereof,
complied in all material respects with the
-15-
requirements of the Securities Act or the Exchange Act, as the case may be, and,
at the respective times they were filed, 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 to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
as set forth in subsequent Company SEC Documents filed prior to the date hereof,
in this Agreement or in Section 3.5 of the Company Letter. The combined
consolidated financial statements (including, in each case, any notes thereto)
of the Company included in the Company SEC Documents (the "Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as of their respective dates of filing, were prepared in
accordance with accounting principles generally accepted in the United States
("GAAP") (except, in the case of the unaudited statements, as permitted by
Regulation S-X of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and their consolidated cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments and to any other adjustments described
therein), except as set forth in subsequent Company SEC Documents filed prior to
the date hereof, in this Agreement or in Section 3.5 of the Company Letter.
Except as disclosed in the Company SEC Documents, the Company has not, since
December 31, 2001, made any material change in the accounting policies applied
in the preparation of its financial statements.
Section 3.6 REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS. None of the information to be supplied by the Company for
inclusion or incorporation by reference in the Registration Statement or the
Proxy Statement/Prospectus will (i) in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or (ii) in the
case of the Proxy Statement/Prospectus, at the time of the mailing of the Proxy
Statement/Prospectus to the Company's shareholders, at the time of the Special
Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event with respect to the Company, its officers and directors or any of
its Subsidiaries shall occur that is required to be described in the Proxy
Statement/Prospectus or the Registration Statement, such event shall be so
described and promptly disclosed to Parent, and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company. The Registration Statement and
the Proxy Statement/Prospectus will comply (with respect to the Company and its
Subsidiaries) as to form in all material respects with the provisions of the
Securities Act and the Exchange Act.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in Section 3.7 of the Company Letter, from December 31, 2001 through
the date of this Agreement, (a) the Company and its Subsidiaries have not
incurred any material liability or obligation (indirect, direct or contingent),
or entered into any material oral or written agreement or other transaction,
that is not in the ordinary course of business or that would reasonably be
expected to result in a Company Material Adverse Effect, (b) the Company and its
Subsidiaries have not
-16-
sustained any loss or interference with their business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had or that would reasonably be expected to have a Company
Material Adverse Effect, (c) there has been no change in the capital stock of
the Company and no dividend or distribution of any kind declared, paid or made
by the Company or by Xxxxxxxx Export on any class of its stock, except for
regular quarterly cash dividends declared or paid on Company Common Stock,
Company 7 1/2% Preferred or the common stock of Xxxxxxxx Export, (d) there has
not been (i) any payment or agreement to pay any compensation of any nature
whatsoever (other than pursuant to any agreement as in effect on the date hereof
or otherwise in the ordinary course of business consistent with past practice),
or any award or grant under any Company Plan (as defined in Section 3.12(h)) as
in effect on the date hereof, to any officer or key employee of the Company or
of any of its Subsidiaries, (ii) any granting by the Company or any of its
Subsidiaries to any such officer or key employee of any severance or termination
award or (iii) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination agreement with any such officer or key
employee, (e) there would have been no breach by the Company of Section 4.1,
assuming that such Section and this Agreement had been in effect since such date
in accordance with their respective terms and (f) there has been no other event
causing a Company Material Adverse Effect, nor any development that,
individually or in the aggregate, has resulted in or would reasonably be
expected to result in a Company Material Adverse Effect. Set forth in Section
3.7 of the Company Letter is a list of the indebtedness of the Company and its
Subsidiaries as of the date of this Agreement, excluding any indebtedness in an
amount not greater than $1 million individually or $5 million in the aggregate,
and a summary of any material changes in the terms of such indebtedness between
December 31, 2001 and the date of this Agreement.
Section 3.8 PERMITS AND COMPLIANCE. Each of the Company and
each of its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, charters, easements, variances, exceptions,
consents, certificates, approvals and orders necessary for the Company or any of
its Subsidiaries to own, sell, lease and operate its properties or to carry on
its business as it is now being conducted (the "Company Permits"), except where
the failure to have any of the Company Permits, individually and in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect, and no suspension or cancellation of any of the Company
Permits is pending or, to the knowledge of the Company, threatened, except where
such suspension or cancellation has not had and would not reasonably be expected
to have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in violation of (i) its charter, bylaws or other organizational
documents, (ii) any applicable law, ordinance, administrative or governmental
rule or regulation or (iii) any order, decree or judgment of any Governmental
Entity having jurisdiction over the Company or any of its Subsidiaries except,
in the case of clauses (ii) and (iii), for any violations that, individually and
in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect. Except for Commitments (as hereinafter defined)
to be entered into after the date hereof permitted under the provisions of
Section 4.1, Section 3.8 of the Company Letter sets forth a complete and correct
list of each contract, agreement or arrangement, written or unwritten, to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound that (i) relates to the borrowing of money or the
guaranty of any obligation to borrow money, in each case, in excess of $1
million, (ii) involves revenues or expenditures in excess of $1 million per
annum (excluding purchase and sale orders
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entered into in the ordinary course of business consistent with past practice),
(iii) is a collective bargaining or employment agreement involving any employee
or employees of the Company or any of its Subsidiaries, (iv) obligates the
Company or any of its Subsidiaries not to compete with any business or otherwise
restricts its right to carry on its business, (v) relates to any acquisition of
the capital stock or any of the assets of the Company or any Subsidiary by
another person (other than in the ordinary course of the Company's or such
Subsidiary's business consistent with past practice, with respect to assets) and
pursuant to which the Company or any Subsidiary has continuing obligations or
liabilities, (vi) relates to any acquisition by the Company or any of its
Subsidiaries of the capital stock or any substantial part of the assets of
another person that was entered into in the three years prior to the date
hereof, (vii) is a contract with any supplier, customer, distributor or
fabricator involving an amount in excess of $1 million per annum that is not
cancelable by the Company without causing a Company Material Adverse Effect
(excluding purchases and sales orders entered into in the ordinary course of
business consistent with past practice), (viii) relates to any merger,
consolidation, recapitalization, dissolution, liquidation or other
reorganization of the Company or any of its Subsidiaries pursuant to which the
Company or any such Subsidiary has continuing obligations or liabilities, (ix)
relates to consulting or other professional services (other than contracts for
information technology and other services entered into in the ordinary course of
business consistent with past practice and providing for fees that are less than
$1 million in the aggregate) or to investment banking or other financial
advisory services (including any agreements requiring the Company or any of its
Subsidiaries to use a particular investment bank in any financing or other
transaction), (x) is referred to in Section 3.19 of the Company Letter, (xi) is
an after-market agreement with a distributor who purchases in excess of $1
million of goods from the Company and the Subsidiaries per annum, (xii) provides
for pricing concessions or givebacks in excess of 5% per annum of the price of
any product supplied to a customer or (xiii) is a sales representative agreement
pursuant to which compensation to the representative is reasonably expected to
exceed $250,000 in any year or in respect of which the cost to the Company or
any of its Subsidiaries would exceed $250,000 upon the termination thereof by
the Company or such Subsidiary (collectively, the "Commitments"). Except as set
forth in Section 3.8 of the Company Letter, neither the Company nor any of its
Subsidiaries is in breach of or default or has suffered the loss of a material
benefit under or the acceleration of its obligations under or the termination of
(and, to the knowledge of the Company, no event has occurred which with notice
or the passage of time or both would constitute or result in a breach of or
default or such a loss of a material benefit or acceleration under or the
termination of) any Commitment, except for breaches, defaults or losses that,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
Section 3.9 TAX MATTERS. Except as otherwise set forth in
Section 3.9 of the Company Letter, (i) the Company and each of its Subsidiaries
have timely filed all income Tax Returns and all other Tax Returns required to
have been filed or appropriate extensions therefor have been properly obtained,
and such Tax Returns are true, correct and complete in all respects, (ii) all
Taxes (whether or not shown on any Tax Return) required to have been paid by the
Company and each of its Subsidiaries have been timely paid, (iii) the Company
and each of its Subsidiaries have complied with all rules and regulations
relating to the withholding of Taxes, (iv) neither the Company nor any of its
Subsidiaries has waived in writing any statute of limitations in respect of its
Taxes and, to the Company's knowledge, no deficiency with respect to any Taxes
has been proposed, asserted or assessed against the Company or any of its
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Subsidiaries, (v) to the Company's knowledge, no issues that have been raised by
the relevant taxing authority in connection with the examination of the Tax
Returns referred to in clause (i) are currently pending, (vi) all deficiencies
asserted or assessments made as a result of any examination of any Tax Returns
referred to in clause (i) by any taxing authority have been paid in full, (vii)
the Financial Statements reflect an adequate reserve for all Taxes payable by
the Company and its Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements, (viii) there are no Liens for
Taxes (other than for current Taxes not yet due and payable or, if past due,
which are being contested in good faith by appropriate proceedings and set forth
in Section 3.9 to the Company Letter) on the assets of the Company or any of its
Subsidiaries, (ix) any Tax Returns referred to in clause (i) relating to federal
and state income Taxes for any period commencing after December 31, 1997, have
been examined by the Internal Revenue Service (the "IRS") or the appropriate
state taxing authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (x) there is no
action, suit, investigation, audit, claim or assessment pending or proposed or,
to the Company's knowledge, threatened with respect to Taxes of the Company or
any of its Subsidiaries and no reasonable basis exists therefor, (xi) Xxxxxxxx
Export has no assets, the shares of the capital stock of Xxxxxxxx Export have a
fair market value not greater than $100,000 and all contracts, agreements or
arrangements between Xxxxxxxx Export and the Company or any of its Subsidiaries
may be terminated prior to the Effective Time without any liability on the part
of the Company or its Subsidiaries and (xii) Xxxxxxxx Export has no "accumulated
DISC income," as such term is defined in Treasury Regulations Section
1.996-3(b). For purposes of this Agreement: (i) "Taxes" means any federal,
state, local, foreign or provincial income, gross receipts, property, sales,
use, license, excise, franchise, employment, payroll, withholding, alternative
or added minimum, ad valorem, value-added, transfer or excise tax, or other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any Governmental
Entity, and (ii) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any Tax,
including any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 3.10 ACTIONS AND PROCEEDINGS. Except as set forth in
Section 3.10 of the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against the Company or
any of its Subsidiaries or against any of the directors, officers or employees
of the Company or any of its Subsidiaries as such, any of its or their
properties, assets or business that, individually or in the aggregate, have had
or would reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Section 3.10 of the Company Letter, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of its or their directors,
officers or employees as such, or any of its or their properties, assets or
businesses that (a) if determined or resolved adversely to the Company or any
Subsidiary of the Company in accordance with the claimant's or plaintiff's
demands, individually or in the aggregate, have had or would reasonably be
expected to have a Company Material Adverse Effect or (b) seek to, or is
reasonably likely to, prevent, delay or impair the Merger or the other
transactions contemplated by this Agreement. With respect to each such action,
suit, claim, proceeding or investigation set forth in Section 3.10 of the
Company Letter, the Company has furnished to Parent true and correct copies of
each pleading, filing, notice of other material correspondence or e-mail
relating thereto.
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Section 3.11 CERTAIN AGREEMENTS. Except as set forth in
Section 3.11, 4.1(h) or 4.1(i) of the Company Letter, neither the Company nor
any of its Subsidiaries is a party to any oral or written agreement or plan,
including any employment agreement, severance agreement, stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement. Except as set forth in Section 3.11 of the Company Letter, no holder
of any option to purchase shares of Company Common Stock, or shares of Company
Common Stock granted in connection with the performance of services for the
Company or its Subsidiaries is or will be entitled to receive cash or other
consideration (other than Company Common Stock) from the Company or any
Subsidiary in lieu of or in exchange for such option or shares as a result of
the transactions contemplated by this Agreement.
Section 3.12 ERISA. (a) Section 3.12(a) of the Company Letter
contains a list of each Company Plan (as hereinafter defined). With respect to
each Company Plan, the Company has made available to Parent a true and correct
copy of (i) the most recent annual report (Form 5500) filed with the IRS and the
two most recent actuarial reports and financial statements, (ii) such Company
Plan and all amendments thereto, (iii) each trust agreement, insurance contract
or administration agreement relating to such Company Plan, (iv) the most recent
summary plan description for each Company Plan for which a summary plan
description is required, (v) the most recent determination letter, if any,
issued by the IRS with respect to (A) any Company Plan intended to be qualified
under Section 401(a) of the Code or (B) any Company Plan or related trust
intended to be tax-exempt under any other provision of the Code, (vi) any
request for a determination currently pending before the IRS and (vii) all
material correspondence with the IRS, the Department of Labor ("DOL") or the
Pension Benefit Guaranty Corporation ("PBGC") relating to any outstanding
controversy or pending correction under the IRS's Employee Plans Compliance
Resolution System or the DOL's Voluntary Fiduciary Correction Program. Each
Company Plan complies in form, and has been operated and administered in
compliance, with the Employee Retirement Income Security Act of 1974 and the
regulations, promulgated thereunder ("ERISA"), the Code and all other applicable
statutes and governmental rules and regulations, except for noncompliance that,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(b) No "reportable event" (other than those for which the
30-day notice to the PBGC has been waived) or "prohibited transaction" (other
than those for which there is an available exemption) (as such terms are defined
in ERISA and the Code, as applicable) has occurred with respect to any Company
Plan during the six years preceding the Closing Date. Neither the Company nor
any ERISA Affiliate has incurred any liability under Title IV of ERISA to the
PBGC in connection with any Company Plan which is subject to Title IV of ERISA
which has not been fully paid prior to the date hereof, other than liability for
premiums due the PBGC, which premiums have been paid when due, and, except as
set forth on Section 3.12(b) of the Company Letter, no such Plan has been
terminated or is reasonably expected to be terminated or to be subject to
proceedings by the PBGC under Title IV of ERISA on or before the Closing Date.
No amendment to any Company Plan has been adopted that would require the
provision of security to such Plan under Section 401(a)(29) of the Code.
-20-
(c) All the information furnished by the Company to Parent
prior to the date hereof in respect of (i) the present value of all "benefit
liabilities" (whether or not vested) (as defined in Section 4001(a)(16) of
ERISA) under each Company Plan which is subject to Title IV of ERISA or (ii) the
actuarial present value (determined in accordance with reasonable actuarial
methods and assumptions disclosed in writing to Parent prior to the date hereof)
of all liabilities of the Company and its ERISA Affiliates to provide life
insurance or medical benefits after termination of employment or service to any
current or former employee, director, consultant or dependent (other than as
required by Section 4980B of the Code or Part 6 of Title 1 of ERISA), is true
and complete in all material respects. The Company and its ERISA Affiliates have
validly reserved the right to amend or terminate any life insurance or health or
medical benefits provided to retirees and their dependents, including any
amendment or termination that may be adopted before or after the retirement or
termination of services of such persons.
(d) Except as set forth on Section 3.12(d) of the Company
Letter, none of the Company Plans is a Multiemployer Plan or a Multiple Employer
Plan and neither the Company nor any ERISA Affiliate has contributed or been
required to contribute to any Multiemployer Plan or Multiple Employer Plan
within the six years preceding the Closing Date. No withdrawal liability has
been incurred by or asserted against, or is reasonably expected to be asserted
against, the Company or any ERISA Affiliate with respect to any Multiemployer
Plan. The Company has received no notice and has no knowledge or reasonable
expectation that any Company Plan is insolvent or in reorganization within the
meaning of Title IV of ERISA or that increased contributions to any Company Plan
may be required to avoid a reduction in plan benefits or the imposition of any
excise tax.
(e) There has been no failure by the Company or any ERISA
Affiliate to make any required contribution or pay any amount due to any Company
Plan as required by Section 412 of the Code, Section 302 of ERISA, or the terms
of any such Company Plan.
(f) There have been no claims made against any administrator
of a Company Plan or such Company Plan itself for any liability other than a
liability to pay benefits under such Company Plan in accordance with the terms
thereof.
(g) All Company Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so qualified,
or a timely application for such determination is now pending or will be filed
on a timely basis and there is no reason why any Company Plan is not so
qualified in operation.
(h) As used herein, (i) "Company Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA), a "welfare plan" (as defined in Section
3(1) of ERISA), or any material bonus, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, severance, death benefit, insurance or other plan, arrangement
or understanding, in each case established, maintained or contributed to by the
Company or any of its ERISA Affiliates or as to which the Company or any of its
ERISA Affiliates may have any liability, (ii) "Multiemployer Plan" means a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA), (iii)
"Multiple Employer Plan" means a plan described in PBGC Reg. Section 4001.2 and
subject to Section 413(c) of the Code and the regulations promulgated thereunder
and (iv) with respect to any person, "ERISA Affiliate" means any trade
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or business (whether or not incorporated) which is under common control or would
be considered a single employer with such person pursuant to Section 414(b),
(c), (m) or (o) of the Code and the regulations promulgated under those sections
or pursuant to Section 4001(b) of ERISA and the regulations promulgated
thereunder.
(i) Except as disclosed in Section 3.12(i) of the Company
Letter, neither the Company nor any Subsidiary of the Company maintains or
contributes to any arrangement (other than a Company Plan) providing pension or
welfare benefits that is established or maintained by the Company or any
Subsidiary for the benefit of employees who are or were employed outside the
United States. Any such arrangement listed on Section 3.12(i) of the Company
Letter complies in form and has been operated and administered in compliance
with applicable laws, except for noncompliance that, individually and in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect; and the Financial Statements appropriately reflect all
liabilities with respect to any such arrangement and neither the Company nor any
Subsidiary of the Company has incurred or expects to incur any liabilities with
respect to any such arrangement, other than as disclosed in Section 3.12(i) of
the Company Letter.
(j) Section 3.12(j) of the Company Letter contains a list, as
of the date of this Agreement, of all (i) severance and employment agreements
with officers, directors, employees and consultants of the Company and each
ERISA Affiliate, (ii) severance programs and policies of the Company and each
ERISA Affiliate with or relating to its officers, directors, employees or
consultants and (iii) plans, programs, agreements and other arrangements of the
Company and each ERISA Affiliate with or relating to its officers, directors,
employees or consultants which contain change of control or similar provisions,
and in the case of each of (i), (ii) and (iii) above, such list shall be limited
only to such agreements, programs, policies, plans and other arrangements that
involve a severance or employment agreement or arrangement with an individual
officer, director, employee or consultant, and which provide for minimum annual
payment or payments (not including commissions or any similar contingent
incentive payments) in excess of $100,000. The Company has provided to Parent a
true and complete copy of each of the foregoing.
Section 3.13 CERTAIN LIABILITIES. Except as set forth in
Section 3.13 of the Company Letter or as disclosed in the combined consolidated
balance sheet of the Company as of March 31, 2002, and except for such
indebtedness permitted to be incurred after the date hereof under the provisions
of Section 4.1, the Company and its Subsidiaries have no liabilities, absolute
or contingent, and whether or not required to be disclosed on the combined
consolidated balance sheet of the Company in accordance with GAAP, except for
any liabilities that, individually and in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect. Except as
set forth in Section 3.13 of the Company Letter, neither the Company nor any of
its Subsidiaries has engaged in any transaction that received off-balance sheet
accounting treatment under Financial Accounting Standard No. 125 or No. 140.
Section 3.14 INTELLECTUAL PROPERTY. (a) Section 3.14(a) of the
Company Letter sets forth a true and complete list of all material patents,
copyrights, trademarks (registered or unregistered), trade names and service
marks and applications therefor (collectively, "Marks") owned, used, filed by or
licensed to the Company or any of its Subsidiaries. With respect to
-22-
registered trademarks, Section 3.14(a) of the Company Letter sets forth a list
of all jurisdictions in which such trademarks are registered or applied for and
all registration and application numbers. Except as set forth in Section 3.14(a)
of the Company Letter, the Company and its Subsidiaries own, and the Company and
its Subsidiaries have the right to use, execute, reproduce, display, perform,
modify, enhance, distribute, prepare derivative works of and sublicense, without
payment to any other person, all Marks listed in Section 3.14(a) of the Company
Letter and the consummation of the transactions contemplated hereby will not
conflict with, alter or impair any such rights.
(b) Except as set forth in Section 3.14(b) of the Company
Letter, none of the Company or any of its Subsidiaries has granted any material
options, licenses, sublicenses or agreements of any kind relating to any Xxxx or
any other intellectual property and proprietary rights, whether or not subject
to statutory registration or protection (collectively with the Marks,
"Intellectual Property"). None of the Company or any of its Subsidiaries is
bound by or a party to any material options, licenses, sublicenses or agreements
of any kind relating to the Intellectual Property of any other person, except as
set forth in Section 3.14(b) of the Company Letter and except for agreements
relating to computer software licensed to the Company or its Subsidiaries in the
ordinary course of business. Subject to the rights of third parties set forth in
Section 3.14(b) of the Company Letter, all Intellectual Property listed in
Section 3.14(b) of the Company Letter is free and clear of the claims of others
and of all Liens. Except as disclosed in Section 3.14(b) of the Company Letter,
to the Company's knowledge, the conduct of the business of the Company or its
Subsidiaries as presently conducted and as proposed to be conducted does not and
will not violate or infringe the Intellectual Property of any other person.
Except as set forth in Section 3.14(b) of the Company Letter, no claims are
pending, or to the knowledge of the Company, threatened, against the Company or
any of its Subsidiaries by any person with respect to the ownership, validity,
enforceability, effectiveness or use of any Intellectual Property. To the
knowledge of the Company, there is no actual or suspected unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property rights
of the Company or any of its Subsidiaries or any third party Intellectual
Property rights, to the extent licensed to the Company or any of its
Subsidiaries by any third party, including any employee or former employee of
the Company or any of its Subsidiaries.
(c) It is the policy of the Company that all officers of the
Company or any of its Subsidiaries (other than the Chinese Joint Ventures (as
defined in Section 8.3) with respect to their operations in the People's
Republic of China) and all employees of the Company or any of such Subsidiaries
who could reasonably be expected to create Intellectual Property execute and
deliver to the Company or such Subsidiary prior to or promptly after the
commencement of their employment an agreement providing for the assignment to
the Company or such Subsidiary of any Intellectual Property arising from
services performed for the Company or such Subsidiary by such persons. To the
Company's knowledge, there is no Intellectual Property developed by an officer
or employee of the Company or any of its Subsidiaries that is subject to a
patent, copyright or trademark application of the Company or such Subsidiary
that has not been transferred to, and all such Intellectual Property is owned
free and clear of any Liens by, the Company or such Subsidiary.
Section 3.15 PROPERTIES, TITLE AND RELATED MATTERS. (a) The
Company and its Subsidiaries have sufficient title to all their tangible
properties and assets to conduct their
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respective businesses as currently conducted or as contemplated to be conducted,
with only such exceptions as, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
(b) Except as described in Section 3.15(b) of the Company
Letter, each parcel of real property owned or leased by the Company or any of
its Subsidiaries (i) is owned or leased free and clear of all mortgages,
pledges, liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, "Encumbrances"), other than (A) Encumbrances for current taxes
and assessments and other governmental charges not yet past due or, if past due,
which are being contested in good faith by appropriate proceedings and set forth
in Section 3.15(b) of the Company Letter, (B) inchoate mechanics' and
materialmen's Encumbrances for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Encumbrances arising in the ordinary
course of business of the Company or such Subsidiary consistent with past
practice, and (D) all matters of record, Encumbrances and other imperfections of
title that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect and (ii) is
neither subject to any governmental decree or order to be sold nor is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the Company's knowledge, has
any such condemnation, expropriation or taking been proposed.
(c) All leases of real and personal property for the use or
benefit of the Company or any of its Subsidiaries to which the Company or any
such Subsidiary is a party requiring rental payments in excess of $100,000 per
year during the period of the lease and all amendments and modifications thereto
are in full force and effect and have not been further modified or amended, and
there exists no default under any such lease by the Company or any such
Subsidiary nor any event which with notice or lapse of time or both would
constitute a default thereunder by the Company or any such Subsidiary except as
would not, individually and in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Except as disclosed in Section 3.15(c) of the
Company Letter, neither the Company nor any of its Subsidiaries has engaged in
any sale/leaseback or similar financing transactions, whether or not accounted
for as an operating or a capital lease, with respect to its real or personal
property.
Section 3.16 CUSTOMER WARRANTIES. Except as disclosed in
Section 3.16 of the Company Letter, there are not pending nor are there, to the
knowledge of the Company, threatened, any claims under or pursuant to any
warranty, whether expressed or implied, on products or services sold prior to
the date of this Agreement by the Company or any of its Subsidiaries that are
not reflected in the Financial Statements, except for such claims that, if
determined or resolved adversely to the Company or any Subsidiary of the Company
in accordance with the claimant's or plaintiff's demands, individually would
cost the Company and its Subsidiaries less than $500,000 for the related product
or program. Since January 1, 2000, neither the Company nor any of its
Subsidiaries has had any of its products involved in a recall (including any
government-mandated recall, "silent" recall or OEM customer satisfaction
campaign) with a cost to the Company or any such Subsidiary in excess of
$500,000 in respect of any product or program. To the Company's knowledge,
neither the Company nor any of its Subsidiaries has received any notice or claim
regarding any such potential recall.
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Section 3.17 ENVIRONMENTAL MATTERS. Except as disclosed in
Section 3.17 of the Company Letter and except as, individually and in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect, (i) neither the businesses of the Company and its
Subsidiaries, nor the operation thereof, nor any condition or circumstance at
any property, asset, improvement, fixture or equipment currently owned, operated
or leased by the Company or any of its Subsidiaries violates in any material
respect any applicable federal, state, local, regional or foreign laws, rules
and regulations, orders, decrees, common law, judgments, permits and licenses
relating to public or worker health and safety, the protection, management,
regulation or clean-up of the indoor or outdoor environment and activities or
conditions related thereto, including those relating to the generation,
handling, disposal, transportation or release of hazardous or toxic materials,
substances, wastes, pollutants and contaminants including, without limitation,
asbestos, petroleum (whether crude oil or any refined or altered product),
radon, urea formaldehyde, lead-based paint, mold and polychlorinated biphenyls
(such laws, rules, regulations, orders, decrees, common law, judgments, permits
and licenses, collectively, "Environmental Laws"); (ii) no condition,
circumstance or event exists or has occurred which, with notice or the passage
of time or both, would constitute such a violation of any Environmental Law or
give rise to a liability under any Environmental Law for the Company or its
Subsidiaries; (iii) the Company and each of its Subsidiaries is in possession of
all Company Permits required under any applicable Environmental Law
("Environmental Permits") for its operations and the Company and each of its
Subsidiaries has been and is in compliance in all material respects with all the
requirements and limitations included in such Environmental Permits; (iv) none
of the Company or any of its Subsidiaries has handled, buried, dumped, disposed
of, released (actively or passively), spilled, transported, stored or used any
materials, products, pollutants, contaminants, hazardous or toxic wastes,
substances or other materials regulated by, defined in or subject to any
Environmental Law (collectively, the "Hazardous Substances") on, at, beneath or
adjacent to any of its property or any other property (including ground water)
in any manner; (v) no person is violating, or has violated, any Environmental
Law applicable to the business of the Company or any of its Subsidiaries, or to
any property, asset, improvement, fixture or equipment owned, leased or operated
by the Company or any of its Subsidiaries, nor has any such other person failed
to obtain any Environmental Permits respecting any property, asset, improvement,
fixture or equipment necessary or useful to the Company or any of its
Subsidiaries in the conduct of their respective operations; (vi) none of the
Company or any of its Subsidiaries has received any notice, suit or claim from
any authority or any private person or entity alleging that the Company or any
of its Subsidiaries or the operation of any of their respective properties or
their respective operations is or may be in violation of any Environmental Law
or any Environmental Permit or that it is or may be responsible (or potentially
responsible) for the presence, release or threatened release of any Hazardous
Substances at, on or beneath any of the properties (including ground water) of
the Company or any of its Subsidiaries, or at, on or beneath any land adjacent
thereto (including ground water) or in connection with any other site; (vii)
each of the Company and its Subsidiaries has timely filed all material reports
required to be filed with respect to all of its property, assets, improvements,
fixtures or equipment and has generated and maintained all material required
data, documentation and records required under all applicable Environmental
Laws; (viii) to the Company's knowledge there are no underground storage tanks,
including any piping, landfills, surface improvements, lagoons or disposal
areas, at, on or beneath any property owned, leased or operated by the Company
or any Subsidiary for any purpose; (ix) there are no conditions,
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circumstances or events respecting any property, asset, improvement, fixture or
equipment owned or operated by any person other than the Company or any
Subsidiary that have given rise to or would reasonably be expected to give rise
to a Company Material Adverse Effect under any Environmental Law; (x) to the
Company's knowledge, none of the Company or any of its Subsidiaries or any of
their properties are subject to any investigation, judicial or administrative
proceeding, order, judgment, decree or settlement agreement respecting
Environmental Law or Hazardous Substances; (xi) none of the Company or any of
its Subsidiaries and none of the businesses of the Company or any of its
Subsidiaries have manufactured, distributed or sold products containing
asbestos; and (xii) none of the properties, assets, improvements, fixtures or
equipment of the Company or any of its Subsidiaries contain asbestos that,
individually or in the aggregate, has given rise to or would reasonably be
expected to give rise to liability for the Company or its Subsidiaries. All the
foregoing representations and warranties contained in clauses (ii) through (xii)
concerning properties, assets, improvements, fixtures and equipment of the
Company or any of its Subsidiaries shall be deemed to include all current and
former properties, assets, improvements, fixtures and equipment owned, leased or
operated by the Company or any of its Subsidiaries.
Section 3.18 INSURANCE. Section 3.18 of the Company Letter
sets forth descriptions of all insurance contracts or policies of the Company
(the "Company Policies"), including those that relate to liability or excess
liability insurance (collectively, the "Company Liability Policies"), including
the name of the insurer, the types, dates and amounts of coverages, and any
material coverage exclusions. Neither the Company nor any of its Subsidiaries
has breached or otherwise failed to perform in any material respects its
obligations under any of the Company Policies or the Company Liability Policies
nor has the Company or any of its Subsidiaries received any adverse written
notice or, to the knowledge of the Company, oral communication from any of the
insurers party to the Company Policies or the Company Liability Policies with
respect to any such alleged breach or failure in connection with any of the
Company Policies or the Company Liability Policies. In the last five years,
neither the Company nor any of its Subsidiaries has been denied coverage under
any Company Policy or Company Liability Policy. Except as disclosed in Section
3.18 of the Company Letter, all Company Policies are sufficient for compliance
with all laws and regulations of any Government Entity and all agreements to
which the Company and its Subsidiaries are subject; are valid and outstanding,
policies; and will not be affected by, or terminate or lapse by reason of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except to the extent that any such termination or lapse
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section 3.19 RELATED PARTY TRANSACTIONS. Except as set forth
in Section 3.19 of the Company Letter, neither any present or former officer,
director or Principal Shareholder of the Company or any of its Subsidiaries, nor
any affiliates of such officers, directors or Principal Shareholders, are
currently a party to any transaction involving an amount in excess of $50,000
with the Company or any of its Subsidiaries, excluding employment agreements but
including any agreement providing for the furnishing of services by, rental of
assets from or to, or otherwise requiring payments to, any of such officers,
directors, Principal Shareholders or affiliates.
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Section 3.20 PARACHUTE PAYMENTS TO DISQUALIFIED INDIVIDUALS.
Except as set forth in Section 3.20 of the Company Letter, no payment or other
benefit, and no acceleration of the vesting or payment of any options, payments
or other benefits, will, as a direct or indirect result of the transactions
contemplated by this Agreement, be (or under Section 280G of the Code and the
Treasury Regulations thereunder be presumed to be) a "parachute payment" to a
"disqualified individual" (as those terms are defined in Section 280G of the
Code and the Treasury Regulations thereunder) with respect to the Company or any
of its Subsidiaries without regard to whether such payment or acceleration is
reasonable compensation for personal services performed or to be performed in
the future. The approximate aggregate amount of excess "parachute payments"
related to the matters set forth in such Section 3.20 of the Company Letter,
assuming the Closing occurs on the date specified therein and termination of all
listed individuals without cause on such date, is set forth in such Section 3.20
of the Company Letter.
Section 3.21 OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company have received the opinion of Xxxxxxx Xxxxx Barney Inc.
("Xxxxxxx Xxxxx Xxxxxx"), dated the date of this Agreement, to the effect that,
as of such date, Exchange Ratio is fair from a financial point of view to the
holders of Company Class A Common Stock (other than those holders and their
respective affiliates that have executed the Shareholders' Agreement), a copy of
the written opinion of which will be delivered to Parent promptly after receipt
thereof by the Company.
Section 3.22 STATE TAKEOVER STATUTES. The requirements of
Section 780 of the MBCA do not apply to the Merger, this Agreement or any of the
transactions contemplated hereby, pursuant to Section 783 of the MBCA. None of
the Merger, this Agreement or any of the transactions contemplated hereby is
subject to Chapter 7B of the MBCA. No takeover statute or similar statute or
regulation in the State of Michigan or any other state or other jurisdiction,
applies or purports to apply to the Merger or to this Agreement, or any of the
transactions contemplated hereby.
Section 3.23 REORGANIZATION. To the knowledge of the Company,
neither it nor any of its Subsidiaries has taken any action or failed to take
any action which action or failure would jeopardize the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
Section 3.24 BROKERS. No broker, investment banker or other
person, other than Xxxxxxx Xxxxx Xxxxxx, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder'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. The Company has
furnished to Parent a true and correct copy of the engagement letter between the
Company and Xxxxxxx Xxxxx Barney.
Section 3.25 VOTES REQUIRED. The affirmative vote by the
holders of Company Common Stock entitled to vote not less than two-thirds of the
total number of votes entitled to be cast by holders of Company Common Stock,
with the holders of Company Class A Common Stock and Company Class B Common
Stock voting together as a single class (the "Company Required Vote"), is the
only vote of the holders of any class or series of the Company's voting
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securities that is necessary to approve the Merger, this Agreement and the
transactions contemplated hereby.
Section 3.26 DISCLOSURE. No representation or warranty by the
Company in this Agreement, and no document furnished to Parent in connection
with the transactions contemplated by this Agreement, contains any untrue
statement of a material fact or omits any material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which made, not misleading. All facts that would reasonably be expected to be
material to an investor making a decision to invest in equity securities of the
Company have been disclosed to Parent.
Section 3.27 ACCOUNTING CONTROLS. In all material respects,
the Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances, to the extent required by Section 13(b)(2)(B) of
the Exchange Act, that (a) transactions are executed in accordance with
management's general or specific authorization; (b) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (c) access to assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
Section 3.28 ACCOUNTING MATTERS. The Company has not been
advised by its independent accountants of any material accounting irregularities
that would reasonably be expected to require the Company to restate the
Financial Statements (other than as required by any change in accounting
principles generally accepted in Canada or the United States). To the Company's
knowledge, the Company is not subject to any material pending or threatened
investigation by the SEC concerning the Financial Statements.
Section 3.29 LABOR MATTERS. Except as provided in Section 3.29
of the Company Letter, neither the Company nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice, labor arbitration proceeding or other material
labor dispute or claim pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries relating to their businesses. To
the knowledge of the Company, there are no organizational efforts with respect
to the formation of a collective bargaining unit currently being made or
threatened involving employees of the Company or any of its Subsidiaries. The
Company has not received any written or, to the knowledge of the Company, oral
claims that its Subsidiaries' European operations have employed any slave or
prisoner-of-war labor.
Section 3.30 OLD COMPANY STOCK OPTIONS. All the Company Stock
Options have vested in accordance with their terms by reason of the change of
control of the Company that occurred for purposes thereof upon the execution and
delivery of the Shareholders' Agreement by the parties thereto. If the Old
Company Stock Options are not duly exercised by the holders thereof prior to the
Effective Time, such Old Company Stock Options would terminate and be of no
further force or effect and would not give rise to any claim against the
Surviving Corporation by such holders.
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Section 3.31 SUBSIDIARIES AND JOINT VENTURES. Section 3.31 of
the Company Letter sets forth all agreements and all organizational documents
(collectively, the "Subsidiary and Joint Venture Agreements") that are either
(i) between any of the Hohe Holders (as hereinafter defined) or any of their
affiliates and Hohe (as hereinafter defined) or (ii) with respect to any debt or
equity investment by the Company or any of its Subsidiaries or by any third
party in (a) any Subsidiary of the Company that is not a wholly owned Subsidiary
(each, a "non-wholly owned Subsidiary"), including Xxxxxxxx Hohe GmbH & Co., KG
("Hohe"), and (b) any joint venture or equity investment of the Company that is
not a Subsidiary of the Company (each, a "Joint Venture"); and the Company has
furnished to Parent true and correct copies of each Subsidiary and Joint Venture
Agreement. Each Subsidiary and Joint Venture Agreement is in full force and
effect and the Company and the relevant non-wholly owned Subsidiary, as the case
may be, and, to the knowledge of the Company, the relevant Joint Venture and any
third party is not in violation of or in default under such Subsidiary and Joint
Venture Agreement. Neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby will
(with or without notice or lapse of time, or both) result in any violation of,
or default or the loss of a material benefit under, or give to others a right of
termination, cancellation or acceleration of any obligation under, any
Subsidiary and Joint Venture Agreement. Xxxxxxxx Holding GmbH has the legal and
enforceable right under applicable law under the Acquisition Agreement dated May
25, 1995, as amended by the Agreement dated March 20, 1998, between, among other
parties, Xxxx Xxxx, Xxxxxxxxx Xxxx, Xxxxx Xxxx, Xx. Xxxxx Xxxx-Xxxxxxx and
Xxxxxxxxx Xxxxx (the "Hohe Holders") to acquire all the economic interest in
Hohe not currently owned by Xxxxxxxx Holding GmbH for DM5 million plus a
potential additional payment of up to DM500,000 upon notarized notice to the
Hohe Holders prior to the exercise of such right and, following the exercise
thereof, shall have the legal and enforceable right under applicable law under
the Option Agreement dated May 24, 1995 between Xxxxxxxx Holding GmbH, Xxxxx
Xxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxxxx Xxxxxxxxxx to acquire all the
shares of Hohe Verwaltungs-GmbH not currently owned by the Company from Xxxxx
Xxxx for DM25,000 on written notice (such rights, collectively, the "Hohe Call
Options").
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. During the period from the date of this Agreement through the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, conduct
its operations in the ordinary course of business consistent with past practice
and, to the extent consistent therewith, use all reasonable efforts to keep
available the services of its current officers and key employees and, except as
otherwise agreed upon by Parent, preserve its material relationships with
customers, suppliers, licensors, lessors, creditors and others having business
dealings with it, except where the failure to do so, individually and in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Without limiting the generality of the foregoing, and except as
otherwise expressly required by this Agreement, the Company shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent of
Parent:
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(a) adopt any amendment to its articles or certificate of
incorporation or by-laws or other comparable organizational documents;
(b) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities, equity equivalent or
convertible securities, other than the issuance of shares of Company Class A
Common Stock or shares of common stock of Information Products, Inc. upon the
exercise of employee stock options pursuant to the Company Stock Plans and the
Information Products, Inc. stock option plan, respectively, outstanding on the
date of this Agreement in accordance with their terms or the issuance of Company
Class A Common Stock in exchange for Company Class B Common Stock;
(c) (i) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to its shareholders in their
capacity as such (other than dividends and other distributions by Subsidiaries
to the Company or its Subsidiaries and other than the Company's regular
quarterly cash dividends; PROVIDED that the record dates after June 2002 for
such regular quarterly cash dividends shall be set on the record date
established by Parent for dividends on Parent Common Stock), (ii) other than in
the case of any wholly owned Subsidiary, split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
(iii) except as contemplated by Section 4.4, purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its non-wholly
owned Subsidiaries or any other debt or equity securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(d) (A) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the assets or
properties of or equity in (except as contemplated by clause (ii) below), or by
any other manner, any business or any corporation, partnership, limited
liability company, association or other business organization or division
thereof for a price in excess of $2 million or (ii) any assets or properties
that are, individually or in the aggregate, material to the Company and its
Subsidiaries taken as a whole, other than purchases of equipment, tooling or raw
materials that are in the ordinary course of business consistent with past
practice or (B) make any capital contributions to, or other investments in, any
person that is not a majority owned Subsidiary of the Company (other than
additional capital contributions or investments not in excess of $500,000 in the
aggregate that are in respect of investments of the Company held as of the date
hereof);
(e) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its assets, other than
transactions (including the sale of inventory) that are in the ordinary course
of business consistent with past practice or in connection with the liquidation
of Xxxxxx Xxxxxxxx, LLC;
(f) incur or assume any indebtedness for borrowed money,
guarantee any such indebtedness in excess of existing credit facilities, issue
or sell any debt securities or warrants or other rights to acquire any debt
securities, guarantee or otherwise support any debt securities or make any loans
or advances to any other person, or enter into any arrangement having the
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economic effect of any of the foregoing, other than (i) indebtedness incurred in
the financing of customer contracts and accounts receivable in the ordinary
course of business consistent with past practice, (ii) indebtedness, loans,
advances, guarantees, capital contributions and investments between the Company
and any of its wholly owned Subsidiaries or between any of such wholly owned
Subsidiaries, (iii) other indebtedness in a maximum aggregate principal amount
not exceeding $5 million or (iv) in connection with refinancing existing
indebtedness;
(g) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership of
the Company or any non-wholly owned Subsidiary;
(h) except as required under Section 5.8 or as set forth in
Section 4.1(h) of the Company Letter, enter into or adopt any, or amend any
existing, severance plan, agreement or arrangement or enter into or amend any
Company Plan or employment or consulting agreement, other than as required by
law or by an existing contractual obligation of the Company disclosed in Section
4.1(h) of the Company Letter;
(i) except as set forth in Section 4.1(i) of the Company
Letter, and except to the extent required by written employment agreements
existing on the date of this Agreement and set forth in Section 3.12(i) of the
Company Letter, increase the compensation payable or to become payable to its
officers or other employees, except for increases in the ordinary course of
business consistent with past practice in salaries or wages of such other
employees of the Company or any of its Subsidiaries;
(j) grant or award, or amend or modify any previously granted
or awarded, any stock options, restricted stock, performance shares, stock
appreciation rights or other equity-based incentive awards;
(k) change or modify the accounting methods, principles or
practices used by it (other than changes or modifications required to be made by
changes in accounting principles generally accepted in the United States);
(l) except as set forth in Section 4.1(l) of the Company
Letter, make or agree to make any capital expenditure, other than (i) in the
ordinary course of business consistent with past practice to support the
Company's production in respect of takeover work or other contracts awarded by
an OEM after the date of the business plan of the Company previously delivered
to Parent, (ii) as specified in such business plan or (iii) to the extent not
specified in such business plan, in an amount not greater than $1 million
individually or $5 million in the aggregate;
(m) settle or compromise any suit, proceeding or claim or
threatened suit, proceeding or claim in an amount not covered by insurance in
excess of $1 million in the aggregate;
(n) settle or compromise any liability under any federal,
state, local or foreign tax law or under any Environmental Law, in each case, in
excess of $1 million or that would impose a material restraint on the business
of the Company or any Subsidiary;
(o) make any material tax election not required by law;
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(p) except as set forth in Section 4.1(p) of the Company
Letter, make any material amendment to, or waive any material provision of, any
contract, arrangement or understanding requiring the lease or purchase of
equipment, materials, supplies or services in excess of $1,000,000 individually
or $5,000,000 in the aggregate, which is not cancelable without penalty on 90 or
fewer days' notice;
(q) knowingly violate or fail to perform any material
obligation or duty imposed upon it or any Subsidiary by any applicable federal,
state or local law, rule, regulation, guideline or ordinance;
(r) make any payment of any nature whatsoever to Xxxxxxxx
Export, other than to permit it to make its regular quarterly cash dividend in
the ordinary course of business consistent with past practice;
(s) take or agree to take any action that would reasonably be
expected to cause any representation or warranty of the Company set forth in
this Agreement not to be true and correct in any material respect or result in
any of the conditions set forth in Article VI not being satisfied as
contemplated by this Agreement (or fail to take any action required to (i)
prevent any such representation or warranty from becoming not true and correct
in any material respect or (ii) satisfy such conditions as contemplated hereby);
or
(t) authorize, recommend, propose or announce an intention to
do any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 NO SOLICITATION; THIRD PARTY STANDSTILL
AGREEMENTS. (a) From the date hereof until the termination of this Agreement in
accordance with its terms, the Company shall not, nor shall it authorize or
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor,
representative or agent of, the Company or any of its Subsidiaries to, (i)
solicit, initiate or encourage the submission of, any Takeover Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to or approve
or recommend any Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
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 financial
advisor, attorney or other advisor, representative or agent of the Company or
any of its Subsidiaries, whether or not such person is purporting to act on
behalf of the Company or any of its Subsidiaries or otherwise, shall be deemed
to be a breach of this Section 4.2(a) by the Company. For purposes of this
Agreement, "Takeover Proposal" means any proposal for a merger, sale of all or
substantially all the assets of, or other business combination or
recapitalization or similar transaction involving, the Company or any of its
Subsidiaries or any proposal or offer to acquire in any manner, directly or
indirectly, an equity interest in excess of 5% of the Company Common Stock or
voting securities of the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
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(b) The Company promptly (but in no event later than 48 hours
after the event) shall advise Parent orally and in writing of (i) any Takeover
Proposal or any inquiry or any communication with respect to or which could
reasonably be expected to lead to any Takeover Proposal, (ii) the material terms
of such Takeover Proposal (including a copy of any written proposal) and (iii)
the identity of the person or persons making any such Takeover Proposal, inquiry
or communication. The Company will keep Parent promptly and fully informed of
the status, changes in and details of any such Takeover Proposal, inquiry or
communication.
(c) During the period from the date of this Agreement through
the Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality, standstill or similar agreement to which the
Company or any of its Subsidiaries is a party (other than any to which Parent is
a party). During such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including using all reasonable efforts to obtain injunctions to prevent any
threatened or actual breach of such agreements and to enforce specifically the
terms and any provision thereof in any court of the United States or any state
thereof having jurisdiction.
Section 4.3 REORGANIZATION. During the period from the date of
this Agreement through the Effective Time, unless the other party shall
otherwise agree in writing, none of Parent, the Company or any of their
respective Subsidiaries shall knowingly take or fail to take any action which
action or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Section 4.4 REDEMPTION OF COMPANY 7 1/2% PREFERRED. Prior to
the Effective Time, the Company shall duly call for redemption and, immediately
prior to the Effective Time, shall duly redeem, all outstanding shares of the
Company 7 1/2% Preferred, in accordance with the terms thereof.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 SPECIAL MEETING OF SHAREHOLDERS. The Company shall
duly call a Special Meeting of its shareholders for the purpose of voting upon
this Agreement (insofar as it relates to the Merger), the Merger and related
matters and use its best efforts duly to give notice of, convene and hold such
Special Meeting as soon as practicable following the date hereof. The Company
will, through its Board of Directors, recommend to its shareholders approval and
adoption of this Agreement and approval of the Merger, unless the Company has
received a Superior Proposal (as hereinafter defined) or unless Parent has
delivered a Parent MAE Notice with respect to any Parent Material Adverse Effect
or deemed Parent Material Adverse Effect pursuant to Section 6.2(d).
Notwithstanding the foregoing or any other provision of this Agreement, the
Company shall adjourn the Special Meeting at any time and from time to time,
until the conditions set forth in Article VI (other than in Section 6.1(f) and
other than those that this Agreement contemplates will be satisfied at or
immediately prior to the Effective Time) have been satisfied or waived.
"Superior Proposal" means any bona fide written Takeover Proposal that the Board
of Directors of the Company determines in good faith after consultation with the
Company's legal and financial advisors, and taking into account all the terms
and conditions of
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the Takeover Proposal, including the likelihood of consummation of such
proposal, is more favorable to the Company's shareholders than the Merger and
for which financing, to the extent required, is then fully committed or
reasonably determined by the Board of Directors of the Company to be available.
Section 5.2 FILINGS; OTHER ACTIONS. (a) The Company shall as
soon as practicable after the date hereof prepare and file with the SEC the
Proxy Statement/Prospectus and Parent shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement/Prospectus will be included
as a prospectus. Each of Parent and the Company shall use all reasonable efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing. As promptly as practicable after
the Registration Statement shall have become effective, the Company shall mail
the Proxy Statement/Prospectus to its shareholders (the date of such mailing to
any of such shareholders being hereinafter called the "Mailing Date"). Each
party shall furnish all information concerning itself and the holders of its
capital stock as may reasonably be requested in connection with any such action,
including information relating to the number of shares of Parent Common Stock
required to be registered.
(b) Each party hereto agrees, subject to applicable laws
relating to the exchange of information, promptly to furnish the other parties
hereto with copies of written communications (and memoranda setting forth the
substance of all oral communications) received by such party, or any of its
subsidiaries, affiliates or associates (as such terms are defined in Rule 12b-2
under the Exchange Act as in effect on the date hereof), from any Governmental
Entity, and to promptly advise the other parties hereto of any proposed delivery
of any of the foregoing to any Governmental Entity and provide such other
parties with reasonable opportunity to comment thereon, in respect of the
transactions contemplated hereby.
(c) Each of the Company and Parent will promptly, and in any
event within ten business days after execution and delivery of this Agreement
with respect to the HSR Act, within seven calendar days after the execution and
delivery of this Agreement, with respect to the EC Merger Regulation (unless a
valid extension is obtained granting additional time with respect to the EC
Merger Regulation, and then within such extended period of time) and within the
time required by all other applicable laws, rules and regulations, make all
filings or submissions as are required under the HSR Act or the EC Merger
Regulation or any other applicable antitrust statute. Each of the Company and
Parent will promptly furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submissions necessary under the HSR Act or the EC
Merger Regulation or any other applicable antitrust statute. Each of the Company
and Parent will promptly notify the other of the receipt and content of any
inquiries or requests for additional information made by any Governmental Entity
in connection therewith and, subject to the next sentence, will promptly (i)
comply with any such inquiry or request and (ii) provide the other with a
description of the information provided to any Governmental Entity with respect
to any such inquiry or request. In addition, each of the Company and Parent will
keep the other apprised of the status of any such inquiry or request. The
foregoing shall not require (i) Parent or the Company to make any divestiture or
consent to any divestiture in order to fulfill any condition or obtain any
consent, authorization or approval or to appeal an injunction or order, or to
post a bond in respect of such appeal or (ii) Parent to comply with any request
for additional information from any
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Governmental Entity, compliance with which would be, after Parent's good faith
efforts to negotiate with such Governmental Entity the narrowing of the scope of
such request, unduly burdensome or expensive (it being understood that a "second
request" for information from any Governmental Entity in connection with filings
made under the HSR Act would not necessarily be unduly burdensome or expensive).
Section 5.3 COMFORT LETTERS. (a) The Company shall use all
reasonable efforts to cause to be delivered to Parent "comfort" letters of
PriceWaterhouseCoopers and BDO Xxxxxxx LLP, the Company's independent public
accountants, dated the date on which the Registration Statement shall become
effective and as of the Effective Time, and addressed to the respective Boards
of Directors of Parent and the Company, in form and substance reasonably
satisfactory to Parent and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) Parent shall use all reasonable efforts to cause to be
delivered to the Company "comfort" letters of Ernst & Young LLP, Parent's
independent public accountants, dated the date on which the Registration
Statement shall become effective and as of the Effective Time, and addressed to
the respective Boards of Directors of the Company and Parent, in form and
substance reasonably satisfactory to the Company and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
Section 5.4 ACCESS TO INFORMATION. Subject to the other terms
and conditions of this Section 5.4, during normal business hours during the
period from the date of this Agreement through the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, afford to the accountants,
counsel, financial advisors and other representatives of Parent reasonable
access to, and permit them to make such reasonable inspections (including
environmental and other sampling, subject to the execution of a reasonable
environmental site access agreement) as they may reasonably require of, all
their respective properties, books, Tax Returns, contracts, commitments and
records (including the work papers of independent accountants, if available and
subject to the consent of such independent accountants) and, during such period,
the Company shall, and shall cause each of its Subsidiaries to, furnish promptly
to Parent (i) a copy of each material report, schedule, registration statement
and other document filed by it during such period pursuant to the requirements
of federal or state securities laws or otherwise filed by it during such period
with any Governmental Entity and (ii) all other information concerning its
business, properties and personnel as Parent may reasonably request.
Notwithstanding any provision of this Agreement, including this Section 5.4, the
Company shall have no obligation to disclose or provide to Parent or any of its
accountants, counsel, financial advisors or other representatives any
information, documents or records that are competitively highly sensitive,
including costing information on any particular product or program and
information on any program or product to be bid to an automotive manufacturer,
provided that no such sensitive, non-disclosed or non-provided information,
documents or records involves any facts that, individually or in the aggregate,
has had or would reasonably be expected to have a Company Material Adverse
Effect. No investigation pursuant to this Section 5.4(a) shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained by
Parent pursuant to this Section
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5.4(a) shall be kept confidential in accordance with the letter agreement dated
March 21, 2002 (the "Confidentiality Agreement") between Parent and the Company.
Section 5.5 COMPLIANCE WITH THE SECURITIES ACT. The Company
shall use all reasonable efforts to cause each person who is identified as an
"affiliate" of the Company as that term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (the "Rule 145 Affiliates") to deliver to
Parent on or prior to the Effective Time a written agreement in substantially
the form of Exhibit 5.5 hereto, executed by such person.
Section 5.6 STOCK EXCHANGE LISTINGS. Parent shall use its best
efforts to list on the NYSE and the TSE, upon official notice of issuance, the
shares of Parent Common Stock to be issued in connection with the Merger.
Section 5.7 FEES AND EXPENSES. (a) Except as provided in
paragraphs (b) and (c) of this Section 5.7, all fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated
hereby, including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated; PROVIDED that all expenses incurred in
connection with (i) the fees of Xxxxxx & Xxxxxx incurred pursuant to any joint
retainer agreement in connection with any filings made pursuant to the EC Merger
Regulation and antitrust statutes of countries other than the United States and
(ii) the printing of the Registration Statement and the Proxy
Statement/Prospectus shall be divided equally between Parent and the Company.
(b) The Company shall pay to Parent upon demand, in same day
funds, a fee of $8 million (a "Termination Fee") if this Agreement is terminated
by Parent pursuant to Section 7.1(c) or (d).
(c) Parent shall pay to the Company upon demand, in same day
funds, a Termination Fee of $8 million if this Agreement is terminated by the
Company pursuant to Section 7.1(c) or (d).
(d) The Company and Parent each acknowledge that the
agreements contained in paragraphs (b) and (c) of this Section 5.7 are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, the parties hereto would not enter into this
Agreement; accordingly, if the Company or Parent, as the case may be, fails
promptly to pay any amount due pursuant to this Section 5.7 and, in order to
obtain such payment, the Company, Parent or Sub, as the case may be, commences a
suit that results in a judgment against such other party for any such amount,
such other party shall pay to the commencing party its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the amount of the fee at the base prime rate of Citibank, N.A., from the date
such payment was due under this Agreement.
(e) Payment of the Termination Fee pursuant to this Section
5.7 shall be the sole and exclusive damages remedy to which Parent or the
Company, as the case may be, shall be entitled against the other; PROVIDED,
HOWEVER, that nothing in this Section 5.7 shall limit any remedy that any party
hereto may have for specific performance of any provision of this Agreement
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Section 5.8 REASONABLE EFFORTS. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
all reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including: (a) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from all Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including those in connection with the
HSR Act, the EC Merger Regulation, any other applicable antitrust statute and
state takeover statutes), (b) the obtaining of all necessary consents, approvals
or waivers from third parties, (c) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity with respect to the Merger or this Agreement vacated or
reversed, and (d) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that the foregoing shall not require (i) Parent or the
Company to make any divestiture or consent to any divestiture in order to
fulfill any condition or obtain any consent, authorization or approval or to
appeal an injunction or order, or to post a bond in respect of such appeal or
(ii) Parent to comply with any request for additional information from any
Governmental Entity, compliance with which would be, after Parent's good faith
efforts to negotiate with such Governmental Entity the narrowing of the scope of
such request, unduly burdensome or expensive (it being understood that a "second
request" for information from any Governmental Entity in connection with filings
made under the HSR Act would not necessarily be unduly burdensome or expensive).
Section 5.9 PUBLIC ANNOUNCEMENTS. Neither Parent nor the
Company will issue any press release with respect to the transactions
contemplated by this Agreement or otherwise issue any written public statements
with respect to such transactions without the prior consent of the other party,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange or the TSE.
Section 5.10 REAL ESTATE TRANSFER AND GAINS TAX. Parent and
the Company agree that the Surviving Corporation will pay any state or local tax
which is attributable to the transfer of the beneficial ownership of the
Company's or its Subsidiaries' real property, if any (collectively, the "Gains
Taxes"), and any penalties or interest with respect to the Gains Taxes, payable
in connection with the consummation of the Merger. The Company and Parent agree
to cooperate with the other in the filing of any returns with respect to the
Gains Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company and its Subsidiaries and any information
with respect to such property that is reasonably necessary to complete such
returns. The portion of the consideration allocable to the real property of the
Company and its Subsidiaries shall be agreed to between Parent and the Company.
The shareholders of the Company shall be deemed to have agreed to be bound by
the allocation established pursuant to this Section 5.10 in the preparation of
any return with respect to the Gains Taxes.
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Section 5.11 STATE TAKEOVER LAWS. If any "fair price,"
"business combination" or "control share acquisition" statute or other takeover
or tender offer statute or regulation shall become applicable to the
transactions contemplated hereby, Parent, Sub and the Company and their
respective Boards of Directors shall use all reasonable efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and shall otherwise act to minimize the effects of any such
statute or regulation on the transactions contemplated hereby.
Section 5.12 INDEMNIFICATION; DIRECTORS AND OFFICERS
INSURANCE. For claims asserted, occurring or arising within six years from and
after the Effective Time, the Surviving Corporation shall indemnify, defend and
hold harmless all past and present officers and directors of the Company and of
its Subsidiaries (the "Indemnified Parties") to the same extent such persons are
indemnified as of the date of this Agreement by the Company pursuant to the
Company Articles of Incorporation, the Company's Bylaws and any agreements and
contracts set forth in Section 5.12 of the Company Letter between the Company or
any of its Subsidiaries and any of their current officers and directors, as such
agreements and contracts are amended prior to the Effective Time, for acts or
omissions occurring at or prior to the date hereof, for acts or omissions
occurring at or prior to the Effective Time. For a period of six (6) years after
the Effective Time, the Surviving Corporation shall maintain in effect the
current policies of directors' and officers' liability insurance maintained by
the Company (PROVIDED that the Surviving Corporation may at its option
substitute therefor policies that would cover the Indemnified Parties (i) with
at least the same coverage and amounts containing terms and conditions that are
no less advantageous in any material respect to the Indemnified Parties or (ii)
after July 1, 2003, that cover Parent's directors against similar liabilities,
in amounts and coverages equal to those provided for Parent's directors;
PROVIDED FURTHER that there shall be no period of time between the effectiveness
of coverage of the Company's current policies and the effectiveness of coverage
of any substitute policies) with respect to matters arising before the Effective
Time. The provisions of this Section 5.12 are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party, his or her heirs and his or
her personal representatives and shall be binding on all successors and assigns
of Sub, the Company and the Surviving Corporation. Without limiting the
foregoing, from and after the Effective Time, Parent and Surviving Corporation
shall, and Parent shall cause Surviving Corporation to, indemnify and hold
harmless all current directors of the Company for all liability, damages,
claims, charges, cost and expenses, including fees of one counsel for all such
directors (it being understood that (i) Parent shall have the right to assume
the defense of any claims or suits brought against any such directors, in which
case Parent shall not be liable for any such fees subsequently incurred by any
directors, and (ii) no director shall settle any such claim or suit without
Parent's consent, which shall not be unreasonably withheld), arising from or
related to any acts or omissions occurring in connection with this Agreement,
the negotiation and approval of this Agreement, and the consummation of the
transactions contemplated hereby. Parent also agrees to cause Surviving
Corporation to fulfill all contractual indemnification obligations of the
Company to its officers and directors referred to in this Section 5.12.
Section 5.13 NOTIFICATION OF CERTAIN MATTERS. Parent shall use
all reasonable efforts to give prompt notice to the Company, and the Company
shall use all reasonable efforts to give prompt notice to Parent, of: (i) the
occurrence, or non-occurrence, of any event the
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occurrence, or non-occurrence, of which it is aware and which would reasonably
be likely to cause (x) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be timely
complied with or satisfied in all material respects, (ii) any failure of Parent
or the Company, as the case may be, to comply in a timely manner with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any material new litigation or claim instituted or asserted
against the Company or any of its Subsidiaries or any material developments in
any such existing litigation or claim or (iv) any event, change or development
that, individually or in the aggregate, has had or would reasonably be expected
to have a Parent Material Adverse Effect or a Company Material Adverse Effect,
as the case may be; PROVIDED, HOWEVER, that the delivery of any notice pursuant
to this Section 5.13 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.14 SHAREHOLDER LITIGATION. Each of Parent and the
Company shall use all reasonable efforts to settle, and the Company shall give
Parent the opportunity to direct the defense of, any shareholder litigation
against the Company or its directors relating to the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that no such settlement shall be agreed to
without Parent's consent, which shall not be unreasonably withheld; PROVIDED
FURTHER, HOWEVER, that no such settlement the result of which would be to
prevent the consummation of the Merger shall be agreed to without the Company's
consent, which shall not be unreasonably withheld, and no such settlement shall
be agreed to without the consent of the Company or any director of the Company
unless such settlement contains a release of, and no admission of fault or
wrongdoing with respect to, the Company or such director, as the case may be.
Section 5.15 COMPANY DEBT AGREEMENTS. The Company will, if
required by Parent, (a) promptly seek agreement, on terms reasonably acceptable
to Parent, of the banks party to the credit agreements of the Company or any of
its Subsidiaries and the holders of debt instruments of the Company or any of
its Subsidiaries (collectively, the "Company Debt") to amend such agreements and
instruments to permit the consummation of the Merger, and to provide that such
actions do not constitute an event permitting the banks or lenders that are
parties thereto to accelerate the amounts outstanding under such agreements and
instruments and (b) in the event that such acceleration occurs prior to the
Merger, reasonably cooperate with Parent and Sub in arranging financing on terms
reasonably acceptable to Parent and Sub to finance any required repurchase or
prepayment of Company Debt.
Section 5.16 COMPANY STOCK OPTIONS. The Company shall use all
reasonable efforts to cause the holders of New Company Stock Options to exercise
all such New Company Stock Options immediately prior to the Effective Time.
Section 5.17 XXXXXXXX EXPORT. The Company shall terminate,
effective prior to the Effective Time, all contracts, agreements or arrangements
between the Company or any of its Subsidiaries and Xxxxxxxx Export.
Section 5.18 BENEFIT PLANS.
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(a) With respect to any employee benefit plans of Parent in
which the employees of the Company or any of its wholly owned Subsidiaries
participate subsequent to the Effective Time, Parent shall, or shall cause the
Surviving Corporation to: (i) waive all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the employees under any such employee
benefit plan that is a welfare plan, as defined in Section 3(1) of ERISA, in
which such employees may be eligible to participate, to the same extent that
such limitations are or would be waived or satisfied with respect to any
particular employee under a comparable Company Plan as in effect immediately
prior to the Effective Time, and (ii) recognize all service of the employees of
the Company and its wholly owned Subsidiaries with the Company and its wholly
owned Subsidiaries for all purposes (excluding benefit accrual under any defined
benefit pension plan, deferred profit sharing plan and eligibility for benefits
under any post-retirement medical plans) in any employee benefit plan of Parent
in which such employees are eligible to participate, to the same extent that
such service is or would be recognized under a comparable Company Plan as in
effect immediately prior to the Effective Time.
(b) The Surviving Corporation shall not and Parent shall cause
the Surviving Corporation not to make any changes, amendments or revisions to
the Company's (i) Pension Plan for Outside Directors, (ii) Deferred Director Fee
Plan, (iii) Deferred Compensation Plan or (iv) Supplemental Retirement Plan,
that would adversely affect the amounts or the payment terms with respect to
benefits accrued as of the Effective Time and to be paid to the participants
therein as of the Effective Time. Notwithstanding the foregoing, the Surviving
Corporation may make any other changes, amendments or revisions to the foregoing
plans as permitted by the terms of such plans and applicable law.
(c) The Surviving Corporation shall terminate, as of the
Effective Time, the Company's 2002 management bonus plan and each participant in
such plan as of the Effective Time shall be entitled to such participant's
benefits thereunder as disclosed in Section 5.18(c) of the Company Letter
(prorated as appropriate).
(d) The Surviving Corporation will, and Parent will cause the
Surviving Corporation to, provide retiree medical benefits after the Effective
Time as follows:
(i) With respect to each current retiree at the Effective Time
who receives medical benefits that are fully paid for by the Company or
one of its wholly owned Subsidiaries, the Surviving Corporation will
continue after the Effective Time to provide Medical Benefits (as
hereinafter defined) to such retiree (at no cost or expense to the
retiree).
(ii) With respect to each current retiree at the Effective
Time who receives medical benefits that are partially paid for by the
Company or one of its wholly owned Subsidiaries and partially paid for
by the retiree, the Surviving Corporation will continue after the
Effective Time to provide Medical Benefits to and pay a percentage of
the cost of Medical Benefits for such retiree that is equal to the
percentage of the cost of medical benefits, subject to existing maximum
Company contribution amounts, for such retiree that is paid by the
Company or one of its wholly owned Subsidiaries immediately prior to
the Effective Time.
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(iii) With respect to each current employee of the Company
or one of its wholly owned Subsidiaries at the Effective Time who (A)
commenced employment with the Company or one of its wholly owned
Subsidiaries on or before July 1, 1998, and (B) retires after the
Effective Time with both ten (10) or more years of service to the
Company or one of its wholly owned Subsidiaries or successors and at an
age of fifty-five (55) years or older, the Surviving Corporation will
provide Medical Benefits to and pay a percentage of the cost of Medical
Benefits for such person that is equal to the percentage of the cost of
medical benefits, subject to existing maximum Company contribution
amounts, that would have been required to be paid by the Company or one
of its wholly owned Subsidiaries upon such retirement pursuant to the
schedule used to determine the percentage of such cost that is paid by
the Company or one of its wholly owned Subsidiaries immediately prior
to the Effective Time with respect to the retirees referenced in
Section 5.18(d)(ii) above. For purposes of determining a person's years
of service under the foregoing sentence, the Surviving Corporation
shall only be required to take account of the greater of years of
service to the Company or one of its wholly owned Subsidiaries prior to
the Effective Time or ten (10) years.
(iv) With respect to each current employee of the Company
or one of its wholly owned Subsidiaries at the Effective Time who (A)
commenced employment with the Company or one of its wholly owned
Subsidiaries after July 1, 1998, and (B) retires after the Effective
Time, such person shall be entitled to participate in such retiree
medical programs and receive such medical benefits as may be offered by
the Surviving Corporation from time to time to its employees in
accordance with the terms of such programs. For purposes of determining
an employee's eligibility under such retiree medical programs, the
Surviving Corporation shall take account of the combined service of
such employee with the Company or one of its wholly owned Subsidiaries
and the Surviving Corporation.
(v) "Medical Benefits" shall mean medical benefits that
are substantially similar to the medical benefits that the Surviving
Corporation provides from time to time to its employees.
Except as otherwise provided in Section 5.18(d) above, the
Surviving Corporation shall have such rights to modify, amend or terminate such
Medical Benefits as are currently afforded the Company pursuant to the Company's
Participant Benefit Plan - Summary Plan Description, revised January 1, 2000.
Section 5.19 EXERCISE OF HOHE CALL OPTIONS. The Company shall
use all reasonable efforts, including negotiations with the Hohe Holders, to
exercise the Hohe Call Options such that the closings of the share and economic
interest transfers contemplated thereby (the "Hohe Call Option Closings") shall
occur immediately prior to the Effective Time, but shall be conditioned on the
satisfaction or waiver of all conditions to the Merger set forth in Article VI
hereof. If the Company is unable to exercise the Hohe Call Options on such a
conditional basis, then upon Parent's request to the Company, delivered at least
10 business days prior to the date of the Effective Time (the "Parent Hohe
Request"), the Company shall exercise the Hohe Call Options pursuant to their
terms on a date specified by Parent. If Parent has made the Parent Hohe Request,
then, at the Hohe Call Option Closings, Parent shall loan or cause to be loaned
to
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the Company all amounts necessary to permit such exercise and such closings, as
specified in Section 3.31. Such loan shall (i) be evidenced by a promissory note
in customary form, (ii) be made in Euros, (iii) not bear interest and (iv) be
repayable in Euros on the fifth anniversary of the making of such loan; PROVIDED
that, in the event that this Agreement is terminated by Parent pursuant to
Section 7.1(c) or (d), the Company shall repay such loan on the business day
immediately following the date of such termination.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment (or waiver by such party) at or prior to the
Effective Time of the following conditions:
(a) STOCK EXCHANGE LISTINGS. The shares of Parent Common Stock
issuable in the Merger shall have been authorized for listing on the NYSE and on
the TSE, subject to official notice of issuance.
(b) HSR WAITING PERIOD; OTHER ANTITRUST STATUTES. The waiting
period (and any extension thereof) applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any required
approval of the Merger shall have been obtained pursuant to any other applicable
antitrust statute.
(c) EC MERGER REGULATION. The proposed merger of Sub into the
Company:
(i) shall have been cleared by the European Commission, or
(ii) shall be deemed to have been cleared by the European
Commission due to expiry of the time limit pursuant to Article 10 par.
6 of the EC Merger Regulation, or
(iii) may be consummated due to a derogation from the
suspension obligation granted by the European Commission in accordance
with Art. 7 par. 4 of the EC Merger Regulation.
(d) REGISTRATION STATEMENT. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and remain in effect and no proceedings for that
purpose shall have been initiated or, to the knowledge of Parent or the Company,
threatened by the SEC and not been dismissed. All necessary state securities or
blue sky authorizations shall have been received.
(e) NO ORDER. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall (after the date of this Agreement) have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the Merger or any of the
transactions contemplated hereby illegal.
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(f) PROXY STATEMENT/PROSPECTUS; COMPANY REQUIRED VOTE. At
least 30 days shall have elapsed between the Mailing Date and the date of the
Special Meeting, and the Company Required Vote approving the Merger and this
Agreement shall have been duly obtained at the Special Meeting.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger shall be subject
to the fulfillment (or waiver by the Company) at or prior to the Effective Time
of the following additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. Each of Parent and Sub shall have performed in all material respects
each of its agreements contained in this Agreement required to be performed at
or prior to the Effective Time, each of the representations and warranties of
Parent and Sub contained in this Agreement that is qualified as to materiality
shall be true and correct at and as of the Effective Time as if made at and as
of such time (other than representations and warranties which address matters
only as of a certain date, which shall be true and correct as of such certain
date), each of the representations and warranties that is not so qualified shall
be true and correct in all material respects on and as of the Effective Time as
if made on and as of such date (other than representations and warranties which
address matters only as of a certain date, which shall be true and correct in
all material respects as of such certain date), in each case except as otherwise
contemplated or permitted by this Agreement, and the Company shall have received
certificates signed on behalf of each of Parent and Sub by its Chief Financial
Officer and its President or any Executive Vice-President (the "Parent Closing
Certificate") to such effect; PROVIDED, HOWEVER, that this condition shall be
deemed (i) not to have been satisfied if the cumulative effect of all
inaccuracies in such representations and warranties (without regard to any
qualification in any particular representation or warranty as to materiality or
Parent Material Adverse Effect (other than the proviso to the last sentence of
Section 2.1)) has had or would reasonably be expected to have a Parent Material
Adverse Effect and (ii) to have been satisfied (with respect only to the
representations and warranties of Parent and Sub) if the cumulative effect of
all inaccuracies in such representations and warranties (without regard to any
qualification in any particular representation or warranty as to materiality or
Parent Material Adverse Effect (other than as aforesaid)) has not had and would
not reasonably be expected to have a Parent Material Adverse Effect.
(b) COMFORT LETTERS. The Company shall have received the
"comfort letter" described in Section 5.3(b), in form and substance reasonably
satisfactory to the Company.
(c) TAX OPINION. The Company shall have received an opinion of
Varnum, Riddering, Xxxxxxx and Xxxxxxx LLP, in form and substance reasonably
satisfactory to the Company, dated the Effective Time, substantially to the
effect that on the basis of facts, representations and assumptions set forth in
such opinion that are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes the Merger will constitute a
"reorganization" within the meaning of Section 368(a)(1)(B) of the Code, and the
Company, Sub and Parent will each be a party to that reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, Varnum,
Riddering, Xxxxxxx and Xxxxxxx LLP may rely as to matters of fact upon the
representations contained herein and may receive and rely upon customary
representations from Parent and the Company.
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(d) PARENT MATERIAL ADVERSE EFFECT. From the commencement of
the 20 consecutive NYSE trading day period used in determining the Parent Stock
Price pursuant to Section 1.5(c) through the Closing, there shall not have
occurred a Parent Material Adverse Effect or any event or occurrence that would
reasonably be expected to result in a Parent Material Adverse Effect, and the
Company shall have received a certificate signed on behalf of Parent by its
Chief Financial Officer and its President or any Executive Vice-President to
such effect; PROVIDED, however, that if there shall have occurred such a Parent
Material Adverse Effect or event or occurrence, then this condition shall
nevertheless be deemed satisfied if Parent gives notice to the Company (a
"Parent MAE Notice") that the Effective Time and the Closing shall occur on the
22nd NYSE trading day after the date on which Parent publicly announces such
Parent Material Adverse Effect (including any deemed Parent Material Adverse
Effect as contemplated by Section 6.2(e)), in which case the Effective Time and
the Closing shall occur on such date (subject to the satisfaction or waiver of
all other conditions to the respective obligations of the parties to effect the
Merger), it being understood that the timing of such public announcement shall
be at the discretion of Parent, subject to applicable law, regulation and stock
exchange rules.
(e) PARENT ACCOUNTING MATTERS. Parent (i) shall not have been
advised by its independent accountants of any material accounting irregularities
that would reasonably be expected to require Parent to restate its consolidated
financial statements included in the Parent SEC Documents (other than as
required by any change in accounting principles generally accepted in Canada or
the United States) and (ii) to Parent's knowledge, shall not be subject to any
material pending or threatened investigation by the SEC concerning such
consolidated financial statements, and the Parent Closing Certificate shall be
to such effect; PROVIDED, HOWEVER, that Parent may elect to deem any failure to
satisfy this condition to be a Parent Material Adverse Effect for purposes of
the proviso to Section 6.2(d), in which case this condition shall be deemed
satisfied.
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO
EFFECT THE MERGER. The obligations of Parent and Sub to effect the Merger shall
be subject to the fulfillment (or waiver by Parent) at or prior to the Effective
Time of the following additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. The Company shall have performed in all material respects each of
its agreements contained in this Agreement required to be performed at or prior
to the Effective Time, each of the representations and warranties of the Company
contained in this Agreement that is qualified as to materiality shall be true
and correct at and as of the Effective Time as if made at and as of such time
(other than representations and warranties which address matters only as of a
certain date, which shall be true and correct as of such certain date), each of
the representations and warranties that is not so qualified shall be true and
correct in all material respects at and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date, which shall be true and correct in all
material respects as of such certain date), and Parent shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer and
its Chief Financial Officer (the "Company Closing Certificate") to such effect;
PROVIDED, HOWEVER, that this condition shall be deemed (i) not to have been
satisfied if the cumulative effect of all inaccuracies in such representations
and warranties (without regard to any qualification in any particular
representation or warranty as to materiality or Company
-44-
Material Adverse Effect (other than the two provisos to the last sentence of
Section 3.1(a))) has had or would reasonably be expected to have a Company
Material Adverse Effect and (ii) to have been satisfied (with respect only to
the representations and warranties of the Company) if the cumulative effect of
all inaccuracies in such representations and warranties (without regard to any
qualification in any particular representation or warranty as to materiality or
Company Material Adverse Effect (other than as aforesaid)) has not had and would
not reasonably be expected to have a Company Material Adverse Effect.
(b) CONSENTS UNDER AGREEMENTS. The Company shall have obtained
the consent or approval of each person that is not a Governmental Entity whose
consent or approval is set forth in Section 6.3(b) of the Company Letter.
(c) APPROVALS. All authorizations, consents, orders,
declarations or approvals of, or registrations, declarations or filings with, or
terminations or expirations of waiting periods imposed by, any Governmental
Entity set forth in Section 6.3(c) of the Company Letter shall have been
obtained, shall have been made or shall have occurred, and shall be in full
force and effect.
(d) COMFORT LETTERS. Parent shall have received the "comfort
letter" described in Section 5.3(a), in form and substance reasonably
satisfactory to Parent.
(e) COMPANY MATERIAL ADVERSE EFFECT. Except as specifically
disclosed in the Company Letter, since the date of this Agreement, there shall
have been no Company Material Adverse Effect and no event or occurrence that
would reasonably be expected to result in a Company Material Adverse Effect, and
Parent shall have received a certificate of the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect.
(f) COMPANY ACCOUNTING MATTERS. The Company (i) shall not
have been advised by its independent accountants of any material accounting
irregularities that would reasonably be expected to require the Company to
restate the Financial Statements (other than as required by any change in
accounting principles generally accepted in Canada or the United States) and
(ii) to the Company's knowledge, shall not be subject to any material pending
or threatened investigation by the SEC concerning the Financial Statements,
and the Company Closing Certificate shall be to such effect.
(g) RECEIPT OF AGREEMENTS TO EXERCISE NEW COMPANY STOCK
OPTIONS. The Company shall have received from each holder of a New Company Stock
Option a binding, unconditional agreement, on terms reasonably satisfactory to
Parent, obligating such holder to exercise, not later than immediately prior to
the Effective Time, all such New Company Stock Options held by such holder, and
the Company shall have delivered to Parent true and correct copies thereof prior
to August 1, 2002.
(h) HOHE CALL OPTION CLOSINGS. If Parent has made the Parent
Hohe Request pursuant to Section 5.19, then the Hohe Call Option Closings shall
have occurred as contemplated by such Section.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any approval of
the matters presented at the Special Meeting in connection with the Merger:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the required approval
of the Merger by the shareholders of the Company shall not have been obtained by
reason of the failure to obtain the required vote upon a vote held at a duly
held meeting of such shareholders or at any adjournment thereof;
(c) by either Parent or the Company if the other of them shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with prior to the
date of such termination, which failure to comply, if curable, has not been
cured within 20 business days following receipt by such other of them of written
notice of such failure to comply;
(d) by either Parent or the Company if there has been a breach
(which breach, if curable, has not been cured within 20 business days following
receipt by the breaching party of written notice of the breach) by the other of
them (in the case of Parent, including any material breach by Sub) of any
representation or warranty that would make the condition set forth in Section
6.3(a) or 6.2(a), respectively, not satisfied if the Effective Time occurred on
such 20th business day;
(e) by either Parent or the Company if: (i) the Merger has not
been effected on or prior to the close of business on December 31, 2002 (as such
date may be extended by mutual agreement); PROVIDED, HOWEVER, that the right to
terminate this Agreement pursuant to this Section 7.1(e)(i) shall not be
available to any party whose failure to fulfill any of its obligations contained
in this Agreement has been the proximate cause of the failure of the Merger to
have occurred on or prior to the aforesaid date; or (ii) any court or other
Governmental Entity having jurisdiction over a party hereto shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree or ruling or other action shall have become
final and non-appealable;
(f) by Parent if Parent or Sub shall have received (i) notice
under the HSR Act that the Federal Trade Commission or the Antitrust Division of
the Department of Justice has extended the applicable waiting period under the
HSR Act by requesting additional information concerning the Merger, any related
transaction, or Parent or Sub, (ii) notice that the European Commission finds
that the Merger raises serious doubts as to its compatibility with the common
market and has initiated the proceedings pursuant to Art. 6 par. 1 (c) of the EC
Merger Regulation or (iii) any request for additional information from any
Governmental Entity in connection with the EC Merger Regulation, compliance with
which would be, after Parent's
-46-
good faith efforts to negotiate with such Governmental Entity the narrowing of
the scope of such request, unduly burdensome or expensive (it being understood
that a "second request" for information from any Governmental Entity in
connection with filings made under the HSR Act would not necessarily be unduly
burdensome or expensive);
(g) by the Company if the Parent Stock Price is less than
$52.28; PROVIDED, HOWEVER, that such termination pursuant to this Section 7.1(g)
shall not be effective (and this Agreement shall continue in full force and
effect) unless both (i) the Company shall have (x) provided written notice to
Parent prior to the date of the Special Meeting of its intention to terminate
this Agreement pursuant to this Section 7.1(g) and (y) duly called, given notice
of and convened the Special Meeting and immediately thereafter duly adjourned
the Special Meeting to the date that is five business days thereafter (the
"Special Meeting Resumption Date") and (ii) Parent shall have not, on or prior
to 5:00 p.m., Holland, Michigan time, on the business day next preceding the
Special Meeting Resumption Date, given written notice to the Company (the
"Merger Consideration Increase Notice") that the Exchange Ratio shall be
increased to equal the quotient of $24.00 divided by the Parent Stock Price;
PROVIDED FURTHER that, in the event of any adjustment of the Exchange Ratio
pursuant to Section 1.10, all such dollar amounts shall be commensurately
adjusted, as mutually agreed by Parent and the Company, each acting reasonably
and in good faith; and PROVIDED FURTHER that Parent shall have no obligation to
deliver the Merger Consideration Increase Notice; or
(h) by the Company if both (i) Parent has given a Parent MAE
Notice to the Company pursuant to Section 6.2(d) and (ii) after giving effect to
Section 6.2(d), either (x) the Parent Stock Price or (y) the average of the
Average Prices for the three consecutive NYSE trading days immediately prior to
the date of the Effective Time, is less than $61.00.
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers, directors
or representatives, whether prior to or after the execution of this Agreement.
Section 7.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Sub or their respective officers
or directors (except for the last sentence of Section 5.4 and the entirety of
Sections 2.9, 3.24 and 5.7, this Section 7.2 and Article VIII, which shall
survive the termination); PROVIDED, HOWEVER, that nothing contained in this
Agreement shall relieve any party hereto from any liability for any breach of a
representation or warranty contained in this Agreement or the breach of any
covenant contained in this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company, but, after any
such approval, no amendment shall be made which by law requires further approval
by such shareholders without such further approval. This Agreement may not be
amended except by an instrument in writing duly executed by each of the parties
hereto.
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Section 7.4 WAIVER. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly executed by such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Except for any claim arising as a result of any breach of a representation or
warranty prior to the termination of this Agreement as contemplated by Section
7.2, the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the earlier of (i) the
Effective Time or (ii) the termination of this Agreement.
Section 8.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to a nationally recognized overnight
courier or when telecopied (with a confirmatory copy sent by such 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 Parent or Sub, to
Magna Mirrors Acquisition Corporation
In care of
Magna International Inc.
000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0 Xxxxxx
Attention: President (with a separate copy
to Corporate Secretary)
Facsimile Nos.:
-48-
with copies to:
Xxxxx X. Xxxxxxx
Sidley Xxxxxx Xxxxx & Xxxx LLP
(on or prior to July 4, 2002)
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
(after July 4, 2002)
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
(b) if to the Company, to
Xxxxxxxx Corporation
00 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Varnum, Riddering, Xxxxxxx & Xxxxxxx LLP
Bridgewater Place
000 Xxxxxxxxxxx Xxxxxx, X.X.
Post Xxxxxx Xxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Section 8.3 INTERPRETATION. When a reference is made in this
Agreement to a Section or Article, such reference shall be to a Section or
Article of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The phrase "to
the knowledge of the Company" and similar phrases, when used in this Agreement,
refer to the knowledge, after reasonable investigation, of the officers of the
Company as of the date of determination. All references in this Agreement to "$"
shall be references to United States dollars. For all purposes of this
Agreement, "affiliate" shall have the meaning specified in Rule 405 under the
Securities Act. For all purposes of this Agreement, except as hereinafter
provided, "Subsidiary" means any corporation, partnership, limited liability
company, joint venture, trust company or other legal entity of which Parent or
the Company, as the case may be (either alone or through or together with any
other Subsidiary), (i) owns, directly or indirectly, 50% or more of the stock or
other equity interests the holders of which are generally entitled to vote for
the
-49-
election of the board of directors or other governing body of such corporation,
partnership, limited liability company, joint venture, trust company or other
legal entity, (ii) is a general partner, trustee, manager or other entity or
person performing similar functions or (iii) has control (as defined in Rule 405
under the Securities Act). For all purposes of this Agreement, (x) a "wholly
owned Subsidiary" of the Company shall be deemed to include those entities
which, for regulatory or other local law purposes, have issued nominal ownership
interests to persons other than the Company or any of its Subsidiaries and (y)
Shunde Xxxxxxxx Xxxx Hua Automotive Systems Co. Ltd. and Shanghai Xxxxxxxx
Ganxiang Automotive Systems Co. Ltd. (the "Chinese Joint Ventures") and Xxxxxxxx
Export shall be deemed to be Subsidiaries of the Company; PROVIDED that any
representation or warranty of the Company with respect to any Chinese Joint
Venture, Shanghai Xxxxxxxx Fu Hua Window System Company Limited, Xxxxxxxx Yantai
Electronics Corporation Limited, Varitronix (Malaysia) sdn.bhd or Xxxxxx
Xxxxxxxx, LLC (collectively, the "Non-Controlled Subsidiaries") set forth in
Article III or in any certificate furnished in connection with this Agreement
shall be deemed qualified as though made only to the knowledge of the Company,
without investigation, and any covenant or agreement of the Company in this
Agreement to cause any Non-Controlled Subsidiary to take or refrain from taking
any action shall be deemed to require the Company only to use all reasonable
efforts to cause such Non-Controlled Subsidiary to take or refrain from taking,
as the case may be, such action. Any obligation of Parent under any Section of
this Agreement to cause the Surviving Corporation to take any action or refrain
from any action shall be deemed to be absolute and unconditional and without
regard to the financial ability of the Surviving Corporation to take or refrain
from such action and, in the case of any obligation of the Surviving Corporation
to make any payment, shall require Parent to make or cause to be made such
payment when due in the event that the Surviving Corporation failed to make such
payment for any reason.
Section 8.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
Except for the Confidentiality Agreement, this Agreement together with all other
agreements executed by the parties hereto on the date hereof constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
This Agreement, except for the provisions of Section 5.12, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.6 GOVERNING LAW. Except to the extent that the laws
of the State of Michigan are mandatorily applicable to the Merger, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of
New York, regardless of the laws that might otherwise govern under
the applicable principles of conflicts of laws thereof.
Section 8.7 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any wholly owned Subsidiary of Parent. Subject to the
preceding
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sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and permitted
assigns.
Section 8.8 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
Section 8.9 ENFORCEMENT OF THIS AGREEMENT. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific wording or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity.
-51-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
MAGNA INTERNATIONAL INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice-President and Chief
Financial Officer
MAGNA MIRRORS ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx
Executive Vice-President
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx
Executive Vice-President
XXXXXXXX CORPORATION
By: /s/ Xxxxx Xxxxxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxxxxx
President and Chief Executive Officer
-52-
EXHIBIT 5.5
FORM OF AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
[Date]
Magna International Inc.
000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0 Xxxxxx
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Xxxxxxxx Corporation, a Michigan corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of June 25, 2002 (the "Merger Agreement"),
among
Magna International Inc., an Ontario corporation ("Parent"), Magna Mirrors
Acquisition Corp., a Michigan corporation ("Sub"), and the Company, Sub will be
merged with and into the Company (the "Merger"). Capitalized terms used in this
letter without definition shall have the meanings assigned to them in the Merger
Agreement.
As a result of the Merger, I may receive Class A Subordinate
Voting Shares, without par value, of Parent (the "Parent Shares") in exchange
for shares of common stock of the Company (the "Company Shares") owned by me or
purchasable upon exercise of stock options.
1. I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
any Parent Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of the Parent
Shares, to the extent I felt necessary, with my counsel or counsel for the
Company.
C. I have been advised that the issuance of the Parent Shares
to me pursuant to the Merger has been registered with the Commission under the
Act on a Registration Statement on Form F-4. However, I have also been advised
that, because at the time the Merger is submitted for a vote of the shareholders
of the Company, (a) I may be deemed to be an affiliate of the Company and (b)
the sale, transfer or other distribution by me of the Parent Shares has not been
registered under the Act, I may not sell, transfer or otherwise dispose of the
Parent Shares
53
issued to me in the Merger unless (i) such sale, transfer or other disposition
is made in conformity with the volume limitations and other conditions of Rule
145 promulgated by the Commission under the Act (PROVIDED that I deliver to
Parent customary letters of representation from myself and my broker), (ii) such
sale, transfer or other disposition has been registered under the Act or (iii)
in the opinion of counsel reasonably acceptable to Parent, such sale, transfer
or other disposition is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of any Parent Shares by me or on my
behalf under the Act or, except as provided in paragraph 2(A) below, to take any
other action necessary in order to make compliance with an exemption from such
registration available.
E. I also understand that there will be placed on the
certificates for the Parent Shares issued to me, or any substitutions therefor,
a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 MAY APPLY. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
TERMS OF AN AGREEMENT DATED ________, ____ BETWEEN THE
REGISTERED HOLDER HEREOF AND
MAGNA INTERNATIONAL INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
MAGNA INTERNATIONAL INC."
F. I also understand that unless a sale, transfer or other
disposition is made in conformity with the provisions of Rule 145, or pursuant
to a registration statement, Parent reserves the right to put the following
legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH
A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
G. Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as described in the
first paragraph of this letter, nor as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the date of this
letter.
54
2. By Parent's acceptance of this letter, Parent hereby agrees with me
as follows:
A. For so long as and to the extent necessary to permit me to
sell Parent Shares pursuant to Rules 144 and 145 under the Act, to the extent
applicable, Parent shall (a) use all reasonable efforts to (i) file, on a timely
basis, all reports and data required to be filed with the Commission by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and (ii) furnish to me upon request a written statement as to
whether Parent has complied with such reporting requirements during the 12
months preceding any proposed sale of Parent Shares by me under Rule 145, and
(b) otherwise use all reasonable efforts to permit such sales pursuant to Rule
145 and Rule 144. Parent has filed all reports required to be filed with the
Commission under Section 13 of the 1934 Act during the preceding 12 months.
55
B. It is understood and agreed that certificates with the
legends set forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the Parent Shares received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two
years shall have elapsed from the date the undersigned acquired the Parent
Shares received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) Parent has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to Parent,
or a "no action" letter obtained by the undersigned from the staff of the
Commission, to the effect that the restrictions imposed by Rule 145 under the
Act no longer apply to the undersigned.
Very truly yours,
------------------------------
Name:
Agreed and accepted this ___
day of ______________, 2002, by
Magna International Inc.
By_________________________
Name:
Title:
56
