EXHIBIT 99.(c)(1)
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AGREEMENT AND PLAN OF MERGER
AMONG
▇▇▇▇ INDUSTRIES, INC.,
▇▇▇▇ ACQUISITION CO., INC.
AND
ELJER INDUSTRIES, INC.
DATED DECEMBER 14, 1996
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated December 14, 1996 (this "Agreement"),
among ▇▇▇▇ Industries, Inc., a Pennsylvania corporation ("Parent"), ▇▇▇▇
Acquisition Co., Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Eljer Industries, Inc., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent, by means of the merger
of Sub with and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company each desire
that Parent cause Sub to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $1.00 per share, of the Company
(the "Shares" or the "Company Common Stock") upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2) and the Board of Directors of the Company has approved such
tender offer and is recommending (subject to the limitations contained herein)
that the Company's stockholders accept the tender offer and tender their
shares of Company Common Stock pursuant thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer (as defined
in Section 1.1) and the Merger and also to prescribe various conditions to the
consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
The Offer
1.1 The Offer. (a) Provided that none of the events set forth in Exhibit A
hereto shall have occurred and be continuing, as promptly as practicable (but
in any event not later than five business days after the public announcement
of the execution and delivery of this Agreement), Parent shall cause Sub to
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer")
all outstanding shares of the Company Common Stock at a price of $24.00 per
share, net to the seller in cash (as paid pursuant to the Offer, the "Offer
Consideration"). The obligation of Parent and Sub to commence the Offer, to
consummate the Offer and to accept for payment and to pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit A hereto.
(b) Without the prior written consent of the Company, Sub shall not (and
Parent shall cause Sub not to) (i) decrease or change the form of the Offer
Consideration or decrease the number of Shares sought pursuant to the Offer,
(ii) change the conditions to the Offer, (iii) impose additional conditions to
the Offer, (iv) extend the expiration date of the Offer beyond the initial
expiration date of the Offer (except (A) as required by applicable law, (B)
that Sub may extend the expiration date of the Offer for up to 20 business
days after the initial expiration date of the Offer (which shall be the 20th
business day after commencement of the Offer), and (C) that if any condition
to the Offer has not been satisfied or waived, Sub shall extend the expiration
date of the Offer for one or more periods not exceeding 60 calendar days (or,
if required by the Company in its sole discretion, 120 days calendar days) in
the aggregate), (v) waive the condition that there shall be validly tendered
and not withdrawn prior to the time the Offer expires a number of Shares which
constitutes 50.1% of the Shares outstanding on a fully-diluted basis on the
date of purchase ("on a fully-diluted basis" meaning, as of any date, the
number of
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Shares outstanding, together with the Shares which the Company may be required
to issue pursuant to obligations outstanding at that date under employee stock
or similar benefit plans or otherwise), or (vi) amend any term of the Offer in
any manner adverse to holders of shares of Company Common Stock; provided,
however, that, except as set forth above and subject to applicable legal
requirements, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as
to comply with applicable rules and regulations of the United States
Securities and Exchange Commission (the "SEC"). Assuming the prior
satisfaction or waiver of the conditions to the Offer, Sub shall accept for
payment, and pay for, in accordance with the terms of the Offer, all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
as soon as practicable after the expiration date thereof.
1.2 Offer Documents. As soon as practicable on the date of commencement of
the Offer, Parent and Sub shall file or cause to be filed with the SEC a
Tender Offer Statement on Schedule 14D-1 ("Schedule 14D-1") with respect to
the Offer which shall contain the offer to purchase and related letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents") and which Parent and Sub jointly represent,
warrant and covenant will comply in all material respects with the Exchange
Act and any other applicable law and shall contain (or shall be amended in a
timely manner so as to contain) all information which is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law; provided, however, that
no agreement or representation is hereby made or shall be made by Parent or
Sub with respect to information supplied by the Company in writing expressly
for inclusion in, or with respect to Company information derived from the
Company's public SEC filings which is incorporated by reference in, the Offer
Documents; and provided, further, however, that no representation, warranty or
covenant is made or shall be made herein by the Company with respect to
information contained in the Offer Documents other than information supplied
by the Company in writing expressly for inclusion in, or with respect to
Company information derived from the Company's public SEC filings which is
incorporated by reference in, the Offer Documents.
Parent, Sub and the Company each agree promptly to correct any information
provided by them for use in the Offer Documents if and to the extent that it
shall have become false or misleading in any material respect and Parent and
Sub further jointly and severally agree to take all lawful action necessary to
cause the Offer Documents as so corrected to be filed promptly with the SEC
and to be disseminated to holders of Company Common Stock, in each case as and
to the extent required by applicable law. In conducting the Offer, Parent and
Sub shall comply in all material respects with the provisions of the Exchange
Act and any other applicable law. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents and any
amendments thereto prior to the filing thereof with the SEC.
1.3 Company Actions. The Company hereby consents to the Offer and represents
that (a) its Board of Directors (at a meeting duly called and held) has (i)
determined that each of this Agreement, the Offer and the Merger are fair to
and in the best interests of the Company and its stockholders, (ii) approved
this Agreement and the transactions contemplated hereby, including the Offer
and the Merger, and such approval is sufficient to render (x) Section 203 of
the Delaware General Corporation Law (the "DGCL") inapplicable to this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, and (y) Article Eighth of the Restated Certificate of
Incorporation of the Company inapplicable to this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and
(iii) resolved (subject to the limitations herein contained) to recommend
acceptance of the Offer and adoption of this Agreement by the holders of
Company Common Stock, and (b) Bear, ▇▇▇▇▇▇▇ & Co. Inc. has delivered to the
Board of Directors of the Company its opinion that the Offer Consideration to
be received by the holders of Company Common Stock in the Offer is fair, from
a financial point of view, to such holders. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation referred to in this
Section 1.3; provided, however, that the Company's Board of Directors may
withdraw, modify or change such recommendation to the extent that, after
consultation with legal counsel (who may be the Company's regularly engaged
legal counsel), it determines in good faith that such
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action is necessary for the Board of Directors to comply with its fiduciary
duties under applicable law. The Company hereby agrees to file with the SEC
simultaneously with the filing by ▇▇▇▇▇▇ and Sub of Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger; provided, however, that the Company's Board of Directors may
withdraw, modify or change such recommendation to the extent that, after
consultation with legal counsel (who may be the Company's regularly engaged
legal counsel), it determines in good faith that such action is necessary for
the Board of Directors to comply with its fiduciary duties under applicable
law. The Company represents, warrants and covenants that Schedule 14D-9 shall
comply in all material respects with the Exchange Act and any other applicable
law and shall contain (or shall be amended in a timely manner so as to
contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law. The Company agrees to include in the Schedule 14D-9
information furnished by Parent or Sub in writing concerning Parent's
Designees (as such term is defined in Section 1.4 hereof), as required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company,
Parent and Sub each agree promptly to correct any information provided by them
for use in Schedule 14D-9 if and to the extent that it shall have become false
or misleading in any material respect and the Company further agrees to take
all lawful action necessary to cause Schedule 14D-9 as so corrected to be
filed promptly with the SEC and disseminated to the holders of Company Common
Stock, in each case as and to the extent required by applicable law. Parent,
Sub and their counsel shall be given a reasonable opportunity to review
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
SEC. In connection with the Offer, the Company shall promptly furnish Parent
with mailing labels, security position listings and all available listings or
computer files containing the names and addresses of the record holders of the
Company Common Stock as of the latest practicable date and shall furnish
Parent with such information and assistance (including updated lists of
stockholders, mailing labels and lists of security positions) as Parent or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of Company Common Stock. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Offer
and the Merger, Parent and Sub and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such labels, lists and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with its terms, shall deliver promptly
to the Company (or destroy and certify to the Company the destruction of) all
copies of such information (and any copies, compilations or extracts thereof
or based thereon) then in their possession or under their control.
1.4 Directors. (a) Promptly upon the purchase by Sub pursuant to the Offer
of such number of shares of Company Common Stock which represents at least
50.1% of the outstanding shares of Company Common Stock (on a fully diluted
basis), and from time to time thereafter, (i) Parent shall be entitled to
designate such number of directors ("Parent's Designees"), rounded up to the
next whole number as will give Parent, subject to compliance with Section
14(f) of the Exchange Act, representation on the Board of Directors of the
Company equal to the product of (x) the number of directors on the Board of
Directors of the Company (giving effect to any increase in the number of
directors pursuant to this Section 1.4) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and (ii) the Company
shall, upon request by Parent, promptly satisfy the Board Percentage by (x)
increasing the size of the Board of Directors of the Company or (y) using
reasonable efforts to secure the resignations of such number of directors as
is necessary to enable Parent's Designees to be elected to the Board of
Directors of the Company and shall use best efforts to cause Parent's
Designees promptly to be so elected, subject in all instances to compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
At the request of Parent, the Company shall take, at Parent's expense, all
lawful action necessary to effect any such election. Parent will supply to the
Company in writing and be solely responsible for any information with respect
to itself, the Parent's Designees and its officers, directors and affiliates
required by Section 14(f) of the Exchange and Rule 14f-1 promulgated
thereunder to be included in Schedule 14D-9. Notwithstanding the foregoing, at
all times prior to the Effective Time the Company's Board of Directors shall
include at least two Continuing Directors (as defined in Section 1.4(b)).
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(b) Following the election or appointment of ▇▇▇▇▇▇'s Designees pursuant to
this Section 1.4 and prior to the Effective Time (as defined in Section 2.3)
of the Merger, any amendment or termination of this Agreement, extension for
the performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights hereunder shall require the concurrence of a
majority of directors of the Company then in office who are directors on the
date hereof and who voted to approve this Agreement (such directors, the
"Continuing Directors").
ARTICLE II
The Merger
2.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Sub shall be merged with and
into the Company at the Effective Time. Each of the parties shall use its
respective reasonable best efforts to cause the Merger to occur as promptly as
possible (subject to the limitations herein contained). At the Effective Time,
the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a wholly owned subsidiary of Parent
(Sub and the Company are sometimes hereinafter referred to as "Constituent
Corporations" and, as the context requires, the Company is sometimes
hereinafter referred to as the "Surviving Corporation"), and shall continue
under the name "Eljer Industries, Inc."
2.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1, the closing of the Merger (the "Closing") shall take place at 10:00 a.m.,
New York time, on the first business day following satisfaction or waiver of
the conditions set forth in Article VII (the "Closing Date"), at the offices
of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ unless
another date, time or place is agreed to in writing by the parties hereto.
2.3 Effective Time of the Merger. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, as provided in the DGCL, as soon
as practicable on or after the Closing Date. The Merger shall become effective
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").
2.4 Effects of the Merger. (a) The Merger shall have the effects as set
forth in the applicable provisions of the DGCL.
(b) The directors and the officers of Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the initial directors and
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified, or until their earlier death, resignation
or removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
(c) The Certificate of Incorporation of Sub immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.
(d) The Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by applicable law, the Certificate of Incorporation or the Bylaws.
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ARTICLE III
Effect of The Merger on The Capital Stock of The Constituent Corporations;
Exchange of Certificates
3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of Company
Common Stock or the holder of any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$1.00 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock and all other shares of capital stock of the Company that
are owned by the Company and all shares of Company Common Stock and other
shares of capital stock of the Company owned by Parent, Sub or any other
wholly-owned Subsidiary (as defined below) of Parent or the Company shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. As used in this Agreement, the
word "Subsidiary", with respect to any party, means any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which: (i) such party or any other Subsidiary of such party
is a general partner; (ii) voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of its Subsidiaries, or by such party and any one
or more of its Subsidiaries; or (iii) at least 50% of all classes of equity
securities is, directly or indirectly, owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and any one or more of
its Subsidiaries.
3.2 Conversion of Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of Sub, the Company or the holders of any
of the shares thereof:
(a) (i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (excluding (i) shares owned, directly
or indirectly, by the Company or any wholly-owned Subsidiary of the Company or
by Parent, Sub or any other wholly-owned Subsidiary of Parent and (ii)
Dissenting Shares (as defined in Section 3.6)) shall be converted into the
right to receive the Offer Consideration, payable to the holder thereof,
without any interest thereon (the "Merger Consideration"), less any required
withholding taxes, upon surrender and exchange of a Certificate (as defined in
Section 3.3).
(ii) All such shares of Company Common Stock, when converted as provided in
Section 3.2(a)(i), no longer shall be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each Certificate
previously evidencing Shares shall thereafter represent only the right to
receive the Merger Consideration. The holders of Certificates previously
evidencing Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to the Company Common Stock except as
otherwise provided herein or by law and from and after the Effective Time such
Certificates shall represent only the right to receive for their Shares the
Merger Consideration, without any interest thereon, upon surrender of the
Certificates in accordance with the provisions of Section 3.3.
3.3 Payment for Shares. (a) Paying Agent. Prior to the Effective Time, Sub
shall appoint a United States bank or trust company reasonably acceptable to
the Company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Parent shall deposit or shall cause to be deposited
with the Paying Agent in a separate fund established for the benefit of the
holders of shares of Company Common Stock, for payment in accordance with this
Article III, through the Paying Agent (the "Payment Fund"), immediately
available funds in amounts necessary to make the payments pursuant to Section
3.2(a)(i) and this Section 3.3 to holders (other than (i) the Company or any
wholly-owned Subsidiary of the Company or Parent, Sub or any other wholly-
owned Subsidiary of Parent, or (ii) holders of Dissenting Shares). The Paying
Agent shall, pursuant to irrevocable instructions, pay the Merger
Consideration out of the Payment Fund. From time to time at or after the
Effective Time, Parent shall take all lawful action necessary to make or cause
to be made the appropriate
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cash payments, if any, to holders of Dissenting Shares. The Paying Agent shall
invest portions of the Payment Fund as Parent directs in obligations of or
guaranteed by the United States of America, in commercial paper obligations
receiving the highest investment grade rating from either ▇▇▇▇▇'▇ Investors
Services, Inc. and/or Standard & Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial
banks with capital exceeding $1,000,000,000 (collectively, "Permitted
Investments"); provided, however, that the maturities of Permitted Investments
shall be such as to permit the Paying Agent to make prompt payment to former
holders of Company Common Stock entitled thereto as contemplated by this
Section 3.3. Parent shall cause the Payment Fund to be promptly replenished to
the extent of any losses incurred as a result of Permitted Investments. All
earnings on Permitted Investments shall be paid to Sub. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of shares of Company Common Stock shall be entitled under this Section
3.3, Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Paying Agent to mail to each holder
of record (other than the Company or any wholly-owned Subsidiary of the
Company or Parent, Sub or any other wholly-owned Subsidiary of Parent) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i)
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other customary provisions as Parent reasonably may
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender of a Certificate
for cancellation to the Paying Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in respect thereof cash in an amount equal to the product of (x) the
number of shares of Company Common Stock represented by such Certificate and
(y) the Merger Consideration, and the Certificate so surrendered shall
forthwith be canceled. Absolutely no interest shall be paid or accrued on the
Merger Consideration payable upon the surrender of any Certificate. If payment
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered in accordance with the provisions of this
Section 3.3(b), each Certificate (other than Certificates representing Shares
owned by the Company or any wholly-owned Subsidiary of the Company or Parent,
Sub or any other wholly-owned Subsidiary of Parent) shall represent for all
purposes only the right to receive the Merger Consideration with respect to
the shares of Company Common Stock formerly evidenced by such Certificate.
(c) Termination of Payment Fund; Interest. Any portion of the Payment Fund
which remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of Company Common Stock who have not theretofore complied with
this Article III and the instructions set forth in the letter of transmittal
mailed to such holder after the Effective Time shall thereafter look only to
Parent for payment of the Merger Consideration to which they are entitled.
(d) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. Parent 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 may be required to
deduct and withhold with respect to such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld, 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.
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3.4 Stock Transfer Books. At the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company.
3.5 Stock-Based Executive Compensation Arrangements. At the Effective Time,
each holder of (a) a then-outstanding option to purchase Shares under the
Company's Long-Term Executive Incentive Compensation Plan (the "LTIP") (a true
and correct copy of which has been delivered by the Company to Parent),
whether or not then exercisable (the "Options"), shall, in settlement thereof,
receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Merger
Consideration and the per Share exercise price of such Option to the extent
such difference is a positive number (such amount being hereinafter referred
to as, the "Option Consideration"), (b) any then-outstanding shares of
restricted Company Common Stock awarded under the LTIP ("Restricted Shares")
shall, in settlement thereof, receive for each Restricted Share converted
pursuant to Section 3.2(a) an amount (subject to any applicable withholding
tax) in cash equal to the Merger Consideration (the "Restricted Share
Consideration"), and (c) any then-outstanding phantom stock unit under the
Eljer Industries, Inc. 1995 Long-Term Incentive Plan (the "Incentive Plan"),
whether or not then exercisable (the "Phantom Rights") shall, in settlement
thereof, receive for each Phantom Right an amount (subject to applicable
withholding tax) in cash equal to the difference between the Merger
Consideration and the Initial Value (as defined in the Incentive Plan) of such
Phantom Right to the extent such difference is a positive number (such amount
being hereinafter referred to as, the "Phantom Right Consideration");
provided, however, that with respect to any person subject to Section 16(a) of
the Exchange Act, any such amount shall be paid as soon as practicable after
the first date payment can be made without liability to such person under
Section 16(b) of the Exchange Act. Upon receipt of the Option Consideration,
the Restricted Share Consideration or the Phantom Right Consideration, the
Option or the Phantom Right shall be cancelled and the Restricted Shares shall
be surrendered and cancelled. The surrender of an Option, a Restricted Share
or a Phantom Right to the Company in exchange for the Option Consideration,
the Restricted Share Consideration or the Phantom Right Consideration shall be
deemed a release of any and all rights the holder had or may have had in
respect of such Option, Restricted Share or Phantom Right. Prior to the
Effective Time, the Company shall use its reasonable efforts to obtain all
necessary consents or releases from holders of Options, Restricted Shares or
Phantom Rights under the LTIP and the Incentive Plan and take all such other
lawful action as may be necessary to provide for and give effect to the
transactions contemplated by this Section 3.5 (except for any such action that
may require the approval of the Company's stockholders). Except as otherwise
agreed to by the parties, (i) the LTIP and the Incentive Plan shall terminate
as of the Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Subsidiary thereof, shall
be canceled as of the Effective Time, and (ii) the Company shall use
reasonable best efforts to assure that following the Effective Time no
participant in the LTIP, the Incentive Plan or other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of
the Company, the Surviving Corporation or any Subsidiary thereof.
3.6 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing
and who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders instead shall be entitled to receive
payment of the appraised value of such shares of Company Common Stock held by
them in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares of Company Common Stock under such Section 262 shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration upon surrender in the manner provided in Section 3.3, of
the Certificate or Certificates that, immediately prior to the Effective Time,
evidenced such shares of Company Common Stock.
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ARTICLE IV
Representations and Warranties
4.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows (it being expressly
understood that, to the extent that any representation or warranty shall be
untrue or incorrect as a result of (i) the status of United States Brass
Corporation ("US Brass") as a debtor and debtor-in-possession under the
jurisdiction of the United States Bankruptcy Court for the Eastern District of
Texas, (ii) the past or future assertion of claims against US Brass in
connection with its reorganization proceedings, or (iii) the occurrence of any
other events, developments or actions with respect to US Brass in such
reorganization proceedings (collectively, the "US Brass Bankruptcy Events"),
such representation or warranty shall nonetheless be deemed to be true and
correct for all purposes of this Agreement):
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where the
failure so to qualify or be in good standing could not reasonably be expected
to have a Material Adverse Effect (as defined below) with respect to the
Company. The entities identified on Schedule 4.1(a) represent all of the
Subsidiaries of the Company, and the Company does not own any equity interest
in any other entity other than the Subsidiaries. The Company has heretofore
made available to Parent complete and correct copies of its Restated
Certificate of Incorporation and Bylaws and the Certificate of Incorporation
and Bylaws (or other comparable documents) of each of its Subsidiaries. As
used in this Agreement, a "Material Adverse Effect" shall mean, with respect
to any party, a material adverse effect, or any development that is reasonably
likely to result in a material adverse effect, on the business, financial
condition or results of operations of such party and its Subsidiaries, taken
as a whole.
(b) Capital Structure. The authorized capital stock of the Company consists
of 50,000,000 shares of Company Common Stock and 10,000,000 shares of
Preferred Stock, par value $1.00 per share ("Preferred Stock"). As of the date
hereof: (i) 7,153,657 Shares (including 40,600 Restricted Shares) are issued
and outstanding, (ii) no shares of Preferred Stock are issued and outstanding,
(iii) 33,593 Shares are held by the Company or its direct or indirect wholly
owned Subsidiaries, and (iv) no bonds, debentures, notes or other instruments
or evidence of indebtedness having the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matters on which the Company stockholders may vote ("Company Voting Debt") are
issued or outstanding. All outstanding Shares were duly authorized and are
validly issued, fully paid and nonassessable and are not subject to preemptive
or other similar rights. Except as set forth on Schedule 4.1(b), all
outstanding shares of capital stock of the Subsidiaries of the Company are
owned by the Company or a direct or indirect Subsidiary of the Company, free
and clear of all liens, charges, encumbrances, claims and options. As of the
date hereof, except as set forth in this Section 4.1(b) or Schedule 4.1(b),
except for the common stock purchase rights (the "Rights") issued pursuant to
the Rights Agreement dated as of April 14, 1996, as amended, between the
Company and ▇▇▇▇▇▇ Trust and Savings Bank (the "Rights Agreement") and except
for the tentative settlement entered into in November 1995 pursuant to which
it was agreed that 17.5% of the issued and outstanding shares of the common
stock of the Company will be issued to a trust to be created pursuant to the
Bankruptcy Plan (as hereinafter defined) in the US Brass Bankruptcy there are
outstanding: (i) no shares of capital stock, Company Voting Debt or other
voting securities of the Company; (ii) no securities of the Company or any
Subsidiary of the Company convertible into, or exchangeable or exercisable
for, shares of capital stock, Company Voting Debt or other voting securities
of the Company or any Subsidiary of the Company; (iii) no stock appreciation
rights, phantom stock awards or similar rights or awards have been issued or
granted by the Company or any Subsidiary of the Company; and (iv) no options,
warrants, calls, rights (including preemptive rights), commitments or
agreements to which the Company or any Subsidiary of the Company is a party or
by which it is bound, in any case obligating the Company or any Subsidiary of
the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to
be issued, delivered, sold, purchased,
8
redeemed or acquired, additional shares of capital stock or any Company Voting
Debt or other voting securities of the Company or of any Subsidiary of the
Company, or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. Set forth on Schedule 4.1(b) is a list of all options, warrants and
rights to purchase shares of Company Common Stock, and all Phantom Rights and
stock appreciation rights outstanding as of the date hereof and the exercise
prices or Initial Values, as applicable, relating thereto. There are not as of
the date hereof and there will not be at the Effective Time any stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting of any
shares of the capital stock of the Company which will limit in any way the
solicitation of proxies by or on behalf of the Company from, or the casting of
votes by, the stockholders of the Company with respect to the Merger. There
are no restrictions on the Company to vote the stock of any of its
Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject, if required with respect to consummation
of the Merger, to the Company Stockholder Approval (as defined in Section
4.1(c)(iii)), to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject, if required with
respect to consummation of the Merger, to the Company Stockholder Approval.
This Agreement has been duly executed and delivered by the Company and,
subject, if required with respect to consummation of the Merger, to the
Company Stockholder Approval, and, assuming that this Agreement constitutes
the valid and binding agreement of Parent and Sub, constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms
except that the enforcement hereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) (the
foregoing exception, the "Bankruptcy Exception").
(ii) The execution and delivery of this Agreement by the Company do not,
and the consummation of the transactions contemplated hereby by the Company
will not, (x) conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or the
loss of a benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or right of first
refusal with respect to any asset or property (any such conflict,
violation, default, right of termination, cancellation or acceleration,
loss, creation or right of first refusal, a "Violation"), pursuant to any
provision of the Certificate of Incorporation or Bylaws of the Company or
the equivalent constituent documents of any of its Subsidiaries or (y)
except as set forth on Schedule 4.1(c)(ii) hereto and assuming the
consents, approvals, authorizations, permits, filings and notifications
referred to in Section 4.1(c)(iii) are duly and timely obtained or made
and, if required, the Company Stockholder Approval has been obtained,
result in any Violation of any (i) loan or credit agreement, note,
mortgage, indenture, lease, Company ERISA Plan (as defined in Section
4.1(i)), Company Benefit Arrangements (as defined in Section 4.1(i)) or
other agreement, obligation, instrument, Company Permit (as defined in
Section 4.1(f)), concession, franchise or license applicable to the Company
or any of its Subsidiaries or their respective properties or assets or (ii)
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their respective
properties or assets (collectively, "Laws"). The Board of Directors of the
Company has taken all actions necessary under the DGCL, including approving
the transactions contemplated by this Agreement, to ensure that Section 203
of the DGCL does not, and will not, apply to the transactions contemplated
in this Agreement. The Board of Directors of the Company has also taken all
actions necessary under Article EIGHTH of the Company's Restated
Certificate of Incorporation, including approving the transactions
contemplated by this Agreement, to ensure that such Article EIGHTH does
not, and will not, apply to the transactions contemplated in this
Agreement. The Company and its Board of Directors have taken all actions
necessary so that (i) the execution and delivery of this Agreement, the
consummation of the transactions
9
contemplated hereby and the other matters provided for herein will not
result in (A) Purchaser or Sub or any of their respective Affiliates or
Associates being an Acquiring Person, (B) the occurrence of a Distribution
Date, or (C) the Rights becoming exercisable and (ii) the Final Expiration
Date will occur immediately prior to the purchase of Shares pursuant to the
Offer (the terms "Acquiring Person," "Affiliate," "Associate,"
"Distribution Date" and "Final Expiration Date" having the respective
meanings ascribed thereto in the Rights Agreement).
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required
by or with respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby which,
if not obtained or made, would reasonably be expected to have a Material
Adverse Effect with respect to the Company, except for: (A) the filing of a
premerger notification and report form by the Company under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended and the rules and
regulations thereunder (the "HSR Act") and the expiration or termination of
the applicable waiting period thereunder; (B) the filing with the SEC of
(x) if required by applicable law, a proxy or information statement in
definitive form relating to a meeting of the holders of Company Common
Stock (the "Company's Stockholders Meeting") to adopt this Agreement
("Company Stockholder Approval") (such proxy or information statement as
amended or supplemented from time to time being hereinafter referred to as
the "Proxy Statement"), (y) Schedule 14D-9 in connection with the Offer,
and (z) such reports under and such other compliance with the Exchange Act
and the rules and regulations thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby; (C) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware; (D) the consents, approvals, orders, authorizations,
registrations, declarations or filings set forth on Schedule 4.1(c)(iii);
and (E) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover laws.
(d) SEC Documents. The Company has made available to Parent a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by the Company with the SEC since January 1, 1993 and
prior to the date of this Agreement (the "Company SEC Documents") which are
all the documents (other than preliminary material) that the Company was
required to file with the SEC since such date. As of their respective dates,
(i) the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Documents, and (ii)
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. The financial statements of the Company
included in the Company SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and present fairly, in all material respects, in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal, recurring adjustments, none of which are material) the consolidated
financial position of the Company and its consolidated Subsidiaries as of
their respective dates and the consolidated results of operations and the
consolidated cash flows of the Company and its consolidated Subsidiaries for
the periods presented therein.
(e) Information Supplied. None of the information supplied or to be supplied
in writing by the Company expressly for inclusion or incorporation by
reference in (i) any of the Offer Documents will, at the time the Offer
Documents are first published, sent or given to holders of Company Common
Stock, and at any time they are amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, on the date it is first mailed to the holders
10
of the Company Common Stock or at the time of the Company's Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Company makes no representations with respect to
information supplied in writing by Parent or Sub expressly for inclusion in
the Proxy Statement.
(f) Compliance with Applicable Laws. The Company and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders, franchises and approvals
of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except where the failure to
hold any such Company Permits would not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Except as disclosed in
the Company SEC Documents, the businesses of the Company and its Subsidiaries
are not being conducted in violation of any Laws, other than Laws the
violation of which would not reasonably be expected to have a Material Adverse
Effect with respect to the Company. No investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, threatened, other than those the
outcome of which would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "to the knowledge of the Company" and all
phrases of like import shall mean facts or circumstances within the personal
knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, in each case
after reasonably inquiry.
(g) Litigation. Except as disclosed in the Company SEC Documents or on
Schedule 4.1(g) and except for any suits, actions or proceedings initiated or
threatened against the Company or any of its officers or directors by any
shareholder of the Company (or any group thereof) on or after the date hereof
with respect to this Agreement or the transactions contemplated hereby, there
is no suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary of the Company,
nor is there any written judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company, which is reasonably likely to result in a Material
Adverse Effect on the Company or its ability to consummate the transactions
contemplated hereby.
(h) Taxes. Except as disclosed on Schedule 4.1(h):
(i) All Tax returns, statements, reports and forms (including estimated
tax or information returns and reports) required to be filed with any
Taxing Authority with respect to any Pre-Closing Tax Period (defined below)
by or on behalf of the Company or any Subsidiary of the Company
(collectively, the "Returns") have, to the extent required to be filed on
or before the date hereof, been filed when due in accordance with all
applicable laws.
(ii) As of the time of filing, the Returns correctly reflected in all
material respects the facts regarding the income, business, assets,
operations, and activities and status of the Company and its Subsidiaries.
(iii) All Taxes shown as due and payable on the Returns that have been
filed have been timely paid, or withheld and remitted to the appropriate
Taxing Authority.
(iv) The reserves established for Taxes with respect to the Company and
its Subsidiaries for any Pre-Closing Tax Period (including any Pre-Closing
Tax Period for which no Return has yet been filed) reflected on the books
of the Company and its Subsidiaries (excluding any provision for deferred
income taxes) are adequate in accordance with GAAP.
(v) Neither the Company nor any Subsidiary of the Company is delinquent
in the payment of any Tax or has requested any extension of time within
which to file any Return except for extensions granted as a matter of
right.
(vi) Neither the Company nor any Subsidiary of the Company (or any member
of any affiliated, consolidated, combined or unitary group of which the
Company or any Subsidiary of the Company is or has been a member) has
granted any extension or waiver of the statute of limitations period
applicable to any Return, which period (after giving effect to such
extension or waiver) has not yet expired.
11
(vii) There is no action, suit or proceeding now pending and no claim,
audit or investigation now pending of which the Company is aware or, to the
knowledge of the Company, any action, suit, claim, audit or investigation
threatened against or with respect to the Company or any Subsidiary of the
Company in respect of any Tax.
(viii) None of the Company, any Subsidiary of the Company or any other
person on behalf of the Company or any Subsidiary of the Company has
entered into any agreement or consent pursuant to Section 341(f) of the
Code.
(ix) There are no liens for Taxes upon the assets of the Company or any
Subsidiary of the Company except liens for current Taxes not yet due.
(x) Neither the Company nor any Subsidiary of the Company will be
required to include any adjustment in taxable income for any Post-Closing
Tax Period (defined below) under Section 481(c) of the Code (or any similar
provision of the Tax laws of any jurisdiction) as a result of a change in
method of accounting for a Pre-Closing Tax Period or pursuant to the
provisions of any agreement entered into with any Taxing Authority with
regard to the Tax liability of the Company or any Subsidiary of the Company
for any Pre-Closing Tax Period.
(xi) Neither the Company nor any Subsidiary of the Company has been a
member of an affiliated, consolidated, combined or unitary group with
respect to which any corporation (other than the Company or any Subsidiary
of the Company, or any predecessors thereof) was the common parent.
(xii) Schedule 4.1(h) contains a list of all jurisdictions (whether
foreign or domestic) to which any Tax imposed on overall net income is
properly payable by the Company or any Subsidiary of the Company.
(xiv) For purposes of this paragraph 4.1(h):
(A) "Tax" shall mean (1) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, license, withholding on
amounts paid to or by the Company or any Subsidiary of the Company,
payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty, addition to tax or
additional amount imposed by any governmental authority (domestic or
foreign) responsible for the imposition of any such tax (a "Taxing
Authority"), (2) any liability of the Company or any Subsidiary for the
payment of any amounts of any of the foregoing types described as a
result of being a member of an affiliated, consolidated, combined or
unitary group, and (3) liability of the Company or any Subsidiary for
the payment of any amounts as a result of being party to any Tax
sharing agreement or arrangement (whether or not written) binding the
Company or any Subsidiary of the Company or with respect to the payment
of any amounts of any of the foregoing types as a result of any express
or implied obligation to indemnify any other person.
(B) "Pre-Closing Tax Period" shall mean any Tax period (or portion
thereof) ending on or before the close of business on the Closing Date.
(C) "Post-Closing Tax Period" shall mean any Tax period (or portion
thereof) ending after the close of business on the Closing Date.
(i) Pension And Benefit Plans; ERISA.
Schedule 4.1(i) hereto contains a true and complete list of each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained, contributed to or
required to be contributed to by the Company or any of its Subsidiaries for
the benefit of current, former and retired employees or their beneficiaries
(the "Company ERISA Plans") and each other plan, contract, program or
arrangement maintained, contributed to or required to be contributed to by the
Company or any of its Subsidiaries for the benefit of current, former or
retired employees and directors or their beneficiaries (the "Company Benefit
Arrangements" and, together with the Company ERISA Plans, the "Plans"). Each
Company ERISA Plan and each Company Benefit Arrangement is, and has at all
times, operated in compliance
12
in all material respects with its terms (including any applicable collective
bargaining agreements) and all applicable laws, including but not limited to
the Code, federal and state securities laws and ERISA, and no "reportable
event," "prohibited transaction" or breach of fiduciary duty (within the
meaning of ERISA) or termination has occurred with respect to any Company
ERISA Plan under circumstances which present a risk of any material liability
to any governmental authority or other person. None of the Company ERISA Plans
or Company Benefit Arrangements is a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or a "multiple employer plan" within the meaning
of Section 413(c) of the Code or Section 4063 of ERISA. No event has occurred
which would cause the Company to incur (i) any liability to the Pension
Benefit Guaranty Corporation under Title IV of ERISA or (ii) any withdrawal
liability to a "multiemployer plan" or "multiple employer plan," in each case
except for liabilities which could not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Copies or descriptions of
each Company ERISA Plan and Company Benefit Arrangement (and, where
applicable, the most recent summary plan description, actuarial report,
determination letter, annual report (Form 5500) and trust agreement relating
to such Company ERISA Plan and Company Benefit Arrangement), and such other
information as has been reasonably requested by Parent, have been made
available to Parent for review prior to the date hereof. Each Company ERISA
Plan intended to qualify under Section 401(a) of the Code is identified on
Schedule 4.1(i) and, to the knowledge of the Company, is so qualified, and, to
the knowledge of the Company, each trust maintained in connection with each
such plan is tax exempt under Section 501(a) of the Code. The Internal Revenue
Service (the "IRS") has issued favorable determination letters with respect to
each Company ERISA Plan and each Company Benefit Arrangement and related trust
intended to qualify under Section 401(a) of the Code, and the IRS has not
taken any action to revoke any such letter. If and to the extent applicable,
no Company ERISA Plan and no Company Benefit Arrangement has or has incurred
an accumulated funding deficiency within the meaning of ERISA (S) 302 or Code
(S) 412, nor has any waiver of the minimum funding standards of ERISA (S) 302
and Code (S) 412 been requested of or granted by the IRS with respect to any
Company ERISA Plan or Company Benefit Arrangement, nor has any lien in favor
of any such plan arisen under Code (S) 412(n) or ERISA (S) 302(f). Except as
indicated on Schedule 4.1(i), no Plan is self funded by the Company. Except as
disclosed on Schedule 4.1(i), with respect to any insurance policy providing
funding for benefits under any Company ERISA Plan or Company Benefit
Arrangement, there is no liability of the Company in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other actual or
contingent liability, there will be no such liability arising wholly or
partially out of events occurring prior to the execution of this Agreement,
nor would there be any such liability if the Company cancelled such policy as
of the date hereof. Except as disclosed on Schedule 4.1(i), no action, suit,
grievance, arbitration or other manner of litigation, or claim with respect to
the Plans or the assets thereof (other than routine claims for benefits made
in the ordinary course of plan administration) are pending or, to the
knowledge of the Company, threatened against or with respect to the Plans, the
Company or any fiduciaries (as defined in Section 3(21) of ERISA) of the Plans
(including any action, suit, grievance, arbitration or other manner of
litigation, or claim regarding conduct which allegedly interferes with the
attainment of rights under a Plan, in each case except for actions, suits,
grievances, arbitrations, claims, or other matters that could not reasonably
be expected to have a Material Adverse Effect with respect to the Company.
Except as set forth in Schedule 4.1(i), all expenses and liabilities relating
to all of the Plans have been, and will at the Closing Date be, fully and
properly accrued in all material respects on the appropriate Plan's books and
records and disclosed in each case to the extent required and in accordance
with generally accepted accounting principles and in the Plan financial
statements. Except as set forth on Schedule 4.1(i), no Plan is funded through
a "welfare benefit fund" as defined in Section 419(e) of the Code.
(j) Absence of Certain Changes or Events. Since September 30, 1996, the
business of the Company and its Subsidiaries has been carried on only in the
ordinary course and there has not been any adverse change in the business,
financial condition or results of operations which has resulted in or
reasonably could be expected to result in a Material Adverse Effect with
respect to the Company.
(k) Opinion of Financial Advisor. The Company has received the opinion of
Bear, ▇▇▇▇▇▇▇ & Co. Inc. to the effect that, as of the date hereof, the Offer
Consideration to be received by the holders of Company Common Stock in the
Offer and the Merger Consideration to be received by the holders of Company
Common Stock in the Merger is fair, from a financial point of view, to such
holders.
13
(l) Vote Required. In the event that Section 253 of the DGCL is inapplicable
and unavailable to effectuate the Merger, the affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of the Company's capital stock
necessary (under applicable law, the Restated Certificate of Incorporation of
the Company or otherwise) to approve the Merger and this Agreement and the
transactions contemplated hereby.
(m) Labor Matters. Except as set forth on Schedule 4.1(m), neither the
Company nor any of its Subsidiaries is a party to any employment, severance
compensation, labor or collective bargaining agreement and there are no
employment, severance compensation, labor or collective bargaining agreements
which pertain to employees of the Company or any of its Subsidiaries. The only
employment agreements and severance compensation agreements with officers of
the Company or any of its Subsidiaries are set forth on Schedule 4.1(m). No
labor organization or group of employees of the Company or any of its
Subsidiaries has made a pending written demand for recognition or
certification.
(n) Intangible Property.
(i) Schedule 4.1(n) sets forth a list of each material trademark, trade
name, patent, service mark, brand mark, brand name, proprietary computer
program, proprietary database, industrial design or copyright owned by, or
used in connection with the businesses of, the Company or any of its
Subsidiaries as well as a list of all registrations thereof and pending
applications therefor, and each license or other contract relating thereto
(collectively, the "Company Intangible Property"). Items identified with an
asterisk on Schedule 4.1(n) are owned by the Company ("Company Owned
Intangible Property"). Except as set forth on Schedule 4.1(n), all of the
Company Owned Intangible Property is owned by the Company or its
Subsidiaries free and clear of any and all liens, claims or encumbrances,
other than liens, claims and encumbrances which would not materially impair
the value of such Company Owned Intangible Property or its use in the
conduct of the businesses conducted by the Company and its Subsidiaries.
Except as set forth on Schedule 4.1(n), the use of the Company Intangible
Property by the Company or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation of
any right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark,
brand mark, brand name, computer program, database, industrial design,
copyright or any pending application therefor of any other person, except
in each case as would not materially impair the value of such Company
Intangible Property or its use in the conduct of the businesses conducted
by the Company and its Subsidiaries. There have been no claims made (or, to
the knowledge of the Company, threatened) and neither the Company nor any
of its Subsidiaries has received any notice of any claim that any of the
Company Intangible Property is invalid or unenforceable or conflicts with
the asserted rights of any other person or has not been used or enforced or
has failed to be used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of any of the Company
Intangible Property.
(ii) Each of the Company and its Subsidiaries owns, or has a valid right
to use, all Company Intangible Property necessary for the operation of its
business and has not forfeited or otherwise relinquished any Company
Intangible Property.
(iii) Except as set forth on Schedule 4.1(n), each of the licenses or
other contracts relating to the Company Intangible Property (collectively,
the "Company Intangible Property Licenses") is in full force and effect and
is valid and enforceable in accordance with its terms (subject to the
Bankruptcy Exception), and there is no material default under any Company
Intangible Property License either by the Company or any of its
Subsidiaries or, to the knowledge of the Company, by any other party
thereto and there has been no failure to maintain or enforce any material
rights with respect to the Company Intangible Property Licenses. The
transactions contemplated by this Agreement will not invalidate any Company
Intangible Property License to which the Company or any of its Subsidiaries
is a party or by which any of them are bound or result in any requirement
to pay material additional amounts in order to continue to use any such
Company Intangible Property License.
14
(o) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Law" means any applicable law regulating or
prohibiting Releases into any part of the environment (indoor or
outdoor), or pertaining to the protection of natural resources or the
environment including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") (42
U.S.C. (S)(S) 9601, et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. (S)(S) 1801, et seq.), the Resource Conservation and
Recovery Act (42 U.S.C.(S)(S) 6901, et seq.), the Clean Water Act (33
U.S.C. (S)(S) 1251, et seq.), the Clean Air Act (33 U.S.C. (S)(S) 7401,
et seq.), the Toxic Substances Control Act (15 U.S.C. (S)(S) 7401, et
seq.) and the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. (S)(S) 136, et seq.), and the regulations promulgated pursuant
thereto, and any such applicable foreign or domestic state or local
statutes, and the regulations promulgated pursuant thereto, as such
laws are in effect on the date hereof;
(B) "Hazardous Material" means any substance, material or waste which
is regulated by any public or governmental authority in the
jurisdictions in which the Company or its Subsidiaries conducts
business, or the United States, including, without limitation, any
material or substance which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of any Environmental Law;
(C) "Release" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, including, without
limitation, any property owned, operated or leased by the Company or
any of its Subsidiaries; and
(D) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental entity
or required under any Environmental Law, or voluntarily undertaken to
(i) clean up, remove, treat, or in any other way ameliorate or address
any Hazardous Materials or other substance in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not endanger
or threaten to endanger the public health or welfare of the indoor or
outdoor environment; (iii) perform preremedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (iv) achieve or maintain compliance with any
Environmental Law.
(ii) Except as disclosed in the Company SEC Documents, as set forth in
Schedule 4.1(o), or where the failure to comply would not reasonably be
expected to have a Material Adverse Effect with respect to the Company, the
operations of the Company and its Subsidiaries have complied and currently
comply with all Environmental Laws. Except as set forth in Schedule 4.1(o),
neither the Company nor any of its Subsidiaries has received any notice
with respect to any of its facilities of any violation of any Environmental
Law or any possible liability or remediation obligation arising under any
Environmental Law other than those violations, liabilities or obligations
which would not reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(iii) The Company and its Subsidiaries are not subject to any outstanding
material orders, judgments, agreements or contracts with or issued by any
Governmental Entity or other person respecting (A) Environmental Laws, (B)
any Remedial Action or (C) any Release or threatened Release of a Hazardous
Material except as described in Schedule 4.1(o).
(p) Certain Defaults. Except as set forth on Schedule 4.1(p), neither the
Company nor any of its Subsidiaries is, or has received written notice that
any other party is, in default under any material written contract or other
agreement to which the Company or any Subsidiary is a party or otherwise
bound.
(q) Brokerage Fees and Commissions; Legal Fees. Except for Bear, ▇▇▇▇▇▇▇ &
Co. Inc. (a copy of whose engagement letter with the Company has been
furnished to Parent), no person or entity is entitled to receive from the
Company or any of its Subsidiaries any investment banking, brokerage or
finder's fee or fees for financial
15
consulting or other advisory services in connection with this Agreement or the
transactions contemplated hereby based upon arrangements made by or on behalf
of the Company. The fees and expenses of Bear, ▇▇▇▇▇▇▇ & Co. Inc. as a result
of its representation of the Company in connection with this Agreement and the
transactions contemplated hereby shall not exceed $3,250,000.
(r) Full Disclosure. None of the representations or warranties contained in
this Section 4.1 nor any of the disclosures contained in the Schedules
attached hereto 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 contained herein or therein, in light of the circumstances
under which they are made, not misleading.
4.2 Representations and Warranties of Parent and Sub. Parent and Sub,
jointly and severally, represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, and each has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where the
failure so to qualify or be in good standing could not reasonably be expected
to have a Material Adverse Effect with respect to Parent. Parent has delivered
to the Company complete and correct copies of the respective Certificates of
Incorporation and Bylaws, or equivalent organizational documents, of Parent
and Sub.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
This Agreement has been duly executed and delivered by each of Parent and
Sub and assuming this Agreement constitutes the valid and binding agreement
of the Company, constitutes a valid and binding obligation of Parent and
Sub enforceable in accordance with its terms, subject to the Bankruptcy
Exception.
(ii) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby by each of Parent and Sub will not
result in any Violation pursuant to any provision of the Certificate of
Incorporation or Bylaws (or comparable governing instruments) of Parent or
Sub or any of their respective Subsidiaries or, except as set forth on
Schedule 4.2(b)(iii) hereto and assuming the consents, approvals,
authorizations, permits, filings and notifications referred to in Section
4.2(b)(iii) are duly and timely obtained or made, result in any Violation
of any (i) loan or credit agreement, note, mortgage, indenture, lease,
employee benefit plan, or other agreement, obligation, instrument, permit,
concession, franchise or license applicable to Parent or any of its
Subsidiaries or their respective properties or assets or (ii) any Laws
applicable to Parent or any of its Subsidiaries or their respective
properties or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any Governmental
Entity is required by or with respect to Parent or Sub in connection with
the execution and delivery of this Agreement by each of Parent and Sub or
the consummation by each of Parent or Sub of the transactions contemplated
hereby which, if not obtained or made, would reasonably be expected to have
a Material Adverse Effect with respect to Parent, except for: (A) filings
under the HSR Act; (B) the filing with the SEC of (x) Schedule 14D-1,
respectively, in connection with the commencement and consummation of the
Offer and (y) such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder, as may be required
in connection with this Agreement and the transactions contemplated hereby;
(C) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware; and (D) the filings identified on Schedule
4.2(b)(iii).
16
(c) Information Supplied. The Offer Documents, including Schedule 14D-1,
will contain (or will be amended in a timely manner so as to contain) all
information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other applicable
law, and will conform in all material respects with the requirements of the
Exchange Act and any other applicable law. The information contained in the
Offer Documents (other than information furnished in writing by the Company
expressly for inclusion in the Offer Documents, as to which Parent and Sub
make no representations or warranties) will not, at the respective times such
Offer Documents are filed with the SEC (or such filings are amended or
supplemented) or published, sent or given to the Company's stockholders,
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 made therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
Parent or Sub or any affiliate of Parent for inclusion or incorporation by
reference in (i) Schedule 14D-9 will, at the time Schedule 14D-9 is filed with
the SEC, and at any time it is amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading or (ii) the Proxy
Statement will, on the date it is first mailed to the holders of the Company
Common Stock or at the time of the Company's Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in 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 or Sub, or with respect to any information supplied by Parent or Sub
for inclusion in the Schedule 14D-9 or the Proxy Statement, shall occur which
is required to be described in an amendment of, or a supplement to, such
document, Parent or Sub shall so describe the event to the Company.
(d) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby. Sub is a wholly-owned subsidiary of
Parent.
(e) Financing. Parent and Sub collectively have cash on hand or financing
commitments from financially responsible third parties, or a combination
thereof, in an aggregate amount sufficient to enable Parent and Sub to (i) pay
in full (A) the Offer Consideration, (B) the Merger Consideration (including
the Restricted Share Consideration), (C) the Option Consideration, (D) the
Phantom Right Consideration, and (E) all fees and expenses payable by Parent
and Sub in connection with this Agreement and the transactions contemplated
thereby and (ii) refinance such of the Company's existing indebtedness as,
pursuant to its terms, will become due and payable prior to its stated
maturity as a result of the consummation of the transactions contemplated
hereby.
ARTICLE V
Covenants Relating to Conduct of Business
5.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the earlier of (i) such time as Parent or Sub
obtains majority representation on the Board of Directors of the Company (the
"Board") or (ii) the Effective Time, the Company agrees as to the Company and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or by the Third Amended Joint Plan of Reorganization proposed by US
Brass and the Company dated November 27, 1996 (as amended in accordance with
Section 5.1(o) hereof from time to time, the "Bankruptcy Plan"), or to the
extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on their
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and shall use reasonable efforts to preserve
intact its present business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing business shall not be impaired in any material respect at
the Effective Time.
17
(b) Dividends; Changes in Stock. The Company shall not, nor shall it permit
any of its Subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, other than cash
dividends or distributions paid by a wholly-owned Subsidiary of the Company to
the Company or another wholly-owned Subsidiary of the Company; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) repurchase or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any shares
of its capital stock, except as required pursuant to the terms of any
securities outstanding on the date hereof or as contemplated by any employee
benefit or stock plans or any employment or severance agreement, as in effect
on the date hereof.
(c) Issuance of Securities. Except pursuant to the exercise of Options, the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) grant
any options, warrants or rights to purchase shares of Company Common Stock or
grant any Phantom Rights or stock appreciation rights, (ii) amend or reprice
any Option or the LTIP, or (iii) issue, deliver or sell, or authorize or
propose to issue, deliver or sell, any shares of its capital stock of any
class or series (including, without limitation, any Shares), any Company
Voting Debt or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Company Voting Debt or convertible
securities, other than (A) the issuance of Shares upon the exercise of Options
under the LTIP which are outstanding on the date hereof, or in satisfaction of
stock grants or stock based awards made prior to the date hereof and set forth
on Schedule 4.1(b) (in any case as in effect on the date hereof) or (B)
issuances by a wholly-owned Subsidiary of its capital stock to its parent.
(d) Governing Documents. The Company shall not amend or propose to amend
its, or permit any Subsidiary to amend its, Certificate of Incorporation or
Bylaws (or comparable organizational documents).
(e) No Solicitation. From and after the date hereof until the termination of
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries, or any of its or their officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of
its Subsidiaries), directly or indirectly, to initiate, solicit, or facilitate
(including by way of furnishing non-public information or assistance) the
making of any proposal that constitutes an Acquisition Proposal (as defined
below), or enter into or maintain or continue discussions or negotiate with
any person or entity in respect of an Acquisition Proposal, provided, however,
that nothing contained in this Agreement shall prohibit the Company from:
(i) furnishing information to, or engaging in discussions or negotiations
with, or agreeing to or endorsing an Acquisition Proposal from, any person
or entity that makes an unsolicited Acquisition Proposal if, and only to
the extent that, (A) the Board, after consultation with legal counsel (who
may be the Company's regularly engaged legal counsel), determines in good
faith that such action is necessary for the Board to comply with its
fiduciary duties under applicable law and (B) the Company (x) provides
prior notice to Parent to the effect that it is taking such action and (y)
receives from such person or entity an executed confidentiality agreement
in reasonably customary form; or
(ii) failing to make, withdrawing, modifying or amending its
recommendation referred to in Section 1.3 if there exists an Acquisition
Proposal and the Board, after consultation with legal counsel as aforesaid,
determines that such action is necessary for the Board to comply with its
fiduciary duties under applicable law.
Subject to the immediately preceding sentence, the Company shall immediately
cease any existing negotiations with any parties conducted heretofore with
respect to any of the foregoing. The Company will promptly notify Parent after
receipt of any Acquisition Proposal or any request for nonpublic information
relating to the Company or any Subsidiary or for access to the properties,
books or records of the Company or any Subsidiary by any person who has
informed the Company that such person is considering making, or has made, an
Acquisition Proposal, and the Company will keep Parent informed in reasonable
detail of the status and details of any such Acquisition Proposal. For
purposes of this Agreement, "Acquisition Proposal" shall mean any bona fide
proposal with respect to a merger, consolidation, share exchange or similar
transaction involving the
18
Company or any Subsidiary of the Company, or any purchase of all or any
significant portion of the assets of the Company or any Subsidiary of the
Company, or any significant equity interest in the Company or any Subsidiary
of the Company, other than the transactions contemplated hereby. Nothing
contained in this Section 5.1(e) shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which the Board, after consultation with legal counsel
(who may be the Company's regularly engaged legal counsel), determines in good
faith is required under applicable law. Notwithstanding anything contained in
this Agreement to the contrary, (x) any action by the Board permitted by this
Section 5.1(e) shall not constitute a breach of this Agreement by the Company
and (y) a "stop-look-and-listen" communication with respect to the Offer, the
Merger or this Agreement of the nature contemplated in Rule 14d-9 under the
Exchange Act made by the Company as a result of an Acquisition Proposal shall
in no event be deemed a withdrawal or modification by the Board of its
approval or recommendation of the Offer, the Merger and this Agreement.
(f) No Acquisitions. The Company shall not, nor shall it permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(g) No Dispositions. Other than dispositions in the ordinary course of
business which are not material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, the Company shall not, nor
shall it permit any of its Subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), encumber or otherwise dispose of, any of its assets.
(h) Advice of Changes; SEC Filings. The Company shall confer on a reasonably
regular basis with Parent, report on operational matters and promptly advise
Parent orally and in writing of any change or event having, or which could
reasonably be expected to have, a Material Adverse Effect on the Company. The
Company shall promptly provide Parent (or its counsel) with copies of all
filings made by the Company with the SEC or any other state or federal
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(i) No Dissolution, Etc. The Company shall not authorize, recommend, propose
or announce an intention to adopt a plan of complete or partial liquidation or
dissolution of the Company or any of its Subsidiaries.
(j) Other Actions. The Company will not voluntarily take, nor will it permit
any of its Subsidiaries voluntarily to take or agree or commit voluntarily to
take, any action that results in any of the Company's representations or
warranties hereunder being untrue in any material respect or in any of the
Company's covenants hereunder or any of the conditions to the Merger not being
satisfied in all material respects.
(k) Certain Employee Matters. The Company and its Subsidiaries shall not:
(i) except for normal increases to officers and key employees consistent with
past practice, grant any increases in the compensation of any of its
directors, officers or key employees; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated by
any of the existing Company ERISA Plans or Company Benefit Arrangements as in
effect on the date hereof to any such director, officer or key employee,
whether past or present; (iii) enter into any new, or materially amend any
existing, employment or severance or termination agreement with any such
director, officer or key employee; or (iv) except as may be required to comply
with applicable law, become obligated under any new Company ERISA Plan or
Company Benefit Arrangements, which was not in existence on the date hereof,
or amend any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of enhancing any benefits thereunder.
Notwithstanding the foregoing, ▇▇▇▇▇▇ agrees that to the extent that a covered
employee of the Company is unable to meet the targets set forth in the 1997
Executive Incentive Compensation Program or those targets are changed, in
either case as a result of a Change of Control as defined in the 1995 Long
Term Incentive Plan, the employee's 1997 bonus will be paid at par.
19
(l) Indebtedness. Except for borrowings in the ordinary course of business
under its existing credit facilities or arrangements, the Company shall not,
nor shall the Company permit any of its Subsidiaries to, assume or incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities
of the Company or any of its Subsidiaries or guarantee any debt securities of
others or enter into any lease (whether such lease is an operating or capital
lease) or create any mortgages, liens, security interests or other
encumbrances on the property of the Company or any of its Subsidiaries in
connection with any indebtedness thereof, or enter into any "keep well" or
other agreement or arrangement to maintain the financial condition of another
person.
(m) Accounting. The Company shall not take any action, other than in the
ordinary course of business, consistent with past practice or as required by
the SEC or by law, to effect any material change in any of its current
accounting policies, procedures and practices.
(n) Capital Expenditures. The Company shall not make or authorize nor shall
the Company permit any of its Subsidiaries to make or authorize any capital
expenditures in excess of $5,000,000 that is not included in the capital
budget previously furnished to Parent.
(o) U.S. Brass Chapter 11 Case. The Company shall not act in any material
respect in the Chapter 11 case of U.S. Brass, pending in the United States
Bankruptcy Court, Eastern District of Texas (case no. 94-40823S) without
reasonable advance notice to and the consent of Parent, which consent shall
not be withheld unreasonably. In particular, the Company shall not propose or
agree to any amendment to or modification of the Third Amended Joint Plan of
Reorganization proposed in said Chapter 11 case by the Company and U.S. Brass,
dated November 27, 1996. Nothing contained in this Section 5.1(o) is intended
in any way to affect the duties, obligations or responsibilities of U.S. Brass
as a debtor under Chapter 11 of the Bankruptcy Code.
5.2 Notices of Certain Events. The Company and Parent shall promptly notify
the other of:
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement; and
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings commenced
or, to the actual knowledge of the executive officers of the notifying
party, threatened against, relating to or involving or otherwise affecting
such party or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed, in the case of
the Company, pursuant to Section 4.1(g), or which, in the case of either
the Company or Parent, relate to the consummation of the transactions
contemplated by this Agreement.
ARTICLE VI
Additional Covenants and Agreements
6.1 Preparation of the Proxy Statement; Company Stockholders Meeting; Merger
without a Company Stockholders Meeting. (a) As soon as practicable following
the acceptance for payment of and payment for shares of Company Common Stock
by Sub in the Offer, if required by applicable law in order to consummate the
Merger, the Company, in consultation with Parent, shall prepare and file with
the SEC a preliminary proxy statement, together with a form of proxy, or
information statement (the "Preliminary Proxy Statement") relating to the
Merger in accordance with the Exchange Act and the rules and regulations
thereunder. Parent, Sub and the Company will cooperate with each other in the
preparation of the Preliminary Proxy Statement. Without limiting the
generality or effect of the foregoing, the Company shall use its reasonable
efforts to respond to all SEC comments with respect to the Preliminary Proxy
Statement and, subject to compliance with SEC rules and regulations, to cause
the Proxy Statement to be mailed to the Company's stockholders at the earliest
practicable date. Parent and Sub will furnish to the Company the information
relating to Parent and Sub required under the Exchange Act and the rules and
regulations thereunder to be set forth in the Proxy Statement.
20
(b) The Company will, as soon as practicable following the acceptance for
payment of and payment for shares of Company Common Stock by Sub in the Offer,
if required by law to consummate the Merger, duly call, give notice of,
convene and hold the Company Stockholders Meeting for the purpose of approving
this Agreement and the transactions contemplated hereby. At the Company
Stockholders Meeting, Parent shall cause all of the Shares then owned by
▇▇▇▇▇▇ and Sub and any of their respective Subsidiaries or controlled
affiliates to be voted in favor of the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b), in the event that Sub
or any other wholly-owned Subsidiary of Parent shall acquire at least 90% of
the outstanding shares of Company Common Stock in the Offer, the parties
hereto shall, at the request of Sub, take all necessary actions to cause the
Merger to become effective, as soon as practicable after the expiration of the
Offer, without a meeting of stockholders of the Company, in accordance with
Section 253 of the DGCL.
(d) Parent shall (i) cause Sub promptly to submit this Agreement and the
transactions contemplated hereby for approval and adoption by the written
consent of its sole stockholder; (ii) cause the shares of capital stock of Sub
to be voted for adoption and approval of this Agreement and the transactions
contemplated hereby; and (iii) cause to be taken all additional actions
necessary for Sub to adopt and approve this Agreement and the transactions
contemplated hereby.
6.2 Access to Information. (a) Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of Parent access,
during normal business hours during the period prior to the Effective Time, to
all of its properties, books, contracts, commitments and records (including,
without limitation, tax returns) of the Company and its Subsidiaries and cause
the Company's and its Subsidiaries' independent accountants to provide access
to their work papers and such other information as Parent may reasonably
request and, during such period, the Company shall (and shall cause each of
its Subsidiaries to) furnish promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed or received by the
Company or any such Subsidiary during such period pursuant to SEC requirements
and (ii) all other information concerning the business, properties and
personnel of the Company or any such Subsidiary as Parent may reasonably
request. Parent agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.2 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement.
(b) The Confidentiality and Standstill Agreement, dated as of August 21,
1996, between Parent and the Company (the "Confidentiality Agreement") shall
apply with respect to information furnished thereunder or hereunder and any
other activities contemplated thereby.
6.3 Legal Conditions to Merger. Each of the Company, Parent and Sub will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Offer, the
Merger and the transactions contemplated by this Agreement (including
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Offer, the Merger and the transactions contemplated by
this Agreement. Without limiting the generality or effect of the foregoing,
each of the Company, Parent and Sub will, and will cause its Subsidiaries to,
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party,
required to be obtained or made by the Company, Parent or any of their
Subsidiaries in connection with the Offer, the Merger, this Agreement or the
taking of any action contemplated hereby or thereby; provided, however, that
Parent need not agree with the Department of Justice or any other Governmental
Entity to hold separate, sell or otherwise dispose of any Subsidiary of Parent
or the Company or assets or properties of any of the foregoing, in each case,
which the Parent determines, in good faith, would materially affect the value
of the acquisition as a whole to Parent.
6.4 Fees and Expenses. (a) Except as otherwise provided in this Section 6.4,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
21
(b) The Company agrees to pay Sub a fee in immediately available funds equal
to $8,500,000 upon the termination of this Agreement pursuant to Section
8.1(d) for any of the following reasons (each, a "Trigger Event"):
(i) the Company shall have entered into a definitive agreement with
respect to any Acquisition Proposal other than the transactions
contemplated by this Agreement; or
(ii) the Board shall have withdrawn, or modified or amended in a manner
materially adverse to Parent or Sub, its approval or recommendation of the
Offer, the Merger or this Agreement.
(c) The costs incurred in connection with printing and mailing proxy
materials to shareholders of the Company shall be borne equally by the Company
and Parent.
6.5 Brokers or Finders. Except for Bear, ▇▇▇▇▇▇▇ & Co. Inc., the Company
represents, as to itself, its Subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or
will be entitled to any broker's or finders fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement. The fees and expenses of Bear, ▇▇▇▇▇▇▇ & Co. Inc. shall be paid by
the Company in accordance with the Company's agreements with such firm, and
the Company agrees to indemnify and hold Parent harmless from and against any
and all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by the Company or any of its affiliates.
Except for the firms identified on Schedule 6.5, Parent and Sub jointly and
severally represent as to themselves and their Subsidiaries and Affiliates
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finders fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement. The fees and expenses of the firms identified
on Schedule 6.5 shall be paid by Parent and Sub in accordance with the
Parent's agreements with such firms. ▇▇▇▇▇▇ agrees to indemnify and hold
Company harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted
by any person on the basis of any act or statement alleged to have been made
by Parent or its affiliates.
6.6 Best Efforts. Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, subject, as
applicable, to the Company Stockholder Approval, including cooperating fully
with the other party, including by provision of information and making of all
necessary filings in connection with, among other things, approvals under the
HSR Act. In case at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of either of the Constituent
Corporations, the proper officers and directors of each party to this
Agreement shall take all such necessary action.
6.7 Conduct of Business of Sub. During the period of time from the date of
this Agreement to the Effective Time, Sub shall not engage in any activities
of any nature except as provided in or contemplated by this Agreement.
6.8 Publicity. The parties will consult with each other and will mutually
agree upon any press release or public announcement pertaining to this
Agreement or the transactions contemplated hereby, including the Offer and the
Merger, and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be
required by applicable law or by the rules of the New York Stock Exchange,
Inc., in which case the party proposing to issue such press release or make
such public announcement shall use reasonable efforts to consult in good faith
with the other party before issuing any such press release or making any such
public announcement.
6.9 Employee Benefits. From and after the Effective Time, Parent shall cause
the Surviving Corporation to honor and perform each of the severance
agreements and plans identified on Schedule 6.9; and, to the extent
22
necessary under these agreements and plans, the preceding clause shall be
deemed an assumption of the Company's obligations under these agreements and
plans by the Surviving Corporation. The Company has heretofore delivered to
Parent a true and complete copy of each such agreement and plan. Without
limiting the generality of the foregoing, Parent shall cause the Surviving
Corporation to pay to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, on the Closing Date, all amounts that
will be owing to him under his Employment Agreement and Executive Severance
Agreement, in each case as amended, as a result of the transactions
contemplated by this Agreement. In addition, prior to the consummation of the
Offer, the Company shall take such actions as may be necessary to amend its
existing Change-In-Control Severance Payment Plan dated June 1, 1991 for
Employees of the Company so that such plan, as amended, shall provide for the
benefits specified on Schedule 6.9 hereto.
6.10 Indemnification; Directors' and Officers' Insurance. (a) The Company
shall, and from and after the Effective Time, the Surviving Corporation shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of the Company or any of its Subsidiaries (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities or judgments
or amounts that are paid in settlement with the approval of the indemnifying
party (which approval shall not be unreasonably withheld) of or in connection
with any threatened or actual claim, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the fact
that such person is or was a director or officer of the Company or any of its
Subsidiaries whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is
permitted under the DGCL to indemnify its own directors or officers as the
case may be (and Parent and the Surviving Corporation, as the case may be,
will pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law).
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time), (i) the Indemnified
Parties may retain counsel satisfactory to them and the Company (or them and
the Surviving Corporation after the Effective Time) and the Company (or after
the Effective Time, the Surviving Corporation) shall pay all fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor
are received; and (ii) the Company (or after the Effective Time, the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent (which consent shall not unreasonably be withheld). Any
Indemnified Party wishing to claim indemnification under this Section 6.10,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Company (or after the Effective Time, the Surviving
Corporation) (but the failure so to notify shall not relieve a party from any
liability which it may have under this Section 6.10 except to the extent such
failure prejudices such party), and shall deliver to the Company (or after the
Effective Time, the Surviving Corporation) the undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties. All rights to indemnification under this Section 6.10(a), including
provisions relating to advances of expenses incurred in defense of any action
or suit, existing in favor of the Indemnified Parties with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all such rights to indemnification
in respect of any Indemnified Liabilities asserted or made within such period
shall continue until the disposition of such Indemnified Liabilities.
(b) For a period of six years following the Effective Time, Parent shall
cause the Surviving Corporation to keep in effect the provisions in its
Certificate of Incorporation and Bylaws as of the date hereof providing for
exculpation of director and officer liability and indemnification to the
fullest extent provided by the DGCL, which provisions shall not be amended,
repealed, or otherwise modified except as required by applicable law or except
for amendments or modifications that would not adversely affect the rights
thereunder of any Indemnified Party.
23
(c) For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company and its
Subsidiaries (provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are
no less advantageous in any material respect to the Indemnified Parties) with
respect to matters arising before the Effective Time, provided that Parent
shall not be required to pay an annual premium for such insurance in excess of
200% of the last annual premium paid by the Company prior to the date hereof,
but in such case shall purchase as much coverage as possible for such amount.
(d) The provisions of this Section 6.10 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his heirs and his
personal representatives and shall be binding on all successors and assigns of
Sub, the Company and the Surviving Corporation.
ARTICLE VII
Conditions Precedent
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
adopted by the affirmative vote of the holders of a majority of the Shares
entitled to vote thereon if such vote is required by applicable law; provided
that the Parent and Sub shall vote all Shares purchased pursuant to the Offer
in favor of the Merger.
(b) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of Merger shall be in effect;
provided, however, that prior to invoking this condition, the party so
invoking this condition shall have used its commercially reasonable efforts to
have any such Injunction vacated.
(d) Completion of the Offer. Sub shall have accepted for payment and paid
for all shares of Company Common Stock validly tendered in the Offer and not
withdrawn; provided, however, that neither Parent nor Sub may invoke this
condition if Sub shall have failed to purchase shares of Company Common Stock
so tendered and not withdrawn in violation of the terms of this Agreement or
the Offer.
7.2 Conditions of Obligations of Parent and Sub. The obligations of Parent
and Sub to effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Parent
and Sub:
(a) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement on or before the earlier of (i) such time as Parent's
Designees shall constitute at least a majority of the Company's Board of
Directors pursuant to Section 1.4 of this Agreement and (ii) the Closing Date;
provided, however, that no failure by the Company to have so performed in all
material respects any such obligation shall constitute a failure of
satisfaction of the foregoing condition where the Company's failure of
performance occurred, and was actually known to Parent, at or prior to the
time Parent, Sub or any of their affiliates accepted for payment any shares of
Company Common Stock pursuant to the Offer.
Notwithstanding the foregoing, the obligations of Parent and Sub to effect
the Merger shall not be relieved by the failure of any of the foregoing
conditions if such failure is the result, directly or indirectly, of any
breach by Parent or Sub of any of their material obligations under this
Agreement.
24
7.3 Conditions of Obligations of the Company. The obligation of the Company
to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by the
Company:
(a) Representations and Warranties. The representations and warranties of
Parent and Sub set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement on or prior to the Closing Date.
ARTICLE VIII
Termination and Amendment
8.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent, or by mutual action
of their respective Boards of Directors;
(b) by the Company, if Sub shall have failed to commence the Offer within
five business days following the date of the initial public announcement of
the Offer;
(c) by either the Company or Parent, so long as such party has not
materially breached its obligations hereunder, if the Merger shall not have
been consummated on or before May 15, 1997; provided, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on or
before such date;
(d) by either the Company or Parent in the event that a Trigger Event shall
have occurred under Section 6.4(b); provided that the Company's right to
terminate this Agreement under this Section 8.1(d) shall be available only if
the Company shall have paid to Sub the fee provided for in Section 6.4(b);
(e) by Parent, if the Offer shall have expired or have been withdrawn or
terminated in accordance with the terms and conditions thereof without any
shares of Company Common Stock being purchased by Sub thereunder by reason of
the failure to satisfy any condition set forth in Exhibit A hereto;
(f) by the Company, if the Offer shall have expired or have been withdrawn
or terminated without any shares of Company Common Stock being purchased by
Sub thereunder on or prior to the 60th (or, if extended as contemplated by
Section 1.2, the 120th) day after the date of commencement of the Offer
pursuant to Section 1.2 hereof;
(g) by the Company, if Parent or Sub materially breaches any of their
respective representations and warranties or covenants contained in this
Agreement; or
(h) by either the Company or Parent, if any permanent injunction or other
order of a court or other competent authority preventing the consummation of
the Merger shall have become final and non-appealable.
8.2 Effect of Termination. In the event of termination of this Agreement by
either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the
part of Parent, Sub or the Company or their respective affiliates, officers,
directors or stockholders except (i) with respect to this Section 8.2, the
last sentence of Section 6.2(a), and Sections 6.2(b), 6.4 and 6.5, (ii) to the
extent that such termination results from the intentional or wilful breach by
a party hereto
25
of any of its representations or warranties, or of any of its covenants or
agreements, in each case, as set forth in this Agreement (except as provided
in Section 9.7) and (iii) with respect to Parent and Sub, to the extent that
such termination results from the breach, for whatever reason, of the
representations and warranties of Parent and Sub contained in Section 4.2(e)
hereof or from the failure of Parent and Sub to consummate the transactions
contemplated hereby because Parent and Sub do not have sufficient cash on hand
or financing resources in an aggregate amount sufficient to enable Parent and
Sub to pay all of the amounts specified in Section 4.2(e) hereof.
8.3 Amendment. Subject to applicable law and to Section 1.4(b), this
Agreement may be amended, modified or supplemented only by written agreement
of Parent, Sub and the Company at any time prior to the Effective Time with
respect to any of the terms contained herein; provided, however, that, after
this Agreement is adopted by the Company's stockholders, no such amendment or
modification shall reduce the amount or change the form of consideration to be
delivered to the stockholders of the Company or adversely affect the rights of
the stockholders of the Company.
8.4 Extension; Waiver. At any time prior to the Effective Time, and subject
to Section 1.4(b) and applicable law, the parties hereto, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed: (i) extend the time for the performance of any of the obligations or
other acts of 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. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE IX
General Provisions
9.1 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Article III
and Sections 6.9 and 6.10. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement, and the provisions of the
Confidentiality Agreement shall apply to all information and material
delivered by any party hereunder.
9.2 Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by a nationally recognized overnight courier or certified or
registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered by courier, personally, telegraphed or telecopied
or, if mailed, five business days after the date of mailing to the following
address, or to such other address or addresses as such person may subsequently
designate by notice given hereunder:
(a) if to Parent or Sub, to:
▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
26
(b) if to the Company, to:
Eljer Industries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section 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 word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when executed and delivered by each of the parties, it
being understood that all parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement and any
other documents and instruments referred to herein) 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 and,
except as provided in Sections 6.9 and 6.10, is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Notwithstanding anything to the contrary contained herein or in the
Confidentiality Agreement, the taking by any party of any action contemplated
by the provisions hereof to be taken by such party shall in no event
constitute a breach of any provision of the Confidentiality Agreement.
9.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to
the principles of conflict of laws thereof.
9.7 Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby, unless the foregoing inconsistent action or the failure
to take an action constitutes a material breach of this Agreement or makes
this Agreement impossible to perform, in which case this Agreement shall
terminate pursuant to Article VIII hereof. Upon any such holding that any
provision of this Agreement is null, void or unenforceable, the parties will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the
end that the transactions contemplated by this Agreement are consummated to
the extent possible. Except as otherwise contemplated by this Agreement, to
the extent that a party hereto took an action inconsistent herewith or failed
to take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall incur no
liability or obligation unless such party did not in good faith seek to resist
or object to the imposition or entering of such order or judgment.
27
9.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated 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 and delegate, in its
sole discretion, all (but not less than all) of its rights, interests and
obligations hereunder to any newly-formed direct or indirect wholly-owned
Subsidiary of Parent formed solely for the purpose of engaging in the
transactions contemplated hereby and not engaged in any business activities or
conducting any operations other than in connection with the transactions
contemplated hereby. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
▇▇▇▇ Industries, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _________________________________
Title: Chairman and Chief Executive
Officer
▇▇▇▇ Acquisition Co., Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _________________________________
Title: President
Eljer Industries, Inc.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _________________________________
Title: President and Chief Executive
Officer
28
EXHIBIT A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of
the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares tendered, and may postpone
the acceptance for payment or, subject to the restrictions referred to above,
payment for any Shares tendered, and, subject to the terms of the Agreement,
may amend or terminate the Offer (whether or not any Shares have theretofore
been purchased or paid for pursuant to the Offer) (A) unless the following
conditions have been satisfied: (i) there have been validly tendered and not
withdrawn prior to the time the Offer shall otherwise expire a number of
Shares which constitutes 50.1% of the Shares outstanding on a fully-diluted
basis on the date of purchase (the "Minimum Share Condition") ("on a fully-
diluted basis" having the following meaning, as of any date: the number of
Shares outstanding, together with the number of Shares the Company is then
required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise) and (ii) any
applicable waiting periods under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer; and/or (B) if at any time on
or after the date of the Agreement and before acceptance for payment of, or
payment for, such Shares, any of the following events shall occur and are
continuing:
(a) any United States or foreign governmental entity or authority or any
United States or foreign court of competent jurisdiction in the United
States or any foreign country shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect and which (1) materially
restricts, prevents or prohibits consummation of the transactions
contemplated by the Agreement, including the Offer or the Merger, (2)
prohibits or limits materially the ownership or operation by Parent or any
of its Subsidiaries of all or any material portion of the business or
assets of the Company and its Subsidiaries taken as a whole or compels the
Company, Parent, or any of their Subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its Subsidiaries taken as a whole, or (3) imposes material
limitations on the ability of Parent, Sub or any other Subsidiary of Parent
to exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Sub pursuant
to the Offer or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of the Agreement and the transactions contemplated thereby;
provided that Parent and Sub shall have used their respective reasonable
efforts to cause any such order, decree, judgment, or injunction to be
vacated or lifted.
(b) there shall be instituted or pending any action or proceeding before
any United States or foreign court or governmental entity or authority by
any United States or foreign governmental entity or authority seeking any
order, decree or injunction having any effect set forth in (a) above;
(c) the representations and warranties of the Company contained in the
Agreement (without giving effect to the materiality limitations contained
therein) shall not be true and correct as of the expiration date of the
Offer (as the same may be extended from time to time) as though made on and
as of such date (except for representations and warranties made as of a
specified date, which shall not be true and correct as of the specified
date), except for any breach or breaches which, in the aggregate, would not
have a Material Adverse Effect with respect to the Company; it being
expressly understood, however, that any suits, actions or proceedings
initiated or threatened against the Company or any of its officers or
directors by any shareholder of the Company (or any group thereof) on or
after the date hereof with respect to this Agreement or the transactions
contemplated hereby shall not be given effect in determining whether or not
the condition set forth in this subparagraph (c) has been satisfied.
(d) the Company shall not have performed or complied in all material
respects with its obligations under the Agreement to be performed or
complied with by it and such failure continues until the later of (A)
fifteen days after actual receipt by it of written notice from Sub setting
forth in detail the nature of such failure or (B) the expiration date of
the Offer;
A-1
(e) there shall have occurred any material adverse change, or any
development that is reasonably likely to result in a material adverse
change, in the business, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole; it being expressly understood, however, that neither (i)
the U.S. Brass Bankruptcy Events nor (ii) any suits, actions or proceedings
initiated or threatened against the Company or any of its officers or
directors by any shareholder of the Company (or any group thereof) on or
after the date hereof with respect to this Agreement or the transactions
contemplated hereby shall be given effect in determining whether or not the
condition set forth in this subparagraph (e) has been satisfied.
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
(g) prior to the purchase of Shares pursuant to the Offer, the Board
shall have withdrawn or materially modified or changed (including by
amendment of Schedule 14D-9) in a manner adverse to Sub its recommendation
of the Offer, the Agreement or the Merger;
(h) there has occurred the declaration of a banking moratorium or any
limitation or suspension of payments in respect of the extension of credit
by banks or other lending institutions in the United States; or
(i) it shall have been publicly disclosed or Sub shall have otherwise
learned that any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or its affiliates or any group of which
any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation of
a group or otherwise, or shall have been granted an option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of more
than 50% of any class or series of capital stock of the Company (including
the Shares).
The foregoing conditions (other than the Minimum Share Condition) are for
the sole benefit of Sub and its affiliates and may be asserted by Sub
regardless of the circumstances (including, without limitation, any action or
inaction by Sub or any of its affiliates other than a material breach by
Parent or Sub of the Agreement) giving rise to any such condition or may be
waived by Sub, in whole or in part, from time to time in its sole discretion,
except as otherwise provided in the Agreement. The failure by Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right and may be
asserted at any time and from time to time. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Agreement and Plan of Merger among the Parent, Sub and the Company to which
this Exhibit A is attached (the "Agreement").
A-2
