EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
AND
STATIA TERMINALS GROUP N.V.
Dated as of November 12, 2001
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 12, 2001 (this
"Agreement"), by and between Kaneb Pipe Line Operating Partnership, L.P., a
limited partnership organized under the laws of the State of Delaware
("Purchaser"), and Statia Terminals Group N.V., a public company with limited
liability organized under the laws of the Netherlands Antilles ("Company").
W I T N E S S E T H:
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WHEREAS, the Company owns (i) 6,100 common shares (the "Statia
International Common Shares"), par value $1.00, of Statia Terminals
International N.V. ("Statia International"), a Netherlands Antilles limited
liability company, (ii) 1,220 shares of common stock (the "Statia Technology
Common Shares"), par value $0.01, of Statia Technology, Inc. ("Statia
Technology"), a Delaware corporation, and (iii) 471,720 common shares (the
"Statia Marine Common Shares" and, collectively with the Statia International
Common Shares and the Statia Technology Common Shares, the "Shares"), par value
$0.01, of Statia Marine, Inc. ("Statia Marine" and, collectively with Statia
International and Statia Technology, the "Operating Subsidiaries"), a Cayman
Islands company;
WHEREAS, the Company desires to sell, and Purchaser desires to
purchase, the Shares pursuant to this Agreement;
WHEREAS, it is the intention of the parties hereto that, upon
consummation of the purchase and sale of the Shares pursuant to the terms and
subject to the conditions set forth in this Agreement, Purchaser shall own all
of the outstanding shares of capital stock of each of the Operating
Subsidiaries;
WHEREAS, Purchaser is unwilling to enter into this Agreement unless
Statia Terminals Holdings N.V. ("Holdings"), concurrently with the execution and
delivery of this Agreement, enters into a voting and option agreement (the
"Voting Agreement"), dated the date hereof, by and between Purchaser and
Holdings providing for, among other things, the agreement of Holdings to vote
its Company Shares in favor of this Agreement and the transactions and other
matters contemplated by, and described more fully in, this Agreement and to
grant to Purchaser an option to purchase all such Company Shares.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS; ETC.
Section 1.1 Definitions. When used in this Agreement, the following terms
shall have the respective meanings specified therefor below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person.
"Antitrust Authorities" shall mean the Federal Trade Commission, the
Antitrust Division of the United States Department of Justice, the attorneys
general of the several states of the United States and any other Governmental
Entity having jurisdiction with respect to the transactions contemplated hereby
pursuant to applicable Antitrust Laws.
"Antitrust Laws" shall mean the Sherman Antitrust Act of 1890, as
amended, the Clayton Act of 1914, as amended, the HSR Act, the Federal Trade
Commission Act of 1914, as amended and all other federal, state and foreign
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other Laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
"Business Day" shall mean any day except a Saturday, a Sunday or any
other day on which commercial banks are required or authorized to close in New
York, New York or Curacao, Netherlands Antilles.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Company Business Party" shall mean any supplier or customer of the
Company or any of its Subsidiaries that is disclosed as a supplier or customer
of the Company or any of its Subsidiaries on Schedule 4.8 of the Company
Disclosure Letter.
"Company Common Shares" shall mean the class A common shares, par
value $0.01, of the Company.
"Company Disclosure Letter" shall mean the disclosure letter delivered
to Purchaser upon or prior to entering into this Agreement.
"Company Incentive Rights" shall mean the class C shares, par value
$0.01, of the Company.
"Company Material Adverse Effect" shall mean any event, change,
occurrence, effect, fact or circumstance having a material adverse effect on (i)
the ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated
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hereby on a timely basis or (ii) the business, properties, assets, liabilities,
value, results of operations or financial condition of the Operating
Subsidiaries and their respective Subsidiaries, taken as a whole; other than any
such effect resulting from or arising out of (u) the performance by the Company
of any of its obligations pursuant to this Agreement, (v) any general change in
global economic conditions or the economic conditions of the United States of
America, Canada or the Netherlands Antilles, (w) any changes in the condition of
any industry in which any Operating Subsidiary or any of their respective
Subsidiaries operates that does not affect such Subsidiary of the Company
disproportionately, (x) any change, in and of itself, in the market price or
trading volume of the Company Common Shares, (y) any failure, in and of itself,
by the Company or any Operating Subsidiary or any of their respective
Subsidiaries to meet the revenue or earnings predictions of equity analysts for
any period ending (or for which earnings are released) on or after the date of
this Agreement and prior to the Closing, or (z) the announcement by Purchaser of
any plan or intention to make any change in the conduct of any of the businesses
of any Operating Subsidiary or any of their respective Subsidiaries as such
businesses are being conducted on the date of this Agreement.
"Company Shares" shall mean collectively, the Company Common Shares,
the Company Subordinated Shares and the Company Incentive Rights.
"Company Subordinated Shares" shall mean the class B subordinated
shares, par value $0.01, of the Company.
"Completed Commission Filings" shall mean the Commission Filings filed
prior to the date hereof.
"Contingent Tax Payment Note" shall mean an instrument substantially
in the form attached hereto as Annex A.
"control" (including with correlative meanings, the terms "controlled
by" and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, by contract or
otherwise.
"Environmental Law" shall mean any Law, Order or other requirement of
law, including any principle of common law, relating to the protection of human
health or the environment, or the manufacture, use, transport, treatment,
storage, disposal, release or threatened release of petroleum products,
asbestos, urea formaldehyde insulation, polychlorinated biphenyls or any
substance listed, classified or regulated as hazardous or toxic, or any similar
term, under such Law, Order or other requirement of Law.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles of the
United States of America consistently applied, as in effect from time to time.
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"Governmental Entity" shall mean any domestic or foreign court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory agency, authority or body.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean all registered domestic and foreign
trademark, service mark and trade name registrations and applications therefor,
patents, patent applications, copyright registrations and applications, domain
names and trade secrets.
"Law" shall mean any statute, law, code, ordinance, rule or regulation
of any Governmental Entity.
"Lien" shall mean any lien, security interest, charge or encumbrance
of any kind or nature.
"Net Cash Amount" shall mean the difference of (a) the aggregate of
(i) the combined cash of the Operating Subsidiaries and their respective
Subsidiaries as of the close of business on the day before the Closing Date,
(ii) one million five hundred sixteen thousand four hundred three dollars
($1,516,403), representing the amount of the accruals from November 15, 2001
through December 31, 2001 for interest payable by any Operating Subsidiary or
any of their respective Subsidiaries pursuant to the 11-3/4% First Mortgage
Notes of Statia International and Statia Terminals Canada, Incorporated, (iii)
the amount of the accruals from the date hereof through December 31, 2001 for
interest payable by any Operating Subsidiary or any of their respective
Subsidiaries pursuant to the Transamerica Loan, and (iv) the amount of any
payments of principal under the Transamerica Loan from the date hereof through
the Closing Date, minus (b) the aggregate of (i) the amount of the unpaid
accruals through and including the Closing Date for interest payable by any
Operating Subsidiary or any of their respective Subsidiaries pursuant to any
indebtedness for borrowed money outstanding from time to time, (ii) the Tax
Reserve Amount and (iii) indebtedness of any Subsidiary of the Company for
borrowed money (other than indebtedness for borrowed money described in clause
(a)(ii) or (a)(iii) above and indebtedness for borrowed money owing to any other
Subsidiary of the Company).
"Order" shall mean any judgment, order, injunction, decree or writ of
any Governmental Entity.
"Person" shall mean and include an individual, a partnership, a
limited liability partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization, any other legal
entity, a group and a government or other department or agency thereof.
"Purchaser Material Adverse Effect" shall mean any event, change,
occurrence, effect, fact or circumstance having a material adverse effect on the
ability of Purchaser to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby on a timely basis.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary", with respect to any Person, shall mean (i) any
partnership of which such Person or any of its Subsidiaries is a general
partner, (ii) any other Person in which such Person or any of its Subsidiaries
owns or has the power to vote more than fifty percent (50%) of the equity
interests in such other Person having general voting power to participate in the
election of the governing body of such other Person or (iii) any other Person
directly or indirectly (through another Person or otherwise) controlled by such
Person.
"Subsidiary Property" shall mean any real property and improvements
owned (directly, indirectly, or beneficially), leased, used, operated or
occupied by any Operating Subsidiary or any of their respective Subsidiaries.
"Tax Reserve Amount" shall mean the amount shown as a liability on the
Interim Balance Sheet, plus any amounts accrued by the Company pursuant to GAAP
for the period from the date of the Interim Balance Sheet through the Closing
Date for amounts that may be payable to the Island Territory of Sint Eustatius
and the Land Territory of the Netherlands Antilles pursuant to an agreement
regarding Taxes to be entered into by the Operating Subsidiaries and their
respective Subsidiaries and the Island Territory of Sint Eustatius and the Land
Territory of the Netherlands Antilles.
"Transamerica Loan" shall mean the Loan Agreement dated, as of
December 20, 2000, by and between Statia Marine and Transamerica Equipment
Financial Services Corporation
Section 1.2 Cross References. The following terms shall have the
meaning assigned to such term in the respective section.
Acquisition Proposal...........................5.5(b) Material Contracts.............................3.17
Agreement......................................Preamble Notice of Objection............................2.3(b)(i)
Arbitrator.....................................2.3(b)(ii) Operating Subsidiaries.........................Recitals
Cash Deficiency Amount.........................2.4(a) Permits........................................3.8(b)
Cash Excess Amount.............................2.4(a) Proposals......................................3.15
Closing Date Net Cash Amount...................2.2 Proxy Materials................................3.15
Closing Date...................................2.5 Purchaser......................................Preamble
Closing Payment................................2.3 Returns........................................3.12(a)
Closing........................................2.5 Severance Protection Plans.....................5.8(b)
"commercially reasonable efforts"..............5.7(b) Shareholder Meeting............................3.15
Commission Filings.............................3.5 Shares.........................................Recitals
Company Articles...............................3.1 Statia International Common Shares.............Recitals
Company........................................Preamble Statia International...........................Recitals
Company Indemnified Parties....................5.9(b) Statia Marine Common Shares....................Recitals
Confidentiality Agreement......................5.2(a) Statia Marine..................................Recitals
Contracts......................................3.17 Statia Technology Common Shares................Recitals
Employee Benefit Plans.........................3.10 Statia Technology..............................Recitals
ERISA..........................................3.10 Subsidiary Indemnified Parties.................5.9(b)
Estimated Net Cash Amount......................2.2 Superior Proposal..............................5.5(b)
Holdings.......................................Recitals Taxes..........................................3.12(a)
Interim Balance Sheet..........................3.7 Transfer Taxes.................................5.14
Voting Agreement...............................Recitals
Section 1.3 Knowledge. Where any representation or warranty or other
provision contained in this Agreement is expressly qualified by reference to the
knowledge of the Company, such knowledge means to the actual knowledge of the
following individuals, after reasonable investigation under the circumstances of
the transaction contemplated by this Agreement (including the decision to keep
the transactions contemplated hereby confidential until the announcement of the
execution of this Agreement) but without giving effect to constructive
knowledge: James G. Cameron, James F. Brenner, Jack R. Pine, Paul R. Crissman
(solely with respect to matters involving the Point Tupper facility), Clarence
W. Brown (solely with respect to matters involving the St. Eustatius facility)
or Robert C. Gaffney (solely with respect to Section 3.18).
ARTICLE II
SALE OF SHARES
Section 2.1 Sale of Shares. On the terms and subject to the conditions
set forth in this Agreement, the Company agrees to sell, assign, transfer and
deliver to Purchaser on the Closing Date, and Purchaser agrees to purchase from
the Company on the Closing Date, all right, title and interest in and to the
Shares. The Company agrees to deliver to Purchaser at the Closing all right,
title and interest in and to the Shares, free and clear of all Liens, with the
certificate or certificates, if any, evidencing the Shares being duly endorsed
or acknowledged for transfer by the Company (and otherwise acknowledged on
behalf of the respective Operating Subsidiary, if required by Law), and any
deeds of transfer relating to the Shares and, in each case, accompanied by all
powers of attorney and/or other instruments necessary to convey valid and
unencumbered title thereto to Purchaser.
Section 2.2 Delivery of Estimated Net Cash Amount. Not later than
three (3) Business Days prior to the Closing Date, the Company shall deliver to
Purchaser a good faith estimate (the "Estimated Net Cash Amount") of the Net
Cash Amount ("Closing Date Net Cash Amount"), prepared on the same basis as the
line item cash and cash equivalents within financial statements prepared in
accordance with GAAP, which shall describe in reasonable detail the calculation
thereof.
Section 2.3 Closing Payment. In consideration for the sale of the
Shares by the Company to Purchaser, Purchaser shall deliver to the Company at
the Closing (a) an amount (the "Closing Payment") equal to the aggregate of (i)
one hundred eighty-four million eight hundred seventy-two thousand two hundred
twenty-three dollars ($184,872,223) plus (ii) the Estimated Net Cash Amount, by
wire transfer of immediately available funds to the designated account or
accounts of the Company (which account or accounts shall be designated by the
Company in writing to
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Purchaser at least two (2) Business Days prior to the Closing Date) and (b) the
Contingent Tax Payment Note, duly executed by Purchaser.
Section 2.4 Determination of Purchase Price. (a) Promptly after the
Closing Date, and in any event not later than forty-five (45) calendar days
following the Closing Date, Purchaser shall prepare and deliver to the Company a
statement, prepared on the same basis as the line item cash and cash equivalents
within financial statements prepared in accordance with GAAP, of the Closing
Date Net Cash Amount, which shall describe in reasonable detail the calculation
thereof and shall specify the amount by which (i) the Closing Date Net Cash
Amount exceeds the Estimated Net Cash Amount (the "Cash Excess Amount") or, as
the case may be, (ii) the Estimated Net Cash Amount exceeds the Closing Date Net
Cash Amount (the "Cash Deficiency Amount"). Upon delivery of such statement by
Purchaser to the Company, Purchaser shall provide the Company and its
representatives with reasonable access during business hours to the books and
records of the Operating Subsidiaries and their respective Subsidiaries in order
to allow the Company and its representatives to verify the accuracy of the
determination by Purchaser of the Closing Date Net Cash Amount.
(b) (i) In the event that the Company does not object to the
determination by Purchaser of the Closing Date Net Cash Amount by written
notice of objection (the "Notice of Objection") delivered to Purchaser
within ten (10) Business Days after the Company's receipt of the statement
referred to in Section 2.4(a), such Notice of Objection to describe in
reasonable detail the Company's objections to the Closing Date Net Cash
Amount, the Closing Date Net Cash Amount shall be deemed final and binding.
(ii) If the Company delivers a Notice of Objection to Purchaser, then
any dispute shall be resolved as follows:
(x) the Company and Purchaser shall promptly endeavor to agree
upon the determination of the Closing Date Net Cash Amount. In the
event that a written agreement determining the amount of the Closing
Date Net Cash Amount has not been reached within five (5) Business
Days after the date of receipt by Purchaser from the Company of the
Notice of Objection, Purchaser's determination of the Closing Date Net
Cash Amount, together with a description of any unresolved dispute,
shall be submitted to the Miami, Florida office of BDO Seidman, LLP
(the "Arbitrator");
(y) the Company and Purchaser shall use commercially reasonable
efforts to cause the Arbitrator to render a decision in accordance
with this Section 2.4(b), along with a statement of reasons therefor,
within thirty (30) calendar days after the submission of any dispute
concerning the determination of the Closing Date Net Cash Amount to
the Arbitrator. The decision of the Arbitrator shall be final and
binding upon each party hereto and deemed to be an arbitral award
which may be entered in any court having competent jurisdiction; and
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(z) in the event the Company and Purchaser submit any unresolved
disputes to the Arbitrator for resolution pursuant to this Section
2.4(b)(ii), the Company and Purchaser shall each pay fifty percent
(50%) of the fees and expenses of the Arbitrator.
(c) If the Estimated Net Cash Amount exceeds the Closing Date Net Cash
Amount, then the Company shall be obligated to pay to Purchaser the Cash
Deficiency Amount within three (3) Business Days after the determination of the
Closing Date Net Cash Amount by wire transfer of immediately available funds to
an account designated in writing by Purchaser. If the Closing Date Net Cash
Amount exceeds the Estimated Net Cash Amount, then Purchaser shall be obligated
to pay to the Company the Cash Excess Amount within three (3) Business Days
after the determination of the Closing Date Net Cash Amount by wire transfer of
immediately available funds to an account designated in writing by the Company.
Section 2.5 Closing. The sale referred to in Section 2.1 (the
"Closing") shall take place at 10:00 A.M. New York time at the offices of White
& Case LLP, 1155 Avenue of the Americas, New York, New York as soon as
practicable after the last of the conditions set forth in Article VI is
satisfied or waived, but in no event later than the fifth (5th) Business Day
thereafter or at such other time and date as the parties hereto shall agree.
Such date is herein referred to as the "Closing Date".
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
Section 3.1 Due Organization, Good Standing and Corporate Power. The
Company is a limited liability company in the form of a "naamloze venootschap"
duly organized, validly existing and in good standing under the laws of the
Netherlands Antilles. Each Subsidiary of the Company is duly organized, validly
existing and in good standing (where such concept is applicable) under the laws
of the jurisdiction of its incorporation or formation. Each of the Company and
each Subsidiary of the Company has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. Each Subsidiary of the Company is duly qualified or licensed to
do business and is in good standing (where such concept is applicable) in each
jurisdiction in which the property owned, leased or operated by it, or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or licensed
and in good standing does not have, and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company has, prior to the date of this Agreement, made available to Purchaser
complete and correct copies of the articles of incorporation of the Company (as
amended from time to time, the "Company Articles") and the formation,
organizational and other governing documents of each Subsidiary of the Company,
each as in effect as of the date of this Agreement.
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Section 3.2 Authorization and Validity of this Agreement. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company, and the consummation by it of the transactions
contemplated hereby and by the Voting Agreement, have been duly authorized and
approved by its Board of Directors and, except for the shareholder vote
contemplated by Section 5.11, no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions
contemplated hereby and by the Voting Agreement. This Agreement has been duly
executed and delivered by the Company and, assuming that this Agreement
constitutes a valid and binding obligation of Purchaser, constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
Laws relating to or affecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
Section 3.3 Capitalization. The authorized capital stock of Statia
International consists of 30,000 Statia International Common Shares, of which
6,100 are issued and outstanding and none are held in the treasury of Statia
International. The authorized capital stock of Statia Technology consists of
3,000 Statia Technology Common Shares, of which 1,220 are issued and outstanding
and none are held in the treasury of Statia Technology. The authorized capital
stock of Statia Marine consists of 5,000,000 Statia Marine Common Shares, of
which 471,720 are issued and outstanding and none are held in the treasury of
Statia Marine. The Shares constitute all of the issued and outstanding equity
interests in the Operating Subsidiaries. All of the Shares are owned, of record
and beneficially, by the Company, free and clear of any Liens. All of the issued
and outstanding shares of the capital stock and other equity interests of each
of the Operating Subsidiaries and each of their respective Subsidiaries have
been duly authorized and validly issued and are fully paid and nonassessable,
and are not subject to, nor were they issued in violation of, any preemptive
rights. Except as set forth on Schedule 3.3(a) of the Company Disclosure Letter,
there are no outstanding or authorized options, warrants, rights, subscriptions,
agreements, obligations, convertible or exchangeable securities, or other
commitments or claims of any character, contingent or otherwise, relating to
shares of capital stock or other equity interests of any Operating Subsidiary or
any of their respective Subsidiaries or pursuant to which any Operating
Subsidiary or any of their respective Subsidiaries is or may become obligated to
issue shares of capital stock or other equity interests or any securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of capital stock or other equity interests of any Operating
Subsidiary or any of their respective Subsidiaries. Except as set forth on
Schedule 3.3(b) of the Company Disclosure Letter, none of the Operating
Subsidiaries or any of their respective Subsidiaries has authorized or
outstanding bonds, debentures, notes or other indebtedness that entitle the
holders to vote (or are convertible or exercisable for or exchangeable into
securities that entitle the holders to vote) with the shareholders of such
Person on any matter. Except as set forth on Schedule 3.3(c) of the Company
Disclosure Letter, all of the outstanding capital shares and other equity
interests of each of the respective Subsidiaries of each Operating Subsidiary
are owned, of record and beneficially, by such Operating Subsidiary or one or
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more of its Subsidiaries, free and clear of any Liens. Except as set forth on
Schedule 3.3(d) of the Company Disclosure Letter or pursuant to applicable Law,
there are no restrictions of any kind that prevent or restrict the payment of
dividends by any Operating Subsidiary or any of their respective Subsidiaries.
Except as set forth on Schedule 3.3(e) of the Company Disclosure Letter, none of
the Operating Subsidiaries or any of their respective Subsidiaries owns,
directly or indirectly, any shares of the capital stock or other equity,
ownership or proprietary interest in any Person (other than any Subsidiary of
any Operating Subsidiary).
Section 3.4 Consents and Approvals; No Violations. Assuming (a) the
filings required under the HSR Act are made and the applicable waiting periods
thereunder have been terminated or have expired, and (b) the sale of the Shares
by the Company pursuant to this Agreement has been approved and/or adopted by
the shareholders of the Company, the execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby do not: (i) violate or conflict with any provision of the Company
Articles or the comparable governing documents of any of its Subsidiaries; (ii)
violate or conflict in any material respect with any statute, ordinance, rule,
regulation, order or decree of any Governmental Entity applicable to the Company
or any of its Subsidiaries or by which any of their respective properties or
assets may be bound; (iii) except as set forth on Schedule 3.4(a) of the Company
Disclosure Letter, require any material filing with, or material Permit,
material consent or approval of, or the giving of any material notice to, any
Governmental Entity or any other Person; or (iv) except as set forth on Schedule
3.4(b) of the Company Disclosure Letter, result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default under (or give rise to any right of termination, cancellation, payment
or acceleration under), result in the creation of any material Lien upon any of
the properties or assets of any Operating Subsidiary or any of their respective
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit or any right that becomes effective upon the occurrence of a merger,
amalgamation, scheme of arrangement, consolidation or change of control under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, franchise, Permit, Contract, arrangement, lease, franchise agreement
or other obligation to which the Company or any of its Subsidiaries is a party,
or by which any such Person or any of its properties or assets are bound.
Section 3.5 Company Reports and Financial Statements. Since December
31, 1999, the Company has filed all forms, reports, schedules, statements,
registration statements and other documents with the Commission relating to
periods commencing on or after such date required to be filed by it pursuant to
the federal securities Laws and the Commission rules and regulations thereunder
(such forms, reports, schedules, statements, registration statements and other
documents being hereinafter referred to as the "Commission Filings") and, as of
their respective dates, the Commission Filings complied in all material respects
with all applicable requirements of the federal securities Laws and the
Commission rules and regulations promulgated thereunder. The Company has, prior
to the date of this Agreement, made available to Purchaser true and complete
copies of all portions of any Commission Filings not publicly available. As of
their respective dates, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made. All financial statements
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contained in the Commission Filings have been prepared in accordance with GAAP
throughout the periods indicated and present fairly in all material respects the
financial position, results of operations and changes in financial position of
the Company as of the indicated dates and for the indicated periods (except, in
the case of interim financial statements, for the absence of notes thereto and
subject to normal year-end audit adjustments and accruals required to be made in
the ordinary course of business which are not materially adverse and are
consistent with past practices).
Section 3.6 Absence of Certain Changes. Except as set forth on
Schedule 3.6 of the Company Disclosure Letter or in the Completed Commission
Filings, or as contemplated by this Agreement, since December 31, 2000 and prior
to the date of this Agreement, (a) there has not occurred any event, change or
development that has or would reasonably be expected to have a Company Material
Adverse Effect, (b) the business of each Operating Subsidiary and each of their
respective Subsidiaries has been conducted only in the ordinary course of
business, (c) none of the Operating Subsidiaries or any of their respective
Subsidiaries has increased the compensation of any officer or granted any
general salary or benefits increase to their respective employees, other than in
the ordinary course of business, (d) there has been no declaration, setting
aside or payment of any dividend or other distribution with respect to any class
of shares or any repurchase, redemption or other acquisition by any Operating
Subsidiary of any shares or other securities of such Operating Subsidiary, and
(e) there has been no change by any Operating Subsidiary or any of their
respective Subsidiaries in their respective accounting principles, practices or
methods.
Section 3.7 Title to Properties; Encumbrances. Except as set forth on
Schedule 3.7 of the Company Disclosure Letter or in the Completed Commission
Filings, one of the Operating Subsidiaries or one of their respective
Subsidiaries has valid title to, or, in the case of leased properties and
assets, valid leasehold interests in, (a) all of the material tangible and
intangible properties and assets (real and personal) used in connection with the
businesses of the Operating Subsidiaries and their respective Subsidiaries,
including, without limitation, all of the properties and assets reflected in the
consolidated balance sheet of the Company and its Subsidiaries as of September
30, 2001 and previously supplied by the Company to Purchaser (the "Interim
Balance Sheet"), except as indicated in the notes thereto and except for
properties and assets reflected in the Interim Balance Sheet that have been sold
or otherwise disposed of in the ordinary course of business after the date
thereof, and (b) all of the tangible and intangible properties and assets
purchased by the Operating Subsidiaries or any of their respective Subsidiaries
since September 30, 2001, except for such properties and assets that have been
sold or otherwise disposed of in the ordinary course of business; in each case
subject to no material Liens, except for Liens reflected or reserved against in
the Completed Commission Filings or the Interim Balance Sheet. The assets and
properties owned or held pursuant to valid leases by any Operating Subsidiary or
any of their respective Subsidiaries are all of the assets and properties needed
by the Operating Subsidiaries and their respective Subsidiaries to operate the
businesses of the Company and its Subsidiaries in all material respects as such
businesses have been operated by the Company and its Subsidiaries during the
twelve (12)-month period immediately preceding the date of this Agreement. The
Company owns no assets other than the Shares and conducts no business other than
the business incident to ownership of the Shares.
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Section 3.8 Compliance with Laws. (a) Except as set forth on Schedule
3.8 of the Company Disclosure Letter or in the Completed Commission Filings, the
Operating Subsidiaries and their respective Subsidiaries are in material
compliance with all material applicable federal, state, local and foreign Laws,
orders, judgments and decrees.
(b) Except as set forth on Schedule 3.8 of the Company Disclosure
Letter, the Operating Subsidiaries and their respective Subsidiaries hold all
material federal, state, local and foreign permits, approvals, licenses,
authorizations, certificates, rights, exemptions and orders from Governmental
Entities (the "Permits") that are necessary for the operation of the business of
the Operating Subsidiaries and/or their respective Subsidiaries as now
conducted, and there has not occurred any default under any such Permit.
(c) To the knowledge of the Company, none of the Operating
Subsidiaries or any of their respective Subsidiaries has made, or promised or
authorized the making of, any payment of any money or anything of value, or the
provision of any gift, to any foreign official, political party, candidate for
office or any other Person for any purpose prohibited by any applicable Law.
Section 3.9 Litigation. Except as set forth on Schedule 3.9 of the
Company Disclosure Letter or in the Completed Commission Filings, on the date of
this Agreement, there is no action, suit, proceeding at law or in equity, or any
arbitration or any administrative or other proceeding by or before any
Governmental Entity pending or, to the knowledge of the Company, threatened,
against or affecting any Operating Subsidiary or any of their respective
Subsidiaries, or any of their respective properties or rights. There are no
suits, actions, claims, proceedings or investigations pending or, to the
knowledge of the Company, threatened, seeking to prevent or challenging the
transactions contemplated by this Agreement. Except as set forth on Schedule 3.9
of the Company Disclosure Letter, none of the Operating Subsidiaries or any of
their respective Subsidiaries is subject to any judgment, order or decree
entered in any lawsuit or proceeding.
Section 3.10 Employee Benefit Plans. Each material employee benefit
plan within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other material employee
benefit agreements or arrangements that are not employee benefit plans within
the meaning of Section 3(3) of ERISA, including without limitation deferred
compensation plans, incentive plans, bonus plans or arrangements, stock option
plans, stock purchase plans, stock award plans, golden parachute agreements,
severance pay plans, dependent care plans, cafeteria plans, employee assistance
programs, scholarship programs, employment contracts, retention incentive
agreements, noncompetition agreements, consulting agreements, confidentiality
agreements and vacation policies, maintained by any Operating Subsidiary or any
of their respective Subsidiaries, or to which any Operating Subsidiary or any of
their respective Subsidiaries contributes or with respect to which any Operating
Subsidiary or any of their respective Subsidiaries may have any material
liability (collectively, the "Employee Benefit Plans") is listed on Schedule
3.10 of the Company Disclosure Letter. Except as disclosed in the Completed
Commission Filings or as set forth on Schedule 3.10 of the Company Disclosure
Letter: (a) each Employee Benefit Plan is in material compliance with any
applicable Law and has been administered and operated in all material respects
in accordance with its terms; (b) each Employee Benefit Plan that is intended to
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be "qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter or opinion letter from the Internal Revenue
Service and, to the knowledge of the Company, no event has occurred and no
condition exists that would reasonably be expected to result in the revocation
of any such determination letter or opinion letter; (c) (i) none of the
Operating Subsidiaries or any of their respective Subsidiaries or any Person
that was at any time after December 1, 1996 treated as a single employer
together with any Operating Subsidiary or any of their respective Subsidiaries
under section 414 of the Code has ever maintained, had an obligation to
contribute to, or contributed to, or incurred any liability with respect to, a
pension plan that is or was subject to Title IV of ERISA or Section 412 of the
Code and (ii) none of the Operating Subsidiaries or any of their respective
Subsidiaries or any Person that was at any time during the six (6)-year period
immediately preceding the date of this Agreement treated as a single employer
together with any Operating Subsidiary or any of their respective Subsidiaries
under Section 414 of the Code has, within such six (6)-year period, had an
obligation to contribute to, or contributed to, or incurred any unsatisfied
liability with respect to, a multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA that is or was subject to Title IV of ERISA; (d) none of the
Operating Subsidiaries or any of their respective Subsidiaries, or, to the
knowledge of the Company, any other "disqualified person" or "party in interest"
(as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Employee
Benefit Plan that would reasonably be expected to result in the imposition of a
material penalty pursuant to Section 502(i) of ERISA or a material tax pursuant
to Section 4975 of the Code; (e) no claims have been made, commenced or, to the
knowledge of the Company, threatened with respect to any Employee Benefit Plan
(other than routine claims for benefits payable in the ordinary course, and
appeals of denied routine claims for benefits payable in the ordinary course)
that would reasonably be expected to result in a material liability of any
Operating Subsidiary or any of their respective Subsidiaries; (f) no Employee
Benefit Plan provides medical, surgical, hospitalization or life insurance
benefits (whether or not insured by a third party) for employees or former
employees of any Operating Subsidiary or any of their respective Subsidiaries
for periods extending beyond their terminations of employment, other than
coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, or a similar state Law; and (g) the consummation of the transactions
contemplated by this Agreement, either alone or in conjunction with another
event (such as a termination of employment), will not (i) entitle any current or
former employee of any Operating Subsidiary or any of their respective
Subsidiaries to severance pay or any other payment under any Employee Benefit
Plan, (ii) accelerate the time of payment or vesting, or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any Employee Benefit Plan, or (iii) increase the amount of
compensation due any such employee, or result in any material breach or
violation of, or default under, any Employee Benefit Plan.
Section 3.11 Employment Relations and Agreements. (a) Except as set
forth on Schedule 3.11(a) of the Company Disclosure Letter or in the Completed
Commission Filings (i) each of the Operating Subsidiaries and each of their
respective Subsidiaries is in material compliance with all federal, foreign,
state or other applicable Laws respecting employment and employment practices,
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terms and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; (ii) there is no labor strike, slowdown,
stoppage or material dispute pending or, to the knowledge of the Company,
threatened against or involving any Operating Subsidiary or any of their
respective Subsidiaries; (iii) no representation question exists respecting the
employees of any Operating Subsidiary or any of their respective Subsidiaries;
(iv) no collective bargaining agreement is currently being negotiated by any
Operating Subsidiary or any of their respective Subsidiaries and none of the
Operating Subsidiaries or any of their respective Subsidiaries is or has been a
party to a collective bargaining agreement; (v) none of the Operating
Subsidiaries or any of their respective Subsidiaries is experiencing or has
experienced any material labor difficulty during the last three (3) years; and
(vi) no grievance or arbitration proceeding arising out of or under a collective
bargaining agreement is pending and no claim thereunder exists or, to the
knowledge of the Company, is threatened with respect to the operations of the
Operating Subsidiaries or any of their respective Subsidiaries.
(b) Except as set forth on Schedule 3.11(b) of the Company Disclosure
Letter, there exist no employment, consulting, severance, indemnification or
deferred compensation agreements between any Operating Subsidiary or any of
their respective Subsidiaries and any director, officer or employee of any
Operating Subsidiary or any of their respective Subsidiaries or any agreement
that would give any director, officer or employee of any Operating Subsidiary or
any of their respective Subsidiaries the right to receive any payment from any
Operating Subsidiary or any of their respective Subsidiaries as a result of the
transactions contemplated by this Agreement.
Section 3.12 Taxes. Except as set forth on Schedule 3.12 of the
Company Disclosure Letter:
(a) Tax Returns. Each Operating Subsidiary and each of their
respective Subsidiaries have filed or caused to be filed, or shall file or cause
to be filed on or prior to the Closing Date, all material returns, statements,
forms and reports for Taxes (the "Returns") that are required to be filed by, or
with respect to, the Operating Subsidiaries and their respective Subsidiaries on
or prior to the Closing Date (taking into account any extension of time to file
granted to or on behalf of the Company or any of its Subsidiaries), and the
information set forth on the Returns is true and correct in all material
respects and contains all material information required to be reported thereon.
"Taxes" shall mean all taxes, assessments, charges, duties, fees, levies or
other governmental charges including, without limitation, all United States
federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest.
(b) Payment of Taxes. All material Taxes and material Tax liabilities
of the Operating Subsidiaries and their respective Subsidiaries for all taxable
years or periods that end on or prior to the Closing Date and, with respect to
any taxable year or period beginning prior to and ending after the Closing Date,
-14-
the portion of such taxable year or period ending on and including the Closing
Date, have been paid or shall be paid in full on or prior to the Closing Date or
accrued and adequately disclosed and fully provided for on the books and records
of the Operating Subsidiaries and their respective Subsidiaries in accordance
with GAAP.
(c) Tax Liens. There are no Liens for Taxes upon any property or
assets of any of the Operating Subsidiaries --------- or any of their respective
Subsidiaries, except for Liens for Taxes not yet due or payable or Liens for
Taxes being contested in good faith.
(d) Tax Audits. No Federal, state, local or foreign audits,
examinations, investigations or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax Returns filed
by or on behalf of any of the Operating Subsidiaries or any of their respective
Subsidiaries, and no written notification of such proceedings has been received
by the Company, any of the Operating Subsidiaries or any of their respective
Subsidiaries.
(e) Statute of Limitations. There are no outstanding requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against any of the
Operating Subsidiaries or any of their respective Subsidiaries.
(f) Tax Agreements. None of the Operating Subsidiaries or any of their
respective Subsidiaries is a party to any material tax sharing, tax indemnity or
other similar agreement or arrangement with any Person.
(g) Powers of Attorney. No power of attorney has been granted with
respect to any matter relating to Taxes of any Operating Subsidiary or any of
their respective Subsidiaries that is currently in force.
(h) Tax Deficiencies. No material deficiency or claim has been
formally proposed, asserted or assessed by any Governmental Entity with regard
to any Taxes of any Operating Subsidiary or any of their respective Subsidiaries
or Tax Returns including or required to be filed by any Operating Subsidiary or
any of their respective Subsidiaries for which Purchaser would be liable as a
result of the transactions contemplated by this Agreement, which has not been
resolved and paid in full.
(i) Consolidated, Combined or Unitary Tax Returns. None of the
Operating Subsidiaries or any of their respective Subsidiaries has been included
in a consolidated, combined, unitary or similar Tax Return that included the
Company.
(j) No Joint or Several Liability. None of the Operating Subsidiaries
or any of their respective Subsidiaries has any liability, either joint or
several, for any Taxes owed by the Company.
Section 3.13 Liabilities. As of the date of this Agreement, none of
the Operating Subsidiaries or any of their respective Subsidiaries has
outstanding any claims, liabilities or indebtedness, contingent or otherwise, of
any kind whatsoever (whether accrued, absolute, contingent or otherwise, and
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whether or not required to be reflected in the financial statements of the
Operating Subsidiaries and their respective Subsidiaries in accordance with
GAAP), except (a) as set forth on Schedule 3.13 of the Company Disclosure
Letter, (b) as set forth in the Completed Commission Filings or on the Interim
Balance Sheet, and (c) other claims, liabilities or indebtedness that are not,
individually or in the aggregate, material.
Section 3.14 Intellectual Property. (a) Except as set forth in the
Completed Commission Filings, one of the Operating Subsidiaries or one of their
respective Subsidiaries owns or has a valid and enforceable right to use, free
and clear of all material Liens, all material Intellectual Property necessary to
operate their respective businesses in all material respects as such businesses
have been operated during the twelve (12)-month period immediately preceding the
date of this Agreement.
(b) Except as set forth in the Completed Commission Filings, neither
the conduct of the businesses of the Operating Subsidiaries and their respective
Subsidiaries nor the use of the Intellectual Property materially infringes,
violates, misappropriates or misuses any Intellectual Property rights or any
other proprietary right of any Person.
Section 3.15 Proxy Materials. The proxy statement (the "Proxy
Materials") prepared by the Company soliciting the proxies of the shareholders
of the Company in favor of the proposals (the "Proposals") substantially in the
form set forth on Annex B to be voted on at an extraordinary meeting of the
shareholders of the Company (the "Shareholder Meeting"), together with all
materials included therewith and any amendments or supplements thereto will not,
at the time they are filed with the Commission or are first published, sent or,
as the case may be, given, to shareholders of the Company or at the time of the
Shareholders Meeting, 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 were made,
not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied or to be
supplied by Purchaser or any of its representatives in writing for inclusion in
the foregoing documents. The Proxy Materials will comply in all material
respects with the requirements of the Exchange Act.
Section 3.16 Broker's or Finder's Fee. Other than Merrill Lynch & Co.
and Houlihan Lokey Howard & Zukin Financial Advisors, Inc. (the fees and
expenses of each of whom shall be paid by the Company in accordance with the
agreements of the Company with such firms, true and correct copies of which have
been previously delivered to Purchaser by the Company), no agent, broker,
investment bank, Person or firm acting on behalf of the Company is, or shall be,
entitled to any commission or broker's or finder's fees in connection with this
Agreement or any of the transactions contemplated hereby from any of the parties
hereto, or from any Affiliate of the parties hereto.
Section 3.17 Certain Contracts and Arrangements. As of the date
hereof, except as set forth on Schedule 3.17 of the Company Disclosure Letter,
none of the Operating Subsidiaries or any of their respective Subsidiaries is a
party to or bound by any contracts, agreements, instruments, licenses,
commitments or understandings ("Contracts") of the following nature
(collectively, the "Material Contracts"):
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(a) storage and throughput Contracts;
(b) Contracts in respect of the sale or provision of products or
services by the Company or any of its Subsidiaries involving, in each case,
either (i) annualized consideration in excess of five hundred thousand
dollars ($500,000) that are not cancelable without penalty upon ninety (90)
days' notice or (ii) aggregate consideration in excess of two million
dollars ($2,000,000);
(c) collective bargaining agreements, union agreements, employment
agreements, "change of control agreements" with employees, severance
agreements or consulting agreements; (d) loan or credit agreements,
indentures, guarantees (other than endorsements made for collection),
mortgages, pledges, conditional sales or other title retention agreements,
or equipment financing obligations, lease or lease-purchase agreements
involving, in each case, borrowings, or capacity to borrow, in excess of
one hundred thousand dollars ($100,000);
(e) leases or similar instruments regarding real property (other than
storage and throughput Contracts);
(f) (i) Contracts relating to competitive activities that restrict any
Operating Subsidiary or any of their respective Subsidiaries from competing
in any line of business or with any Person in any geographical area, or
that restrict any other Person from competing with any Operating Subsidiary
or any of their respective Subsidiaries in any line of business or in any
geographical area and (ii) Contracts that are material to the Operating
Subsidiaries and their respective Subsidiaries, taken as a whole, and that
restrict any Operating Subsidiary or any of their respective Subsidiaries
from disclosing any information concerning or obtained from any other
Person, or that restrict any other Person from disclosing any information
concerning or obtained from any Operating Subsidiary or any of their
respective Subsidiaries (other than Contracts entered into in the ordinary
course of business);
(g) Contracts with any Affiliate that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act;
(h) except for Contracts for the purchase of inventory to be used for
product sales, other Contracts of a type not described in clauses (a)
through (g) above that involve, in each case, receipts or expenditures of
or by the Operating Subsidiaries and their respective Subsidiaries in
excess of five hundred thousand dollars ($500,000); or
(i) offers or tenders outstanding and capable of being converted into
an obligation of the Company described in clauses (a) through (h) above.
Except as set forth on Schedule 3.17 of the Company Disclosure Letter,
none of the Operating Subsidiaries or any of their respective Subsidiaries is in
material breach or default under any Material Contract nor, to the knowledge of
the Company, is any other party to any
-17-
Material Contract in material breach or default thereunder. There is no
condition that, with the passage of time or the giving of notice or both, would
constitute a material breach or default by any Operating Subsidiary or any of
their respective Subsidiaries under any Material Contract. Copies of all
Material Contracts (or in the case of oral Material Contracts, descriptions of
the terms thereof) have been delivered to Purchaser and such copies are true,
complete and accurate and such descriptions are true, complete and accurate in
all material respects and in each case include all amendments, supplements or
modifications thereto, as at the date hereof. None of the Operating Subsidiaries
or any of their respective Subsidiaries has received any written notice of
cancellation of any Material Contract, and to the knowledge of the Company, no
Person has threatened to cancel any Material Contract.
Section 3.18 Environmental Laws and Regulations. Except as set forth
on Schedule 3.18 of the Company Disclosure Letter or in the Completed Commission
Filings (a) each of the Operating Subsidiaries and each of their respective
Subsidiaries is in material compliance with all applicable Environmental Laws,
and have obtained, and are in material compliance with, all Permits required of
them under applicable Environmental Laws; (b) there are no proceedings,
investigations, actions or material claims by any Governmental Entity pending
or, to the knowledge of the Company, threatened, against any Operating
Subsidiary or any of their respective Subsidiaries under any Environmental Law;
(c) there is no material obligation, undertaking or liability arising out of or
relating to Environmental Laws that any Operating Subsidiary or any of their
respective Subsidiaries has agreed to or assumed, by Contract or otherwise, or
has expressly retained by Contract; (d) to the knowledge of the Company, there
are no existing or proposed requirements under Environmental Laws that would
require any Operating Subsidiary or any of their respective Subsidiaries to
incur any material expenses subsequent to the Closing to remain in compliance
with Environmental Laws or to otherwise make capital improvements; and (e) there
are no facts, circumstances or conditions relating to the past or present
business or operations of any Operating Subsidiary or any of their respective
Subsidiaries (including the disposal of any wastes, hazardous substances or
other materials), or to any past or present Subsidiary Property, that would
reasonably be expected to give rise to any proceeding or action or any material
claim or liability under any Environmental Law.
Section 3.19 Voting Requirements. At a meeting duly called and held at
which at least one-half of the aggregate of the Company Common Shares and
Company Subordinated Shares is present or represented by proxy and entitled to
vote, the affirmative vote of holders of more than sixty-six and two-thirds
percent (66-2/3%) of the Company Common Shares and Company Subordinated Shares,
voting together as a single class, is the only vote required to approve and/or
adopt the Proposals to approve this Agreement and dissolve the Company (each as
more fully set forth on Annex B).
Section 3.20 Insurance. Set forth on Schedule 3.20 of the Company
Disclosure Letter is a list of all policies of fire, liability and other forms
of insurance and all fidelity bonds held by or applicable to any Operating
Subsidiary or any of their respective Subsidiaries at any time during the last
three (3) years. Except as set forth on Schedule 3.20 of the Company Disclosure
Letter, the insurance currently held by or applicable to each Operating
Subsidiary and each of their respective Subsidiaries is in such amount and of
such type and scope as is customary in the industry in which it is engaged and
-18-
each of them has had in full force and effect at all appropriate times insurance
of appropriate type, amount and scope. Except as set forth on Schedule 3.20 of
the Company Disclosure Letter, there has been no change in the type of insurance
coverage held by or applicable to any Operating Subsidiary or any of their
respective Subsidiaries during the past three (3) years that has resulted in any
period during which any of them failed to have appropriate insurance coverage.
Excluding insurance policies that have expired and been replaced, no insurance
policy of any Operating Subsidiary or any of their respective Subsidiaries has
been canceled within the last three (3) years and no threat has been made to
cancel any such insurance policy within such period.
Section 3.21 Inventory. Except as set forth on Schedule 3.21 of the
Company Disclosure Letter, the inventories owned by the Operating Subsidiaries
or their respective Subsidiaries consist of a quality usable by the Operating
Subsidiaries or their respective Subsidiaries in the ordinary course of
business. There are no material shortages in the quantity of product of
customers being held by any Operating Subsidiary or any of their respective
Subsidiaries. There are no contaminations of product of customers being held by
any Operating Subsidiary or any of their respective Subsidiaries for which any
Operating Subsidiary or any of their respective Subsidiaries has any material
liability.
Section 3.22 Information Furnished. Except as set forth on Schedule
3.22 of the Company Disclosure Letter, the Company has made available to
Purchaser or its attorneys, accountants or other representatives true and
correct copies of all agreements and documents listed on the Company Disclosure
Letter and all minute books and stock records of each of the Operating
Subsidiaries and each of their respective Subsidiaries, and none of (a) this
Agreement, (b) the Company Disclosure Letter or (c) the minute books and stock
records of the Operating Subsidiaries and their respective Subsidiaries as of
the date hereof and as of the Closing Date, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
to make the statements herein or therein, as the case may be, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 Due Organization, Good Standing and Corporate Power.
Purchaser is a limited partnership duly organized and validly existing under the
laws of the State of Delaware.
Section 4.2 Authorization and Validity of Agreement. Purchaser has the
requisite partnership power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Purchaser and the consummation by it of the transactions contemplated hereby
have been duly authorized by its general partner. No other partnership action on
the part of Purchaser is necessary to authorize the execution, delivery and
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and, assuming that this Agreement constitutes a valid and
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binding obligation of the Company, constitutes a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, except
that such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting creditors' rights
generally, and general equitable principles.
Section 4.3 Consents and Approvals; No Violations. Assuming (a) the
filings required under the HSR Act are made and the applicable waiting periods
thereunder have been terminated or have expired, and (b) the purchase of the
Shares by Purchaser pursuant to this Agreement has been approved by the
shareholders of the Company, the execution and delivery of this Agreement by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby do not: (i) violate or conflict with any provision of the limited
partnership agreement of Purchaser; (ii) violate or conflict in any material
respect with any statute, ordinance, rule, regulation, order or decree of any
Governmental Entity applicable to Purchaser or by which any of its properties or
assets may be bound; (iii) require any filing with, or Permit, material consent
or approval of, or the giving of any material notice to, any Governmental
Entity; or (iv) result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default under (or give
rise to any right of termination, cancellation, payment or acceleration under),
or result in the creation of any Lien upon any of the properties or assets of
Purchaser under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit or any right that becomes effective upon the occurrence of a merger,
amalgamation, scheme of arrangement, consolidation or change of control under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, franchise, Permit, Contract, arrangement, lease, franchise agreement
or other obligation to which Purchaser or any of its Subsidiaries is a party, or
by which any such Person or any of its properties or assets may be bound.
Section 4.4 Proxy Materials. None of the information provided by
Purchaser in writing for inclusion in the Proxy Materials, any materials
included therewith or any amendments or supplements thereto, will, at the time
such Proxy Materials, materials, amendments or supplements are filed with the
Commission or are first published, sent or, as the case may be, given to the
shareholders of the Company or at the time of the Shareholder Meeting, 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 were made, not misleading.
Section 4.5 Broker's or Finder's Fee. No agent, broker, investment
bank, Person or firm acting on behalf of Purchaser is, or shall be, entitled to
any commission or broker's or finder's fees in connection with this Agreement or
any of the transactions contemplated hereby from any of the parties hereto, or
from any Affiliate of the parties hereto.
Section 4.6 Funds. Purchaser has sufficient funds available to pay (a)
the Closing Payment, (b) the Cash Excess Amount, if any, and (c) all obligations
set forth on Schedule 4.6 of the Company Disclosure Letter, which will, as a
result of the consummation of the transactions contemplated hereby, become due
in respect of any indebtedness of the Operating Subsidiaries or any of their
respective Subsidiaries for money borrowed.
-20-
Section 4.7 Litigation. On the date of this Agreement, there is no
action, suit, proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before any Governmental Entity pending
or, to the knowledge of Purchaser, threatened, against or affecting Purchaser or
any of its respective Subsidiaries, or any of their respective properties or
rights that has, or would reasonably be expected to have, a Purchaser Material
Adverse Effect. There are no suits, actions, claims, proceedings or
investigations pending or, to the knowledge of Purchaser, threatened, seeking to
prevent or challenging the transactions contemplated by this Agreement. Neither
Purchaser nor any of its Affiliates is subject to any judgment, order or decree
entered in any lawsuit or proceeding that has or would reasonably be expected to
have, individually or in the aggregate, a Purchaser Material Adverse Effect.
Section 4.8 No Knowledge of Adverse Change. To the actual knowledge of
Edward D. Doherty, Fred Johnson, Ron Rushton, Alan Barclay or Jim Tidmore, after
reasonable investigation but without giving effect to constructive knowledge,
there exists no fact, event or condition that resulted from or was caused by any
dealing Purchaser or any of its Affiliates has had with any Company Business
Party that, as a result of the announcement of this Agreement or the
consummation of the transactions contemplated by this Agreement, will have, or
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
ARTICLE V
TRANSACTIONS PRIOR TO CLOSING DATE
Section 5.1 Access to Information Concerning Properties and Records.
During the period commencing on the date hereof and ending on the earlier of (a)
the Closing Date and (b) the date on which this Agreement is terminated pursuant
to Section 6.3, the Company shall cause each of its Subsidiaries to, upon
reasonable notice, afford Purchaser and its employees, counsel, accountants,
consultants and other authorized representatives, access during normal business
hours to the officers, directors, employees, accountants, properties, books and
records of such Subsidiaries. The Company shall furnish promptly to Purchaser
all information concerning its Subsidiaries' business, properties and personnel
as Purchaser may reasonably request.
Section 5.2 Confidentiality. (a) Information obtained by Purchaser and
its counsel, accountants, consultants and other authorized representatives
pursuant to Section 5.1 shall be subject to the provisions of the
Confidentiality Agreement by and between the Company and Kaneb Pipe Line Company
LLC, dated July 27, 2001 (the "Confidentiality Agreement"). The Confidentiality
Agreement shall terminate as of the Closing.
(b) The Company recognizes and acknowledges that it has had and will
have access to certain confidential information concerning Purchaser and its
business that is the valuable, special and unique property of Purchaser. The
Company agrees that, during the term of this Agreement and for a period of three
(3) years following the Closing Date or any termination of this Agreement, it
will not disclose, and it will use its commercially reasonable efforts to
prevent disclosure by any Affiliate or authorized representative of the Company
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of, any such confidential information to any Person, except to authorized
representatives of Purchaser in connection with the fulfillment of the Company's
obligations under this Agreement or as required by applicable Law or Order. The
Company agrees that money damages would not be a sufficient remedy for any
breach of its obligations under this Section 5.2(b) and that, in addition to all
other remedies, Purchaser or any of its Affiliates shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach and the Company agrees to waive, and to use its commercially reasonable
efforts to cause each of its Affiliates and representatives to waive, any
requirement for the securing or posting of any bond in connection with such
remedy.
(c) The Company recognizes and acknowledges that it has certain
confidential information concerning the Operating Subsidiaries and their
respective Subsidiaries and their respective businesses that is, after the
Closing, the valuable, special and unique property of Purchaser. The Company
agrees that, for a period of three (3) years following the Closing Date, it will
not disclose, and it will use its commercially reasonable efforts to prevent
disclosure by any Affiliate or authorized representative of the Company of, any
such confidential information to any Person, except to authorized
representatives of Purchaser in connection with the fulfillment of the Company's
obligations under this Agreement or as required by applicable Law or Order. The
Company agrees that money damages would not be a sufficient remedy for any
breach of its obligations under this Section 5.2(c) and that, in addition to all
other remedies, Purchaser or any of its Affiliates shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach and the Company agrees to waive, and to use its commercially reasonable
efforts to cause each of its Affiliates and representatives to waive, any
requirement for the securing or posting of any bond in connection with such
remedy.
Section 5.3 Conduct of Business Pending the Closing Date. The Company
agrees that, except as set forth on Schedule 5.3 of the Company Disclosure
Letter or unless expressly permitted or required by this Agreement or otherwise
consented to in writing by Purchaser (which consent (i) shall not be
unreasonably withheld, conditioned or delayed and (ii) in the case of Section
5.3(b)(xv), shall only be required of Mr. Edward D. Doherty which consent, in
the case of storage and throughput Contracts, shall be deemed given if not
received or affirmatively refused within twenty-four (24) hours after receipt by
Mr. Doherty of the request therefor), during the period commencing on the date
hereof and ending at the earlier of (x) the Closing and (y) any termination of
this Agreement pursuant to Section 6.3:
(a) it shall cause each of its Subsidiaries to conduct such
Subsidiary's operations only in accordance with the ordinary course of business
of such Subsidiary, use such Subsidiary's commercially reasonable efforts to
preserve intact, in all material respects, such Subsidiary's business
organization, keep available, in all material respects, the services of such
Subsidiary's officers and employees and maintain, in all material respects,
satisfactory relationships with licensors, suppliers, distributors, clients,
customers and others having significant business relationships with such
Subsidiary; and
(b) it shall cause each of its Subsidiaries not to:
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(i) take any action to make any change in or amendment to such
Subsidiary's articles of incorporation (or comparable governing documents);
(ii) issue or sell, or authorize to issue or sell, any of such
Subsidiary's share capital or any other securities, or issue or sell, or
authorize to issue or sell, any securities convertible into or exchangeable
for, or options, warrants or rights to purchase or subscribe for, or enter
into any arrangement or contract with respect to the issuance or sale of,
any of such Subsidiary's share capital or any other securities, or make any
other changes in such Subsidiary's capital structure;
(iii) sell, pledge or dispose of or agree to sell, pledge or dispose
of any shares or other equity interest owned by such Subsidiary's in any
other Person;
(iv) declare, pay or set aside any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of such Subsidiary's share
capital or such Subsidiary's other securities (other than (x) distributions
to any other Subsidiary of the Company or (y) distributions to the Company
to the extent necessary to make the distributions required by the Company
Articles);
(v) enter into any contract or commitment with respect to capital
expenditures with a value in excess of, or requiring expenditures in excess
of, one million dollars ($1,000,000), individually, or enter into contracts
or commitments with respect to capital expenditures with a value in excess
of, or requiring expenditures in excess of, two million dollars
($2,000,000), in the aggregate, other than inventory purchased in the
ordinary course of business;
(vi) acquire, by amalgamating, merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any Person or otherwise acquire any assets of
any Person (other than the purchase of assets in the ordinary course of
business);
(vii) except to the extent required by applicable Law or under
existing employee or director benefit plans, Contracts, arrangements or
collective bargaining Contracts in effect on the date of this Agreement,
increase the compensation or fringe benefits of any of such Subsidiary's
directors, officers or employees, or grant any bonus or severance or
termination pay not currently required to be paid under existing severance
plans, or enter into any employment, consulting or severance Contract or
arrangement with any of such Subsidiary's present or former directors,
officers or other employees, or establish, adopt, enter into, amend or
terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, Contract,
trust, fund, policy or arrangement for the benefit of such Subsidiary's
directors, officers or employees; provided, that, without the prior consent
of Purchaser, (A) the Operating Subsidiaries and their respective
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Subsidiaries may increase the aggregate annualized compensation paid to all
of the employees of the Operating Subsidiaries and their respective
Subsidiaries (other than employees who have an employment Contract with any
Operating Subsidiary or any of their respective Subsidiaries or employees
who are covered by any collective bargaining Contract) by an amount not to
exceed four percent (4%) of the aggregate annualized compensation as of the
date hereof payable to such employees, and (B) such Subsidiaries may, with
respect to any employee of any Operating Subsidiary or any of their
respective Subsidiaries having an employment Contract, (1) set the bonus
target for such employee at an amount not in excess of seventy-five percent
(75%) of such employee's base pay, (2) set the bonus target EBITDA for the
Operating Subsidiaries and their respective Subsidiaries for fiscal year
2002 for the purpose of determining the incentive thresholds applicable to
such Contract at an amount not lower than forty-two million seven hundred
thousand dollars ($42,700,000) and (3) set the annual compensation increase
for such employee at an amount not in excess of the minimum required by
such employee's employment Contract;
(viii) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of, subject to any Lien, (other than Liens arising by operation of
Law in the ordinary course of business including, without limitation,
mechanics' or materialmens' Liens and maritime Liens, that are not,
individually or in the aggregate, material) or otherwise encumber any
material assets, or incur or modify any indebtedness or other material
liability, or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
Person (other than any other Subsidiary of the Company) or make any loan or
other extension of credit;
(ix) make or rescind any material Tax election;
(x) except as required by applicable Law or GAAP, make any material
change in its method of accounting;
(xi) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization;
(xii) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, other than indebtedness owing to or
guarantees of indebtedness owing to any other Subsidiary of the Company, or
(y) make any loans or advances to any other Person, other than to any other
Subsidiary of the Company, except, in the case of clause (x), for
borrowings under existing credit facilities described in the Completed
Commission Filings in the ordinary course of business for working capital
purposes;
(xiii) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits;
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(xiv) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (x) of any such claims,
liabilities or obligations in the ordinary course of business or (y) of
claims, liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) contained in the Completed Commission Filings;
(xv) enter into, materially modify, amend or terminate any Material
Contract (other than any storage and throughput Contract that both (x) has
a duration (immediately before terminating such Material Contract or
immediately after entering into, modifying or, as the case may be, amending
such Material Contract) of less than ninety (90) days and (y) involves even
payment obligations throughout the term of such Contract);
(xvi) other than routine employee terminations for cause or in the
ordinary course of business or as disclosed in the Completed Commission
Filings, plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other program or
effort concerning the termination of employment of any of such Subsidiary's
employees; or
(xvii) enter into any Tax agreement or similar agreement with the
Island Territory of Sint Eustatius or the Land Territory of the Netherlands
Antilles; or
(xviii) agree, in writing or otherwise, to take any of the foregoing
actions.
Section 5.4 Commercially Reasonable Efforts. Subject to the terms and
conditions provided herein, the Company and Purchaser shall, and the Company
shall cause each of its Subsidiaries to, cooperate and use their respective
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, and assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated hereby including, without limitation, the satisfaction of the
conditions set forth in Article VI and to make, or cause to be made, all filings
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated by this Agreement, including their
respective commercially reasonable efforts to obtain, prior to the Closing Date,
all Permits, consents and approvals of Governmental Entities and parties to
Contracts with any Operating Subsidiary or any of their respective Subsidiaries
as are required to fulfill the conditions set forth in Article VI.
Section 5.5 No Solicitation of Other Offers. (a) The Company shall,
and shall use its commercially reasonable efforts to cause its Affiliates and
each of its and their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents immediately to, cease any discussions or negotiations with any
other Person or Persons that may be ongoing with respect to any Acquisition
Proposal. The Company shall not take, and shall use its commercially reasonable
efforts to cause its Affiliates and each of its and their respective officers,
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directors, employees, representatives, consultants, investment bankers,
attorneys, accountants or other agents not to take, any action (i) to encourage
knowingly, solicit, initiate or facilitate, directly or indirectly, the making
or submission of any Acquisition Proposal, (ii) to enter into any agreement,
arrangement or understanding with respect to any Acquisition Proposal, (iii) to
initiate or participate in any way in any discussions or negotiations with, or
furnish or disclose any information to, any Person (other than Purchaser) in
connection with any Acquisition Proposal, (iv) to facilitate or further in any
other manner any inquiries or the making or submission of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal,
or (v) to grant any waiver or release under any standstill, confidentiality or
similar agreement (other than waivers or releases in the ordinary course of
business) entered into by the Company or any of its Affiliates or
representatives; provided, that the Company, in response to an unsolicited
Acquisition Proposal that did not result from a breach of this Section 5.5(a)
and otherwise in compliance with its obligations under Section 5.5(c), may
participate in discussions with, request clarifications from, or furnish
information to, any Person (other than Purchaser) that makes an unsolicited
Acquisition Proposal if (x) such action is taken subject to a confidentiality
agreement with terms not more favorable to such Person than the terms of the
Confidentiality Agreement (as in effect on the date hereof), (y) the Board of
Directors of the Company reasonably determines in good faith that such
Acquisition Proposal is, or could reasonably likely lead to, a Superior Proposal
and (z) the Board of Directors of the Company reasonably determines in good
faith, after receiving advice from Netherlands Antilles counsel to the Company,
that it is necessary to take such actions in order to comply with the fiduciary
duties of the Board of Directors under applicable Law.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw, modify or amend, or propose to withdraw, modify or
amend, in a manner adverse to Purchaser, the approval, adoption or, as the case
may be, recommendation of (x) this Agreement and the transactions contemplated
hereby, or (y) the approval by the shareholders of the Company of the Proposals,
or (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal; provided, that the Company may recommend to its
shareholders an Acquisition Proposal and, in connection therewith, withdraw or
modify its approval or recommendation of this Agreement and the transactions
contemplated by this Agreement if (x) the Company has complied with its
obligations under Sections 5.5(a) and (c), (y) the Acquisition Proposal is a
Superior Proposal and (z) the Board of Directors of the Company has determined,
in good faith, after receiving advice from Netherlands Antilles counsel to the
Company, that it is necessary to take such action in order to comply with the
fiduciary duties of the Board of Directors of the Company under applicable Law.
Nothing in this Section 5.5 shall prohibit the Company or the Board of Directors
of the Company from taking and disclosing to the shareholders of the Company a
position with respect to an Acquisition Proposal by a third party to the extent
required under Rule 14e-2 of the Exchange Act.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or offer
(including, without limitation, any proposal to shareholders of the Company)
from any Person or group relating to any direct or indirect acquisition or
purchase of (x) any class of equity securities of the Company or any of its
Subsidiaries or (y) five percent (5%) or more of the consolidated assets of the
Company and its Subsidiaries, (ii) any tender offer or exchange offer that, if
consummated, would result in any Person beneficially owning any class of equity
securities of the Company or any of its Subsidiaries, (iii) any amalgamation,
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merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries, or (iv) any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the consummation of the transactions contemplated by this Agreement or that
could reasonably be expected to dilute materially the benefits to Purchaser of
the transactions contemplated hereby.
"Superior Proposal" shall mean a bona fide written Acquisition
Proposal made by a third party to acquire either all of the Company Shares or
the Shares or substantially all of the combined assets of the Operating
Subsidiaries and their respective Subsidiaries, in either case pursuant to a
tender offer, an amalgamation, a merger or a sale (i) on terms that the Board of
Directors of the Company (after consultation with an independent, nationally
recognized investment bank) reasonably determines in good faith to be more
favorable, from a financial point of view, to the Company and its shareholders
(in their capacity as such) than the transactions contemplated hereby, and (ii)
that is reasonably capable of being consummated (taking into account, among
other things, all legal, financial, regulatory and other aspects of such
proposal and the identity of the Person making such proposal).
(c) In addition to the obligations of the Company set forth in
paragraph (a) above, promptly after receipt or occurrence thereof, the Company
shall advise Purchaser of any request for information with respect to any
Acquisition Proposal or of any Acquisition Proposal, or any inquiry, proposal,
discussions or negotiation with respect to any Acquisition Proposal, the terms
and conditions of such request, Acquisition Proposal, inquiry, proposal,
discussion or negotiation and the Company shall, promptly after receipt thereof,
provide to Purchaser copies of any written materials received by the Company in
connection with any of the foregoing, and the identity of the Person making any
such Acquisition Proposal or such request, inquiry or proposal or with whom any
discussions or negotiations are taking place.
Section 5.6 Notification of Certain Matters. Purchaser and the Company
shall promptly notify each other of the occurrence or non-occurrence of any fact
or event that has caused or could reasonably be expected to cause (a) any
representation or warranty made by it in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Closing, or (b) any covenant, condition or agreement under this Agreement not to
be complied with or satisfied by it in any material respect; provided, however,
that no such notification shall modify the representations or warranties of any
party or the conditions to the obligations of any party hereunder.
Section 5.7 Antitrust. (a) Each party hereto shall promptly take all
actions necessary to make the filings required of it or any of its Affiliates
under any applicable Antitrust Laws in connection with this Agreement and the
transactions contemplated hereby, including but not limited to filing with the
appropriate Antitrust Authorities, no later than the fifth (5th) Business Day
following the date hereof, a Notification and Report Form with respect to the
transactions contemplated by this Agreement, complying at the earliest
practicable date with any formal or informal request for additional information
or documentary material received by it or any of its Affiliates from any
Antitrust Authority, and cooperating, as permitted by Law, with one another in
connection with any filing under applicable Antitrust Laws and in connection
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with resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement initiated by any Antitrust Authority.
(b) Each party hereto shall use its commercially reasonable efforts to
resolve such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law. Without
limiting the generality of the foregoing, "commercially reasonable efforts"
shall include:
(i) in the case of each of Purchaser and the Company, if
Purchaser or the Company receives a formal request for additional
information or documentary material from an Antitrust Authority,
substantially complying with such formal request within a reasonable
period of time following the date of its receipt thereof;
(ii) in the case of the Company only, subject to the compliance
by Purchaser with this Section 5.7, not frustrating or impeding
strategy or negotiating positions of Purchaser with any Antitrust
Authority; and
(iii) in the case of each of Purchaser and the Company, using all
commercially reasonable efforts to (x) defend against any lawsuits,
actions or proceedings, judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby;
(y) seek to prevent the entry or imposition of any preliminary
injunction, temporary restraining order, stay or other legal restraint
or prohibition by any Governmental Entity; and (z) appeal and seek to
have vacated or reversed as promptly as possible any such injunction,
order, stay or other restraint or prohibition that is not yet final
and nonappealable.
The parties agree that, notwithstanding the foregoing, Purchaser shall not be
obligated by this Agreement to hold separate, divest, license or cause a third
party to purchase assets and/or businesses of any Operating Subsidiary or any of
their respective Subsidiaries or of Purchaser or any of its Affiliates.
(c) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other Governmental Entity regarding any of the transactions
contemplated hereby.
Section 5.8 Employee Benefits. (a) During the period commencing at the
Closing and ending on the first anniversary thereof, Purchaser shall cause the
current and former employees of the Operating Subsidiaries and their respective
Subsidiaries who are, on the Closing Date, entitled to receive compensation or
any benefits from any Operating Subsidiary or any of their respective
Subsidiaries to be provided with compensation and employee benefit plans (other
than stock option or other plans involving the potential issuance of securities
of any Operating Subsidiary, Purchaser or any of their respective Subsidiaries)
that in the aggregate are not materially less favorable than those currently
provided to such employees by the Operating Subsidiaries and their respective
Subsidiaries. The provisions of this Section 5.8(a) shall not create in any
current or former employee of any Operating Subsidiary or any of their
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respective Subsidiaries any rights to employment or continued employment with
Purchaser or any Operating Subsidiary or any of their respective Subsidiaries or
Affiliates or any right to specific terms or conditions of employment.
(b) The parties hereto agree that, upon the Closing, a "change in
control", "change of control" or "consolidation" as applicable, shall be deemed
to have occurred in respect of each of the employment agreements, change in
control agreements and severance agreements and other employee benefit plans and
agreements set forth on Schedule 5.8(b) of the Company Disclosure Letter
(collectively, the "Severance Protection Plans"). This Section 5.8(b) shall not
affect any terms of, or otherwise imply that the Closing or any other
termination shall not constitute a "change in control" or "change of control"
under, any employment agreement, change in control agreement, severance
agreement or other employee benefit plan or agreement that is not listed on such
Schedule 5.8(b).
(c) From and after the Closing, Purchaser shall cause the Operating
Subsidiaries and their respective Subsidiaries to (i) pay and perform the
respective obligations of the Operating Subsidiaries and their respective
Subsidiaries under the Severance Protection Plans and (ii) take such action as
may be necessary to pay promptly any severance payments or other amounts from
time to time due thereunder.
(d) Notwithstanding the foregoing provisions of this Section 5.8, no
employee of any Operating Subsidiary or any of their Subsidiaries shall have any
continued right to employment with any Operating Subsidiary or any Subsidiary of
any Operating Subsidiary following the Closing, except as provided in writing by
Purchaser; provided, that nothing in this Section 5.8(d) shall affect the rights
of any employee pursuant to any employment Contract.
Section 5.9 Directors' and Officers' Insurance and Indemnification.
(a) The provisions with respect to indemnification and exculpation from
liability set forth in the respective organizational documents of the
Subsidiaries of the Company as in effect on the date of this Agreement shall not
be amended, repealed or otherwise modified for a period of six (6) years after
the Closing in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Closing Date were directors or officers of
the Subsidiaries of the Company, unless such modification is required by Law.
(b) For a period of six (6) years following the Closing, Purchaser
shall cause the Operating Subsidiaries to either (i) maintain in effect the
current directors' and officers' liability insurance of the Company covering (x)
those Persons who are currently covered as directors or officers of any
Subsidiary of the Company on the date of this Agreement by the directors' and
officers' liability insurance policy of the Company (a copy of which has been
heretofore delivered to Purchaser) (the "Subsidiary Indemnified Parties") and
(y) those Persons who are currently covered as directors or officers of the
Company on the date of this Agreement by the directors' and officers' liability
insurance policy of the Company (the "Company Indemnified Parties"); provided,
however, that in no event shall Purchaser be required to expend, on an
annualized basis, an amount in excess of two hundred percent (200%) of the
annualized premiums currently paid by the Company for such insurance, which the
Company represents to be two hundred and five thousand ($205,000) for the twelve
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(12) month period ending on March 31, 2002; provided, further, that if the
annual premiums of such insurance coverage exceed such amount, Purchaser shall
cause the Operating Subsidiaries to obtain a policy or, as the case may be,
policies, with the greatest coverage available for a cost not exceeding such
amount; and provided, further, that Purchaser may substitute or, as the case may
be, cause to be substituted for such policies other policies with at least the
same coverage containing terms and conditions that are no less advantageous, and
provided that said substitution does not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Closing, or (ii) cause
directors' and officers' liability insurance of Purchaser then in effect to
cover the Company Indemnified Parties and the Subsidiary Indemnified Parties
with respect to those matters covered by the directors' and officers' liability
insurance policy of the Company so long as the terms thereof are no less
advantageous to the Company Indemnified Parties and the Subsidiary Indemnified
Parties than the current directors' and officers' liability insurance of the
Company covering the Company Indemnified Parties and the Subsidiary Indemnified
Parties.
(c) The Operating Subsidiaries shall and, if, at any time after the
Closing, any Operating Subsidiary or any of their respective Subsidiaries shall
be liquidated, dissolved or wound up, Purchaser, or a Person designated by
Purchaser that has a net worth at least equal to that of the liquidated,
dissolved or, as the case may be, wound up, Operating Subsidiary at the time of
such liquidation, dissolution or, as the case may be, winding up (the
"Substitute Party"), shall indemnify all Subsidiary Indemnified Parties to the
fullest extent permitted by applicable Law with respect to all acts and
omissions prior to the Closing arising out of such individuals' services as
officers, directors, employees or agents of any Subsidiary of the Company or as
trustees or fiduciaries of any plan for the benefit of employees of any
Subsidiary of the Company including, without limitation, the execution of, and
the transactions contemplated by, this Agreement. Without limitation of the
foregoing, in the event any such Subsidiary Indemnified Party is or becomes
involved, in any capacity, in any action, proceeding or investigation in
connection with any matter occurring prior to and including the time of the
Closing, including, without limitation, the transactions contemplated by this
Agreement, the Operating Subsidiaries, Purchaser or, as the case may be, the
Substitute Party, shall pay, as incurred, the reasonable legal and other
expenses of such Subsidiary Indemnified Party (including the cost of any
investigation and preparation) incurred in connection therewith. Subject to
Section 5.9(d) below, the Operating Subsidiaries, Purchaser or, as the case may
be, the Substitute Party, shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Subsidiary Indemnified Party in
enforcing this Section 5.9 or any action involving a Subsidiary Indemnified
Party resulting from the transactions contemplated by this Agreement.
(d) Any Subsidiary Indemnified Party wishing to claim indemnification
under Section 5.9(a), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify the Operating Subsidiaries, Purchaser
or, as the case may be, the Substitute Party, thereof. In the event of any such
claim, action, suit, proceeding or investigation, (i) the Operating
Subsidiaries, Purchaser or, as the case may be, the Substitute Party, shall have
the right, from and after the Closing, to assume the defense thereof (with
counsel engaged by the Operating Subsidiaries, Purchaser or, as the case may be,
the Substitute Party, to be reasonably acceptable to the relevant Subsidiary
Indemnified Party), and none of the Operating Subsidiaries, Purchaser or, as the
case may be, the Substitute Party, shall be liable to such Subsidiary
Indemnified Party for any legal expenses of other counsel or any other expenses
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subsequently incurred by such Subsidiary Indemnified Party in connection with
the defense thereof, (ii) such Subsidiary Indemnified Party shall cooperate in
the defense of any such matter, and (iii) none of the Operating Subsidiaries,
Purchaser or, as the case may be, the Substitute Party, shall be liable for any
settlement effected without its prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed; provided, that none of the
Operating Subsidiaries, Purchaser or, as the case may be, the Substitute Party
shall have any obligation hereunder to any Subsidiary Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Subsidiary Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law. None of the Operating Subsidiaries, Purchaser or, as the case
may be, the Substitute Party shall enter into any settlement that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to each Subsidiary Indemnified Party a release from all liability in
respect of such matter.
(e) Notwithstanding any other provisions hereof, the obligations of
Purchaser, the Operating Subsidiaries and the Substitute Party contained in this
Section 5.9 shall be binding upon their respective successors and assigns. In
the event Purchaser, any Operating Subsidiary, the Substitute Party or any of
their respective successors or assigns (i) consolidates or amalgamates with or
merges into any other Person or (ii) transfers all or substantially all of its
properties or assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Purchaser honor
the indemnification obligations set forth in this Section 5.9.
(f) The obligations of Purchaser, the Operating Subsidiaries and the
Substitute Party and their respective Subsidiaries under this Section 5.9 shall
survive the Closing and shall not be terminated or modified in such a manner as
to affect adversely any Company Indemnified Party or any Subsidiary Indemnified
Party to whom this Section 5.9 applies without the consent of such affected
Indemnified Party (it being expressly agreed that the Company Indemnified
Parties and Subsidiary Indemnified Parties to whom this Section 5.9 applies
shall be third-party beneficiaries of this Section 5.9, each of whom may enforce
the provisions of this Section).
Section 5.10 Public Announcements. Purchaser and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and review by the other party of such
release or statement, or without the prior consent of the other party, which
consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by Law or by
any listing agreement with a national securities exchange or automated quotation
system to which Purchaser or any Affiliate of Purchaser or, as the case may be,
the Company is a party, if it has used all commercially reasonable efforts to
consult with the other party and to obtain the consent of such party, but has
been unable to do so in a timely manner.
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Section 5.11 Shareholder Approval. As soon as reasonably practicable
after the date of this Agreement, the Company shall (a) duly call, give notice
of, convene and hold the Shareholder Meeting, including adjourning or recalling
the same if necessary to obtain a quorum, (b) make all filings with all
Governmental Entities necessary in connection therewith (including filing the
Proxy Materials with the Commission), (c) subject to the rights of the Board of
Directors of the Company pursuant to Section 5.5(b), provide the Proxy Materials
to the shareholders of the Company and, if so requested by Purchaser, retain the
services of a proxy solicitation firm and/or an information agent (selected by
the Company) to assist in obtaining proxies for approval and adoption of the
Proposals at the Shareholder Meeting, and (d) subject to the rights of the Board
of Directors of the Company pursuant to Section 5.5(b), use all commercially
reasonable efforts to obtain approval of all of the Proposals by the requisite
vote of the shareholders of the Company.
Section 5.12 Section 338 Election. Notwithstanding anything to the
contrary contained in this Agreement, if Purchaser or any Affiliate of Purchaser
acquires or becomes the owner, for U.S. federal income tax purposes, of any
Company Shares (other than Company Shares held by Holdings) at any time that
Holdings is the owner, for U.S. federal income tax purposes, of any Company
Shares, neither Purchaser nor any Affiliate of Purchaser shall make, or permit
to be made, an election under Section 338 of the Code with respect to such
Company Shares or with respect to any of the transactions contemplated by this
Agreement, unless the Company provides prior express written consent to any such
election.
Section 5.13 Repayment of Indebtedness. At or prior to the Closing,
Purchaser shall, in a manner satisfactory to the Company (which consent shall
not be unreasonably withheld, conditioned or delayed), either (a) discharge in
full the indebtedness under the Transamerica Loan, (b) obtain a release for the
Company of its obligations as guarantor of the Transamerica Loan or (c) agree to
indemnify the Company for its obligations as guarantor of the Transamerica Loan.
Section 5.14 Transfer Taxes. All stamp, documentary, transfer or
similar Taxes ("Transfer Taxes") resulting directly from the transactions
contemplated by this Agreement shall be borne fifty percent (50%) by Purchaser
and fifty percent (50%) by the Company. Any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed when due by the party
primarily or customarily responsible under the applicable local law for filing
such Tax Returns, provided that New York State stock transfer tax stamps shall
be affixed to the Shares transferred at the Closing. The Company and Purchaser
hereby agree to cooperate with each other prior to the Closing to allow the
relevant party to satisfy its obligations under the immediately preceding
sentence.
Section 5.15 Termination of Existing Tax Sharing Agreements. Any and
all existing Tax sharing agreements or arrangements, written or oral, between
the Company (or any Subsidiary or Affiliate of the Company), on the one hand,
and any Subsidiary of the Company, on the other, shall be terminated by the
Company and such Subsidiaries as of the Closing Date.
Section 5.16 Refunds of Taxes for Pre-Closing Periods. In the event
that the Company receives, after the Closing Date, but prior to any liquidation
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of the Company, a refund of Taxes paid by any Subsidiary of the Company, the
Company shall promptly remit such refund to Purchaser.
Section 5.17 Resignation of Directors. Unless otherwise requested in
writing by Purchaser on or prior to December 15, 2001, at or prior to the
Closing, the Company shall either (a) cause each director of each Subsidiary of
the Company to deliver to Purchaser his or her resignation as a director of such
Subsidiary or (ii) remove each director of each Subsidiary of the Company from
his or her position as a director of such Subsidiary.
ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION AND ABANDONMENT
Section 6.1 Conditions to Purchaser's Obligations. The purchase of the
Shares by Purchaser on the Closing Date is conditioned upon the satisfaction or
waiver by Purchaser, at or prior to the Closing, of the following conditions:
(a) Statutes, Orders; No Injunction. (i) There shall not be in effect
any Order by any Governmental Entity of competent jurisdiction and no Law shall
have been promulgated or enacted by any Governmental Entity of competent
jurisdiction that (A) restrains or prohibits the consummation of the
transactions contemplated by this Agreement, (B) prohibits or restricts the
ownership or operation by the Operating Subsidiaries or their respective
Subsidiaries or by Purchaser of any material portion of the business or assets
of the Operating Subsidiaries and their respective Subsidiaries, taken as a
whole, or that would substantially deprive the Operating Subsidiaries or their
respective Subsidiaries or Purchaser of the benefit of ownership of the business
or assets of the Operating Subsidiaries and their respective Subsidiaries, taken
as a whole, or compels Purchaser (or any of its Affiliates or Subsidiaries) to
dispose of or hold separate any material portion of the business or assets of
the Operating Subsidiaries and their respective Subsidiaries, taken as a whole,
(C) imposes material limitations on the ability of Purchaser effectively to
acquire or to hold or to exercise full rights to vote the Shares on all matters
properly presented to the shareholders of the respective Operating Subsidiary,
or (D) imposes any material limitations on the ability of the Operating
Subsidiaries or their respective Subsidiaries or Purchaser to control
effectively in any material respect the business and operations of the Operating
Subsidiaries and their respective Subsidiaries, taken as a whole, and (ii) there
shall not be pending any action by any Governmental Entity seeking to restrain
or prohibit the making or consummation of the transactions contemplated by this
Agreement or to impose any other restriction, prohibition or limitation referred
to in the foregoing clause (i);
(b) Truth of Representations and Warranties. The representations and
warranties of the Company in this Agreement (without giving effect to any
materiality qualification set forth in such representation or warranty, other
than the materiality qualifications set forth in Sections 3.6(a), 3.15 and 3.22
and the first and third sentences of Section 3.5) shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on or as
of such date (other than representations and warranties that, by their terms,
address matters only as of another specified date, which shall be true and
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correct only as of such other specified date), other than any such failures to
be true and correct that, in the aggregate, do not have, and would not
reasonably be expected to have, a Company Material Adverse Effect; provided,
that unless the Company has, not later than December 15, 2001, delivered to
Purchaser a copy of the shareregister of each Subsidiary of the Company that is
organized under the laws of the Netherlands Antilles, in each case certified by
the requisite number of the members of the board of directors of such Subsidiary
and showing the information thereon with respect to such Subsidiary to be as
represented in Section 3.3, the representations and warranties set forth in
Section 3.3 shall be true and correct in all respects. For the avoidance of
doubt, the parties acknowledge that it is their intention that, for purposes of
determining whether the condition set forth in the first sentence of this
Section 6.1(b) has been satisfied, all materiality qualifications set forth in
the representations and warranties of the Company in this Agreement (other than
those set forth in Sections 3.6(a), 3.15 and 3.22 and the first and third
sentences of Section 3.5) shall be deemed to be deleted from such
representations and warranties and the truth and correctness of such
representations and warranties shall be determined as if such materiality
qualifications did not exist;
(c) Performance of Covenants. The Company shall have performed in all
material respects its obligations and complied in all material respects with the
agreements and covenants of the Company to be performed or complied with by it
under this Agreement;
(d) No Company Material Adverse Effect. Since the date of this
Agreement, there shall have occurred no event, nor shall there exist any fact or
circumstance, that, individually or in the aggregate, has, or would reasonably
be expected to have, a Company Material Adverse Effect;
(e) Board Recommendation. Neither the Board of Directors of the
Company nor any committee thereof shall have withdrawn, modified or amended, in
a manner adverse to Purchaser, the approval, adoption or recommendation, as the
case may be, of this Agreement or the transactions contemplated hereby, or shall
have approved or recommended, any Acquisition Proposal;
(f) Shareholder Approval. (i) Each of the Proposals (each as more
fully set forth on Annex B) shall have been approved and adopted by the holders
of more than sixty-six and two-thirds percent (66-2/3%) of the Company Common
Shares and Company Subordinated Shares, voting together as a single class, that
are present or represented by proxy and voting at a meeting at which holders of
at least one-half of the issued and outstanding Company Common Shares and
Company Subordinated Shares, counted as a single class, are present or
represented by proxy, and (ii) the Proposal with respect to the amendment of the
Company Articles (as more fully set forth on Annex B) shall have been approved
and adopted by the holders of more than sixty-six and two-thirds percent
(66-2/3%) of the Company Common Shares, voting as a separate class, that are
present or represented by proxy and voting at a meeting at which holders of
least one-half of the issued and outstanding Company Common Shares are present
or represented by proxy; and
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(g) HSR Act Waiting Periods. All applicable waiting periods under the
HSR Act with respect to the transactions contemplated by this Agreement shall
have expired or been terminated.
Section 6.2 Conditions to the Company's Obligations. The sale of the
Shares by the Company on the Closing Date is conditioned upon the satisfaction
or waiver by the Company, at or prior to the Closing, of the following
conditions:
(a) Statutes, Orders; No Injunction. There shall not be in effect any
Order by any Governmental Entity of competent jurisdiction and no Law shall have
been promulgated or enacted by a Governmental Entity of competent jurisdiction
that restrains or prohibits the consummation of the transactions contemplated by
this Agreement and there shall not be pending any action by a Governmental
Entity seeking to restrain or prohibit the making or consummation of the
transactions contemplated by this Agreement;
(b) Truth of Representations and Warranties. The representations and
warranties of Purchaser in this Agreement (without giving effect to any
materiality qualification set forth in any such representation or warranty,
other than the materiality qualification set forth in Section 4.4) shall be true
and correct as of the date of this Agreement and as of the Closing Date as
though made on or as of such date (other than representations and warranties
that, by their terms, address matters only as of another specified date, which
shall be true and correct only as of such other specified date), other than any
such failures to be true and correct that, in the aggregate, do not have, or
would not reasonably be expected to have, a Purchaser Material Adverse Effect.
For the avoidance of doubt, the parties acknowledge that it is their intention
that, for purposes of determining whether the condition set forth in the first
sentence of this Section 6.2(b) has been satisfied, all materiality
qualifications set forth in the representations and warranties of Purchaser in
this Agreement (other than those set forth in Section 4.4) shall be deemed to be
deleted from such representations and warranties and the truth and correctness
of such representations and warranties shall be determined as if such
materiality qualifications did not exist;
(c) Performance of Covenants. Purchaser shall have performed in all
material respects its obligations and complied in all material respects with the
agreements and covenants of Purchaser to be performed or complied with by it
under this Agreement;
(d) Shareholder Approval. (i) Each of the Proposals (each as more
fully set forth on Annex B) shall have been approved and adopted by the holders
of more than sixty-six and two-thirds percent (66-2/3%) of the Company Common
Shares and Company Subordinated Shares, voting together as a single class, that
are present or represented by proxy and voting at a meeting at which holders of
at least one-half of the issued and outstanding Company Common Shares and
Company Subordinated Shares, counted as a single class, are present or
represented by proxy, and (ii) the Proposal with respect to the amendment of the
Company Articles (as more fully set forth on Annex B) shall have been approved
and adopted by the holders of more than sixty-six and two-thirds percent
(66-2/3%) of the Company Common Shares, voting as a separate class, that are
present or represented by proxy and voting at a meeting at which holders of at
least one-half of the issued and outstanding Company Common Shares are present
or represented by proxy; and
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(e) HSR Act Waiting Periods. All applicable waiting periods under the
HSR Act with respect to the transactions contemplated by this Agreement shall
have expired or been terminated.
Section 6.3 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by mutual consent of the Company and Purchaser;
(b) by either Purchaser, on the one hand, or the Company, on the other
hand:
(i) if any court of competent jurisdiction or any Governmental
Entity shall have issued an order, decree or ruling or taken any other
action permanently restricting, enjoining, restraining or otherwise
prohibiting the sale of the Shares pursuant to this Agreement, and
such order, decree or ruling or other action shall have become final
and nonappealable;
(ii) if at the Shareholder Meeting, or any adjournment or recall
thereof, the shareholders of the Company shall not have approved the
Proposals; or
(iii) at any time after April 30, 2002 if the Closing shall not
have occurred by such date other than as a result of (x) a breach of
this Agreement by Purchaser, if Purchaser is the party attempting to
terminate this Agreement or (y) a breach of this Agreement by the
Company or a breach by Holdings of its obligations under the Voting
Agreement, if the Company is the party attempting to terminate this
Agreement;
(c) by the Company, if a Superior Proposal is received and the Board
of Directors of the Company reasonably determines in good faith, after receiving
advice from Netherlands Antilles counsel to the Company, that it is necessary to
terminate this Agreement and enter into an agreement to effect the Superior
Proposal in order to comply with the fiduciary duties of the Board of Directors
under applicable Law; provided, however, that (x) prior to such termination,
Purchaser has received the payment required by Section 8.1(b) by wire transfer
of immediately available funds and (y) simultaneously or substantially
simultaneously with such termination the Company enters into a definitive
acquisition, merger, stock purchase, asset purchase or similar agreement to
effect the Superior Proposal; or
(d) by Purchaser at any time prior to the Closing, if:
(i) the Company shall have (x) withdrawn, modified or amended in
a manner adverse to Purchaser, the approval, adoption or
recommendation, as the case may be, of the relevant Proposals or (y)
approved or recommended any Acquisition Proposal; or
(ii) there shall have been a breach by the Company of any
provision of Section 5.5(a) or Section 5.5(b) or a material breach by
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the Company of any provision of Section 5.5(c) or a breach by Holdings
of its obligations under the Voting Agreement.
Section 6.4 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.3 by Purchaser or the Company, written
notice thereof shall forthwith be given to the other party specifying the
provision hereof pursuant to which such termination is made, and, except as
provided in this sentence and in the last sentence of this Section 6.4, this
Agreement shall become void and have no effect, and there shall be no liability
hereunder on the part of Purchaser or the Company, except that the provisions of
Section 5.2(b), Section 5.12, this Section 6.4 and Article VII shall survive any
termination of this Agreement. Termination of this Agreement shall not relieve
any party to this Agreement of liability for breach of this Agreement.
ARTICLE VII
NON-SURVIVAL
Section 7.1 Non-Survival of Representations, Warranties, Agreements
and Covenants. None of the representations, warranties, agreements or covenants
contained in this Agreement or in any Schedule, Annex, Exhibit or certificate
delivered pursuant to this Agreement, shall survive the Closing, other than the
agreements and covenants in Sections 2.4, 5.2(b), 5.2(c), 5.8, 5.9, 5.12, 5.13,
5.14, 5.16, this Article VII and Article VIII.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses; provided, that all out-of-pocket costs and
expenses related to the printing, filing and mailing of the Proxy Materials
shall be borne by the Company.
(b) If this Agreement is terminated (i) by Purchaser in accordance
with Section 6.3(d)(i); or (ii) by the Company in accordance with Section
6.3(c), then the Company shall (A) in the case of clause (i), on the day next
succeeding the date of such termination, or (B) in the case of clause (ii),
immediately prior to the Company entering into an agreement with respect to an
Acquisition Proposal, pay to Purchaser in immediately available funds (in
recognition of the fees and expenses incurred and efforts extended by Purchaser
in connection with the transactions contemplated by this Agreement) an amount
equal to eight million dollars ($8,000,000).
(c) If this Agreement is terminated by Purchaser or the Company in
accordance with Section 6.3(b)(ii), the Company shall pay to Purchaser in
immediately available funds an amount equal to the documented, out-of-pocket
expenses incurred by Purchaser in connection with the preparation of its bid
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for, and due diligence of, the Operating Subsidiaries and their respective
Subsidiaries, negotiation and execution of, and the performance of its
obligations under, this Agreement, and preparation for consummation of the
transactions contemplated by this Agreement, such amount not to exceed, in any
event, five hundred thousand dollars ($500,000).
Section 8.2 Investigation and Agreement; Projections; No Other
Representations and Warranties. (a) Each of Purchaser and the Company
acknowledges and agrees that it has made its own inquiry and investigation into,
and, based thereon, has formed an independent judgment concerning, the other
party and its Subsidiaries and their businesses and operations, and such party
has requested and received such documents and information from the other party
as such party considers material in determining whether to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
Each of Purchaser and the Company acknowledges and agrees that it has had an
opportunity to ask questions of and receive answers from the other party with
respect to matters such party considers material in determining whether to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement.
(b) The respective representations and warranties of the Company and
Purchaser contained herein or in any certificates or other documents delivered
prior to or at the Closing shall not be deemed waived or otherwise affected by
any investigation made by any party. Each and every such representation and
warranty shall expire with, and be terminated and extinguished by, the Closing,
and thereafter neither the Company nor Purchaser shall be under any liability
whatsoever with respect to any such representation or warranty. This Section
8.2(b) shall have no effect upon any other obligation of the parties hereto.
(c) In connection with the investigation by Purchaser of the Company
and its Subsidiaries and their businesses and operations, Purchaser and its
representatives have received from the Company or its representatives certain
projections and other forecasts for the Company and its Subsidiaries and certain
estimates, plans and budget information. Purchaser acknowledges and agrees that
there are uncertainties inherent in attempting to make such projections,
forecasts, estimates, plans and budgets; that it is familiar with such
uncertainties; that it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates, projections,
forecasts, plans and budgets so furnished to it or its representatives; and that
it will not (and will cause all of its Subsidiaries or other Affiliates or any
other person acting on its behalf to not) assert any claim or cause of action
against any of the direct or indirect partners, directors, officers, employees,
shareholders or Affiliates of the Company with respect thereto, or hold any such
person liable with respect thereto.
(d) Purchaser and the Company agree that, except for the
representations and warranties made by the other party that are expressly set
forth herein, neither the other party nor any of its representatives or
Affiliates has made and shall not be deemed to have made to such party or to any
of its representatives or Affiliates any representation or warranty of any kind.
Without limiting the generality of the foregoing, each party agrees that neither
the other party nor any of its Affiliates makes or has made any representation
or warranty to such party or to any of its representatives or Affiliates with
respect to:
(i) any projections, forecasts, estimates, plans or budgets of
future revenues, expenses or expenditures, future results of
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operations (or any component thereof), future cash flows (or any
component thereof) or future financial condition (or any component
thereof) of the other party or any of its Subsidiaries or the future
business, operations or affairs of the other party or any of its
Subsidiaries heretofore or hereafter delivered to or made available to
such party or its counsel, accountants, advisors, lenders,
representatives or Affiliates; and
(ii) any other information, statement or documents heretofore or
hereafter delivered to or made available to such party or its counsel,
accountants, advisors, lenders, representatives or Affiliates with
respect to the other party or any of its Subsidiaries or the business,
operations or affairs of the other party or any of its Subsidiaries,
except, with respect to clauses (i) and (ii), to the extent and as expressly
covered by a representation and warranty made by the other party and contained
in this Agreement.
Section 8.3 Extension; Waiver. At any time prior to the Closing, the
parties hereto, by action taken by, on behalf of, or at the direction of the
Board of Directors of the Company or the general partner of Purchaser, may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party,
or (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
Section 8.4 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
sent by facsimile (upon confirmation of receipt), as follows:
(a) if to the Company, to it:
c/o Statia Terminals, Inc.
800 Fairway Drive
Suite 295
Deerfield Beach, Florida 33441
Attention: James G. Cameron, President
Fax: (954) 570-3453
with copies (which shall not constitute notice) to:
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Statia Terminals, Inc.
801 Warrenville Road
Suite 200
Lisle, Illinois 60532-1396
Attention: Jack R. Pine, Secretary
Fax: (630) 435-9542
and
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Eugene W. Goodwillie, Jr., Esq.
Oliver C. Brahmst, Esq.
Fax: (212) 354-8113
(b) if to Purchaser, to it at:
Kaneb Pipe Line Operating Partnership, L.P.
2435 N. Central Expressway
Suite 700
Richardson, TX 75080
Attention: Mr. Edward D. Doherty
Fax: (972) 699-1894
with a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P
2200 Ross Avenue
Suite 2800
Dallas, TX 75201
Attention: Kenneth L. Stewart, Esq.
Fax: (214) 855-8200
or to such other Person or address as either party shall specify by notice in
writing to other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery,
except for a notice of a change of address, which shall be effective only upon
receipt thereof.
Section 8.5 Entire Agreement. This Agreement, together with the
Company Disclosure Letter, Annex A, Annex B and the Confidentiality Agreement,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersedes all prior agreements and
understandings, oral and written, with respect thereto, other than the
Confidentiality Agreement.
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Section 8.6 Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, with respect
to the provisions of Section 5.9, shall inure to the benefit of the Persons or
entities benefiting from the provisions thereof who are intended to be
third-party beneficiaries thereof. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of each of the other parties, except
that Purchaser may assign and transfer its right and obligations hereunder to
any of its Affiliates. Except as provided in the first sentence of this Section
8.6, nothing in this Agreement, expressed or implied, is intended to confer on
any Person (including, without limitation, any current or former employees of
the Company), other than the parties hereto, any rights or remedies.
Section 8.7 Amendment and Modification. Subject to applicable Law,
this Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Closing, by action by, on
behalf of, or at the direction of the Board of Directors of the Company or the
general partner of Purchaser.
Section 8.8 Further Actions. Each of the parties hereto agrees that,
subject to its legal obligations, it shall use its commercially reasonable
efforts to fulfill all conditions precedent specified herein, to the extent that
such conditions are within its control, and to do all things reasonably
necessary to consummate the transactions contemplated hereby.
Section 8.9 Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
Section 8.10 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
Section 8.11 APPLICABLE LAW. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES
THEREOF. THE STATE OR FEDERAL COURTS LOCATED WITHIN THE STATE AND COUNTY OF NEW
YORK SHALL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES
HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY AND THE
PARTIES CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH
OF THE PARTIES HEREBY WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND
THE PROPERTY OF SUCH PARTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH
COURTS OR (III) ANY LITIGATION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS
BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES HEREBY AGREE THAT MAILING OF
-41-
PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE
MANNER PROVIDED IN SECTION 8.4, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY
LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY
OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.
Section 8.12 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable term, provision, covenant or restriction or
any portion thereof had never been contained herein.
Section 8.13 Interpretation. When a reference is made in this
Agreement to a Section or Article, such reference shall be to a Section or
Article of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for convenience of reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.14 Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 8.15 Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or the
transactions contemplated hereby.
* * * * *
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IN WITNESS WHEREOF, each of Purchaser and the Company has caused this
Agreement to be executed by its respective officers thereunto duly authorized,
all as of the date first above written.
KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P.
By KANEB PIPE LINE COMPANY
LLC, its general partner
By
--------------------------------------------
Name:
Title:
STATIA TERMINALS GROUP N.V.
By
--------------------------------------------
Name:
Title:
By
--------------------------------------------
Name:
Title:
-43-
Annex A
PROMISSORY NOTE
_____, 200_
On the Due Date, as defined below, the undersigned, Kaneb Pipe Line
Operating Partnership, L.P. (the "Maker"), a Delaware limited partnership,
hereby promises upon the terms and subject to the provisions of this promissory
note (this "Note") to pay to Statia Terminals Group N.V. (the "Holder"), a
public company with limited liability organized under the laws of the
Netherlands Antilles, or its registered assigns, the Principal Amount (as
defined below) in lawful money of the United States of America, which shall at
the time of payment be legal tender in payment of all debts and dues, public and
private.
1. Principal Amount and Due Date. The "Principal Amount" shall be an
amount equal to eighty percent (80%) of the amount by which (a) the Tax Reserve
Amount (as defined in the Stock Purchase Agreement, dated as of November 12,
2001, by and between the Holder and the Maker (the "Stock Purchase Agreement")
(as such amount is finally determined pursuant to Section 2.4 of the Stock
Purchase Agreement) exceeds (b) the aggregate actual amount paid or payable by
the Maker and its Affiliates in satisfaction of Taxes pursuant to the Tax
Agreement for periods prior to the date hereof.
The Principal Amount shall be due and payable in full on the date (the
"Due Date") that is five (5) Business Days after the date of execution of the
Tax Agreement.
2. No Presentment. The Maker, for itself and its successors and
assigns, waives presentment, demand, protest and notice thereof or of dishonor,
and waives any right to be released by reason of any extension of time or change
in the terms of payment.
3. Amendment. This Note may not be changed orally, but only by an
agreement in writing signed by the Holder and the Maker.
4. Cancellation. After the Principal Amount has been paid in full,
this Note shall be surrendered to the Maker for cancellation and shall not be
reissued.
5. Transfer Restrictions. This Note shall not be assignable by either
the Maker or the Holder without the prior written consent of the other party,
which consent shall not be unreasonably withheld, conditioned or delayed;
provided, that the Holder shall be entitled to assign this Note to Holdings or
any one shareholder of Holdings in connection with the liquidation of the
Holder.
6. GOVERNING LAW. THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW PROVISION THEREOF.
7. Descriptive Headings. The descriptive headings of this Note are
inserted for convenience only, and do not constitute a part of this Note.
8. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to such terms in the Stock Purchase
Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on
the date first written above.
KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P.
By KANEB PIPE LINE COMPANY LLC,
its general partner
By:
----------------------------------------
Name:
Title:
ANNEX B
This Annex B to the Stock Purchase Agreement (the "Agreement") by and between
Kaneb Pipe Line Operating Partnership, L.P. ("Purchaser") and Statia Terminals
Group N.V. (the "Company") dated as of November 12, 2001 sets forth the
proposals that will be presented at the extraordinary meeting of the
shareholders of the Company. Capitalized terms used but not defined herein shall
have the respective meaning ascribed thereto in the Agreement.
AMENDMENT TO THE ARTICLES OF INCORPORATION OF THE COMPANY
PROPOSED, TO ADOPT the Amendment (the "Amendment") to the Company Articles to
add a provision with respect to the distribution of the proceeds from a sale of
all or substantially all of the assets of the Company comprising the capital
stock of the Operating Subsidiaries, a copy of which is annexed hereto as
Schedule 1, and to authorize, with full right of substitution, each director and
officer of the Company and any of the lawyers of the civil law notary office of
Smeets Thesseling van Bokhorst in Curacao to (i) request the approval of the
Ministry of Justice in the Netherlands Antilles with respect to the Amendment,
(ii) to make such changes as the Ministry of Justice requires to the Amendment
and (iii) to execute the notarial deed of amendment to the Articles of
Incorporation of the Company incorporating the Amendment.
STOCK PURCHASE AGREEMENT
SUBJECT TO ADOPTION OF THE AMENDMENT BY (i) THE HOLDERS OF MORE THAN SIXTY-SIX
AND TWO-THIRDS PERCENT (66-2/3%) OF THE COMMON SHARES AND SUBORDINATED SHARES,
VOTING TOGETHER AS A SINGLE CLASS, THAT ARE PRESENT OR REPRESENTED AND VOTING AT
A MEETING AT WHICH HOLDERS OF AT LEAST ONE-HALF OF THE ISSUED AND OUTSTANDING
COMMON SHARES AND SUBORDINATED SHARES, COUNTED AS A SINGLE CLASS, ARE PRESENT OR
REPRESENTED BY PROXY, AND (ii) BY THE HOLDERS OF MORE THAN SIXTY-SIX AND
TWO-THIRDS PERCENT (66-2/3%) OF THE COMMON SHARES, VOTING AS A SEPARATE CLASS AT
A MEETING AT WHICH HOLDERS OF AT LEAST ONE-HALF OF THE ISSUED AND OUTSTANDING
COMMON SHARES ARE PRESENT OR REPRESENTED BY PROXY, PROPOSED, TO APPROVE the
Agreement, pursuant to which the Company will sell to Purchaser the Shares, and
the transactions contemplated thereby, to approve the distribution (the
"Distribution") of the proceeds received by the Company pursuant to the
Agreement in accordance with Article 17A of the Company Articles and to approve
any and all actions in connection with the Distribution by or on behalf of the
Company.
DISSOLUTION OF THE COMPANY
SUBJECT TO APPROVAL OF THE AGREEMENT, PROPOSED, TO ADOPT a resolution to
dissolve the Company in accordance with Article 18, Paragraph 6A of the Company
Articles immediately following the Distribution, to appoint the Board of
Directors of the Company as the liquidator of the Company and to approve any
distribution of any liquidation proceeds of the Company in accordance with the
provisions of Article 18, paragraph 6A of the Company Articles.
Schedule I
PROPOSED TEXT OF THE AMENDMENT TO THE ARTICLES OF
INCORPORATION OF STATIA TERMINALS GROUP N.V.
I. ARTICLE 17, PARAGRAPH 1 SHALL BE AMENDED AS FOLLOWS: A new final sentence
shall be added to paragraph 1 ("Definitions") of this article, which shall read
as follows: "The provisions of this article 17 will, other than the provisions
set forth in paragraphs 2, 3, 4 and 5 of this article 17, not apply to a Sale
Event (as defined in article 17A) or any distribution made to the shareholders
of the company from the proceeds of a Sale Event."
II. A NEW ARTICLE 17A SHALL BE ADDED AFTER ARTICLE 17 WHICH SHALL HAVE THE
FOLLOWING HEADING: "DEFINITIONS/SPECIFIC PROVISION ON A SALE EVENT (AS DEFINED
BELOW) OF OR BY THE COMPANY AND ON DISTRIBUTIONS TO SHAREHOLDERS FROM THE
PROCEEDS OF A SALE EVENT", WHICH ARTICLE SHALL READ AS FOLLOWS:
"In the event (a) the Board of Directors has adopted a resolution to
approve and to recommend to the General Meeting the adoption and approval of a
Sale Event, (b) the General Meeting has adopted and approved such Sale Event,
and (c) a definitive agreement has been entered into by or on behalf of the
company with a third party purchaser in connection with such Sale Event, and the
transactions contemplated by such definitive agreement have been consummated,
then, with due observance of the provisions of paragraphs 2, 3, 4 and 5 of
article 17 of these articles of incorporation, a distribution to the
shareholders shall be made out of the proceeds received by the company from such
Sale Event in accordance with the following provisions:
1. Sale Event Distribution: A distribution of any proceeds received by the
company from a Sale Event shall be made and be paid from legally available funds
therefor, by or on behalf of the company in cash as a distribution from profit,
as a dividend or interim-dividend, as the case may be, and/or from freely
distributable reserves of the company including, but not limited to, capital
surplus reserves, to and for the benefit of its shareholders.
2. Sale Event: Sale Event shall mean a sale or other voluntary disposition, in a
single transaction, of all or substantially all of the assets of the company
comprising the capital stock of Statia Terminals International N.V., Statia
Technology, Inc. and Statia Marine, Inc.
3. Distribution from Sale Event: Any distribution from proceeds received by the
company from a Sale Event shall be made in the following manner:
(a) First, to the common shares, pro rata, until each issued and outstanding
common share has been paid an amount equal to $18.00 (such amount being the
value per common share attributed to each such common share by one or more
independent experts, as appointed by or on behalf of the company in conjunction
with the establishment of the going concern value of the company);
(b) Second, after satisfaction in full of the payment of the amounts under (a)
above, to the subordinated shares, pro rata, until each issued and outstanding
subordinated share has been paid an amount equal to $16.40 (such amount being
the value per subordinated share as attributed to each such subordinated share
by the company in conjunction with the establishment of the going concern value
of the company referred to in clause (a) above);
(c) Third, after satisfaction in full of the payment of the amounts under (a)
and (b) above, to the incentive shares, pro rata, the balance of the proceeds
received by the company from the Sale Event (such amount being the value per
incentive share as attributed to each such incentive share by the company in
conjunction with the establishment of the going concern value of the company
referred to in clause (a) above) minus (x) the amount due from the company
pursuant to the obligations of the company under the 1999 Stock Option Plan, (y)
the amount necessary to satisfy any outstanding liabilities of the company, as
determined by the Board of Directors and (z) $[insert dollar amount equal to 20%
of the authorized capital of the company], and subject to upward or downward
adjustment commensurate with the adjustment of the purchase price, if any,
pursuant to the definitive agreement entered into in connection with such Sale
Event.
Distributions under this paragraph 3 shall satisfy in full any obligations with
respect to, and shall be in lieu of payment of, any Common Share Arrearages and
any deferred distributions declared on the Subordinated Shares, in each case
accrued and unpaid for any period prior to the Sale Event giving rise to such
distributions.
III ARTICLE 18, PARAGRAPH 1 SHALL BE AMENDED AS FOLLOWS: After "to dissolve the
company or to sell all or substantially all of the assets of the company", the
following shall be added ", including but not limited to, a Sale Event".
IV ARTICLE 18, PARAGRAPH 6 SHALL BE AMENDED AS FOLLOWS: After "(a Liquidation
Event)" the following text shall be added: "not constituting a Sale Event (as
defined in these articles of incorporation) in which case paragraph 6A of this
article 18 shall apply".
V A NEW PARAGRAPH 6A SHALL BE ADDED TO ARTICLE 18 AFTER PARAGRAPH 6, WHICH SHALL
HAVE THE HEADING "SALE EVENT/DISTRIBUTION IN CONJUNCTION WITH A LIQUIDATION
EVENT" AND WHICH SHALL READ AS FOLLOWS: "In case of a Liquidation Event
following the distribution of the proceeds from a Sale Event, after satisfaction
of all the company's creditors in the order of priority as set out by or under
applicable law, any distribution of proceeds of such liquidation will be made to
the holders of common and subordinated shares and the holders of incentive
shares as follows:
(a) First, to the common shares, pro rata, until each common share
received an amount equal to $18.00;
(b) Second, to the subordinated shares, pro rata, until each subordinated
share receives an amount equal to $16.40; and
(c) Third, to the incentive shares, pro rata, all remaining proceeds, if
any.
provided however that (x) with any such distribution under (a), (b) and (c)
respectively, any amounts paid under paragraph 17A of these articles of
incorporation, with respect to the common shares, the subordinated shares
and the incentive shares, respectively, shall be deducted from the amounts
of liquidation proceeds prior to any allocation and payment of the
foregoing distribution of liquidation proceeds and (y) no holder shall be
entitled to any distribution under Article 17 hereof.
VI ARTICLE 18, PARAGRAPH 7 SHALL BE AMENDED AS FOLLOWS: A new final sentence
shall be added which reads as follows: "This paragraph shall not apply in the
case of a distribution following a Sale Event in conjunction with a Liquidation
Event under paragraph 6A of article 18 of these articles of incorporation."
TABLE OF CONTENTS
Page
ARTICLE I
Section 1.1 Definitions..............................................2
Section 1.2 Cross References.........................................5
Section 1.3 Knowledge................................................6
ARTICLE II
SALE OF SHARES........................................................6
Section 2.1 Sale of Shares...........................................6
Section 2.2 Delivery of Estimated Net Cash Amount....................6
Section 2.3 Closing Payment..........................................6
Section 2.4 Determination of Purchase Price..........................7
Section 2.5 Closing..................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................8
Section 3.1 Due Organization, Good Standing and Corporate Power......8
Section 3.2 Authorization and Validity of this Agreement.............9
Section 3.3 Capitalization...........................................9
Section 3.4 Consents and Approvals; No Violations...................10
Section 3.5 Company Reports and Financial Statements................10
Section 3.6 Absence of Certain Changes..............................11
Section 3.7 Title to Properties; Encumbrances.......................11
Section 3.8 Compliance with Laws....................................12
Section 3.9 Litigation..............................................12
Section 3.10 Employee Benefit Plans.................................12
Section 3.11 Employment Relations and Agreements....................13
Section 3.12 Taxes..................................................14
(a) Tax Returns........................................14
(b) Payment of Taxes...................................14
(c) Tax Liens..........................................15
(d) Tax Audits.........................................15
(e) Statute of Limitations.............................15
(f) Tax Agreements.....................................15
(g) Powers of Attorney.................................15
(h) Tax Deficiencies...................................15
(i) Consolidated, Combined or Unitary Tax Returns......15
(j) No Joint or Several Liability......................15
Section 3.13 Liabilities............................................15
(i)
Section 3.14 Intellectual Property..................................16
Section 3.15 Proxy Materials........................................16
Section 3.16 Broker's or Finder's Fee...............................16
Section 3.17 Certain Contracts and Arrangements.....................16
Section 3.18 Environmental Laws and Regulations.....................18
Section 3.19 Voting Requirements....................................18
Section 3.20 Insurance..............................................18
Section 3.21 Inventory..............................................19
Section 3.22 Information Furnished..................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................19
Section 4.1 Due Organization, Good Standing and Corporate Power.....19
Section 4.2 Authorization and Validity of Agreement.................19
Section 4.3 Consents and Approvals; No Violations..................20
Section 4.4 Proxy Materials.........................................20
Section 4.5 Broker's or Finder's Fee................................20
Section 4.6 Funds...................................................20
Section 4.7 Litigation..............................................20
Section 4.8 No Knowledge of Adverse Change..........................21
ARTICLE V
TRANSACTIONS PRIOR TO CLOSING DATE...................................21
Section 5.1 Access to Information Concerning Properties
and Records...........................................21
Section 5.2 Confidentiality.........................................21
Section 5.3 Conduct of Business Pending the Closing Date............22
Section 5.4 Commercially Reasonable Efforts.........................25
Section 5.5 No Solicitation of Other Offers.........................25
Section 5.6 Notification of Certain Matters.........................27
Section 5.7 Antitrust...............................................27
Section 5.8 Employee Benefits.......................................28
Section 5.9 Directors' and Officers' Insurance and
Indemnification.......................................29
Section 5.10 Public Announcements...................................31
Section 5.11 Shareholder Approval...................................31
Section 5.12 Section 338 Election...................................32
Section 5.13 Repayment of Indebtedness..............................32
Section 5.14 Transfer Taxes.........................................32
Section 5.15 Termination of Existing Tax Sharing Agreements.........32
Section 5.16 Refunds of Taxes for Pre-Closing Periods...............32
Section 5.17 Resignation of Directors...............................32
ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION AND ABANDONMENT...................33
Section 6.1 Conditions to Purchaser's Obligations...................33
(a) Statutes, Orders; No Injunction........................33
(b) Truth of Representations and Warranties................33
(c) Performance of Covenants...............................34
(d) No Company Material Adverse Effect.....................34
(e) Board Recommendation...................................34
(f) Shareholder Approval..................................34
(g) HSR Act Waiting Periods................................34
Section 6.2 Conditions to the Company's Obligations.................34
(a) Statutes, Orders; No Injunction........................34
(b) Truth of Representations and Warranties................35
(c) Performance of Covenants...............................35
(d) Shareholder Approval..................................35
(e) HSR Act Waiting Periods................................35
Section 6.3 Termination.............................................35
Section 6.4 Effect of Termination...................................36
ARTICLE VII
NON-SURVIVAL.........................................................37
Section 7.1 Non-Survival of Representations, Warranties,
Agreements and Covenants..............................37
ARTICLE VIII
MISCELLANEOUS........................................................37
Section 8.1 Fees and Expenses.......................................37
Section 8.2 Investigation and Agreement; Projections; No
Other Representations and Warranties..................37
Section 8.3 Extension; Waiver.......................................39
Section 8.4 Notices.................................................39
Section 8.5 Entire Agreement........................................40
Section 8.6 Binding Effect; Benefit; Assignment.....................40
Section 8.7 Amendment and Modification..............................40
Section 8.8 Further Actions.........................................41
Section 8.9 Headings................................................41
Section 8.10 Counterparts...........................................41
Section 8.11 APPLICABLE LAW.........................................41
Section 8.12 Severability...........................................41
Section 8.13 Interpretation.........................................41
Section 8.14 Specific Enforcement...................................42
Section 8.15 Waiver of Jury Trial...................................42
ANNEX A - Form of Contingent Tax Payment Note
ANNEX B - Form of Shareholder Proposals
SCHEDULE 1