The consolidated financial statements of Martin Marietta incorporated by reference in Martin Mariettas Annual Report on Form 10-K for the
year ended December 31, 2013 (including the schedule appearing therein), and the effectiveness of Martin Mariettas internal control over financial reporting as of December 31, 2013 have been audited by Ernst & Young,
independent registered public accounting firm, as set forth in their reports thereon, incorporated by reference and included therein, and incorporated herein by reference. Such consolidated financial statements and Martin Marietta managements
assessment of the effectiveness of internal control over financial reporting as of December 31, 2013 are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of TXI appearing in TXIs Annual Report on Form 10-K for the year ended May 31, 2013, and the
effectiveness of TXIs internal control over financial reporting as of May 31, 2013, have been audited by Ernst & Young, independent registered public accounting firm, as set forth in their reports thereon, included therein, and
incorporated herein by reference. Such consolidated financial statements and TXI managements assessment of the effectiveness of internal control over financial reporting as of May 31, 2013 are incorporated herein by reference in reliance
upon such reports given on the authority of such firm as experts in accounting and auditing.
With respect to the unaudited condensed
consolidated interim financial information of TXI for the three-month periods ended August 31, 2013 and 2012, and the three-month and six-month periods ended November 30, 2013 and 2012, incorporated by reference into this joint proxy
statement/prospectus, Ernst & Young reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports dated October 4, 2013 and January 9, 2014,
included in TXIs Quarterly Reports on Form 10-Q for the quarters ended August 31, 2013 and November 30, 2013, and incorporated by reference herein, state that they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Ernst & Young is not subject to the liability provisions of Section 11 of
the Securities Act for their reports on the unaudited interim financial information because those reports are not a report or a part of the Registration Statement prepared or certified by Ernst & Young within the meaning
of Sections 7 and 11 of the Securities Act.
Martin Marietta will hold an annual meeting in 2014 regardless of whether the merger has been completed. Martin Mariettas Bylaws require
shareholders to furnish timely written notice of their intent to nominate a director or bring any other matter before a shareholder meeting, whether or not they wish to include their proposal in Martin Mariettas proxy materials. In general,
notice must be received by Martin Mariettas Corporate Secretary no earlier than January 16, 2014 and no later than February 15, 2014 and must contain specified information concerning, among other things, the matters to be brought
before such meeting and concerning the shareholder proposing such matters. If the date of the 2014 annual meeting is advanced by more than 30 days or delayed by more than 60 days from April 16, 2014, notice must be received by Martin
Mariettas Corporate Secretary not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by Martin Marietta.
Martin Marietta shareholders are no longer eligible to submit
proposals for inclusion in Martin Mariettas proxy statement and accompanying proxy at the 2014 annual meeting of shareholders. In order for a shareholder proposal to have been eligible under the federal proxy rules for consideration for such
inclusion, the proposal must have been received by Martin Mariettas corporate secretary on or before December 17, 2013.
Additional information regarding Martin Mariettas procedures is located in Martin Mariettas Proxy Statement on Schedule 14A filed
April 16, 2013, which is incorporated by reference into this joint proxy statement/prospectus. See Where You Can Find More Information beginning on page 140.
TXI will
hold an annual meeting in 2014 only if the merger has not already been completed. If an annual meeting is held, notice of a stockholder nomination or proposal (other than a proposal submitted for inclusion in TXIs proxy statement pursuant to
the federal proxy rules) intended to be presented at the TXI 2014 annual
meeting of stockholders must be received at the principal executive offices of TXI no earlier than June 18, 2014 and no later than the close of business on July 18, 2014. In accordance
with TXIs Bylaws, if the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from August 23, 2014, notice by a stockholder must be delivered to the TXIs principal executive offices not earlier
than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting
is first made by TXI. Proposals for inclusion in TXIs proxy statement pursuant to the federal proxy rules must be received at the principal executive offices of TXI by the close of business on April 25, 2014.
As of the date of this joint proxy statement/prospectus, neither the Martin Marietta board nor the TXI board knows of any matters that will be
presented for consideration at either the Martin Marietta special meeting or the TXI special meeting other than as described in this joint proxy statement/prospectus. If any other matters come before either of the meetings or any adjournments or
postponements of the meetings and are voted upon, the enclosed proxies will confer discretionary authority on the individuals named as proxies to vote the shares represented by the proxies as to any other matters. The individuals named as proxies
intend to vote in accordance with their best judgment as to any other matters.
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and
annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement or annual report, as applicable, addressed to those stockholders. This process, which is commonly referred to as
householding, potentially provides extra convenience for stockholders and cost savings for companies.
TXI has elected to
implement the SECs householding rules. Accordingly, only one copy of this joint proxy statement/prospectus is being delivered to TXI stockholders residing at the same address, unless such stockholders have notified TXI of their desire to
receive multiple copies of the joint proxy statement/prospectus. If you are a TXI stockholder and, at any time, you no longer wish to participate in householding and would prefer to receive a separate joint proxy statement/prospectus, or if you are
receiving multiple copies of this joint proxy statement/prospectus and wish to receive only one, please call Computershare Investor Services at (866) 641-4276 or write to Texas Industries, Inc., c/o Computershare Investor Services, P.O. Box
43006, Providence, RI 02940-3006. If you are a TXI stockholder and hold shares in street name, you may request a separate copy by calling Investor Communication Services at (800) 542-1061, or by writing to Investor Communication Services,
Householding Department, 51 Mercedes Way, Edgewood, New York 11717. For future annual or special meetings, TXI stockholders may request separate voting materials, or request that TXI send only one set of proxy materials by contacting Investor
Communication Services at the above phone number or address.
Martin Marietta has not instituted householding for shareholders of record.
However, certain brokerage firms may have instituted householding for beneficial owners of shares of Martin Marietta common stock held through brokerage firms. If your household has multiple accounts holding shares of Martin Marietta common stock,
you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of
this proxy statement promptly upon your request. Martin Marietta shareholders may decide at any time to revoke a decision to household, and thereby receive multiple copies.
Martin Marietta and TXI file annual, quarterly and special reports, proxy statements and other information with the SEC under the Exchange
Act. You may read and copy any of this information at the SECs Public
Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also maintains an
Internet website that contains reports, proxy and information statements, and other information regarding issuers, including Martin Marietta and TXI, who file electronically with the SEC. The address of that site is
www.sec.gov
.
Investors may also consult Martin Mariettas or TXIs website for more information concerning the merger described in this joint
proxy statement/prospectus. Martin Mariettas website is www.martinmarietta.com. TXIs website is www.TXI.com. Information included on either website is not incorporated by reference into this joint proxy statement/prospectus. The
information contained on the websites of Martin Marietta, TXI and the SEC (except for the filings described below) is expressly not incorporated by reference into this joint proxy statement/prospectus.
Martin Marietta has filed with the SEC a registration statement of which this joint proxy statement/prospectus forms a part. The registration
statement registers the shares of Martin Marietta common stock to be issued to TXI stockholders in connection with the merger. The registration statement, including the attached exhibits and schedules, contains additional relevant information about
Martin Marietta common stock. The rules and regulations of the SEC allow Martin Marietta and TXI to omit certain information included in the registration statement from this joint proxy statement/prospectus.
In addition, the SEC allows Martin Marietta and TXI to disclose important information to you by referring you to other documents filed
separately with the SEC. This information is considered to be a part of this joint proxy statement/prospectus, except for any information that is superseded by information included directly in this joint proxy statement/prospectus.
This joint proxy statement/prospectus incorporates by reference the documents listed below that Martin Marietta has previously filed or will
file with the SEC (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K). They contain important information about Martin Marietta, its financial condition and other matters.
In addition, Martin Marietta incorporates by reference any future filings it
makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K) after the date of this joint proxy
statement/prospectus and prior to the date of the Martin Marietta special meeting. Such documents are considered to be a part of this joint proxy statement/prospectus, effective as of the date such documents are filed. In the event of conflicting
information in these documents, the information in the latest filed document should be considered correct.
You can obtain any of the
documents listed above from the SEC, through the SECs website at the address described above or from Martin Marietta by requesting them in writing or by telephone at the following address:
These documents are available from Martin Marietta without charge, excluding any exhibits to them
unless the exhibit is specifically listed as an exhibit to the registration statement of which this joint proxy statement/prospectus forms a part.
This joint proxy statement/prospectus also incorporates by reference the documents listed below that TXI has previously filed or will file
with the SEC (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K). They contain important information about TXI, its financial condition and other matters.
In addition, TXI incorporates by reference any future filings it makes with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K) after the date of this joint proxy statement/prospectus and prior to the date
of the TXI special meeting. Such documents are considered to be a part of this joint proxy statement/prospectus, effective as of the date such documents are filed. In the event of conflicting information in these documents, the information in the
latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the SECs
website at the address described above or from TXI by requesting them in writing or by telephone at the following address:
These documents are available from TXI without charge, excluding any exhibits to them unless the exhibit is specifically listed as an exhibit
to the registration statement of which this joint proxy statement/prospectus forms a part.
If you are a shareholder of Martin Marietta or
a stockholder of TXI and would like to request documents, please do so by [ ], 2014 to receive them before the Martin Marietta
special meeting and the TXI special meeting. If you request any documents from Martin Marietta or TXI, Martin Marietta or TXI will mail them to you by first class mail, or another equally prompt means, within one business day after Martin Marietta
or TXI receives your request.
This joint proxy statement/prospectus is a prospectus of Martin Marietta and is a joint proxy statement of
Martin Marietta and TXI for the Martin Marietta special meeting and the TXI special meeting. You should rely only on the information contained or incorporated by reference in this joint proxy statement/prospectus. Neither Martin Marietta nor TXI has
authorized anyone to give any information or make any representation about the merger or Martin Marietta or TXI that is different from, or in addition to, that contained in this joint proxy statement/prospectus or in any of the materials that Martin
Marietta or TXI has incorporated by reference into this joint proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this joint proxy statement/prospectus
speaks only as of the date of this joint proxy statement/prospectus unless the information specifically indicates that another date applies. Neither our mailing of this joint proxy statement/prospectus to Martin Marietta shareholders or TXI
stockholders, nor the issuance by Martin Marietta of shares of common stock pursuant to the merger, will create any implication to the contrary.
WHEREAS the Board of Directors of the Company, the Board of Directors
of Parent, and the Board of Directors of Merger Sub have approved or adopted, as applicable, this Agreement, determined that the terms of this Agreement are in the best interests of the Company, Parent or Merger Sub, as applicable, and their
respective shareholders or stockholders, as applicable, and declared the advisability of this Agreement;
WHEREAS the Board of Directors
of the Company and the Board of Directors of Merger Sub have recommended adoption and approval of this Agreement by their respective shareholders or stockholders, as applicable;
WHEREAS simultaneously with the execution and delivery of this Agreement, Parent and certain stockholders of the Company (the
Principal Stockholders
) are entering into agreements (the
Stockholder Agreements
and, together with this Agreement, the
Transaction Agreements
) pursuant to which the Principal Stockholders
shall agree, among other things, to take specified actions in furtherance of the Merger;
WHEREAS, simultaneously with the execution and
delivery of this Agreement, Parent and the Company (or their respective affiliates) are entering in agreements relating to the lease of certain properties in Tomball, Robstown and Mont Belvieu, Texas (the
Lease Agreements
); and
WHEREAS, for U.S. Federal income Tax purposes, it is intended that (i) the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code and (ii) Parent, the Company and Merger Sub each will be a party to such reorganization within the meaning of Section 368(b) of the Code, and this Agreement is intended to be, and is
adopted as, a plan of reorganization for purposes of Sections 354, 361 and 368 of the Code.
NOW, THEREFORE, in consideration
of the foregoing and the representations, warranties, covenants and agreements herein and intending to be legally bound, the parties hereto agree as follows:
Business Day on which all such conditions shall have been satisfied or (to the extent permitted by Law) waived, or at such other place, time and date as shall be agreed in writing between the
Company and Parent. The date on which the Closing occurs is referred to in this Agreement as the
Closing Date
.
Time shall be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Company with the same rights, powers and privileges as the shares
so converted and shall constitute the only outstanding shares of capital stock of the Surviving Company. From and after the Effective Time, all certificates representing shares of Merger Sub Common Stock shall be deemed for all purposes to represent
the number of shares of common stock of the Surviving Company into which they were converted in accordance with the immediately preceding sentence.
SECTION 2.02.
Exchange of Certificates.
(a)
Exchange Agent.
Prior to the Effective Time, Parent shall appoint a bank or
trust company reasonably acceptable to the Company to act as exchange agent (the
Exchange Agent
) for the payment of the Merger Consideration. At or prior to the Effective Time, Parent shall deposit with the Exchange Agent, for the
benefit of the holders of Certificates, for exchange in accordance with this Article II through the Exchange Agent, certificates representing the shares of Parent Common Stock to be issued as Merger Consideration and cash sufficient to make payments
in lieu of fractional shares pursuant to Section 2.02(f). All such Parent Common Stock and cash deposited with the Exchange Agent is hereinafter referred to as the
Exchange Fund
.
(b)
Letter of Transmittal.
As promptly as reasonably practicable after the Effective Time, Parent shall cause the Exchange Agent to
mail to each holder of record of Company Common Stock a form of letter of transmittal (the
Letter of Transmittal
) (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions (including customary provisions with respect to delivery of an agents message with respect to shares held in
book-entry form) as Parent may specify subject to the Companys reasonable approval prior to the Effective Time), together with instructions thereto.
A-3
(c)
Merger Consideration Received in Connection with Exchange.
Upon (i) in the case
of shares of Company Common Stock represented by a Certificate, the surrender of such Certificate for cancellation to the Exchange Agent, or (ii) in the case of shares of Company Common Stock held in book-entry form, the receipt of an
agents message by the Exchange Agent, in each case together with the Letter of Transmittal, duly, completely and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such shares shall be entitled to receive in exchange therefor (A) the Merger Consideration into which such shares of Company Common Stock have been converted pursuant to Section 2.01 and (B) any
cash in lieu of fractional shares which the holder has the right to receive pursuant to Section 2.02(f) and in respect of any dividends or other distributions which the holder has the right to receive pursuant to Section 2.02(d). In the
event of a transfer of ownership of Company Common Stock which is not registered in the transfer records of the Company, a certificate representing the proper number of shares of Parent Common Stock pursuant to Section 2.01 and cash in lieu of
fractional shares which the holder has the right to receive pursuant to Section 2.02(f) and in respect of any dividends or other distributions which the holder has the right to receive pursuant to Section 2.02(d) may be issued to a
transferee if the Certificate representing such Company Common Stock (or, if such Company Common Stock is held in book-entry form, proper evidence of such transfer) is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock transfer Taxes have been paid. Until surrendered as contemplated by this Section 2.02(c), each share of Company Common Stock, and any Certificate with respect thereto,
shall be deemed at any time from and after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration which the holders of shares of Company Common Stock were entitled to receive in respect of such shares
pursuant to Section 2.01 (and cash in lieu of fractional shares pursuant to Section 2.02(f) and in respect of any dividends or other distributions pursuant to Section 2.02(d)). No interest shall be paid or shall accrue on the cash
payable upon surrender of any Certificate (or shares of Company Common Stock held in book-entry form).
(d)
Treatment of Unexchanged
Shares.
No dividends or other distributions declared or made with respect to Parent Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate (or shares of Company Common Stock held in
book-entry form) with respect to the shares of Parent Common Stock issuable upon surrender thereof, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 2.02(f), until the surrender of such
Certificate (or shares of Company Common Stock held in book-entry form) in accordance with this Article II. Subject to escheat, Tax or other applicable Law, following surrender of any such Certificate (or shares of Company Common Stock held in
book-entry form), there shall be paid to the holder of the certificate representing whole shares of Parent Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of any cash payable in lieu of
a fractional share of Parent Common Stock to which such holder is entitled pursuant to Section 2.02(f) and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(e)
No Further Ownership Rights in Company Common Stock.
The
shares of Parent Common Stock issued and cash paid in accordance with the terms of this Article II upon conversion of any shares of Company Common Stock (including any cash paid pursuant to Section 2.02(f)) shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to such shares of Company Common Stock. From and after the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Company of shares of
Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificates formerly representing shares of Company Common Stock (or shares of Company Common Stock held in book-entry form) are
presented to Parent or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II.
(f)
No
Fractional Shares.
No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the conversion of Company Common Stock pursuant to Section 2.01. Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock
A-4
converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock (after taking into account all shares of Company Common Stock
exchanged by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional amount multiplied by the last reported sale price of Parent Common Stock on the New York Stock Exchange (the
NYSE
) (as reported in
The Wall Street Journal
or, if not reported therein, in another authoritative source mutually selected by Parent and the Company) on the last complete trading day prior to the date of the Effective
Time.
(g)
Termination of Exchange Fund
. Any portion of the Exchange Fund (including any interest received with respect thereto)
that remains undistributed to the holders of Company Common Stock for 180 days after the Effective Time shall be delivered to Parent and any holder of Company Common Stock who has not theretofore complied with this Article II shall thereafter look
only to Parent for payment of its claim for Merger Consideration, any cash in lieu of fractional shares and any dividends and distributions to which such holder is entitled pursuant to this Article II, in each case without any interest thereon.
(h)
No Liability.
None of the Company, Parent, Merger Sub or the Exchange Agent shall be liable to any Person in respect of any portion
of the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Any portion of the Exchange Fund which remains undistributed to the holders of Certificates for two years after the Effective
Time (or immediately prior to such earlier date on which the Exchange Fund would otherwise escheat to, or become the property of, any Governmental Entity) shall, to the extent permitted by applicable Law, become the property of Parent, free and
clear of all claims or interest of any Person previously entitled thereto.
(i)
Investment of Exchange Fund.
The Exchange Agent
shall invest any cash in the Exchange Fund as directed by Parent. Any interest and other income resulting from such investments shall be paid to Parent.
(j)
Withholding Rights.
Each of Parent and the Exchange Agent (without duplication) shall be entitled to deduct and withhold from the
consideration otherwise payable to any holder of Company Common Stock pursuant to this Agreement any amounts required to be deducted and withheld with respect to the making of such payment under applicable Tax Law. Amounts so withheld and paid over
to the appropriate taxing authority shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of which such deduction or withholding was made.
(k)
Lost Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable and customary amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration, any cash in lieu of fractional shares and any dividends and distributions on the
Certificate deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub jointly and severally represent and warrant to the Company that the statements contained in this Article III are true
and correct except as set forth in the Parent SEC Documents filed and publicly available after January 1, 2012 and at least two Business Days prior to the date of this Agreement (the
Filed Parent SEC
Documents
)
(excluding any disclosures in the Filed Parent SEC Documents in any risk factors section, any forward looking disclosure in any section related to forward looking statements and other disclosures that are predictive or forward-looking in nature,
other than historical facts included therein) or in the
A-5
disclosure letter delivered by Parent to the Company at or before the execution and delivery by Parent and Merger Sub of this Agreement (the
Parent Disclosure Letter
). The
Parent Disclosure Letter shall be arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article III, and the disclosure in any section shall be deemed to qualify other sections in this
Article III to the extent (and only to the extent) that it is reasonably apparent that such disclosure also qualifies or applies to such other sections.
SECTION 3.01.
Organization, Standing and Power.
Each of Parent and each of Parents Subsidiaries (the
Parent
Subsidiaries
) is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized (in the case of good standing, to the extent such jurisdiction recognizes such concept), except, in the case
of the Parent Subsidiaries, where the failure to be so organized, existing or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Each of Parent and the
Parent Subsidiaries has all requisite power and authority and possesses all governmental franchises, licenses, permits, authorizations, variances, exemptions, orders, registrations, clearances and approvals (collectively,
Permits
)
necessary to enable it to own, operate, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted (the
Parent Permits
), except where the failure to have such power or authority or to
possess Parent Permits, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Each of Parent and the Parent Subsidiaries is duly qualified or licensed to do business in each
jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, has
not had and would not reasonably be expected to have a Parent Material Adverse Effect. Parent has delivered or made available to the Company, prior to execution of this Agreement, true and complete copies of (a) the restated articles of
incorporation of Parent, as amended, in effect as of the date of this Agreement (the
Parent Articles
) and the restated bylaws of Parent in effect as of the date of this Agreement (the
Parent By-laws
) and
(b) the constituent documents of Merger Sub.
SECTION 3.02.
Parent Subsidiaries.
(a) All the outstanding shares of
capital stock or voting securities of, or other equity interests in, each of the Parent Subsidiaries have been validly issued and are owned by Parent, by another Parent Subsidiary or by Parent and another Parent Subsidiary, free and clear of all
material pledges, liens, claims, charges, mortgages, deeds of trust, rights of first offer or first refusal, options, encumbrances and security interests of any kind or nature whatsoever (collectively, with covenants, conditions, restrictions,
easements, encroachments, title retention agreements or other third party rights or title defect of any kind or nature whatsoever,
Liens
), and free of any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock, voting securities or other equity interests), except for restrictions imposed by applicable securities laws. Section 3.02(a) of the Parent Disclosure Letter sets forth, as of the date of this Agreement,
a true and complete list of the Parent Subsidiaries.
(b) Except for the capital stock and voting securities of, and other equity
interests in, the Parent Subsidiaries, neither Parent nor any Parent Subsidiary owns, directly or indirectly, any capital stock or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable
for, any capital stock or voting securities of, or other equity interests in, any firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity other than ordinary course investments in
publicly traded securities constituting one percent or less of a class of outstanding securities of any entity.
SECTION 3.03.
Capital
Structure.
(a) The authorized capital stock of Parent consists of 100,000,000 shares of common stock, par value $0.01 per share (
Parent Common Stock
), and 10,000,000 shares of preferred stock, par value $0.01 per share,
(the
Parent Preferred Stock
and, together with the Parent Common Stock, the
Parent Capital Stock
). At the close of business on December 31, 2013, (i) 46,111,115 shares of Parent Common Stock were
issued and outstanding, (ii) no shares of Parent Preferred Stock were issued and outstanding and (iii) 1,929,362 shares of Parent Common Stock were reserved and available for issuance pursuant to the Parent Stock Plans, including
(A) 882,416 shares of Parent Common Stock issuable upon the
A-6
exercise of outstanding Parent Stock Options (whether or not presently exercisable), (B) 1,021,815 shares of Parent Common Stock issuable upon settlement of outstanding Parent RSUs and
(C) 25,131 shares of Parent Common Stock issuable upon settlement of outstanding incentive stock plan units of Parent (the
Parent ISPUs
). Except as set forth in this Section 3.03(a) (and other than shares of Parent
Capital Stock that may be issued pursuant to the Rights Agreement), at the close of business on December 31, 2013, no shares of capital stock or voting securities of, or other equity interests in, Parent were issued, reserved for issuance or
outstanding. From the close of business on December 31, 2013 to the date of this Agreement, there have been no issuances by Parent of shares of capital stock or voting securities of, or other equity interests in, Parent other than the issuance
of Parent Common Stock upon the exercise of Parent Stock Options or upon the vesting of Parent RSUs or Parent ISPUs, in each case, outstanding at the close of business on December 31, 2013 and in accordance with their terms in effect at such
time.
(b) All outstanding shares of Parent Capital Stock are, and, at the time of issuance, all such shares that may be issued upon the
exercise or vesting of Parent Stock Options, Parent RSUs or Parent ISPUs will be, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of the NCBCA, the Parent Articles, the Parent By-laws or any Contract to which Parent is a party or otherwise bound (other than rights granted pursuant to the Rights
Agreement). The shares of Parent Common Stock constituting the Merger Consideration will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any purchase option, call option,
right of first refusal, preemptive right, subscription right or any similar right under any provision of the NCBCA, the Parent Articles, the Parent By-laws or any Contract to which Parent is a party or otherwise bound (other than rights granted
pursuant to the Rights Agreement). Except as set forth above in this Section 3.03 (and other than obligations under the Rights Agreement), pursuant to the Parent Deferral Plans as in effect as of the date of this Agreement or pursuant to the
terms of this Agreement, there are no issued, reserved for issuance or outstanding, and there are no outstanding obligations of Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, (x) any capital
stock of Parent or any Parent Subsidiary or any securities of Parent or any Parent Subsidiary convertible into or exchangeable or exercisable for shares of capital stock or voting securities of, or other equity interests in, Parent or any Parent
Subsidiary, (y) any warrants, calls, options or other rights to acquire from Parent or any Parent Subsidiary, or any other obligation of Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, any
capital stock or voting securities of, or other equity interests in, Parent or any Parent Subsidiary, or (z) any rights issued by or other obligations of Parent or any Parent Subsidiary that are linked in any way to the price of any class of
Parent Capital Stock or any shares of capital stock of any Parent Subsidiary, the value of Parent, any Parent Subsidiary or any part of Parent or any Parent Subsidiary or any dividends or other distributions declared or paid on any shares of capital
stock of Parent or any Parent Subsidiary. Other than (1) the acquisition by Parent of shares of Parent Common Stock in connection with the surrender of shares of Parent Common Stock by holders of Parent Stock Options in order to pay the
exercise price thereof, (2) the withholding of shares of Parent Common Stock to satisfy tax obligations with respect to awards granted pursuant to the Parent Stock Plans, (3) the acquisition by Parent of awards granted pursuant to the
Parent Stock Plans in connection with the forfeiture of such awards and (4) obligations under the Rights Agreement, there are not any outstanding obligations of Parent or any of the Parent Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock or voting securities or other equity interests of Parent or any Parent Subsidiary or any securities, interests, warrants, calls, options or other rights referred to in clause (x), (y) or (z) of the immediately
preceding sentence. There are no bonds, debentures, notes or other Indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Parent may
vote (collectively,
Parent Voting Debt
). Neither Parent nor any of the Parent Subsidiaries is a party to any voting agreement with respect to the voting of any capital stock or voting securities of, or other equity interests in,
Parent. Neither Parent nor any of the Parent Subsidiaries is a party to any agreement pursuant to which any Person is entitled to elect, designate or nominate any director of Parent or any of the Parent Subsidiaries.
(c) As of the date hereof, neither Parent nor any Parent Subsidiary owns any shares of Company Common Stock.
A-7
SECTION 3.04.
Authority; Execution and Delivery; Enforceability.
(a) Each of Parent
and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Merger and the other transactions contemplated by this Agreement, subject, in the case
of the Share Issuance, to the receipt of the Parent Shareholder Approval and, in the case of the Merger, to the approval of this Agreement by Parent as the sole shareholder of Merger Sub. The Board of Directors of Parent (the
Parent
Board
) has unanimously adopted resolutions (i) determining that the terms of the Merger and the other transactions contemplated by this Agreement are advisable and in the best interests of Parent and its shareholders,
(ii) approving this Agreement, the Merger and the other transactions contemplated by this Agreement and (iii) recommending that Parents shareholders approve the Share Issuance (the
Parent Recommendation
) and
directing that the Share Issuance be submitted to Parents shareholders for approval at a duly held meeting of such shareholders for such purpose (the
Parent Shareholders Meeting
). As of the date of this Agreement, such
resolutions have not been amended or withdrawn. The Board of Directors of Merger Sub has adopted resolutions (A) determining that the terms of the Merger and the other transactions contemplated by this Agreement are advisable and in the best
interests of Merger Sub and Parent, as its sole shareholder, (B) approving this Agreement, the Merger and the other transactions contemplated by this Agreement and (C) recommending that Parent, as sole shareholder of Merger Sub, approve
this Agreement and directing that this Agreement be submitted to Parent, as sole shareholder of Merger Sub, for approval. As of the date of this Agreement, such resolutions have not been amended or withdrawn. Except (x) solely in the case of
the Share Issuance, for the approval of the Share Issuance by the affirmative vote of the holders of a majority of the voting power of the shares of Parent Common Stock and Parent Preferred Stock represented in person or by proxy at the Parent
Shareholders Meeting, as required by Section 312.03(c) of the NYSE Listed Company Manual (the
Parent Shareholder Approval
), and (y) solely in the case of the Merger, for the approval of this Agreement by Parent as the
sole shareholder of Merger Sub, no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize, adopt or approve, as applicable, this Agreement or to consummate the Transactions (except for the filing of the
appropriate merger documents as required by the DGCL and the NCBCA). Each of Parent and Merger Sub has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the Company, this Agreement constitutes
its legal, valid and binding obligation, enforceable against it in accordance with its terms except, in each case, as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors rights generally and
by general principles of equity.
(b) No fair price, moratorium, control share acquisition or other
similar antitakeover statute or similar statute or regulation applies to Parent or Merger Sub with respect to the Transaction Agreements or the Transactions.
SECTION 3.05.
No Conflicts; Consents.
(a) The execution and delivery by each of Parent and Merger Sub of this Agreement does not,
and the performance by each of Parent and Merger Sub of its obligations hereunder and the consummation of the Merger and the other transactions contemplated by this Agreement will not, (i) conflict with, or result in any violation of any
provision of, the Parent Articles, the Parent By-laws or the comparable charter or organizational documents of any Parent Subsidiary (assuming that the Parent Shareholder Approval is obtained), (ii) conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, any obligation to make an offer to purchase or redeem any Indebtedness or capital stock or
any loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Parent or any Parent Subsidiary under, any provision of any contract, lease, license, indenture, note, bond, agreement, concession,
franchise or other instrument (each, excluding any Parent Benefit Plan or Company Benefit Plan, a
Contract
) to which Parent or any Parent Subsidiary is a party or by which any of their respective properties or assets is bound or
any Parent Permit or (iii) conflict with, or result in any violation of any provision of, subject to the filings and other matters referred to in Section 3.05(b), any judgment, order or decree (
Judgment
) or statute, law
(including common law), ordinance, rule or regulation (
Law
), in each case, applicable to Parent or any Parent Subsidiary or their respective properties or assets (assuming that the Parent Shareholder Approval is obtained), other
than, in the case of clauses (ii) and (iii) above, any matters that, individually or in the aggregate, have not
A-8
had and would not reasonably be expected to have a Parent Material Adverse Effect (it being agreed that for purposes of this Section 3.05(a), effects resulting from or arising in connection
with the execution and delivery of this Agreement, as set forth in clause (iv) of the definition of the term Material Adverse Effect, shall not be excluded in determining whether a Parent Material Adverse Effect has occurred or
would reasonably be expected to occur) and would not prevent or materially impede, interfere with, hinder or delay the consummation of the Merger.
(b) No consent, approval, clearance, waiver, Permit or order (
Consent
) of or from, or registration, declaration, notice or
filing made to or with any federal, national, state, provincial or local, whether domestic or foreign, government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, whether
domestic, foreign or supranational (a
Governmental Entity
), is required to be obtained or made by or with respect to Parent or any Parent Subsidiary in connection with the execution and delivery of this Agreement or its
performance of its obligations hereunder or the consummation of the Transactions, other than (i) (A) the filing with the Securities and Exchange Commission (the
SEC
) of the Joint Proxy Statement in definitive form,
(B) the filing with the SEC, and declaration of effectiveness under the Securities Act of 1933, as amended (the
Securities Act
), of the registration statement on Form
S-4
in connection
with the issuance by Parent of the Merger Consideration, in which the Joint Proxy Statement will be included as a prospectus (the
Form
S-4
), and (C) the filing with the SEC of such
reports and other filings under, and such other compliance with, the Securities Exchange Act of 1934, as amended (the
Exchange Act
), and the Securities Act, and the rules and regulations thereunder, as may be required in
connection with this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the
HSR Act
), (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, the filing of the Articles of Merger with the Secretary of State of the State of North
Carolina and the filing of appropriate documents with the relevant authorities of the other jurisdictions in which Parent and the Company are qualified to do business, (iv) such Consents, registrations, declarations, notices or filings as are
required to be made or obtained under the securities or blue sky laws of various states in connection with the issuance of the shares of Parent Common Stock as Merger Consideration, (v) such filings with and approvals of the NYSE as
are required to permit the consummation of the Merger and the listing of the shares of Parent Common Stock to be issued as Merger Consideration and (vi) such other matters that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Parent Material Adverse Effect (it being agreed that for purposes of this Section 3.05(b), effects resulting from or arising in connection with the execution and delivery of this Agreement, as set forth in
clause (iv) of the definition of the term Material Adverse Effect, shall not be excluded in determining whether a Parent Material Adverse Effect has occurred or would reasonably be expected to occur) and would not prevent or
materially impede, interfere with, hinder or delay the consummation of the Merger.
SECTION 3.06.
SEC Documents; Undisclosed
Liabilities.
(a) Parent has furnished or filed all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be furnished or filed by Parent with the SEC since
January 1, 2012 (such documents, together with any documents filed with the SEC during such period by Parent on a voluntary basis on a Current Report on Form 8-K, but excluding the Joint Proxy Statement and the Form
S-4,
being collectively referred to as the
Parent SEC Documents
).
(b) Each Parent
SEC Document (i) at the time filed, complied in all material respects with the requirements of the Sarbanes-Oxley Act of 2002 (
SOX
) and the Exchange Act or the Securities Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC Document and (ii) did not at the time it was filed (or if amended or superseded by a filing or amendment prior to the date of this Agreement, then at the time of such filing or
amendment) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Each of the consolidated financial statements of Parent included in the Parent SEC Documents complied at the time it was
A-9
filed as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, was prepared in accordance with United
States generally accepted accounting principles (
GAAP
) (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly presented in all material respects the consolidated financial position of Parent and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods
shown (subject, in the case of unaudited statements, to normal year-end audit adjustments).
(c) Except (i) as reflected or reserved
against in Parents consolidated audited balance sheet as of December 31, 2012 (or the notes thereto) as included in the Filed Parent SEC Documents, (ii) for liabilities and obligations incurred since December 31, 2012 in the
ordinary course of business and (iii) for liabilities and obligations incurred as permitted by this Agreement, neither Parent nor any Parent Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that, individually or in the aggregate, have had or would reasonably be expected to have a Parent Material Adverse Effect.
(d)
Each of the chief executive officer of Parent and the chief financial officer of Parent (or each former chief executive officer of Parent and each former chief financial officer of Parent, as applicable) has made all applicable certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Parent SEC Documents, and the statements contained in such certifications are true and accurate. For purposes of this Agreement, chief
executive officer and chief financial officer shall have the meanings given to such terms in SOX. None of Parent or any of the Parent Subsidiaries has outstanding, or has arranged any outstanding, extensions of credit
to directors or executive officers within the meaning of Section 402 of SOX.
(e) Parent maintains a system of internal control
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurance (A) that transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP, consistently applied, (B) that transactions are executed only in accordance with the authorization of management and (C) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of
Parents properties or assets.
(f) The disclosure controls and procedures (as defined in Rules
13a-15(e)
and 15d-15(e) of the Exchange Act) utilized by Parent are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by Parent in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information required to be disclosed is accumulated and communicated to the
management of Parent, as appropriate, to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of Parent to make the certifications required under the Exchange Act with respect to
such reports.
(g) Neither Parent nor any of the Parent Subsidiaries is a party to, or has any commitment to become a party to, any joint
venture, off-balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among Parent and any of the Parent Subsidiaries, on the one hand, and any unconsolidated
Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any off-balance sheet arrangements (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where
the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, Parent or any of the Parent Subsidiaries in Parents or such Parent Subsidiarys published
financial statements or other Parent SEC Documents.
(h) Since December 31, 2012, none of Parent, Parents independent
accountants, the Parent Board or the audit committee of the Parent Board has received any oral or written notification of any (x) significant
A-10
deficiency in the internal controls over financial reporting of Parent, (y) material weakness in the internal controls over financial reporting of Parent or (z) fraud,
whether or not material, that involves management or other employees of Parent who have a significant role in the internal controls over financial reporting of Parent. For purposes of this Agreement, the terms significant deficiency and
material weakness shall have the meanings assigned to them in Auditing Standard No. 5 of the Public Company Accounting Oversight Board, as in effect on the date of this Agreement.
(i) None of the Parent Subsidiaries is, or has at any time since January 1, 2012 been, subject to the reporting requirements of
Section 13(a) or 15(d) of the Exchange Act.
SECTION 3.07.
Information Supplied.
None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 or any amendment or supplement thereto is declared effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Joint Proxy Statement will, at the date it is first mailed to each of Parents shareholders and
the Companys stockholders or at the time of each of the Parent Shareholders Meeting and the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Joint Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation is made by Parent or Merger Sub with respect to statements made or incorporated by reference therein based on information supplied by the Company for inclusion or incorporation by
reference therein.
SECTION 3.08.
Absence of Certain Changes or Events.
From December 31, 2012 to the date of this Agreement,
there has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect. From December 31, 2012 to the date of
this Agreement, Parent and the Parent Subsidiaries have conducted the business of Parent and the Parent Subsidiaries in the ordinary course in all material respects.
SECTION 3.09.
Taxes.
Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, each of Parent and each Parent Subsidiary (a) has duly and timely filed, or caused to be filed, taking into account any extensions, all Tax Returns required to have been filed by it and such Tax Returns are true, correct and complete
and (b) has duly and timely paid all Taxes required to have been paid by it (including any Taxes required to be withheld from amounts owing to any employee, creditor, stockholder or other third party), except in each case of clauses
(a) and (b), with respect to matters contested in good faith in appropriate proceedings and for which adequate reserves have been established in accordance with GAAP in the Parent SEC Documents.
SECTION 3.10.
Intended Tax Treatment.
Neither Parent nor any Parent Subsidiary (including Merger Sub) has taken or agreed to take any
action or knows of the existence of any fact that is reasonably likely to prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
SECTION 3.11.
Litigation.
There is no, and since January 1, 2012 there has been no, suit, action or other proceeding pending or,
to the Knowledge of Parent, threatened against Parent or any Parent Subsidiary or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.
There is no, and since January 1, 2012 there has been no, Judgment outstanding against or, to the Knowledge of Parent, investigation by any Governmental Entity involving Parent or any Parent Subsidiary or any of their respective properties or
assets that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.
A-11
SECTION 3.12.
Compliance with Applicable Laws.
Except for matters that, individually or in
the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect, Parent and the Parent Subsidiaries are, and since January 1, 2012 have been, in compliance with all applicable Laws and Parent Permits.
Except for matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect, there is no, and since January 1, 2012, there has been no, action, demand or investigation by
or before any Governmental Entity pending or, to the Knowledge of Parent, threatened alleging that Parent or a Parent Subsidiary is not in compliance with any applicable Law or Parent Permit or which challenges or questions the validity of any
rights of the holder of any Parent Permit. To the Knowledge of Parent, Parent is, and since January 1, 2012, has been, in compliance with the Foreign Corrupt Practices Act of 1977, as amended (the
FCPA
) and any rules and
regulations thereunder, other than as has not had and would not reasonably be expected to have a Parent Material Adverse Effect. This section does not relate to Tax matters or environmental matters, which are the subjects of Sections 3.09 and 3.13,
respectively.
SECTION 3.13.
Environmental Matters.
Except for matters that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Parent Material Adverse Effect:
(a) Parent and the Parent Subsidiaries are and, since
January 1, 2010, have been, in compliance with all Environmental Laws, and neither Parent nor any Parent Subsidiary has received any (i) written communication from a Governmental Entity or other Person that alleges that Parent or any
Parent Subsidiary is in violation of, or has liability under, any Environmental Law or any Permit issued pursuant to Environmental Law or (ii) written request for information pursuant to any Environmental Law that is outstanding or unresolved
(including any such request relating to the new source review, NESHAPs or other requirements under the Clean Air Act) that would form the basis of any violation or liability under Environmental Law;
(b) Parent and Parent Subsidiaries have obtained and are and, since January 1, 2010, have been, in compliance with all Permits required
pursuant to any Environmental Law for the operations (as currently conducted) of Parent, the Parent Subsidiaries and the real property owned or leased by Parent and the Parent Subsidiaries and all such Permits are valid and in good standing and will
not be subject to modification or revocation as a result of the transactions contemplated by this Agreement;
(c) to the Knowledge of
Parent and the Parent Subsidiaries, maintaining or achieving compliance with applicable Environmental Laws, including any requirement to install, upgrade or replace pollution control equipment, meet emission standards or otherwise comply with the
Clean Air Act, to surrender or acquire emission allowances or credits or otherwise comply with AB 32, or to reclaim or restore any mined real properties, will not require Parent or the Parent Subsidiaries to incur costs beyond those reflected or
reserved against in Parents consolidated audited balance sheet as of December 31, 2012 (or the notes thereto) as included in the Filed Parent SEC Documents;
(d) there are no Environmental Claims pending or, to the Knowledge of Parent, threatened against Parent or any of the Parent Subsidiaries;
(e) there has been no Release of, or exposure to, any Hazardous Material that would reasonably be expected to form the basis of any
Environmental Claim against Parent or any of the Parent Subsidiaries or against any Person whose liabilities for such Environmental Claim Parent or any of Parent Subsidiaries has, or may have, retained or assumed, either contractually or by
operation of Law;
(f) neither Parent nor any of the Parent Subsidiaries has retained or assumed, either contractually or by operation of
Law, any liabilities or obligations (including any reclamation obligations) that would reasonably be expected to form the basis of any Environmental Claim against Parent or any of the Parent Subsidiaries; and
(g) with respect to the real properties owned, leased or mined by Parent or any Parent Subsidiary, there are and have been no significant and
substantial mining safety or health hazards or pattern of violations, as
A-12
regulated or defined under the MSHA, or similar safety or health hazards at any such property arising under the OSHA or any other federal, state or local Law similar to MSHA or OSHA, which would
reasonably be expected to result in Parent or any Parent Subsidiary incurring any liability or require Parent or any Parent Subsidiary to cease operations at such property.
SECTION 3.14.
Brokers Fees and Expenses.
No broker, investment banker, financial advisor or other Person, other than Barclays
Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC (the
Parent Financial Advisors
), the fees and expenses of which will be paid by Parent, is entitled to any brokers, finders, financial
advisors or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent.
SECTION 3.15.
Opinions of Financial Advisors.
The Parent Board has received an opinion from each of the Parent Financial Advisors to
the effect that, as of the date of each such opinion, and subject to the assumptions, limitations, qualifications and conditions set forth therein, the Exchange Ratio in the Merger was fair, from a financial point of view, to Parent. Promptly after
the execution of this Agreement, Parent will furnish the Company, solely for informational purposes, true and complete copies of the written opinions of the Parent Financial Advisors.
SECTION 3.16.
Merger Sub.
Parent is the sole shareholder of Merger Sub. Since its date of incorporation, Merger Sub has not carried on
any business or conducted any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.
SECTION 3.17.
No Other Representations or Warranties.
Except for the representations and warranties contained in Article IV, Parent
acknowledges that none of the Company, the Company Subsidiaries or any other Person on behalf of the Company makes any other express or implied representation or warranty whatsoever, and specifically (but without limiting the generality of the
foregoing) that none of the Company, the Company Subsidiaries or any other Person on behalf of the Company makes any representation or warranty with respect to: (i) any projections, estimates or budgets delivered or made available to Parent or
any of its affiliates or Representatives of future revenues, results of operations (or any component thereof), cash flows or financial condition (or any component thereof) of the Company and the Company Subsidiaries or (ii) the future business
and operations of the Company and the Company Subsidiaries, including in the case of (i) and (ii) with respect to any information, documents, projections, forecasts or other material made available to Parent or its affiliates and
Representatives in certain data rooms or management presentations in expectation of the transactions contemplated by this Agreement, and Parent has not relied on any such information or any representation or warranty not set forth in
Article IV.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Merger Sub that the statements contained in this Article IV are true and correct except as
set forth in the Company SEC Documents filed and publicly available after January 1, 2012 and at least two Business Days prior to the date of this Agreement (the
Filed Company SEC
Documents
) (excluding any disclosures
in the Filed Company SEC Documents in any risk factors section, any forward looking disclosure in any section related to forward looking statements and other disclosures that are predictive or forward-looking in nature, other than historical facts
included therein) or in the disclosure letter delivered by the Company to Parent at or before the execution and delivery by the Company of this Agreement (the
Company Disclosure Letter
). The Company Disclosure Letter shall be
arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article IV, and the disclosure in any section shall be deemed to qualify other sections in this Article IV to the extent (and only to
the extent) that it is reasonably apparent that such disclosure also qualifies or applies to such other sections.
A-13
SECTION 4.01.
Organization, Standing and Power.
Each of the Company and each of the
Companys Subsidiaries (the
Company Subsidiaries
) is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized (in the case of good standing, to the extent such
jurisdiction recognizes such concept), except, in the case of the Company Subsidiaries, where the failure to be so organized, existing or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect. Each of the Company and the Company Subsidiaries has all requisite power and authority and possesses all Permits necessary to enable it to own, operate, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted (the
Company Permits
), except where the failure to have such power or authority or to possess the Company Permits, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect. Each of the Company and the Company Subsidiaries is duly qualified or licensed to do business in each jurisdiction where the nature of its business or the ownership or leasing of its
properties make such qualification necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse
Effect. The Company has delivered or made available to Parent, prior to execution of this Agreement, true and complete copies of the certificate of incorporation of the Company in effect as of the date of this Agreement (the
Company
Charter
) and the by-laws of the Company in effect as of the date of this Agreement (the
Company By-laws
).
SECTION 4.02.
Company Subsidiaries.
(a) All the outstanding shares of capital stock or voting securities of, or other equity
interests in, each of the Company Subsidiaries have been validly issued and are owned by the Company, by another Company Subsidiary or by the Company and another Company Subsidiary, free and clear of all material Liens, and free of any other
restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock, voting securities or other equity interests), except for restrictions imposed by applicable securities laws. Section 4.02(a) of the
Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of the Company Subsidiaries.
(b) Except
for the capital stock and voting securities of, and other equity interests in, the Company Subsidiaries, neither the Company nor any Company Subsidiary owns, directly or indirectly, any capital stock or voting securities of, or other equity
interests in, or any interest convertible into or exchangeable or exercisable for, any capital stock or voting securities of, or other equity interests in, any firm, corporation, partnership, company, limited liability company, trust, joint venture,
association or other entity other than ordinary course investments in publicly traded securities constituting one percent or less of a class of outstanding securities of any entity.
SECTION 4.03.
Capital Structure.
(a) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common
Stock and 100,000 shares of cumulative preferred stock, without par value (the
Company Preferred Stock
and together with Company Common Stock, the
Company Capital Stock
). At the close of business on
December 31, 2013, (i) 28,622,741 shares of Company Common Stock were issued and outstanding, (ii) no shares of Company Preferred Stock and no Company Restricted Shares were issued and outstanding, (iii) no shares of Company
Common Stock were held by the Company in its treasury and (iv) 4,141,504 shares of Company Common Stock were reserved and available for issuance pursuant to the Company Stock Plans, including (A) 1,466,841 shares of Company Common Stock
issuable upon the exercise of outstanding Company Stock Options (whether or not presently exercisable), (B) 133,315 shares of Company Common Stock issuable pursuant to outstanding Company SARs and (C) 177,464 shares of Company Common Stock
issuable upon settlement of outstanding Company RSUs. Except as set forth in this Section 4.03(a), at the close of business on December 31, 2013, no shares of capital stock or voting securities of, or other equity interests in, the Company
were issued, reserved for issuance or outstanding. From the close of business on December 31, 2013 to the date of this Agreement, there have been no issuances by the Company of shares of capital stock or voting securities of, or other equity
interests in, the Company, other than the issuance of Company Common Stock upon the exercise of the Company Stock Options or upon the vesting of Company RSUs, in each case, outstanding at the close of business on December 31, 2013 and in
accordance with their terms in effect at such time.
A-14
(b) All outstanding shares of Company Capital Stock are, and, at the time of issuance, all such
shares that may be issued upon the exercise or vesting of the Company Stock Options, Company SARs or Company RSUs will be, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any purchase
option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company Charter, the Company By-laws or any Contract to which the Company is a party or otherwise bound.
Except as set forth above in this Section 4.03 or pursuant to the Company Deferral Plans as in effect as of the date of this Agreement, there are no issued, reserved for issuance or outstanding, and there are no outstanding obligations of the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, (x) any capital stock of the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or voting securities of, or other equity interests in, the Company or any Company Subsidiary, (y) any warrants, calls, options or other rights to acquire from the Company or any Company
Subsidiary, or any other obligation of the Company or any Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, any capital stock or voting securities of, or other equity interests in, the Company or any Company
Subsidiary or (z) any rights issued by or other obligations of the Company or any Company Subsidiary that are linked in any way to the price of any class of the Company Capital Stock or any shares of capital stock of any Company Subsidiary, the
value of the Company, any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of the Company or any Company Subsidiary. Other than
(1) the acquisition by the Company of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price thereof, (2) the withholding of
shares of Company Common Stock to satisfy tax obligations with respect to awards granted pursuant to the Company Stock Plans and (3) the acquisition by the Company of awards granted pursuant to the Company Stock Plans in connection with the
forfeiture of such awards, there are not any outstanding obligations of the Company or any of the Company Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or voting securities or other equity interests of the
Company or any Company Subsidiary or any securities, interests, warrants, calls, options or other rights referred to in clause (x), (y) or (z) of the immediately preceding sentence. There are no bonds, debentures, notes or other
Indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote (collectively,
Company Voting Debt
).
Neither the Company nor any of the Company Subsidiaries is a party to any voting agreement with respect to the voting of any capital stock or voting securities of, or other equity interests in, the Company. Neither the Company nor any of the Company
Subsidiaries is a party to any agreement pursuant to which any Person is entitled to elect, designate or nominate any director of the Company or any of the Company Subsidiaries.
(c) No subsidiary of the Company owns any shares of Company Common Stock.
SECTION 4.04.
Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the Merger and the other transactions contemplated by this Agreement, subject, in the case of the Merger, to the receipt of the Company Stockholder Approval. The Board of Directors of the Company (the
Company
Board
) has adopted resolutions, by unanimous vote at a meeting duly called at which a quorum of directors of the Company was present, (i) approving the execution, delivery and performance of this Agreement and the transactions
contemplated hereby, including the Merger, (ii) determining that entering into this Agreement is in the best interests of the Company and its stockholders, (iii) declaring this Agreement advisable and (iv) recommending that the
Companys stockholders adopt this Agreement (the
Company Recommendation
) and directing that this Agreement be submitted to the Companys stockholders for adoption at a duly held meeting of such stockholders for such
purpose (the
Company Stockholders Meeting
). As of the date of this Agreement, such resolutions have not been amended or withdrawn. Except for the adoption of this Agreement by the stockholders of the Company in accordance with the
Companys Charter and the DGCL (the
Company Stockholder Approval
), no
A-15
other corporate proceedings on the part of the Company are necessary to authorize, adopt or approve, as applicable, the Transaction Agreements or to consummate the Transactions (except for the
filing of the appropriate merger documents as required by the DGCL and NCBCA). The Company has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by Parent and Merger Sub, this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except, in each case, as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors rights
generally and by general principles of equity.
(b) (i) The Company Board has adopted such resolutions as are necessary to render
inapplicable to the Transaction Agreements and the Transactions the restrictions on business combinations (as defined in Section 203 of the DGCL) as set forth in Section 203 of the DGCL and (ii) no other fair
price, moratorium, control share acquisition or other similar antitakeover statute or similar statute or regulation applies to the Company with respect to the Transaction Agreements or the Transactions.
SECTION 4.05.
No Conflicts; Consents.
(a) The execution and delivery by the Company of this Agreement does not, and the
performance by it of its obligations hereunder and the consummation of the Merger and the other transactions contemplated by this Agreement will not, (i) conflict with, or result in any violation of any provision of, the Company Charter, the
Company By-laws or the comparable charter or organizational documents of any Company Subsidiary (assuming that the Company Stockholder Approval is obtained), (ii) conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, any obligation to make an offer to purchase or redeem any Indebtedness or capital stock or any loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or assets of the Company or any Company Subsidiary under, any provision of any Contract to which the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound or any Company Permit or (iii) conflict with, or result in any violation of any provision of, subject to the filings and other matters referred to in Section 4.05(b), any Judgment or Law, in each
case, applicable to the Company or any Company Subsidiary or their respective properties or assets (assuming that the Company Stockholder Approval is obtained), other than, in the case of clauses (ii) and (iii) above, any matters that,
individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect (it being agreed that for purposes of this Section 4.05(a), effects resulting from or arising in connection with the
execution and delivery of this Agreement, as set forth in clause (iv) of the definition of the term Material Adverse Effect, shall not be excluded in determining whether a Company Material Adverse Effect has occurred or would
reasonably be expected to occur) and would not prevent or materially impede, interfere with, hinder or delay the consummation of the Merger.
(b) No Consent of or from, or registration, declaration, notice or filing made to or with any Governmental Entity is required to be obtained
or made by or with respect to the Company or any Company Subsidiary in connection with the execution and delivery of this Agreement or its performance of its obligations hereunder or the consummation of the Transactions, other than
(i) (A) the filing with the SEC of the Joint Proxy Statement in definitive form, the filing with the SEC, and the declaration of effectiveness under the Securities Act, of the Form
S-4
and
(B) the filing with the SEC of such reports and other filings under, and such other compliance with, the Exchange Act and the Securities Act, and the rules and regulations thereunder, as may be required in connection with the Transaction
Agreements or the Transactions, (ii) compliance with and filings under the HSR Act, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, the filing of the Articles of Merger with the Secretary
of State of the State of North Carolina and the filing of appropriate documents with the relevant authorities of the other jurisdictions in which Parent and the Company are qualified to do business, (iv) such Consents, registrations,
declarations, notices or filings as are required to be made or obtained under the securities or blue sky laws of various states in connection with the issuance of the shares of Parent Common Stock to be issued as Merger Consideration,
(v) such filings with and approvals of the NYSE as are required to permit the consummation of the Merger and the listing of the shares of Parent Common Stock to be issued as Merger Consideration and (vi) such other matters that,
individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect
A-16
(it being agreed that for purposes of this Section 4.05(b), effects resulting from or arising in connection with the execution and delivery of this Agreement, as set forth in clause
(iv) of the definition of the term Material Adverse Effect, shall not be excluded in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur) and would not prevent or materially
impede, interfere with, hinder or delay the consummation of the Merger.
SECTION 4.06.
SEC Documents; Undisclosed Liabilities.
(a) The Company has furnished or filed all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be furnished or filed by the Company with the SEC since
January 1, 2012 (such documents, together with any documents filed with the SEC during such period by the Company on a voluntary basis on a Current Report on Form 8-K, but excluding the Joint Proxy Statement and the Form
S-4,
being collectively referred to as the
Company SEC Documents
).
(b) Each Company
SEC Document (i) at the time filed, complied in all material respects with the requirements of SOX and the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document and (ii) did not at the time it was filed (or if amended or superseded by a filing or amendment prior to the date of this Agreement, then at the time of such filing or amendment) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the consolidated financial
statements of the Company included in the Company SEC Documents complied at the time it was filed as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto,
was prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented
in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(c) Except (i) as reflected or reserved against in the Companys
consolidated audited balance sheet as of May 31, 2013 (or the notes thereto) as included in the Filed Company SEC Documents, (ii) for liabilities and obligations incurred since May 31, 2013 in the ordinary course of business and
(iii) for liabilities and obligations incurred as permitted by this Agreement, neither the Company nor any Company Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that,
individually or in the aggregate, have had or would reasonably be expected to have a Company Material Adverse Effect.
(d) Each of the
chief executive officer of the Company and the chief financial officer of the Company (or each former chief executive officer of the Company and each former chief financial officer of the Company, as applicable) has made all applicable
certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Company SEC Documents, and the statements contained in such certifications are true and accurate. None of the Company or any
of the Company Subsidiaries has outstanding, or has arranged any outstanding, extensions of credit to directors or executive officers within the meaning of Section 402 of SOX.
(e) The Company maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) sufficient to provide reasonable assurance (A) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, consistently applied, (B) that transactions are executed
only in accordance with the authorization of management and (C) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Companys properties or assets.
(f) The disclosure controls and procedures (as defined in Rules
13a-15(e)
and 15d-15(e) of
the Exchange Act) utilized by the Company are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the
A-17
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information required to be disclosed is
accumulated and communicated to the management of the Company, as appropriate, to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of the Company to make the certifications
required under the Exchange Act with respect to such reports.
(g) Neither the Company nor any of the Company Subsidiaries is a party to,
or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or among the Company and any of the
Company Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any off-balance sheet arrangements (as defined in
Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of the Company
Subsidiaries in the Companys or such Company Subsidiarys published financial statements or other the Company SEC Documents.
(h) Since May 31, 2013, none of the Company, the Companys independent accountants, the Company Board or the audit committee of the
Company Board has received any oral or written notification of any (x) significant deficiency in the internal controls over financial reporting of the Company, (y) material weakness in the internal controls over
financial reporting of the Company or (z) fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the internal controls over financial reporting of the Company.
(i) None of the Company Subsidiaries is, or has at any time since January 1, 2012 been, subject to the reporting requirements of
Section 13(a) or 15(d) of the Exchange Act.
SECTION 4.07.
Information Supplied.
None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the Form S-4 will, at the time the Form S-4 or any amendment or supplement thereto is declared effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Joint Proxy Statement will, at the date it is first mailed to each of Parents
shareholders and the Companys stockholders or at the time of each of the Parent Shareholders Meeting and the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Joint Proxy Statement will comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder, except that no representation is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Merger Sub for inclusion or
incorporation by reference therein.
SECTION 4.08.
Absence of Certain Changes or Events.
From May 31, 2013 to the date of this
Agreement, there has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect. From May 31, 2013 to the
date of this Agreement, the Company and the Company Subsidiaries have conducted the business of the Company and the Company Subsidiaries in the ordinary course in all material respects.
SECTION 4.09.
Taxes.
(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:
(i) Each of the Company and each Company Subsidiary (A) has duly and timely filed, or caused to be filed, taking into
account any extensions, all Tax Returns required to have been filed by it and such Tax Returns are true, correct and complete, and (B) has duly and timely paid all Taxes required to have been
A-18
paid by it (including any Taxes required to be withheld from amounts owing to any employee, creditor, stockholder or other third party) except, in each case of clauses (A) and (B), with
respect to matters contested in good faith in appropriate proceedings and for which adequate reserves have been established in accordance with GAAP in the Company SEC Documents.
(ii) To the Knowledge of the Company, no claim has been made in the past three years by a Governmental Entity in a jurisdiction
where the Company or any Company Subsidiary does not file Tax Returns that the Company or any Company Subsidiary is or may be subject to Taxes in such jurisdiction.
(iii) Neither the Company nor any Company Subsidiary has received any written notice of any audit, judicial proceeding or other
examination against or with respect to the Company or any Company Subsidiary with respect to Taxes. As of the date of this Agreement, there are no pending requests for waivers of time to assess any Tax.
(iv) Neither the Company nor any Company Subsidiary has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to the assessment or collection of any Taxes, which waiver or extension is currently in effect (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business).
(v) There are no liens or other security interests upon any property or assets of the Company or any Company Subsidiary for
Taxes, except for liens for Taxes (A) not yet due and payable or (B) being contested in good faith and for which adequate reserves have been established in accordance with GAAP in the Company SEC Documents.
(vi) Neither the Company nor any Company Subsidiary is a party to or is bound by any Tax sharing, allocation or indemnification
agreement (other than (A) any such agreement exclusively between or among the Company and/or wholly owned Company Subsidiaries and (B) (1) any lease or financing arrangement or (2) any other agreement (a) the primary purpose
of which is not the allocation or payment of Tax liability and (b) that was entered into in the ordinary course of business). Neither the Company nor any Company Subsidiary is or may be liable under Treasury Regulation section 1.1502-6 (or any
similar provision of the Tax Laws of any state, local or foreign jurisdiction) for Taxes of any person other than the Company and the Company Subsidiaries.
(vii) Within the past two years, neither the Company nor any Company Subsidiary has been a distributing corporation
or a controlled corporation in a distribution intended to qualify for tax-free treatment under Section 355 of the Code.
(viii) Neither the Company nor any Company Subsidiary has been a party to a transaction that, as of the date of this Agreement,
constitutes a listed transaction for purposes of Section 6011 of the Code and applicable Treasury Regulations thereunder (or a similar provision of state law).
(b) The Company had Federal net operating loss carryforwards of at least $409 million as of May 31, 2013. As of immediately prior to the
Effective Time, such net operating loss carryforwards will not be subject to limitation under Section 382 of the Code or any similar provision of applicable Tax Law (not taking into account the effect, if any, of this Agreement).
SECTION 4.10.
Intended Tax Treatment.
Neither the Company nor any Company Subsidiary has taken or agreed to take any action or knows of
the existence of any fact that is reasonably likely to prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
SECTION 4.11.
Benefits Matters; ERISA Compliance.
(a) Section 4.11(a) of the Company Disclosure Letter sets forth, as of the
date of this Agreement, a complete and correct list identifying any material Company Benefit Plan. The Company has delivered or made available to Parent true and complete copies of (i) all material Company Benefit Plans or, in the case of any
unwritten material Company Benefit Plan, a description thereof, (ii) the most recent annual report on Form 5500 (other than Schedule SSA thereto) filed with the Internal Revenue Service (the
IRS
) with respect to each material
Company Benefit Plan (if any such report was
A-19
required), (iii) the most recent summary plan description for each material Company Benefit Plan for which such summary plan description is required, (iv) each trust agreement and group
annuity contract relating to any material Company Benefit Plan and (v) the most recent financial statements and actuarial reports for each Company Benefit Plan (if any). For purposes of this Agreement,
Company Benefit Plans
means, collectively (A) all employee pension benefit plans (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (
ERISA
)), other than any plan which is a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA (a
Multiemployer Plan
), employee welfare benefit plans (as defined in Section 3(1) of ERISA) and all other bonus, pension,
profit sharing, retirement, deferred compensation, incentive compensation, equity or equity-based compensation, severance, retention, change in control, disability, vacation, death benefit, hospitalization, medical or other plans, arrangements or
understandings providing, or designed to provide, material benefits to any current or former directors, officers, employees or consultants of the Company or any Company Subsidiary and (B) all employment, consulting, indemnification, severance,
retention, change of control or termination agreements or arrangements between the Company or any Company Subsidiary and any current or former directors, officers, employees or consultants of the Company or any Company Subsidiary.
(b) All Company Benefit Plans which are intended to be qualified under Section 401(a) of the Code have been the subject of, have timely
applied for or have not been eligible to apply for, as of the date of this Agreement, determination letters from the IRS to the effect that such Company Benefit Plans and the trusts created thereunder are so qualified, and no such determination
letter has been revoked nor, to the Knowledge of the Company, has revocation been threatened, nor has any such Company Benefit Plan been amended since the date of its most recent determination letter or application therefor in any respect that would
adversely affect its qualification.
(c) Except for matters that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect, (i) no Company Benefit Plan which is subject to Title IV of ERISA, Section 302 of ERISA, Section 412 of the Code or Section 4971 of the Code (a
Company Pension
Plan
) has failed to meet any minimum funding standards, as applicable (as such terms are defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived, (iii) none of the Company, any Company
Subsidiary, any officer of the Company or any Company Subsidiary or any Company Benefit Plans which are subject to ERISA, including the Company Pension Plans, any trust created thereunder or, to the Knowledge of the Company, any trustee or
administrator thereof, has engaged in a prohibited transaction (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary responsibility that could subject the Company, any
Company Subsidiary or any officer of the Company or any Company Subsidiary to the Tax or penalty on prohibited transactions imposed by the Code, ERISA or other applicable Law, (iv) no Company Pension Plans or related trusts have been
terminated, nor is there any intention or expectation to terminate any Company Pension Plans or related trusts, (v) no Company Pension Plans or related trusts are the subject of any proceeding by any Person, including any Governmental Entity,
that would be reasonably expected to result in a termination of any Company Pension Plan or related trust, and (vi) there has not been any reportable event (as that term is defined in Section 4043 of ERISA) with respect to any
Company Pension Plan during the last six years as to which the 30-day advance-notice requirement has not been waived. Neither the Company nor any Company Subsidiary has, or within the past six years had, contributed to, been required to contribute
to, or has any liability (including withdrawal liability within the meaning of Title IV of ERISA) with respect to, any Multiemployer Plan.
(d) With respect to each Company Benefit Plan that is an employee welfare benefit plan (including any health reimbursement
account), such Company Benefit Plan (including any Company Benefit Plan covering retirees or other former employees) may be amended to reduce benefits or limit the liability of the Company or the Company Subsidiaries or terminated, in each
case, without material liability to Parent and its Subsidiaries on or at any time after the Effective Time.
A-20
(e) No Company Benefit Plan provides health, medical or other welfare benefits after retirement
or other termination of employment (other than for continuation coverage required under Section 4980(B)(f) of the Code or applicable Law where the cost thereof is borne entirely by the former employee (or his or her eligible dependents or
beneficiaries)).
(f) Except for matters that, individually or in the aggregate, have not had and would not reasonably be expected to have
a Company Material Adverse Effect, (i) each Company Benefit Plan and its related trust, insurance contract or other funding vehicle has been administered in accordance with its terms and is in compliance with ERISA, the Code and all other Laws
applicable to such Company Benefit Plan and (ii) the Company and each of the Company Subsidiaries is in compliance with ERISA, the Code and all other Laws applicable to the Company Benefit Plans.
(g) Except for matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material
Adverse Effect, there are no pending or, to the Knowledge of the Company, threatened claims by or on behalf of any participant in any of the Company Benefit Plans, or otherwise involving any such Company Benefit Plan or the assets of any Company
Benefit Plan, other than routine claims for benefits.
(h) Except as provided by this Agreement or pursuant to applicable Law, none of the
execution and delivery of the Transaction Agreements, the obtaining of the Company Stockholder Approval or the consummation of the Transactions (alone or in conjunction with any other event, including any termination of employment on or following
the Effective Time) will (A) entitle any current or former director, officer, employee or consultant of the Company or any of the Company Subsidiaries to any compensation or benefit, (B) accelerate the time of payment or vesting, or
trigger any payment or funding, of any compensation or benefits or trigger any other material obligation under any Company Benefit Plan or (C) result in any breach or violation of, default under or limit the Companys right to amend,
modify or terminate any Company Benefit Plan.
(i) Since January 1, 2011, there has been, and in connection with the consummation of
the transactions contemplated hereby there will be, no disallowance of a deduction under Section 162(m) or 280G of the Code for any amount paid or payable by the Company or any Company Subsidiary as employee compensation, whether under any
contract, plan, program or arrangement, understanding or otherwise, that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.
(j) Each Company Benefit Plan that is a nonqualified deferred compensation plan (as defined in Section 409A(d)(1) of the
Code) that is subject to Section 409A of the Code has since (i) January 1, 2005 been maintained and operated in good faith compliance with Section 409A of the Code and Notice 2005-1 and (ii) January 1, 2009, been in
documentary and operational compliance in all material respects with Section 409A of the Code.
(k) Except as, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, all contributions required to be made to any Company Benefit Plan by applicable Law, regulation, any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies funding any Company Benefit Plan, for any period through the date hereof have been timely made or paid in full or, to the extent not required to be made or paid on or
before the date hereof, have been fully reflected on the financial statements set forth in the Company SEC Documents. Each Company Benefit Plan that is an employee welfare benefit plan under Section 3(1) of ERISA either (i) is funded
through an insurance company contract and is not a welfare benefit fund within the meaning of Section 419 of the Code or (ii) is unfunded.
(l) Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect,
there does not now exist, nor do any circumstances exist that are reasonably likely to result in, any Controlled Group Liability that would be a liability of the Company or any
A-21
Company Subsidiary following the Closing, other than any such Controlled Group Liability relating to any Company Benefit Plan. Without limiting the generality of the foregoing, except as,
individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any Company Subsidiary, nor any of their respective ERISA Affiliates, has engaged in any
transaction described in (i) Section 4069 or (ii) Section 4204 or 4212 of ERISA with respect to any Multiemployer Plans.
SECTION 4.12.
Litigation.
There is no, and since January 1, 2012 there has been no, suit, action or other proceeding pending or,
to the Knowledge of the Company, threatened against the Company or any Company Subsidiary or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect. There is no, and since January 1, 2012 there has been no, Judgment outstanding against or, to the Knowledge of the Company, investigation by any Governmental Entity involving the Company or any Company Subsidiary or any of their
respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.13.
Compliance with Applicable Laws.
Except for matters that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect, the Company and the Company Subsidiaries are, and since January 1, 2012 have been, in compliance with all applicable Laws and the Company Permits. Except for matters that,
individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, there is no, and since January 1, 2012, there has been no, action, demand or investigation by or before any
Governmental Entity pending or, to the Knowledge of the Company, threatened alleging that the Company or a Company Subsidiary is not in compliance with any applicable Law or the Company Permit or which challenges or questions the validity of any
rights of the holder of any Company Permit. To the Knowledge of the Company, the Company is, and since January 1, 2012, has been, in compliance with the FCPA and any rules and regulations thereunder, other than as has not had and would not
reasonably be expected to have a Company Material Adverse Effect. This section does not relate to Tax matters, employee benefits matters, environmental matters or Intellectual Property Rights matters, which are the subjects of Sections 4.09, 4.11,
4.14 and 4.17, respectively.
SECTION 4.14.
Environmental Matters.
Except for matters that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material Adverse Effect:
(a) the Company and the Company Subsidiaries are
and, since January 1, 2010, have been, in compliance with all Environmental Laws, and neither the Company nor any Company Subsidiary has received any (i) written communication from a Governmental Entity or other Person that alleges that
the Company or any Company Subsidiary is in violation of, or has liability under, any Environmental Law or any Permit issued pursuant to Environmental Law or (ii) written request for information pursuant to any Environmental Law that is
outstanding or unresolved (including any such request relating to the new source review, NESHAPs or other requirements under the Clean Air Act) that would form the basis of any violation or liability under Environmental Law;
(b) the Company and the Company Subsidiaries have obtained and are and, since January 1, 2010, have been, in compliance with all Permits
required pursuant to any Environmental Law for the operations (as currently conducted) of the Company, the Company Subsidiaries and the Company Properties and all such Permits are valid and in good standing and will not be subject to modification or
revocation as a result of the transactions contemplated by this Agreement;
(c) to the Knowledge of the Company and the Company
Subsidiaries, maintaining or achieving compliance with applicable Environmental Laws, including any requirement to install, upgrade or replace pollution control equipment, meet emission standards or otherwise comply with the Clean Air Act, to
surrender or acquire emission allowances or credits or otherwise comply with AB32, or to reclaim or restore any mined
A-22
real properties, will not require the Company or the Company Subsidiaries to incur costs beyond those reflected or reserved against in the Companys consolidated audited balance sheet as of
May 31, 2013 (or the notes thereto) as included in the Filed Company SEC Documents;
(d) there are no Environmental Claims pending
or, to the Knowledge of the Company, threatened against the Company or any of the Company Subsidiaries;
(e) there has been no Release of,
or exposure to, any Hazardous Material that would reasonably be expected to form the basis of any Environmental Claim against the Company or any of the Company Subsidiaries or against any Person whose liabilities for such Environmental Claim the
Company or any of the Company Subsidiaries has, or may have, retained or assumed, either contractually or by operation of Law;
(f)
neither the Company nor any of the Company Subsidiaries has retained or assumed, either contractually or by operation of Law, any liabilities or obligations (including any reclamation obligations) that would reasonably be expected to form the basis
of any Environmental Claim against the Company or any of the Company Subsidiaries; and
(g) with respect to the real properties owned,
leased or mined by the Company or any Company Subsidiary, there are and have been no significant and substantial mining safety or health hazards or pattern of violations, as regulated or defined under the MSHA, or similar safety or
health hazards at any such property arising under the OSHA or any other federal, state or local Law similar to MSHA or OSHA, which would reasonably be expected to result in the Company or any Company Subsidiary incurring any liability or require the
Company or any Company Subsidiary to cease operations at such property.
SECTION 4.15.
Contracts.
(a) As of the date of this
Agreement, neither the Company nor any Company Subsidiary is a party to any Contract required to be filed by the Company as a material contract pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act (a
Filed
Company Contract
) that has not been so filed.
(b) Section 4.15 of the Company Disclosure Letter sets forth, as of the date
of this Agreement, a true and complete list, and the Company has made available to Parent true and complete copies, of (i) each agreement, Contract, understanding, or undertaking to which the Company or any of the Company Subsidiaries is a
party that (A) restricts the ability of the Company or the Company Subsidiaries to compete in any business or with any Person in any geographical area in a manner that is material to the Company and the Company Subsidiaries, taken as a whole or
(B) would restrict in any respect the ability of Parent or any of the Parent Subsidiaries to compete in any business or with any Person in any geographical area after the Effective Time, (ii) each loan and credit agreement, Contract, note,
debenture, bond, indenture, mortgage, security agreement, pledge, or other similar agreement pursuant to which any material Indebtedness of the Company or any of the Company Subsidiaries is outstanding or may be incurred, other than any such
agreement between or among the Company and the wholly owned Company Subsidiaries, (iii) each partnership, joint venture or similar agreement, Contract, understanding or undertaking to which the Company or any of the Company Subsidiaries is a
party relating to the formation, creation, operation, management or control of any partnership or joint venture, in each case, material to the Company and the Company Subsidiaries, taken as a whole, and (iv) each agreement, Contract,
understanding or undertaking relating to the disposition or acquisition by the Company or any of the Company Subsidiaries, other than in the ordinary course of business, of any material business or any material amount of assets (excluding
dispositions or acquisitions which were consummated prior to the date of this Agreement). Each agreement, Contract, understanding or undertaking of the type described in this Section 4.15(b) and each Filed Company Contract is referred to herein
as a
Company Material Contract
.
(c) Except for matters which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect, (i) each Company Material Contract (including, for purposes of this Section 4.15(c), any Contract entered into after the date of this Agreement that would have been
A-23
a Company Material Contract if such Contract existed on the date of this Agreement) is a valid, binding and legally enforceable obligation of the Company or one of the Company Subsidiaries, as
the case may be, and, to the Knowledge of the Company, of the other parties thereto, except, in each case, as enforcement may be limited by bankruptcy, insolvency, reorganization or similar Laws affecting creditors rights generally and by
general principles of equity, (ii) each such Company Material Contract is in full force and effect and (iii) none of the Company or any of the Company Subsidiaries is (with or without notice or lapse of time, or both) in breach or default
under any such Company Material Contract and, to the Knowledge of the Company, no other party to any such Company Material Contract is (with or without notice or lapse of time, or both) in breach or default thereunder.
SECTION 4.16.
Properties.
(a) The Company and each Company Subsidiary has good and valid title to, and with respect to real
property owned by the Company or any Company Subsidiary, insurable fee simple interest in, or valid license or leasehold interests in, all their respective properties and assets (the
Company Properties
) except (i) for Liens
permitted by the penultimate sentence of this Section 4.16(a) and (ii) in respects that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. The Company Properties
are, in all respects, adequate and sufficient, and in satisfactory condition, to support the operations of the Company and the Company Subsidiaries as presently conducted, except in respects that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect. All of the Company Properties owned by the Company or any Company Subsidiary are owned free and clear of all Liens, except for (i) Liens on material Company Properties
that, individually or in the aggregate, do not materially impair and would not reasonably be expected to materially impair, the continued use and operation of such material Company Property to which they relate in the conduct of the Company and the
Company Subsidiaries as presently conducted, (ii) Permitted Liens and (iii) Liens that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. This
Section 4.16(a) does not relate to Intellectual Property Rights matters, which are the subject of Section 4.17.
(b) The Company
and each of the Company Subsidiaries has complied with the terms of all leases, subleases and licenses entitling it to the use of real property owned by third parties (the
Company Leases
), and all the Company Leases are valid and
in full force and effect, except, in each case, as, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. The Company and each Company Subsidiary is in exclusive possession of
the properties or assets purported to be leased under all the Company Leases, except for (i) such failures to have such possession of material properties or assets as, individually or in the aggregate, do not materially impair and would not
reasonably be expected to materially impair, the continued use and operation of such material assets to which they relate in the conduct of the Companys and the Company Subsidiaries business as presently conducted and (ii) failures
to have such possession of properties or assets as, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.17.
Intellectual Property.
The Company and the Company Subsidiaries own, or are validly licensed or otherwise have the right
to use, all patents, patent applications, trademarks, trademark rights, trade names, service marks, copyrights, trade secrets, designs, domain names, data, databases, processes, methods, schematics, technology, software, know-how, documentation, and
other intellectual property rights (collectively,
Intellectual Property Rights
) as used in their business as presently conducted, except where the failure to own or have the right to use such Intellectual Property Rights,
individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. No actions, suits or other proceedings are pending or, to the Knowledge of the Company, threatened that allege that the
Company or any of the Company Subsidiaries is infringing, misappropriating or otherwise violating any Persons Intellectual Property Rights, except for matters that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect. To the Knowledge of the Company, no Person is infringing, misappropriating or otherwise violating any Intellectual Property Right owned by the Company or any of the Company Subsidiaries, except for
such infringement, misappropriation or violation that, individually or in
A-24
the aggregate, has not had and would not reasonably be expected to have, a Company Material Adverse Effect. Since January 1, 2012, no prior or current employee or officer or any prior or
current consultant or contractor of the Company or any of the Company Subsidiaries has asserted or, to the Knowledge of the Company, has any ownership in any Intellectual Property Rights owned by the Company or any of the Company Subsidiaries,
except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
SECTION 4.18.
Labor Matters.
As of the date of this Agreement, Section 4.18 of the Company Disclosure Letter sets forth a true and
complete list of all collective bargaining or other labor union contracts applicable to any employees of the Company or any of the Company Subsidiaries. To the Knowledge of the Company, as of the date of this Agreement, no labor organization or
group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending
or threatened to be brought or filed, with the National Labor Relations Board or any other labor relations tribunal or authority. To the Knowledge of the Company, as of the date of this Agreement, there are no material organizing activities,
strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances, or other material labor disputes pending or threatened against or involving the Company or any Company Subsidiary. None of the Company or any of the Company
Subsidiaries has breached or otherwise failed to comply with any provision of any collective bargaining agreement or other labor union Contract applicable to any employees of the Company or any of the Company Subsidiaries, except for any breaches or
failures to comply that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. There are no written grievances or written complaints by represented employees of the Company or
its Subsidiaries and, to the Knowledge of the Company, no such grievances or complaints are threatened, in each case, that individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect. The
Company has made available to Parent true and complete copies of all collective bargaining agreements and other material labor union contracts (including all amendments thereto) applicable to any employees of the Company or any Company Subsidiary
(the
Company CBAs
). Except as otherwise set forth in the Company CBAs, neither the Company nor any Company Subsidiary (a) as of the date of this Agreement, has entered into any agreement, arrangement or understanding, whether
written or oral, with any union, trade union, works council or other employee representative body or any material number or category of its employees which would prevent, restrict or materially impede the consummation of the Transactions or the
implementation of any layoff, redundancy, severance or similar program within its or their respective workforces (or any part of them) or (b) has any express commitment, whether legally enforceable or not, to, or not to, modify, change or
terminate any Company CBAs. Except for the labor organizations identified in the Company CBAs, no labor organization or group of employees represents or purports to represent any employees of the Company or any of the Company Subsidiaries with
respect to their service to the Company or any of the Company Subsidiaries.
SECTION 4.19.
Brokers Fees and Expenses.
No
broker, investment banker, financial advisor or other Person, other than Citigroup Global Markets Inc. (the
Company Financial Advisor
), the fees and expenses of which will be paid by the Company, is entitled to any brokers,
finders, financial advisors or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company. Prior to the execution of this Agreement, the Company has furnished to Parent
true and complete copies of all agreements between or among the Company and the Company Financial Advisor relating to the Transactions.
SECTION 4.20.
Opinion of Financial Advisor.
The Company Board has received an opinion from the Company Financial Advisor to the effect
that, as of the date of such opinion, and subject to the assumptions, limitations, qualifications and conditions set forth therein, the Exchange Ratio in the Merger was fair, from a financial point of view, to the holders of Company Common Stock.
Promptly after the execution of this Agreement, the Company will furnish Parent, solely for informational purposes, a true and complete copy of the written opinion of the Company Financial Advisor.
A-25
SECTION 4.21.
Insurance.
Each of the Company and the Company Subsidiaries maintains
insurance policies with reputable insurance carriers against all risks of a character and in such amounts as are usually insured against by similarly situated companies in the same or similar businesses. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) each insurance policy of the Company or any Company Subsidiary is in full force and effect and was in full force and effect during the
periods of time such insurance policy are purported to be in effect, and (ii) neither the Company nor any of the Company Subsidiaries is (with or without notice or lapse of time, or both) in breach or default (including any such breach or
default with respect to the payment of premiums or the giving of notice) under any such policy. There is no claim by the Company or any of the Company Subsidiaries pending under any such policies that (a) to the Knowledge of the Company, has
been denied or disputed by the insurer other than denials and disputes in the ordinary course of business consistent with past practice or (b) if not paid would constitute a Company Material Adverse Effect.
SECTION 4.22.
Affiliate Transactions.
Except for (i) employment-related Contracts filed or incorporated by reference as an exhibit
to the Filed Company SEC Documents or (ii) the Company Benefits Plans, Section 4.22 of the Company Disclosure Letter sets forth a correct and complete list of the contracts or arrangements that are in existence as of the date of this
Agreement between the Company or any of its Subsidiaries, on the one hand, and, on the other hand, any (x) present executive officer or director of the Company, (y) Person that, to the Knowledge of the Company, is the record or beneficial
owner of more than 5% of the shares of Company Common Stock as of the date hereof or (z) to the Knowledge of the Company, any affiliate of any such executive officer, director or owner (other than the Company or any of the Company
Subsidiaries).
SECTION 4.23.
No Other Representations or Warranties.
Except for the representations and warranties contained in
Article III, the Company acknowledges that none of Parent, the Parent Subsidiaries or any other Person on behalf of Parent makes any other express or implied representation or warranty whatsoever, and specifically (but without limiting the
generality of the foregoing) that none of Parent, the Parent Subsidiaries or any other Person on behalf of Parent makes any representation or warranty with respect to: (i) any projections, estimates or budgets delivered or made available to the
Company or any of its affiliates or Representatives of future revenues, results of operations (or any component thereof), cash flows or financial condition (or any component thereof) of Parent and the Parent Subsidiaries or (ii) the future
business and operations of Parent and the Parent Subsidiaries, including in the case of (i) and (ii) with respect to any information, documents, projections, forecasts or other material made available to the Company or its affiliates and
Representatives in certain data rooms or management presentations in expectation of the transactions contemplated by this Agreement, and the Company has not relied on any such information or any representation or warranty not set forth
in Article III.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01.
Conduct of Business.
(a)
Conduct of Business by Parent.
Except for matters set forth in Section 5.01(a)
of the Parent Disclosure Letter or otherwise expressly permitted or expressly contemplated by this Agreement or required by applicable Law or with the prior written consent of the Company (which shall not be unreasonably withheld, conditioned or
delayed), from the date of this Agreement to the Effective Time, or, if earlier, the termination of this Agreement in accordance with its terms, Parent shall, and shall cause each Parent Subsidiary to, (i) conduct its business in the ordinary
course consistent with past practice in all material respects and (ii) use reasonable best efforts to preserve intact its business organization and advantageous business relationships and keep available the services of its current officers and
employees. In addition, and without limiting the generality of the foregoing, except for matters set forth in the Parent Disclosure Letter or otherwise expressly permitted or expressly contemplated by this Agreement or required by applicable Law or
with the prior
A-26
written consent of the Company (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to the Effective Time, or, if earlier, the termination of this
Agreement in accordance with its terms, Parent shall not, and shall not permit any Parent Subsidiary to, do any of the following:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any
combination thereof) in respect of, any of its capital stock, other equity interests or voting securities, other than (x) regular quarterly cash dividends of $0.40 per share of Parent Common Stock payable by Parent in respect of shares of
Parent Common Stock with declaration, record and payment dates consistent with past practice and in accordance with Parents current dividend policy and (y) dividends and distributions by a direct or indirect wholly owned Parent Subsidiary
to its parent, (B) split, combine, subdivide or reclassify any of its capital stock, other equity interests or voting securities, or securities convertible into or exchangeable or exercisable for capital stock or other equity interests or
voting securities or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, other equity interests or voting securities or (C) repurchase, redeem or otherwise acquire, or
offer to repurchase, redeem or otherwise acquire, any capital stock or voting securities of, or equity interests in, Parent or any Parent Subsidiary or any securities of Parent or any Parent Subsidiary convertible into or exchangeable or exercisable
for capital stock or voting securities of, or equity interests in, Parent or any Parent Subsidiary, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, other than (1) the acquisition by
Parent of shares of Parent Common Stock in connection with the surrender of shares of Parent Common Stock by holders of Parent Stock Options in order to pay the exercise price thereof, (2) the withholding of shares of Parent Common Stock to
satisfy tax obligations with respect to awards granted pursuant to the Parent Stock Plans and (3) the acquisition by Parent of awards granted pursuant to the Parent Stock Plans in connection with the forfeiture of such awards;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien (except for transactions among Parent and
wholly owned Parent Subsidiaries and for any liens in favor of the administrative agent under Parents existing credit agreement) (A) any shares of capital stock of Parent or any Parent Subsidiary (other than the issuance of Parent Common
Stock upon the exercise of Parent Stock Options and the vesting or delivery of other awards pursuant to the Parent Stock Plans), (B) any other equity interests or voting securities of Parent or any Parent Subsidiary, (C) any securities
convertible into or exchangeable or exercisable for capital stock or voting securities of, or other equity interests in, Parent or any Parent Subsidiary, (D) any warrants, calls, options or other rights to acquire any capital stock or voting
securities of, or other equity interests in, Parent or any Parent Subsidiary, (E) any rights issued by Parent or any Parent Subsidiary that are linked in any way to the price of any class of Parent Capital Stock or any shares of capital stock
of any Parent Subsidiary, the value of Parent, any Parent Subsidiary or any part of Parent or any Parent Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of Parent or any Parent Subsidiary,
(F) any Parent Voting Debt, or (G) any Parent Preferred Stock, except, in each case (A)-(F), for grants of awards pursuant to and in accordance with the Parent Stock Plans;
(iii) amend the Parent Articles or the Parent By-laws, except as may be required by Law or the rules and regulations of the SEC
or the NYSE;
(iv) make any material change in financial accounting methods, principles or practices, except insofar as may
have been required by a change in GAAP (after the date of this Agreement);
(v) (A) directly or indirectly acquire or
agree to acquire in any transaction any equity interest in or business of any firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity or division thereof or any properties or assets
(other than purchases of supplies and inventory in the ordinary course of business consistent with past practice or any transaction solely between Parent and a wholly owned Parent Subsidiary or between wholly owned Parent Subsidiaries), other than
any of the foregoing that would not reasonably be expected to delay or make it more difficult to obtain any authorization, consent or approval required in connection with the Merger and that would not reasonably be expected to prevent or materially
delay or impede the consummation of the transactions
A-27
contemplated by this Agreement, including the Merger or (B) solicit or enter into any transaction or Contract requiring (including because conditioned upon), or reasonably expected to cause,
Parent to abandon, terminate, materially delay or not consummate the Transactions, or requiring, or reasonably expected to cause, Parent to fail to comply in any material respect with this Agreement;
(vi) take any actions or omit to take any actions that would or would be reasonably likely to (i) result in any of the
conditions set forth in Article VII not being satisfied, (ii) result in new or additional required approvals from any Governmental Entity in connection with the Transactions or (iii) materially impair the ability of Parent, the Company or
Merger Sub to consummate the Transactions in accordance with the terms of the applicable Transaction Agreements or materially delay such consummation; or
(vii) authorize any of, or commit, resolve or agree to take any of, the foregoing actions.
(b)
Conduct of Business by the Company.
Except for matters set forth in Section 5.01(b) of the Company Disclosure Letter or
otherwise expressly permitted or expressly contemplated by this Agreement or required by applicable Law or with the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement
to the Effective Time, or, if earlier, the termination of this Agreement in accordance with its terms, the Company shall, and shall cause each Company Subsidiary to, (i) conduct its business in the ordinary course consistent with past practice
in all material respects and (ii) use reasonable best efforts to preserve intact its business organization and advantageous business relationships and keep available the services of its current officers and employees. In addition, and without
limiting the generality of the foregoing, except for matters set forth in the Company Disclosure Letter or otherwise expressly permitted or expressly contemplated by this Agreement or required by applicable Law or with the prior written consent of
Parent (which shall not be unreasonably withheld, conditioned or delayed), from the date of this Agreement to the Effective Time, or, if earlier, the termination of this Agreement in accordance with its terms, the Company shall not, and shall not
permit any Company Subsidiary to, do any of the following:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of its capital stock, other equity interests or voting securities, other than dividends and distributions by a direct or indirect wholly owned
Company Subsidiary to its parent, (B) split, combine, subdivide or reclassify any of its capital stock, other equity interests or voting securities, or securities convertible into or exchangeable or exercisable for capital stock or other equity
interests or voting securities or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its capital stock, other equity interests or voting securities or (C) repurchase, redeem or otherwise
acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary or any securities of the Company or any Company Subsidiary convertible into or
exchangeable or exercisable for capital stock or voting securities of, or equity interests in, the Company or any Company Subsidiary, or any warrants, calls, options or other rights to acquire any such capital stock, securities or interests, other
than (1) the acquisition by the Company of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price thereof, (2) the
withholding of shares of Company Common Stock to satisfy tax obligations with respect to awards granted pursuant to the Company Stock Plans and (3) the acquisition by the Company of awards granted pursuant to the Company Stock Plans in
connection with the forfeiture of such awards;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or subject
to any Lien (except for transactions among the Company and wholly owned Company Subsidiaries and for any liens in favor of the administrative agent under the Companys existing credit agreement) (A) any shares of capital stock of the
Company or any Company Subsidiary (other than the issuance of Company Common Stock upon the exercise of the Company Stock Options and the Company SARs and the vesting or delivery of other awards pursuant to the Company Stock Plans, in each case
outstanding at the close of business on the date of this Agreement or as may be granted in accordance with the terms of this Agreement), (B) any other equity interests or voting securities of the Company or any Company Subsidiary, (C) any
securities convertible into or exchangeable or exercisable for capital stock or voting securities of, or other equity interests in, the
A-28
Company or any Company Subsidiary, (D) any warrants, calls, options or other rights to acquire any capital stock or voting securities of, or other equity interests in, the Company or any
Company Subsidiary, (E) any rights issued by the Company or any Company Subsidiary that are linked in any way to the price of any class of Company Capital Stock or any shares of capital stock of any Company Subsidiary, the value of the Company,
any Company Subsidiary or any part of the Company or any Company Subsidiary or any dividends or other distributions declared or paid on any shares of capital stock of the Company or any Company Subsidiary, (F) any Company Voting Debt or
(G) any Company Preferred Stock, except, in each case (A) (F), for Company RSUs (other than Matching RSUs (as defined in the Companys Management Deferred Compensation Plan)) to the extent required to be granted to
employees and directors of the Company with respect to deferral elections pursuant to and in accordance with the Companys Management Deferred Compensation Plan as in effect as of the date of this Agreement;
(iii) (A) amend the Company Charter or the Company By-laws or (B) amend in any material respect the charter or
organizational documents of any Company Subsidiary, except, in the case of each of the foregoing clauses (A) and (B), as may be required by Law or the rules and regulations of the SEC or the NYSE;
(iv) (A)(1) grant to any current or former (a) director of the Company, (b) director of any Company Subsidiary (in
his or her capacity as a director of a Company Subsidiary), (c) executive officer of the Company or (d) officer or employee of the Company or any Company Subsidiary who is a party to a Change in Control Severance Agreement or a participant
in or party to any plan, program, policy, agreement or arrangement that provides for severance or similar payments in an amount equal to or in excess of one years salary to be made upon or following a change in control or similar event (alone
or in conjunction with any other event, including any termination of employment on or following the Effective Time) (each such officer or employee, a
Change in Control Individual
), in each case, any increase in compensation, bonus
or fringe or other benefits or grant any type of compensation or benefit to any such Person not previously receiving or entitled to receive such compensation, except to the extent required under any Company Benefit Plan as in effect as of the date
of this Agreement (or any Company Benefit Plan entered into, adopted or amended following the date hereof to the extent permitted by Section 5.01(b)(iv)(D)), or (2) grant to any director of a Company Subsidiary (other than in his or her
capacity as a director), or any officer or employee of the Company or any Company Subsidiary not described in Section 5.01(b)(iv)(A)(1), in each case, any increase in compensation, bonus or fringe or other benefits or grant any type of
compensation or benefit to any such Person not previously receiving or entitled to receive such compensation, except in the ordinary course of business consistent with past practice or to the extent required under any Company Benefit Plan as in
effect as of the date of this Agreement (or any Company Benefit Plan entered into, adopted or amended following the date hereof to the extent permitted by Section 5.01(b)(iv)(D)), (B) engage in promotions of employees, fill open employee
positions or modify employee job descriptions, except in each case in the ordinary course of business consistent with past practice, (C) grant to any Person any severance, retention, change in control or termination compensation or benefits or
any increase therein, except with respect to new hires or to employees in the context of promotions based on job performance or workplace requirements, in each case in the ordinary course of business consistent with past practice, or except to the
extent required under any Company Benefit Plan as in effect as of the date of this Agreement (or any Company Benefit Plan entered into, adopted or amended following the date hereof to the extent permitted by Section 5.01(b)(iv)(D)), or
(D) enter into or adopt any material Company Benefit Plan or amend in any material respect any material Company Benefit Plan or any award issued thereunder, except for any amendments in the ordinary course of business consistent with past
practice or as necessary to comply with applicable Law (including Section 409A of the Code);
(v) make any material
change in financial accounting methods, principles or practices, except insofar as may have been required by a change in GAAP (after the date of this Agreement);
(vi) directly or indirectly acquire or agree to acquire in any transaction any equity interest in or business of any firm,
corporation, partnership, company, limited liability company, trust, joint venture, association or other entity or division thereof or any properties or assets (other than purchases of supplies
A-29
and inventory in the ordinary course of business consistent with past practice or any transaction solely between the Company and a wholly owned Company Subsidiary or between wholly owned Company
Subsidiaries, in each case, in the ordinary course of business consistent with past practice) if the amount of the consideration paid or transferred by the Company and the Company Subsidiaries in connection with any such transactions would exceed
$1,000,000 individually or $5,000,000 in the aggregate;
(vii) sell, lease (as lessor), license, mortgage, sell and
leaseback or otherwise encumber or subject to any Lien, or otherwise dispose of any properties or assets (other than sales of products or services in the ordinary course of business consistent with past practice) or any interests therein that
individually have a fair market value in excess of $1,000,000 or in the aggregate have a fair market value in excess of $5,000,000, except (A) any of the foregoing with respect to inventory in the ordinary course of business consistent with
past practice, (B) any of the foregoing with respect to obsolete or worthless equipment in the ordinary course of business consistent with past practice or (C) in relation to mortgages, liens and pledges to secure Indebtedness for borrowed
money permitted to be incurred under Section 5.01(b)(viii) and guarantees thereof and for any transactions among the Company and the wholly owned Company Subsidiaries in the ordinary course of business consistent with past practice;
(viii) incur any Indebtedness, except for (A) Indebtedness incurred in the ordinary course of business consistent with
past practice not to exceed $5,000,000 in the aggregate; (B) Indebtedness in replacement of existing Indebtedness,
provided
that the execution, delivery, and performance of this Agreement and the consummation of the Transactions shall
not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or any loss of a material benefit under, or
result in the creation of any Lien, under such replacement Indebtedness; (C) guarantees by the Company of Indebtedness of any wholly owned Company Subsidiary and guarantees by any Company Subsidiary of Indebtedness of the Company or any other
wholly owned Company Subsidiary, in each case, in the ordinary course of business consistent with past practice, (D) intercompany Indebtedness among the Company and the wholly owned Company Subsidiaries in the ordinary course of business
consistent with past practice or (E) making borrowings under the Companys revolving credit facility (as existing on the date hereof) in the ordinary course of business consistent with past practice;
provided
,
however
, that
the Company shall coordinate with Parent in order to minimize the cost of repaying such borrowings at Closing, including with respect to any breakage costs;
(ix) make, or agree or commit to make, any capital expenditure except for capital expenditures (A) in accordance with the
capital plans for 2014 set forth in Section 5.01(b)(ix) of the Company Disclosure Letter, (B) as required by a Governmental Entity or (C) in response to any emergency, whether caused by war, terrorism, weather events, public health
events, outages or otherwise;
(x) (A) enter into or amend any Contract if such Contract or amendment of a Contract
would reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Transactions or (B) solicit or enter into any transaction or Contract requiring (including because conditioned upon), or
reasonably expected to cause, the Company to abandon, terminate, materially delay or not consummate the Transactions, or requiring, or reasonably expected to cause, the Company to fail to comply in any material respect with this Agreement;
(xi) enter into any new, or amend any, material Contract to the extent that, as a result of such entry or amendment,
consummation of the Merger or compliance by the Company or any Company Subsidiary with the provisions of this Agreement would reasonably be expected to conflict with, or result in a violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation, any obligation to make an offer to purchase or redeem any Indebtedness or capital stock or any loss of a material benefit under, or result in the
creation of any Lien upon any of the material properties or assets of the Company or any Company Subsidiary under, or require Parent, the Company or any of their respective Subsidiaries to license or transfer any of its material properties or assets
under, or give rise to any increased, additional, accelerated, or guaranteed right or entitlements of any third party under, or result in any material alteration of, any provision of such Contract or amendment;
A-30
(xii) enter into, modify, amend, extend, renew, replace or terminate any
collective bargaining or other labor union Contract applicable to the employees of the Company or any of the Company Subsidiaries, other than modifications, amendments, extensions, renewals, replacements or terminations of such Contracts in the
ordinary course of business consistent with past practice;
(xiii) waive, release, assign, settle or compromise any claim,
action or proceeding, other than waivers, releases, assignments, settlements or compromises that do not create obligations of the Company or any of the Company Subsidiaries other than the payment of monetary damages (a) equal to or less than
the amounts reserved with respect thereto on the Filed Company SEC Documents or (b) not in excess of $1,000,000 in the aggregate;
(xiv) abandon, encumber, convey title (in whole or in part), exclusively license or grant any right or other licenses to
material trademarks, trademark rights, trade names or service marks owned by or exclusively licensed to the Company or any Company Subsidiary, or enter into licenses or agreements that impose material restrictions upon the Company or any of its
Affiliates with respect to trademarks, trademark rights, trade names or service marks owned by any third party, in each case other than in the ordinary course of business consistent with past practice;
(xv) other than in the ordinary course of business, materially amend or modify any Company Material Contract or enter into,
materially amend or modify any Contract that would be a Company Material Contract if it had been entered into prior to the date of this Agreement;
(xvi) change any material method of Tax accounting, settle any material claim, action or proceeding relating to Taxes or make
any material Tax election, in each case except for such actions taken in the ordinary course of business consistent with past practice;
(xvii) enter into any new line of business outside of its existing business;
(xviii) take any actions or omit to take any actions that would or would be reasonably likely to (i) result in any of the
conditions set forth in Article VII not being satisfied, (ii) result in new or additional required approvals from any Governmental Entity in connection with the Transactions or (iii) materially impair the ability of Parent, the Company or
Merger Sub to consummate the Transactions in accordance with the terms of the applicable Transaction Agreements or materially delay such consummation;
(xix) dissolve or liquidate any Company Subsidiary; or
(xx) authorize any of, or commit, resolve or agree to take any of, the foregoing actions.
(c)
Control of Operations.
Nothing contained in this Agreement shall give Parent or the Company, directly or indirectly, the right to
control or direct the other partys operations prior to the Effective Time.
SECTION 5.02.
No Solicitation by the Company; Company
Recommendation.
(a) Except as otherwise provided in this Agreement, from the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with its terms, the Company shall not, nor shall it
authorize or permit any of its Affiliates or any of its or their respective directors, officers or employees or any of their respective investment bankers, accountants, attorneys or other advisors, agents or representatives (collectively,
Representatives
) to, (i) directly or indirectly solicit or initiate, or knowingly encourage, induce or facilitate, any Company Takeover Proposal or any inquiry or proposal that may reasonably be expected to lead to a Company
Takeover Proposal, or (ii) directly or indirectly participate in any discussions or negotiations with any Person regarding, or furnish to any Person any information with respect to, or cooperate in any way with any Person (whether or not a
Person making a Company Takeover Proposal) with respect to, any Company Takeover Proposal or any inquiry or proposal that may reasonably be expected to lead to a Company Takeover Proposal. The Company shall, and shall cause its Affiliates and its
and their respective Representatives to, immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any Company Takeover Proposal or any inquiry or proposal that may
reasonably be expected to lead to a Company Takeover Proposal, request the prompt return or destruction of all confidential information
A-31
previously furnished any such Person or its Representatives and immediately terminate all physical and electronic data room access previously granted to any such Person or its Representatives.
Notwithstanding the foregoing, at any time prior to obtaining the Company Stockholder Approval, in response to a bona fide written Company Takeover Proposal that the Company Board determines in good faith (after consultation with outside counsel and
a financial advisor of nationally recognized reputation) constitutes or is reasonably expected to result in a Superior Company Proposal, and which Company Takeover Proposal did not result from a breach of this Section 5.02(a) or the Letter
Agreement, the Company, and its Representatives at the request of the Company may, subject to compliance with Section 5.02(c), (x) furnish information with respect to the Company and the Company Subsidiaries to the Person making such
Company Takeover Proposal (and its Representatives) (
provided
that all such information has previously been provided to Parent or is provided to Parent prior to or substantially concurrent with the time it is provided to such Person) pursuant
to a customary confidentiality agreement not less restrictive of such Person than the Confidentiality Agreement (other than with respect to standstill provisions), and (y) participate in discussions regarding the terms of such
Company Takeover Proposal and the negotiation of such terms with, and only with, the Person or Persons making such Company Takeover Proposal (and such Persons or Persons Representatives and financing sources). Without limiting the
foregoing, it is agreed that any violation of the restrictions set forth in this Section 5.02(a) by any Affiliates of the Company or any of its or their Representatives shall constitute a breach of this Section 5.02(a) by the Company.
(b) Except as set forth in this Section 5.02, neither the Company Board nor any committee thereof shall (i) (A) withdraw (or
modify in any manner adverse to Parent), or propose publicly to withdraw (or modify in any manner adverse to Parent), the Company Recommendation or (B) approve, recommend or declare advisable, or propose publicly to approve, recommend or
declare advisable, any Company Takeover Proposal (any action in this clause (i) being referred to as a
Company Adverse Recommendation Change
) or (ii) adopt, or propose publicly to adopt, or allow the Company or any of
its Affiliates to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or
other agreement or arrangement (other than a confidentiality agreement referred to in Section 5.02(a)) relating to any Company Takeover Proposal. Notwithstanding the foregoing, at any time prior to obtaining the Company Stockholder Approval,
the Company Board may (1) make a Company Adverse Recommendation Change or terminate this Agreement in accordance with Section 8.01(h), in each case following receipt of a Company Takeover Proposal after the execution of this Agreement that
did not result from a breach of Section 5.02(a) or the Letter Agreement and that the Company Board determines in good faith, after consultation with outside counsel and a financial advisor of nationally recognized reputation, constitutes a
Superior Company Proposal or (2) make a Company Adverse Recommendation Change in response to a Company Intervening Event, in each case referred to in the foregoing clauses (1) and (2), only if the Company Board determines in good faith
(after consultation with outside counsel and a financial advisor of nationally recognized reputation) that the failure to do so would be inconsistent with its fiduciary duties under applicable Law;
provided
,
however
, that the Company
shall not be entitled to exercise its rights to make a Company Adverse Recommendation Change or terminate this Agreement in accordance with Section 8.01(h) unless (i) the Company delivers to Parent a written notice (a
Company
Notice
) advising Parent that the Company Board intends to take such action and specifying the reasons therefor, including in the case of a Superior Company Proposal, the terms and conditions of any Superior Company Proposal that is the
basis of the proposed action by the Company Board and (ii) on or after the Applicable Time on the fourth Business Day following the day on which Parent received the Company Notice (it being understood that for purposes of calculating such four
Business Days, the first Business Day shall be the first Business Day after the date of such receipt), the Company reaffirms in good faith (after consultation with outside counsel and a financial advisor of nationally recognized reputation) that
(A) such Company Takeover Proposal continues to constitute a Superior Company Proposal or such Company Intervening Event remains in effect and (B) the failure to make a Company Adverse Recommendation Change as a result thereof would be
inconsistent with its fiduciary duties under applicable Law (it being understood and agreed that any amendment to any material term of such Superior Company Proposal shall require a new Company Notice and a new three Business Day period (it being
understood that any such three Business Day period shall be calculated in the same manner as the initial four Business Day period)). In determining whether to make a Company Adverse Recommendation Change or
A-32
terminate this Agreement in accordance with Section 8.01(h), the Company Board shall take into account any changes to the terms of this Agreement proposed by Parent in response to a Company
Notice or otherwise, and if requested by Parent, the Company shall engage in good faith negotiations with Parent regarding any changes to the terms of this Agreement proposed by Parent. The Company shall provide Parent with written information
describing any Company Intervening Event that would reasonably be expected to entitle the Company to make a Company Adverse Recommendation Change pursuant to this Section 5.02 in reasonable detail promptly after becoming aware of it, and shall
keep Parent reasonably informed of material developments with respect to such Company Intervening Event.
(c) In addition to the
obligations of the Company set forth in paragraphs (a) and (b) of this Section 5.02, the Company shall promptly, and in any event within 24 hours of the Company obtaining Knowledge of the receipt thereof, advise Parent in writing of
any Company Takeover Proposal or any inquiry or proposal that may reasonably be expected to lead to a Company Takeover Proposal, the material terms and conditions of any such Company Takeover Proposal (including any changes thereto) and the identity
of the Person making any such Company Takeover Proposal. The Company shall (i) keep Parent informed in all material respects and on a reasonably current basis of the status and details (including any material change to the terms thereof) of any
Company Takeover Proposal and (ii) provide to Parent as soon as practicable after receipt or delivery thereof all drafts of agreements relating to any Company Takeover Proposal and any written proposals containing any material terms of a
Company Takeover Proposal or a counterproposal to a Company Takeover Proposal, in each case exchanged between any of the Company or any of its Subsidiaries or any of their Representatives, on the one hand, and the Person making any such Company
Takeover Proposal or any of its Affiliates or any of their Representatives, on the other hand. If Parent requests, the information required to be provided in clause (i) above shall be provided on a daily basis pursuant to a phone call between
senior representatives of outside counsel or financial advisors of the parties to be held at mutually agreeable times;
provided
,
however
, that such phone calls need not be longer than 30 minutes on any given day; and
provided
further
that nothing in this sentence shall in any way expand or otherwise change the Companys obligations contained in clause (i) above.
(d) Nothing contained in this Section 5.02 shall prohibit the Company from complying with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act;
provided
,
however
, that in no event shall the Company or the Company Board or any committee thereof take, or agree or resolve to take, any action prohibited by Section 5.02(b).
(e) For purposes of this Agreement:
Company Takeover Proposal
means any bona fide proposal or offer (whether or not in writing) from a third
party (other than Parent or Merger Sub or any of their respective Subsidiaries) with respect to any (i) merger, consolidation, share exchange, other business combination or similar transaction involving the Company or any Company Subsidiary,
(ii) sale, lease, contribution or other disposition, directly or indirectly (including by way of merger, consolidation, share exchange, other business combination, partnership, joint venture, sale of capital stock of or other equity interests
in a Company Subsidiary or otherwise) of any business or assets of the Company or the Company Subsidiaries representing 20% or more of the consolidated revenues, net income or assets of the Company and the Company Subsidiaries, taken as a whole,
(iii) issuance, sale or other disposition, directly or indirectly, to any Person (or the stockholders of any Person) or group of securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such
securities) representing 20% or more of the total outstanding voting power of the Company, (iv) transaction in which any Person (or the stockholders of any Person) shall acquire, directly or indirectly, beneficial ownership, or the right to
acquire beneficial ownership, or formation of any group which beneficially owns or has the right to acquire beneficial ownership of, 20% or more of the Company Common Stock or (v) combination of the foregoing (in each case, other than the
Transactions).
Superior Company Proposal
means any bona fide written offer from a third party (other
than Parent or Merger Sub or any of their respective Subsidiaries) that, if consummated, would result in such Person (or,
A-33
in the case of a direct merger between such Person and the Company, the stockholders of such Person) acquiring, directly or indirectly, more than 50% of the voting power of the Company Common
Stock or all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, and which offer, in the good faith judgment of the Company Board (after consultation with outside counsel and a financial advisor of nationally
recognized reputation), is more favorable to the stockholders of the Company than the Transactions (taking into account all of the terms and conditions of, and the likelihood of completion of, such offer and of this Agreement (including any changes
to the terms of this Agreement proposed by Parent in response to such Superior Company Proposal or otherwise)).
SECTION 5.03.
No
Solicitation by Parent; Parent Recommendation.
(a) Except as otherwise provided in this Agreement, from the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with its terms,
Parent shall not, nor shall it authorize or permit any of its Affiliates or any of its or their respective Representatives to, (i) directly or indirectly solicit or initiate, or knowingly encourage, induce or facilitate, any Parent Takeover
Proposal or any inquiry or proposal that may reasonably be expected to lead to a Parent Takeover Proposal, or (ii) directly or indirectly participate in any discussions or negotiations with any Person regarding, or furnish to any Person any
information with respect to, or cooperate in any way with any Person (whether or not a Person making a Parent Takeover Proposal) with respect to, any Parent Takeover Proposal or any inquiry or proposal that may reasonably be expected to lead to a
Parent Takeover Proposal. Parent shall, and shall cause its Affiliates and its and their respective Representatives to, immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with
respect to any Parent Takeover Proposal or any inquiry or proposal that may reasonably be expected to lead to a Parent Takeover Proposal, request the prompt return or destruction of all confidential information previously furnished any such Person
or its Representatives and immediately terminate all physical and electronic data room access previously granted to any such Person or its Representatives. Notwithstanding the foregoing, at any time prior to obtaining the Parent Shareholder
Approval, in response to a bona fide written Parent Takeover Proposal that the Parent Board determines in good faith (after consultation with outside counsel and a financial advisor of nationally recognized reputation) constitutes or is reasonably
expected to result in a Superior Parent Proposal, and which Parent Takeover Proposal did not result from a breach of this Section 5.03(a), Parent, and its Representatives at the request of Parent may, subject to compliance with
Section 5.03(c), (x) furnish information with respect to Parent and the Parent Subsidiaries to the Person making such Parent Takeover Proposal (and its Representatives) (
provided
that all such information has previously been
provided to the Company or is provided to the Company prior to or substantially concurrent with the time it is provided to such Person) pursuant to a customary confidentiality agreement not less restrictive of such Person than the Confidentiality
Agreement (other than with respect to standstill provisions), and (y) participate in discussions regarding the terms of such Parent Takeover Proposal and the negotiation of such terms with, and only with, the Person or Persons
making such Parent Takeover Proposal (and such Persons or Persons Representatives and financing sources). Without limiting the foregoing, it is agreed that any violation of the restrictions set forth in this Section 5.03(a) by any
Affiliates of Parent or any of its or their Representatives shall constitute a breach of this Section 5.03(a) by Parent.
(b) Except
as set forth in this Section 5.03, neither the Parent Board nor any committee thereof shall (i) (A) withdraw (or modify in any manner adverse to the Company), or propose publicly to withdraw (or modify in any manner adverse to the
Company), the Parent Recommendation or (B) approve, recommend or declare advisable, or propose publicly to approve, recommend or declare advisable, any Parent Takeover Proposal (any action in this clause (i) being referred to as a
Parent Adverse Recommendation Change
) or (ii) adopt, or propose publicly to adopt, or allow Parent or any of its Affiliates to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or other agreement or arrangement (other than a confidentiality agreement referred to in Section 5.03(a)) relating to
any Parent Takeover Proposal. Notwithstanding the foregoing, at any time prior to obtaining the Parent Shareholder Approval, the Parent Board may (1) make a Parent Adverse Recommendation Change or terminate this Agreement in accordance with
Section 8.01(i), in each case following receipt of a Parent Takeover Proposal after
A-34
the execution of this Agreement that did not result from a breach of Section 5.03(a) and that the Parent Board determines in good faith, after consultation with outside counsel and a
financial advisor of nationally recognized reputation, constitutes a Superior Parent Proposal or (2) make a Parent Adverse Recommendation Change in response to a Parent Intervening Event, in each case referred to in the foregoing clauses
(1) and (2), only if the Parent Board determines in good faith (after consultation with outside counsel and a financial advisor of nationally recognized reputation) that the failure to do so would be inconsistent with its fiduciary duties under
applicable Law;
provided
,
however
, that Parent shall not be entitled to exercise its rights to make a Parent Adverse Recommendation Change or terminate this Agreement in accordance with Section 8.01(i) unless (i) Parent
delivers to the Company a written notice (a
Parent Notice
) advising the Company that the Parent Board intends to take such action and specifying the reasons therefor, including in the case of a Superior Parent Proposal, the terms
and conditions of any Superior Parent Proposal that is the basis of the proposed action by the Parent Board and (ii) on or after the Applicable Time on the fourth Business Day following the day on which the Company received the Parent Notice
(it being understood that for purposes of calculating such four Business Days, the first Business Day shall be the first Business Day after the date of such receipt), Parent reaffirms in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) that (A) such Parent Takeover Proposal continues to constitute a Superior Parent Proposal or such Parent Intervening Event remains in effect and (B) the failure to make a Company
Adverse Recommendation Change as a result thereof would be inconsistent with its fiduciary duties under applicable Law (it being understood and agreed that any amendment to any material term of such Superior Parent Proposal shall require a new
Parent Notice and a new three Business Day period (it being understood that any such three Business Day period shall be calculated in the same manner as the initial four Business Day period)). In determining whether to make a Parent Adverse
Recommendation Change or terminate this Agreement in accordance with Section 8.01(i), the Parent Board shall take into account any changes to the terms of this Agreement proposed by the Company in response to a Parent Notice or otherwise, and
if requested by the Company, Parent shall engage in good faith negotiations with the Company regarding any changes to the terms of this Agreement proposed by the Company. Parent shall provide the Company with written information describing any
Parent Intervening Event that would reasonably be expected to entitle Parent to make a Parent Adverse Recommendation Change pursuant to this Section 5.03 in reasonable detail promptly after becoming aware of it, and shall keep the Company
reasonably informed of material developments with respect to such Parent Intervening Event.
(c) In addition to the obligations of Parent
set forth in paragraphs (a) and (b) of this Section 5.03, Parent shall promptly, and in any event within 24 hours of Parent obtaining Knowledge of the receipt thereof, advise the Company in writing of any Parent Takeover Proposal or
any inquiry or proposal that may reasonably be expected to lead to a Parent Takeover Proposal, the material terms and conditions of any such Parent Takeover Proposal (including any changes thereto) and the identity of the Person making any such
Parent Takeover Proposal. Parent shall (i) keep the Company informed in all material respects and on a reasonably current basis of the status and details (including any material change to the terms thereof) of any Parent Takeover Proposal and
(ii) provide to the Company as soon as practicable after receipt or delivery thereof all drafts of agreements relating to any Parent Takeover Proposal and any written proposals containing any material terms of a Parent Takeover Proposal or a
counterproposal to a Parent Takeover Proposal, in each case exchanged between any of Parent or any of its Subsidiaries or any of their Representatives, on the one hand, and the Person making any such Parent Takeover Proposal or any of its Affiliates
or any of their Representatives, on the other hand. If the Company requests, the information required to be provided in clause (i) above shall be provided on a daily basis pursuant to a phone call between senior representatives of outside
counsel or financial advisors of the parties to be held at mutually agreeable times;
provided
,
however
, that such phone calls need not be longer than 30 minutes on any given day; and
provided
further
that nothing in this
sentence shall in any way expand or otherwise change Parents obligations contained in clause (i) above.
(d) Nothing contained
in this Section 5.03 shall prohibit Parent from complying with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act;
provided
,
however
, that in no event shall Parent or the Parent Board or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 5.03(b).
(e) For purposes of this Agreement:
A-35
Parent Takeover Proposal
means any bona fide proposal or offer
(whether or not in writing) from a third party (other than the Company or any of its Subsidiaries) with respect to any (i) merger, consolidation, share exchange, other business combination or similar transaction involving Parent or any Parent
Subsidiary, (ii) sale, lease, contribution or other disposition, directly or indirectly (including by way of merger, consolidation, share exchange, other business combination, partnership, joint venture, sale of capital stock of or other equity
interests in a Parent Subsidiary or otherwise) of any business or assets of Parent or the Parent Subsidiaries representing 20% or more of the consolidated revenues, net income or assets of Parent and the Parent Subsidiaries, taken as a whole,
(iii) issuance, sale or other disposition, directly or indirectly, to any Person (or the stockholders of any Person) or group of securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such
securities) representing 20% or more of the total outstanding voting power of Parent, (iv) transaction in which any Person (or the stockholders of any Person) shall acquire, directly or indirectly, beneficial ownership, or the right to acquire
beneficial ownership, or formation of any group which beneficially owns or has the right to acquire beneficial ownership of, 20% or more of the Parent Common Stock or (v) combination of the foregoing (in each case, other than the Transactions).
Superior Parent Proposal
means any bona fide written offer from a third party (other than the Company
or any of its Subsidiaries) that, if consummated, would result in such Person (or, in the case of a direct merger between such Person and Parent, the stockholders of such Person) acquiring, directly or indirectly, more than 50% of the voting power
of the Parent Common Stock or all or substantially all the assets of Parent and its Subsidiaries, taken as a whole, and which offer, in the good faith judgment of the Parent Board (after consultation with outside counsel and a financial advisor of
nationally recognized reputation), is more favorable to the shareholders of Parent than the Transactions (taking into account all of the terms and conditions of, and the likelihood of completion of, such offer and of this Agreement (including any
changes to the terms of this Agreement proposed by the Company in response to such Superior Parent Proposal or otherwise)).
ARTICLE VI
Additional Agreements
SECTION 6.01.
Preparation of the Form S-4 and the Joint Proxy Statement; Company Stockholders Meeting and Parent Shareholders Meeting.
(a) As promptly as reasonably practicable following the date of this Agreement, Parent and the Company shall jointly prepare and cause to be filed with the SEC a joint proxy statement to be sent to the shareholders of Parent and the
stockholders of the Company relating to the Parent Shareholders Meeting and the Company Stockholders Meeting (together with any amendments or supplements thereto, the
Joint Proxy Statement
) and Parent shall prepare and cause to be
filed with the SEC the Form
S-4,
in which the Joint Proxy Statement will be included as a prospectus, and Parent and the Company shall use their respective reasonable best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as reasonably practicable after such filing. Each of the Company and Parent shall furnish all information concerning such Person and its Affiliates to the other, and provide such other assistance, as
may be reasonably requested in connection with the preparation, filing and distribution of the Form S-4 and Joint Proxy Statement, and the Form S-4 and Joint Proxy Statement shall include all information reasonably requested by such other party to
be included therein. Each of the Company and Parent shall promptly notify the other upon the receipt of any comments from the SEC or any request from the SEC for amendments or supplements to the Form S-4 or Joint Proxy Statement and shall provide
the other with copies of all correspondence between it and its Representatives, on the one hand, and the SEC, on the other hand. Each of the Company and Parent shall use its reasonable best efforts to respond as promptly as reasonably practicable to
any comments from the SEC with respect to the Form S-4 or Joint Proxy Statement. Notwithstanding the foregoing, prior to filing the Form S-4 (or any amendment or supplement thereto) or mailing the Joint Proxy Statement (or any amendment or
supplement thereto) or responding to any comments of the SEC with respect thereto, each of the Company and Parent (i) shall provide the other an opportunity to review and comment on such document or response (including the proposed final
A-36
version of such document or response), (ii) shall include in such document or response all comments reasonably proposed by the other and (iii) shall not file or mail such document or
respond to the SEC prior to receiving the approval of the other, which approval shall not be unreasonably withheld, conditioned or delayed. Each of the Company and Parent shall advise the other, promptly after receipt of notice thereof, of the time
of effectiveness of the Form S-4, the issuance of any stop order relating thereto or the suspension of the qualification of the Merger Consideration for offering or sale in any jurisdiction, and each of the Company and Parent shall use its
reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated. Each of the Company and Parent shall also take any other action (other than qualifying to do business in any jurisdiction in which it is not
now so qualified) required to be taken under the Securities Act, the Exchange Act, any applicable state securities or blue sky laws and the rules and regulations thereunder in connection with the Transactions.
(b) If prior to the Effective Time, any event occurs with respect to Parent or any Parent Subsidiary, or any change occurs with respect to
other information supplied by Parent for inclusion in the Joint Proxy Statement or the Form S-4, which is required to be described in an amendment of, or a supplement to, the Joint Proxy Statement or the Form S-4, Parent shall promptly notify the
Company of such event, and the Company and Parent shall cooperate in the prompt filing with the SEC of any necessary amendment or supplement to the Joint Proxy Statement or the Form S-4 and, as required by Law, in disseminating the information
contained in such amendment or supplement to Parents shareholders and the Companys stockholders. Nothing in this Section 6.01(b) shall limit the obligations of any party under Section 6.01(a).
(c) If prior to the Effective Time, any event occurs with respect to the Company or any Company Subsidiary, or any change occurs with respect
to other information supplied by the Company for inclusion in the Joint Proxy Statement or the Form S-4, which is required to be described in an amendment of, or a supplement to, the Joint Proxy Statement or the Form S-4, the Company shall promptly
notify Parent of such event, and the Company and Parent shall cooperate in the prompt filing with the SEC of any necessary amendment or supplement to the Joint Proxy Statement or the Form S-4 and, as required by Law, in disseminating the information
contained in such amendment or supplement to Parents shareholders and the Companys stockholders. Nothing in this Section 6.01(c) shall limit the obligations of any party under Section 6.01(a).
(d) Parent shall, as soon as reasonably practicable following the date of this Agreement, duly call, give notice of, convene and hold the
Parent Shareholders Meeting for the sole purpose of seeking the Parent Shareholder Approval. Parent shall use its reasonable best efforts to (i) cause the Joint Proxy Statement to be mailed to Parents shareholders and to hold the Parent
Shareholders Meeting as soon as reasonably practicable after the Form S-4 is declared effective under the Securities Act and (ii) subject to Section 5.03(b), solicit the Parent Shareholder Approval. Parent shall, through the Parent Board,
recommend to its shareholders that they give the Parent Shareholder Approval and shall include such recommendation in the Joint Proxy Statement, except to the extent that the Parent Board shall have made a Parent Adverse Recommendation Change as
permitted by Section 5.03(b). Notwithstanding the foregoing provisions of this Section 6.01(d), if on a date for which the Parent Shareholders Meeting is scheduled, Parent has not received proxies representing a sufficient number of shares
of Parent Common Stock to obtain the Parent Shareholder Approval, whether or not a quorum is present, Parent shall have the right to make one or more successive postponements or adjournments of the Parent Shareholders Meeting, provided that the
Parent Shareholders Meeting is not postponed or adjourned to a date that is more than 30 days after the date for which the Parent Shareholders Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law).
Parent agrees that its obligations pursuant to this Section 6.01 shall not be affected by the commencement, public proposal, public disclosure or communication to Parent of any Parent Takeover Proposal, by the making of any Parent Adverse
Recommendation Change by the Parent Board or the occurrence of a Parent Intervening Event.
(e) The Company shall, as soon as reasonably
practicable following the date of this Agreement, duly call, give notice of, convene and hold the Company Stockholders Meeting for the sole purpose of seeking the
A-37
Company Stockholder Approval. The Company shall use its reasonable best efforts to (i) cause the Joint Proxy Statement to be mailed to the Companys stockholders as promptly as
reasonably practicable after the Form S-4 is declared effective under the Securities Act and to hold the Company Stockholders Meeting as soon as reasonably practicable after the Form S-4 becomes effective and (ii) subject to
Section 5.02(b), solicit the Company Stockholder Approval. The Company shall, through the Company Board, recommend to its stockholders that they give the Company Stockholder Approval and shall include such recommendation in the Joint Proxy
Statement, except to the extent that the Company Board shall have made a Company Adverse Recommendation Change as permitted by Section 5.02(b). Notwithstanding the foregoing provisions of this Section 6.01(e), if on a date for which the
Company Stockholders Meeting is scheduled, the Company has not received proxies representing a sufficient number of shares of Company Common Stock to obtain the Company Stockholder Approval, whether or not a quorum is present, the Company shall have
the right to make one or more successive postponements or adjournments of the Company Stockholders Meeting, provided that the Company Stockholders Meeting is not postponed or adjourned to a date that is more than 30 days after the date for which the
Company Stockholders Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law). The Company agrees that its obligations pursuant to this Section 6.01 shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any Company Takeover Proposal, by the making of any Company Adverse Recommendation Change by the Company Board or the occurrence of a Company Intervening Event.
(f) The parties shall use their reasonable best efforts to hold the Company Stockholders Meeting and the Parent Shareholders Meeting on the
same day at the same time.
(g) Parent, as sole shareholder of Merger Sub, has, in connection with the execution and delivery of this
Agreement by each of the parties hereto, approved this Agreement.
SECTION 6.02.
Access to Information; Confidentiality.
(a) Subject to applicable Law, the Company shall, and shall cause each of the Company Subsidiaries to, afford to Parent and to Parents Representatives reasonable access, upon reasonable advance notice, during the period from the date of
this Agreement until the earlier of the Effective Time or termination of this Agreement in accordance with its terms, to all their respective properties, books, contracts, commitments, personnel and records and, during such period, the Company
shall, and shall cause each of the Company Subsidiaries to, furnish promptly to Parent all information concerning its business, properties and personnel as Parent may reasonably request in connection with this Agreement and the transactions
contemplated hereby, including for purposes of any business planning (including for post-Closing periods) and integration;
provided
,
however
, that the Company (i) shall not be required to afford such access if it would
unreasonably disrupt the operations of the Company, (ii) may withhold any document or information the disclosure of which would cause a violation of any agreement to which the Company or such Company Subsidiary is a party (
provided
that
the Company shall use its reasonable best efforts to obtain the required consent of such third party to such access or disclosure) and (iii) may withhold any document or information the disclosure of which would be reasonably likely to risk a
loss of legal privilege (
provided
that the Company shall use its reasonable best efforts to allow for such access or disclosure (or as much of it as possible) in a manner that would not be reasonably likely to risk a loss of legal privilege).
If any material is withheld by the Company pursuant to the immediately preceding sentence, the Company shall, to the extent possible without violating an agreement or risking a loss of legal privilege, inform Parent as to the general nature of what
is being withheld. All information exchanged pursuant to this Section 6.02(a) shall be subject to the confidentiality agreement dated August 29, 2013 between Parent and the Company (the
Confidentiality Agreement
).
(b) Subject to applicable Law, Parent shall, and shall cause each of the Parent Subsidiaries to, afford to the Company and to the
Companys Representatives reasonable access, upon reasonable advance notice, during the period from the date of this Agreement until the earlier of the Effective Time or termination of this Agreement in accordance with its terms, to all their
respective properties, books, contracts, commitments, personnel and records and, during such period, Parent shall, and shall cause each of the Parent Subsidiaries to, furnish promptly to the Company all information concerning its business,
properties and personnel as the Company may reasonably request in connection with this Agreement and the transactions contemplated hereby;
A-38
provided
,
however
, that Parent (i) shall not be required to afford such access if it would unreasonably disrupt the operations of Parent, (ii) may withhold any document or
information the disclosure of which would cause a violation of any agreement to which Parent or such Parent Subsidiary is a party (
provided
that Parent shall use its reasonable best efforts to obtain the required consent of such third party
to such access or disclosure) and (iii) may withhold any document or information the disclosure of which would be reasonably likely to risk a loss of legal privilege (
provided
that Parent shall use its reasonable best efforts to allow
for such access or disclosure (or as much of it as possible) in a manner that would not be reasonably likely to risk a loss of legal privilege). If any material is withheld by Parent pursuant to the immediately preceding sentence, Parent shall, to
the extent possible without violating an agreement or risking a loss of legal privilege, inform the Company as to the general nature of what is being withheld. All information exchanged pursuant to this Section 6.02(b) shall be subject to the
Confidentiality Agreement.
SECTION 6.03.
Required Actions.
(a) Each of the parties shall use their respective reasonable best
efforts to take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other parties in doing, all things reasonably appropriate to consummate and make effective, as soon as reasonably possible, the
Transactions.
(b) In connection with and without limiting Section 6.03(a), the Company and the Company Board and Parent and the
Parent Board shall use their respective reasonable best efforts to (x) take all action reasonably appropriate to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to the Transaction Agreements or
the Transactions and (y) if any state takeover statute or similar statute or regulation becomes applicable to the Transaction Agreements or the Transactions, take all action reasonably appropriate to ensure that the Transactions may be
consummated as promptly as practicable on the terms contemplated by the applicable Transaction Agreements.
(c) In connection with and
without limiting Section 6.03(a), Parent and the Company shall cooperate in good faith to seek to obtain all consents, approvals and waivers required by the terms of any material Contracts with third parties or material Permits in connection
with the transactions contemplated hereby.
(d) In connection with and without limiting Section 6.03(a), the Company and Parent shall
promptly enter into discussions with the Governmental Entities from whom Consents or nonactions are required to be obtained in connection with the consummation of the Merger and the other transactions contemplated by this Agreement in order to
obtain all such required Consents or nonactions from such Governmental Entities, in each case with respect to the Merger, so as to enable the Closing to occur as soon as reasonably possible, and in any event no later than the End Date. To the extent
necessary in order to accomplish the foregoing and subject to the limitations set forth in Section 6.03(f), the Company and Parent shall use their respective reasonable best efforts to jointly negotiate, commit to and effect, by consent decree,
hold separate order, condition or approval or otherwise, the sale, divestiture or disposition of, or prohibition or limitation on the ownership or operation of, or requirements or undertakings with respect to the conduct by the Company, Parent or
any of their respective Subsidiaries of, any portion of the business, properties or assets of the Company, Parent or any of their respective Subsidiaries;
provided
,
however
, that neither Parent nor the Company shall be required
pursuant to this Section 6.03(d) to commit to or effect any action, prohibition, limitation, requirement or undertaking that is not conditioned upon the consummation of the Merger or that would or would reasonably be expected to have a
Substantial Detriment. If the actions taken by Parent and the Company pursuant to the immediately preceding sentence do not result in the conditions set forth in Sections 7.01(c) and (d) being satisfied, then, during the term of this Agreement,
each of Parent and the Company shall use their reasonable best efforts to initiate or participate in any proceedings, whether judicial or administrative, in order to (i) oppose or defend against any action by any Governmental Entity to prevent
or enjoin the consummation of the Transactions or (ii) take such action as necessary to overturn any regulatory action by any Governmental Entity to block consummation of the Transactions, including by defending any suit, action or other legal
proceeding brought by any Governmental Entity in order to avoid the entry of, or to have vacated, overturned or terminated, including by appeal if necessary, any Legal Restraint resulting from any suit, action or other legal proceeding that would
cause any condition set forth in Section 7.01(c) or (d) not to be satisfied.
A-39
(e) In connection with and without limiting the generality of the foregoing, each of Parent and
the Company shall:
(i) make or cause to be made as promptly as reasonably practicable (and in any event no later than 15
Business Days following the date of this Agreement), in consultation and cooperation with the other, all filings required under the HSR Act relating to the Merger;
(ii) use its reasonable best efforts to furnish to the other all assistance, cooperation and information required for any such
registration, declaration, notice or filing and in order to achieve the effects set forth in Section 6.03(d);
(iii)
give the other reasonable prior notice of any such registration, declaration, submission, notice or filing and, to the extent reasonably practicable, of any communication with any Governmental Entity regarding the Merger (including with respect to
any of the actions referred to in Section 6.03(d) and in this Section 6.03(e)), and permit the other to review and discuss in advance, and consider in good faith the views of, and secure the participation of, the other in connection with
any such registration, declaration, submission, notice, filing or communication;
(iv) use its reasonable best efforts to
respond as promptly as reasonably practicable to any inquiries or requests received from any Governmental Entity or any other authority enforcing applicable antitrust, competition, trade regulation or similar Laws for additional information or
documentary material in connection with antitrust, competition, trade regulation or similar matters (including a second request under the HSR Act), and not extend any waiting period under the HSR Act or enter into any agreement with such
Governmental Entities or other authorities not to consummate any of the transactions contemplated by this Agreement, except with the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed; and
(v) unless prohibited by applicable Law or by the applicable Governmental Entity, (A) to the extent reasonably
practicable, not participate in or attend any meeting, or engage in any conversation with any Governmental Entity in respect of the Merger (including with respect to any of the actions referred to in Section 6.03(d) and in this
Section 6.03(e)) without the other, (B) to the extent reasonably practicable, give the other reasonable prior notice of any such meeting or conversation, (C) in the event one party is prohibited by applicable Law or by the applicable
Governmental Entity from participating in or attending any such meeting or engaging in any such conversation, keep such party reasonably apprised with respect thereto, (D) cooperate in the filing of any substantive memoranda, white papers,
filings, correspondence or other written communications explaining or defending this Agreement and the Merger, articulating any regulatory or competitive argument, or responding to requests or objections made by any Governmental Entity and
(E) furnish the other party with copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between it and its Affiliates and their respective Representatives on the one hand, and any
Governmental Entity or members of any Governmental Entitys staff, on the other hand, with respect to this Agreement and the Merger, subject to redaction of competitively sensitive information, valuation material or information subject to
attorney client privilege.
(f) Notwithstanding anything else contained herein but subject to the proviso of the second sentence of
Section 6.03(d), the provisions of this Section 6.03 shall not be construed to require the Company, Parent or their respective Subsidiaries to offer, take, commit to or accept any action, restrictions or limitations of or on the Company,
Parent or their respective Subsidiaries, or to permit such actions, restrictions or limitations without the prior written consent of the other party, if such actions, restrictions or limitations, individually or in the aggregate, would or would
reasonably be expected to result in a Substantial Detriment.
SECTION 6.04.
Stock Plans.
(a) Each Company Stock Option, whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, as of the
Effective Time, automatically and without any action on the part of the holders thereof, vest and be converted into a Parent Stock Option on the same terms and conditions (except as provided
A-40
in this Section 6.04(a)) as were applicable under such Company Stock Option immediately prior to the Effective Time, to purchase (i) that number of shares of Parent Common Stock equal
to the product determined by multiplying (A) the total number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time by (B) the Exchange Ratio, rounded down to the nearest whole
number of shares of Parent Common Stock, (ii) at a per-share exercise price equal to the quotient determined by dividing (A) the exercise price per share of Company Common Stock at which such Company Stock Option was exercisable
immediately prior to the Effective Time by (B) the Exchange Ratio, and rounding the resulting per-share exercise price up to the nearest whole cent.
(b) Each Company SAR granted, whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, as of the
Effective Time, automatically and without any action on the part of the holders thereof, vest and be converted into a stock appreciation right (a
Parent SAR
), on the same terms and conditions (except as provided in this
Section 6.04(b)) as were applicable under such Company SAR immediately prior to the Effective Time, corresponding to (i) that number of shares of Parent Common Stock equal to the product determined by multiplying (A) the total number
of shares of Company Common Stock corresponding to such Company SAR immediately prior to the Effective Time by (B) the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock, (ii) at a per-share base
price equal to the quotient determined by dividing (A) the base price per share of Company Common Stock corresponding to such Company SAR immediately prior to the Effective Time by (B) the Exchange Ratio, and rounding the resulting
per-share base price up to the nearest whole cent.
(c) Effective as of the Effective Time, each Company RSU (other than a Company
Rollover RSU) shall, as of the Effective Time, whether or not then vested or free of conditions to payment, vest and automatically and without any action on the part of the holder thereof, be converted, into the right to receive from Parent, a
number of shares of Parent Common Stock (and cash in lieu of fractional shares to be paid by the Surviving Company to the holder) equal to the product determined by multiplying (i) the total number of shares of Company Common Stock subject to
such Company RSU by (ii) the Exchange Ratio and be settled within ten Business Days following the Effective Time. For purposes of this Section 6.04(c), with respect to any Company RSU that is subject to performance goals, the vesting
provided for in this Section 6.04(c) shall be based on the deemed achievement in full of such performance goals (i.e., the award shall vest with respect to 100% of the shares underlying the award).
(d) Effective as of the Effective Time, each Company Rollover RSU shall, as of the Effective Time, be converted into restricted share units,
otherwise on the same terms and conditions as were applicable under such Company Rollover RSU immediately prior to the Effective Time, with respect to a number of shares of Parent Common Stock determined by multiplying the number of shares of
Company Common Stock subject to such Company Rollover RSU immediately prior to the Effective Time by the Exchange Ratio;
provided
that any fractional share of Parent Common Stock resulting therefrom shall be rounded down to the nearest whole
share.
(e) Prior to the Effective Time, the Company Board (or, if appropriate, any committee thereof administering the Company Stock
Plans) shall pass resolutions to effect the foregoing provisions of this Section 6.04.
(f) As soon as practicable after the
Effective Time, Parent shall prepare and file with the SEC a Form S-8 (or file such other appropriate form) registering a number of shares of Parent Common Stock necessary to fulfill Parents obligations under this Section 6.04.
SECTION 6.05.
Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, Parent and Merger Sub agree that
all rights to indemnification, advancement of expenses and exculpation of each former and present director or officer of the Company or any Company Subsidiary and each person who served as a director, officer, member, trustee or fiduciary of another
corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such service was at the request or for the benefit of the
A-41
Company or any Company Subsidiary (each, together with such persons heirs, executors or administrators, a
Company Indemnified Party
), against all claims, losses,
liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses, including attorneys fees and disbursements, incurred in connection with any claim, action, suit or proceeding, whether civil, criminal, administrative
or investigative, with respect to matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), arising out of or pertaining to the fact that the Company Indemnified
Party is or was an officer or director of the Company or any Company Subsidiary or is or was serving at the request of the Company or any Company Subsidiary as a director or officer of another Person, whether asserted or claimed prior to, at or
after the Effective Time as provided in their respective certificates of incorporation or by-laws (or comparable organizational documents) as in effect on the date of this Agreement or in any agreement, a true and complete copy of which agreement
has been provided by the Company to Parent prior to the date hereof, to which the Company or any of its Subsidiaries is a party, shall survive the Merger and continue in full force and effect in accordance with their terms. For a period of six years
from the Effective Time, Parent shall, and shall cause the Surviving Company to, maintain in effect the exculpation, indemnification and advancement of expenses provisions of the Companys and any Company Subsidiarys articles of
incorporation and by-laws or other organization documents in effect immediately prior to the Effective Time or in any agreement, a true and complete copy of which agreement has been provided by the Company to Parent prior to the date hereof, to
which the Company or any of its Subsidiaries is a party, in each case in effect immediately prior to the Effective Time and shall not amend, repeal or otherwise modify any such provisions or the exculpation, indemnification or advancement of
expenses provisions of the Surviving Companys articles of incorporation and by-laws set forth in Exhibit A and Exhibit B in any manner that would adversely affect the rights thereunder of any individual who immediately before the Effective
Time was a Company Indemnified Party;
provided
,
however
, that all rights to indemnification in respect of any Action pending or asserted or any claim made within such period shall continue until the disposition of such Action or
resolution of such claim.
(b) At and after the Effective Time, Parent shall indemnify and hold harmless (and advance funds in respect of
the foregoing) each Company Indemnified Party to the fullest extent permitted under applicable Law against any costs or expenses (including advancing attorneys fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative (each, an
Action
), arising out of or pertaining to the fact that the Company Indemnified Party is or was an officer or director of the Company or any Company Subsidiary or is or was
serving at the request of the Company or any Company Subsidiary as a director or officer of another Person, whether asserted or claimed prior to, at or after the Effective Time. Parent and the Surviving Company shall reasonably cooperate with the
Indemnified Party in the defense of any such Action.
(c) For a period of six years from the Effective Time, Parent shall cause to be
maintained in effect the coverage provided by the policies of directors and officers liability insurance and fiduciary liability insurance in effect as of the Effective Time by the Company and its Subsidiaries from a carrier with
comparable or better credit ratings to the Companys existing directors and officers insurance and fiduciary liability insurance policy carrier and on terms and conditions not less favorable to the insured Persons than the
directors and officers liability insurance and fiduciary liability insurance coverage currently maintained by the Company with respect to claims arising from facts, events, acts or omissions that occurred on or before the Effective Time,
except that in no event shall Parent be required to pay an annual premium for such insurance in excess of 250% of the aggregate annual premium payable by the Company for such insurance policy for the year ended December 31, 2012 (the
Maximum Amount
);
provided
,
however
, that if such insurance can only be obtained at an annual premium in excess of the Maximum Amount, Parent shall obtain the most advantageous policy of directors and
officers insurance obtainable for an annual premium equal to the Maximum Amount. In lieu of the foregoing, the Company may in its discretion purchase, and Parent may in its discretion purchase if the Company declines to do so, a
tail directors and officers liability insurance and fiduciary liability insurance policy covering the six-year period from and after the Effective Time from a carrier with comparable or better credit ratings to the
A-42
Companys existing directors and officers insurance and fiduciary liability insurance policy carrier and on terms and conditions not less favorable to the insured Persons than
the directors and officers liability insurance and fiduciary liability insurance coverage currently maintained by the Company with respect to claims arising from facts, events, acts or omissions that occurred on or before the Effective
Time,
provided
that without the Parents consent, the cost of such tail policy shall not exceed the Maximum Amount.
(d) In the event that Parent, the Surviving Company or any of their respective successors or assigns (i) consolidates with or merges into
any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, Parent
or the Surviving Company shall cause proper provision to be made so that the successors and assigns of Parent or the Surviving Company, as the case may be, assume the obligations set forth in this Section 6.05.
(e) The provisions of this Section 6.05 shall (i) survive consummation of the Merger, (ii) are intended to be for the benefit
of, and will be enforceable by, each indemnified or insured party (including the Company Indemnified Parties), his or her heirs and his or her representatives and (iii) are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such Person may have by contract or otherwise.
SECTION 6.06.
Fees and Expenses.
(a) Except as provided in Section 6.06(b), 6.06(c) and 6.06(d), all fees and expenses incurred in connection with the Transaction Agreements and the Transactions shall be paid by the party incurring such fees or expenses, whether or not
such transactions are consummated.
(b) The Company shall pay to Parent the Company Termination Fee if:
(i) Parent terminates this Agreement pursuant to Section 8.01(e);
provided
that if either the Company or Parent
terminates this Agreement pursuant to Section 8.01(b)(i) (solely in the event that the Company Stockholders Meeting has not occurred at least five Business Days prior to such time) or Section 8.01(b)(iv) at any time after Parent would have
been permitted to terminate this agreement pursuant to Section 8.01(e), this Agreement shall be deemed terminated pursuant to Section 8.01(e) for purposes of this Section 6.06(b)(i);
(ii) the Company terminates this Agreement pursuant to Section 8.01(h); or
(iii) (A) this Agreement is terminated pursuant to Section 8.01(b)(i) (solely in the event that the Company Stockholders
Meeting has not occurred at least five Business Days prior to such time), Section 8.01(b)(iv) or Section 8.01(d), (B) after the date hereof, but prior to the date of the Company Stockholders Meeting (in the case of
Section 8.01(b)(iv)) or prior to the date this Agreement is terminated (in the case of Section 8.01(b)(i) or Section 8.01(d)), a third party has made a Company Takeover Proposal that has become known to the public or a third party has
publicly announced an intention to make a Company Takeover Proposal, and (C) within 12 months of such termination, the Company enters into a definitive Contract to consummate any Company Takeover Proposal or any Company Takeover Proposal is
consummated. For the purposes of Section 6.06(b)(iii)(C) only, the term Company Takeover Proposal shall have the meaning assigned to such term in Section 5.02(e) except that all references to 20% therein shall be
deemed to be references to 50%.
(c) Parent shall pay to the Company the Parent Termination Fee if:
(i) the Company terminates this Agreement pursuant to Section 8.01(f);
provided
that if either the Company or
Parent terminates this Agreement pursuant to Section 8.01(b)(i) (solely in the event that the Parent Shareholders Meeting has not occurred at least five Business Days prior to such time) or Section 8.01(b)(iii) at any time after the
Company would have been permitted to terminate this agreement pursuant to Section 8.01(f), this Agreement shall be deemed terminated pursuant to Section 8.01(f) for purposes of this Section 6.06(c)(i);
A-43
(ii) Parent terminates this Agreement pursuant to Section 8.01(i); or
(iii) (A) this Agreement is terminated pursuant to Section 8.01(b)(i) (solely in the event that the Parent Shareholders
Meeting has not occurred at least five Business Days prior to such time), Section 8.01(b)(iii) or Section 8.01(c), (B) after the date hereof, but prior to the date of the Parent Shareholders Meeting (in the case of
Section 8.01(b)(iii)) or prior to the date this Agreement is terminated (in the case of Section 8.01(b)(i) or Section 8.01(c)), a third party has made a Parent Takeover Proposal that has become known to the public or a third party has
publicly announced an intention to make a Parent Takeover Proposal, and (C) within 12 months of such termination, Parent enters into a definitive Contract to consummate any Parent Takeover Proposal or any Parent Takeover Proposal is
consummated. For the purposes of Section 6.06(c)(iii)(C) only, the term Parent Takeover Proposal shall have the meaning assigned to such term in Section 5.03(e) except that all references to 20% therein shall be
deemed to be references to 50%.
(d) Parent shall pay to the Company the Reverse Termination Fee, if this Agreement is
terminated pursuant to Section 8.01(b)(i) and at the time of such termination all of the conditions set forth in Sections 7.01 and 7.02 have been satisfied or waived (or with respect to the conditions set forth in Section 7.01(b) and
7.02(e) and the conditions that by their nature are to be satisfied at the Closing) were capable of being satisfied or would have been so satisfied if the Closing would have occurred) except for any conditions set forth in (w) Section 7.01(c),
(x) Section 7.01(d) (if the failure of such condition is due to a Legal Restraint relating to antitrust Laws), (y) Section 7.01(e) (if a primary reason for the failure of such condition is due to (i) a breach by Parent of its
obligations under this Agreement or (ii) the failure to obtain approval or clearance for the Merger under antitrust Laws) or (z) Section 7.02(d).
(e) Any Company Termination Fee, Parent Termination Fee or Reverse Termination Fee due under Section 6.06(b), 6.06(c) or 6.06(d) shall be
paid by wire transfer of same-day funds (x) in the case of Section 6.06(b)(i), 6.06(b)(ii), 6.06(c)(i), 6.06(c)(ii) or 6.06(d), on the Business Day immediately following the date of termination of this Agreement and (y) in the case of
Section 6.06(b)(iii) or 6.06(c)(iii), on the date of the first to occur of the events referred to in Section 6.06(b)(iii)(C) or 6.06(c)(iii)(C), as applicable.
(f) Parent and the Company acknowledge and agree that the agreements contained in Section 6.06(b), 6.06(c) and 6.06(d) are an integral
part of the transactions contemplated by this Agreement, and that, without these agreements, Parent and the Company would not have entered into this Agreement. Accordingly, if either party fails promptly to pay the amount due pursuant to
Section 6.06(b), 6.06(c) or 6.06(d), as applicable, and, in order to obtain such payment, the other party commences a suit, action or other proceeding that results in a Judgment in its favor for such payment, the Company or Parent, as
applicable, shall pay to the other party such payment and its costs and expenses (including attorneys fees and expenses) in connection with such suit, action or other proceeding, together with interest on the amount of such payment from the
date such payment was required to be made until the date of payment at the prime rate of JPMorgan Chase Bank, N.A. in effect on the date such payment was required to be made. In no event shall either party be obligated to pay more than one
termination fee pursuant to this Section 6.06.
SECTION 6.07.
Certain Tax Matters.
(a) The Company, Parent and Merger Sub
shall each use its reasonable best efforts to cause the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, including by not taking any action (or failing to take any action) that is reasonably
likely to prevent or impede such qualification. Parent will report the Transactions in a manner consistent with such qualification.
(b)
(i) The Company shall use its reasonable best efforts to deliver to Wachtell, Lipton, Rosen & Katz, special
counsel to the Company (
Companys Counsel
), and Cravath, Swaine & Moore LLP, counsel to Parent (
Parents Counsel
), a tax representation letter dated as of the Closing Date (and, if requested,
dated as of the date the Form S-4 is declared effective by the SEC) and signed by an officer of the Company,
A-44
containing representations of the Company, and Parent shall use its reasonable best efforts to deliver to Companys Counsel and Parents Counsel a tax representation letter dated as of
the Closing Date (and, if requested, dated as of the date the Form S-4 is declared effective by the SEC) and signed by an officer of Parent and Merger Sub, containing representations of Parent and Merger Sub (collectively, the
Tax
Representation Letters
), in each case as reasonably necessary and appropriate to enable Companys Counsel to render the opinion described in Section 7.03(d) and Parents Counsel to render the opinion described in
Section 7.02(e).
(ii) Each of the Company and Parent shall use its reasonable best efforts not to take or cause to be
taken any action that would cause to be untrue (or fail to take or cause not to be taken any action which inaction would cause to be untrue) any of the representations included in the Tax Representation Letters.
SECTION 6.08.
Transaction Litigation.
Subject to applicable Law, Parent shall give the Company the opportunity to participate in the
defense or settlement of any litigation by a holder of securities of Parent against Parent or its directors relating to the Transactions and no such settlement shall be agreed to without the prior written consent of the Company, which consent shall
not be unreasonably withheld, conditioned or delayed. Subject to applicable Law, the Company shall give Parent the opportunity to participate in the defense or settlement of any litigation against the Company or its directors or officers by a holder
of securities of the Company relating to the Transactions and no such settlement shall be agreed to without the prior written consent of Parent. Without limiting in any way the parties obligations under Section 6.03, each of Parent and
the Company shall cooperate, shall cause the Parent Subsidiaries and the Company Subsidiaries, as applicable, to cooperate, and shall use its reasonable best efforts to cause its directors, officers, employees, agents, legal counsel, financial
advisors, independent auditors, and other advisors and representatives to cooperate in the defense against such litigation by a holder of securities of the Company or of Parent, as applicable.
SECTION 6.09.
Section 16 Matters.
Prior to the Effective Time, the Company, Parent and Merger Sub each shall take all such steps
as may be required to cause (a) any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the Transactions by each individual who will be subject to the reporting requirements
of Section 16(a) of the Exchange Act with respect to the Company immediately prior to the Effective Time to be exempt under Rule 16b-3 promulgated under the Exchange Act and (b) any acquisitions of Parent Common Stock (including derivative
securities with respect to Parent Common Stock) resulting from the Merger and the other transactions contemplated by this Agreement, by each individual who may become or is reasonably expected to become subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Parent to be exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION
6.10.
Public Announcements.
Except with respect to any Company Adverse Recommendation Change or Parent Adverse Recommendation Change made in accordance with the terms of this Agreement, Parent and the Company will use reasonable best efforts
to develop a joint communications plan and to consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transactions, and not to issue any
such press release or make any such public statement prior to such consultation, except as such party may reasonably conclude may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national
securities exchange or national securities quotation system. The Company and Parent agree that the initial press release to be issued with respect to the Transactions shall be in the form heretofore agreed to by the parties. Notwithstanding the
foregoing sentences of this Section 6.10, Parent and the Company may make any oral or written public announcements, releases or statements without complying with the foregoing requirements if the substance of such announcements, releases or
statements, was publicly disclosed and previously subject to the foregoing requirements.
SECTION 6.11.
Stock Exchange Listing.
Parent shall use its reasonable best efforts to cause the shares of Parent Common Stock to be issued in the Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date.
A-45
SECTION 6.12.
Director Appointment.
Parent agrees that it will cause to be appointed the
Agreed Individual to the Parent Board promptly after the Effective Time.
Agreed Individual
shall mean an individual to be mutually agreed by Parent and the Company (or one of the current two largest stockholders of the Company
designated by the Company Board) following (a) consultations between Parent and the Company (or such designee) regarding potential candidates whom they believe in good faith would be valuable additions to the Parent Board and (b) a
determination by the Nominating and Corporate Governance Committee of the Parent Board that such individual is an appropriate person to add to the Parent Board, taking into account such committees Guidelines for New Directors.
SECTION 6.13.
Certain Transfer Taxes
. Except to the extent set forth in Section 2.02(c), any liability arising out of any
documentary, sales, use, real property transfer, registration, transfer, stamp, recording and similar Taxes with respect to the transactions contemplated by this Agreement shall be borne by the Surviving Company and expressly shall not be a
liability of stockholders of the Company.
SECTION 6.14.
Employee Matters.
(a) From and after the Effective Time, the Company shall, and Parent shall cause the Company to, honor all Company Benefit Plans in accordance
with their terms as in effect immediately before the Effective Time. For a period of one year following the Effective Time, Parent shall provide, or shall cause to be provided, to each employee of the Company and its Subsidiaries as of the Effective
Time (each, a
Company Employee
) (i) base salaries or wage rates, as applicable, that, in each case, are no less favorable than were provided to the Company Employee immediately before the Effective Time and (ii) employee
benefits that are substantially comparable in the aggregate to either (A) those that were provided to the Company Employees immediately before the Effective Time or (B) those provided to similarly situated employees of Parent.
Notwithstanding any other provision of this Agreement to the contrary, (x) Parent shall or shall cause the Surviving Company to provide the Company Employees whose employment terminates during the one-year period following the Effective Time
with severance benefits that are no less favorable than were provided to the Company Employees immediately before the Effective Time and (y) any such severance benefits shall be determined without regard to any reduction following the Effective
Time in base salary or base wage rates.
(b) For purposes of vacation eligibility and participation in long-service award programs of
Parent, each Company Employee shall be credited with his or her years of service with the Company and its Subsidiaries (but not any predecessor) to the same extent as such Company Employee was entitled, before the Effective Time, to credit for such
service under any similar Company Benefit Plan in which such Company Employee participated or was eligible to participate immediately prior to the Effective Time;
provided
that (i) the foregoing shall not apply to the extent that its
application would result in a duplication of benefits and (ii) Parent shall not be obligated to provide credit for service with the Company or any of its Subsidiaries for any other purpose. Parent shall use its commercially reasonable efforts
to cause any eligible expenses incurred by each Company Employee and his or her covered dependents during the portion of the plan year in which the Effective Time occurs to be taken into account for purposes of satisfying such years
deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable employee welfare benefit plan in which they will be eligible to participate from and after the Effective
Time, to the extent credited under the employee welfare benefit plans maintained by the Company prior to the Effective Time.
(c) Parent
hereby acknowledges that a change of control (or similar phrase) within the meaning of the Company Benefit Plans will occur at or prior to the Effective Time, as applicable.
(d) At or prior to the Effective Time, the Company shall terminate each health reimbursement account within the meaning of the
applicable Company Benefit Plan in accordance with the terms of such plan.
(e) Without limiting the generality of Section 9.07, the
provisions of this Section 6.14 are solely for the benefit of the parties to this Agreement, and no current or former director, officer, employee or independent
A-46
contractor or any other Person shall be a third-party beneficiary of this Agreement. Nothing herein shall be construed as an amendment to any Parent Benefit Plan, Company Benefit Plan or other
compensation or benefit plan or arrangement for any purpose or as prohibiting or limiting the ability of Parent to amend, modify or terminate any plans, programs, policies, agreements, arrangements or understandings of the Company or Parent. Nothing
herein shall be construed as requiring, and the Company shall take no action that would have the effect of requiring, Parent to continue any specific plans or to continue the employment, or any changes to the terms and conditions of the employment,
of any specific person.
ARTICLE VII
Conditions Precedent
SECTION 7.01.
Conditions to Each Partys Obligation to Effect the Merger.
The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:
(a)
Shareholder and
Stockholder Approvals.
The Parent Shareholder Approval and the Company Stockholder Approval shall have been obtained.
(b)
Listing.
The shares of Parent Common Stock issuable as Merger Consideration pursuant to this Agreement shall have been approved for listing on the NYSE, subject to official notice of issuance.
(c)
HSR Act.
Any waiting period applicable to the Merger under the HSR Act shall have been terminated or shall have expired.
(d)
No Legal Restraints.
No applicable Law and no Judgment, preliminary, temporary or permanent, or other legal restraint or
prohibition and no binding order or ruling by any Governmental Entity (collectively, the
Legal Restraints
) shall be in effect that prevents, makes illegal or prohibits the consummation of the Merger.
(e)
Form S-4.
The Form S-4 shall have been declared effective by the SEC under the Securities Act. No stop order suspending the
effectiveness of the
Form S-4
shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC.
SECTION 7.02.
Condition to Parents and Merger Subs Obligation to Effect the Merger.
The obligation of Parent and Merger Sub
to consummate the Merger is further subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:
(a)
Representations and Warranties.
The representations and warranties of the Company contained in this Agreement (except for the representations and warranties contained in Sections 4.01, 4.03, 4.04 and 4.19) shall be true and correct (without
giving effect to any limitation as to materiality or Company Material Adverse Effect set forth therein) at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct (without giving effect to any limitation as to materiality or
Company Material Adverse Effect set forth therein), individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect (it being agreed that with respect to any representation or
warranty with respect to which effects resulting from or arising in connection with the matters set forth in clause (iv) of the definition of the term Material Adverse Effect are not excluded in determining whether a Company
Material Adverse Effect has occurred or would reasonably be expected to occur, such effects shall similarly not be excluded for purposes of this Section 7.02(a)), and the representations and warranties of the Company contained in Sections 4.01,
4.03, 4.04 and 4.19 shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time (except to the extent expressly made as of an earlier date, in which
case as of such earlier date). Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect.
A-47
(b)
Performance of Obligations of the Company.
The Company shall have performed in all
material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such
effect.
(c)
Absence of Company Material Adverse Effect.
Since the date of this Agreement, except to the extent contained in any
Company Material Adverse Effect Condition Exceptions, there shall not have occurred a Company Material Adverse Effect, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such
effect.
(d)
No Substantial Detriment.
No Legal Restraints issued or promulgated by a U.S. Governmental Entity shall be in effect
that results, directly or indirectly, in (i) any prohibition or limitation on the ownership or operation by the Company, Parent or any of their respective Subsidiaries of any portion of the business, properties or assets of the Company, Parent
or any of their respective Subsidiaries, (ii) the Company, Parent or any of their respective Subsidiaries being compelled to dispose of or hold separate any portion of the business, properties or assets of the Company, Parent or any of their
respective Subsidiaries, in each case as a result of the Merger, (iii) any prohibition or limitation on the ability of Parent to acquire or hold, or exercise full right of ownership of, any shares of the capital stock of the Company or the
Company Subsidiaries, including the right to vote, or (iv) any prohibition or limitation on Parent effectively controlling the business or operations of the Company and the Company Subsidiaries, which, individually or in the aggregate, in the
case of each of clauses (i)-(iv), would reasonably be expected to result in a Substantial Detriment.
(e)
Tax Opinion.
Parent shall
have received the written opinion of Parents Counsel, dated as of the Closing Date, to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. In rendering the opinion
described in this Section 7.02(e), Parents Counsel shall be entitled to receive and rely upon the Tax Representation Letters.
SECTION 7.03.
Condition to the Companys Obligation to Effect the Merger.
The obligations of the Company to consummate the Merger
are further subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:
(a)
Representations and
Warranties.
The representations and warranties of Parent and Merger Sub contained in this Agreement (except for the representations and warranties contained in Sections 3.01, 3.03, 3.04 and 3.14) shall be true and correct (without giving effect
to any limitation as to materiality or Parent Material Adverse Effect set forth therein) at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct (without giving effect to any limitation as to materiality or
Parent Material Adverse Effect set forth therein), individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect (it being agreed that with respect to any representation or
warranty with respect to which effects resulting from or arising in connection with the matters set forth in clause (iv) of the definition of the term Material Adverse Effect are not excluded in determining whether a Parent Material
Adverse Effect has occurred or would reasonably be expected to occur, such effects shall similarly not be excluded for purposes of this Section 7.03(a)) and the representations and warranties of Parent and Merger Sub contained in Sections 3.01,
3.03, 3.04 and 3.14 shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date as if made at and as of such time (except to the extent expressly made as of an earlier date, in which
case as of such earlier date). The Company shall have received a certificate signed on behalf of each of Parent and Merger Sub by an executive officer of each of Parent and Merger Sub, respectively, to such effect.
(b)
Performance of Obligations of Parent and Merger Sub.
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
A-48
prior to the Closing Date, and the Company shall have received a certificate signed on behalf of each of Parent and Merger Sub by an executive officer of each of Parent and Merger Sub,
respectively, to such effect.
(c)
Absence of Parent Material Adverse Effect.
Since the date of this Agreement, except to the
extent contained in any Parent Material Adverse Effect Condition Exceptions, there shall not have occurred a Parent Material Adverse Effect, and the Company shall have received a certificate signed on behalf of Parent by an executive officer of
Parent to such effect.
(d)
Tax Opinion.
The Company shall have received the written opinion of Companys Counsel, dated as of
the Closing Date, to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. In rendering the opinion described in this Section 7.03(d), Companys Counsel shall be
entitled to receive, and rely upon the Tax Representation Letters.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01.
Termination.
This Agreement may be terminated at any time prior to the Effective Time, whether before or after the
receipt of the Company Stockholder Approval or the Parent Shareholder Approval, as follows:
(a) by mutual written consent
of the Company and Parent;
(b) by either the Company or Parent:
(i) if the Merger is not consummated on or before the End Date. The
End Date
shall mean six months from
signing;
provided
,
however
, that if all of the conditions to Closing shall have been satisfied or shall be then capable of being satisfied (other than the condition set forth in Sections 7.01(c) or 7.01(d) (to the extent relating to
antitrust Laws), the End Date may be extended for one or more periods of one month each by either Parent or the Company by written notice to the other party, up to a date not beyond the one year anniversary of this Agreement, the latest of any of
which dates shall thereafter be deemed to be the End Date; and
provided further
that (A) any such extensions shall be made only in the five Business Day period prior to the then applicable End Date and (B) only one such extension
shall be made in any such one-month extension period; and
provided
,
further
,
however
, that the terminating party shall have complied with its obligations pursuant to Section 6.03 and the right to terminate this Agreement
under this Section 8.01(b)(i) shall not be available to any party if such failure of the Merger to occur on or before the End Date is a proximate result of a breach of this Agreement by such party (including, in the case of Parent, Merger Sub);
(ii) [Reserved.]
(iii) if the Parent Shareholder Approval is not obtained at the Parent Shareholders Meeting duly convened (unless such Parent
Shareholders Meeting has been adjourned, in which case at the final adjournment thereof); or
(iv) if the Company
Stockholder Approval is not obtained at the Company Stockholders Meeting duly convened (unless such Company Stockholders Meeting has been adjourned, in which case at the final adjournment thereof);
(c) by the Company, if Parent or Merger Sub breaches or fails to perform any of its covenants or agreements contained in this Agreement, or if
any of the representations or warranties of Parent or Merger Sub contained herein fails to be true and correct, which breach or failure (i) would give rise to the failure of a condition set forth in Section 7.03(a) or 7.03(b) and
(ii) is not reasonably capable of being cured by the End Date or is not cured by Parent or Merger Sub, as the case may be, within 90 days after receiving written notice from the Company;
(d) by Parent, if the Company breaches or fails to perform any of its covenants or agreements contained in this Agreement, or if any of the
representations or warranties of the Company contained herein fails to be true
A-49
and correct, which breach or failure (i) would give rise to the failure of a condition set forth in Section 7.02(a) or 7.02(b) and (ii) is not reasonably capable of being cured by
the End Date or is not cured by the Company, as the case may be, within 90 days after receiving written notice from Parent;
(e) by
Parent, in the event that (i) a Company Adverse Recommendation Change shall have occurred or (ii) the Company shall have failed to include in the Joint Proxy Statement, the Company Recommendation;
(f) by the Company, in the event that (i) a Parent Adverse Recommendation Change shall have occurred or (ii) Parent shall have
failed to include in the Joint Proxy Statement, the Parent Recommendation;
(g) [Reserved.]
(h) by the Company, if permitted by Section 5.02(b) and provided that the Company has complied with its obligations under
Section 5.02(b), at any time prior to obtaining the Company Stockholder Approval, in order to enter into a binding agreement that provides for a Superior Company Proposal; or
(i) by Parent, if permitted by Section 5.03(b) and provided that Parent has complied with its obligations under Section 5.03(b), at
any time prior to obtaining the Parent Shareholder Approval, in order to enter into a binding agreement that provides for a Superior Parent Proposal.
The
party desiring to terminate this Agreement pursuant to clause (b), (c), (d), (e), (f), (h) or (i) of this Section 8.01 shall give written notice of such termination to the other parties in accordance with Section 9.02, specifying
the provision of this Agreement pursuant to which such termination is effected.
SECTION 8.02.
Effect of Termination.
In the event
of termination of this Agreement by either Parent or the Company as provided in Section 8.01, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of the Company, Parent or Merger Sub,
other than the last sentence of Section 6.02(a), the last sentence of Section 6.02(b), Section 6.06, this Section 8.02 and Article IX, which provisions shall survive such termination, and no such termination shall relieve any
party from any liability for fraud, intentional misrepresentation or intentional breach of any covenant or agreement set forth in this Agreement.
SECTION 8.03.
Amendment.
Prior to the Effective Time, this Agreement may be amended by the parties at any time before or after receipt
of the Company Stockholder Approval or the Parent Shareholder Approval;
provided
,
however
, that (i) after receipt of the Company Stockholder Approval, there shall be made no amendment that by Law requires further approval by the
stockholders of the Company without the further approval of such stockholders and (ii) after receipt of the Parent Shareholder Approval, there shall be made no amendment that by Law requires further approval by the shareholders of Parent
without the further approval of such shareholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties.
SECTION 8.04.
Extension; Waiver.
At any time prior to the Effective Time, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement, (c) waive compliance with
any covenants and agreements contained in this Agreement or (d) waive the satisfaction of any of the conditions contained in this Agreement. No extension or waiver by Parent shall require the approval of the shareholders of Parent unless such
approval is required by Law and no extension or waiver by the Company shall require the approval of the stockholders of the Company unless such approval is required by Law. Any agreement on the part of a party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.
A-50
ARTICLE IX
General Provisions
SECTION 9.01.
Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 9.01 shall not limit Section 8.02 or any covenant or agreement of the parties which by its terms contemplates performance after the Effective
Time.
SECTION 9.02.
Notices.
All notices, requests, demands and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in accordance with the following clauses (i) and (ii): (i) by email to the parties at the following email addresses (or at such other email address for a party as shall be specified by
like notice) and (ii) by email and hand delivery to the parties counsel at the following email addresses and street addresses (or at such other email address or street address for a partys counsel as shall be specified by like
notice):
|
(a)
|
if to the Company, by email to:
|
Texas Industries, Inc.
1503 LBJ Freeway, Suite 400
Dallas, Texas 75234
Attention:
General Counsel
Email: fanderson@txi.com
and by email and hand delivery to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York,
New York 10019
Attention: Gordon S. Moodie
Email: gsmoodie@wlrk.com
|
(b)
|
if to Parent or Merger Sub, by email to:
|
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh,
North Carolina 27607
Attention: General Counsel
Email: roselyn.bar@martinmarietta.com
and by email and hand delivery to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth
Avenue
New York, New York 10019
Attention: Scott A. Barshay
George F. Schoen
Email: sbarshay@cravath.com
gschoen@cravath.com
SECTION 9.03.
Definitions.
For purposes of this Agreement:
An
Affiliate
of any Person means another Person that directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first Person. For the avoidance of doubt, none of Southeastern Asset Management Inc. or any of its Affiliates or NNS Holding or any of its Affiliates shall be considered an Affiliate of the
Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries shall be considered an Affiliate of any of the foregoing.
A-51
Applicable Time
means the actual time of day at which the applicable Company
Notice or Parent Notice was received by Parent or the Company, as applicable (e.g., if the applicable notice was received at 4:00 p.m. on the day on which it was received, then the Applicable Time on any subsequent day shall be 4:00 p.m.).
Business Day
means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking and savings and
loan institutions are authorized or required by Law to be closed in New York City.
Clean Air Act
means the federal
Clean Air Act, 42 U.S.C. 7401 et seq., as amended, and all related regulations and standards, including requirements relating to NESHAPs, new source performance standards and maximum achievable control technology standards.
Code
means the Internal Revenue Code of 1986, as amended.
Company Deferral Plan
means each of the Companys Management Deferred Compensation Plan and the Companys
Deferred Compensation Plan for Directors.
Company Intervening Event
means a material event, fact, circumstance,
development or occurrence that is unknown to or by the Board of Directors of the Company as of the date of this Agreement (or if known, the magnitude or material consequences of which were not known or understood by the Board of Directors of the
Company as of the date of this Agreement), which event, fact, circumstance, development, occurrence, magnitude or material consequences becomes known (or the magnitude or material consequences thereof become known or understood) to or by the Board
of Directors of the Company prior to obtaining the Company Stockholder Approval;
provided
,
however
that none of the following shall constitute a Company Intervening Event: (i) any action taken by any party hereto pursuant to and
in compliance with the affirmative covenants set forth in Section 6.03, (ii) changes in the market price or trading volume of the Companys securities or its credit ratings and (iii) the receipt, existence of or terms of a
Company Takeover Proposal or any inquiry relating thereto or the consequences thereof.
Company Material Adverse Effect
means a Material Adverse Effect with respect to the Company.
Company Material Adverse Effect Condition Exception
means
(i) any disclosures in the Filed Company SEC Documents (excluding any disclosures in the Filed Company SEC Documents in any risk factors section, any forward looking disclosure in any section related to forward looking statements and other
disclosures that are predictive or forward-looking in nature, other than historical facts included therein) to the extent describing matters that constituted or contributed to the occurrence of a Company Material Adverse Effect since the date of
this Agreement or (ii) any disclosures in Section 4.08 of the Company Disclosure Letter or in any other section of the Company Disclosure Letter to the extent (and only to the extent) that it is reasonably apparent that such disclosure
applies to Section 4.08.
Company Restricted Share
means any award of Company Common Stock that is subject to
restrictions based on performance or continuing service and granted under any Company Stock Plan.
Company Rollover RSU
means any Company RSU granted pursuant to Section 5.01(b)(ii) of the Company Disclosure Letter.
Company RSU
means
any award of restricted stock units corresponding to shares of Company Common Stock, which award is subject to restrictions based on performance or continuing service and granted under any Company Stock Plan.
Company SAR
means a stock appreciation right relating to shares of Company Common Stock granted under any Company Stock
Plan.
A-52
Company Stock Option
means a stock option to acquire Company Common Stock
granted under any Company Stock Plan.
Company Stock Plans
means the Companys 2004 Omnibus Equity Compensation
Plan, the Companys 2003 Share Appreciation Rights Plan, the Company Deferral Plans and each other Company Benefit Plan that provides for the award of rights of any kind to receive shares of Company Common Stock or benefits measured in whole or
in part by reference to shares of Company Common Stock.
Company Termination Fee
means $70 million in cash.
Controlled Group Liability
means any and all liabilities (i) under Title IV of ERISA, (ii) under
Section 302 or 4068(a) of ERISA, (iii) under Section 430(k) or 4971 of the Code, (iv) for violation of the continuation coverage requirements of Sections 601
et seq.
of ERISA and Section 4980B of the Code or the group
health requirements of Sections 701
et seq.
of ERISA and Sections 9801
et seq.
of the Code and (v) any foreign Law similar to the foregoing clauses (i) through (iv).
Environmental Claim
means any administrative, regulatory or judicial actions, suits, orders, demands, directives, claims,
liens, investigations, proceedings or written or oral notices of noncompliance or violation by or from any Person alleging liability of whatever kind or nature arising out of, based on or resulting from (x) the presence or Release of, or
exposure to, any Hazardous Materials at any location; or (y) the failure to comply with any Environmental Law or any Permit issued pursuant to Environmental Law.
Environmental Laws
means all applicable Federal, national, state, provincial or local Laws, Judgments, or Contracts issued,
promulgated or entered into by or with any Governmental Entity, relating to pollution, natural resources or protection of endangered or threatened species, the climate, human health or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata), including the Clean Air Act and similar state and local requirements and including all Laws relating to providing notice to workers, consumers or the public of regarding the use or presence of
hazardous, toxic or carcinogenic materials (such as Californias Safe Drinking Water and Toxic Enforcement Act of 1986 commonly known as Proposition 65), relating to the regulation of greenhouse gases (such as Californias Global Warming
Solutions Act of 2006 (
AB 32
)) or relating to the reclamation and closure of mining sites.
Hazardous
Materials
means (x) any petroleum or petroleum products, explosive or radioactive materials or wastes, asbestos in any form, chromium and other metals, silica and silica dust, hydrochloric acid and polychlorinated biphenyls; and
(y) any other chemical, material, substance or waste that in relevant form or concentration is prohibited, limited or regulated under any Environmental Law.
Indebtedness
means, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed
money, or with respect to deposits or advances of any kind to such Person, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all capitalized lease obligations of such Person or
obligations of such Person to pay the deferred and unpaid purchase price of property and equipment, (iv) all obligations of such Person pursuant to securitization or factoring programs or arrangements, (v) all guarantees and arrangements
having the economic effect of a guarantee of such Person of any Indebtedness of any other Person (other than any guarantee by Parent or any wholly owned Parent Subsidiary with respect to Indebtedness of Parent or any wholly owned Parent Subsidiary,
or any guarantee by the Company or any wholly owned Company Subsidiary with respect to Indebtedness of the Company or any wholly owned Company Subsidiary), (vi) all obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others or to purchase the obligations or property of others, (vii) net cash payment obligations of such Person under swaps, options, derivatives and other hedging agreements or arrangements that
will be payable upon termination thereof (assuming they were terminated on the date of determination) or (viii) letters of credit, bank guarantees, and other similar contractual obligations entered into by or on behalf of such Person.
A-53
The
Knowledge
of any Person that is not an individual means, with respect to
any matter in question, in the case of Parent, the actual knowledge of any of the Persons set forth on Section 9.03 of the Parent Disclosure Letter and, in the case of the Company, the actual knowledge of any of the Persons set forth on
Section 9.03 of the Company Disclosure Letter.
Letter Agreement
means the letter agreement, dated as of
December 4, 2013, between Parent and the Company.
Material Adverse Effect
with respect to any Person means any
fact, circumstance, effect, change, event or development that materially adversely affects the business, properties, financial condition or results of operations of such Person and its Subsidiaries, taken as a whole, excluding any fact,
circumstance, effect, change, event or development to the extent that it results from or arises out of (i) changes or conditions generally affecting the industries in which such Person and any of its Subsidiaries operate, except to the extent
such fact, circumstance, effect, change, event or development has a materially disproportionate effect on such Person and its Subsidiaries, taken as a whole, relative to others in such industries in respect of the business conducted in such
industries, (ii) general economic or political conditions or securities, credit, financial or other capital markets conditions, in each case in the United States or any foreign jurisdiction, except to the extent such fact, circumstance, effect,
change, event or development has a materially disproportionate effect on such Person and its Subsidiaries, taken as a whole, relative to others in the industries in which such Person and any of its Subsidiaries operate in respect of the business
conducted in such industries, (iii) any failure, in and of itself, by such Person to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for
any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect, to the
extent permitted by this definition), (iv) the execution and delivery of this Agreement or the public announcement or pendency of the Transactions, including the impact thereof on the relationships, contractual or otherwise, of such Person or
any of its Subsidiaries with employees, labor unions, customers, suppliers or partners, (v) any change, in and of itself, in the market price or trading volume of such Persons securities or in its credit ratings (it being understood that
the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect, to the extent permitted by this definition),
(vi) any change in applicable Law, regulation or GAAP (or authoritative interpretation thereof), except to the extent such fact, circumstance, effect, change, event or development has a materially disproportionate effect on such Person and its
Subsidiaries, taken as a whole, relative to others in the industries in which such Person and any of its Subsidiaries operate in respect of the business conducted in such industries, (vii) geopolitical conditions, the outbreak or escalation of
hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of this Agreement, except to the extent such fact, circumstance, effect, change,
event or development has a materially disproportionate effect on such Person and its Subsidiaries, taken as a whole, relative to others in the industries in which such Person and any of its Subsidiaries operate in respect of the business conducted
in such industries (viii) any hurricane, tornado, flood, earthquake or other natural disaster, except to the extent such fact, circumstance, effect, change, event or development has a materially disproportionate effect on such Person and its
Subsidiaries, taken as a whole, relative to others in the industries in which such Person and any of its Subsidiaries operate in respect of the business conducted in such industries, (ix) any litigation arising from allegations of a breach of
fiduciary duty or other violation of applicable Law relating to this Agreement or the transactions contemplated hereby, or (x) any taking of any action at the written request of the other party hereto.
MSHA
means the Federal Mine Safety & Health Act of 1977, as amended.
NESHAPs
means National Emission Standards for Hazardous Air Pollutants.
OSHA
means the Occupational Safety and Health Act of 1970, as amended.
A-54
Parent Benefit Plans
means, collectively (i) all employee pension
benefit plans (as defined in Section 3(2) of ERISA), other than any plan which is a Multiemployer Plan, employee welfare benefit plans (as defined in Section 3(1) of ERISA) and all other bonus, pension, profit sharing,
retirement, deferred compensation, incentive compensation, equity or equity-based compensation, severance, retention, change in control, disability, vacation, death benefit, hospitalization, medical or other plans, arrangements or understandings
providing, or designed to provide, material benefits to any current or former directors, officers, employees or consultants of Parent or any Parent Subsidiary and (ii) all employment, consulting, indemnification, severance, retention, change of
control or termination agreements or arrangements between Parent or any Parent Subsidiary and any current or former directors, officers, employees or consultants of Parent or any Parent Subsidiary.
Parent Deferral Plan
means each of Parents Incentive Stock Plan and Parents Common Stock Purchase Plan for
Directors.
Parent Intervening Event
means a material event, fact, circumstance, development or occurrence that is
unknown to or by the Board of Directors of Parent as of the date of this Agreement (or if known, the magnitude or material consequences of which were not known or understood by the Board of Directors of Parent as of the date of this Agreement),
which event, fact, circumstance, development, occurrence, magnitude or material consequences becomes known (or the magnitude or material consequences thereof become known or understood) to or by the Board of Directors of Parent prior to obtaining
the Parent Shareholder Approval;
provided
,
however
that none of the following shall constitute a Parent Intervening Event: (i) any action taken by any party hereto pursuant to and in compliance with the affirmative covenants set
forth in Section 6.03, (ii) changes in the market price or trading volume of Parents securities or its credit ratings and (iii) the receipt, existence of or terms of a Parent Takeover Proposal or any inquiry relating thereto or
the consequences thereof.
Parent Material Adverse Effect
means a Material Adverse Effect with respect to Parent.
Parent Material Adverse Effect Condition Exception
means (i) any disclosures in the Filed Parent SEC Documents
(excluding any disclosures in the Filed Parent SEC Documents in any risk factors section, any forward looking disclosure in any section related to forward looking statements and other disclosures that are predictive or forward-looking in nature,
other than historical facts included therein) to the extent describing matters that constituted or contributed to the occurrence of a Parent Material Adverse Effect since the date of this Agreement or (ii) any disclosures in Section 3.08
of the Parent Disclosure Letter or in any other section of the Parent Disclosure Letter to the extent (and only to the extent) that it is reasonably apparent that such disclosure applies to Section 3.08.
Parent RSU
means any award of the right to receive Parent Common Stock that is subject to restrictions based on performance
or continuing service and granted under any Parent Stock Plan.
Parent Stock Option
means any option to purchase Parent
Common Stock granted under any Parent Stock Plan.
Parent Stock Plans
means Parents Amended and Restated
Stock-Based Award Plan, Parents Amended Omnibus Securities Award Plan, the Parent Deferral Plans and each other Parent Benefit Plan that provides for the award of rights of any kind to receive shares of Parent Common Stock or benefits measured
in whole or in part by reference to shares of Parent Common Stock.
Parent Termination Fee
means $140 million in cash.
Permitted Liens
means any Lien (A) for Taxes or governmental assessments, charges or claims of payment
(i) not yet due or (ii) being contested in good faith in appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (B) which is a carriers, warehousemens, mechanics,
A-55
materialmens, repairmens, or other similar lien arising in the ordinary course of business, or (C) which is disclosed on the most recent consolidated balance sheet of the Company
or notes thereto included in the Company SEC Documents filed prior to the date hereof or securing liabilities reflected on such balance sheet.
Person
means any natural person, firm, corporation, partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
Release
means any actual or threatened release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within or from any
building, structure, facility or fixture.
Reverse Termination Fee
means $25 million in cash.
Rights Agreement
means the Rights Agreement, dated September 27, 2006, between Parent and American Stock
Transfer & Trust Company, as Rights Agent.
A
Subsidiary
of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing Person or body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
Substantial Detriment
means any sale,
divestiture or disposition of, or prohibition or limitation on the ownership or operation of, or requirements or undertakings with respect to the conduct by the Company or any of its Subsidiaries, or Parent or any of its Subsidiaries, of, any
portion of any business, properties or assets (or any combination thereof), other than (i) one of the quarries located in Mill Creek, Oklahoma currently held by the Company or Parent, (ii) up to two of the related rail yards located in
Dallas, Texas and (iii) other assets specifically associated with the assets described in clause (i) or (ii).
Tax
Return
means all Tax returns, declarations, statements, reports, schedules, forms and information returns, any amended Tax return and any other document filed or required to be filed relating to Taxes.
Taxes
means all taxes, customs, tariffs, imposts, levies, duties, fees or other like assessments or charges of any kind
imposed by a Governmental Entity, together with all interest, penalties and additions imposed with respect to such amounts.
SECTION 9.04.
Interpretation.
When a reference is made in this Agreement to an Exhibit, an Article or a Section, such reference shall be to an Exhibit, an Article or a Section of this Agreement unless otherwise indicated. The table of contents, index of
defined terms and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words include, includes or
including are used in this Agreement, they shall be deemed to be followed by the words without limitation. The words hereof, hereto, hereby, herein and hereunder and
words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term or is not exclusive. The word extent in the phrase to the
extent shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply if. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.
Any agreement, instrument or Law defined or referred to herein means such agreement, instrument or Law as from time to time amended, modified or supplemented, unless otherwise specifically indicated. References to a Person are also to its permitted
successors and assigns. Unless otherwise specifically indicated, all references to dollars and $ will be deemed references to the lawful money of the United States of America. Each of the parties has participated in the
drafting and negotiation of this Agreement. If an ambiguity or question of intent or
A-56
interpretation arises, this Agreement must be construed as if it is drafted by all the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
SECTION 9.05.
Severability.
If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as either the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party or such party waives its rights under this Section 9.05 with respect thereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.06.
Counterparts.
This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.
SECTION 9.07.
Entire Agreement; No Third-Party Beneficiaries.
This Agreement, taken together with the Parent Disclosure Letter, the
Company Disclosure Letter, the Stockholder Agreements, the Lease Agreements and the Confidentiality Agreement, (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, between the
parties with respect to the Transactions and (b) except for Section 6.05, is not intended to confer upon any Person other than the parties any rights or remedies.
SECTION 9.08.
Governing Law; Consent to Jurisdiction; Venue.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than
the State of New York.
(b) Each of the parties hereto hereby (i) expressly and irrevocably submits to the exclusive personal
jurisdiction of the United States District Court of the Southern District of New York (or, to the extent such court declines to accept jurisdiction over a particular matter, the Supreme Court of the State of New York in New York County) in the event
any dispute arises out of the Transaction Agreements or the Transactions, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that it will
not bring any action relating to the Transaction Agreements or the Transactions in any court other than the United States District Court of the Southern District of New York (or, to the extent such court declines to accept jurisdiction over a
particular matter, the Supreme Court of the State of New York in New York County), (iv) agrees that each of the other parties shall have the right to bring any action or proceeding for enforcement of a judgment entered by United States District
Court of the Southern District of New York (or, to the extent such court declines to accept jurisdiction over a particular matter, the Supreme Court of the State of New York in New York County) and (v) expressly and irrevocably waives (and
agrees not to plead or claim) any objection to the laying of venue of any action arising out of the Transaction Agreements or the Transactions in United States District Court of the Southern District of New York (or, to the extent such court
declines to accept jurisdiction over a particular matter, the Supreme Court of the State of New York in New York County) or that any such action brought in any such court has been brought in an inconvenient forum. Each of Parent, Merger Sub and the
Company agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
SECTION 9.09.
Assignment.
Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of Law or otherwise by any of the parties without the prior written consent of the other parties;
provided
, that Parent and Merger Sub may assign their rights and obligations pursuant to this
Agreement to any direct or indirect wholly owned Subsidiary of Parent so long as Parent continues to remain primarily liable for all of such rights and obligations as if no such
A-57
assignment had occurred. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 9.10.
Specific Performance.
The parties
acknowledge and 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, and that monetary damages, even if available,
would not be an adequate remedy therefor. It is accordingly agreed that, prior to the termination of this Agreement pursuant to Article VIII, the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the performance of terms and provisions of this Agreement, without proof of actual damages (and each party hereby waives any requirement for the securing or posting of any bond in connection with such remedy), this being in
addition to any other remedy to which they are entitled at law or in equity. The parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, nor to assert that a
remedy of monetary damages would provide an adequate remedy for any such breach.
SECTION 9.11.
Waiver of Jury Trial.
EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THE TRANSACTION AGREEMENTS OR ANY OF THE TRANSACTIONS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9.11.
[Remainder of page left intentionally blank]
A-58
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have duly executed this Agreement, all as
of the date first written above.
|
|
|
TEXAS INDUSTRIES, INC.
|
|
|
By:
|
|
/s/ Mel G. Brekhus
|
|
|
Name: Mel G. Brekhus
|
|
|
Title: President and CEO
|
|
|
|
MARTIN MARIETTA MATERIALS, INC.
|
|
|
By:
|
|
/s/ C. Howard Nye
|
|
|
Name: C. Howard Nye
|
|
|
Title: President and CEO
|
|
|
|
PROJECT HOLDINGS, INC.
|
|
|
By:
|
|
/s/ C. Howard Nye
|
|
|
Name: C. Howard Nye
|
|
|
Title: President
|
Index of Defined Terms
|
|
|
Term
|
|
Section
|
AB 32
|
|
Section 9.03
|
Actions
|
|
Section 6.05(b)
|
Affiliate
|
|
Section 9.03
|
Agreed Individual
|
|
Section 6.12
|
Agreement
|
|
Preamble
|
Applicable Time
|
|
Section 9.03
|
Articles of Merger
|
|
Section 1.03
|
Business Day
|
|
Section 9.03
|
Certificate
|
|
Section 2.01(c)
|
Certificate of Merger
|
|
Section 1.03
|
Change in Control Individual
|
|
Section 5.01(b)(iv)
|
Clean Air Act
|
|
Section 9.03
|
Closing
|
|
Section 1.02
|
Closing Date
|
|
Section 1.02
|
Code
|
|
Section 9.03
|
Company
|
|
Preamble
|
Company Adverse Recommendation Change
|
|
Section 5.02(b)
|
Company Benefit Plans
|
|
Section 4.11(a)
|
Company Board
|
|
Section 4.04(a)
|
Company By-laws
|
|
Section 4.01
|
Company Capital Stock
|
|
Section 4.03(a)
|
Company CBAs
|
|
Section 4.18
|
Company Charter
|
|
Section 4.01
|
Company Common Stock
|
|
Section 2.01(b)
|
Company Deferral Plan
|
|
Section 9.03
|
Company Disclosure Letter
|
|
ARTICLE IV
|
Company Employee
|
|
Section 6.14(a)
|
Company Financial Advisor
|
|
Section 4.19
|
Company Indemnified Party
|
|
Section 6.05(a)
|
Company Intervening Event
|
|
Section 5.02(b)
|
Company Leases
|
|
Section 4.16(b)
|
Company Material Adverse Effect
|
|
Section 9.03
|
Company Material Adverse Effect Condition Exception
|
|
Section 9.03
|
Company Material Contract
|
|
Section 4.15(b)
|
Company Notice
|
|
Section 5.02(b)
|
Company Pension Plan
|
|
Section 4.11(c)
|
Company Permits
|
|
Section 4.01
|
Company Preferred Stock
|
|
Section 4.03(a)
|
Company Properties
|
|
Section 4.16(a)
|
Company Recommendation
|
|
Section 4.04(a)
|
Company Restricted Share
|
|
Section 9.03
|
Company Rollover RSU
|
|
Section 9.03
|
Company RSU
|
|
Section 9.03
|
Company SAR
|
|
Section 9.03
|
Company SEC Documents
|
|
Section 4.06(a)
|
Company Stockholder Approval
|
|
Section 4.04(a)
|
Company Stockholders Meeting
|
|
Section 4.04(a)
|
Company Stock Option
|
|
Section 9.03
|
Company Stock Plans
|
|
Section 9.03
|
Company Subsidiaries
|
|
Section 4.01
|
Company Takeover Proposal
|
|
Section 5.02(e)
|
Company Termination Fee
|
|
Section 9.03
|
Company Voting Debt
|
|
Section 4.03(b)
|
Companys Counsel
|
|
Section 6.07(b)(i)
|
Confidentiality Agreement
|
|
Section 6.02(a)
|
Consent
|
|
Section 3.05(b)
|
|
|
|
Term
|
|
Section
|
Contract
|
|
Section 3.05(a)
|
Controlled Group Liability
|
|
Section 9.03
|
DGCL
|
|
Section 1.01
|
Effective Time
|
|
Section 1.03
|
End Date
|
|
Section 8.01(b)(i)
|
Environmental Claim
|
|
Section 9.03
|
Environmental Laws
|
|
Section 9.03
|
ERISA
|
|
Section 4.11(a)
|
Exchange Act
|
|
Section 3.05(b)
|
Exchange Agent
|
|
Section 2.02(a)
|
Exchange Fund
|
|
Section 2.02(a)
|
Exchange Ratio
|
|
Section 2.01(c)
|
FCPA
|
|
Section 3.12
|
Filed Company Contract
|
|
Section 4.15(a)
|
Filed Company SEC Documents
|
|
ARTICLE IV
|
Filed Parent SEC Documents
|
|
ARTICLE III
|
Form S-4
|
|
Section 3.05(b)
|
GAAP
|
|
Section 3.06(b)
|
Governmental Entity
|
|
Section 3.05(b)
|
Hazardous Materials
|
|
Section 9.03
|
HSR Act
|
|
Section 3.05(b)
|
Indebtedness
|
|
Section 9.03
|
Intellectual Property Rights
|
|
Section 4.17
|
IRS
|
|
Section 4.11(a)
|
Joint Proxy Statement
|
|
Section 6.01(a)
|
Judgment
|
|
Section 3.05(a)
|
Knowledge
|
|
Section 9.03
|
Law
|
|
Section 3.05(a)
|
Lease Agreements
|
|
Recitals
|
Legal Restraints
|
|
Section 7.01(d)
|
Letter Agreement
|
|
Section 9.03
|
Letter of Transmittal
|
|
Section 2.02(b)
|
Liens
|
|
Section 3.02(a)
|
Material Adverse Effect
|
|
Section 9.03
|
Maximum Amount
|
|
Section 6.05(c)
|
Merger
|
|
Section 1.01
|
Merger Consideration
|
|
Section 2.01(c)
|
Merger Sub
|
|
Preamble
|
Merger Sub Common Stock
|
|
Section 2.01(a)
|
MSHA
|
|
Section 9.03
|
Multiemployer Plan
|
|
Section 4.11(a)
|
NCBCA
|
|
Section 1.01
|
NESHAPs
|
|
Section 9.03
|
NYSE
|
|
Section 2.02(f)
|
OSHA
|
|
Section 9.03
|
Parent
|
|
Preamble
|
Parent Adverse Recommendation Change
|
|
Section 5.03(b)
|
Parent Articles
|
|
Section 3.01
|
Parent Benefit Plans
|
|
Section 9.03
|
Parent Board
|
|
Section 3.04(a)
|
Parent By-laws
|
|
Section 3.01
|
Parent Capital Stock
|
|
Section 3.03(a)
|
Parent Common Stock
|
|
Section 3.03(a)
|
Parent Deferral Plan
|
|
Section 9.03
|
Parent Disclosure Letter
|
|
ARTICLE III
|
Parent Financial Advisors
|
|
Section 3.14
|
Parent Intervening Event
|
|
Section 9.03
|
|
|
|
Term
|
|
Section
|
Parent ISPUs
|
|
Section 3.03(a)
|
Parent Material Adverse Effect
|
|
Section 9.03
|
Parent Material Adverse Effect Condition Exception
|
|
Section 9.03
|
Parent Notice
|
|
Section 5.03(b)
|
Parent Permits
|
|
Section 3.01
|
Parent Preferred Stock
|
|
Section 3.03(a)
|
Parent Recommendation
|
|
Section 3.04(a)
|
Parent RSU
|
|
Section 9.03
|
Parent SAR
|
|
Section 6.02(b)
|
Parent SEC Documents
|
|
Section 3.06(a)
|
Parent Shareholder Approval
|
|
Section 3.04(a)
|
Parent Shareholders Meeting
|
|
Section 3.04(a)
|
Parent Stock Option
|
|
Section 9.03
|
Parent Stock Plans
|
|
Section 9.03
|
Parent Subsidiaries
|
|
Section 3.01
|
Parent Takeover Proposal
|
|
Section 5.03(e)
|
Parent Termination Fee
|
|
Section 9.03
|
Parent Voting Debt
|
|
Section 3.03(b)
|
Parents Counsel
|
|
Section 6.07(b)(i)
|
Permits
|
|
Section 3.01
|
Permitted Liens
|
|
Section 9.03
|
Person
|
|
Section 9.03
|
Principal Stockholders
|
|
Recitals
|
Release
|
|
Section 9.03
|
Representatives
|
|
Section 5.02(a)
|
Reverse Termination Fee
|
|
Section 9.03
|
Rights Agreement
|
|
Section 9.03
|
SEC
|
|
Section 3.05(b)
|
Securities Act
|
|
Section 3.05(b)
|
Share Issuance
|
|
Section 1.01
|
SOX
|
|
Section 3.06(b)
|
Stockholder Agreements
|
|
Recitals
|
Subsidiary
|
|
Section 9.03
|
Substantial Detriment
|
|
Section 9.03
|
Superior Company Proposal
|
|
Section 5.02(e)
|
Superior Parent Proposal
|
|
Section 5.03(e)
|
Surviving Company
|
|
Section 1.01
|
Tax Representation Letters
|
|
Section 6.07(b)(i)
|
Tax Return
|
|
Section 9.03
|
Taxes
|
|
Section 9.03
|
Transaction Agreements
|
|
Recitals
|
Transactions
|
|
Section 1.01
|
ANNEX B
January 27, 2014
The Board of Directors
Martin Marietta Materials, Inc.
2710 Wycliff Road,
Raleigh, NC 27607
Members of the Board of Directors:
You have requested our
opinion as to the fairness, from a financial point of view, to Martin Marietta Materials, Inc., a North Carolina corporation (the
Company),
of the Exchange Ratio (as defined below) in the proposed merger (the
Transaction) of Project Holdings, Inc., a North Carolina corporation and a wholly-owned subsidiary of the Company
(Merger Sub),
with Texas Industries, Inc., a Delaware corporation
(TXI),
with TXI
continuing as the surviving corporation. Pursuant to the Agreement and Plan of Merger Agreement, dated as of January 27, 2014 (the
Agreement
), among the Company, Merger Sub and TXI, TXI will become a wholly-owned subsidiary
of the Company, and each outstanding share of common stock, par value $1.00 per share, of TXI (the
TXI Common Stock),
other than shares of TXI Common Stock held in treasury or owned by the Company or Merger Sub, will be converted
into the right to receive 0.70 shares (the
Exchange
Ratio)
of the Companys common stock, par value $0.01 per share (the
Company Common Stock),
together with the associated preferred share purchase
rights granted pursuant to the Rights Agreements (as defined in the Agreement).
In connection with preparing our opinion, we have (i) reviewed the
Agreement; (ii) reviewed certain publicly available business and financial information concerning TXI and the Company and the industries in which they operate; (iii) reviewed publicly available financial terms of certain precedent
transactions; (iv) compared the financial and operating performance of TXI and the Company with publicly available information concerning certain other companies we deemed relevant and reviewed the current and historical market prices of TXI
Common Stock and the Company Common Stock and certain publicly traded securities of such other companies; (v) reviewed certain internal financial analyses and forecasts prepared by or at the direction of the management of the Company relating
to the respective businesses of the Company and TXI, as well as the estimated amount and timing of (x) the cost savings and related expenses and synergies expected to result from the Transaction and the anticipated accelerated utilization of
TXIs net operating tax losses (collectively, the
Synergies
) and (y) the expected proceeds of certain anticipated non-operating real estate asset divestitures (the
Real Estate Proceeds);
and
(vi) performed such other financial studies and analyses and considered such other information as we deemed appropriate for the purposes of this opinion.
In addition, we have held discussions with certain members of the management of the Company with respect to certain aspects of the Transaction, and the past
and current business operations of TXI and the Company, the financial condition and future prospects and operations of TXI and the Company, the effects of the Transaction on the financial condition and future prospects of the Company, and certain
other matters we believed necessary or appropriate to our inquiry.
In giving our opinion, we have relied upon and assumed the accuracy and completeness
of all information that was publicly available or was furnished to or discussed with us by TXI and the Company or otherwise reviewed by or for us, and we have not independently verified (nor have we assumed responsibility or liability for
independently verifying) any such information or its accuracy or completeness. We have not conducted or been
B-1
provided with any valuation or appraisal of any assets or liabilities, nor have we evaluated the solvency of TXI or the Company under any state or federal laws relating to bankruptcy, insolvency
or similar matters. In relying on financial analyses and forecasts provided to us or derived therefrom, including the Synergies and the Real Estate Proceeds, we have assumed that they have been reasonably prepared based on assumptions reflecting the
best currently available estimates and judgments by management as to the expected future results of operations and financial condition of TXI and the Company to which such analyses or forecasts relate. We express no view as to such analyses or
forecasts (including the Synergies and the Real Estate Proceeds) or the assumptions on which they were based. We have also assumed that the Transaction will qualify as a tax free reorganization for United States federal income tax purposes and that
the Transaction and the other transactions contemplated by the Agreement will be consummated as described in the Agreement. We have also assumed that the representations and warranties made by the Company and TXI in the Agreement and the related
agreements are and will be true and correct in all respects material to our analysis. We are not legal, regulatory or tax experts and have relied on the assessments made by advisors to the Company with respect to such issues. We have further assumed
that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on TXI or the Company or on the contemplated benefits of the Transaction.
Our opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect this opinion, and that we do not have any obligation to update, revise, or reaffirm this opinion. Our opinion is limited to the fairness, from a financial point of view, to the Company of
the Exchange Ratio in the proposed Transaction and we express no opinion as to the fairness of the Exchange Ratio to the holders of any class of securities, creditors or other constituencies of the Company or as to the underlying decision by the
Company to engage in the Transaction. Furthermore, we express no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the Transaction, or any class of such persons relative to the
Exchange Ratio in the Transaction or with respect to the fairness of any such compensation. We are expressing no opinion herein as to the price at which TXI Common Stock or the Company Common Stock will trade at any future time.
We have acted as financial advisor to the Company with respect to the proposed Transaction and will receive a fee from the Company for our services, a
substantial portion of which will become payable only if the proposed Transaction is consummated. In addition, the Company has agreed to indemnify us for certain liabilities arising out of our engagement. Please be advised that during the two years
preceding the date of this letter, neither we nor our affiliates have had any material financial advisory or material commercial or investment banking relationships with TXI. During the two years preceding the date of this letter, we and our
affiliates have had commercial or investment banking relationships with the Company for which we and such affiliates have received customary compensation. Such services during such period have included acting as lead arranger and joint bookrunner on
the Companys revolving credit facility and term loan facility in November 2013. In addition, our commercial banking affiliate provides treasury and securities services to NNS Holding, a significant shareholder of TXI, and is an agent bank and
a lender under outstanding credit facilities of the Company, for which it receives customary compensation or other financial benefits. In the ordinary course of our businesses, we and our affiliates may actively trade the debt and equity securities
of the Company or TXI for our own account or for the accounts of customers and, accordingly, we may at any time hold long or short positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the date hereof that the Exchange Ratio in the proposed Transaction is fair, from a
financial point of view, to the Company.
The issuance of this opinion has been approved by a fairness opinion committee of J.P. Morgan Securities LLC.
This letter is provided to the Board of Directors of the Company (in its capacity as such) in connection with and for the purposes of its evaluation of the Transaction. This opinion does not constitute a recommendation to any shareholder of the
Company as to how such shareholder should vote with respect to the Transaction or any other
B-2
matter. This opinion may not be disclosed, referred to, or communicated (in whole or in part) to any third party for any purpose whatsoever except with our prior written approval. This opinion
may be reproduced in full in any proxy or information statement mailed to shareholders of the Company but may not otherwise be disclosed publicly in any manner without our prior written approval.
Very truly yours,
J.P. MORGAN SECURITIES LLC
J.P. Morgan Securities LLC
B-3
ANNEX C
|
|
|
|
|
January 27, 2014
|
|
Deutsche Bank Securities Inc.
60 Wall
Street
New York, NY 10005
|
Board of Directors
Martin Marietta Materials, Inc.
270 Wycliff Road
Raleigh, NC 27607
|
|
|
Ladies and Gentlemen:
Deutsche
Bank Securities Inc. (
Deutsche Bank
) has acted as financial advisor to Martin Marietta Materials, Inc., a North Carolina corporation (
Parent
), in connection with the Agreement and Plan of Merger, dated as of
January 27, 2014 (the
Merger Agreement
), among Parent, Project Holdings, Inc., a North Carolina corporation and a wholly-owned subsidiary of Parent (
Merger Sub
), and Texas Industries, Inc., a Delaware
corporation (
TXI
), which provides, among other things, for the merger of Merger Sub with and into TXI, as a result of which TXI will become a wholly owned subsidiary of Parent (the
Transaction
). As set forth
more fully in the Merger Agreement, as a result of the Transaction, each share of common stock, par value $1.00 per share (the
TXI Common Stock
), of TXI, other than treasury shares and shares owned by Merger Sub or Parent, will be
converted into the right to receive 0.70 shares (the
Exchange Ratio
) of common stock, par value $0.01 per share, of Parent (the
Parent Common Stock
), together with the associated preferred share purchase rights
granted pursuant to the Rights Agreement (as defined in the Merger Agreement).
You have requested our opinion, as investment bankers, as to the fairness
of the Exchange Ratio, from a financial point of view, to Parent.
In connection with our role as financial advisor to Parent, and in arriving at our
opinion, we reviewed certain publicly available financial and other information concerning TXI and Parent, and certain internal analyses, financial forecasts and other information relating to TXI and Parent prepared by management of Parent. We have
also held discussions with certain senior officers and other representatives and advisors of TXI and Parent regarding the businesses and prospects of TXI and Parent, respectively, and of Parent after giving effect to the Transaction, including
certain cost savings, operating efficiencies, financial synergies and other strategic benefits projected by the management of Parent to result from the Transaction, the anticipated accelerated utilization of Stars net operating tax losses and
the proceeds of certain anticipated non-operating real estate asset divestitures. In addition, we have (i) reviewed the reported prices and trading activity for TXI Common Stock and Parent Common Stock, (ii) to the extent publicly
available, compared certain financial and stock market information for TXI and Parent with similar information for certain other companies we considered relevant whose securities are publicly traded, (iii) to the extent publicly available,
reviewed the financial terms of certain precedent business combinations, (iv) reviewed the Merger Agreement and certain related documents, and (v) performed such other studies and analyses and considered such other factors as we deemed
appropriate.
We have not assumed responsibility for independent verification of, and have not independently verified, any information, whether publicly
available or furnished to us, concerning TXI or Parent, including, without limitation, any financial information considered in connection with the rendering of our opinion. Accordingly, for purposes of our opinion, we have, with your knowledge and
permission, assumed and relied upon the accuracy and completeness of all such information. We have not conducted a physical inspection of any of the properties or assets, and have not prepared, obtained or reviewed any independent evaluation or
appraisal of any
Confidential
C-1
|
|
|
Deutsche Bank
|
|
|
Board of Directors of Martin Marietta Materials, Inc.
January 27, 2014
Page 2
of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets or liabilities), of TXI or Parent or any of their respective subsidiaries, nor have we evaluated the
solvency or fair value of TXI, Parent or any of Parents subsidiaries under any state or federal law relating to bankruptcy, insolvency or similar matters. With respect to the financial forecasts, including, without limitation, the analyses and
forecasts in respect of the amount and timing of (x) certain cost savings, operating efficiencies, financial synergies and other strategic benefits projected by Parent to be achieved as a result of the Transaction and the anticipated
accelerated utilization of TXIs net operating tax losses (collectively, the
Synergies
) and (y) the proceeds of certain anticipated non-operating real estate asset divestitures (the
Real Estate
Proceeds
), in each case prepared by the management of Parent and used in our analyses, we have assumed, with your knowledge and permission, that such forecasts, including the Synergies and the Real Estate Proceeds, have been reasonably
prepared on bases reflecting the best currently available estimates and judgments of the management of Parent as to the matters covered thereby and that such forecasts and projections will be realized in the amounts and in the time periods currently
estimated by the management of Parent. In rendering our opinion, we express no view as to the reasonableness of such forecasts and projections, including, without limitation, the Synergies and the Real Estate Proceeds, or the assumptions on which
they are based. Our opinion is necessarily based upon economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. We expressly disclaim any undertaking or obligation to advise any person of
any change in any fact or matter affecting our opinion of which we become aware after the date hereof.
For purposes of rendering our opinion, we have
assumed with your knowledge and permission that, in all respects material to our analysis, the representations and warranties of Parent and TXI contained in the Merger Agreement are true and correct. Additionally, we have assumed with your knowledge
and permission that, in all respects material to our analysis, the Transaction will be consummated in accordance with the terms of the Merger Agreement, without any waiver, modification or amendment of any term, condition or agreement that would be
material to our analysis. We also have assumed with your knowledge and permission that all material governmental, regulatory or other approvals and consents required in connection with the consummation of the Transaction will be obtained and that in
connection with obtaining any necessary governmental, regulatory or other approvals and consents, no restrictions, terms or conditions will be imposed that would be material to our analysis, including any divestitures by Parent or TXI. We are not
legal, regulatory, tax or accounting experts and have relied on the assessments made by Parent and its other advisors with respect to such issues. We have assumed with your knowledge and permission that the Transaction will qualify as a tax free
reorganization for United States federal income tax purposes.
This opinion has been approved and authorized for issuance by a Deutsche Bank fairness
opinion review committee and is addressed to, and is for the use and benefit of, the Board of Directors of Parent in connection with and for the purpose of its evaluation of the Transaction and is not a recommendation to the security holders of
Parent as to how they should vote with respect to the Transaction or any transactions contemplated thereby. This opinion is limited to the fairness of the Exchange Ratio, from a financial point of view, to Parent as of the date hereof. This opinion
does not address any other terms of the Transaction or the Merger Agreement. Nor does it address the terms of any other agreement entered into in connection with the Transaction. You have not asked us to, and this opinion does not, address the
fairness of the Transaction, or any consideration paid in connection therewith, to the holders of any class of securities, creditors or other constituencies of Parent, nor does it address the fairness of the contemplated benefits of the Transaction.
We express no opinion as to the merits of the underlying decision by Parent to engage in the Transaction or the relative merits of the Transaction as compared
|
|
|
Deutsche Bank
|
|
|
Board of Directors of Martin Marietta Materials, Inc.
January 27, 2014
Page 3
to any alternative transactions or business strategies. In addition, we do not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation
payable to or to be received by any of the officers, directors, or employees of any parties to the Transaction, or any class of such persons, in connection with the Transaction relative to the Exchange Ratio. This opinion does not in any manner
address the prices at which TXI Common Stock will trade following the announcement of the Transaction and Parent Common Stock or other Parent securities will trade following the announcement or consummation of the Transaction.
Deutsche Bank will be paid a fee for its services as financial advisor to Parent in connection with the Transaction, a portion of which becomes payable upon
delivery of this opinion (or would have become payable if Deutsche Bank had advised the Board of Directors that it was unable to render this opinion) and a substantial portion of which is contingent upon consummation of the Transaction. Parent has
also agreed to reimburse Deutsche Bank for its expenses, and to indemnify Deutsche Bank against certain liabilities, in connection with its engagement. We are an affiliate of Deutsche Bank AG (together with its affiliates, the
DB
Group
). One or more members of the DB Group have, from time to time, provided, and are currently providing, investment banking, commercial banking (including extension of credit) and other financial services to Parent or its
affiliates for which they have received, and in the future may receive, compensation, including: (i) having acted as financial advisor to Parent on its proposed acquisition of Vulcan Materials Company (December 2011); and (ii) having acted
as a joint lead arranger and a joint bookrunner for a $350 million revolving credit facility and a $250 million term loan (November 2013). The DB Group may also provide investment and commercial banking services to TXI, Parent and/or their
respective affiliates in the future, for which we would expect the DB Group to receive compensation. In the ordinary course of business, members of the DB Group may actively trade in the securities and other instruments and obligations of TXI,
Parent and their respective affiliates for their own accounts and for the accounts of their customers. Accordingly, the DB Group may at any time hold a long or short position in such securities, instruments and obligations.
Based upon and subject to the foregoing assumptions, limitations, qualifications and conditions, it is Deutsche Banks opinion as investment bankers
that, as of the date hereof, the Exchange Ratio is fair, from a financial point of view, to Parent.
This opinion may not be disclosed, summarized,
referred to, or communicated (in whole or in part) to any other person for any purpose whatsoever except with our prior written approval, provided that, if required by applicable law, this opinion may be included in any disclosure document filed by
Parent with the Securities and Exchange Commission with respect to the Transaction, provided, further, that it is reproduced in full and that any description of or reference to Deutsche Bank or summary of this opinion in the disclosure document is
in a form reasonably acceptable to Deutsche Bank and its counsel.
|
Very truly yours,
|
|
|
DEUTSCHE BANK SECURITIES INC.
|
ANNEX D
|
|
|
|
|
745 Seventh Avenue
New York, NY 10019
United States
|
January 27, 2014
Board of Directors
Martin Marietta Materials, Inc.
2719 Wycliff Road
Raleigh, NC 27607
Members of the Board of Directors:
We understand
that Martin Marietta Materials, Inc., a North Carolina corporation (the
Company
), intends to enter into a transaction (the
Proposed Transaction
) with Texas Industries, Inc., a Delaware corporation
(
TXI
), pursuant to which Project Holdings, Inc., a North Carolina corporation and a wholly-owned subsidiary of the Company (the
Merger Sub
), will merge with and into TXI, with TXI surviving as a wholly owned
subsidiary of the Company (the
Merger
) and each issued and outstanding share of common stock, par value $1.00 per share, of TXI (the
TXI Common Stock
), other than shares of TXI Common Stock held in treasury or
owned by the Company or Merger Sub, will be converted into the right to receive 0.70 shares (the
Exchange Ratio
) of the Companys common stock, par value $0.01 per share (the
Company Common Stock
), together
with the associated preferred share purchase rights granted pursuant to the Rights Agreement (as defined in the Agreement). The terms and conditions of the Proposed Transaction are set forth in more detail in the Agreement and Plan of Merger
Agreement dated January 27, 2014 among the Company, Merger Sub and TXI (the
Agreement
). The summary of the Proposed Transaction set forth above is qualified in its entirety by the terms of the Agreement.
We have been requested by the Board of Directors of the Company to render our opinion with respect to the fairness, from a financial point of
view, to the Company of the Exchange Ratio in the Proposed Transaction. We have not been requested to opine as to, and our opinion does not in any manner address, the Companys underlying business decision to proceed with or effect the Proposed
Transaction or the likelihood of consummation of the Proposed Transaction. In addition, we express no opinion on, and our opinion does not in any manner address, the fairness of the amount or the nature of any compensation to any officers, directors
or employees of any parties to the Proposed Transaction, or any class of such persons, relative to the Exchange Ratio or otherwise.
In
arriving at our opinion, we reviewed and analyzed: (1) the Agreement and the specific terms of the Proposed Transaction; (2) publicly available information concerning the Company and TXI that we believe to be relevant to our analysis,
including the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2012, the Companys Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and
September 30, 2013, TXIs Annual Report on Form 10-K for the fiscal year ended May 31, 2013 and TXIs Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 2013 and November 30, 2013;
(3) financial and operating information with respect to the business, operations and prospects of the Company furnished to us by the Company, including
D-1
Page 2 of 4
financial projections of the Company furnished to us by management of the Company (the
Company Projections
); (4) financial and operating information with respect to the
business, operations and prospects of TXI furnished to us by the Company, including financial projections of TXI furnished to us by management of the Company (the
TXI Projections
); (5) the pro forma impact of the Proposed
Transaction on the future financial performance of the combined company, including cost savings, operating synergies and other strategic benefits expected by the management of the Company to result from the combination of the businesses of TXI and
the Company and the anticipated accelerated utilization of TXIs net operating tax losses (collectively, the
Expected Synergies
) as well as the amount of time the management of the Company anticipates will be needed for the
combined company to realize such Expected Synergies, and the proceeds of certain anticipated real estate asset divestitures (the
Expected Real Estate Proceeds
); (6) trading history of each of the Company Common Stock and TXI
Common Stock from January 28, 2013 to January 24, 2014 and a comparison of such trading histories with those of other companies that we deemed relevant; (7) a comparison of the historical financial results and present financial
condition of the Company and TXI with each other and with those of other companies that we deemed relevant; and (8) the financial terms of certain precedent transactions. In addition, we have had discussions with the management of the Company
concerning their respective business, operations, assets, liabilities, financial condition and prospects and have undertaken such other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and completeness of the financial and other information used by us
without any independent verification of such information (and have not assumed responsibility or liability for any independent verification of such information) and have further relied upon the assurances of the management of the Company that they
are not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections of the Company, including the Company Projections, upon the advice of the Company, we have assumed that
such projections have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company and that the Company will perform
substantially in accordance with such projections. With respect to the financial projections of TXI, including the TXI Projections and the Expected Synergies and the Expected Real Estate Proceeds, upon the advice of the Company, we have assumed that
such projections have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of TXI and that TXI will perform substantially in
accordance with such projections. Furthermore, upon the advice of the Company, we have assumed that the amounts and timing of the Expected Synergies and the Expected Real Estate Proceeds are reasonable and that the Expected Synergies and the
Expected Real Estate Proceeds will be realized in accordance with such estimates. We assume no responsibility for and we express no view as to any such projections or estimates or the assumptions on which they are based. In arriving at our opinion,
we have not conducted a physical inspection of the properties and facilities of the Company or TXI and have not made or obtained any evaluations or appraisals of the assets or liabilities of the Company or TXI. Our opinion necessarily is based upon
market, economic and other conditions as they exist on, and can be evaluated as of, the date of this letter. We assume no responsibility for updating or revising our opinion based on events or circumstances that may occur after the date of this
letter. We express no opinion as to the prices at
D-2
Page 3 of 4
which shares of TXI Common Stock would trade following the announcement of the Proposed Transaction or shares of the Company Common Stock would trade following the announcement or consummation of
the Proposed Transaction. Our opinion should not be viewed as providing any assurance that the market value of the shares of Company Common Stock to be held by the stockholders of the Company after the consummation of the Proposed Transaction will
be in excess of the market value of the Company Common Stock owned by such stockholders at any time prior to the announcement or consummation of the Proposed Transaction.
We have assumed upon the advice of the Company that, in all respects material to our analysis, the accuracy of the representations and warranties
contained in the Agreement and all agreements related thereto. We have also assumed, upon the advice of the Company, that all material governmental, regulatory and third party approvals, consents and releases for the Proposed Transaction will be
obtained within the constraints contemplated by the Agreement and that, in all respects material to our analysis, the Proposed Transaction will be consummated in accordance with the terms of the Agreement without waiver, modification or amendment of
any material term, condition or agreement thereof and without any divestitures by the Company or TXI. Additionally, we have also assumed, upon the advice of the Company, that the Proposed Transaction will qualify as a tax free reorganization for
United States federal income tax purposes. We do not express any opinion as to any tax or other consequences that might result from the Proposed Transaction, nor does our opinion address any legal, tax, regulatory or accounting matters, as to which
we understand that the Company has obtained such advice as it deemed necessary from qualified professionals.
Based upon and subject to the
foregoing, we are of the opinion as of the date hereof that, from a financial point of view, the Exchange Ratio in the Proposed Transaction is fair to the Company.
We have acted as financial advisor to the Company in connection with the Proposed Transaction and will receive a fee for our services a portion
of which is payable upon rendering this opinion and a substantial portion of which is contingent upon the consummation of the Proposed Transaction. In addition, the Company has agreed to reimburse our expenses and indemnify us for certain
liabilities that may arise out of our engagement. We expect to perform various investment banking and financial services for the Company in the future, and expect to receive customary fees for such services.
Barclays Capital Inc. and its affiliates engage in a wide range of businesses from investment and commercial banking, lending, asset management
and other financial and non-financial services. In the ordinary course of our business, we and our affiliates may actively trade and effect transactions in the equity, debt and/or other securities (and any derivatives thereof) and financial
instruments (including loans and other obligations) of the Company, TXI and /or their respective affiliates for our own account and for the accounts of our customers and, accordingly, may at any time hold long or short positions and investments in
such securities and financial instruments.
This opinion, the issuance of which has been approved by our Fairness Opinion Committee, is for
the use and benefit of the Board of Directors of the Company and is rendered to the Board of Directors in connection with its consideration of the Proposed Transaction. This opinion is not intended to be and
D-3
Page 4 of 4
does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the Proposed Transaction. This opinion may not be disclosed, referred
to, or communicated (in whole or in part) to any third party for any purpose whatsoever except with our prior written approval. This opinion may be reproduced in full in any proxy or information statement mailed to shareholders of the Company but
may not otherwise be disclosed publicly in any manner without our prior written approval.
|
Very truly yours,
|
|
|
BARCLAYS CAPITAL INC.
|
D-4
ANNEX E
388 Greenwich Street
New York,
NY 10013
January 27, 2014
The Board of Directors
Texas Industries, Inc.
1503 LBJ Freeway, Suite 400
Dallas, TX 75234
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of view, to the holders of the common stock of Texas Industries, Inc. (the
Company) (other than Martin Marietta (defined below) and its affiliates) of the Exchange Ratio (defined below) set forth in the Agreement and Plan of Merger, dated as of January 27, 2014 (the Merger Agreement), among the
Company, Martin Marietta Materials, Inc. (Martin Marietta) and [MERGER SUB], a wholly owned subsidiary of Martin Marietta (Merger Sub). As more fully described in the Merger Agreement, Merger Sub will be merged with and into
the Company (the Merger) and each outstanding share of the common stock, par value $1.00 per share, of the Company (Company Common Stock) will be converted into the right to receive 0.700 (the Exchange Ratio) of a
share of the common stock, par value $0.01 per share, of Martin Marietta (Martin Marietta Common Stock).
In arriving at our opinion, we
reviewed the Merger Agreement and also held discussions with certain senior officers, directors and other representatives and advisors of the Company and received information and data from certain senior officers and other representatives and
advisors of Martin Marietta, in each case concerning the businesses, operations and prospects of the Company and Martin Marietta. We reviewed certain publicly available business and financial information relating to the Company and Martin Marietta
as well as certain financial forecasts and other information and data relating to the Company and Martin Marietta which were provided to or discussed with us by the managements of the Company and Martin Marietta, including information relating to
potential strategic implications and operational benefits (including the amount, timing and achievability thereof) anticipated by the management of Martin Marietta to result from the Merger, which we evaluated at the direction and with the consent
of the Company. We reviewed the financial terms of the Merger as set forth in the Merger Agreement in relation to, among other things: current and historical market prices and trading volumes of Company Common Stock and Martin Marietta Common Stock;
the historical and projected earnings and other operating data of the Company and Martin Marietta; and the capitalization and financial condition of the Company and Martin Marietta. We considered, to the extent publicly available, the financial
terms of certain other transactions which we considered relevant in evaluating the Merger and analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations we
considered relevant in evaluating those of the Company and Martin Marietta. We also evaluated certain potential pro forma financial effects of the Merger on the Company and Martin Marietta utilizing, among other things, the financial forecasts and
estimates relating to the Company and Martin Marietta referred to above after giving effect to the potential strategic implications and operational benefits anticipated by the
E-1
The Board of Directors
Texas Industries, Inc.
January 27, 2014
Page 2
management of Martin Marietta to result from the Merger, which we evaluated at the direction and with the
consent of the Company. In addition to the foregoing, we conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as we deemed appropriate in arriving at our opinion. The
issuance of our opinion has been authorized by our fairness opinion committee.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with us and upon the assurances of the managements of the Company and Martin
Marietta that they are not aware of any relevant information that has been omitted or that remains undisclosed to us. As discussed, we considered the selected precedent transactions that we reviewed to lack sufficient comparability due to various
factors and circumstances that distinguish the proposed Merger from such transactions and, accordingly, did not perform a selected precedent transactions analysis in reaching our opinion. With respect to financial forecasts and other information and
data provided to or otherwise reviewed by or discussed with us relating to the Company and Martin Marietta and potential pro forma financial effects of, and strategic implications and operational benefits resulting from, the Merger, we have been
advised by the management of the Company, and we have assumed, with your consent, that such forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the managements
of the Company and Martin Marietta as to the future financial performance of the Company and Martin Marietta, such strategic implications and operational benefits and the other matters covered thereby. We also have assumed, with your consent, that
the financial results (including the potential strategic implications and operational benefits anticipated to result from the Merger) reflected in such financial forecasts and other information and data will be realized in the amounts and at the
times projected. We have relied, at the direction of the Company, upon the assessments of the management of the Company as to market and cyclical trends and prospects relating to the building materials industry and the potential impact of such
trends and prospects on the Company and Martin Marietta, including the assumptions of the management of the Company as to building materials prices, supply and demand trends reflected in the financial forecasts and other information and data
utilized in our analyses, including the assessment of mid-cycle EBITDA for the Company and Martin Marietta, all of which are subject to significant volatility and which, if different than as assumed, could have a material impact on our analyses or
opinion. We have assumed, at the direction of the Company, that there will be no developments with respect to any of the foregoing that would be material to our analyses or opinion.
We have assumed, with your consent, that the Merger will be consummated in accordance with its terms without waiver, modification or amendment of any material
term, condition or agreement and that, in the course of obtaining the necessary regulatory or third party approvals, consents, releases and waivers for the Merger, no delay, limitation, restriction or condition will be imposed that would have an
adverse effect on the Company, Martin Marietta or the contemplated benefits of the Merger. We also have assumed, with your consent, that the Merger will qualify for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended. Our opinion, as set forth herein, relates to the relative values of the Company and Martin Marietta. We are not expressing any opinion as to what the value of Martin Marietta
Common Stock
E-2
The Board of Directors
Texas Industries, Inc.
January 27, 2014
Page 3
actually will be when issued pursuant to the Merger or the prices at which Company Common Stock or Martin Marietta Common Stock will trade at any time. We have not made or been provided with an
independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company or Martin Marietta nor have we made any physical inspection of the properties or assets of the Company or Martin Marietta. We express no view
as to, and our opinion does not address, the underlying business decision of the Company to effect the Merger, the relative merits of the Merger as compared to any alternative business strategies that might exist for the Company or the effect of any
other transaction in which the Company might engage. Our opinion does not address any terms (other than the Exchange Ratio to the extent expressly specified herein) or other aspects or implications of the Merger, including, without limitation, the
form or structure of the Merger or any voting or other agreement, arrangement or understanding to be entered into in connection with or contemplated by the Merger or otherwise. We express no view as to, and our opinion does not address, the fairness
(financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the Merger, or any class of such persons, relative to the Exchange Ratio. Our opinion is necessarily
based upon information available to us, and financial, stock market and other conditions and circumstances existing and disclosed to us, as of the date hereof. As you are aware, the credit, financial and stock markets are experiencing unusual
volatility and we express no opinion or view as to any potential effects of such volatility on the Company, Martin Marietta or the contemplated benefits of the Merger.
Citigroup Global Markets Inc. has acted as financial advisor to the Company in connection with the proposed Merger and will receive a fee for such services, a
significant portion of which is contingent upon the consummation of the Merger. We also will receive a fee in connection with the delivery of this opinion. In addition, the Company has agreed to reimburse certain of our expenses arising, and
indemnify us against certain liabilities that may arise, out of our engagement. In the past two years, we have not provided any investment banking services to the Company or its affiliates unrelated to the proposed Merger. We may provide services
unrelated to the proposed Merger to or with respect to the Company or its affiliates in the future for which we may receive compensation. We and our affiliates in the past have provided, currently are providing and in the future may provide services
to Martin Marietta unrelated to the proposed Merger, for which services we and such affiliates have received and expect to receive compensation, including, without limitation, (i) loan portfolio management in 2012 and 2013 and (ii) prepaid
card services in 2013. In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of the Company and Martin Marietta for our own account or for the account of our customers and, accordingly, may at any
time hold a long or short position in such securities. In addition, we and our affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with the Company, Martin Marietta and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the information of the Board of Directors of the Company (in its capacity as such) in
its evaluation of the proposed Merger, and our opinion is not intended to be and does not constitute a recommendation to any securityholder as to how such securityholder should vote or act on any matters relating to the proposed Merger or otherwise.
Based upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, we are
of the opinion that, as of the date hereof, the Exchange Ratio is fair, from a financial point of view, to the holders of Company Common Stock (other than Martin Marietta and its affiliates).
E-3
The Board of Directors
Texas Industries, Inc.
January 27, 2014
Page 4
Very truly yours,
CITIGROUP GLOBAL MARKETS INC.
E-4