Exhibit 2.1
MERGER AGREEMENT
MERGER AGREEMENT, dated as of March 30, 1999, by and between Reunion
Industries, Inc., a Delaware corporation ("Reunion"), and Chatwins Group, Inc.
a Delaware corporation ("Chatwins").
W I T N E S S E T H:
WHEREAS, Reunion desires to acquire Chatwins, and Chatwins desires that
Reunion acquire Chatwins, all on the terms and conditions set forth in this
Agreement;
WHEREAS, it is the intention of the parties that the Merger (as defined
below) shall: (i) be accounted for by the "purchase method" under generally
accepted accounting principles ("GAAP"); (ii) qualify as a tax free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall qualify as a "plan of
reorganization" within the meaning of Section 368 of the Code; and (iii)
qualify as a tax free exchange of stock under Section 354 of the Code;
WHEREAS, the Boards of Directors of Chatwins and Reunion have approved and
adopted this Agreement and have authorized the execution hereof; and
WHEREAS, the shareholders of Chatwins and the shareholders of Reunion shall
vote for or against the adoption of this Agreement at meetings thereof to be
called as promptly as possible following the execution of this Agreement (or by
written consent).
NOW, THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement and the representations, warranties, conditions and promises
hereinafter contained, the parties to this Agreement hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger
(a) At the Effective Time (as defined in Section 1.1(b)), Chatwins shall be
merged with and into Reunion (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "Delaware GCL"), whereupon the
separate existence of Chatwins shall cease and Reunion shall be the surviving
corporation.
(b) As soon as practicable after satisfaction or waiver of all conditions to
the Merger, Chatwins and Reunion will file a certificate of merger (which shall
be in form and substance reasonably satisfactory to the parties hereto) with
the Secretary of State of the State of Delaware (the "Secretary of State") in
accordance with Section 251(c) of the Delaware GCL and make all other filings
or recordings required by the Delaware GCL in connection with the Merger. The
Merger shall become effective on such date as the certificate of merger is duly
filed with the Secretary of State or at such later date as is specified in the
certificate of merger (the "Effective Time").
(c) From and after the Effective Time, Reunion shall possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities, liabilities and duties of Chatwins as provided in the Delaware
GCL.
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1.2 Conversion of Shares. By virtue of the Merger and without any action on
the part of Reunion or Chatwins:
(a) The aggregate number of shares of the common stock of Chatwins, par
value $.01 per share, issued and outstanding immediately prior to the Effective
Time (the "Chatwins Common Stock") shall be automatically converted into the
right to receive the following consideration in the manner and at the time
described below:
(i) at the Effective Time, 8,500,000 fully paid and nonassessable shares
of common stock of Reunion, par value $.01 per share ("Reunion Common Stock");
and
(ii) up to 500,000 shares of Reunion Common Stock (the "Additional
Shares") to be issued within 30 days after the filing by Reunion of its Annual
Report on Form 10K for the year ending December 31, 1999 (the "Filing Date") as
follows:
(x) 200,000 shares of Reunion Common Stock if EBITDA (as defined in
clause (z) below) earned by the Chatwins Divisions (as defined
in clause (z) below) during the year ending December 31, 1999
("1999 EBITDA") is at least $27,911,000; plus
(y) .3 shares of Reunion Common Stock for each dollar of 1999 EBITDA
in excess of $27,911,000 up to and including $28,911,001.
(z) For purposes of this Agreement, "EBITDA" shall mean the earnings
before interest, taxes, depreciation and amortization of the
Chatwins Divisions, determined in accordance with GAAP applied
on a consistent basis, without, however, any allocations related
to headquarters overhead or expense, as audited by
PriceWaterhouseCoopers, LLP, and the "Chatwins Divisions" shall
mean the operating divisions of Chatwins known as "CPI",
"Xxxxx", "Alliance", "Xxxxx", "Steelcraft" and "AutoLok", the
Kingway material handling business of Stanwich Acquisition Corp.
("SAC"), which will be merged into Reunion and operated within
the AutoLok division and the Naptech business of NPS Acquisition
Corp. ("NPS"), which will be merged into Reunion and operated
within the CPI division.
(iii) the Reunion Common Stock to be issued in accordance with this
Section 1.2(a) shall be allocated among the holders of the Chatwins Common Stock
pro rata based upon their percentage ownership of the Chatwins Common Stock at
the Effective Time.
(b)(i) The aggregate number of shares of Class D, Series A Preferred Stock
of Chatwins, par value $.01 per share (the "Series A Preferred"), Class D,
Series B Preferred Stock of Chatwins, par value $.01 per share, (the "Series B
Preferred"), and Class D, Series C Preferred Stock of Chatwins, par value $.01
per share (the "Series C Preferred"), issued and outstanding immediately prior
to the Effective Time shall be automatically converted into the right to
receive preferred stock of Reunion (the "Series A Reunion Preferred") with an
initial redemption value (the "Initial Redemption Value") equal to the
aggregate redemption price of such Chatwins preferred stock on the Closing Date
(as defined in Section 1.4) determined as provided in Chatwins's Restated
Certificate of Incorporation. The Series A Reunion Preferred will be redeemable
when no shares of Series B Preferred Stock of Reunion (the "Series B Reunion
Preferred") to be issued in connection with the merger of SAC into Reunion are
outstanding at any time at the option of Reunion at a redemption value (the
"Total Redemption Value") equal to the Initial Redemption Value plus all
accrued but unpaid preferred dividends. The Series A Reunion Preferred will
accrue a cumulative dividend equal to 10% of the Initial Redemption Value per
annum, which will accrue from the Effective Time (the "Series A Preferred
Dividend"). The Series A Preferred Dividend will be junior in right of payment
to dividends on the Series B Reunion Preferred, will be payable as and when the
Board of Directors of Reunion determines and will be senior in right of payment
to dividends on shares of Reunion Common Stock. The Series A Reunion Preferred
will not be voting, except as required by law, and will not have any right of
conversion into the Reunion Common Stock or any other securities of Reunion.
Upon a liquidation of Reunion, the holders of the Series A Reunion Preferred
will be entitled to be paid, out of the assets of Reunion available for payment
to the holders of Reunion's capital stock, an amount equal to the Total
Redemption Value on the date of payment. In the
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event of a liquidation of Reunion no payments will be made and no assets will
be distributed to the holders of the Reunion Common Stock or any other class of
capital stock of Reunion, including the Series B Reunion Preferred, until the
holders of the Series A Reunion Preferred shall have been paid the Total
Redemption Value. The Series A Reunion Preferred will have such other
preferences, privileges, restrictions and rights as are determined by the Board
of Directors of Reunion prior to the Effective Time.
(ii) The Series A Reunion Preferred shall be allocated among the holders of
the Series A Preferred, Series B Preferred and Series C Preferred in accordance
with such holders' applicable Redemption Percentages at the Effective Time. For
these purposes, a particular holder's "Redemption Percentage" shall mean the
fraction (expressed as a percentage) obtained by dividing (y) the aggregate
Initial Redemption Value of the Series A Preferred, Series B Preferred and
Series C Preferred held by such holder immediately prior to the Effective Time
by (z) the aggregate Initial Redemption Value of the shares of Series A
Preferred, Series B Preferred and Series C Preferred issued and outstanding
immediately prior to the Effective Time.
(c) All shares of Chatwins Common Stock, Series A Preferred, Series B
Preferred and Series C Preferred (collectively, the "Chatwins Capital Stock")
shall automatically be cancelled and retired and shall cease to exist and each
holder of a certificate representing any such Chatwins Capital Stock (a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive consideration (the "Merger Consideration") consisting of the
number of shares of Reunion Common Stock or Series A Reunion Preferred
specified herein, together with any cash in lieu of fractional shares of
Reunion Common Stock to be paid pursuant to Section 1.3(c), upon the surrender
of such Certificate in accordance with Section 1.3(a), without interest.
(d) All shares of Chatwins Capital Stock held by Chatwins as treasury shares
shall be cancelled and retired and shall cease to exist and no shares of
Reunion Common Stock or Series A Reunion Preferred shall be issuable in respect
thereof.
(e) Chatwins agrees that the 1,450,000 shares of Reunion Common Stock and
the warrant to purchase an additional 75,000 shares of Reunion Common Stock
owned by Chatwins as of the date hereof shall be retired by Reunion, and
Chatwins shall thereupon cease to have any rights with respect thereto,
including any right of exchange in connection with the Merger.
1.3 Surrender of Certificates; Payment of Merger Consideration
(a) Surrender of Certificates. At or after the Closing (as defined in
Section 1.4), upon presentation by the holder thereof, duly endorsed, each
Certificate shall be cancelled and exchanged and, simultaneously with such
cancellation and exchange, (i) in respect of Chatwins Common Stock a new
certificate shall be issued representing the number of shares of Reunion Common
Stock into which the Chatwins Common Stock formerly held by such shareholder
shall have been converted in the Merger in accordance with Section 1.2 (a)(i)
hereof, together with a check payable to such shareholder representing any
payment of cash in lieu of fractional shares determined in accordance with
Section 1.3(c) hereof and (ii) in respect of Series A Preferred, Series B
Preferred and Series C Preferred, a new certificate shall be issued
representing the number of shares of Series A Reunion Preferred determined in
accordance with the applicable Redemption Percentages. Within 30 days following
the Filing Date, a certificate shall be issued representing Additional Shares,
if any, into which the Chatwins Common Stock formerly held by such shareholder
shall have been converted in the Merger in accordance with Section 1.2(a)(ii)
hereof, together with a check payable to such shareholder representing any
payment of cash in lieu of fractional shares determined in accordance with
Section 1.3(c) hereof. All of the shares of Reunion Common Stock and Series A
Reunion Preferred issued in the Merger shall be duly authorized, validly
issued, fully paid and nonassessable and, at the time of issuance, shall be
free and clear of all liens, claims, encumbrances, security interests and
rights of redemption (together, "Liens").
(b) No Further Ownership Rights in Chatwins Capital Stock. The Merger
Consideration issued upon the surrender for exchange of Certificates in
accordance with the terms of this Agreement (including any cash paid pursuant
to Section 1.3(c)) shall be deemed to have been issued (or paid, as the case
may be) in full satisfaction
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of all rights pertaining to the Chatwins Capital Stock represented thereby.
From and after the Closing, the stock transfer books of Chatwins shall be
closed and there shall be no further registration of transfers on the stock
transfer books of Chatwins or Reunion of the Chatwins Capital Stock which was
outstanding immediately prior to the Effective Time. If, after the Closing,
Certificates are presented to Reunion for any reason, they shall be cancelled
and exchanged as provided in this Agreement.
(c) No Fractional Shares. No certificate or scrip representing fractional
shares of Reunion Common Stock will be issued in the Merger upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Reunion.
In lieu of any such fractional shares, each holder of Chatwins Common Stock,
who would otherwise have been entitled to a fraction of a share of Reunion
Common Stock in exchange for Certificates pursuant to this Agreement shall
receive from Reunion a cash payment in lieu of such fractional share equal to
the product of the market price of Reunion Common Stock at the close of
business on the Closing Date and the fractional share interest to which such
holder would otherwise be entitled.
1.4 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of Xxxxxxxx Xxxxxxxxx
Professional Corporation, One Oxford Centre, 000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 at 10:00 a.m. on June 29, 1999, or at such other
place or time as the parties may mutually agree (the "Closing Date").
1.5 Further Assurances. At the Closing and thereafter, each party hereto
will execute such further documents and instruments and take such further
actions as may reasonably be requested by one or more of the others to
consummate the Merger, to vest Reunion with full title to all assets,
properties, rights, approvals, immunities and franchises of Chatwins and to
effect the other purposes of this Agreement.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Reunion in effect at the Effective Time shall be the Certificate of
Incorporation of the surviving corporation until amended in accordance with
applicable law.
2.2 By-Laws. The By-laws of Reunion in effect at the Effective Time shall be
the By-laws of the surviving corporation until amended in accordance with
applicable law.
2.3 Officers. The persons listed on Schedule 2.3 shall serve in the offices
shown opposite their names on Schedule 2.3 at the Effective Time and shall
continue in the same offices on behalf of the surviving corporation until their
resignation or removal in accordance with the By-laws.
2.4 Directors. The Directors of Reunion serving on the Reunion Board of
Directors at the Effective Time shall continue to serve as members of the Board
of Directors of the surviving corporation until their resignation or until
their successors are duly elected and qualified. In addition, at the first
meeting of the Board of Directors occurring after the Effective Time, the total
number of persons serving on the Board of Directors shall be increased by two
and two additional persons nominated by Chatwins shall be appointed by the
Board of Directors of Reunion to fill the vacancies, effective at such meeting
of the Board, thereby created.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHATWINS
Chatwins hereby represents and warrants to Reunion on the date hereof and as
of the Effective Time as follows (it being understood that for purposes of this
Section 3, Chatwins shall include each of its subsidiaries):
3.1 Chatwins' Organization and Good Standing. Chatwins is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power and authority to own, lease and operate
its properties and to carry on its business as now conducted. Chatwins is duly
qualified to do business and in good standing in each jurisdiction where the
character of property owned
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or leased by it or the nature of its activities makes such qualification
necessary except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Chatwins Material Adverse
Effect. As used herein, a "Chatwins Material Adverse Effect" means a material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of Chatwins or on the ability of Chatwins to consummate
the transactions contemplated by this Agreement.
3.2 Power and Authority; Execution and Delivery. Chatwins has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement. Except for shareholder approval as required by the
Delaware GCL, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved
and authorized by all requisite corporate action of Chatwins. Except for such
shareholder approval and the filing of a certificate of merger in accordance
with Section 1.1(b), no further corporate actions or approvals on the part of
Chatwins are required under applicable law for the consummation of the Merger.
This Agreement has been duly executed and delivered by Chatwins and, subject
only to the approval of its shareholders in accordance with the Delaware GCL,
constitutes the legal, valid and binding obligation of Chatwins, enforceable
against it in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity).
3.3 Capitalization and Voting Rights
The authorized capital of Chatwins consists entirely of the following, the
rights, privileges and preferences of which are as stated in the Certificate of
Incorporation of Chatwins:
. 3,000 shares of Series A Preferred, of which 2,249 shares are issued and
outstanding as of the date hereof;
. 800 shares of Series B Preferred, of which 800 shares are issued and
outstanding as of the date hereof;
. 2,500 shares of Series C Preferred, of which 1,510 shares are issued and
outstanding as of the date hereof; and
. 400,000 shares of Chatwins Common Stock, of which 289,677.4 shares are
issued and outstanding and 41,109 shares are held by Chatwins as treasury
shares.
Except as set forth on Schedule 3.3, Chatwins has no outstanding
subscriptions, options, warrants, calls or other agreements or commitments by
which Chatwins is bound in respect of the capital stock of Chatwins, whether
issued or unissued, and no outstanding rights or securities convertible into or
exchangeable for any such capital stock, and Chatwins is not a party or subject
to any agreement or understanding, and to Chatwins's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects
or relates to the voting or giving of written consents with respect to any
security of Chatwins. All shares of Class A, B, C and E Preferred Stock
authorized to be issued by the Certificate of Incorporation of Chatwins have
been retired, and no shares thereof or rights with respect thereto are
outstanding.
3.4 Subsidiaries. Except as set forth in Schedule 3.4, Chatwins does not own
or control, directly or indirectly, any interest in any other corporation,
association or other business entity.
3.5 Valid Issuance of Preferred and Common Stock. Except as set forth on
Schedule 3.5, the outstanding shares of Chatwins Capital Stock are duly and
validly authorized and issued, fully paid and nonassessable.
3.6 Reports and Financial Statements. Chatwins has previously furnished to
Reunion a true and complete copy of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Chatwins 10-K") substantially in the
form to be filed with the Securities and Exchange Commission ("SEC") and
Current Reports on Form 8K as filed with the SEC since December 31, 1998.
Chatwins will provide Reunion with a true and complete copy of each Quarterly
Report on Form 10-Q promptly after filing such report with the SEC.
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As of their respective dates, the Chatwins 10-K, Quarterly Reports on Form 10-Q
and Current Reports on Form 8K referred to above did not, and will not, when
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements included in the
Chatwins 10-K have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the consolidated financial position of Chatwins and its
subsidiaries as of December 31, 1998 and the consolidated results of operations
and changes in cash flow of Chatwins and its subsidiaries for the period then
ended.
3.7 Changes. Except as set forth on Schedule 3.7 or in the Chatwins 10-K,
since December 31, 1998, there has not been:
(a) any adverse change in the assets, condition (financial or otherwise),
affairs, business, operations, properties, or liabilities of Chatwins from that
reflected in the balance sheet as at December 31, 1998, referred to in Section
3.6 above, except for changes in the ordinary course of business which do not
constitute, either individually or in the aggregate, a Chatwins Material
Adverse Effect;
(b) any material change in the liabilities or obligations of Chatwins,
contingent or otherwise, whether due or to become due, whether by way of
guaranty, endorsement, indemnity, warranty or otherwise, except for the
incurrence of current liabilities in the ordinary course of business, none of
which has had a Chatwins Material Adverse Effect;
(c) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the properties, operations or business of
Chatwins;
(d) any waiver by Chatwins of a valuable right or of a material debt owed
to it;
(e) any loans made by Chatwins other than advances of expenses made in
the ordinary course of business;
(f) any declaration or payment of any dividend or other distribution of
the assets of Chatwins or any direct or indirect redemption, purchase or
acquisition of any securities of Chatwins;
(g) any incurrence of indebtedness for money borrowed or any other
liabilities individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of $100,000 in the
aggregate;
(h) any sale, exchange or other disposition of any of Chatwins's assets,
other than in the ordinary course of business;
(i) to the best of Chatwins's knowledge, any other event or condition of
any character which could reasonably be expected to result in a Chatwins
Material Adverse Effect;
(j) any increase in compensation of any of its existing officers, or the
rate of pay of its employees as a group, except as part of regular compensation
increases in the ordinary course of business;
(k) any resignation or termination of employment of any officer or key
employee of Chatwins; or
(l) any agreements to do or enter into any of the foregoing.
3.8 Governmental Approvals and Filings. Except as set forth in Schedule 3.8
and for the filing of a certificate of merger in accordance with the Delaware
GCL, no approval, authorization, consent, license, clearance or order of,
declaration or notification to, or filing, registration or compliance with, any
governmental or regulatory authority, is required in order to permit Chatwins
to enter into this Agreement or to consummate the transactions contemplated
herein.
3.9 Litigation. Except as set forth in the Chatwins 10-K, (i) there is no
action, suit, proceeding or investigation pending or, to Chatwins's knowledge,
currently threatened in writing against Chatwins or its property, assets or
business which might reasonably be expected to result, either individually or
in the
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aggregate, in a Chatwins Material Adverse Effect, including without limitation,
actions pending or threatened involving the prior employment of any of
Chatwins's employees, their use in connection with Chatwins's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers; and
(ii) Chatwins is not a party or subject to the provisions of any order, writ,
injunction, award, judgment or decree of any court, arbitration panel or
government agency or instrumentality.
3.10 Patents and Trademarks. Chatwins has sufficient title and ownership of
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now
conducted and without any conflict with or infringement of the rights of others
which could reasonably be expected to result in a Chatwins Material Adverse
Effect. Schedule 3.10 contains a complete list of patents and patent
applications owned by Chatwins. Except as set forth in Schedule 3.10, there are
no outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is Chatwins bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes owned by any other person or entity. Chatwins has not
received any communications or claims alleging that Chatwins has violated or,
by conducting its business as currently conducted, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other person or
entity. Chatwins is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court of
administrative agency, that would interfere with the use of such employee's
best efforts to promote the interests of Chatwins or that would conflict with
Chatwins's business as proposed to be conducted. Neither the execution and
delivery of this Agreement nor the carrying on of Chatwins's business by the
employees of Chatwins will, to Chatwins's knowledge, conflict with or result in
a breach of the terms, conditions or provisions of or constitute a default
under any contract, covenant or instrument under which any of such employees is
now obligated.
3.11 No Conflict. Except as set forth on Schedule 3.11, neither the
execution, delivery and performance of this Agreement by Chatwins, nor the
consummation by Chatwins of the transactions contemplated hereby will (i)
conflict with, or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of Chatwins, (ii)
conflict with, result in a breach or violation of, give rise to a default under
or result in the acceleration of performance under any mortgage, lease,
agreement, note, bond, indenture, guarantee or any statute, regulation,
ordinance, writ, injunction, order, judgment or decree to which Chatwins may be
subject, which conflict, breach, default, violation or acceleration could
reasonably be expected to have a Chatwins Material Adverse Effect, or (iii)
give rise to an imposition of any Lien of any nature whatsoever upon any of the
assets of Chatwins.
3.12 Agreements
(a) Except as set forth in Schedule 3.12, there are no agreements,
understandings or transactions between Chatwins and any of its officers or
directors or any affiliate thereof.
(b) Except as set forth in Schedule 3.12, there are no agreements,
understanding or transactions to which Chatwins is a party or by which it is
bound which (i) involve obligations (contingent or otherwise) of, or payments
to, Chatwins in excess of $500,000 other than in the ordinary course of
business, (ii) are material to the conduct and operations of Chatwins's
business or properties (including, without limitation, the license of any
patent, copyright, trade secret or other proprietary rights to or from
Chatwins), (iii) restrict or adversely affect the development, manufacture or
distribution of Chatwins's products or services, (iv) involve any written
employment or consulting arrangement between Chatwins and any person, or (v)
involve any material oral employment or consulting arrangement between Chatwins
and any person.
3.13 Title to Property and Assets. Except as set forth on Schedule 3.13,
Chatwins has good title to its property and assets free and clear of all Liens,
except such Liens which do not materially impair Chatwins's
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ownership or use of such property or assets. With respect to the property and
assets it leases, Chatwins is in substantial compliance with such leases and,
to its knowledge, holds a valid leasehold interest free of any Liens. All of
Chatwins's properties and assets are, in all material respects, in good
operating condition, subject to normal wear and tear.
3.14 Labor Agreements and Actions; Employee Benefits. Except as set forth on
Schedule 3.14, Chatwins is not bound by or subject to (and none of its assets
or properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and within
the last two (2) years no labor union has requested or, to the knowledge of
Chatwins, has sought to represent any of the employees, representatives, or
agents of Chatwins; there is no strike or other labor dispute involving
Chatwins pending or, to the knowledge of Chatwins, threatened, which could
reasonably be expected to have a Chatwins Material Adverse Effect, nor is
Chatwins aware of any labor organization activity involving its employees.
Except as noted in Schedule 3.14 hereto, Chatwins does not have any employee
benefit plans presently in force with respect to profit-sharing or pensions.
3.15 Tax Matters. Chatwins (i) has timely filed all tax returns that are
required to have been filed by it with all appropriate governmental agencies
(and all such returns are true and correct and fairly reflect in all material
respects its operations for tax purposes); and (ii) has timely paid all taxes
owed or assessed against it (other than taxes the validity of which are being
contested in good faith by appropriate proceedings). The assessment of any
additional taxes for periods for which returns have been filed is not expected
to exceed the reserves therefor reflected in the Chatwins's publicly-filed
financial statements and, to Chatwins's knowledge, there are no material
unresolved questions or claims concerning Chatwins's tax liability. Chatwins
1995 federal corporate income tax return was audited by the Internal Revenue
Service and all additional tax and interest assessed as a result of such audit
has been paid and all required state tax filings as a result thereof have been
made. Except as provided in the preceding sentence, Chatwins's federal income
tax returns have not been reviewed or audited by any taxing authority. There is
no pending dispute with any taxing authority relating to any of said returns
which, if determined adversely to Chatwins, would result in the assertion by
any taxing authority of any valid material tax deficiency.
3.16 Minute Books. The minute books of Chatwins contain a complete and
accurate record of all meetings of directors and stockholders since the date of
incorporation and all actions by written consent.
3.17 Purchase Method. To the best knowledge of Chatwins, neither Chatwins
nor any of its affiliates has taken or agreed to take any action inconsistent
with Reunion's accounting for the Merger under the "purchase method".
3.18 Disclosure. Neither this Agreement nor any document or information
furnished to Reunion by Chatwins pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements of Chatwins contained herein or therein not misleading.
3.19 S-4 Registration Statement. At the time the Registration Statement (as
defined in Section 9.8) becomes effective and at the Effective Time, the
Registration Statement and the Proxy Statement/Prospectus included therein, to
the extent that material is prepared or furnished by Chatwins for inclusion
therein, and the Chatwins SEC filings incorporated by reference therein, will
not contain any statement which, at the time and in light of the circumstances
under which it is made, is false or misleading with respect to any material
fact, or shall omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or necessary
to correct any statement which has become false or misleading with respect to
the transactions contemplated hereby and will comply in all material respects
with the requirements of the Securities Act of 1933 (the "Securities Act") and
the rules and regulations thereunder (provided that no representation or
warranty is made with respect to the information not prepared or furnished by
Chatwins specifically for use therein or not contained in Chatwins SEC filings
incorporated by reference therein).
3.20 Broker's or Finder's Fees. Except as set forth in Schedule 3.20,
neither Chatwins nor any of its affiliates has authorized any person to act as
broker, finder, banker, consultant, intermediary or in any other
8
similar capacity which would entitle such person to any investment banking,
brokerage, finder's or similar fee from Chatwins in connection with the
transactions contemplated by this Agreement.
3.21 Permits, Licenses, Authorizations; Compliance with Laws. Chatwins has
all licenses, franchises, certificates of occupancy, permits and other
governmental authorizations which are material and necessary to conduct its
business, and Chatwins is not in violation in any material respect of any such
license, franchise, certificate of occupancy, permit or other governmental
authorization, or any statute, law, ordinance, rule regulation, judgment, order
or decree applicable to it or any of its properties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REUNION
Reunion represents and warrants to Chatwins as of the date hereof and as at
the Effective Time as follows (it being understood that for purposes of this
Section 4, Reunion shall include each of its subsidiaries):
4.1 Organization and Good Standing. Reunion is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. Reunion is
duly qualified to do business and in good standing in each jurisdiction where
the character of property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Reunion Material Adverse Effect. As used herein, the term "Reunion Material
Adverse Effect" means a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of Reunion and its
subsidiaries, taken as a whole, or on the ability of Reunion to consummate the
transactions contemplated by this Agreement.
4.2 Power and Authority; Execution and Delivery. Reunion has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement. Except for shareholder approval as required by the
Delaware GCL, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved
and authorized by all requisite corporate action of Reunion. Except for such
shareholder approval and the filing of a certificate of merger in accordance
with Section 1.1(b), no further corporate actions or approvals on the part of
Reunion are required under applicable law for the consummation of the Merger.
This Agreement has been duly executed and delivered by Reunion and, subject
only to the approval of its shareholders in accordance with the Delaware GCL,
constitutes the legal, valid and binding obligation of Reunion, enforceable
against Reunion in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity).
4.3 Governmental Approvals and Filings. Except as set forth in Schedule 4.3,
and for the filing of a certificate of merger in accordance with the Delaware
GCL, no approval, authorization, consent, license, clearance or order of,
declaration or notification to, or filing, registration or compliance with, any
governmental or regulatory authority, is required in order to permit Reunion to
enter into this Agreement or to consummate the transactions contemplated
herein.
4.4 No Conflict. Except as set forth in Schedule 4.4, neither the execution,
delivery and performance of this Agreement by Reunion, nor the consummation by
Reunion of the transactions contemplated hereby will (i) conflict with, or
result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or By-laws of Reunion, (ii) conflict with, result
in a breach or violation of, give rise to a default under or result in the
acceleration of performance under any mortgage, lease, agreement, note, bond,
indenture, guarantees or any statute, regulation, ordinance, writ, injunction,
order, judgment or decree to which Reunion may be subject, which conflict,
breach, default, violation or acceleration would have a Reunion Material
Adverse Effect, or (iii) give rise to an imposition of any Lien, charge,
security interest or encumbrance of any nature whatsoever upon any of the
assets of Reunion.
9
4.5 Merger Consideration. When issued, the shares of Reunion Common Stock
and Series A Reunion Preferred to be issued in the Merger will be duly
authorized, validly issued, fully-paid and nonassessable and free and clear of
all Liens and preemptive rights. The certificates or instruments representing
such shares will be in due and proper form.
4.6 Reports and Financial Statements. Reunion has previously furnished to
Chatwins a true and complete copy of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Reunion 10-K") substantially in the
form to be filed with the SEC and Current Reports on Form 8-K as filed with the
SEC since December 31, 1998. Reunion will provide Chatwins with a true and
complete copy of each Quarterly Report on Form 10-Q promptly after filing such
report with the SEC. As of their respective dates, the Reunion 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K referred to above, did
not, and will not, when filed, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements
included in the Reunion 10-K have been prepared in accordance with GAAP applied
on a consistent basis (except as may be indicated therein or in the notes
thereto) and fairly present the consolidated financial position of Reunion and
its subsidiaries as of December 31, 1998 and the consolidated results of
operations and changes in cash flow of Reunion and its subsidiaries for the
period then ended.
4.7 Absence of Material Adverse Change. Except as set forth on Schedule 4.7
or the Reunion 10-K, since December 31, 1998 there has not been any Reunion
Material Adverse Effect.
4.8 Capitalization of Reunion. Reunion's authorized capital stock consists
of (i) 20,000,000 shares of Reunion Common Stock of which 3,900,065 are
outstanding on the date hereof, and (ii) 10,000,000 shares of preferred stock,
par value $.01 per share, none of which are outstanding on the date hereof. All
of the issued and outstanding shares of capital stock of Reunion are duly
authorized and validly issued, fully-paid and nonassessable.
4.9 Certificates of Incorporation and By-laws
(a) Reunion has delivered to Chatwins copies of its Certificate of
Incorporation and all amendments thereto, which copies are complete and
correct. Reunion is not in default under, or in violation of, any provisions of
its Certificate of Incorporation. Reunion's Certificate of Incorporation has
not been amended since December 31, 1998 and, except as contemplated by this
Agreement or in connection with the Acquisitions (as defined in Section
6.2(c)), no action has been taken for the purpose of effecting any amendment
thereto.
(b) Reunion has delivered to Chatwins copies of its By-laws and all
amendments thereto, which copies are complete and correct. Reunion is not in
default under, or in violation of, any provision of its By-laws. Reunion's By-
laws have not been amended since the date of certification thereof and no
action has been taken for the purpose of effecting any amendment thereto.
4.10 Legal Proceedings. Except as set forth in the Reunion 10-K, (i) there
are no suits, actions, claims, proceedings (including, without limitation,
arbitration or administrative proceedings) or investigations pending or to the
knowledge of Reunion threatened in writing against Reunion or its property,
assets or business which could reasonably be expected, individually or in the
aggregate, to have a Reunion Material Adverse Effect; and (ii) Reunion is not a
party or subject to the provisions of any judgment, order, injunction, decree
or award of any court, arbitration panel or government agency or
instrumentality.
4.11 Purchase Method. To the best knowledge of Reunion, neither Reunion nor
any of its affiliates has taken or agreed to take any action inconsistent with
the accounting treatment of the Merger under the "purchase method".
4.12 Disclosure. Neither this Agreement nor any document or information
furnished to Chatwins by Reunion pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements of Reunion contained herein or therein not misleading.
10
4.13 S-4 Registration Statement. At the time the Registration Statement
becomes effective and at the Effective Time, the Registration Statement and the
Proxy Statement/Prospectus included therein and the Reunion SEC filings
incorporated by reference therein, will not contain any statement which, at the
time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or shall omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or necessary to correct any statement which
has become false or misleading with respect to the transactions contemplated
hereby and will comply in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder (provided that no
representation or warranty is made with respect to the information prepared or
furnished by Chatwins to Reunion specifically for use therein or contained in
Chatwins SEC filings incorporated by reference therein).
4.14 Broker's or Finder's Fees. Except for Xxxx Xxxxx Xxxx Xxxxxx, Inc. and
Xxxxxx Xxxx, neither Reunion nor any of its affiliates has authorized any
person to act as broker, finder, banker, consultant, intermediary or in any
other similar capacity which would entitle such person to any investment
banking, brokerage, finder's or similar fee from Reunion in connection with the
transactions contemplated by this Agreement.
4.15 Permits, Licenses, Authorizations; Compliance with Laws. Reunion has
all licenses, franchises, certificates of occupancy, permits and other
governmental authorizations which are material and necessary to conduct its
business, and Reunion is not in violation in any material respect of any such
license, franchise, certificate of occupancy, permit or other governmental
authorization, or any statute, law, ordinance, rule regulation, judgment, order
or decree applicable to it or any of its properties.
ARTICLE V
COVENANTS OF CHATWINS
Chatwins covenants and agrees that:
5.1 Regular Course of Business. Except as otherwise consented to in writing
by Reunion, prior to the Closing Chatwins will carry on its businesses only in
the ordinary course and substantially in accordance with past practices, and
Chatwins will use commercially reasonable efforts to preserve its present
business organization intact and keep available the services of its present
executive officers.
5.2 Restricted Activities and Transactions. Except as otherwise consented to
in writing by Reunion or contemplated by this Agreement or as resulting from
the consummation of the transactions contemplated by this Agreement, prior to
the Closing Chatwins will not:
(a) amend its Certificate of Incorporation or By-laws;
(b) except in the ordinary course of business and substantially in
accordance with past practices, (i) borrow or agree to borrow any funds or
mortgage or pledge any of its assets, tangible or intangible, (ii) voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any material obligation or liability (absolute or contingent), (iii)
cancel or agree to cancel any material debts or claims, or (iv) lease, sell,
transfer or encumber, agree to lease, sell, transfer or encumber, or grant or
agree to grant any preferential rights to lease or acquire, any of its assets,
property or rights;
(c) except as set forth on the Schedules hereto, (i) grant any increase
in compensation or benefits, or (ii) make, pay or accrue any bonuses, pension,
profit sharing or similar payment to any director, officer or employee of
Chatwins other than payment of 1998 performance bonuses accrued as of December
31, 1998;
(d) acquire control or ownership of any other corporation, association,
joint venture, partnership, business trust or other business entity, or acquire
control or ownership of all or a substantial portion of the assets of any of
the foregoing, or merge, consolidate or otherwise combine with any other
corporation or enter into any agreement providing for any of the foregoing;
11
(e) except as set forth on the Schedules hereto or in the ordinary course
of business consistent with past practice, hire any additional professional
personnel or make any change in the responsibilities or office of any officer
of Chatwins;
(f) except as set forth on the Schedules hereto or in the ordinary course
of business consistent with past practice, enter into any material contract or
agreement or materially modify any existing material agreement;
(g) declare, set aside, make or pay any dividend or other distribution
with respect to its capital stock, or retire or redeem any of such capital
stock, or take any action which would have an effect equivalent to any of the
foregoing; or
(h) agree or commit to do any of the foregoing.
5.3 Approval of Shareholders
(a) Chatwins shall through its Board of Directors duly call, give notice of,
convene and hold a meeting of its shareholders (or solicit the written consent
thereof) for the purpose of voting on (i) the adoption and approval of this
Agreement and (ii) the waiver of all rights available to such shareholders to
demand appraisal of their shares of Chatwins Common Stock under the Delaware
GCL, as soon as reasonably practicable after the date hereof.
(b) Chatwins will provide its shareholders with, or give its shareholders
access to, all material information about the transactions contemplated by this
Agreement. The written information provided to the Chatwins shareholders will
be, when so provided, true and accurate in all material respects, and such
information will not, when so provided, contain any untrue statement of a
material fact or omit to state a material fact with respect to such written
information. Copies of all written information delivered or to be delivered to
the shareholders shall be offered for review and approval to Reunion prior to
its delivery to the Chatwins shareholders.
5.4 Consents, Approvals and Filings. Chatwins will use its best efforts to
obtain on or before the Closing all necessary approvals, authorizations,
registrations, consents, licenses, clearances or orders of governmental and
regulatory authorities referred to in Section 3.8.
5.5 Access to Books, Records and Other Information. Chatwins will afford to
Reunion and its accountants, attorneys and agents such information as Reunion
may reasonably request (including such copies of documents as Reunion may
reasonably request) and reasonable access to the books and records of Chatwins.
ARTICLE VI
COVENANTS OF REUNION
Reunion covenants and agrees that:
6.1 Regular Course of Business. Except as otherwise consented to in writing
by Chatwins, prior to the Closing, Reunion will carry on its businesses only in
the ordinary course and substantially in accordance with past practices, and
will use commercially reasonable efforts to preserve its present business
organization intact and keep available the services of its present executive
officers.
6.2 Restricted Activities and Transactions. Except as otherwise consented to
in writing by Chatwins or contemplated by this Agreement or as resulting from
the consummation of the transactions contemplated by this Agreement, prior to
the Closing Reunion will not:
(a ) amend its Certificate of Incorporation or By-laws except in
connection with the Acquisitions (as defined in Section 6.2(c));
(b) except in the ordinary course of business and substantially in
accordance with past practices, (i) borrow or agree to borrow any funds or
mortgage or pledge any of its assets, tangible or intangible, (ii) voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any
12
material obligation or liability (absolute or contingent), (iii) cancel or
agree to cancel any material debts or claims, or (iv) lease, sell, transfer or
encumber, agree to lease, sell, transfer or encumber, or grant or agree to
grant any preferential rights to lease or acquire, any of its assets, property
or rights;
(c) acquire control or ownership of any other corporation, association,
joint venture, partnership, business trust or other business entity, or acquire
control or ownership of all or a substantial portion of the assets of any of
the foregoing, or merge, consolidate or otherwise combine with any other
corporation or enter into any agreement providing for any of the foregoing;
provided that Reunion, or one of its subsidiaries, may enter into a merger or
other acquisition agreement with each of SAC and NPS (collectively, the
"Acquisitions").
(d) issue or sell any shares of its capital stock or other equity
interests or issue or award any options, warrants or other rights with respect
to its capital stock or other equity interests, except in connection with the
Acquisitions; or
(e) agree or commit to do any of the foregoing.
6.3 Approval of Shareholders
(a) Reunion shall through its Board of Directors duly call, give notice of,
convene and hold a meeting of its shareholders for the purpose of voting on the
adoption and approval of this Agreement as soon as reasonably practicable after
the date hereof.
(b) Reunion will provide its shareholders with, or give its shareholders
access to, all material information about the transactions contemplated by this
Agreement. The written information provided to the Reunion shareholders will
be, when so provided, true and accurate in all material respects, and such
information will not, when so provided, contain any untrue statement of a
material fact or omit to state a material fact with respect to such written
information.
6.4 Consents, Approvals and Filings. Reunion will use its best efforts to
obtain on or before the Closing all necessary approvals, authorizations,
registrations, consents, licenses, clearances or orders of governmental and
regulatory authorities referred to in Section 4.3.
6.5 Access to Books, Records and Other Information. Reunion will afford to
Chatwins and its accountants, attorneys and agents such information as Chatwins
may reasonably request (including such copies of documents as Chatwins may
reasonably request) and reasonable access to its books and records.
ARTICLE VII
MUTUAL COVENANTS
7.1 Payment of Expenses. Except for the fees, costs and expenses charged in
connection with any refinancing of Reunion to be consummated in connection with
the Merger, which shall be paid one-half by Reunion and one-half by Chatwins,
and except as otherwise specifically provided elsewhere herein, each party to
this Agreement shall be responsible for its own costs and expenses incurred in
connection with the transactions contemplated by this Agreement, and in
particular, Reunion shall be responsible for the fees and expenses of Xxxx
Xxxxx Xxxx Xxxxxx, Incorporated. All expenses incurred in connection with the
Registration Statement shall be borne by Reunion.
7.2 Public Announcements. Reunion and Chatwins shall to the maximum extent
feasible advise and confer with each other prior to the issuance of any
reports, public statements or releases pertaining to this Agreement or any
transaction contemplated hereby.
7.3 Public Disclosure. None of the information supplied by Reunion and
Chatwins for inclusion or incorporation by reference in the Registration
Statement (as defined below) at the time the Registration
13
Statement is filed with the SEC and the time such document becomes effective
under the Securities Act, will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
7.4 Refinancing. Reunion and Chatwins shall, and shall cause their
respective affiliates, agents and employees to, cooperate and expend all
efforts reasonably necessary to consummate on the Closing Date the currently
contemplated refinancing of the outstanding indebtedness of Reunion and
Chatwins through lenders reasonably acceptable to Chatwins and Reunion, and any
refinancing in lieu or supplemental thereof.
7.5 No Shop. From the date hereof until the Effective Time, except in
connection with the Acquisitions, and as otherwise required to comply with
applicable law, Reunion and Chatwins shall not and shall not permit any
officer, director or other agent of Reunion or Chatwins, directly or
indirectly, to take any action to seek, initiate, negotiate or encourage or
enter into or participate in any discussions regarding, any offer from any
third party to acquire any shares of capital stock or other equity interest of
such third party, or to sell to such third party any shares of capital stock or
other equity interest of Reunion or Chatwins, to merge or consolidate with
Reunion or Chatwins, or to otherwise acquire any significant portion of the
assets of Reunion or Chatwins or to acquire any significant portion of the
assets of such third party.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF REUNION
The obligation of Reunion to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, on or prior to the Closing,
of the following conditions:
8.1 Representations and Warranties True at the Closing. The representations
and warranties of Chatwins contained in this Agreement shall be true and
correct in all material respects, except to the extent such representations
were made as of a specific date other than the date hereof.
8.2 Performance of Covenants. Chatwins shall have performed in all material
respects all covenants required to be performed by it under this Agreement
prior to the Closing.
8.3 Opinion of Counsel. Chatwins shall have delivered to Reunion an opinion,
dated the Closing Date and addressed to Reunion, of Xxxxxxxx & X'Xxxx, LLP in
form and substance reasonably satisfactory to Reunion and its counsel.
8.4 Shareholder Approvals. This Agreement shall have been adopted by the
requisite vote of the shareholders of Reunion and of Chatwins under the
Delaware GCL; and holders of no more than 5% of Chatwins Common Stock shall
have exercised their rights of appraisal under the Delaware GCL, provided that
the Board of Directors of Reunion may elect to proceed with the Merger in the
event that more than 5% of holders of Chatwins Common Stock exercise such
rights of appraisal.
8.5 Other Approvals and Consents. All required approvals and authorizations
of governmental and regulatory authorities, including those listed on Schedule
3.8 and Schedule 4.3, shall have been obtained.
8.6 No Governmental or Other Proceeding. No order of any court or
administrative agency of competent jurisdiction shall be in effect which
restrains or prohibits any transaction contemplated hereby or which would limit
or otherwise affect in any material respect the Merger.
8.7 No Material Adverse Change. There shall not have been since the date
hereof any occurrence which could reasonably be expected to have a Chatwins
Material Adverse Effect.
8.8 Certificate of Chatwins. Chatwins shall have furnished Reunion with a
Certificate of Chatwins signed by its principal executive officer to the effect
that the representations and warranties of Chatwins contained in this Agreement
are true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made on such date (except as to
representations and warranties which are expressly limited to a state of facts
existing at a time prior to the Closing Date) and that Chatwins has performed
or complied in all material respects with all terms, covenants and provisions
of this Agreement required to be performed or complied with by it prior to or
at the Closing.
14
8.9 Certificate of Merger. Chatwins shall have executed and delivered to
Reunion the certificate of merger to be filed with the Secretary of State in
connection with the Merger.
8.10 Fairness Opinion. Reunion's Board of Directors shall have received the
opinion of Xxxx Xxxxx Xxxx Xxxxxx, Inc., in a form reasonably satisfactory to
the Board, that the consideration to be paid for Chatwins pursuant to this
Agreement is fair to Reunion and its stockholders, other than Chatwins, from a
financial point of view.
8.11 Refinancing; Chatwins Warrants. Reunion shall have an enforceable
agreement or agreements with one or more lenders, to consummate and/or continue
one or more credit facilities, the proceeds of which will be sufficient to
redeem the $50,000,000 principal amount Senior Notes of Chatwins due 2003 (the
"Senior Notes") and to provide adequate working capital resources to Reunion
after giving effect to the Merger, and all conditions precedent to the
amendment and/or funding of such credit facilities shall have been satisfied
other than the consummation of the Merger. Chatwins shall have issued the
requisite "bring along notice" to its warrantholders and all Chatwins warrants
shall have been exercised or terminated.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF CHATWINS
The obligations of Chatwins to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, on or prior to the Closing,
of the following conditions:
9.1 Representations and Warranties True at the Closing Date. The
representations and warranties of Reunion contained in this Agreement shall be
true and correct in all material respects, except for representations and
warranties which were made as of a specified date other than the date hereof.
9.2 Performance of Covenants. Reunion shall have performed in all material
respects all covenants required to be performed by it under this Agreement
prior to the Closing.
9.3 Opinion of Counsel. Reunion shall have delivered to Chatwins an opinion,
dated the Closing Date and addressed to Chatwins, of Xxxxxxxx Ingersoll
Professional Corporation, in form and substance reasonably satisfactory to
Chatwins and its counsel.
9.4 Shareholder Approvals. This Agreement shall have been adopted by the
requisite vote of the shareholders of Reunion and of Chatwins under the
Delaware GCL and holders of no more than 5% of Chatwins Common Stock shall have
exercised their rights of appraisal under the Delaware GCL; provided that the
Board of Directors of Chatwins may elect to proceed with the Merger in the
event that more than 5% of holders of Chatwins Common Stock exercise such
rights of appraisal.
9.5 Other Approvals and Consents. All required approvals and authorizations
of governmental and regulatory authorities, including those listed on Schedule
3.8 and Schedule 4.3, shall have been obtained.
9.6 No Governmental or Other Proceeding. No order of any court or
administrative agency of competent jurisdiction shall be in effect which
restrains or prohibits any transaction contemplated hereby or which would limit
or otherwise affect in any material respect the Merger.
9.7 Certificate of Reunion. Reunion shall have furnished Chatwins with a
Certificate of Reunion signed by its respective President or any Vice President
to the effect that, except for changes thereto agreed to in writing by
Chatwins, the representations and warranties of Reunion contained in this
Agreement are true and correct in all material respects at and as of the
Closing Date as though such representations and warranties were made on such
date (except as to representations and warranties which are expressly limited
to a state of facts existing at a time prior to the Closing) and that Reunion
has performed or complied in all material respects with all terms, covenants
and provisions of this Agreement required to be performed or complied with by
it prior to or at the Closing.
15
9.8 Registration. Reunion shall have filed with the SEC the Registration
Statement and the Registration Statement shall be effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended (the "Securities Act").
For the purposes of this Agreement, "Registration Statement" shall mean the
registration statement on Form S-4 of Reunion covering the shares of Reunion
Common Stock to be issued to the Chatwins's shareholders upon conversion of the
Chatwins Common Stock in connection with the Merger, including a proxy
statement/prospectus, amendments and supplements to such Registration
Statement, including post- effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement. Reunion shall have
complied in all material respects with all "Blue Sky" obligations applicable to
the transactions contemplated by this Agreement and by the Registration
Statement.
9.9 Listing. Reunion shall have taken such actions as are necessary to cause
the shares registered by the Registration Statement to be listed on the Pacific
Exchange and the NASDAQ Small-Cap Market.
9.10 Certificate of Merger. Reunion shall have executed and delivered to
Chatwins the certificate of merger to be filed with the Secretary of State in
connection with the Merger.
9.11 No Material Adverse Change. There shall not have been since the date
hereof any occurrence which could reasonably be expected to have a Reunion
Material Adverse Effect.
9.12 Refinancing. Reunion shall have an enforceable agreement or agreements
with one or more lenders, to consummate and/or continue one or more credit
facilities, the proceeds of which will be sufficient, to redeem the Senior
Notes and to provide adequate working capital resources to Reunion after giving
effect to the Merger, and all conditions precedent to the amendment and/or
funding of such credit facilities shall have been satisfied other than the
consummation of the Merger.
9.13 Reunion Preferred. The Board of Directors of Reunion shall have
approved and Reunion shall have filed with the Secretary of the State and
delivered to Chatwins a Certificate of Designations with respect to the Series
A Reunion Preferred having the terms described in Section 1.2(b) hereof.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated (i) by the mutual consent
of Reunion and Chatwins; (ii) by Reunion or Chatwins at any time after 120 days
after the date hereof if for any reason the Merger shall not by such date have
been consummated and such failure to consummate the Merger is not caused by a
breach of this Agreement by the terminating party; (iii) by Reunion if there has
been a misrepresentation or breach on the part of Chatwins in the
representations, warranties and covenants of Chatwins set forth herein which, if
curable, has not been cured within 10 days of notice thereof by Reunion and
which breach, if not cured, would cause a failure of the conditions set forth in
Section 8.1 or 8.2; (iv) by Chatwins if there has been a misrepresentation or
breach on the part of Reunion in the representations, warranties and covenants
of Reunion set forth herein which, if curable, has not been cured within 10 days
of notice thereof by Chatwins and which breach, if not cured, would cause a
failure of the conditions set forth in Section 9.1 or 9.2; and (v) by Reunion or
Chatwins if any court or administrative agency of competent jurisdiction shall
have issued an order which restrains or prohibits any transaction contemplated
hereby or which would limit or otherwise affect in any material respect the
Merger and such order shall have become final and nonappealable.
10.2 Effect of Termination. If this Agreement is validly terminated by
Reunion or Chatwins pursuant to Section 10.1, this Agreement will forthwith
become null and void and there will be no liability or obligation on the part
of Reunion or Chatwins (or any of their respective subsidiaries,
representatives or affiliates), except (i) that the provisions of Sections 7.1
and 7.2 will continue to apply following any such termination and (ii) that
nothing contained herein shall relieve any party hereto from liability for
breach of its representations, warranties, covenants or agreements contained in
this Agreement.
16
10.3 Termination After Shareholder Vote. At any time prior to the Effective
Time this Agreement may be terminated by the Board of Directors of Reunion or
Chatwins pursuant to Section 10.1 hereof notwithstanding the prior approval of
this Agreement and the Merger by their respective stockholders.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification
(a) Reunion shall indemnify and hold harmless Chatwins, each of its
directors and officers, and each person or entity, if any, who controls
Chatwins within the meaning of the Securities Act against all losses, claims,
damages or liabilities, joint or several, to which Chatwins or any such
director, officer or controlling person may become subject (i) which arise out
of or are caused by any breach by Reunion of any representation or warranty of
Reunion contained in this Agreement or any related agreement, (ii) which arise
out of or are caused by any breach or other failure to perform any covenant,
agreement or other obligation of Reunion contained in this Agreement or any
related agreement, or (iii) under the Securities Act insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and Reunion shall reimburse Chatwins or any such director, officer or
controlling person for any reasonable legal or other expenses in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that Reunion shall not be required to indemnify and
hold harmless or reimburse Chatwins to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission in any document
made in reliance upon and in conformity with written information furnished to
Reunion by or on behalf of Chatwins for use in the preparation of such
documents.
(b) Chatwins shall indemnify and hold harmless Reunion, each of its
directors and officers, and each person or entity, if any, who controls Reunion
within the meaning of the Securities Act, against all losses, claims, damages
or liabilities to which Reunion or any such director or officer or controlling
person may become subject (i) which arise out of or are caused by any breach by
Chatwins of any representation or warranty of Chatwins contained in this
Agreement or any related agreement, (ii) which arise out of or are caused by
any breach or other failure to perform any covenant, agreement or other
obligation of Chatwins contained in this Agreement or any related agreement, or
(iii) under the Securities Act insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case only
to the extent that such untrue statement or alleged untrue statement or
omission was made in reliance upon and in conformity with written information
furnished to Reunion by or on behalf of Chatwins; and Chatwins shall reimburse
Reunion for any reasonable legal or other expenses reasonably incurred by
Reunion or any such director or officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by a party who is, under paragraphs (a) or (b) of
this Section 11.1 an indemnified party, of notice of the commencement of any
action with respect to which indemnification may be sought under this Section
11.1, such indemnified party shall notify the indemnifying party. Such notice
shall be a condition precedent to any liability of the indemnifying party for
indemnification contained in this Section 11.1; provided, however, that the
rights of the indemnified party to indemnification or compensation hereunder
will only be affected by its failure to give prompt notice to the indemnifying
party of the commencement of such action if and to the extent that such failure
prejudices the indemnifying party in the defense of such action. In case any
such action is being brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to assume and control the defense of the action at its expense and if
the indemnifying party gives notice to such indemnified party of its election
to assume and
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control the defense, the indemnifying party will not be liable to such
indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense or investigation of the
action, so long as and to the extent that the indemnifying party continues to
diligently defend the indemnified party.
(d) No action for indemnity under this Article XI may be brought or
maintained by either party after the Effective Time.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Notices, Etc. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given, when
delivered in person, telegraphed, or when mailed by certified or registered
mail, postage prepaid, or when given by telex or facsimile transmission
(promptly confirmed in writing), as follows:
(a) If to Chatwins:
Chatwins Group, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: President
with copies to:
Xxxxxxxx & O'Neil, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) If to Reunion:
Reunion Industries, Inc.
One Stamford Landing, 00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: President
with copies to:
Xxxxxxxx Ingersoll Professional
Corporation
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
or such other person as the person entitled to notice shall designate in
writing, such writing to be delivered to the other parties hereto in the manner
provided in this Section 12.1.
12.2 Survival of Representations and Warranties. The representations and
warranties contained herein and in any certificate delivered pursuant hereto
shall not survive the Closing Date and the consummation of any or all of the
transactions contemplated hereby.
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12.3 Entire Agreement; Amendment. This Agreement (including the various
Schedules hereto) sets forth the entire agreement and understanding of the
parties in respect of the transactions contemplated hereby and supersedes all
prior agreements, arrangements and understandings relating to the subject
matter hereof. This Agreement may be amended or modified only by a written
instrument executed by Reunion and Chatwins. The Boards of Directors of
Chatwins and Reunion may amend this Merger Agreement at any time prior to the
time that this Merger Agreement (or a certificate in lieu thereof) filed with
the Secretary of State becomes effective in accordance with Section 103 of the
Delaware GCL, provided that an amendment made subsequent to the adoption of
this Merger Agreement by the stockholders of Chatwins or Reunion may not (1)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof, (2) alter or change any term of the
certificate of incorporation of Reunion to be effected by the Merger, or (3)
alter or change any of the terms and conditions of this Merger Agreement if
such alteration or change would adversely affect the holders of any class or
series of capital stock of Reunion or Chatwins.
12.4 Individual Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid and unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable
provision, and (iv) there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
12.5 General. This Agreement: (i) shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the choice of law principles thereof; (ii) shall inure to the benefit
of the parties hereto and their heirs, personal representatives, successors and
permitted assigns, nothing in this Agreement, expressed or implied, being
intended to confer upon any other person any rights or remedies hereunder;
(iii) may not be assigned by a party without the prior written consent of the
other parties; and (iv) may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument. The Section, Schedule and other headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement the
day and year first above written.
REUNION INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
Executive Vice President
CHATWINS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-----------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Chairman
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