SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of July 17, 1997 (this "Agreement"),
by and among CTS Corporation, an Indiana corporation ("Parent"), and CTS First
Acquisition Corp., a wholly owned subsidiary of Parent and a New York
corporation ("Sub"), WHX Corporation, a Delaware corporation ("Shareholder No.
1"), SB Acquisition Corp., a New York corporation and a wholly owned subsidiary
of Shareholder No. 1 ("Shareholder No. 2" and, together with Shareholder No. 1,
"Shareholder").
RECITALS
A. Simultaneously with the execution of this Agreement, Parent, Sub and
Dynamics Corporation of America, a New York corporation (the "Company"), are
entering into an Amended and Restated Agreement and Plan of Merger, dated as of
May 9, 1997, as amended (as such agreement may hereafter be amended from time to
time, the "Merger Agreement"); and
B. As an inducement to the parties' entry into the Merger Agreement, as
so amended and restated, Parent and Sub have requested that Shareholder agree,
and Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. In addition to the terms defined elsewhere
herein, capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement. In addition, for purposes of
this Agreement, the following terms have the following meanings when used herein
with initial capital letters:
(a) "Company Securities" means the Existing Shares together with
any Shares or other securities of the Company as to which Beneficial Ownership
is acquired by Shareholder in any capacity after the date hereof, whether upon
the exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, by means of purchase, dividend,
distribution, split-up, recapitalization, combination, exchange of shares or the
like or as a successor in interest in any capacity or otherwise.
(b) "Existing Shares" means Shares Beneficially Owned by
Shareholder as of the date hereof.
2. VOTING OF SHARES. (a) During the period commencing on the date
hereof and continuing until the earlier to occur of (i) the Effective Time or
(ii) termination of the Merger Agreement but in no event later than October 31,
1997 (the "Restriction Period"), at any meeting (whether annual or special
1
and whether or not an adjourned or postponed meeting) of the holders of Shares,
however called, Shareholder will appear at the meeting or otherwise cause the
Company Securities to be counted as present thereat for purposes of establishing
a quorum and vote or, in connection with any written consent of the holders of
Shares, consent (or cause to be voted or consented) the Company Securities (A)
in favor of the transactions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and hereof; (B)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement; and (C) except as
otherwise agreed to in writing in advance by Parent in its sole discretion,
against the following actions (other than the Merger and the other transactions
expressly contemplated by the Merger Agreement): (1) any Company Takeover
Proposal or Company Acquisition Agreement and (2)(v) any change in a majority of
the persons who constitute the Company Board; (w) any material change in the
present capitalization of the Company, including without limitation any proposal
to sell a substantial equity interest in the Company or any of its Subsidiaries;
(x) any amendment of the Company's Certificate of Incorporation or By-laws; (y)
any other change in the Company's corporate structure or business; or (z) any
other action which, in the case of each of the matters referred to in clauses
(2)(v), (w), (x) or (y), is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement.
(b) In furtherance of and not in limitation of the foregoing,
Shareholder irrevocably hereby appoints Sub as Shareholder's proxy and attorney
in fact, with full power of substitution and resubstitution, to the full extent
of Shareholder's rights with respect to the Company Securities to vote or cause
to be voted all Company Securities as provided in Section 2(a). Such proxy is
considered coupled with an interest in the Company Securities and is
irrevocable.
3. RESTRICTION ON TRANSFER; PROXIES. During the Restriction Period,
Shareholder will not, directly or indirectly, (a) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of the Company Securities or any
interest therein; (b) grant any proxies or powers of attorney, deposit the
Company Securities into a voting trust or enter into a voting agreement with
respect to the Company Securities; or (c) take any action that would make any
representation or warranty of Shareholder contained herein untrue or incorrect
or would result in a breach by Shareholder of its obligations under this
Agreement.
2
4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.
Shareholder hereby represents and warrants to, and agrees with, Parent as
follows:
(a) Ownership of Shares. Shareholder is the sole record and
Beneficial Owner of Existing Shares consisting of 516,440 Shares. On the date
hereof, the Existing Shares constitute all of the Shares owned of record or
Beneficially Owned by Shareholder. Shareholder has sole voting power and sole
power to issue instructions with respect to the matters set forth in Sections 2
and 3 hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Existing Shares with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws, and the terms of this Agreement. Shareholder does
not Beneficially Own and is not the record holder of any shares of Parent Common
Stock.
(b) Authorization. This Agreement has been duly and validly
executed and delivered by Shareholder and constitutes a valid and binding
agreement enforceable against Shareholder in accordance with its terms except
(i) as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights and (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) No Conflicts. Except for filings, authorizations, consents
and approvals as may be required under the Exchange Act, (i) no filing with, and
no permit, authorization, consent or approval of, any state or federal
Governmental Authority is necessary for the execution of this Agreement by
Shareholder and the compliance by Shareholder with any of the provisions hereof,
and (ii) none of the execution and delivery of this Agreement by Shareholder,
the consummation by Shareholder of the transactions contemplated hereby or
compliance by Shareholder with any of the provisions hereof will (A) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Shareholder is a party or by which
Shareholder or any of its properties or assets may be bound, or (B) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Shareholder or any of its properties or assets.
(d) No Encumbrances. The Existing Shares are and at all times
during the term hereof will be Beneficially Owned by
3
Shareholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Shareholder.
(f) Reliance by Parent. Shareholder understands and acknowledges
that Parent is entering into the amendment, dated the date hereof, to the Merger
Agreement in reliance upon Shareholder's execution and delivery of this
Agreement.
(g) No Inconsistent Agreements. Shareholder will not enter into
any agreement or understanding with any person the effect of which would be
inconsistent with or violative of any provision contained in this Agreement.
5. STOP TRANSFER, ETC. During the Restriction Period:
(a) Shareholder agrees with, and covenants to, Parent that
Shareholder will not request that the Company register the transfer (book-entry
or otherwise) of any certificate or uncertificated interest representing any of
the Company Securities, unless such transfer is made in compliance with this
Agreement.
(b) In the event of a stock dividend or distribution, or any
change in the Company Securities by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like other than
pursuant to the Merger, the terms Shares, Existing Shares, Parent Common Stock
and Company Securities will be deemed to refer to and include the shares of
Company Securities as well as all such stock dividends and distributions and any
shares into which or for which any or all of the Company Securities or Parent
Common Stock may be changed or exchanged and appropriate adjustments shall be
made to the terms and provisions of this Agreement.
(c) Shareholder will promptly after the date hereof or the date
of acquisition thereof, as applicable, surrender to the Company all certificates
representing the Company Securities and the Company will place the following
legend on such certificates in addition to any other legend required thereon:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS
PURSUANT TO AND OTHER PROVISIONS OF A SHAREHOLDERS
4
AGREEMENT, DATED AS OF JULY 17, 1997, BY AND AMONG
CTS CORPORATION, THE HOLDER HEREOF AND CERTAIN OTHER
PERSONS." THIS LEGEND SHALL IMMEDIATELY TERMINATE IN
THE EVENT OF THE TERMINATION OF THE MERGER AGREEMENT
(AS DEFINED IN THE SHAREHOLDERS AGREEMENT) PRIOR TO
THE EFFECTIVE TIME (AS DEFINED IN THE SHAREHOLDERS
AGREEMENT).
In the event of the termination of the Merger Agreement prior to the
Effective Time, the Company will promptly cause any legends placed on
Certificates representing the Company Securities to be removed.
6. DISCLOSURE. The Company and Parent will have the right to publish
and disclose in the Form S-4 (including the prospectus contained therein), the
Joint Proxy Statement and all the documents and schedules filed with the SEC,
and any press release or other disclosure document which either the Company or
Parent, in its respective sole discretion, determines to be necessary or
desirable in connection with the transactions contemplated by the Merger
Agreement, Shareholder's identity and ownership of Shares and the nature of its
commitments, arrangements and understandings set forth in this Agreement. Parent
will provide Shareholder with a copy of any proposed disclosure by it and will
provide Shareholder with a reasonable opportunity to comment thereon.
7. TERMINATION. This Agreement may be terminated by Shareholder No.
1 by written notice to Parent, or by Parent by written notice to Shareholder No.
1, (a) upon announcement that the Merger Agreement has been amended to (i)
reduce the Cash Election Price or the Exchange Ratio, (ii) reduce the amount of
cash available for Electing Shares by changing the reference to "49.9%" in
Section 3.01(f) to a lower number, or (iii) provide that holders of Shares that
are not Electing Shares will receive cash for all or any portion of their Shares
(other than in respect of fractional shares) or (b) if the Effective Time has
not occurred, at any time on or after October 31, 1997.
8. MISCELLANEOUS. (a) Entire Agreement. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
(b) Binding Agreement. Shareholder agrees that this Agreement and
the obligations hereunder will attach to the Company Securities and will be
binding upon any person or entity to which legal or Beneficial Ownership of such
securities shall pass, whether by operation of law or otherwise, including
without limitation Shareholder's legal representatives or successors or other
transferees (for value or otherwise) and any other successors in interest.
5
(c) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned or delegated (whether by
operation of law or otherwise) without the prior written consent of the other
parties, provided that Parent may assign, in its sole discretion, its rights,
interests and obligations hereunder to any direct or indirect wholly owned
Subsidiary of Parent, but no such assignment will relieve Parent from any of its
obligations hereunder if such assignee does not perform such obligations.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
(d) Amendment and Modification. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices and other communications hereunder will
be in writing and will be deemed given if delivered personally, faxed (which is
confirmed) or sent by an overnight courier service, such as FedEx, to the
parties at the following addresses (or at such other address for a party as will
be specified by like notice):
If to Shareholder No. 1 or Shareholder No. 2, to:
WHX Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx XxXxx
Telecopy: (000) 000-0000
copy to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
if to Parent or Sub, to:
CTS Corporation
000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
6
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(f) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement will remain in full force and effect and will in no way be affected,
impaired or invalidated.
(g) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties will be
entitled to the remedy of specific performance of the terms hereof, in addition
to any other remedy at law or equity.
(h) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, will not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(i) No Third Party Beneficiaries. This Agreement is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
(j) Governing Law. This Agreement will be governed and construed
in accordance with the laws of the State of New York, without giving effect to
the principles of conflict of laws thereof.
(k) Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding will be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein); provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this Section 9(k) and will not be deemed to be a
general submission to the jurisdiction of said courts or in the State of New
York other than for such purposes. Each party hereto hereby waives any right to
a trial by jury in connection with any such action, suit or proceeding.
(l) Descriptive Headings. The descriptive headings used herein
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
7
(m) Counterparts. This Agreement may be executed in counterparts,
each of which will be considered one and the same agreement and will become
effective when such counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
(n) Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto will execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, Parent, Shareholder Xx. 0, Xxxxxxxxxxx Xx. 0 and
Sub have caused this Agreement to be duly executed as of the day and year first
above written.
CTS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
CTS FIRST ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
WHX CORPORATION
By: /s/ Xxx XxXxx
---------------------------------------
Name: Xxx XxXxx
Title: Chairman
SB ACQUISITION CORP.
By: /s/ Xxx XxXxx
---------------------------------------
Name:
Title:
