Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT, (hereinafter, together with the Exhibits annexed hereto the
"Agreement") made and entered into as of the 26th day of May, 2004, by and among
CUNO Incorporated, a Delaware corporation ("Purchaser"), Xxxxxx Acquisition,
Inc., a Delaware corporation and a wholly-owned subsidiary of Purchaser
("Acquisition Sub") and WTC Industries, Inc., a Delaware corporation (the
"Company).
RECITALS
WHEREAS, the respective Boards of Directors of Purchaser, Acquisition
Sub and the Company have adopted or approved this Agreement, pursuant to which
Acquisition Sub will be merged with and into the Company on the terms and
subject to the conditions set forth in this Agreement (the "Merger"), with each
share of common stock, $0.10 par value, of the Company issued and outstanding
immediately prior to the Effective Time of the Merger (as defined in Section
1.1) converting into the right to receive cash, except for (i) Company Treasury
Shares (as defined in Section 1.4 (a)), (ii) shares of Company Common Stock
owned by Purchaser or Acquisition Sub, and (iii) shares of Company Common Stock
that are owned by stockholders ("Dissenting Stockholders") who shall not have
voted in favor of the Merger and who shall have properly demanded in writing
appraisal for such shares ("Dissenting Shares") pursuant to Section 262 of the
Delaware General Corporation Law ("DGCL");
NOW, THEREFORE, in consideration of mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree that
the Company and Acquisition Sub shall be merged and that the terms and
conditions of the Merger and the mode of carrying the same into effect shall be
as follows:
SECTION 1. PLAN OF MERGER.
1.1 Actions to be Taken. Upon performance of all of the covenants and
obligations of the parties contained herein and upon fulfillment (or waiver) of
all of the conditions to the obligations of the parties contained herein, at the
Effective Time of the Merger (as hereinafter defined) and pursuant to the DGCL,
the following shall occur:
(a) Acquisition Sub shall be merged with and into the Company,
which shall be the surviving corporation (the "Surviving Corporation"). The
separate existence and corporate organization of Acquisition Sub shall cease at
the Effective Time of the Merger, and thereupon the Company and Acquisition Sub
shall be a single corporation, the name of which shall be PentaPure Holding
Company. The Company, as the Surviving Corporation, shall succeed, insofar as
permitted by law, to all of the rights, assets, liabilities and obligations of
Acquisition Sub in accordance with the DGCL.
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(b) The Certificate of Incorporation of Acquisition Sub shall
be the certificate of incorporation of the Surviving Corporation until amended
as provided by law, except for the change in corporate name referred to in
paragraph (a) above.
(c) The By-Laws of Acquisition Sub shall be the by-laws of the
Surviving Corporation until amended as provided by law.
(d) Until changed in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation, Xxxx X. Xxxxxx,
Xxxxxxxxx X. Xxxxx, Xx. and Xxxx X. Xxxxxx shall be the directors of the
Surviving Corporation.
(e) Until changed in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation, the following persons
shall be the officers of the Surviving Corporation:
Name Office
Xxxx X. Xxxxxx President and Chief Executive Officer
Xxxxxxxxx X. Xxxxx, Xx. Chief Financial Officer
Xxxx X. Xxxxxx Secretary
(f) As soon as practicable after the terms and conditions of
this Agreement have been satisfied, and at the Closing (as defined in Section 8
below), a Certificate of Merger consistent with this Agreement, in form and
substance satisfactory to the parties hereto (the "Certificate of Merger"),
shall be filed with the Delaware Secretary of State. The Merger shall become
effective on the date and time on which the Certificate of Merger is properly
filed with such Secretary of State, or at such later time as is specified in the
Certificate of Merger. As used in this Agreement, the "Effective Time of the
Merger" shall mean such time.
1.2 Common Stock of Surviving Corporation. As of the Effective Time of
the Merger, each share of the issued and outstanding shares of common stock of
Acquisition Sub shall, by virtue of the Merger and without any action on the
part of Purchaser, be converted into one share of the common stock of the
Surviving Corporation. Each share shall be fully paid and non-assessable.
1.3 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) The term "Company Common Stock" shall mean the Company's
common stock of $.10 par value per share.
(b) The term "Stockholder" shall mean a holder of the Company
Common Stock, and the term "Stockholders" shall refer to all of the holders of
stock of the Company.
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(c) The term "Number of Outstanding Common Shares" shall be
the number of issued and outstanding shares of the Company Common Stock at the
Effective Time of the Merger.
(d) The term "Common Payment" shall mean Thirty Nine Dollars
and Eighty Seven Cents ($39.87) which is the amount per share of Company Common
Stock which will be paid by Purchaser at Closing for distribution after the
Effective Time of the Merger to the holders of outstanding shares of Company
Common Stock at the Effective Time of Merger.
1.4 Cancellation or Conversion of Company Common Stock. As of the
Effective Time of the Merger, by virtue of the Merger and without any action on
the part of any stockholder of the Company:
(a) Treasury Shares. Any share of the Company Common Stock
held in the treasury of the Company, shall be canceled and retired. No cash,
securities or other consideration shall be paid or delivered in exchange for
such Company Common Stock under this Agreement.
(b) Conversion. Except as provided herein with respect to
Dissenting Shares (as defined in Section 1.4(d) below) and shares canceled
pursuant to Section 1.4(a) hereof, at the Effective Time of the Merger, each
share of Company Common Stock which is issued and outstanding shall be converted
into the right to receive a cash payment in an amount equal to the Common
Payment; provided, however, that each share of Company Common Stock which is
owned by Purchaser or Acquisition Sub, if any, as of the Effective Time of the
Merger shall be canceled without any consideration being issued therefor.
Hereinafter, the aggregate cash payment to be received by holders of Company
Common Stock at the Effective Time of the Merger is sometimes referred to as the
"Cash Payment Amount".
(c) Surrender of Certificates. After the Effective Time of the
Merger, each holder of an outstanding certificate or certificates theretofor
representing shares of Company Common Stock converted pursuant to Section 1.4(b)
hereof ("Company Common Stock Certificates"), upon surrender thereof to
Purchaser as provided herein, shall be entitled to receive in exchange therefor
the amounts provided in Section 1.4(b), without interest. Until so surrendered,
each outstanding Company Common Stock Certificate shall be deemed for all
purposes to represent the Common Payment for the shares represented by the
Certificate.
Whether or not a Company Common Stock Certificate is
surrendered, from and after the Effective Time of the Merger, such Certificate
shall under no circumstances evidence, represent or otherwise constitute any
stock or other interest whatsoever in the Company, the Surviving Corporation or
any other person, firm or corporation.
(d) Dissenters. The shares of Company Common Stock held by
those stockholders of the Company who have timely and properly exercised their
dissenters' rights in accordance with the provisions of Section 262 of the DGCL
applicable to dissenters' rights (the "Appraisal Laws") and have not withdrawn
or lost their dissenters' rights under the Appraisal
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Laws are referred to herein as "Dissenting Shares." Each Dissenting Share, the
holder of which, as of the Effective Time of the Merger, has not effectively
withdrawn or lost his dissenters' rights under the Appraisal Laws, shall not be
converted into or represent a right to receive the Common Payment in the Merger,
but the holder thereof shall be entitled only to such rights as are granted by
the Appraisal Laws. Each holder of Dissenting Shares who becomes entitled to
payment for his Company Common Stock pursuant to the provisions of the Appraisal
Laws shall receive payment therefor from the Surviving Corporation from funds
provided by Purchaser (but only after the amount thereof shall have been agreed
upon or finally determined pursuant to such provisions). If any holder of
Dissenting Shares shall effectively withdraw or lose his dissenters' rights
under the Appraisal Laws, each Dissenting Share shall be converted into the
right to receive the Common Payment in accordance with the provisions of Section
1.4(b) hereof.
1.5 Options. As of the Effective Time of the Merger, each person or
entity listed in Schedule 2.2 of the Company Disclosure Letter holds options,
warrants, or other rights (including without limitation rights under the WTC
Industries, Inc. 1996 Stock Plan and the Company's 1994 Stock Option Plan) in
the amounts and at the prices set forth in such schedule of the Company
Disclosure Letter to purchase or acquire shares of Company Common Stock (each an
"Option" and collectively the "Options"). At the Effective Time of the Merger,
but subject to any adjustment under Section 1.6(a) or (b) below, each holder of
an Option shall have the right to receive from the Payment Agent on behalf of
the Purchaser (or on behalf of the Company, in the case of Options held by
persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended) in respect of each share of Company Common Stock underlying each such
Option, a cash payment equal to the positive difference per share between the
exercise price applicable to such Option and the Common Payment, less required
withholding taxes. The Company agrees to take all actions necessary, including,
without limitation, the giving of appropriate notices to the holders of Options,
so that at or before the Effective Time of the Merger each Option shall
represent the right solely to receive payment for such Options as set forth
herein. The Company's Board of Directors has approved with respect to the
Company's directors and executive officers the payments provided in this Section
1.5 with respect to Options held such persons.
1.6 Payment.
(a) The Common Payment has been calculated based upon the
representations and warranties made by the Company in Section 2.2. Without
limiting the effect of the failure of the representations and warranties made by
the Company in Section 2.2 to be true and correct, in the event that, at the
Effective Time of the Merger, the sum of (i) the actual Number of Outstanding
Common Shares, and (ii) the actual number of shares of Company Common Stock
issuable upon the exercise of Outstanding Options, warrants or similar
agreements or upon conversion of securities, (including without limitation, as a
result of any stock split, stock dividend, including any dividend or
distribution of securities convertible into Company Common Stock, or
recapitalization) is greater or less than as described in Section 2.2, the
Common Payment shall be appropriately adjusted downward or upward without change
to the Cash Payment Amount.
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(b) In the event that, at the Effective Time of the Merger,
the Indebtedness (as hereinafter defined) of the Company exceeds $14 million,
then the total of the Cash Payment Amount and the payment to holders of Options
under Section 1.5 shall be reduced by one dollar for each dollar of such excess,
and the Common Payment and the payment to holders of Options under Section 1.5
shall be proportionately reduced to reflect the reduction. For purposes of this
Section 1.6(b), "Indebtedness" shall mean (without duplication) any indebtedness
for borrowed money or indebtedness evidenced by any note, bond, debenture or
other debt security.
(c) At the Closing, and in any event no later than the
Effective Time of the Merger, Purchaser shall deposit with a payment agent to be
selected by Purchaser and reasonably acceptable to the Company (the "Payment
Agent"), for the benefit of the holders of Company Common Stock and the Options,
in cash, an amount equal to the aggregate of the Cash Payment Amount and the
total amount payable to holders of Options as provided in Section 1.5 above
(such cash is hereinafter referred to as the "Payment Fund").
(d) As soon as reasonably practicable after the Effective Time
of the Merger, the Payment Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time of the
Merger represented outstanding shares of Company Common Stock (the
"Certificates"):
(i) a letter of transmittal, which shall specify that
delivery shall be effected and risk of loss and title to the
Certificates shall pass only upon delivery of the Certificates to the
Payment Agent, and which shall be in such form and have such other
provisions as Purchaser and the Company may reasonably specify; and
(ii) instructions on how to surrender the
Certificates in exchange for the Common Payment.
Upon surrender to the Payment Agent of a Certificate for cancellation, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a check representing the
Common Payment which such holder has the right to receive pursuant to the
provisions of this Section 1.6, and the Certificate so surrendered shall
forthwith be canceled. In the event that a transfer of ownership of shares of
Company Common Stock is not registered in the transfer of records of the
Company, payment of the Common Payment may be made to a transferee if the
Certificate representing such shares is presented to the Payment Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 1.6, each Certificate shall be
deemed at any time after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Common Payment as contemplated by this
Section 1.6.
(e) In the event that any Certificate shall have been lost,
stolen or destroyed, the Payment Agent shall issue in exchange therefor, upon
the making of an affidavit of that fact by the holder thereof, such Common
Payment required pursuant to this Agreement; provided,
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however, that Purchaser or the Payment Agent may, in its discretion, require the
delivery of a suitable bond or indemnity.
(f) All Common Payments paid upon the surrender for exchange
of Company Common Stock in accordance with the terms hereof shall be deemed to
have been paid in full satisfaction of all rights pertaining to such Company
Common Stock.
(g) Any portion of the Payment Fund which remains
undistributed to the Stockholders of the Company for six (6) months after the
Effective Time of the Merger shall be delivered to Purchaser, and any
Stockholders who have not theretofore complied with this Section 1.6 shall
thereafter look only to Purchaser for payment of their claim for the Cash
Payment Amount.
(h) Neither Purchaser nor the Surviving Corporation shall be
liable to any holder of Company Common Stock for cash from the Payment Fund
delivered to a public official pursuant to applicable abandoned property escheat
or similar law.
(i) No interest will be paid or will accrue on any cash
payable pursuant to Section 1.6.
(j) The Payment Agent shall invest any cash included in the
Payment Fund as directed by Purchaser on a daily basis, with such investments to
be made only in short-term U.S. government obligations. Any interest or other
income resulting from these investments shall promptly be paid to Purchaser.
Purchaser shall promptly reimburse any losses which may have resulted from such
investments so that at all times Payment Agent shall hold the full amount
necessary to make the payments required hereunder.
(k) Each of the Surviving Corporation and Purchaser shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the provisions of the Internal Revenue Code and the rules and
regulations promulgated thereunder, or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Surviving
Corporation or Purchaser (or Payment Agent at the direction of Purchaser), as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which deduction withholding was made.
(l) Purchaser shall pay all fees and expenses of the Payment
Agent.
l.7 Stock Transfer Books. The stock transfer books of the Company shall
be closed immediately upon the Effective Time of the Merger and there shall be
no further registration of transfers of shares of Company Common Stock
thereafter on the records of the Company.
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1.8 Further Assurances. From time to time, on and after the Effective
Time of the Merger, as and when requested by Purchaser or its successors or
assigns, the proper officers and directors of the Company immediately before the
Effective Time of the Merger, the officers and directors of the Surviving
Corporation at the time of the request, or other proper officers or directors,
shall, at Purchaser's expense, and for and on behalf and in the name of the
Company, or otherwise, execute and deliver all such deeds, bills of sale,
assignments and other instruments and shall take or cause to be taken such
further or other reasonable actions as Purchaser or their respective successors
or assigns may deem necessary or desirable in order to confirm or record or
otherwise transfer to the Surviving Corporation title to and possession of all
the properties, rights, privileges, powers, franchises and immunities of the
Company and otherwise to carry out fully the provisions and purposes of this
Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As used herein, the "Company Disclosure Letter" shall mean the Company
Disclosure Letter delivered by the Company to Purchaser. The Company Disclosure
Letter shall refer to the representation or warranty to which exceptions or
matters disclosed therein relate; provided however that an exception or matter
disclosed with respect to one representation or warranty shall also be deemed
disclosed with respect to each other warranty where there is a cross reference
stated. Except as set forth in the Company Disclosure Letter, the Company hereby
represents and warrants to Purchaser and Acquisition Sub that all of the
statements contained in this Section 2 are true and correct as of the date of
this Agreement (or if made as of a specified date, as of such date). As provided
in Section 7.2(a), it is a condition precedent to Purchaser's and Acquisition
Sub's obligations that such statements are true and correct as of the Closing
(or if made as of a specified date, as of such date).
The representations and warranties are as follows:
2.1 Organization and Qualifications of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware with full corporate power and corporate authority to
own or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is currently
conducted or proposed to be conducted. The copies of the Company's Certificate
of Incorporation as amended to date, certified by the Delaware Secretary of
State, and the Company's by-laws, as amended to date, certified by the Company's
Secretary, and heretofore delivered to Purchaser, are complete and correct, and
no amendments thereto are pending. The Company is not in violation of any term
of its Certificate of Incorporation or bylaws. The Company is duly qualified to
do business as a foreign corporation in the State of Minnesota and it is not
required to be licensed or qualified to conduct its business or own its property
in any other jurisdiction except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on the Company Group.
2.2 Capital Stock of the Company; Beneficial Ownership.
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(a) The authorized capital stock of the Company consists of
2,000,000 shares of Preferred Stock, of which no shares are outstanding, and
15,000,000 shares of Common Stock, par value $.10 per share, of which, as of the
date hereof, 1,906,999 shares are outstanding, fully paid and non-assessable and
13,093,001 shares are authorized but unissued. The Company has delivered to the
Purchaser a list of its registered shareholders as of a recent date that is
certified by the Company's transfer agent. No class of capital stock of the
Company is entitled to preemptive rights. Since January 1, 2003 to the date of
this Agreement, there have been no issuances of shares of the Stock of the
Company other than issuances of shares pursuant to options, warrants or rights
outstanding under the Benefit Plans of the Company as described in the Company
Disclosure Letter. All issued and outstanding shares of the Stock of the Company
are duly authorized, validly issued, fully paid and nonassessable. No other
classes of stock are authorized.
(b) Except for the options described in the Company Disclosure
Letter (the "Outstanding Options"), there now are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into or
exchangeable for, any additional shares of capital stock of any class of the
Company or any such options, warrants, rights or securities. No bonds,
debentures, notes or other indebtedness of the Company having the right to vote
on any matters on which Stockholders may vote are issued or outstanding.
Following the Effective Time of the Merger, no holder of Outstanding Options
will have any right to receive shares of Company Common Stock or any other
consideration upon exercise of such Outstanding Options and all such Outstanding
Options shall cease to exist as of the Effective Time of the Merger. The
treatment of the Outstanding Options pursuant to Section 1.5 herein complies
with the terms of such options and the plans under which they were issued.
(c) None of the Company's capital stock has been issued in
violation of any federal or state securities laws. Except as set forth in the
Company Disclosure Letter, there are no voting trusts, voting agreements,
proxies or other agreements, instruments or undertakings with respect to the
voting of the Company Shares to which the Company is a party.
2.3 Subsidiaries. Except for PentaPure, Incorporated, a Minnesota
corporation (the "Subsidiary"), the Company does not have any direct or indirect
subsidiaries. Except as listed in the Company Disclosure Letter and except for
the shares of stock in the Subsidiary, the Company does not own any securities
issued by any other business organization or governmental authority, except
United States, state, and municipal government securities, bank certificates of
deposit, or money market accounts acquired as investments in the ordinary course
of its business, and, except as set forth in the Company Disclosure Letter,
neither the Company nor the Subsidiary owns or has any direct or indirect
ownership interest in or control over any other corporation, partnership, joint
venture, or entity of any kind.
All of the issued and outstanding shares of stock of the Subsidiary are
owned by the Company free and clear of all liens, pledges, claims, security
interests and other encumbrances of any kind whatsoever (collectively, "Liens").
The Company Disclosure Letter specifies the Subsidiary's authorized capital
stock and the number of shares which are issued and outstanding.
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There are no outstanding options, warrants, rights, commitments, preemptive
rights or agreements of any kind for the issuance or sale of, or outstanding
securities convertible into or exchangeable for, any shares of stock of any
class of the Subsidiary or any such options, warrants, rights or securities.
The Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the necessary
corporate power and corporate authority to own or lease its properties. Copies
of the Subsidiary's organizational documents, as amended to date, have been
provided to Purchaser. The Subsidiary (i) is not in violation of any of the
terms of its organizational documents, and (ii) is duly qualified to do business
as a foreign corporation in the jurisdictions listed in the Company Disclosure
Letter, and is not required to be licensed or qualified to conduct its business
or its property in any other Jurisdiction, except where such violation, or where
the failure to be so licensed or qualified, would not have a Material Adverse
Effect on the Company Group.
In this Agreement the Company and the Subsidiary are sometimes referred
to as the "Company Group."
2.4 Authority of the Company; Consents; Approvals; Fairness Opinion.
(a) The Company has full right, authority and power to enter into this
Agreement, to approve the Voting Agreement (as defined below) and to carry out
the transactions contemplated hereby, subject in the case of consummation of the
Merger to the receipt of the Stockholder Approval as described below. The
execution, delivery and performance by the Company of this Agreement have been
duly authorized by all necessary corporate action, including (i) unanimous
approval by the Company's Board of Directors and (ii) unanimous approval by a
special committee of the Company's Board of Directors established on February
18, 2004 by the Board of Directors, subject to the approval of this Agreement
and the transactions contemplated hereby by the Stockholders in accordance with
the DGCL and the Certificate of Incorporation and by-laws of the Company
("Stockholder Approval"). This Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by general equity principles (regardless of
whether such enforceability is considered in a proceeding at equity or at law).
The execution, delivery and performance by the Company of this
Agreement:
(i) does not and will not violate any provision of
the Certificate of Incorporation or by-laws of the Company, or the
charter documents of the Subsidiary;
(ii) subject to obtaining the Required Consents, as
defined below, does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to the Company
Group or require the Company Group to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental
or otherwise) that has not been obtained or made (other than
Stockholder Approval); and
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(iii) subject to obtaining the Required Consents, and
except as set forth in the Company Disclosure Letter, does not and will
not result in a breach of, constitute a default under, accelerate any
obligation under, or give rise to a right of termination of any
indenture or loan or credit agreement or any other material agreement,
contract, instrument, mortgage, lien, lease, permit, license,
authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which any member of the Company Group is a
party or by which the property of any member of the Company Group is
bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or
encumbrance on the assets of any member of the Company Group.
(b) Except for filings, consents, permits and approvals that
may be required under, and other requirements under, the Securities Act, the
Exchange Act, the HSR Act and the filing of documentation to effectuate the
Merger (collectively, the "Required Consents"), no filing with or notice to, and
no permit or approval of, any Governmental Entity is necessary for the execution
and delivery by the Company of this Agreement and its performance of the
transactions contemplated hereby. All such Required Consents are listed in the
Company Disclosure Letter.
(c) The Company has received written opinions from Xxxxxx X.
Xxxxx & Co. Incorporated and from Xxxxxx, Xxxxxxx & Xxxxxx, LLC which have not
been withdrawn (the "Fairness Opinions"), copies of which are being provided to
Purchaser herewith, to the effect that the consideration to be received by the
Stockholders hereunder is fair to the Stockholders (other than Purchaser and
Acquisition Sub) from a financial point of view, and such Fairness Opinions are
acceptable in form and substance to the Company's Board of Directors.
(d) The Company's Board of Directors, at a meeting duly called
and held, has (i) unanimously determined that this Agreement and the Merger are
fair to and in the best interests of the Stockholders, (ii) unanimously approved
the Merger in compliance with the DGCL and any other applicable law, and (iii)
unanimously resolved to recommend that Stockholders approve this Agreement and
the Merger. A committee of the Company's Board of Directors comprised
exclusively of independent directors formed by the Board of Directors has
unanimously approved the Merger. None of the aforesaid actions by the Company's
Board of Directors or the committee of the Company's Board of Directors has been
amended, rescinded or modified and such actions remain in full force and effect.
(e) There are no "anti-takeover" provisions (including so
called "fair price" or "control share" provisions) applicable to this Agreement
or the transactions contemplated hereby under the DGCL.
2.5 Filings With the SEC. The Company has timely made all filings with
the SEC that it has been required to make since January 1, 1999 under the
Securities Act and the Exchange Act (collectively the "Company Public Reports").
Each of the Company Public Reports, as of their respective dates but after
giving effect to any amendment thereto, complied with the Securities Act and the
Exchange Act in all material respects. None of the Company
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Public Reports, as of their respective dates, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The Company has
delivered to Purchaser a correct and complete copy of each Company Public Report
(together with all exhibits and schedules thereto and as amended to date).
2.6 Financial Statements. The Company Public Reports filed by the
Company include Quarterly Reports on Form 10-QSB for the fiscal quarters ended
March 31, 2003, June 30, 2003 and September 30, 2003, and an Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2003 (the "Annual Report").
As used in this Agreement, March 31, 2004 is the "Most Recent Fiscal Quarter
End." The financial statements included in or incorporated by reference into
these Company Public Reports (including the related notes and schedules) and in
Company's consolidated balance sheet as of April 30, 2004 and consolidated
income statement for the four months then ended (the "Interim Financial
Statements") have been prepared in accordance with the books and records of the
Company and with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly in all material respects the financial
condition of the Company and its Subsidiaries on a consolidated basis as of the
indicated dates and the results of operations and cash flows of the Company and
its Subsidiaries on a consolidated basis for the indicated periods; provided,
however that (i) the interim statements included or incorporated by reference
into the Company Public Reports and the Interim Financial Statements are subject
to normal year-end adjustments and do not include all footnotes, and (ii) the
Interim Financial Statements do not include a statement of cash flows.
Since December 31, 2003, the Company and its Subsidiaries conducted
their respective businesses only in the ordinary and usual course, consistent
with past practice, and (a) have not incurred, and do not have (except as set
forth in the Company Public Reports), any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) that are of a nature that would be
required to be disclosed on a balance sheet of the Company and its Subsidiaries
or the footnotes thereto where said balance sheet was prepared in conformity
with GAAP, other than liabilities incurred in the ordinary course of business,
(b) have not taken any action, and no fact, event, circumstance or change has
occurred or arisen, that, if Section 3.2 herein had been in effect, would have
violated the provisions of Section 3.2, and (c) there has not been any fact,
event, circumstance or change affecting or relating to the Company Group which
individually or in the aggregate have had a Material Adverse Effect on the
Company. Except for liabilities or obligations which are accrued or reserved
against in the Interim Financial Statements or disclosed in the Company
Disclosure Letter, none of the Company and its Subsidiaries have any liabilities
or financial obligations (whether absolute, accrued, contingent or otherwise) as
of the date of this Agreement which would have a Material Adverse Effect, and
the Company has no knowledge of any valid basis for the assertion of the
foregoing.
Each of the Company and its Subsidiaries maintains accurate books and
records reflecting its assets and liabilities and maintains proper and adequate
internal accounting controls.
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2.7 Real Estate. No member of the Company Group owns any real estate,
and no member of the Company Group has owned any real estate since December 31,
1999. No member of the Company Group leases any real estate, other than pursuant
to the leases (the "Real Estate Leases") listed in the Company Disclosure
Letter. True and complete copies of the Real Estate Leases have been provided to
or made available to Purchaser for review. Each member of the Company Group is
in possession of the properties purported to be leased by it under the Real
Estate Leases and the member of the Company Group that is a party to any such
Real Estate Lease, and to the knowledge of the Company, the other party thereto,
is not in default under such Real Estate Lease. Except as set forth in the
Company Disclosure Letter, no consent is required under any of the Real Estate
Leases in connection with the transactions contemplated by this Agreement.
2.8 Taxes.
(a) The Company has paid or caused to be paid all federal
taxes, and all material state, local, foreign, and other taxes, including,
without limitation, income taxes, estimated taxes, alternative minimum taxes,
excise taxes, sales taxes, use taxes, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income, and all deficiencies, or other additions to tax, interest,
fines and penalties (collectively, "Taxes"), owed or required to be paid by any
member of the Company Group through the date hereof, and will pay all Taxes
required to be paid by any member of the Company Group through the Closing Date,
except for Taxes not yet due which are properly accrued on the balance sheet for
the Most Recent Fiscal Quarter End in accordance with GAAP.
(b) The Company has in accordance with applicable law timely
filed all federal, and all state, local and foreign tax returns required to be
filed by any member of the Company Group through the date hereof, and, to the
knowledge of the Company, all such returns correctly set forth the amount of any
Taxes or losses relating to the applicable period. A list of all federal, state,
local and foreign income tax returns filed with respect to the Company Group for
taxable periods ended on or after December 31, 1999 is set forth in the Company
Disclosure Letter, and said Letter indicates those returns which have been
audited or which currently are the subject of an audit. For each taxable period
of the Company Group ended on or after December 31, 1999, the Company has made
available to Purchaser correct and complete copies of all federal, state, local
and foreign income tax returns, examination reports and statements of
deficiencies filed by, assessed against or agreed to by the Company.
(c) Neither the Internal Revenue Service (the "IRS") nor any
other governmental authority, domestic or foreign, is now asserting or, to the
knowledge of the Company, threatening to assert, against the Company Group any
deficiency or claim for additional Taxes. Since December 31, 1999 no claim has
been made by any governmental entity in a jurisdiction where any member of the
Company Group does not file reports and returns asserting that any member of the
Company Group is or may be subject to taxation by that jurisdiction. There are
no security interests on any of the assets of any member of the Company
17
Group that arose in connection with any failure (or alleged failure) to pay any
Taxes. Except as set forth in the Company Disclosure Letter, since December 31,
1999, no member of the Company Group has ever entered into a closing agreement
pursuant to Section 7121 of the Internal Revenue Code of 1986, as amended (the
"Code").
(d) Except as set forth in the Company Disclosure Letter,
since December 31, 1999, there has not been any audit of any tax return filed by
any member of the Company Group, no such audit is in progress, and no member of
the Company Group has been notified by any tax authority that any such audit is
contemplated or pending. Except as set forth in the Company Disclosure Letter,
no extension of time with respect to any date on which a tax return was or is to
be filed by any member of the Company Group is in force, and no waiver or
agreement by any member of the Company Group is in force for the extension of
time for the assessment or payment of any Taxes.
(e) Except as set forth in the Company Disclosure Letter,
since December 31, 1999 the Company and each other member of the Company Group
has never been (and has never had any liability for unpaid Taxes because it once
was) a member of an "affiliated group" (as defined in Section 1504(a) of the
Code) other than a group of which the Company is the parent. Except as set forth
in the Company Disclosure Letter, the Company and each other member of the
Company Group has never filed, and has never been required to file, a
consolidated, combined or unitary tax return with any other entity. No member of
the Company Group is a party to any tax sharing or tax indemnity agreement.
(f) For purposes of this Agreement, all references to Sections
of the Code shall include any predecessor provisions to such Sections.
(g) No member of the Company Group has made an election under
Section 341 (f) of the Code.
2.9 Intellectual Property.
For purpose of this Agreement, "Intellectual Property" shall mean
trademarks and service marks and applications to register such marks, both
foreign and domestic; patents and patent applications, both foreign and
domestic; copyrights; Internet domain names, trade names, trade dress, designs
and logos; computer software and the source code and object code related
thereto; and confidential information, know-how, inventions, methodologies and
trade secrets. The Company Disclosure Letter contains a list identifying each
patent, patent application, registered and unregistered trademarks and service
marks, and registered copyright owned by any member of the Company Group and
each license of Intellectual Property to which any member of the Company Group
is a party (except licenses granted to customers in the ordinary course of
business).
(a) Each of the Company and its Subsidiaries is the sole and
exclusive owner of or has an irrevocable royalty-free license or other right to
use all Intellectual Property used in or necessary for the conduct of its
business as currently conducted, including all Intellectual
18
Property listed in the Company Disclosure Letter, free and clear of all Liens,
other than the blanket security interest of the Company's bank lender;
(b) The use or ownership of any such Intellectual Property by
the Company and its Subsidiaries does not infringe on or otherwise violate the
rights of any third persons, and the products and services provided by the
Company and its Subsidiaries and their respective operations do not infringe the
intellectual or proprietary rights of any third persons;
(c) In the case of any license agreement for material
Intellectual Property, the member of the Company Group that is a party to any
such license agreement is in compliance therewith in all respects and is not in
default under such license agreement;
(d) To the knowledge of the Company, no third party is
infringing upon or challenging the ownership, use, validity or enforceability of
any material Intellectual Property owned or used by any member of the Company
Group; and
(e) Since December 31, 1999, no member of the Company Group
has received any written notice of any pending or threatened claim, suit or
proceeding challenging the ownership, use, validity or enforceability of any
Intellectual Property owned or used by any member of the Company Group.
2.10 Material Contracts.
(a) The Company Disclosure Letter attached hereto lists, and
the Company has made available to Purchaser, true and complete copies of all
material contracts or other obligations (the "Material Contracts") to which any
member of the Company Group is a party or by which it is bound, including those
of the following types:
(i) Employment agreements and any other contracts
with or loans to any of the Company Group's stockholders, officers,
directors, employees, consultants, distributors or sales
representatives;
(ii) Any Benefit Plans, except for Benefit Plans
where such Plans are maintained by any member of a Company Group that
will not give rise to a Material Adverse Effect on the Company Group;
(iii) Any material contracts with customers;
(iv) Any deeds of trust, mortgages, conditional sales
contracts, security agreements, pledge agreements, trust receipts, or
any other agreements or arrangements whereby any assets of the Company
Group are subject to a lien, encumbrance, charge or other restriction;
(v) Any loan agreements, letters of credit or lines
of credit;
19
(vi) Any contracts restricting any member of the
Company Group from doing business or competing in any area;
(vii) Purchase orders issued or received and any
contracts, in each case, calling for aggregate payments in excess of
$100,000;
(viii) Any joint venture, partnership, limited
liability company or limited partnership agreement;
(ix) Any guarantees of the obligations of any other
party (including other members of the Company Group) except those
resulting from the endorsement of customer checks deposited for
collection;
(x) Any other contracts which may have a material
impact on the Company Group's assets, results of operations or
financial condition; and
(xi) Any commitment to enter into any of the
foregoing.
In the case of each Material Contract, the member of the
Company Group party thereto has not received notice of any default under any
such contracts, obligations or commitments, and is not in default under, and no
event has occurred which with notice or the lapse of time or both would
constitute a material default or violation of, any such contracts, obligations
or commitments. To the knowledge of the Company, no other party to each Material
Contract is in default.
Except as set forth in the Company Disclosure Letter, no
consent is required under any of the Material Contracts in connection with the
transactions contemplated by this Agreement.
2.11 Litigation. Except as set forth in the Company Disclosure Letter
or in the Company Public Reports, there are no legal, administrative,
arbitration or other proceedings or claims pending or, to the knowledge of the
Company, threatened against any member of the Company Group, nor is any member
of the Company Group subject to any existing proceedings, claims or judgments.
Except as set forth in the Company Disclosure Letter, no member of the Company
Group is operating under or subject to, or in default with respect to, any
order, writ, injunction or decree of any court or federal, state, municipal or
other governmental department, commission, board, agency or instrumentality,
domestic or foreign.
2.12 Compliance with Applicable Laws; Environmental Matters.
(a) Laws. Except as set forth in the Company Disclosure Letter
or as disclosed in the Company Public Reports, the operations, assets and
properties of each member of the Company Group are and have been since December
31, 1999 in compliance with all federal, foreign, state, county, and municipal
laws, ordinances, regulations, rules, reporting requirements, judgments, orders
and decrees applicable to the conduct of business of the
20
Company Group and to the assets owned, used or occupied by it (collectively
referred to hereinafter as the "General Laws"), including without limitation all
applicable foreign, federal, state, county and municipal laws, ordinances,
regulations, rules, reporting requirements, judgments, orders, decrees and
requirements of common law concerning or relating to the protection of health
and the environment (collectively referred to hereinafter as the "Environmental
Laws"), except for non-compliance that would not have a Material Adverse Effect
on the Company Group. Except as set forth in the Company Disclosure Letter, no
member of the Company Group has received any notice of violation, citation,
complaint, request for information, order, directive, compliance schedule or
other similar enforcement order, or any other notice from any administrative or
governmental agency or entity, indicating that it was not or currently is not in
compliance with the Environmental Laws and General Laws, except for
noncompliance that would not have a Material Adverse Effect on the Company
Group, and to the knowledge of the Company, no such item is threatened.
(b) Environmental Laws. Except as set forth in the Company
Disclosure Letter, all businesses and operations of the Company Group are in
compliance with any: (i) judgments, orders, decrees, awards or directives, of
any court, arbitrator or administrative or governmental agency or entity binding
any member of the Company Group and concerning compliance with the Environmental
Laws; and (ii) consent decrees, administrative orders, settlement agreements or
other settlement documents entered into by any member of the Company Group with
any administrative or governmental agency or entity concerning compliance with
the Environmental Laws.
(c) Hazardous Materials. Except as set forth in the Company
Disclosure Letter, the assets (including but not limited to real property)
owned, leased or operated by the Company Group and, to the knowledge of the
Company, the assets, including but not limited to real property, formerly owned,
leased, occupied or operated by the Company Group (in the case of real property
leased by the Company Group, it being understood in addition that no
representation is made with respect to portions of the real property not
actually leased and utilized by a member of the Company Group) do not contain
any materials designated as hazardous substances, hazardous wastes, hazardous
materials, pollutants or contaminants as defined in or regulated under any
applicable Environmental Laws (collectively, "Hazardous Materials") therein,
thereon, thereunder or emanating therefrom, other than Hazardous Materials which
are properly stored, generated, used and/or disposed of in accordance with all
Environmental Laws. Except as set forth in the Company Disclosure Letter, no
Hazardous Materials used or generated by any member of the Company Group have
been or are being treated, stored, transported or disposed of in material
violation of any Environmental Laws.
(d) Licenses and Permits. The Company Disclosure Letter lists
material permits, licenses and other authorizations issued by administrative or
governmental agencies or entities under the General Laws and the Environmental
Laws or otherwise required for the conduct of the Company Group's business as
presently conducted which are held by the Company Group ("Licenses and
Permits"). The Licenses and Permits include all such permits which are necessary
to the Company Group's business and operations as presently conducted
21
and the Company Group is and has been in material compliance with the terms and
conditions of the Licenses and Permits.
2.13 Finder's or Investment Banker's Fee. No agent, broker, investment
banker, financial advisor or similar person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee payable by the
Company in connection with this Agreement or the Merger, other than Xxxxxx X.
Xxxxx & Co. Incorporated and Xxxxxx, Xxxxxxx & Xxxxxx LLC. The Company has
provided to Purchaser a true and complete copy of all agreements providing for
any commission, fee or expense payment to Xxxxxx X. Xxxxx & Co. Incorporated and
to Xxxxxx, Xxxxxxx & Xxxxxx LLC.
2.14 ERISA and Employment Matters.
(a) The Company Disclosure Letter contains a true and complete
list of all Benefit Plans of the Company Group.
(b) The Company has delivered or made available to Purchaser a
current, accurate and complete copy of each Benefit Plan and of any material
agreements or documents related to such Benefit Plan such as trust agreements or
funding instruments, the most recent determination letter, the most recent
summary plan description, and, for the three (3) most recent years, the Form
5500 and attached Schedules.
(c) (i) Each Benefit Plan is administered in accordance with
its terms and in compliance in all material respects with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations;
(ii) no actions, suits or claims, other than the routine claims for benefits in
the ordinary course of business, are pending against any Plan or the Company
Group in connection with any Benefit Plan, or, to the knowledge of the Company,
threatened, except as set forth in the Company Disclosure Letter; (iii) neither
the Company nor any Subsidiary nor any of the Benefit Plans has engaged in any
transaction as a result of which the Company Group would reasonably be expected
to be subject to any liability pursuant to Sections 406 and 409 of ERISA or to
either a civil penalty assessed pursuant to Section 502(i) or (l) of ERISA or a
tax imposed pursuant to Section 4975 of the Code and no fact or event exists
which could give rise to any liability.
(d) None of the Benefit Plans is subject to Title IV of ERISA
or the minimum funding requirements of the Code or ERISA, nor has the Company or
any Subsidiary during each year within the six (6) year period preceding the
Effective Time of the Merger, maintained or contributed to a plan subject to
Title IV of ERISA. None of the Benefit Plans is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
(e) No member of the Company Group maintains any pension plan
within the meaning of Section 3(2)(A) of ERISA, except for the PentaPure
Incorporated 401(k) Plan (the "WTC Plan") which is maintained by WTC and the
Subsidiary, hereinafter the WTC Plan is sometimes collectively referred to as
the "Retirement Plans"). The Retirement Plans are
22
qualified within the meaning of Section 401(a) of the Code and no fact or event
has occurred that would adversely affect the qualified status of the Retirement
Plans.
(f) Except as set forth in the Company Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not, alone
or together with any other event, (i) entitle any director, officer, employee or
agent of any member of the Company Group to a bonus, severance pay or any other
payment, or (ii) accelerate the time of payment or vesting of, or increase the
amount of, compensation benefit due to any such director, officer, employee or
agent. No payment that is owed or may become due to any director, officer,
employee or agent of any member of the Company Group will be non-deductible to
the Surviving Corporation and Purchaser or subject to tax under Section 280G or
Section 4999 of the Code.
2.15 Labor Matters.
(a) No member of the Company Group is delinquent in payments
to any of its employees for any wages, salaries, commissions, bonuses, or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees.
(b) Except as listed in the Company Disclosure Letter, there
are no current or, to the knowledge of the Company, threatened, organizational
activities or demands for recognition by labor organizations seeking to
represent employees of any member of the Company Group and no such activities
have occurred during the past twelve (12) months. Except as listed in the
Company Disclosure Letter, there are no grievances, complaints, or charges that
have been filed against any member of the Company Group under any dispute
resolution procedure that are outstanding. No collective bargaining agreement is
in effect or is currently being or is about to be negotiated by any member of
the Company Group. Except as listed in the Company Disclosure Letter, the
Company has not received notice to indicate that any of the employment policies
or practices of any member of the Company Group is currently being audited or
investigated by any federal, state, local or foreign government agency.
2.16 Authority Relative to Agreements; Enforceability. This Agreement
and the transactions contemplated hereby have been approved by all of the
Company's Directors. The approval of this Agreement and the Merger at the
Stockholders Meeting by the affirmative vote of a majority of all outstanding
shares of Company Common Stock as of the record date for the Stockholders
Meeting will constitute approval of this Agreement and the Merger by the
stockholders of the Company.
2.17 Affiliate Transactions. Except as disclosed in the Company
Disclosure Letter, there are no material contracts, commitments, agreements,
arrangements or other transactions between any member of the Company Group and
(i) any officer or director of any member of the Company Group; (ii) any record
or beneficial owner of five (5) percent or more of the voting securities of the
Company; or (iii) any affiliate (as such term is defined in Regulation 12b-2
promulgated trader the Exchange Act) of any such officer, director or beneficial
owner.
23
2.18 Title. Except as disclosed in the Company Disclosure Letter, each
member of the Company Group has good and marketable title to all of its
properties (real, personal or intangible) and assets which are reflected on the
balance sheet included in the latest Quarterly Report on Form 10-QSB filed with
the SEC, and all properties acquired after the date thereof by such member, free
and clear of all Liens (except statutory liens securing payments not yet due).
2.19 Accounts Receivable. All accounts receivable of the Company and
the Subsidiary, whether reflected on the financial statements included in the
Annual Report, the Interim Financial Statements or subsequently created, have
arisen from bona fide transactions in the ordinary course of business.
2.20 Inventory. The inventories of the Company and each Subsidiary,
including raw materials, supplies, work-in-process, finished goods and other
materials (i) are in good, merchantable and useable condition, (ii) are
reflected in the financial statements included in the Annual Report and in the
Interim Financial Statements at the lower of cost or fair market value in
accordance with GAAP and (iii) are, in the case of finished goods, of a quality
and quantity usable in the ordinary course of business. The reserves for
inventory obsolescence contained in the financial statements included in the
Annual Report and in the Interim Financial Statements fairly reflect the amount
of obsolete inventory as of such dates.
2.21 Product Warranty. To the Company's knowledge, no material
liability exists, and no material liability is anticipated to arise, for repair,
replacement or damage in connection with products manufactured, shipped or sold
prior to the Closing Date in excess of applicable reserves reflected on the
Interim Financial Statements. All warranties are in conformity with the labeling
and other requirements of applicable laws. The Company's expenses for product
warranty and returns for the three (3) years ended as of the date hereof has not
exceeded an aggregate amount of $150,000 per year.
2.22 Product Liability. The Company Disclosure Letter sets forth an
accurate, correct and complete list and summary description of all existing
claims, liabilities, or obligations, in excess of $50,000 individually, arising
from, or alleged to arise from, any injury to person (including current and
former employees) or property as a result of the manufacture, sale, ownership,
possession, or use of any product of the Company and each Subsidiary
manufactured, sold, assembled, distributed, transported or serviced prior to the
date hereof. There have been no recalls of any product of the Company or the
Subsidiary, and none are threatened or pending, and no report has been filed or
is required to have been filed with respect to any products of the Company or
any Subsidiary under any applicable law, rule, or regulation. To the Company's
knowledge, no circumstances exist affecting the safety of the products of the
Company or any Subsidiary which would result in any reporting obligations to any
Person or could result in a claim against the Company or any Subsidiary after
the Closing.
2.22 Operations Insurance. The Company Disclosure Letter contains a
true and complete list of all liability, property, workers compensation,
directors and officers liability, and other similar insurance contracts that
insure the business, operations, or assets of the Company and each Subsidiary.
All such insurance is in full force and effect and is with financially sound
24
and reputable insurers, and in light of the business and operations of the
Company and each Subsidiary, is in amounts and provides coverage that is
reasonable and customary for companies in similar businesses.
SECTION 3. COVENANTS OF THE COMPANY.
3.1 Making of Covenants and Agreements. The Company hereby makes the
covenants and agreements set forth in this Section 3.
3.2 Conduct of Business. Except as set forth in the Company Disclosure
Letter, between the date of this Agreement and the Closing Date, the Company
Group, and each member thereof, will, unless otherwise consented to in writing
by Purchaser:
(a) conduct its business only in the ordinary course;
(b) refrain from making any capital expenditures in excess of
$100,000 in the aggregate, and from mortgaging, pledging, subjecting to a lien
or otherwise encumbering (except for the security interest of the Company's bank
lender) any of its properties or assets;
(c) refrain from incurring any contingent liability as a
guarantor or otherwise with respect to, or assuming, the obligations of others,
and from incurring any other obligations or liabilities except in the ordinary
course of business;
(d) refrain from making any change in its Certificate of
Incorporation or By-Laws;
(e) refrain from declaring, setting aside or paying any
dividend or other distribution with respect to its capital stock, or making any
direct or indirect redemption, purchase or other acquisition of its capital
stock or any other securities, except for dividends paid by Subsidiaries to the
Company in the ordinary course of their business consistent with past practice;
(f) except to the extent required under any existing
agreements and any existing employee and director Benefit Plans (including
existing severance plans or arrangements) as in effect on the date of this
Agreement and listed in the Company Disclosure Letter, refrain from paying
bonuses to, or increasing the compensation or fringe benefits of, any of its
directors, officers or employees, except for increases in salary or wages of
non-management employees of the Company Group in the ordinary course of business
and in amounts and on terms consistent with past practice, and refrain from
granting any deferred compensation, severance or termination pay and refrain
from entering into, or amending, any employment, consulting, deferred
compensation or severance agreement or arrangement with any director, officer or
other employee of the Company Group;
25
(g) except as may be required as a result of any change in law
or in GAAP, refrain from changing any of the accounting or tax practices,
principles or procedures used by the Company Group;
(h) refrain from making any tax election and from settling or
compromising any material federal, state, local or foreign tax liability or
dispute;
(i) refrain from authorizing for issuance, issuing, selling,
granting, delivering, pledging or encumbering any shares of its capital stock or
any other equity or voting security of the Company or any Subsidiary, or any
securities convertible into or exchangeable for any such shares of capital stock
or other equity or voting security, except for issuances of stock pursuant to
the Outstanding Options, refrain from authorizing for issuance, issuing, selling
or granting or delivering any options, warrants, calls, commitments,
subscriptions or rights to purchase or acquire any shares or securities from any
member of the Company Group, and refrain from making any amendment or
modification to any outstanding options, warrants, calls, commitments, shares or
other securities of any member of the Company Group;
(j) refrain from any sale or other transfer of the assets of
any member of the Company Group, except in the ordinary course of business in a
manner consistent with past practice;
(k) refrain from reclassifying, combining, splitting,
subdividing or redeeming, purchasing or otherwise acquiring directly or
indirectly any of the Company's capital stock;
(l) refrain from adopting a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring or
recapitalization or other reorganization of any member of the Company Group;
(m) refrain making any material change in the Company's
borrowing arrangements and refrain from authorizing for issuance, issuing,
selling any notes, bonds, debentures or other evidences of indebtedness of any
kind whatsoever, provided that the Company and Subsidiary may draw on its
existing credit facility or increase its revolving credit line to up to $8
million, so long as total Indebtedness does not exceed $14 million;
(n) refrain from making any material loan, advance or capital
contribution to, or material investment in, any person or entity other than a
Subsidiary in the ordinary course consistent with past practice;
(o) use its reasonable efforts to prevent any change with
respect to its management and supervisory personnel and banking arrangements
(subject to the proviso in paragraph (m) above);
(p) use its reasonable efforts to keep intact its business
organization, to keep available its present officers and employees and to
preserve the goodwill of all suppliers, customers, independent contractors and
others having business relations with it;
26
(q) have in effect and maintain at all times all insurance of
the kind, in the amount and with the insurers set forth in the Company
Disclosure Letter or equivalent insurance with any substitute insurers approved
in writing by Purchaser;
(r) except as required to conform to applicable law, refrain
from entering into or making any change in the Retirement Plans and from
amending or terminating any other existing Benefit Plan, or adopting any new
Benefit Plan;
(s) refrain from acquiring control or ownership of, or
securities of or ownership interests in, any other corporation, association,
joint venture, partnership, limited liability company, business trust or other
business entity, or control or ownership of all or a substantial portion of the
assets of the foregoing, and from entering into any agreement providing for any
of the foregoing;
(t) except in the ordinary course of business, refrain from
entering into any licensing arrangement or other material contract;
(u) refrain from settling any pending litigation and from
commencing any litigation; and
(v) refrain from agreeing to or committing to carry out any
action which is prohibited by the foregoing provisions, or which would cause any
of the representations or warranties in this Agreement to be untrue in any
material respect.
3.3 Stockholders Meeting; Proxy Statement.
(a) The Company will call and hold a special meeting of its
Stockholders (the "Stockholders Meeting") as soon as reasonably practicable in
order that its Stockholders may consider and vote upon this Agreement and
approval of the Merger in accordance with the DGCL.
(b) The Company will prepare and file as promptly as possible
with the SEC preliminary proxy materials under the Securities and Exchange Act
relating to the Stockholders Meeting. The Company will use its reasonable best
efforts, after consultation with Purchaser, to respond to the comments of the
SEC thereon and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary. The Company, as
promptly as practicable, shall cause the definitive proxy materials to be mailed
to its Stockholders. Purchaser agrees to provide the Company with whatever
information in connection with said filings that the Company may reasonably
request. Except as otherwise permitted under Section 3.4, the Board of the
Directors of the Company shall not withdraw or modify (or propose to withdraw or
modify) and the Company will include in the Proxy Statement, the recommendation
of the Company's Board of Directors that the Stockholders of the Company vote in
favor of the approval and adoption of this Agreement, the Merger and the
transactions contemplated hereby. The Company shall solicit proxies and may, at
its discretion,
27
employ a proxy solicitation firm to assist in disseminating proxy materials,
contacting Stockholders to solicit proxies to vote in favor of the approval and
adoption of this Agreement, and performing the services customarily performed by
such firms in transactions of this type. The final Company proxy materials will
comply with the Exchange Act in all material respects, and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they will be made, not misleading; provided, however, that the
Company makes no representation or warranty with respect to any information that
Purchaser will supply specifically for use in said proxy materials. At or prior
to the Closing, the Company shall deliver to the Purchaser a certificate of the
Company's Secretary setting forth the voting results from its Stockholders
Meeting.
3.4 Exclusivity.
(a) For purposes of this Agreement, the term "Takeover
Proposal" shall mean any proposal for a merger or other business combination
involving the Company or the Subsidiary, or for the acquisition of a substantial
equity interest in the Company or the Subsidiary, a substantial portion of the
assets of the Company or the Subsidiary or a product line or line of business of
the Company or the Subsidiary, other than as contemplated by this Agreement. The
Company shall promptly advise Purchaser orally and in writing, and in no event
later than forty-eight (48) hours after receipt, of any "Takeover Proposal" or
of any proposal, or inquiry reasonably likely to result in a Takeover Proposal.
(b) For purposes of this Agreement, "Superior Proposal" shall
mean a bona fide written proposal obtained not in breach of this Agreement to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all of the equity securities of the Company or substantially all of
the assets of the Company made by a third party on terms and conditions which
the Board of Directors of the Company determines in its good faith judgment
after consultation with its financial advisor and outside counsel to be more
favorable (other than in immaterial respects) from a financial point of view
than the Merger and the transactions contemplated thereby, taking into account
at the time of determination any changes to the terms of this Agreement that as
of that time had been proposed by Purchaser and the ability of the person making
such Superior Proposal to consummate such Takeover Proposal (based upon, among
other things, the availability of financing and the expectation of obtaining
required regulatory approvals).
(c) Following the execution and delivery of this Agreement,
each member of the Company Group shall immediately cease, and shall cause its
officers, directors, Stockholders, investment bankers, agents and
representatives to cease, any discussions or negotiations with any parties that
may be ongoing with respect to a Takeover Proposal (other than the discussions
and negotiations with Purchaser) and shall not, directly or indirectly, whether
through its officers, directors, Stockholders, investment bankers, agents,
representatives, or otherwise, (i) solicit or encourage the initiation of any
inquiries, proposals or offers that constitute, or may be reasonably be expected
to lead to, a Takeover Proposal, or (ii) engage in any discussions or
negotiations with, or provide any non-public information to, any person or
entity making, proposing to make
28
or believed to be contemplating a Takeover Proposal to the Company; provided,
however, that if, prior to the Effective Time of the Merger, and after the
receipt of a Takeover Proposal that was made in circumstances not otherwise
involving a breach of this Agreement, the Board of Directors of the Company
determines in good faith, after considering applicable provisions of state law
and after consultation with its financial advisor and outside counsel, that a
failure to do so would reasonably be expected to constitute a breach by it of
its fiduciary duties to its Stockholders under applicable law, the Company may,
in response to such Takeover Proposal and subject to compliance with the notice
requirement set forth in Section 3.4(a), (x) furnish information with respect to
the Company to the party making such Takeover Proposal pursuant to a customary
confidentiality agreement, (y) participate in negotiations with such party
regarding such Takeover Proposal, and (z) following receipt of an unsolicited,
bona fide Takeover Proposal from a third party which is a Superior Proposal,
enter into an agreement with such third party and terminate this Agreement
pursuant to the terms of Section 9.1 hereof, if after duly considering the
advice of outside counsel, the Board of Directors of the Company determines in
good faith that failure to do so would reasonably be expected to breach its
fiduciary duties to the Stockholders under applicable law.
(d) The Company shall not take any of the actions referred to
in clauses (y) or (z) in subsection (c) above unless the Company shall have
provided Purchaser with at least five (5) days prior written notice of the
Company's intention to take such action. During such period, the Company shall
negotiate, and shall cause its legal and financial advisors to negotiate, with
Purchaser in good faith to make such adjustments in the terms and conditions of
this Agreement such that the Takeover Proposal would no longer constitute a
Superior Proposal.
(e) Nothing in this Section 3.4 shall (i) permit the Company
to terminate this Agreement other than as provided in Section 9.1, or (ii)
permit the Company to enter into any written agreement with respect to a
Takeover Proposal during the term of this Agreement (other than a
confidentiality agreement).
3.5 Authorization from Others. Prior to the Closing Date, the Company
will use its reasonable best efforts to obtain all authorizations, consents and
permits of others required to permit the consummation by the Company of the
transactions contemplated by this Agreement.
3.6 Notice of Default. Promptly upon the occurrence of, or promptly
upon the Company becoming aware of the impending or threatened occurrence of,
any event which would cause or constitute a breach or default, or would have
caused or constituted a breach or default had such event occurred or been known
to the Company prior to the date hereof, of any of the representations,
warranties or covenants of the Company contained in or referred to in this
Agreement, the Company shall give written notice thereof to Purchaser.
3.7 Consummation of Agreement. Except as otherwise permitted under
Section 3.4, the Company shall use its reasonable best efforts to perform and
fulfill all conditions and obligations on its part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out.
29
3.8 Confidentiality. The Company agrees that each of the Company, the
Subsidiary and the Company's and Subsidiary's officers, directors and
representatives will hold in strict confidence, and will not use, any
confidential or proprietary data or information obtained from Purchaser with
respect to its business or financial condition except for the purpose of
evaluating, negotiating and completing the transaction contemplated hereby.
Information generally known in Purchaser's industry or which has been disclosed
to the Company by third parties which have a right to do so shall not be deemed
confidential or proprietary information for purposes of this Agreement. If the
transaction contemplated by this Agreement is not consummated, the Company will
return to Purchaser (or certify that it has destroyed) all copies of such data
and information, including but not limited to financial information, customer
lists, business and corporate records, worksheets, test reports, tax returns,
lists, memoranda, and other documents prepared by or made available to the
Company in connection with the transaction.
3.9 Access to Records and Properties. Purchaser may, prior to the
Closing Date, through its employees, agents and representatives, make or cause
to be made a detailed review of the business and financial condition of the
Company Group and make or cause to be made such investigation as it deems
necessary or advisable of the properties, assets, businesses, books and records
of each member of the Company Group. The Company agrees to assist Purchaser in
conducting such review and investigation and will provide, and will cause its or
their representatives and independent public accountants to provide, Purchaser
and its employees, agents and representatives full access to, and complete
information concerning, all aspects of the businesses of the Company Group,
including their respective books, records (including tax returns filed or in
preparation), projections, personnel and premises, and any documents (including
any documents filed on a confidential basis) included in any report filed with
any governmental agency. Purchaser and Acquisition Sub shall use their
reasonable best efforts to minimize any disruption to the business of the
Company Group.
3.10 Notification Regarding Dissenters' Shares. The Company shall give
Purchaser (i) prompt notice of any notice of intent to demand fair value for any
shares of Company Common Stock, withdrawals of such notices, and any other
instruments served pursuant to the Appraisal Laws and received by the Company,
and (ii) the opportunity to direct any negotiations and proceedings with respect
to demands for fair value for shares of Company Common Stock under the Appraisal
Laws. The Company shall not, without the prior written consent of Purchaser,
voluntarily make any payment with respect to any demands for fair value for
shares of Company Common Stock or offer to settle or settle any such demands.
3.11 Voting Agreement. Concurrently herewith, and as an essential
inducement for Purchaser's entering into this Agreement, Purchaser and
Acquisition Sub are entering into a Voting Agreement with each of Xxxxxx X.
Xxxx, Xx., Xxxxxx X. Xxxx, Xx. and The TapeMark Company in substantially the
forms of Exhibits X-0, X-0 and A-3 attached hereto (collectively, the "Voting
Agreement").
3.12 Financial Statements. Beginning with financial statements for the
month of March 2004 and continuing for each month thereafter until the Closing,
the Company shall deliver to Purchaser within seven business days after the end
of each month, financial statements
30
for the most recently ended month, accompanied by a statement of the chief
financial officer of the Company that, in the opinion of such officer, such
monthly financial statements have been prepared in accordance with the books and
records of the Company and with GAAP applied on a consistent basis and present
fairly the financial condition of the Company and its Subsidiaries on a
consolidated basis and the results of operations and cash flows of the Company
and its Subsidiaries on a consolidated basis for such month.
3.13 Financing. Concurrently herewith, and as an essential inducement
for the Company's entering into this Agreement, the Purchaser has provided the
Company with reasonable assurance concerning the availability of financing to
the Purchaser to permit payment of the amounts provided for payment by the
Purchaser under this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ACQUISITION SUB.
4.1 Organization of Purchaser and Acquisition Sub. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it.
Acquisition Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is conducted by it. Each of Purchaser and Acquisition Sub has delivered
to the Company true and complete copies of its Certificate or Articles of
Incorporation, as applicable, and Bylaws as currently in effect.
4.2 Authority of Purchaser and Acquisition Sub. Each of Purchaser and
Acquisition Sub has full right, authority and power to enter into this Agreement
and each agreement, document and instrument to be executed and delivered by it
pursuant to this Agreement and to carry out the transactions contemplated
hereby. The execution, delivery and performance by each of Purchaser and
Acquisition Sub of this Agreement and each such other agreement, document and
instrument have been duly authorized by all necessary corporate action of
Purchaser and Acquisition Sub and no other action on the part of Purchaser or
Acquisition Sub is required in connection therewith. This Agreement and each
other agreement, document and instrument executed and delivered by each of
Purchaser and Acquisition Sub pursuant to this Agreement constitute, or when
executed and delivered will constitute, valid and binding obligations of
Purchaser or Acquisition Sub, as applicable, enforceable in accordance with
their terms, except as such enforceability may be limited by general equity
principles (regardless of whether such enforceability is considered in a
proceeding at equity or at law).
The execution, delivery and performance by each of Purchaser and
Acquisition Sub of this Agreement and each such agreement, document and
instrument:
(a) do not and will not violate any provision of the
Certificate of Incorporation or Bylaws of each of Purchaser and Acquisition Sub;
31
(b) except as would not have a Material Adverse Effect on
Purchaser or Acquisition Sub, and subject to obtaining the Required Consents, do
not and will not violate any laws, rules, or regulations of the United States or
of any state or any other jurisdiction applicable to Purchaser or Acquisition
Sub or require Purchaser or Acquisition Sub to obtain any approval, consent, or
waiver of, or make any filing with, any person or entity (governmental or
otherwise) which has not been obtained or made; and
(c) except as would not have a Material Adverse Effect on
Purchaser or Acquisition Sub, and subject to obtaining the Required Consents, do
not and will not result in a breach of, constitute a default under, accelerate
any obligation under, or give rise to a right of termination of any indenture,
loan, or credit agreement, or any other agreement, mortgage, lease, permit,
order, judgment, or decree to which Purchaser or Acquisition Sub is a party and
which is material to the business and financial condition of Purchaser and its
affiliated organizations on a consolidated basis.
4.3 Litigation. There is no litigation pending or, to Purchaser's
knowledge, threatened against Purchaser or Acquisition Sub which would prevent
or hinder the consummation of the transactions contemplated by this Agreement.
4.4 Consents and Approvals. Except for the Required Consents, no filing
with or notice to, and no permit or approval of, any Governmental Entity is
necessary for the execution and delivery by Purchaser and Acquisition Sub of
this Agreement and their performance of the transactions contemplated hereby.
4.5 No Business Activities. Acquisition Sub is not a party to any
material agreement and has not conducted any activities other than in connection
with the organization of Acquisition Sub, the negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby.
Acquisition Sub has no Subsidiaries.
4.6 No Vote Required. No approval of the stockholders of Purchaser is
required to approve this Agreement and the transactions contemplated hereby. The
vote or consent of Purchaser as the sole stockholder of Acquisition Sub (which
shall have occurred prior to the Effective Time of the Merger) is the only vote
or consent of the holders of any class or series of capital stock of Acquisition
Sub necessary to approve this Agreement, the Merger or the transactions
contemplated hereby.
4.7 Financial Capability. Purchaser has the financial capacity to
perform and to cause Acquisition Sub to perform its obligations under this
Agreement.
SECTION 5. COVENANTS OF PURCHASER.
5.1 Making of Covenants and Agreement. Purchaser hereby makes the
covenants and agreements set forth in this Section 5.
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5.2 Authorization from Others. Prior to the Closing Date, Purchaser and
Acquisition Sub will use their reasonable efforts to obtain all authorizations,
consents and permits of others required to permit the consummation by Purchaser
and Acquisition Sub of the transactions contemplated by this Agreement.
5.3 Confidentiality; Nonsolicitation. Purchaser agrees that, unless and
until the Closing has been consummated:
(a) Purchaser and its officers, directors, and representatives
will hold in strict confidence, and will not use any confidential or proprietary
data or information obtained from the Company Group with respect to the business
or financial condition of the Company Group except for the purpose of
evaluating, negotiating and completing the transaction contemplated hereby.
Information or data which (i) was or becomes (other than as a result of a
disclosure by Purchaser) generally known in the industries of the Company Group,
(ii) which has been disclosed to Purchaser by third parties which have a right
to do so, or (iii) was known to Purchaser prior to its disclosure to Purchaser
hereunder shall not be deemed confidential or proprietary information for
purposes of this Agreement. Notwithstanding the foregoing, Purchaser may
disclose any confidential or proprietary data or information if disclosure is
required by law (including by interrogatory, subpoena or similar process);
provided, however, that prior to disclosing such information Purchaser shall
give prior written notice of such proposed disclosure to the Company and shall
reasonably cooperate with any efforts by the Company to prevent such disclosure.
If the transaction contemplated by this Agreement is not consummated and this
Agreement is terminated, Purchaser will return to the Company (or certify that
it has destroyed) all copies of such data and information provided by the
Company and its representatives including but not limited to financial
information, customer lists, business and corporate records, worksheets, test
reports, tax returns, lists, memoranda, and other documents prepared by or made
available to Purchaser in connection with the transaction.
(b) During the period commencing on the date hereof and ending
two (2) years from the date hereof, Purchaser and its affiliates shall not
employ, nor solicit or make offers of employment to, any individuals who are
presently employed by any member of the Company Group or who become employed by
any member of the Company Group during the time period between the date hereof
and the date of termination of this Agreement.
5.4 Notice of Default. Promptly upon the occurrence of, or promptly
upon Purchaser or Acquisition Sub becoming aware of the impending or threatened
occurrence of, any event which would cause or constitute a breach or default, or
which would have caused or constitute a breach or default had such event
occurred or been known to Purchaser or Acquisition Sub prior to the date hereof,
of any of the representations, warranties or covenants of the Purchaser and
Acquisition Sub contained in or referred to in this Agreement, Purchaser shall
given written notice thereof to the Company.
5.5 Consummation of Agreement. Each of Purchaser and Acquisition Sub
shall use its reasonable efforts to perform and fulfill all conditions and
obligations on the part of either to
33
be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out.
5.6 Indemnification; Directors and Officers Insurance.
(a) Purchaser and Acquisition Sub agree that all rights to
indemnification for acts or omissions occurring prior to the Effective Time of
the Merger now existing in favor of the current and former directors or officers
of the Company Group ("Indemnified Parties"), as provided in the respective
certificate of incorporation or bylaws of the Company Group, or by statute,
shall survive the Merger and shall continue in full force and effect in
accordance with their terms.
(b) Purchaser agrees that the Company may purchase prior to
the Closing an extension of rights with respect to its directors and officers
liability coverage at a price not to exceed $105,000.
(c) This Section 5.6 shall survive the consummation of the
Merger and is intended to benefit the Indemnified Parties, and shall be binding
upon all successors and assigns of the Purchaser and Acquisition Sub.
5.7 Employee Benefits. With respect to any benefit plans in which any
employees of the Company Group become eligible to participate on or after the
Effective Time of the Merger ("New Plans"), Purchaser shall (i) waive all
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements under any such New Plans, to the extent
such waiver is permissible under the New Plans of Purchaser, and (ii) recognize
service of the employees of the Company Group with the Company Group accrued
prior to the Effective Time of the Merger in determining eligibility to
participate and vesting credit in any New Plans. Vacation entitlement of the
Company Group employees accrued as of the Effective Time of the Merger shall not
be reduced and will apply after the Effective Time of the Merger.
Purchaser agrees that after the Effective Time of the Merger the
Surviving Corporation will pay or provide for the fiscal year ending December
31, 2004, to the persons employed by members of the Company Group immediately
prior to the Effective Time, the incentive compensation program benefits which
such persons have or will accrue, or to which they have or will become entitled,
in the ordinary course for that fiscal year under the incentive compensation
programs which are described in Section 5.7 of the Company Disclosure Letter;
provided, that the Company Group does not prior to the Effective Time of the
Merger expand such programs or the class or classes of employees entitled to
such programs.
5.8 Redundancies. Employees of the Company Group whose jobs are
eliminated as a result of the consummation of the transactions contemplated
under this Agreement shall receive severance payments in the amounts due under
the severance policy of Purchaser (but in no event less than one week of
severance pay for each year of service, including service to the Company),
except that Messrs. Carbonari, Botts, Feil, Fritze, Xxxxxx and Xxxxxxx shall be
entitled to the respective benefits provided by the "Change in Control
Agreements" between each of them and
34
the Company which have been delivered to the Purchaser. Purchaser acknowledges
that the Merger will constitute a "Change in Control" under the Change in
Control Agreements.
SECTION 6. MUTUAL COVENANTS.
6.1 HSR Matters. Each party hereto shall make an appropriate filing of
a Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof. Each such filing shall request early termination of the waiting periods
imposed by the HSR Act. Each party hereby agrees to use its reasonable best
efforts to cause a termination of the waiting period under the HSR Act without
the entry by a court of competent jurisdiction of an order enjoining the
consummation of the transactions contemplated hereby at as early a date as
possible. Each party also agrees to respond promptly to all investigatory
requests as may be made by the government. In the event that a Request for
Additional Information is issued under the HSR Act, each party agrees to furnish
all information required and to comply substantially with such Request as soon
as is practicable after its receipt thereof so that any additional applicable
waiting period under the HSR Act may commence. Each party will keep the other
party apprised of the status of any inquiries made of such party by the
Department of Justice, Federal Trade Commission or any other governmental agency
or authority or members of their respective staffs with respect to this
Agreement or the transactions contemplated hereby. All filing fees to be paid by
Purchaser or the Company in connection with filing Notification and Report Forms
pursuant to the HSR Act shall be paid by the Purchaser. Notwithstanding anything
to the contrary contained in this Agreement, in connection with any filing or
submission required or action to be taken by either Purchaser or the Company or
any Subsidiary to consummate the transactions contemplated hereby, (i) the
Company shall not, without Purchaser's prior written consent, commit to any
divestiture transaction, or commit to alter its business or commercial lines in
any way or any Subsidiary's business or commercial lines in any way, and (ii)
Purchaser shall not be required to (A) divest or hold separate or otherwise take
or commit to take any action that limits its freedom of action with respect to,
or its ability to retain, the Company or any Subsidiary (or any of the
businesses, product lines or assets of the Company or any Subsidiary) or
Purchaser or any of its affiliates (or any of the businesses, product lines or
assets of Purchaser or any of its affiliates), or (B) alter or restrict in any
way the business or commercial practices of Purchaser, any of its affiliates, or
the Company or any Subsidiary.
6.2 Public Announcements. The parties hereto will consult with one
another before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public statement without
the prior written consent of such other party; provided, however, that prior
consent of the other party is not required if such a disclosure or release is
required by obligations pursuant to law or to any listing agreement with NASDAQ
as reasonably determined by the disclosing party and the disclosing party has
first used its reasonable best efforts to consult with the other party about the
form and substance of such disclosure.
SECTION 7. CONDITIONS.
35
7.1 Conditions to the Obligations of Each Party. The obligations of
each of Purchaser, Acquisition Sub and the Company to consummate this Agreement
and the transactions contemplated hereby are subject to the fulfillment, prior
to or at the Closing, of the following conditions precedent:
(a) Shareholder Approval. The Company shall have obtained the required
Shareholder Approval of this Agreement and the transactions contemplated hereby.
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(c) No Injunctions or Restraints; Illegality. No Governmental entity or
federal or state court of competent jurisdiction shall have enacted, issued,
enforced or entered any statute, rule, regulation, executive order, decree,
judgment, injunction or other order which is in effect and which prevents or
prohibits consummation of the Merger or any other material transactions
contemplated in this Agreement, and no Governmental entity shall institute any
action or proceeding before any United States court or other Governmental body
seeking to enjoin, restrain or otherwise prohibit consummation of the
transactions contemplated by this Agreement, which action or proceeding remains
pending at what would otherwise be the Closing Date.
7.2 Conditions to the Obligations of Purchaser and Acquisition Sub. The
obligations of Purchaser and Acquisition Sub to consummate this Agreement and
the transactions contemplated hereby are subject to the fulfillment, prior to or
at the Closing, of the following conditions precedent:
(a) Representations; Warranties. Each of the representations
and warranties of the Company contained in Section 2 shall be true and correct
in all material respects (except that representations and warranties qualified
by materiality or Material Adverse Effect shall be true and correct in all
respects) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing (it being understood that representations and
warranties that speak as of a particular date must continue to be thus true and
correct as of the date as of which they speak), without giving effect to any
disclosures made by the Company after the date hereof, and the Company shall
have delivered to Purchaser a certificate, dated the Closing Date, signed by the
Company's chief executive officer to the foregoing effect.
(b) Covenants. The Company shall, on or before the Closing,
have performed in all material respects all of its obligations hereunder which
by the terms hereof are to be performed on or before the Closing, and the
Company shall have delivered to Purchaser a certificate, dated the Closing Date,
signed by the Company's chief executive officer to the foregoing effect.
(c) No Material Adverse Effect. Since the date of the Most
Recent Fiscal Quarter End, there shall not have occurred or arisen any event,
fact, circumstance or change which has a Material Adverse Effect on the Company,
except as expressly disclosed in this Agreement or the Company Disclosure
Letter.
36
(d) Consents. All of the material consents, approvals,
authorizations, orders or permits required to be obtained by the Company shall
have been obtained; provided, that Purchaser warrants it has obtained the
consent of the customer referred to in Section 2.4 of the Company Disclosure
Letter.
(e) Options. All holders of Options shall have either
exercised their Options or acknowledged and agreed that their Options will
terminate as of the Effective Time of the Merger and that thereafter they will
have the right solely to receive payment for such Options as set forth in
Section 1.5 hereof.
(f) Dissenting Shares. As of the Closing Date, no more than
ten percent (10%) of the issued and outstanding shares of Company Common Stock
shall be eligible for treatment as Dissenting Shares hereunder.
(g) Legal Opinion. Purchaser and Acquisition Sub shall have
received at the Closing an opinion of Xxxxxxxxx & Xxxxxx P.L.L.P. legal counsel
to the Company, addressed to Purchaser, in form and content reasonably
satisfactory to Purchaser.
(h) Resignations. Purchaser shall have received written
resignations, effective as of the Effective Time of the Merger, of all directors
of the Company and each Subsidiary.
Notwithstanding the foregoing, if within thirty (30) days following
notice to the Company of the existence of any condition enumerated in this
Section 7.2, the condition or conditions disclosed in the notice have been cured
or corrected or otherwise have ceased to exist, then this Section shall not
relieve Purchaser and Acquisition Sub of their obligations to proceed with the
consummation of this Agreement and the transactions contemplated hereby.
7.3 Conditions to Obligations of the Company. The obligation of the
Company to consummate this Agreement and the transactions contemplated hereby is
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations; Warranties. Each of the representations
and warranties of Purchaser and Acquisition Sub contained in Section 4 shall be
true and correct in all material respects (except that representations and
warranties qualified by materiality shall be true and correct in all respects)
as though made on and as of the Closing.
(b) Covenants. Purchaser shall, on or before the Closing, have
performed in all material respects all of its obligations hereunder which by the
terms hereof are to be performed on or before the Closing; and Purchaser shall
have delivered to the Company and the Stockholders a certificate of the
President of Purchaser dated on the Closing to such effect.
(c) Legal Opinion. The Company shall have received at the
Closing an opinion of Xxxxxxx & Xxxxxx, legal counsel to Purchaser and
Acquisition Sub, addressed to the Company, in form and content reasonable
satisfactory to the Company.
37
Notwithstanding the foregoing, if within thirty (30) days following
notice to Purchaser of the existence of any condition enumerated in this Section
7.3, the condition or conditions disclosed in the notice have been cured or
corrected or otherwise have ceased to exist, then this Section shall not relieve
the Company of its obligations to proceed with the consummation of this
Agreement and the transactions contemplated hereby.
SECTION 8. CLOSING; CLOSING DATE.
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to a provision of Section 9
hereof and subject to compliance with the conditions hereto (but after extension
of any cure period provided in Section 7.2 or 7.3, if applicable), a closing
(the "Closing") will be held on the date of the Stockholders Meeting, or as soon
thereafter as the conditions in Section 7 have been satisfied or waived, or on
such other date which is mutually acceptable to Purchaser and the Company, at
the offices of legal counsel to Purchaser commencing at 11:00 A.M. At the
Closing, Purchaser will deliver to the Payment Agent in cash the Cash Payment
Amount and the amounts due with respect to Options referred to in Section 1.5,
any documents required hereunder will be exchanged by the parties, and the
Certificate of Merger will be filed by Acquisition Sub and the Company with the
Secretary of State of the State of Delaware. The date on which the Closing
occurs is herein referred to as the Closing Date.
SECTION 9. TERMINATION.
9.1 Termination and Abandonment. This Agreement may be terminated and
the Merger may be abandoned before the Effective Time of the Merger,
notwithstanding any approval and adoption of this Agreement by the stockholders
of the Company or Acquisition Sub:
(a) by the mutual consent of the Board of Directors of
Purchaser and the Company; or
(b) by Purchaser or the Company, if the Stockholders fail to
approve the Merger at the Stockholders Meeting; or
(c) subject to the Company's right to cure pursuant to Section
7.2, by Purchaser if there has been a material misrepresentation or material
breach on the part of the Company in the representations, warranties or
covenants of the Company set forth herein, or if there has been any material
failure on the part of the Company to comply with its obligations hereunder; or
subject to Purchaser's right to cure under Section 7.3, by the Company if there
has been a material misrepresentation or material breach on the part of
Purchaser or Acquisition Sub in the representations, warranties or covenants of
Purchaser Acquisition Sub set forth herein, or if there has been any material
failure on the part of Purchaser or Acquisition Sub to comply with their
obligations hereunder; or
38
(d) by Purchaser in the event that the Company's Board of
Directors withdraws its recommendation that stockholders approve this Agreement
and the Merger or if the Company's Board of Directors approves or recommends a
Superior Proposal; or
(e) by the Company giving written notice to Purchaser at any
time prior to the Stockholder Meeting if the Company intends to enter into a
definitive agreement in connection with a Superior Proposal as permitted by
Section 3.4 and makes simultaneous payment to Purchaser of the fee referred to
in Section 9.3(b); or
(f) by the Company or Purchaser if the Merger is not effective
by October 31, 2004, except that a party whose breach of this Agreement has
caused a delay in the consummation of the Merger shall not be entitled to
terminate this Agreement pursuant to this Section 9.1(f).
9.2 Termination Procedures. The power of termination provided for by
this Section 9 may be exercised for Purchaser or the Company only by its
respective President or, in the absence of the President, by a duly acting Vice
President, and will be effective only after written notice thereof, signed on
behalf of the party for which it is given by a duly authorized officer, shall
have been given to the other and, in the case of termination by the Company,
upon payment of the fee referred to in Section 9.3(b). If this Agreement is
terminated in accordance with this Section 9, then the Merger shall be abandoned
without further action by the Company, Purchaser and Acquisition Sub.
9.3 Liability Upon Termination. In the event of termination or
abandonment of the Merger pursuant to this Section 9, no party hereto shall have
any liability or further obligation to any other party hereto except that:
(a) a party that is in material breach of its representations,
warranties or covenants hereunder shall be liable for damages incurred by the
other parties hereto to the extent that such damages are proximately caused by
such breach, and if any legal action is instituted to enforce or interpret the
terms of this Agreement the prevailing party in such action shall be entitled,
in addition to any other relief to such the party is entitled, to reimbursement
of its actual out-of-pocket costs, including attorneys fees; and
(b) in the event that (i) this Agreement is abandoned by the
Company or terminated by the Company pursuant to Section 9.1(b) or (e), or (ii)
this Agreement is terminated or abandoned by Purchaser pursuant to Section
9.1(b) or (d), then the Company shall immediately pay to Purchaser by wire
transfer in immediately available funds an amount equal to a termination fee
equal to $5,400,000 (the "Termination Fee"). Subject to Section 9.3(a), upon
payment of such Termination Fee to Purchaser, the Company shall have no further
obligation or liability to Purchaser or Acquisition Sub under or related to this
Agreement, and, subject to Section 9.3(a), if such payment is made it shall be
the sole and exclusive remedy of Purchaser and Acquisition Sub upon termination
of this Agreement by the Company pursuant to 9.1(b) or (e), or termination or
abandonment by Purchaser pursuant to Section 9.1(b) or (d), and, subject to
Section 9.3(a), such remedy shall be limited to the payment of the Termination
Fee regardless of
39
the circumstances of giving rise to such termination or abandonment, provided
that the provisions of Sections 3.8 and 5.3 hereof related to confidentiality
shall survive and remain in force.
9.4 Effect of Termination. All obligations of the parties hereunder
shall cease upon any termination pursuant to Section 9.1, provided, however,
that (a) the provisions of this Section 9 (Termination), Section 3.8
(Confidentiality), the last sentence of Section 3.4 (Exclusivity), Section 5.3
(Confidentiality), and Section 10.2 (Fees and Expenses) hereof shall survive any
termination of this Agreement.
9.5 Amendment. This Agreement may be amended by the parties hereto by
action taken or authorized by their respective Boards of Directors at any time
before or after Stockholder Approval, but after Stockholder Approval no
amendment shall be made without the further approval of the Stockholders of the
Company which reduces the consideration payable to the Stockholders hereunder,
changes the form or timing of such consideration or changes any other terms and
conditions of this Agreement if the changes, alone or in the aggregate, will
materially adversely affect the Stockholders of the Company. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
9.6 Waiver. The Company may extend the time for the performance of any
of the obligations or other acts of Purchaser or Acquisition Sub hereunder,
waive any inaccuracies in the representations and warranties of Purchaser or
Acquisition Sub contained herein or in any document delivered pursuant hereto,
or waive compliance by Purchaser with any of the agreements or conditions
contained herein, but no such action may be taken without the further approval
of the Stockholders of the Company which reduces the consideration payable to
the Stockholders hereunder, changes the form or timing of such consideration or
changes any other terms and conditions of this Agreement if the changes, alone
or in the aggregate, would materially adversely affect the Stockholders of the
Company. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the Company. Purchaser may extend, on behalf of
itself and Acquisition Sub, the time for the performance of any of the
obligations or other acts of the Company hereunder, waive any inaccuracies in
the representations and warranties of the Company contained herein or in any
document delivered pursuant hereto, or waive compliance by the Company with any
of the agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by Purchaser.
SECTION 10. MISCELLANEOUS.
10.1 Non-Survival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights raising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time of the Merger,
except only for those covenants and agreements contained herein and therein that
by their terms apply or are to be performed in whole or in part after the
Effective Time of the Merger.
40
10.2 Fees and Expenses. Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, it being understood that if the Merger is
consummated as provided herein Purchaser and the Company will be responsible for
the expenses of the Company.
10.3 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the State of Delaware without regard to its
conflict of laws provisions.
10.4 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage prepaid or after
deposit with a recognized overnight delivery service properly addressed. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO PURCHASER AND ACQUISITION SUB:
CUNO Incorporated
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, General Counsel
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx & Xxxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
TO COMPANY: WTC Industries, Inc.
0000 Xxxxxx Xxxx
Xxxxx, Xxxxxxxxx 00000-0000
Attn: President
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. XxXxxx
Facsimile: (000) 000-0000
41
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
10.5 Entire Agreement. This Agreement, including the Company Disclosure
Letter, and the other writings specifically identified herein, is complete,
reflects the entire agreement of the parties with respect to its subject matter,
and supersedes all previous written or oral negotiations, commitments and
writings, between the parties hereto in respect of the transactions contemplated
herein.
10.6 Assignability; Binding Effect; No Third Party Beneficiaries. This
Agreement shall only be assignable by Purchaser to (i) a corporation or
partnership controlling, controlled by or under common control with Purchaser
upon written notice to the Company or (ii) any successor of the business and
assets that are the subject of this Agreement, and such assignment shall not
relieve Purchaser of any liability hereunder. This Agreement may not be assigned
by the Company without the prior written consent of Purchaser. This Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any
third party any right or benefit.
10.7 Captions and Gender. The captions in this Agreement are for
convenience of reference only and shall not affect the construction or
interpretation of any term or provision hereof. The use in this Agreement of the
masculine pronoun in reference to a party hereto shall be deemed to include the
feminine or neuter, as the context may require.
10.8 Execution in Counterparts. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.9 Submission to Jurisdiction. Each of Purchaser, Acquisition Sub and
the Company irrevocably agree that any legal action or proceeding with respect
to this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the courts of the State of Delaware and each of
Purchaser, Acquisition Sub and the Company hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally to the nonexclusive jurisdiction of the
aforesaid courts.
10.10 Personal Liability; Time of the Essence. This Agreement shall not
create or be deemed to create or permit any personal liability or obligation on
the part of any direct or indirect stockholder of the Company, Acquisition Sub
or Purchaser, or any officer, director, employee, agent, representative or
investor of any party hereto. The parties agree that time is of the essence with
regard to all dates and time periods in this Agreement and the performance of
obligations under this Agreement.
10.11 Definitions. As used in this Agreement the following terms shall
have the meaning set forth below, and where said meaning, said term shall be
capitalized:
42
(a) "Benefit Plan" means any employee benefit plan, program,
arrangement and contract of the Company and its Subsidiaries, including without
limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA and
any stock purchase, stock option, severance, employment, change-in-control,
fringe benefit, bonus, incentive, deferred compensation, and all other employee
benefit plans, agreements or arrangements of the Company and its Subsidiaries.
(b) "Blue Sky Laws" shall mean state securities laws.
(c) "Business Day" means any day other than a day on which
banks in the State of Minnesota are authorized to close.
(d) "ERISA" means the Employee Retirement Income Securities
Act of 1974, as amended.
(e) "Exchange Act" means the Securities Exchange Act or 1934,
as amended.
(f) "GAAP" means United States generally accepted accounting
principles as in effect from time to time.
(g) "Governmental Entity" shall mean any court or tribunal or
administrative governmental or regulatory body, agency or authority.
(h) "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(i) "Material Adverse Effect" means, with respect to any
entity, an effect, individually or in the aggregate, that (i) is or would
reasonably be expected to be materially adverse to the business, assets,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole, or (ii) does or would reasonably be expected to
materially impair the ability of the Company to perform its obligations under
this Agreement or otherwise materially and adversely threatens or impedes the
consummation of the Merger or the conduct of the business of the Surviving
Corporation; provided, however that the following will not be considered when
determining whether a material adverse effect has occurred: (x) any general
social, political or economic condition or event, the effects of which are not
specific or unique to the Company Group, including stock market fluctuations,
acts of war or terrorism, or the consequences of any of the foregoing; (y) the
general condition of the water filtration industry in the United States,
including any change in such industry conditions; or (z) any change in any law
or regulation.
(j) "SEC" means the Securities and Exchange Commission.
(k) "Securities Act" means the Securities Act or 1933, as
amended.
43
IN WITNESS WHEREOF the parties hereto have caused this Agreement and
Plan of Merger to be executed as of the date set forth above by their duly
authorized representatives.
COMPANY: PURCHASER:
WTC INDUSTRIES, INC. CUNO INCORPORATED
By /s/ Xxxxx X. Xxxxxxxxx By: /s/Xxxx X. Xxxxxx
---------------------- ---------------------
Name: Xxxxx X. Xxxxxxxxx Name: Xxxx X. Xxxxxx
Title: President, Chief Executive Officer Title: Chairman of the Board,
President and Chief
Executive Officer
ACQUISITION SUB:
XXXXXX ACQUISITION, INC.
By: Xxxx X. Xxxxxx
--------------
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board,
President and Chief
Executive Officer
44
Exhibit A-1
VOTING AGREEMENT
This Agreement is made as of May 26, 2004 by and among CUNO
Incorporated a Delaware corporation ("Purchaser"), Xxxxxx Acquisition, Inc., a
Delaware corporation ("Acquisition Sub") that is a wholly owned subsidiary of
the Purchaser, and Xxxxxx X. Xxxx, Xx. ("Stockholder") solely in his capacity as
a stockholder of WTC Industries, Inc., a Delaware corporation (the "Company"),
and not in his capacity as a director or officer of the Company.
WHEREAS, Stockholder personally owns 1,020,110 shares of the Company's
common stock (the "Shares");
WHEREAS, Purchaser, Acquisition Sub and the Company are entering into
an Agreement and Plan of Merger (the "Merger Agreement") which provides, among
other things, that Acquisition Sub will be merged with and into the Company (the
"Merger") on the terms of the Merger Agreement;
WHEREAS, Purchaser and Acquisition Sub would be unwilling to enter into
the Merger Agreement unless Stockholder enters into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the benefits that
will be received by Stockholder as a result of the consummation of the Merger
Agreement, the parties agree as follows:
1. Agreement to Vote Shares. During the period (the "Agreement Period")
beginning on the date hereof and ending on the earlier of (i) the Effective Time
of the Merger (as defined in the Merger Agreement) and (ii) the termination of
the Merger Agreement, except as described in Section 4 below, the Stockholder
hereby agrees to vote the Shares and any other shares of the Company's common
stock that the Stockholder is entitled to vote at the time of such vote
("Additional Shares"), to approve and adopt the Merger Agreement, the Merger,
all agreements related to the Merger that are contemplated by the Merger
Agreement, and any actions directly and reasonably related thereto that are
contemplated by the Merger Agreement, at any meeting or meetings of the
stockholders of the Company, and at any adjournment thereof or pursuant to
action by written consent, at or by which such Merger Agreement, the Merger,
such agreements or such other actions, are submitted for the consideration and
vote of the stockholders of the Company. Notwithstanding any provision of this
Voting Agreement to the contrary, nothing in this Voting Agreement shall limit
or restrict the Stockholder from acting in the Stockholder's capacity as a
director or officer of the Company, it being understood that this Agreement
shall apply to Stockholder solely in Stockholder's capacity as a stockholder of
the Company.
2. Not Voting for Alternative Proposals. During the Agreement Period,
the Stockholder agrees that he will not vote, or exercise a consent with respect
to, any of the Shares or Additional Shares in favor of the approval of any other
merger, consolidation, sale of assets,
reorganization, recapitalization, liquidation or winding up of the Company or
any other extraordinary transaction involving the Company or any corporate
action the consummation of which would either frustrate in any material respect
the purposes of, or prevent or delay the consummation of, the transactions
contemplated by the Merger Agreement.
3. Takeover Proposals. During the Agreement Period, the Stockholder
will not, directly or indirectly, (i) solicit, initiate or knowingly take any
action designed to facilitate the submission of any Takeover Proposal (as
defined in the Merger Agreement) or (ii) engage in negotiations or discussions
with, or furnish any nonpublic information relating to the Company or its
Subsidiary (as defined in the Merger Agreement) or knowingly afford access to
the properties, books or records of the Company or its Subsidiary (other than
such components of such businesses, properties or assets that are generally
accessible to the public) to, any third party that to the knowledge of the
Stockholder is seeking to make, or has made, a Takeover Proposal.
Notwithstanding the foregoing, the provisions of this Section 3 shall not be
construed to limit acts taken by the Stockholder in his capacity as an officer
or director of the Company and any such action by the Stockholder in his
capacity as a director or officer of the Company that is taken in accordance
with Section 3.4 of the Merger Agreement shall be deemed not to be a violation
of this Voting Agreement.
4. Termination. This Agreement shall terminate on the first to occur of
(a) the Effective Time of the Merger; (b) the termination of the Merger
Agreement; and (c) 180 calendar days after the date hereof. Notwithstanding the
foregoing, if this Agreement is terminated as the consequence of the termination
of the Merger Agreement pursuant to Section 9.1(b), (d) or (e) of the Merger
Agreement, the provisions of Section 9 hereof (Recapture of Profits) shall
survive termination of this Agreement and shall terminate (a) nine (9) months
after termination of the Merger Agreement, if no Alternative Disposition has
occurred within such nine (9) months or (b) at such time as Stockholder has
discharged his obligations under Section 9 hereof, if an Alternative Disposition
has occurred within nine (9) months after termination of the Merger Agreement.
Stockholder shall have the right to terminate this Agreement by written notice
to Purchaser if the terms of the Merger Agreement are amended without the
written consent of Stockholder, but only if such amendment reduces the Common
Payment, changes the form or mix of the Common Payment or otherwise adversely
affects Stockholder.
5. No Exercise of Appraisal Rights. The Stockholder hereby agrees not
to exercise any rights (including, without limitation, under Section 262 of the
Delaware General Corporation Law) to demand appraisal of any Shares or
Additional Shares in connection with the Merger.
6. Transfers of Shares by Stockholder. The Stockholder hereby agrees
that if he sells, transfers, assigns, encumbers or otherwise disposes (each, a
"Transfer") of any Shares or Additional Shares during the Agreement Period, the
Stockholder shall require the transferee of such Shares or Additional Shares to
execute and deliver to Purchaser, Acquisition Sub and the Company, immediately
upon any such Transfer, a voting agreement identical in form to this Voting
Agreement except for the identity of the Stockholder prior to or concurrent with
the consummation of such Transfer.
2
7. Stockholder's Representations. The Stockholder hereby represents and
warrants to Purchaser that as of the date hereof:
(a) The Stockholder (i) owns of record and beneficially the
number of Shares set forth in the preamble hereto (except for 2,340 of the
Shares which he owns beneficially but is not the record owner), (ii) is entitled
to vote all of the Shares, (iii) has the full legal capacity to enter into,
execute and deliver this Voting Agreement without the consent or approval of any
other person or entity, and (iv) has not entered into any other voting agreement
with or granted any person or entity any proxy (revocable or irrevocable) with
respect to the Shares (other than this Voting Agreement).
(b) The Stockholder has duly executed and delivered this
Agreement.
(c) No investment banker, broker or finder is entitled to a
commission or fee from the Stockholder in respect of this Agreement based upon
any arrangement or agreement made by or on behalf of the Stockholder.
8. Remedies. The parties hereto agree that if for any reason any party
hereto shall have failed to perform its or his obligations under this Voting
Agreement, then the party seeking to enforce this Agreement against such
non-performing party shall be entitled to specific performance and injunctive
and other equitable relief. This provision is without prejudice to any other
rights or remedies, whether at law or in equity, that any party hereto may have
against any other party hereto for any failure to perform its or his obligations
under this Voting Agreement.
9. Recapture of Profits. If (A) the Merger Agreement is terminated
either by the Purchaser pursuant to Section 9.1(d) of the Merger Agreement or by
the Company pursuant to Section 9.1(e) of the Merger Agreement or by either the
Purchaser or the Company pursuant to Section 9.1(b) of the Merger Agreement and
(B) within nine (9) months after the date of such termination, Stockholder
consummates the sale, transfer or other disposition for a consideration that is
not at least ten percent (10%) greater than the consideration to which the
Stockholder would have been entitled under the Merger Agreement of any or all of
his Shares to or with any person or entity not an affiliate or associate of
Purchaser, Acquisition Sub or the Company (but including a sale to the Company
if such sale is a transactional element of a Takeover Proposal) (i) in
connection with a Takeover Proposal or (ii) in a transaction or series of
related transactions which would reasonably be expected to lead to or facilitate
the making or consummation of a Takeover Proposal (such sale, transfer or other
disposition of Shares being collectively referred to as an "Alternative
Disposition"), and (C) within nine (9) months after the date of such termination
of the Merger Agreement such Takeover Proposal or any other Takeover Proposal is
consummated, then the Stockholder shall, within three Business Days of the
closing of such Takeover Proposal, pay to Purchaser, the amount of the Profit,
if any, realized by Stockholder from such Alternative Disposition, net of
Stockholder's reasonably documented expenses in connection with such Alternative
Disposition, any taxes incurred by Stockholder on such Profit and any legal fees
incurred by Stockholder in connection with the execution, delivery and
performance of this Agreement; provided, however, that the sale by Stockholder
of any of his Shares pursuant to an underwritten public offering (so long as at
the time of the closing of such
3
public offering there has not been publicly announced and pending a Takeover
Proposal and Stockholder does not have actual knowledge of a planned Takeover
Proposal) or a sale pursuant to Rule 144 of the Securities Act shall not be
considered an Alternative Disposition which is subject to the provisions of this
Section 5. As used in this Section, "Profit" shall be calculated on a per
Stockholder Share basis and shall mean an amount equal to the excess, if any, of
the per Stockholder Share proceeds received by Stockholder in such Alternative
Disposition over the Common Payment (or such higher price as Purchaser and/or
Acquisition Sub or their affiliates may offer pursuant to the Merger Agreement
per share of Company Common Stock). Any such Profits received by Stockholder on
such Alternative Disposition will be paid to Purchaser in the same form and in
the same proportion as was received by Stockholder. Notwithstanding anything to
the contrary contained herein, under no circumstances shall the Stockholder be
required to pay to Purchaser an amount which would result in Stockholder
retaining from such Alternative Disposition an amount less than Stockholder
would have received had the Merger Agreement been consummated.
10. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Subject to the last sentence of subsection (c) hereunder,
Stockholder hereby irrevocably grants to, and appoints, the President and the
Chief Financial Officer of the Purchaser and each of their designees
(individually, an "Authorized Party" and collectively, the "Authorized
Parties"), and each of them individually, as Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of Stockholder, to vote the Shares, or execute one or more written
consents or approval in respect of the Shares, (i) in favor of the Merger, the
adoption of the Merger Agreement and the approval of the terms thereof and the
transactions contemplated by the Merger Agreement; (ii) against any action or
agreement that would result in a breach of any covenant or any other obligation
or agreement of the Company under the Merger Agreement or in a breach in any
material respect of any representation or warranty of the Company in the Merger
Agreement; (iii) against any Takeover Proposal (other than with Purchaser and/or
Acquisition Sub); and (iv) against any amendment of the Company's Certificate of
Incorporation and/or by-laws or any other action or agreement that is intended
or could reasonably be expected to impede, interfere with, delay, postpone or
discourage the Merger or change in any manner the voting rights of any class of
the Company Common Stock. Notwithstanding anything contained herein to the
contrary, such irrevocable proxy will not be exercised by any Authorized Party
unless Stockholder breaches his obligations under Section 1(a) of this
Agreement.
(b) Stockholder represents that any proxies heretofore given
in respect of the Shares are revocable, and that any such proxies have been or
are hereby revoked.
(c) Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 10 is given in connection with the execution of the Merger
Agreement and that such irrevocable proxy is given to secure the performance of
the duties of Stockholder in accordance with this Agreement. Stockholder hereby
further affirms that the irrevocable proxy granted hereby is coupled with an
interest and may under no circumstances be revoked, except as otherwise provided
in this Agreement. Stockholder hereby ratifies and confirms all that such
4
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable prior to
termination of this Agreement in accordance with the provisions of Section
212(e) of the DGCL. Such irrevocable proxy shall be valid until the termination
of this Agreement pursuant to Section 4. Notwithstanding anything contained
herein to the contrary, this irrevocable proxy shall automatically terminate
upon termination of this Agreement.
(d) Any action taken by any such party pursuant to the proxy
granted under this Section 10(a) shall provide that Stockholder may revoke such
action effective upon termination of this Agreement.
11. Partial Invalidity. If any provision of this Voting Agreement shall
be invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining provisions of this Voting Agreement.
12. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
If to Purchaser or Acquisition Sub, to:
CUNO Incorporated
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx, LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to the Stockholder, to:
Xx. Xxxxxx X. Xxxx, Xx.
000 Xxxxx Xxxxxx X.
Xxxxx Xx. Xxxx, XX 00000
Facsimile: 000-000-0000
5
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose of notice to the other parties hereto. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
13. Entire Agreement. This Voting Agreement contains the entire
agreement of the parties concerning the subject matter and supercedes any prior
agreements or understandings. No provision of this Voting Agreement shall be
amended, waived, or supplemented other than by a written agreement that refers
to this Voting Agreement and is signed by or on behalf of all the parties
hereto.
14 Governing Law. This Voting Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of law rules of such state.
15. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that the Purchaser may assign, in its sole discretion, any or
all of its rights hereunder to any direct or indirect wholly owned subsidiary of
the Purchaser; provided that any such assignment would not cause any delay in
the consummation of the Merger; and provided further that no such assignment
shall relieve the Purchaser of its obligations hereunder.
16. Further Assurances. The Stockholder will, upon request, execute and
deliver any additional documents reasonably necessary or desirable to complete
and effectuate the covenants contained herein.
17. No Third Party Beneficiaries; Etc. Nothing in this Agreement,
express or implied, shall confer on any person other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement. The obligations of the
Stockholder under this Agreement shall be several and not joint.
18. Counterparts. This Voting Agreement may be executed in two or more
counterparts, each of which shall be an original with the same effect as if the
signatures hereto and thereto were upon the same instrument.
6
IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of the date first written above.
PURCHASER: STOCKHOLDER:
CUNO Incorporated
By: /s/Xxxx X. Xxxxxx /s/ Xxxxxx X. Xxxx, Xx.
----------------- -----------------------
Name: Xxxx X. Xxxxxx Xxxxxx X. Xxxx, Xx.
ACQUISITION SUB:
Xxxxxx Acquisition, Inc.
By: /s/Xxxx X. Xxxxxx
-----------------
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board, President and Chief Executive Officer
7
Exhibit A-2
VOTING AGREEMENT
This Agreement is made as of May 26, 2004 by and among CUNO
Incorporated a Delaware corporation ("Purchaser"), Xxxxxx Acquisition, Inc., a
Delaware corporation ("Acquisition Sub") that is a wholly owned subsidiary of
the Purchaser, and Xxxxxx X. Xxxx, Xx. ("Stockholder") solely in his capacity as
a stockholder of WTC Industries, Inc., a Delaware corporation (the "Company"),
and not in his capacity as a director or officer of the Company.
WHEREAS, Stockholder personally owns 85,575 shares of the Company's
common stock (the "Shares");
WHEREAS, Purchaser, Acquisition Sub and the Company are entering into
an Agreement and Plan of Merger (the "Merger Agreement") which provides, among
other things, that Acquisition Sub will be merged with and into the Company (the
"Merger") on the terms of the Merger Agreement;
WHEREAS, Purchaser and Acquisition Sub would be unwilling to enter into
the Merger Agreement unless Stockholder enters into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the benefits that
will be received by Stockholder as a result of the consummation of the Merger
Agreement, the parties agree as follows:
1. Agreement to Vote Shares. During the period (the "Agreement Period")
beginning on the date hereof and ending on the earlier of (i) the Effective Time
of the Merger (as defined in the Merger Agreement) and (ii) the termination of
the Merger Agreement, except as described in Section 4 below, the Stockholder
hereby agrees to vote the Shares and any other shares of the Company's common
stock that the Stockholder is entitled to vote at the time of such vote
("Additional Shares"), to approve and adopt the Merger Agreement, the Merger,
all agreements related to the Merger that are contemplated by the Merger
Agreement, and any actions directly and reasonably related thereto that are
contemplated by the Merger Agreement, at any meeting or meetings of the
stockholders of the Company, and at any adjournment thereof or pursuant to
action by written consent, at or by which such Merger Agreement, the Merger,
such agreements or such other actions, are submitted for the consideration and
vote of the stockholders of the Company. Notwithstanding any provision of this
Voting Agreement to the contrary, nothing in this Voting Agreement shall limit
or restrict the Stockholder from acting in the Stockholder's capacity as a
director or officer of the Company, it being understood that this Agreement
shall apply to Stockholder solely in Stockholder's capacity as a stockholder of
the Company.
2. Not Voting for Alternative Proposals. During the Agreement Period,
the Stockholder agrees that he will not vote, or exercise a consent with respect
to, any of the Shares
or Additional Shares in favor of the approval of any other merger,
consolidation, sale of assets, reorganization, recapitalization, liquidation or
winding up of the Company or any other extraordinary transaction involving the
Company or any corporate action the consummation of which would either frustrate
in any material respect the purposes of, or prevent or delay the consummation
of, the transactions contemplated by the Merger Agreement.
3. Takeover Proposals. During the Agreement Period, the Stockholder
will not, directly or indirectly, (i) solicit, initiate or knowingly take any
action designed to facilitate the submission of any Takeover Proposal (as
defined in the Merger Agreement) or (ii) engage in negotiations or discussions
with, or furnish any nonpublic information relating to the Company or its
Subsidiary (as defined in the Merger Agreement) or knowingly afford access to
the properties, books or records of the Company or its Subsidiary (other than
such components of such businesses, properties or assets that are generally
accessible to the public) to, any third party that to the knowledge of the
Stockholder is seeking to make, or has made, a Takeover Proposal.
Notwithstanding the foregoing, the provisions of this Section 3 shall not be
construed to limit acts taken by the Stockholder in his capacity as an officer
or director of the Company and any such action by the Stockholder in his
capacity as a director or officer of the Company that is taken in accordance
with Section 3.4 of the Merger Agreement shall be deemed not to be a violation
of this Voting Agreement.
4. Termination. This Agreement shall terminate on the first to occur of
(a) the Effective Time of the Merger; (b) the termination of the Merger
Agreement; and (c) 180 calendar days after the date hereof. Notwithstanding the
foregoing, if this Agreement is terminated as the consequence of the termination
of the Merger Agreement pursuant to Section 9.1(b), (d) or (e) of the Merger
Agreement, the provisions of Section 9 hereof (Recapture of Profits) shall
survive termination of this Agreement and shall terminate (a) nine (9) months
after termination of the Merger Agreement, if no Alternative Disposition has
occurred within such nine (9) months or (b) at such time as Stockholder has
discharged his obligations under Section 9 hereof, if an Alternative Disposition
has occurred within nine (9) months after termination of the Merger Agreement.
Stockholder shall have the right to terminate this Agreement by written notice
to Purchaser if the terms of the Merger Agreement are amended without the
written consent of Stockholder, but only if such amendment reduces the Common
Payment, changes the form or mix of the Common Payment or otherwise adversely
affects Stockholder.
5. No Exercise of Appraisal Rights. The Stockholder hereby agrees not
to exercise any rights (including, without limitation, under Section 262 of the
Delaware General Corporation Law) to demand appraisal of any Shares or
Additional Shares in connection with the Merger.
6. Transfers of Shares by Stockholder. The Stockholder hereby agrees
that if he sells, transfers, assigns, encumbers or otherwise disposes (each, a
"Transfer") of any Shares or Additional Shares during the Agreement Period, the
Stockholder shall require the transferee of such Shares or Additional Shares to
execute and deliver to Purchaser, Acquisition Sub and the Company, immediately
upon any such Transfer, a voting agreement identical in form to this Voting
Agreement except for the identity of the Stockholder prior to or concurrent with
the consummation of such Transfer.
2
7. Stockholder's Representations. The Stockholder hereby represents and
warrants to Purchaser that as of the date hereof:
(a) The Stockholder (i) owns of record and beneficially the
number of Shares set forth in the preamble hereto, (ii) is entitled to vote all
of the Shares, (iii) has the full legal capacity to enter into, execute and
deliver this Voting Agreement without the consent or approval of any other
person or entity, and (iv) has not entered into any other voting agreement with
or granted any person or entity any proxy (revocable or irrevocable) with
respect to the Shares (other than this Voting Agreement).
(b) The Stockholder has duly executed and delivered this
Agreement.
(c) No investment banker, broker or finder is entitled to a
commission or fee from the Stockholder in respect of this Agreement based upon
any arrangement or agreement made by or on behalf of the Stockholder.
8. Remedies. The parties hereto agree that if for any reason any party
hereto shall have failed to perform its or his obligations under this Voting
Agreement, then the party seeking to enforce this Agreement against such
non-performing party shall be entitled to specific performance and injunctive
and other equitable relief. This provision is without prejudice to any other
rights or remedies, whether at law or in equity, that any party hereto may have
against any other party hereto for any failure to perform its or his obligations
under this Voting Agreement.
9. Recapture of Profits. If (A) the Merger Agreement is terminated
either by the Purchaser pursuant to Section 9.1(d) of the Merger Agreement or by
the Company pursuant to Section 9.1(e) of the Merger Agreement or by either the
Purchaser or the Company pursuant to Section 9.1(b) of the Merger Agreement and
(B) within nine (9) months after the date of such termination, Stockholder
consummates the sale, transfer or other disposition for a consideration that is
not at least ten percent (10%) greater than the consideration to which the
Stockholder would have been entitled under the Merger Agreement of any or all of
his Shares to or with any person or entity not an affiliate or associate of
Purchaser, Acquisition Sub or the Company (but including a sale to the Company
if such sale is a transactional element of a Takeover Proposal) (i) in
connection with a Takeover Proposal or (ii) in a transaction or series of
related transactions which would reasonably be expected to lead to or facilitate
the making or consummation of a Takeover Proposal (such sale, transfer or other
disposition of Shares being collectively referred to as an "Alternative
Disposition"), and (C) within nine (9) months after the date of such termination
of the Merger Agreement such Takeover Proposal or any other Takeover Proposal is
consummated, then the Stockholder shall, within three Business Days of the
closing of such Takeover Proposal, pay to Purchaser, the amount of the Profit,
if any, realized by Stockholder from such Alternative Disposition, net of
Stockholder's reasonably documented expenses in connection with such Alternative
Disposition, any taxes incurred by Stockholder on such Profit and any legal fees
incurred by Stockholder in connection with the execution, delivery and
performance of this Agreement; provided, however, that the sale by Stockholder
of any of his Shares pursuant to an underwritten public offering (so long as at
the time of the closing of such
3
public offering there has not been publicly announced and pending a Takeover
Proposal and Stockholder does not have actual knowledge of a planned Takeover
Proposal) or a sale pursuant to Rule 144 of the Securities Act shall not be
considered an Alternative Disposition which is subject to the provisions of this
Section 5. As used in this Section, "Profit" shall be calculated on a per
Stockholder Share basis and shall mean an amount equal to the excess, if any, of
the per Stockholder Share proceeds received by Stockholder in such Alternative
Disposition over the Common Payment (or such higher price as Purchaser and/or
Acquisition Sub or their affiliates may offer pursuant to the Merger Agreement
per share of Company Common Stock). Any such Profits received by Stockholder on
such Alternative Disposition will be paid to Purchaser in the same form and in
the same proportion as was received by Stockholder. Notwithstanding anything to
the contrary contained herein, under no circumstances shall the Stockholder be
required to pay to Purchaser an amount which would result in Stockholder
retaining from such Alternative Disposition an amount less than Stockholder
would have received had the Merger Agreement been consummated.
10. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Subject to the last sentence of subsection (c) hereunder,
Stockholder hereby irrevocably grants to, and appoints, the President and the
Chief Financial Officer of the Purchaser and each of their designees
(individually, an "Authorized Party" and collectively, the "Authorized
Parties"), and each of them individually, as Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of Stockholder, to vote the Shares, or execute one or more written
consents or approval in respect of the Shares, (i) in favor of the Merger, the
adoption of the Merger Agreement and the approval of the terms thereof and the
transactions contemplated by the Merger Agreement; (ii) against any action or
agreement that would result in a breach of any covenant or any other obligation
or agreement of the Company under the Merger Agreement or in a breach in any
material respect of any representation or warranty of the Company in the Merger
Agreement; (iii) against any Takeover Proposal (other than with Purchaser and/or
Acquisition Sub); and (iv) against any amendment of the Company's Certificate of
Incorporation and/or by-laws or any other action or agreement that is intended
or could reasonably be expected to impede, interfere with, delay, postpone or
discourage the Merger or change in any manner the voting rights of any class of
the Company Common Stock. Notwithstanding anything contained herein to the
contrary, such irrevocable proxy will not be exercised by any Authorized Party
unless Stockholder breaches his obligations under Section 1(a) of this
Agreement.
(b) Stockholder represents that any proxies heretofore given
in respect of the Shares are revocable, and that any such proxies have been or
are hereby revoked.
(c) Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 10 is given in connection with the execution of the Merger
Agreement and that such irrevocable proxy is given to secure the performance of
the duties of Stockholder in accordance with this Agreement. Stockholder hereby
further affirms that the irrevocable proxy granted hereby is coupled with an
interest and may under no circumstances be revoked, except as otherwise provided
in this Agreement. Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy
4
is executed and intended to be irrevocable prior to termination of this
Agreement in accordance with the provisions of Section 212(e) of the DGCL. Such
irrevocable proxy shall be valid until the termination of this Agreement
pursuant to Section 4. Notwithstanding anything contained herein to the
contrary, this irrevocable proxy shall automatically terminate upon termination
of this Agreement.
(d) Any action taken by any such party pursuant to the proxy
granted under this Section 10(a) shall provide that Stockholder may revoke such
action effective upon termination of this Agreement.
11. Partial Invalidity. If any provision of this Voting Agreement shall
be invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining provisions of this Voting Agreement.
12. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
If to Purchaser or Acquisition Sub, to:
CUNO Incorporated
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx, LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to the Stockholder, to:
Xx. Xxxxxx X. Xxxx, Xx.
000 Xxxxx Xxxxxx X.
Xxxxx Xx. Xxxx, XX 00000
Facsimile: (000) 000-0000
5
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose of notice to the other parties hereto. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
13. Entire Agreement. This Voting Agreement contains the entire
agreement of the parties concerning the subject matter and supercedes any prior
agreements or understandings. No provision of this Voting Agreement shall be
amended, waived, or supplemented other than by a written agreement that refers
to this Voting Agreement and is signed by or on behalf of all the parties
hereto.
14 Governing Law. This Voting Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of law rules of such state.
15. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that the Purchaser may assign, in its sole discretion, any or
all of its rights hereunder to any direct or indirect wholly owned subsidiary of
the Purchaser; provided that any such assignment would not cause any delay in
the consummation of the Merger; and provided further that no such assignment
shall relieve the Purchaser of its obligations hereunder.
16. Further Assurances. The Stockholder will, upon request, execute and
deliver any additional documents reasonably necessary or desirable to complete
and effectuate the covenants contained herein.
17. No Third Party Beneficiaries; Etc. Nothing in this Agreement,
express or implied, shall confer on any person other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement. The obligations of the
Stockholder under this Agreement shall be several and not joint.
18. Counterparts. This Voting Agreement may be executed in two or more
counterparts, each of which shall be an original with the same effect as if the
signatures hereto and thereto were upon the same instrument.
6
IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of the date first written above.
PURCHASER: STOCKHOLDER:
CUNO Incorporated
By: /s/Xxxx X. Xxxxxx /s/ Xxxxxx X. Xxxx, Xx.
----------------- -----------------------
Name: Xxxx X. Xxxxxx Xxxxxx X. Xxxx, Xx.
ACQUISITION SUB:
Xxxxxx Acquisition, Inc.
By: /s/Xxxx X. Xxxxxx
-----------------
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board, President and Chief Executive Officer
7
Exhibit A-3
VOTING AGREEMENT
This Agreement is made as of May 26, 2004 by and among CUNO
Incorporated a Delaware corporation ("Purchaser"), Xxxxxx Acquisition, Inc., a
Delaware corporation ("Acquisition Sub") that is a wholly owned subsidiary of
the Purchaser, and The TapeMark Company, a Minnesota corporation ("Stockholder")
solely in its capacity as a stockholder of WTC Industries, Inc., a Delaware
corporation (the "Company").
WHEREAS, Stockholder owns 104,545 shares of the Company's common stock
(the "Shares");
WHEREAS, Purchaser, Acquisition Sub and the Company are entering into
an Agreement and Plan of Merger (the "Merger Agreement") which provides, among
other things, that Acquisition Sub will be merged with and into the Company (the
"Merger") on the terms of the Merger Agreement;
WHEREAS, Purchaser and Acquisition Sub would be unwilling to enter into
the Merger Agreement unless Stockholder enters into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the benefits that
will be received by Stockholder as a result of the consummation of the Merger
Agreement, the parties agree as follows:
1. Agreement to Vote Shares. During the period (the "Agreement Period")
beginning on the date hereof and ending on the earlier of (i) the Effective Time
of the Merger (as defined in the Merger Agreement) and (ii) the termination of
the Merger Agreement, except as described in Section 4 below, the Stockholder
hereby agrees to vote the Shares and any other shares of the Company's common
stock that the Stockholder is entitled to vote at the time of such vote
("Additional Shares"), to approve and adopt the Merger Agreement, the Merger,
all agreements related to the Merger that are contemplated by the Merger
Agreement, and any actions directly and reasonably related thereto that are
contemplated by the Merger Agreement, at any meeting or meetings of the
stockholders of the Company, and at any adjournment thereof or pursuant to
action by written consent, at or by which such Merger Agreement, the Merger,
such agreements or such other actions, are submitted for the consideration and
vote of the stockholders of the Company.
2. Not Voting for Alternative Proposals. During the Agreement Period,
the Stockholder agrees that it will not vote, or exercise a consent with respect
to, any of the Shares or Additional Shares in favor of the approval of any other
merger, consolidation, sale of assets, reorganization, recapitalization,
liquidation or winding up of the Company or any other extraordinary transaction
involving the Company or any corporate action the consummation of which would
either frustrate in any material respect the purposes of, or prevent or delay
the consummation of, the transactions contemplated by the Merger Agreement.
3. Takeover Proposals. During the Agreement Period, the Stockholder
will not, directly or indirectly, (i) solicit, initiate or knowingly take any
action designed to facilitate the submission of any Takeover Proposal (as
defined in the Merger Agreement) or (ii) engage in negotiations or discussions
with, or furnish any nonpublic information relating to the Company or its
Subsidiary (as defined in the Merger Agreement) or knowingly afford access to
the properties, books or records of the Company or its Subsidiary (other than
such components of such businesses, properties or assets that are generally
accessible to the public) to, any third party that to the knowledge of the
Stockholder is seeking to make, or has made, a Takeover Proposal.
4. Termination. This Agreement shall terminate on the first to occur of
(a) the Effective Time of the Merger; (b) the termination of the Merger
Agreement; and (c) 180 calendar days after the date hereof. Notwithstanding the
foregoing, if this Agreement is terminated as the consequence of the termination
of the Merger Agreement pursuant to Section 9.1(b), (d) or (e) of the Merger
Agreement, the provisions of Section 9 hereof (Recapture of Profits) shall
survive termination of this Agreement and shall terminate (a) nine (9) months
after termination of the Merger Agreement, if no Alternative Disposition has
occurred within such nine (9) months or (b) at such time as Stockholder has
discharged its obligations under Section 9 hereof, if an Alternative Disposition
has occurred within nine (9) months after termination of the Merger Agreement.
Stockholder shall have the right to terminate this Agreement by written notice
to Purchaser if the terms of the Merger Agreement are amended without the
written consent of Stockholder, but only if such amendment reduces the Common
Payment, changes the form or mix of the Common Payment or otherwise adversely
affects Stockholder.
5. No Exercise of Appraisal Rights. The Stockholder hereby agrees not
to exercise any rights (including, without limitation, under Section 262 of the
Delaware General Corporation Law) to demand appraisal of any Shares or
Additional Shares in connection with the Merger.
6. Transfers of Shares by Stockholder. The Stockholder hereby agrees
that if it sells, transfers, assigns, encumbers or otherwise disposes (each, a
"Transfer") of any Shares or Additional Shares during the Agreement Period, the
Stockholder shall require the transferee of such Shares or Additional Shares to
execute and deliver to Purchaser, Acquisition Sub and the Company, immediately
upon any such Transfer, a voting agreement identical in form to this Voting
Agreement except for the identity of the Stockholder prior to or concurrent with
the consummation of such Transfer.
7. Stockholder's Representations. The Stockholder hereby represents and
warrants to Purchaser that as of the date hereof:
(a) The Stockholder (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) owns of record and beneficially the number of Shares set
forth in the preamble hereto, (iii) is entitled to vote all of the Shares, (iv)
has all necessary corporate power to enter into, execute and deliver this Voting
Agreement, and (v) has not entered into any other voting agreement with or
granted any person
2
or entity any proxy (revocable or irrevocable) with respect to the Shares (other
than this Voting Agreement).
(b) The execution, delivery and performance by the Stockholder
of this Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized and approved by the Board of Directors of the
Stockholder, and no other consent or approval of any other person or entity,
including the stockholders of the Stockholder, is necessary to authorize the
execution and delivery by the Stockholder of this Agreement and the consummation
by it of the transactions contemplated hereby.
(c) The Stockholder has duly executed and delivered this
Agreement.
(d) No investment banker, broker or finder is entitled to a
commission or fee from the Stockholder in respect of this Agreement based upon
any arrangement or agreement made by or on behalf of the Stockholder.
8. Remedies. The parties hereto agree that if for any reason any party
hereto shall have failed to perform its or its obligations under this Voting
Agreement, then the party seeking to enforce this Agreement against such
non-performing party shall be entitled to specific performance and injunctive
and other equitable relief. This provision is without prejudice to any other
rights or remedies, whether at law or in equity, that any party hereto may have
against any other party hereto for any failure to perform its obligations under
this Voting Agreement.
9. Recapture of Profits. If (A) the Merger Agreement is terminated
either by the Purchaser pursuant to Section 9.1(d) of the Merger Agreement or by
the Company pursuant to Section 9.1(e) of the Merger Agreement or by either the
Purchaser or the Company pursuant to Section 9.1(b) of the Merger Agreement and
(B) within nine (9) months after the date of such termination, Stockholder
consummates the sale, transfer or other disposition for a consideration that is
not at least ten percent (10%) greater than the consideration to which the
Stockholder would have been entitled under the Merger Agreement of any or all of
its Shares to or with any person or entity not an affiliate or associate of
Purchaser, Acquisition Sub or the Company (but including a sale to the Company
if such sale is a transactional element of a Takeover Proposal) (i) in
connection with a Takeover Proposal or (ii) in a transaction or series of
related transactions which would reasonably be expected to lead to or facilitate
the making or consummation of a Takeover Proposal (such sale, transfer or other
disposition of its Shares being collectively referred to as an "Alternative
Disposition"), and (C) within nine (9) months after the date of such termination
of the Merger Agreement such Takeover Proposal or any other Takeover Proposal is
consummated, then the Stockholder shall, within three Business Days of the
closing of such Takeover Proposal, pay to Purchaser, the amount of the Profit,
if any, realized by Stockholder from such Alternative Disposition, net of
Stockholder's reasonably documented expenses in connection with such Alternative
Disposition, any taxes incurred by Stockholder on such Profit and any legal fees
incurred by Stockholder in connection with the execution, delivery and
performance of this Agreement; provided, however, that the sale by Stockholder
of any of its Shares pursuant to an underwritten public offering (so long as at
the time of the closing of such public offering there has not been publicly
announced and pending a Takeover Proposal and
3
Stockholder does not have actual knowledge of a planned Takeover Proposal) or a
sale pursuant to Rule 144 of the Securities Act shall not be considered an
Alternative Disposition which is subject to the provisions of this Section 5. As
used in this Section, "Profit" shall be calculated on a per Stockholder Share
basis and shall mean an amount equal to the excess, if any, of the per
Stockholder Share proceeds received by Stockholder in such Alternative
Disposition over the Common Payment (or such higher price as Purchaser and/or
Acquisition Sub or their affiliates may offer pursuant to the Merger Agreement
per share of Company Common Stock). Any such Profits received by Stockholder on
such Alternative Disposition will be paid to Purchaser in the same form and in
the same proportion as was received by Stockholder. Notwithstanding anything to
the contrary contained herein, under no circumstances shall the Stockholder be
required to pay to Purchaser an amount which would result in Stockholder
retaining from such Alternative Disposition an amount less than Stockholder
would have received had the Merger Agreement been consummated.
10. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Subject to the last sentence of subsection (c) hereunder,
Stockholder hereby irrevocably grants to, and appoints, the President and the
Chief Financial Officer of the Purchaser and each of their designees
(individually, an "Authorized Party" and collectively, the "Authorized
Parties"), and each of them individually, as Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of Stockholder, to vote the Shares, or execute one or more written
consents or approval in respect of the Shares, (i) in favor of the Merger, the
adoption of the Merger Agreement and the approval of the terms thereof and the
transactions contemplated by the Merger Agreement; (ii) against any action or
agreement that would result in a breach of any covenant or any other obligation
or agreement of the Company under the Merger Agreement or in a breach in any
material respect of any representation or warranty of the Company in the Merger
Agreement; (iii) against any Takeover Proposal (other than with Purchaser and/or
Acquisition Sub); and (iv) against any amendment of the Company's Certificate of
Incorporation and/or by-laws or any other action or agreement that is intended
or could reasonably be expected to impede, interfere with, delay, postpone or
discourage the Merger or change in any manner the voting rights of any class of
the Company Common Stock. Notwithstanding anything contained herein to the
contrary, such irrevocable proxy will not be exercised by any Authorized Party
unless Stockholder breaches its obligations under Section 1(a) of this
Agreement.
(b) Stockholder represents that any proxies heretofore given
in respect of the Shares are revocable, and that any such proxies have been or
are hereby revoked.
(c) Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 10 is given in connection with the execution of the Merger
Agreement and that such irrevocable proxy is given to secure the performance of
the duties of Stockholder in accordance with this Agreement. Stockholder hereby
further affirms that the irrevocable proxy granted hereby is coupled with an
interest and may under no circumstances be revoked, except as otherwise provided
in this Agreement. Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable prior to
termination of this Agreement in accordance
4
with the provisions of Section 212(e) of the DGCL. Such irrevocable proxy shall
be valid until the termination of this Agreement pursuant to Section 4.
Notwithstanding anything contained herein to the contrary, this irrevocable
proxy shall automatically terminate upon termination of this Agreement.
(d) Any action taken by any such party pursuant to the proxy
granted under this Section 10(a) shall provide that Stockholder may revoke such
action effective upon termination of this Agreement.
11. Partial Invalidity. If any provision of this Voting Agreement shall
be invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining provisions of this Voting Agreement.
12. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
If to Purchaser or Acquisition Sub, to:
CUNO Incorporated
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx, LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to the Stockholder, to:
The TapeMark Company
c/o Xx. Xxxxxx X. Xxxx, Xx.
000 Xxxxx Xxxxxx X.
Xxxxx Xx. Xxxx, XX 00000
Facsimile: 000-000-0000
5
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose of notice to the other parties hereto. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
13. Entire Agreement. This Voting Agreement contains the entire
agreement of the parties concerning the subject matter and supercedes any prior
agreements or understandings. No provision of this Voting Agreement shall be
amended, waived, or supplemented other than by a written agreement that refers
to this Voting Agreement and is signed by or on behalf of all the parties
hereto.
14 Governing Law. This Voting Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of law rules of such state.
15. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that the Purchaser may assign, in its sole discretion, any or
all of its rights hereunder to any direct or indirect wholly owned subsidiary of
the Purchaser; provided that any such assignment would not cause any delay in
the consummation of the Merger; and provided further that no such assignment
shall relieve the Purchaser of its obligations hereunder.
16. Further Assurances. The Stockholder will, upon request, execute and
deliver any additional documents reasonably necessary or desirable to complete
and effectuate the covenants contained herein.
17. No Third Party Beneficiaries; Etc. Nothing in this Agreement,
express or implied, shall confer on any person other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement. The obligations of the
Stockholder under this Agreement shall be several and not joint.
18. Counterparts. This Voting Agreement may be executed in two or more
counterparts, each of which shall be an original with the same effect as if the
signatures hereto and thereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of the date first written above.
PURCHASER: STOCKHOLDER:
CUNO Incorporated The TapeMark Company
By: /s/Xxxx X. Xxxxxx /s/ Xxxxxx X. Xxxx, Xx.
----------------- -----------------------
Name: Xxxx X. Xxxxxx Xxxxxx X. Xxxx, Xx.
ACQUISITION SUB:
Xxxxxx Acquisition, Inc.
By: /s/Xxxx X. Xxxxxx
-----------------
Name: Xxxx X. Xxxxxx
Title: Chairman of the Board, President and Chief Executive Officer
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