CONFIDENTIALITY, NON-DISCLOSURE AND EXCLUSIVE NEGOTIATION AGREEMENT
Exhibit (d)(3)
CONFIDENTIALITY,
NON-DISCLOSURE AND EXCLUSIVE NEGOTIATION AGREEMENT
This
Agreement (the “Agreement”) is made as of
December 10, 2009, between X. X. Xxxxxx
Company, located at 000 Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (“Buyer”), and Portec
Rail Products, Inc., located at 000 Xxx Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000
(“Seller”).
1. Background; Certain Definitions. Buyer wishes to obtain and Seller wishes to
provide Buyer with certain non-public information regarding Seller in connection with Buyer’s
consideration of a possible purchase by Buyer (the “Transaction”) of all of the outstanding
capital stock of Seller. In addition, in the course of negotiations Seller might be provided by
Buyer with certain non-public information regarding Buyer. As a condition to the furnishing of
such information, Buyer and Seller are requiring that each other agree, as set forth herein, to
treat confidentially such information and any other information (collectively, the “Evaluation
Material”) furnished or made available in any form including, without limitation, in writing,
verbally or electronically before, on or after the date hereof by or on behalf of either party to
the other party, its directors, officers, employees, agents, advisors, bank or institutional
lenders, affiliates or representatives (all of the foregoing collectively referred to as the
“Representatives”). The term “Evaluation Material” shall also include all notes, analyses,
compilations, studies, summaries, memoranda, interpretations, extracts or other documents prepared
by or on behalf of the receiving party or its Representatives which contain, reflect or are based
upon, in whole or in part, other Evaluation Material disclosed by the disclosing party. Evaluation
Material does not include information which the receiving party or its Representatives can
demonstrate (i) is or becomes generally available to the public other than as a result of a
disclosure by the receiving party or its Representatives in breach of this Agreement, (ii) is
independently developed by the receiving party or its Representatives without the use or knowledge
of information provided by or on behalf of the disclosing party, or (iii) becomes available to the
receiving party or its Representatives on a non-confidential basis from a source other than the
disclosing party, provided that such source is not bound by a confidentiality or other agreement
restricting disclosure or use of such information. The term “person” as used in this Agreement
shall be broadly interpreted to include, without limitation, any individual, governmental or
regulatory authority, corporation, company, group, partnership or other entity.
2. Certain Disclosure and Use Restrictions. Unless otherwise agreed to in writing by
Buyer or Seller, as applicable, the receiving party agrees (i) to keep all Evaluation Material
confidential and not to disclose or reveal any Evaluation Material to any person other than its
Representatives directly participating in the evaluation of a possible Transaction and who need to
know the Evaluation Material for the purpose of evaluating the same and who agree in writing to be
bound by the terms hereof, (ii) to cause the receiving party’s Representatives to observe the terms
of this Agreement applicable to the receiving party and/or its Representatives, and (iii) not to
use, or allow its Representatives to use, the Evaluation Material for any purpose other than the
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evaluation of a possible Transaction. The receiving party acknowledges that it is responsible for
any breach of the terms of this Agreement by the receiving party or the receiving party’s
Representatives.
3. Property Rights. All Evaluation Material disclosed by or on behalf of the
disclosing party shall remain the property of the disclosing party. No licenses or rights under
any patent, copyright, trademark, trade name, trade secret or other intellectual property are
granted or to be implied by reason of this Agreement.
4. No Disclosure of Discussions. Without the prior written consent of the other
party, neither party nor its Representatives will disclose to any person (i) the fact that the
Evaluation Material has been made available, (ii) the fact that any discussions or negotiations are
taking place concerning a possible Transaction, or (iii) any of the terms, conditions or other
facts with respect to any possible Transaction, including the status thereof; provided, however,
that either party may disclose the foregoing to the extent it is required to do so under the
federal securities laws.
5. Certain Permitted Disclosures of Evaluation Material. In the event that a
receiving party or its Representatives are required by oral questions, interrogatories, requests
for information or documents in a legal proceeding or investigation by any governmental or
regulatory authority, subpoena, civil investigative demand or other similar process or required by
the applicable rules of any relevant stock exchange or other relevant governmental or regulatory
authority to disclose any of the Evaluation Material, such receiving party or its Representatives
shall provide the other party hereto with prompt written notice of any such requirement in order
that the other party hereto may challenge such requirement or seek a protective order or other
appropriate remedy (in which efforts the receiving party and its Representatives shall cooperate)
and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective
order or other remedy or the receipt of a waiver by the disclosing party, the receiving party or
its Representatives are nonetheless, in the reasonable opinion of reputable counsel, required to
disclose Evaluation Material, the receiving party or its Representatives may disclose only that
portion of the Evaluation Material which is legally required to be disclosed; provided that the
receiving party and its Representatives attempt to preserve the confidentiality of the Evaluation
Material, including, without limitation, by cooperating with the disclosing party, to obtain an
appropriate protective order or other reliable assurance that confidential treatment will be
accorded the Evaluation Material.
6. Return or Destruction of Evaluation Material. If either party determines that it
does not wish to proceed with a possible Transaction, such party will promptly advise the other
party of that decision. In that case, or in the event that the disclosing party at any time so
requests, the receiving party will promptly deliver to the disclosing party or, at the disclosing
party’s election, destroy all of the Evaluation Material, including all copies thereof (except for
that portion of the Evaluation Material that may be found in analyses, compilations, forecasts,
studies or other documents prepared by the receiving party or its Representatives), that is in the
receiving party’s possession or in the possession of any of the receiving party’s Representatives,
and will promptly confirm
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such destruction in writing. Notwithstanding the return or destruction of the Evaluation Material,
the receiving party and its Representatives will continue to be bound by its and their obligations
hereunder.
7. No Liability. Each party acknowledges that neither party hereto nor any of their
respective Representatives makes any express or implied representation or warranty as to the
accuracy or completeness of the Evaluation Material. Neither party hereto nor its Representatives
shall have any liability to the other party, any of such other party’s Representatives or any other
person relating to or arising from the provision by such party or use by the other party of the
Evaluation Material supplied by such party or for any errors therein or omissions therefrom and the
receiving party assumes full responsibility for all conclusions such receiving party and/or its
Representatives derive from the disclosing party’s Evaluation Material. A receiving party shall be
entitled to rely solely on the representations and warranties, if any, made to a receiving party by
the disclosing party in any definitive written agreement with respect to a Transaction.
8. Xxxxxxx Xxxxxxx. Each party acknowledges that it is aware, and will advise each of
its Representatives who are informed as to the matters which are the subject of this Agreement,
that the United States securities laws restrict persons with material non-public information about
a company obtained directly or indirectly from that company from purchasing or selling securities
of such company, or from communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or sell such securities.
9. Exclusive Negotiations. From and after the date of this Agreement through the
earlier of (a) the date, if any, on which Buyer delivers to Seller a written notice that Buyer has
terminated its interest regarding a Transaction or (b) January 31, 2010 (the “Exclusivity
Period”), Seller will exclusively negotiate with Buyer regarding a Transaction and Seller will
not (directly or indirectly or through any of Seller’s Representatives) take any action to (i)
initiate, solicit or encourage, or take any action intended to facilitate, any inquiry or
discussion for, or negotiate or accept, any offer or proposal for, (ii) continue, propose to
negotiate with or hold discussions with respect to or (iii) enter into any agreement or
understanding (whether or not binding) providing for, an acquisition of any of the capital stock or
other voting securities, or any security that is convertible into the capital stock or other voting
securities, all or any portion of the assets, or all of any portion of the business, of Seller, or
any merger, consolidation, financing, reorganization or other business combination involving Seller
(in each case, other than the Transaction or in the usual and ordinary course of Seller’s
business), or any other similar transaction relating to Seller (each, a “Potential Alternative
Transaction”). Nor shall any of such persons or entities provide any information to or assist
any person (other than Buyer and its Representatives) for the purpose of evaluating or determining
whether to make or pursue any inquiry or proposal with respect to any Potential Alternative
Transaction. Seller will immediately advise Buyer of, and communicate to Buyer the terms of, any
such bona fide inquiry or proposal (which information shall include the identity of any person
making such proposal) that any such person or entity may receive or of which any of them may become
aware. Seller will notify Buyer as
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promptly as practicable but in any event within twenty-four (24) hours after receipt by Seller (or
any of its Representatives), at any time on or prior to the date of expiration of the Exclusivity
Period, of any unsolicited proposal for, or inquiry respecting, any Potential Alternative
Transaction or any request for nonpublic information in connection with such a proposal or inquiry,
or for access to the properties, books or records of Seller by any person, or entity that informs
Seller that it is considering making, or has made, such a proposal or inquiry.
10. Procedures. Unless and until a definitive written agreement with respect to a
Transaction is entered into, neither Buyer nor Seller will be under any legal obligation of any
kind whatsoever with respect to a Transaction except for the matters specifically agreed to in this
Agreement. Seller acknowledges and understands that Buyer may, in its sole discretion, terminate
its interest regarding a Transaction at any time by delivering written notice thereof to Seller. In
addition, each party shall bear its own costs and expenses incurred, including without limitation,
legal, accounting and investment or other advisory fees and expenses, in connection with the review
of Evaluation Material or a possible Transaction whether or not the parties enter into a definitive
written agreement for a Transaction.
11. No Unsolicited Transaction.
Buyer acknowledges that the Evaluation Material is being furnished by Seller in consideration
of Buyer’s agreement that for a period of twelve (12) months, it will not propose to the Seller or
any other person any transaction between Buyer and Seller and/or its securities holders or
involving any of its securities or securities holders regarding an acquisition, directly or
indirectly, of control of Seller or a majority of Seller’s securities, businesses or assets unless
the Seller shall have requested in writing that Buyer make such a proposal, and that Buyer will not
acquire, or assist, advise or encourage any other persons in acquiring, directly or indirectly,
control of a majority of Seller or substantially all of the Seller’s securities, businesses or
assets for a period of twelve (12) months from the date of this Agreement unless the Seller shall
have consented in advance in writing to such acquisition. Notwithstanding the foregoing, in the
event that either (i) a third party not affiliated with Buyer nor acting in concert with Buyer
commences a tender offer to buy a majority or more of Seller’s common stock or (ii) Seller enters
into any agreement to be acquired by a third party or under which a majority of Seller’s assets
will be sold to a third party, Buyer shall no longer be bound by the provisions of this Section.
12. No Solicitation of Employees.
Each party agrees that, without the prior written consent of the other party, for a period of
one (1) year from the date hereof such party will not, directly or indirectly, (i) solicit any
person or employee whom such party knows or has a reasonable basis to know is an employee of the
other party; or (ii) solicit for employment or employ any person employed by the other party with
whom such party had contact or who became known to such party during Buyer’s evaluation of the
Seller; provided, however, that general advertisements and other similar broad forms of
solicitation shall not constitute direct or
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indirect solicitation hereunder and such party shall not be prohibited from employing any
individual who responds to any such general advertisement.
13. Certain Property.
Buyer acknowledges Seller’s statement that Seller is unwilling to enter into a definitive
agreement for a Transaction which contains any condition precedent to closing or provides any right
of termination to Buyer in connection with Seller’s former Troy, New York property (including any
litigation or other government action related to the former Troy, New York property). Buyer also
acknowledges that Buyer is aware that Buyer may become liable for all liabilities of Seller
associated with Seller’s former Troy, New York property if a Transaction were entered into and
closed and Seller becomes a wholly-owned subsidiary of Buyer. Buyer agrees that it will first
complete its due diligence review of the former Troy, New York property and agrees that Seller has
no obligation to supply Evaluation Material regarding other aspects of Seller and its business
until Buyer has completed such review. Upon completion of such review, Buyer agrees to send a
letter to Seller stating that it has completed such review. Upon receipt of this letter Seller
shall have the right to terminate Buyer’s exclusivity under Section 9 and not to supply any further
Evaluation Material to Buyer unless such letter also contains a statement to the following effect:
If Buyer, in its sole discretion following completion of all due diligence, decides to proceed with
a Transaction and if Seller has provided Buyer with access to all material information regarding
Seller’s former Troy, New York property (including any litigation or other government action
related to the former Troy, New York property) in Seller’s possession or of which Seller has
knowledge, then Buyer will not include in a definitive acquisition agreement for a Transaction any
condition precedent to closing or any right of termination of Buyer in connection with Seller’s
former Troy, New York property (including any litigation or other government action related to the
former Troy, New York property) other than a representation regarding the accuracy and completeness
to the best of Seller’s knowledge of the information furnished to Buyer by Seller regarding such
property.
14. Remedies.
(a) Without prejudice to the rights and remedies otherwise available, the parties hereto shall
be entitled to (i) equitable relief, including by way of injunction or specific performance,
without requirement of posting a bond, and (ii) recovery of its costs and expenses including, but
not limited to, court costs and attorney’s fees, if the other party hereto or any of its
Representatives breaches or threatens to breach any of the provisions of this Agreement.
(b) With regard to the provisions of Sections 9, 11 and 12 hereof, the parties agree that
irreparable damage will occur in the event that the provisions of Sections 9, 11 and 12 are not
performed in accordance with their specific terms or are otherwise breached. It is accordingly
agreed (i) by Seller that Buyer shall be entitled to specifically enforce and obtain an injunction
or injunctions to prevent breaches of the provisions of Section 9 and that Seller will not oppose
the granting of such relief to Buyer
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and (ii) by each party that the other party shall be entitled to specifically enforce and obtain an
injunction or injunctions to prevent breaches of Sections 11 and 12 and that such party will not
oppose the granting of such relief to the other party. The parties further agree to and consent to
the jurisdiction and venue of any court situated in Allegheny County, Pennsylvania and agree to
bring any action regarding this Agreement therein.
15. No Waiver. It is further understood and agreed that no failure or delay by a
party in exercising any right, power or privilege hereunder shall operate as a wavier thereof nor
shall any single or partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
16. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania, regardless of any conflict-of-laws principles.
17. Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) by each party in a separate counterpart, each of which when so executed and
delivered being deemed to be an original copy of the same Agreement.
18. Entire Agreement. This Agreement contains the entire agreement between the
parties concerning the subject matter hereof and supersedes all prior agreements regarding the same
subject matter. No modifications of this Agreement or waiver of the terms and conditions hereof
shall be binding, unless in a writing by the parties.
19. Enforceability. If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable for any reason, it shall be adjusted rather than voided,
if possible, in order to achieve the intent of the parties to the extent possible. In any event,
all other provisions of this Agreement shall be deemed valid and enforceable to the extent
possible.
20. Headings. The headings used in this Agreement are for convenience of reference
only and shall not in any way affect the meaning or interpretation of this Agreement.
21. Assignment. Neither party may assign its rights under this Agreement in whole or
in part without the prior written consent of the other party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first
above written by their respective representatives, each thereunto duly authorized.
| PORTEC RAIL PRODUCTS, INC. | X. X. XXXXXX COMPANY | |||||||
By:
|
/s/ Xxxxxxxx X. Xxxxxxxx | By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: | Xxxxxxxx X. Xxxxxxxx | Name: Xxxx X. Xxxxxxxxxxx | ||||||
| Title: | Chairman | Title: President & CEO | ||||||
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AMENDMENT
The Confidentiality, Non- Disclosure and Exclusive Negotiation Agreement dated on or
about December 10, 2009 (the “Agreement”), between X.
X. Xxxxxx Company (“Buyer”) and Portec
Rail Products, Inc. (“Seller”), is hereby amended, effective January 15, 2010, as follows:
Section 9(b) of the Agreement is hereby amended by
deleting the term “January 31, 2010” and inserting in
lieu thereof the term “February 7, 2010”.
Except as hereby amended, all of the provisions of the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date
first above written by their respective representatives, each thereunto duly authorized.
| PORTEC RAIL PRODUCTS, INC. | X. X. XXXXXX COMPANY | |||||||
By:
|
/s/ Xxxxxxxx X. Xxxxxxxx | By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
Name:
|
Xxxxxxxx X. Xxxxxxxx | Name: Xxxx X. Xxxxxxxxxxx | ||||||
Title: Chairman
|
Title: President & CEO | |||||||
SECOND AMENDMENT
The Confidentiality, Non-Disclosure and Exclusive Negotiation Agreement
dated on or about December 10, 2009, as amended effective January 15, 2010 (the
“Agreement”), between X. X. Xxxxxx Company (“Buyer”) and Portec Rail Products,
Inc. (“Seller”), is hereby further amended, effective February 7, 2010, as
follows:
Section 9(b) of the Agreement is hereby
amended by deleting the words “February 7,
2010” and inserting in lieu thereof the
words “February 15, 2010”.
Except as hereby amended, all of the provisions of the Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first
above written by their respective representatives, each thereunto duly authorized.
| PORTEC RAIL PRODUCTS, INC. | X. X. XXXXXX COMPANY | |||||||
By:
|
/s/ Xxxxxxxx X. Xxxxxxxx | By: | /s/ Xxxx X. Xxxxxxxxxxx | |||||
| Name: Xxxxxxxx X. Xxxxxxxx | Name: Xxxx X. Xxxxxxxxxxx | |||||||
| Title: Chairman | Title: President & CEO | |||||||
