EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED SEPTEMBER 13, 1999
BY AND AMONG
NDC AUTOMATION, INC.
XXXXXXX ACQUISITION CORP.
AND
PORTEC, INC.
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER...............................................................................................1
1.1 The Merger...............................................................................1
1.2 Consummation of the Merger...............................................................1
1.3 Effects of the Merger....................................................................2
1.4 Certificate of Incorporation; Bylaws.....................................................2
1.5 Directors and Officers...................................................................2
1.6 Time and Place of Closing................................................................2
1.7 Further Assurances.......................................................................2
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES........................................................................2
2.1 Conversion of Shares.....................................................................2
2.2 Exchange Procedures......................................................................3
2.3 Adjustment of Merger Consideration.......................................................4
2.4 Options, Warrants and Restricted Shares..................................................4
2.5 Dissenting Shares........................................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES...........................................................................5
3.1 General Statement........................................................................5
3.2 Representations and Warranties of the Company............................................5
3.2.1 Organization and Authority....................................................5
3.2.2 Authority Relative to this Agreement and Related Matters......................6
3.2.3 Required Filings..............................................................6
3.2.4 No Conflicts..................................................................6
3.2.5 Capitalization................................................................7
3.2.6 SEC Reports...................................................................7
3.2.7 Financial Statements..........................................................7
3.2.8 Liabilities...................................................................8
3.2.9 Absence of Changes or Events..................................................8
3.2.10 Ownership of Properties......................................................10
3.2.11 Insurance....................................................................10
3.2.12 Related Parties. ...........................................................10
3.2.13 Tax Matters Definitions......................................................10
3.2.14 Returns......................................................................11
3.2.15 Tax Liabilities..............................................................11
3.2.16 Issues with Taxing Authorities...............................................11
3.2.17 Miscellaneous Tax Matters....................................................11
3.2.18 Permits......................................................................12
3.2.19 Significant Customers and Suppliers..........................................12
3.2.20 Contracts....................................................................12
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3.2.21 ERISA Matters................................................................14
3.2.22 Labor Relations..............................................................15
3.2.23 Absence of Litigation........................................................15
3.2.24 Product/Service Warranties...................................................16
3.2.25 Injunctions; Judgments.......................................................16
3.2.26 Compliance with Law..........................................................16
3.2.27 Environmental Matters........................................................16
3.2.28 Owned Real Estate............................................................17
3.2.29 Leased Premises..............................................................17
3.2.30 Matters Regarding Real Estate and Leased Premises............................18
3.2.31 Intellectual Property........................................................18
3.2.32 Year 2000 Compliance.........................................................18
3.2.33 Brokers......................................................................19
3.2.34 Fairness Opinion.............................................................19
3.2.35 Voting Requirements..........................................................19
3.2.36 Proxy Statement..............................................................19
3.2.37 State Takeover Statutes; Absence of Stockholder Rights Plan..................20
3.2.38 Certain Illegal Payments.....................................................20
3.2.39 Full Disclosure..............................................................20
3.3 Representations and Warranties of Parent and Purchaser..................................20
3.3.1 Organization and Authority...................................................20
3.3.2 Authority Relative to this Agreement.........................................20
3.3.3 Required Filings.............................................................20
3.3.4 No Conflicts.................................................................21
3.3.5 Financing....................................................................21
3.3.6 Proxy Statement..............................................................21
3.3.7 Financial Statements.........................................................21
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER AND ADDITIONAL COVENANTS.........................................21
4.1 Obligations of Each of the Parties......................................................21
4.2 Access..................................................................................22
4.3 The Company's Obligations...............................................................22
4.4 Proxy Statement; Other Regulatory Matters...............................................25
4.5 Stockholders' Meeting...................................................................25
4.6 Filings; Other Action...................................................................26
4.7 Acquisition Proposals...................................................................26
4.8 Board Action............................................................................27
4.9 Indemnification and Insurance...........................................................28
4.10 Stockholder Claims......................................................................28
4.11 Cooperation with Proposed Financing.....................................................28
4.12 State Takeover Laws.....................................................................28
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ARTICLE V
CONDITIONS TO CLOSING; CLOSING DELIVERIES...............................................................29
5.1 Conditions to Each Party's Obligations..................................................29
5.2 Conditions to the Company's Obligations.................................................29
5.3 Conditions to Obligations of Parent and Purchaser.......................................29
5.4 Closing Deliveries......................................................................31
ARTICLE VI
TERMINATION/EFFECT OF TERMINATION.......................................................................31
6.1 Right to Terminate......................................................................31
6.2 Certain Effects of Termination..........................................................33
6.3 Remedies................................................................................33
6.4 Right to Damages; Expense Reimbursement.................................................33
ARTICLE VII
MISCELLANEOUS...........................................................................................34
7.1 Survival of Representations, Warranties and Agreements..................................34
7.2 Amendment...............................................................................34
7.3 Public Announcements....................................................................35
7.4 Notices.................................................................................35
7.5 Expenses; Transfer Taxes................................................................36
7.6 Entire Agreement........................................................................36
7.7 Non-Waiver..............................................................................36
7.8 Counterparts............................................................................36
7.9 Severability............................................................................36
7.10 Applicable Law..........................................................................37
7.11 Binding Effect; Benefit.................................................................37
7.12 Assignability...........................................................................37
7.13 Governmental Reporting..................................................................37
7.14 Defined Terms...........................................................................37
7.15 Headings................................................................................39
7.16 Interpretation..........................................................................39
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TABLE OF EXHIBITS
Exhibit A - Voting Agreement
Exhibit B - Form of Legal Opinion of Purchaser's Counsel
Exhibit C - Form of Legal Opinion of the Company's Counsel
Exhibit D - Employment Agreement with Xxxxx Xxxxxxxxx
TABLE OF SCHEDULES
Company Disclosure Schedule
Schedule 4.6 - Consents
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of this 13th day of September, 1999, by and among Portec, Inc., a Delaware
corporation ("Parent"), Xxxxxxx Acquisition Corp., a Delaware corporation
("Purchaser"), and NDC Automation, Inc., a Delaware corporation (the "Company").
RECITALS:
A. The respective boards of directors of Purchaser and the Company have
approved the merger of Purchaser into the Company on the terms and subject to
the conditions set forth in this Agreement (the "Merger") and the Delaware
General Corporation Law (the "DGCL");
B. Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
C. As a condition to their willingness to enter into this Agreement,
Purchaser and Parent have requested, and each of Xxxxxxx & Xxxxxxxx Xx. XX, a
limited liability Swedish corporation ("Xxxxxxx & Xxxxxxxx"), Xxxxx X.X.
Xxxxxxx, Jan X.X. Jutander, Xxxx Xxxxxxx and Xxxxxx Xxxxxxxx (each a
"Significant Stockholder") has executed and delivered, a Voting Agreement of
even date herewith (the "Voting Agreement") in the form of Exhibit A hereto;
D. Simultaneously with the execution hereof (i) Parent, the Company and
Xxxxxxx & Xxxxxxxx have entered into a Second Restated Master License Agreement
of even date herewith (the "Amended License") and (ii) the Company and Xxxxx
Xxxxxxxxx have entered into an Employment Agreement (in the form of Exhibit D
hereto) to be effective as of the Effective Time.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. On the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined herein, and a cross-reference
to defined terms is set forth at Section 7.14 to this Agreement), in accordance
with this Agreement and the DGCL, Purchaser shall merge with and into the
Company, the separate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation. The Company, in its capacity as the
corporation surviving the Merger, is sometimes referred to herein as the
"Surviving Corporation," and Purchaser and the Company are sometimes referred to
collectively herein as the "Constituent Corporations."
1.2 Consummation of the Merger. In order to effectuate the Merger, on
the Closing Date (as herein defined), the parties hereto will cause a
certificate of merger (the "Certificate of Merger") to be filed with the
Secretary of State of the State of Delaware of the DGCL, in such form as
required by, and executed in accordance with the DGCL. The Merger shall be
effective as of the time of filing of the Certificate of Merger (the "Effective
Time") in accordance with the DGCL.
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1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects provided in this Agreement and as set forth in Section
251 of the DGCL.
1.4 Certificate of Incorporation; Bylaws. At and after the Effective
Time, the Certificate of Incorporation and By-Laws of the Company as in effect
immediately prior to the Effective Time, shall be adopted as the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and shall thereafter
continue in effect until amended as provided therein and in accordance with the
DGCL.
1.5 Directors and Officers. At and after the Effective Time, the
directors and officers of Purchaser holding office immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
until their respective successors shall have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
1.6 Time and Place of Closing. Subject to the provisions of Article V
and Section 6.1, the transactions contemplated by this Agreement shall be
consummated (the "Closing") at 10:00 a.m., prevailing business time, at the
offices of Altheimer & Xxxx, 00 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, XX on the day which
is three (3) business days after the first date on which each of the conditions
to Closing set forth in Article V hereof shall have been satisfied or waived
(and continue to be satisfied or waived), or on such other date, or at such
other place, as shall be agreed upon by the parties hereto. The date on which
the Closing shall occur in accordance with the preceding sentence is referred to
in this Agreement as the "Closing Date."
1.7 Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title and interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Company or Purchaser, or (ii) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either the Company or Purchaser, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of such
corporations, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title and
interest in, to and under any of the rights, privileges, powers, franchises,
properties or assets of such corporations and otherwise to carry out the
purposes of this Agreement.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES
2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holders thereof:
2.1.1 Each share of common stock, $.01 par value, of the
Company (the "Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Common Shares held as treasury shares by the Company
and Dissenting Shares (as defined herein)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $ 0.75 per share in cash, without interest (the "Merger
Consideration"). Each such share of Common Stock outstanding immediately prior
to the Effective Time shall be deemed to be no longer outstanding and shall
represent solely
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the right to receive the Merger Consideration upon surrender of the certificate
formerly representing the Common Stock in accordance with the provisions of this
section.
2.1.2 Each share of Common Stock issued and outstanding
immediately prior to the Effective Time which is then held as a treasury share
by the Company immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the Company, be canceled and
retired and cease to exist, without any conversion thereof.
2.1.3 Each share of common stock, par value $.01 per
share of Purchaser outstanding immediately prior to the Effective Time shall be
converted into and exchanged into one validly issued, fully-paid and
non-assessable share, $.01 par value, of the Surviving Corporation.
2.2 Exchange Procedures.
2.2.1 Immediately prior to the Effective Time, Purchaser
shall deposit with a paying agent mutually acceptable to Parent and the Company
(the "Paying Agent"), in trust for the holders of record of Common Stock
immediately prior to the Effective Time (the "Company Stockholders") cash in an
aggregate amount equal to the Merger Consideration (such deposit with the Paying
Agent pursuant to this paragraph is referred to as the "Payment Fund"). The
Payment Fund shall not be used for any purpose except as provided in this
Agreement.
2.2.2 As soon as practicable after the Effective Time,
the Surviving Corporation shall cause the Paying Agent to mail to each Company
Stockholder a letter of transmittal and instructions for use (the "Letter of
Transmittal") in effecting the surrender of certificates representing Common
Stock outstanding immediately prior to the Effective Time ("Certificates"). The
Letter of Transmittal shall be in appropriate and customary form, include
provisions stating that delivery shall be effected, and risk of loss and title
to such Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent, provide instructions for effecting the surrender of such
Certificates in exchange for the Merger Consideration and provide such other
provisions as Purchaser may reasonably specify (including those provisions
described in this Section 2.2). Upon surrender of a Certificate for cancellation
to the Paying Agent, together with such Letter of Transmittal, duly and properly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefore the portion of the Merger Consideration represented by the
Certificate pursuant to Section 2.1.1 of this Agreement. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate representing Common Stock
surrendered in exchange therefor is registered on the record books of the
Company, it shall be a condition to such exchange that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the Paying
Agent any transfer or other taxes required by reason of the payment of such
consideration to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. No interest will be paid or will
accrue on the cash payable upon surrender of any Certificate. Until surrendered
as contemplated by this Section 2.2, each Certificate shall, at and after the
Effective Time, be deemed to represent only the right to receive, upon surrender
of such Certificate, the Merger Consideration with respect to the shares of
Common Stock represented thereby.
2.2.3 At and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Common Stock of
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged as provided in this Section 2.2. In the event of
a transfer of ownership of shares of
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Common Stock which is not registered in the transfer records of the Company,
payment may be made with respect to such Common Stock to such a transferee only
if the Certificate representing such shares of Common Stock is presented to the
Paying Agent, accompanied by all documents required to evidence and effect such
transfer and evidence that any applicable stock transfer taxes have been paid.
2.2.4 In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, upon the posting by such person of a bond in such
amount as the Surviving Corporation may reasonably direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent will issue in respect of such lost, stolen or destroyed
Certificate, the Merger Consideration with respect to the shares of Common Stock
represented thereby.
2.2.5 Any portion of the Payment Fund which remains
unclaimed by the Company Stockholders for three (3) months after the Effective
Time shall be delivered to the Surviving Corporation upon demand of the
Surviving Corporation, and the holders of Common Stock shall thereafter look
only to the Surviving Corporation for payment of their claim for the Merger
Consideration in respect of their Common Stock. Neither the Company, Purchaser
nor the Surviving Corporation shall be liable to any holder of Common Stock for
any Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
2.2.6 The Surviving Corporation or the Paying Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of a Certificate surrendered for the
Merger Consideration such amount as the Surviving Corporation or the Paying
Agent is required to deduct and withhold with respect to the making of such
payment under the Code (as defined herein), or any provision of any state, local
or foreign tax law. To the extent that amounts are so deducted and withheld,
such amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of such Certificate.
2.3 Adjustment of Merger Consideration. In the event of any
reclassification, stock split, stock dividend or other general distribution of
securities, cash or other property with respect to Common Stock (or if a record
date with respect to any of the foregoing should occur) on or after the date of
this Agreement and on or prior to the date of the Effective Time, appropriate
and equitable adjustments, if any, shall be made to the calculation of the
Merger Consideration and all references herein shall be deemed to be to the
Merger Consideration as so adjusted.
2.4 Options, Warrants and Restricted Shares. Immediately prior to the
Effective Time, each outstanding option to purchase Common Stock (each, a "Stock
Option") granted under the Company's 1997 Stock Option Plan (the "1997 Plan"),
1993 Stock Option Plan (the "1993 Plan") and 1990 Stock Option Plan (the "1990
Plan" and collectively with the 1997 Plan and the 1993 Plan, the "Plans") or
pursuant to any other stock option plan or agreement entered into by the Company
with any employee or director of the Company, whether or not then vested or
exercisable, shall be canceled, and each holder of a Stock Option shall be
entitled to receive as soon as practicable thereafter from the Company in
consideration for the cancellation of such Stock Option an amount in cash (less
applicable withholding taxes) equal to the product of (i) the number of Common
Shares previously subject to such Stock Option multiplied by (ii) the excess, if
any, of the Merger Consideration over the exercise price per Common Share
previously subject to such Stock Option. If the Merger Consideration is equal to
or less than the exercise price per Common Share previously subject to such
Stock Option, the consideration for the cancellation of such Stock Option shall
be nominal. The Company shall use reasonable efforts to obtain in writing the
consent of each holder of a Stock Option to
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the cancellation of the Stock Option held in accordance with the terms of this
Section 2.4 in a form reasonably satisfactory to Parent (the "Stock Option
Consents").
2.5 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, the shares of Common Stock outstanding immediately prior to the
Effective Time held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded properly in writing appraisal
for such shares of Common Stock in accordance with Section 262 of the DGCL and
who shall not have withdrawn such demand or otherwise have forfeited appraisal
rights shall not be converted into or represent the right to receive the Merger
Consideration ("Dissenting Shares"). Such stockholders shall be entitled to
receive payment of the appraised value of such Common Shares held by them in
accordance with the provisions of such Section 262, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such shares of Common
Stock held by them under such Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration,
upon surrender, in the manner provided in this Article II, of the Certificate or
Certificates that formerly evidenced such shares of Common Stock. The Company
shall give Parent and Purchaser prompt notice of any demands for appraisal
received by the Company, withdrawals of such demands, and any other instruments
served pursuant to Delaware law and received by the Company, and Parent and
Purchaser shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent and
Purchaser, make any payment with respect to any demands for appraisal, or settle
or offer to settle, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 General Statement. The parties make the representations and
warranties to each other which are set forth in this Article III. All
representations and warranties of the Company are made subject to the exceptions
noted in the schedule delivered by the Company to Parent and Purchaser
concurrently herewith and identified by the parties as the "Company Disclosure
Schedule".
3.2 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Purchaser that, except as set forth in the
Company Disclosure Schedule:
3.2.1 Organization and Authority. The Company (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware (ii) has all necessary corporate power and authority to
conduct its business as now being conducted or as proposed to be conducted; and
(iii) is duly qualified as a foreign corporation and in good standing in each
jurisdiction in which the nature of its business or the nature or location of
its assets require such qualification. Since November 30, 1996, the Company has
not (a) owned, directly or indirectly, any of the capital stock or other equity
interests, of any corporation, partnership, joint venture, limited liability
company or other legal entity, (b) had an interest in the assets of any
corporation, partnership, joint venture, limited liability company or other
legal entity or (c) had any other investment, direct or indirect, in any Person.
True and complete copies of the Certificate of Incorporation and Bylaws of the
Company are set forth as exhibits to the SEC Reports (as herein defined).
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3.2.2 Authority Relative to this Agreement and Related
Matters. The Board of Directors of the Company (the "Board") at a meeting duly
called and held has (A) determined that the Merger is advisable and fair to, and
in the best interests of, the Company and its stockholders, (B) approved this
Agreement, the Amended License and the Merger, (C) resolved to recommend to the
stockholders of the Company that they approve the Merger and (D) authorized the
preparation and filing of the Proxy Statement (as defined herein). The Company
has full corporate power and authority to enter into and perform this Agreement,
the Amended License and the other agreements to be entered into in connection
with this Agreement to which it is a party. The execution and delivery of this
Agreement and the Amended License by the Company and the performance by the
Company of its respective obligations hereunder and thereunder have been duly
authorized and approved by all requisite corporate action other than the
approval of the holders of a majority of the outstanding shares of Common Stock
voting at the Stockholders' Meeting (as herein defined) with respect to the
Merger. This Agreement and the Amended License have been duly executed and
delivered by duly authorized officers of the Company and constitute, when so
executed and delivered, valid legal and binding obligations of the Company
enforceable against it in accordance with its terms.
3.2.3 Required Filings. No consent, approval or
authorization of, or filing, registration, qualification, declaration or
designation ("Authorization") with or by, any federal, state, local or foreign
court, administrative agency, commission or other governmental authority or
instrumentality ("Governmental Entity") is required for the execution and
delivery by the Company of this Agreement or the consummation by the Company of
any of the transactions contemplated hereby, except for (i) the filing and
recordation by the Company of the Merger Certificate as required by the DGCL and
(ii) the filing with the United States Securities and Exchange Commission (the
"SEC") of the Proxy Statement (as defined herein) with respect to the Merger
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
3.2.4 No Conflicts. Neither the execution and delivery of
this Agreement by the Company, nor the consummation by Company of any of the
transactions contemplated hereby, will (i) conflict with or result in a breach
of any of the terms, conditions or provisions of the certificate, articles or
other instrument of incorporation or limited partnership or by-laws or agreement
of limited partnership or other similar instrument, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment or decree
of a Governmental Entity or of any arbitration award to which the Company is a
party or by which the Company is bound, or (ii) violate, conflict with, breach,
constitute a default (or give rise to an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
lien or other claims, equities, security interests, preemptive rights, judgments
and other encumbrances ("Encumbrances") upon any of the properties or assets of
the Company under, any written or oral note, bond, mortgage, indenture, deed of
trust, license, lease, contract, agreement or other instrument or written or
oral obligation to which Company is a party or to which any of its respective
properties or assets are subject (each being an "Obligation"), except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other Encumbrances that do not and could not, individually
or in the aggregate, (x) have a Material Adverse Effect (as defined herein) on
the Company, or (y) materially impair the ability of the Company to perform its
obligations under the Agreement. Without limiting the generality of the
foregoing, the Company is not subject to any Obligation pursuant to which timely
performance of this Agreement or any of the transactions contemplated hereby may
be prohibited, prevented or materially delayed. As used in this Agreement with
respect to a Person, "Material Adverse Effect" means an effect which involves
$50,000 or more on the business, operations (or results of operations),
condition (financial or otherwise), properties, assets, liabilities, or
prospects of such Person or its subsidiaries, and "Person" means an individual,
partnership, corporation, limited liability company, business, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Entity or other entity of whatever nature or a group, including any
pension, profit sharing or other benefit plan or trust.
6
3.2.5 Capitalization. The authorized capital stock of the
Company consists solely of 11,000,000 shares of Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"). As of
August 12, 1999, (i) 3,453,451 shares of Common Stock were outstanding, (ii) no
shares of Common Stock were held in the treasury of the Company, (iii) options
with respect to 249,027 shares of Common Stock had been granted, and an
additional 15,000 shares of Common Stock were reserved for issuance, in the
aggregate, under the Plans and (iv) no shares of Preferred Stock were
outstanding. There are no other shares of capital stock of the Company
authorized, issued or outstanding. All of the outstanding shares of Common Stock
have been validly issued and are fully paid and nonassessable and not subject to
preemptive rights. Except as set forth in this Section 3.2.5, there are no
subscriptions, options, stock appreciation rights, warrants, rights (including
preemptive rights), calls, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of the Company obligating the Company to issue, or register the
sale of, any securities of any kind. There are no agreements or obligations of
any kind or character to which the Company is a party, or as to which the
Company has knowledge, with respect to the voting of Common Stock or the
election of Directors to its Board ("Directors").
3.2.6 SEC Reports. The Company has timely filed (and has
delivered to Purchaser a true and complete copy of) each report, schedule,
registration statement and definitive proxy statement required to be filed or
filed by the Company with the SEC (including, without limitation, reports
required to be filed pursuant to Section 13(d) or 13(g) of the Exchange Act)
since January 1, 1995 (the "SEC Reports"). As of their respective dates, the SEC
Reports comply in all material respects with the requirements of the Securities
Act of 1933, as amended (the "Securities Act") or the Exchange Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder, and none
of the SEC Reports, as of their respective dates, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company has
corrected and updated, prior to the date hereof, all statements in the SEC
Reports which have required correction or updating, as the case may be, and have
filed all necessary amendments to the Company SEC Reports as required by
applicable law. As used in this Agreement, "to the best of the Company's
knowledge" or similar words shall mean the actual knowledge of senior management
of the Company upon due inquiry.
3.2.7 Financial Statements.
(a) Each of the financial statements (including the notes
thereto) included in the SEC Reports (the "Financial Statements") complies, as
of their respective dates, with all applicable accounting requirements and rules
and regulations of the SEC with respect thereto, has been prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-QSB of the SEC) and presents fairly in all
material respects the consolidated financial position of the Company at the
dates thereof and the consolidated results of its operations, cash flows and
changes in financial position for the periods indicated therein (subject, in the
case of the unaudited statements, to normal year-end audit adjustments). The
books, accounts and records of the Company are, and have been, maintained in
such Company's usual, regular and ordinary manner, in accordance with generally
accepted accounting practices, and all transactions to which the Company is or
has been a party are properly reflected therein.
(b) To the best of the Company's knowledge, (i) all trade
receivables and notes receivables of the Company reflected on the Financial
Statements or which arose subsequent to the date of the Financial Statements,
arose out of bona fide, arms-length transactions for the sale of goods or
performance of
7
services, and (ii) all such trade receivables and notes receivable are good and
collectible (or have been collected) in the ordinary course of business using
normal collection practices at the aggregate recorded amounts thereof, less the
amount of applicable reserves for doubtful accounts and for allowances and
discounts. Since November 30, 1998, there has not been a material change in the
aggregate amount of the Company's trade receivables or a material adverse change
in the aging thereof, except as otherwise set forth in the SEC Reports filed
prior to the date hereof.
(c) To the best of the Company's knowledge, all inventory
of the Company which is held for sale or resale, including raw materials, work
in process and finished goods (collectively, "Inventory"), consists of items of
a quantity and quality historically useable and/or saleable in the normal course
of business, except for items of obsolete and slow-moving material and materials
which are below standard quality, all of which have been written down to
estimated net realizable value in the most recent Financial Statements filed
prior to the date hereof. With the exception of items of below standard quality
which have been written down to their estimated net realizable value, the
Inventory is free from material defects in materials and/or workmanship. Since
November 30, 1998, there has not been a material change in the level of the
Inventory. All Inventory is located at the Real Estate (as herein defined) and
the Leased Premises (as herein defined) or at the site of a vendor or in
transit.
3.2.8 Liabilities. The Company has no obligation or
liability of any kind or nature whatsoever (direct or indirect, matured or
unmatured, absolute, accrued, contingent or otherwise), whether or not required
by GAAP to be provided or reserved against on a balance sheet (all the foregoing
herein collectively being referred to as the "Liabilities"), except for:
(a) Liabilities specifically provided for or reserved
against in the balance sheet contained in the Financial Statements or
the balance sheet contained in the most recent interim financial
statements in a Company SEC Document filed prior to the date of this
Agreement (the "Interim Balance Sheet");
(b) Liabilities which have been incurred since the date of
the Interim Balance Sheet in the ordinary course of the Company's
business and consistent with past practice which are not material; and
(c) Liabilities under the executory portion of Permits (as
herein defined), Environmental Permits (as herein defined), licenses,
governmental directives, agreements and contracts issued or entered
into in the ordinary course of business.
3.2.9 Absence of Changes or Events. Except as specifically
disclosed in the SEC Reports filed prior to the date of this Agreement and
furnished to Purchaser, since November 30, 1998: (x) the Company has not
suffered or been threatened with (and the Company has no knowledge of any facts
which are reasonably likely to cause or result in) any material adverse change
in its business, operations (or results of operations), assets, properties,
liabilities or condition (financial or otherwise); and (y) the Company has
operated only in the usual and ordinary course of business consistent with past
practice. Without limiting the generality of the foregoing, since such date, the
Company has not:
(a) sold, assigned, leased, exchanged, transferred or
otherwise disposed of any material portion of its assets or property,
except in the usual and ordinary course of business consistent with
past practice;
8
(b) suffered any material casualty, damage or loss, or any
material interruption in use, of any material assets or property
(whether or not covered by insurance), on account of fire, flood, riot,
strike or other hazard or Act of God;
(c) written off any material asset as unusable or
obsolete or for any other reason;
(d) made or suffered any material change in the conduct or
nature of its business (whether or not in the ordinary course of
business and whether or not such change would result in a Material
Adverse Effect on the Company);
(e) waived any material right or canceled or compromised
any material debt, other than in the ordinary course of business;
(f) paid, declared or set aside any dividends or other
distributions on its securities of any class or purchased or redeemed
any of its securities of any class;
(g) made any change in accounting methods or principles;
(h) made or committed to make capital expenditures in
excess of $40,000 in the aggregate;
(i) discharged any liability except in the usual and
ordinary course of business in accordance with past practices, or
prepaid any liability;
(j) entered into any transaction with, or made any payment
to, or incurred any liability to, any Related Party (as herein
defined);
(k) increased the compensation payable to any director,
officer or employee except for raises to nonofficers in the ordinary
course of business consistent with past practice;
(l) made any payments or distributions to its employees,
officers or directors except such amounts as constitute currently
effective compensation for services rendered, or reimbursement for
reasonable ordinary and necessary out-of-pocket business expenses;
(m) paid or incurred any management or consulting fees, or
engaged any consultants;
(n) elected any director or hired any officer or senior
employee;
(o) borrowed any money or issued any bonds, notes,
debentures or other evidence of indebtedness;
(p) acquired by merger, consolidation or acquisition of
stock or assets any Person or business;
(q) adopted, amended or terminated any Employee Benefit
Plan (as defined herein); or
(r) agreed in writing or otherwise to take any of the
foregoing actions.
9
3.2.10 Ownership of Properties. The Company has good and
marketable title to its respective properties and assets purported to be owned
by it (including, without limitation, all assets reflected on the Financial
Statements) free and clear of any Encumbrances, except: (i) statutory liens for
Taxes not yet due, (ii) statutory liens of carriers, warehousemen, mechanics and
materialmen incurred in the ordinary course of business for sums not yet due;
(iii) liens incurred or deposits made in the ordinary course of business, in
connection with workers' compensation and unemployment insurance; and (iv) minor
imperfections of title which do not in the aggregate materially detract from the
value or use of the asset in question. The tangible personal property (other
than inventory) owned or leased by the Company and used in its businesses
constitutes all tangible personal property necessary in order to conduct such
businesses as they have been conducted in the past.
3.2.11 Insurance. Section 3.2.11 of the Company Disclosure
Schedule contains a true and correct list and description (including coverages,
deductibles and expiration dates) of all insurance policies which are owned by
the Company or which name the Company as an insured (or loss payee), including
without limitation those which pertain to the Company's assets, employees or
operations. All such insurance policies are in full force and effect and the
Company has not received notice of cancellation of any such insurance policies.
3.2.12 Related Parties. Section 3.2.12 of the Company
Disclosure Schedule describes each: (i) existing business relationship
(excluding employee compensation and other ordinary incidents of employment)
between (x) the Company, and (y) any present or former officer, director, or
Affiliate of the Company, any present or former known spouse, ancestor or
descendant of any of the aforementioned persons or any trust or other similar
entity for the benefit of any of the foregoing persons (all such persons and
trusts encompassed by this clause (y) being sometimes collectively referred to
herein as the "Related Parties" and individually as a "Related Party"); (ii)
transaction occurring since November 30, 1997, between the Company and any
Related Party; and (iii) amount owing by or to any of the Related Parties,
respectively, to or from the Company as of the date of this Agreement. No
property or interest in any property (including, without limitation, designs and
drawings concerning machinery) which relates to and is or will be necessary or
useful in the present or currently contemplated future operation of the
Company's business, is presently owned by or leased or licensed by or to any
Related Party. To the knowledge of the Company, no Related Party has an
interest, directly or indirectly, in any business which is in competition with
the Company's business. As used herein, the term "Affiliate" shall have the same
meaning as such term is defined in Rule 405 promulgated under the Securities
Act.
3.2.13 Tax Matters Definitions. As used in this Agreement,
the following terms shall have the following meanings:
(a) the term "Taxes" means all federal, state, local,
foreign, estimated and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any
kind whatever, together with any interest and any penalties, additions
to tax or additional amounts with respect thereto, and the term "Tax"
means any one of the foregoing Taxes;
(b) the term "Returns" means all returns, declarations,
reports, statements and other documents required to be filed in respect
of Taxes, and the term "Return" means any one of the foregoing Returns;
and
10
(c) the term "Code" means the Internal Revenue Code of
1986, as amended.
All citations to the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments or any substitute or successor
provisions thereto.
3.2.14 Returns. To the best of the Company's knowledge,
there have been properly completed and filed on a timely basis and in correct
form all Returns required to be filed by the Company. As of the time of filing,
the Returns correctly reflected the facts regarding the income, business,
assets, operations, activities, status or other matters of such Company or any
other information required to be shown thereon. Except as disclosed in Section
3.2.14 of the Company Disclosure Schedule, an extension of time within which to
file any Return which has not been filed has not been requested or granted.
3.2.15 Tax Liabilities. With respect to all amounts in
respect of Taxes imposed upon the Company, or for which the Company is or could
be liable, whether to taxing authorities (as, for example, under law) or to
other persons or entities (as, for example, under tax allocation agreements),
with respect to all taxable periods or portions of periods ending on or before
the Closing Date, all applicable tax laws and agreements have been complied with
in all material respects, and all amounts required to be paid by the Company, to
taxing authorities or others, on or before the date hereof have been paid. To
the best of the Company's knowledge, the unpaid Taxes of the Company do not
exceed the reserve for tax liability with respect to the Company (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and tax income) set forth or included in the SEC Reports as adjusted for
the passage of time through the Closing Date, in accordance with the past
practices of the Company.
3.2.16 Issues with Taxing Authorities. No issues have been
raised (and are currently pending) by any taxing authority in connection with
any of the Returns filed by the Company. No waivers of statutes of limitation
with respect to such Returns have been given by or requested from the Company.
Section 3.2.16 of the Company Disclosure Schedule sets forth (i) the taxable
years of the Company as to which the respective statutes of limitations with
respect to Taxes have not expired, and (ii) with respect to such taxable years,
sets forth those years for which examinations have been completed, those years
for which examinations are presently being conducted, those years for which
examinations have not been initiated, and those years for which required Returns
have not yet been filed. All deficiencies asserted or assessments made as a
result of any examinations have been fully paid, are fully reflected as a
liability in the SEC Reports or are being contested in good faith and an
adequate reserve therefor has been established and is fully reflected in the SEC
Reports.
3.2.17 Miscellaneous Tax Matters. The Company is not a
party to or bound by any tax indemnity, tax sharing or tax allocation agreement.
The Company has not agreed to make, nor is the Company required to make, any
adjustment under section 481(a) of the Code by reason of a change in accounting
method or otherwise. The Company is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of section 280G of the Code. All material elections with respect to Taxes
affecting the Company as of the date hereof are set forth in Section 3.2.17 of
the Company Disclosure Schedule. After the date hereof, no election with respect
to Taxes will be made without the written consent of Buyer. The transaction
contemplated herein is not subject to the tax withholding provisions of Section
3406 of the Code, or of Subchapter A of Chapter 3 of the Code, or of any other
provision of law. The unpaid Taxes of the Company do not exceed the reserve for
tax liability (excluding any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth or included in the
Company's most recent balance
11
sheet, as adjusted for the passage of time through the Closing Date, in
accordance with the past custom and practice of the Company.
3.2.18 Permits. Section 3.2.18 of the Company Disclosure
Schedule contains a true and correct copy of every governmental license, permit,
registration, approval and consent applied for, pending by, issued or given to
the Company, and every agreement with governmental authorities (federal, state,
local or foreign) entered into by the Company, which is in effect or has been
applied for or is pending (the "Permits"). The Permits constitute all
governmental licenses, permits, registrations, approvals and agreements and
consents which are required in order for the Company to conduct its business as
presently conducted. None of the foregoing will cease to be in full force and
effect by virtue of the entry into this Agreement or the consummation of the
transactions contemplated hereby.
3.2.19 Significant Customers and Suppliers. The Company
has no knowledge of any intention or indication by a Significant Customer (as
herein defined) that such Significant Customer intends to terminate its business
relationship with the Company or to limit or alter its business relationship
with the Company in any material respect. The Company has no knowledge of any
intention or indication of intention by a Significant Supplier (as herein
defined) to terminate its business relationship with the Company or to limit or
alter its business relationship with the Company in any material respect. As
used herein, (x) "Significant Customer" means any of the five largest customers
of the Company, measured in terms of sales volume in dollars for the current
fiscal year and (y) "Significant Supplier" means any supplier of the Company
from whom the Company has purchased $50,000 or more of goods during for the
current fiscal year for use in the Company's business.
3.2.20 Contracts. Except as set forth in Section 3.2.20 of
the Company Disclosure Schedule or filed as an exhibit to the SEC Reports filed
prior to the date hereof, the Company is not a party to, or bound by, any
undischarged written or oral:
(a) employment or consulting agreement which is not
terminable by the Company at will without premium or penalty or other
payment;
(b) collective bargaining agreement;
(c) plan or contract or arrangement providing for bonuses,
options, stock appreciation rights, deferred compensation, retirement
payments, stock purchases, severance, split dollar insurance programs,
profit sharing, medical and dental benefits or the like covering
employees of the Company;
(d) agreement between the Company and any of its
Affiliates or other Related Parties;
(e) agreement of agency, representation, distribution, or
franchise which cannot be canceled by the Company without payment or
penalty upon notice of thirty (30) days or less;
(f) agreement for the advertisement, display, or promotion
of any of the Company's products or services which cannot be canceled
by the Company without payment or penalty upon notice of thirty (30)
days or less;
(g) service agreement affecting any of the Company's
assets where the annual service charge is in excess of $20,000 or has
an unexpired term as of the Closing Date in excess of thirty (30) days;
12
(h) material agreement or order for the sale of goods or
the performance of services sold or performed by the Company which, if
performed in accordance with its terms, could only be performed with a
gross profit of 10% or less;
(i) contract with any railroad or other transportation
company;
(j) lease or sublease, either as lessee or sublessee,
lessor or sublessor, of real or personal property or intangibles, where
the lease or sublease provides for annual payments (whether to be made
or received) in excess of $20,000 and has an unexpired term as of the
date hereof in excess of one (1) year;
(k) guaranty performance, bid or completion bond, or
surety or indemnification agreement;
(l) loan or credit agreement, pledge agreement, note,
security agreement, mortgage, debenture, indenture, factoring
agreement, credit card agreement, letter of credit or banker's
acceptance;
(m) agreement for the purchase, sale or removal (as the
case may be) of electricity, gas, water, telephone, coal, sewage, or
other utility service;
(n) governmental order or directive;
(o) agreement for the treatment or disposal of hazardous
materials;
(p) partnership or joint venture agreement;
(q) lease which is required by GAAP to be classified as a
capital lease;
(r) reciprocal easement or operating agreement with
respect to any parcel of the Real Estate (as defined herein) or any of
the Leased Premises (as defined herein);
(s) secrecy or confidentiality agreement, other than those
agreements customarily included in sales or service contracts;
(t) agreement restricting in any manner the right of the
Company to compete with any other Person, to sell to or purchase from
any other Person or to employ any Person;
(u) rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross- currency rate
swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions), or
any combination of these transactions;
(v) supply or requirements contract; or
13
(w) agreement or arrangement not specifically enumerated
above concerning or which provides for the receipt or expenditure of
more than $25,000, except agreements for the sale of goods or rendering
of services entered into by the Company in the ordinary course of its
business.
Such agreements, leases, subleases and other instruments or arrangements
disclosed in response to this Section 3.2.20, the "Contracts," and each a
"Contract," are in full force and binding upon the Company and, to the Company's
knowledge, the other parties thereto. Neither the Company on the one hand, nor
any of the other parties thereto, on the other hand, are in monetary or material
nonmonetary default under any Contract. No event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, or the happening
of any further event or condition, would become a default under any Contract by
the Company, on the one hand, or the other contracting party, on the other hand.
The Company has not released or waived any of its respective rights under any
Contract. The Company is not subject to any legal obligation to renegotiate, nor
does the Company have knowledge of a claim for a legal right to renegotiate, any
contract, loan, agreement, lease, sublease or instrument to which it is now or
has been a party.
3.2.21 ERISA Matters.
(a) Neither the Company nor any affiliate of the Company
within the meaning of Code Section 414(b), (c), (m) or (o) ("ERISA
Affiliate") maintains, administers or contributes to, or has any
liability with respect to, nor do the employees of the Company or any
ERISA Affiliate receive, or will be entitled to receive as a condition
of employment, benefits pursuant to any employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether or not excluded from coverage
under specific Titles or Subtitles of ERISA), including, without
limitation, any multiemployer plan (as defined in section 3(37) of
ERISA) ("Multiemployer Plan"), or bonus, deferred compensation, stock
purchase, stock option, stock appreciation, severance, salary
continuation, vacation, holiday, sick leave, fringe benefit,
reimbursement program employee discount, personnel policy, allowances,
incentives, insurance, welfare or similar plan, program, policy or
arrangement except as identified in Section 3.2.21 of the Company
Disclosure Schedule (the "Employee Benefit Plans").
(b) Neither the Company nor any ERISA Affiliate has
maintained, administered or contributed to any pension plan subject to
Title IV of ERISA or any Multiemployer Plan.
(c) Each Welfare Plan which is a group health plan (within
the meaning of section 5000(b)(1) of the Code) complies with and has
been maintained and operated in accordance with each of the
requirements of section 4980B of the Code, Part 6 of Subtitle B of
Title I of ERISA and applicable state law. The Disclosure Schedule sets
forth the individuals with rights to continuation coverage under
section 4980B of the Code or Part 6 of Subtitle B of Title I of ERISA
or state law, including those individuals within the applicable
election period. Except as required by Section 4980B of the Code,
neither the Company nor any ERISA Affiliate has promised any former
employee or other individual not employed by the Company or any ERISA
Affiliate medical or other benefit coverage and neither the Company nor
any ERISA Affiliate maintains or contributed to any plan, program,
policy or arrangement providing medical or life insurance benefits to
former employees, their spouses or dependents or any other individual
not employed by the Company or any ERISA Affiliate. No Employee Benefit
Plan has any provision which could increase or accelerate benefits or
increase the liability of the Company as a result of any transaction
contemplated by this Agreement.
14
(d) To the best of the Company's knowledge, neither any
fiduciary of any Employee Benefit Plan nor any Employee Benefit Plan
(excluding each Multiemployer Plan and its fiduciaries) has engaged in
any transaction in violation of Section 406 of ERISA or any "prohibited
transaction" (as defined in Section 4975(c)(1) of the Code) unless
exempt under Section 408 of ERISA or section 4975 of the Code.
(e) Each Employee Benefit Plan complies in all material
respects with and is and has been operated in all material respects in
accordance with its terms and each applicable provision of ERISA, the
Code, other federal statutes, state law and the regulations and rules
thereunder. With respect to each Employee Benefit Plan intended to
qualify under Section 401(a) of the Code, a favorable determination as
to such qualification of such Employee Benefit Plan and each amendment
thereto has been made by the Internal Revenue Service, each such
Employee Benefit Plan remains qualified under the Code and no event has
occurred, either by reason of any action or failure to act, which would
cause the loss of any such qualification. Each trust funding any
Employee Benefit Plan is and has been tax-exempt. Neither the Company
nor any ERISA Affiliate has failed to make any contributions or pay any
amounts required on or before the Closing Date by the terms of any
Employee Benefit Plan, collective bargaining agreement, ERISA or any
other applicable law.
(f) True and complete copies of each Employee Benefit
Plan, related trust agreements, annuity contracts, determination
letters, the most recent determination letter request, summary plan
descriptions, annual reports on Form 5500, Form 990, actuarial reports
and Pension Benefit Guaranty Corporation Forms 1 for the most recent
three (3) plan years, and each plan, agreement, instrument and
commitment referred to herein has been previously furnished to
Purchaser. The annual reports on Form 5500 and Form 990 and actuarial
statements furnished to the Company fully and accurately set forth the
actuarial condition of the respective Employee Benefit Plan, as may be
applicable.
(g) There are no pending or, to the knowledge of the
Company, any threatened claims by or on behalf of any Employee Benefit
Plan by any employee or beneficiary covered under any Company Plans or
Company Benefit Plans or otherwise involving any Company Plan or
Company Benefit Plan (other than routine claims for benefits).
(h) With respect to employees of the Company, the Company
is and has been in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, including, without
limitation, any such laws respecting employment discrimination,
occupational safety and health, and unfair labor practices.
3.2.22 Labor Relations. The Company is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company, and there are no known organizational
campaigns, petitions or other unionization activities seeking recognition of a
collective bargaining unit. There are no strikes, slowdowns, work stoppages or
material labor relations controversies pending or, to the knowledge of the
Company, threatened between the Company and any of its employees, and the
Company has not experienced any such strike, slowdown, work stoppage or material
controversy within the past three years.
3.2.23 Absence of Litigation. Except as set forth in the
SEC Reports filed prior to the date hereof, there is no litigation or
proceeding, in law or in equity, and there are no proceedings or governmental
investigations before or by any Governmental Entity, pending or, to the
Company's knowledge,
15
threatened against the Company or any of the officers, directors or employees of
the Company, which, if decided adversely to the Company, officer, director or
employee could have a Material Adverse Effect on the Company or would materially
impair the consummation of any of the transactions contemplated hereby. There
are no facts which, if known by a potential claimant or governmental authority,
would give rise to a claim or proceeding which, if asserted or conducted with
results unfavorable to the Company, would have a Material Adverse Effect on the
Company or would materially impair the consummation of any of the transactions
contemplated hereby.
3.2.24 Product/Service Warranties. The Company has not
made any oral or written warranties with respect to the quality or absence of
defects of its products or services which it has sold or performed which are in
force as of the date hereof, except for those warranties which are described in
Section 3.2.24 of the Company Disclosure Schedule. There are no material claims
pending, or to the best of the Company's knowledge, threatened against the
Company with respect to the quality of or absence of defects in such products or
services. The Company has no knowledge or reason to believe that the percentage
of products sold and services performed by the Company for which warranties are
presently in effect and for which warranty adjustments can be expected during
unexpired warranty periods which extend beyond the Closing Date will be higher
than the percentage of such products and services which the Company has sold and
performed for which warranty adjustments have been required in the past.
3.2.25 Injunctions; Judgments. The Company is not a party
to, or bound by, any judgment, writ, injunction, decree, order or arbitration
award (or agreement entered into with any Governmental Entity in connection with
any administrative, judicial or arbitration proceeding) with respect to or
affecting the properties, assets, personnel or business activities of the
Company, the enforcement or operation of which or compliance with which could
have a Material Adverse Effect on the Company, or would restrict the operations
of the Company or the ability of the Company to engage in any lines of business,
in either case, in a material manner.
3.2.26 Compliance with Law. The Company is not in
violation of, in noncompliance with, or delinquent with respect to, any
judgment, writ, injunction, decree, order or arbitration award or law, statute,
or regulation of or agreement with, or any permit from, any Governmental Entity
to which the property, assets, personnel or business activities of the Company
are subject, which violation, noncompliance or delinquency could have a Material
Adverse Effect on the Company.
3.2.27 Environmental Matters.
(a) The Company is and at all times has been, and all real
property currently or previously owned, leased, occupied, used by or
under the control of the Company, and all operations or activities of
the Company (including those conducted on or taking place at any of
such real property) are and at all times have been, in material
compliance with and not subject to any material liability or obligation
under any Environmental Law or Environmental Permit. As used in this
Agreement, "Environmental Laws" means all applicable federal, state or
local laws, rules, regulations or principles of common law relating to
protection of health and safety, pollution, and environmental matters
of any kind whatsoever, including with respect to the storage,
treatment, generation, transportation, spillage, discharge, leakage or
other release or threatened release of any material, substance or waste
of any kind whatsoever; and "Environmental Permits" means any permits,
licenses, registrations, notifications, consents, agreements or
approvals required under any Environmental Law. To the best of the
Company's knowledge, there is no condition or circumstance regarding
the Company or its business or any such real property or the operations
or activities thereon, which, with
16
the passing of time or upon notice to any other party, is possible of
giving rise to a material violation of, or material liability or
obligation under, any Environmental Law or Environmental Permit. To the
best of the Company's knowledge, neither the Company nor any Person,
the acts or omissions of which may be attributable to, or the
responsibility of, or liability to, the Company has, or has arranged to
have, any material, substance or waste treated, stored or disposed of
at, or transported to, any facility or property the remediation or
cleanup of which, or the response costs related thereto, could be
attributed in any manner to, or otherwise become responsibilities of or
liabilities to, the Company. There are no allegations, claims, demands,
citations, notices of violation, or orders of noncompliance made
against, issued to or received by the Company within the past (5) years
relating or pursuant to any Environmental Law or Environmental Permit
except those which have been corrected or complied with, and no such
allegation, claim, demand, citation, notice of violation or order of
noncompliance is to the best knowledge of the Company threatened,
imminent or likely.
(b) To the best of the Company's knowledge, Section 3.2.27
of the Company Disclosure Schedule sets forth a complete list of any
storage, treatment, generation, transportation or release of any
hazardous materials with respect to the business by the Company or its
predecessors in interest, or by any other person or entity for which
the Company is or may be held responsible, at any Facility (as herein
defined) or any Offsite Facility (as herein defined) in violation of,
or which could give rise to any material obligation under,
Environmental Laws. "Facility" means any facility as defined in the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601, ET SEQ., as amended and reauthorized ("CERCLA"), and
forming part of the Company. "Offsite Facility" means any Facility
which is not presently, and has not heretofore been, owned, leased or
occupied by Seller with respect to the Business.
(c) To the best of the Company's knowledge, Section 3.2.27
of the Company Disclosure Schedule sets forth a complete list of all
Containers (as herein defined) that are now present at, or have
heretofore been removed from, the Real Estate or Leased Premises. All
Containers which have been heretofore removed from the Real Estate or
Leased Premises have been removed in accordance with all applicable
Environmental Laws and environmental requirements. "Containers" means
above-ground and under-ground storage tanks, vessels and related
equipment and containers.
3.2.28 Owned Real Estate. The Company does not own any
real estate or any interest in real estate other than the premises identified
(including by street address) in Section 3.2.28 of the Company Disclosure
Schedule as being so owned (the "Real Estate"). The Company has good and
marketable fee simple title to its Real Estate, subject only to general real
estate taxes not delinquent and to Encumbrances, covenants, conditions,
restrictions and easements of record, none of which makes title to any of such
Real Estate unmarketable and none of which are violated by or interfere with the
Company's use or occupancy thereof. None of the Real Estate is subject to any
leases or tenancies. To the best of the Company's knowledge, none of the
improvements comprising the Real Estate or the businesses conducted by any of
the Company thereon, are in violation of any use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law, code
or ordinance or public utility easement. No material expenditures are required
to be made for the repair or maintenance of any improvements on any of the Real
Estate. Each facility located on the Real Estate currently is served by gas,
electricity, water, sewage and waste disposal and other utilities adequate to
operate such facility at its current rate of production.
3.2.29 Leased Premises. The Company does not lease (or
have any commitment to lease) any real estate other than the premises identified
in Section 3.2.29 of the Company Disclosure Schedule as being so leased (the
"Leased Premises"). The Leased Premises are leased to the Company pursuant to
written
17
leases, true, correct and complete copies of which have been delivered to
Purchaser prior to the date hereof or are contained in the SEC Reports. To the
best of the Company's knowledge, the improvements comprising the Leased
Premises, and the businesses conducted by the Company thereon, are not in
violation of any use or occupancy restriction, limitation, condition or covenant
of record or any zoning or building law, code or ordinance or public utility or
other easements. No material expenditures are required to be made for the repair
or maintenance of any improvements on the Leased Premises. The Company is not in
default under any agreement relating to the Leased Premises nor, to the
Company's knowledge, is any other party thereto in default thereunder and no
event, occurrence or condition exists which, with the lapse of time, the giving
of notice, or both, or the happening of any further event or condition, would
become a default under any such instrument. All options in favor of, or which
obligate, the Company to purchase any of the Leased Premises or any other real
estate, if any, are described in Section 3.2.29 of the Company Disclosure
Schedule. All Persons (other than the Company or the owners of any of the Leased
Premises) having any interest (economic or otherwise) in any of the Leased
Premises are set forth in Section 3.2.29 of the Company Disclosure Schedule.
3.2.30 Matters Regarding Real Estate and Leased Premises.
There are no condemnation proceedings pending or, to the best of the Company's
knowledge, threatened with respect to any portion of the Real Estate or the
Leased Premises. The buildings and other facilities located on the Real Estate
and the Leased Premises are free of any patent structural or engineering defects
and, to the knowledge of the Company, are free of any latent structural or
engineering defects.
3.2.31 Intellectual Property. Section 3.2.31 of the
Company Disclosure Schedule sets forth all Intellectual Property (as defined
herein) material to the conduct of the business of the Company and the Person
which is the owner or licensee thereof. The Company is the owner of all right,
title and interest in such Intellectual Property or is duly licensed to use such
Intellectual Property. All Intellectual Property which is registrable has been
duly registered, or is in the process of being registered, and is valid and has
been maintained in good standing. To the best of the Company's knowledge, no
Intellectual Property has infringed, infringes or in any material way has
damaged or damages any of the rights, title or interests of any third party (nor
has any third party given the Company notice of any claimed infringement or
damage). To the best of the Company's knowledge, all copyrightable works of
employees, representatives or other persons paid or commissioned by the Company
which constitute a part of the Intellectual Property were original creations by
such persons. To the best of the Company's knowledge, no Intellectual Property
has been, is currently or is anticipated by the Company to be infringed upon or
in any way damaged by any third party. To the extent that any Intellectual
Property is licensed, such license is legal, valid, binding and fully
enforceable. "Intellectual Property" means all of the following, whether owned,
used or licensed: (i) all common law, federally registered, state registered and
foreign trademarks and service marks and all applications for federal, state or
foreign registration of trademarks or service marks, (ii) all slogans, trade
dress and trade names, (iii) all proprietary know-how and methods, (iv) all
trade secrets, (v) all federal and foreign patents and patent applications, (vi)
all copyright registrations and any unregistered copyright material and (vii)
all computer software.
3.2.32 Year 2000 Compliance. Except as set forth in
Section 3.2.32 of the Company Disclosure Schedule, all of the Company's
Information Technology (as defined below), and, to the best of the Company's
knowledge, all Information Technology of the EDI Parties (as defined below),
Significant Suppliers and Significant Customers, is and shall be Year 2000
Compliant (as defined below). Section 3.2.32 of the Company Disclosure Schedule
contains true and correct copies of all written (and descriptions of all verbal)
certifications, assurances, statements, representations, warranties and
covenants concerning Year 2000-related compliance matters which the Company has
given, has been asked to provide, has received or has requested.
18
Section 3.2.32 of the Company Disclosure Schedule contains a list of all
suppliers, customers and other third parties with whom the Company exchanges (as
provider or recipient) information electronically ("EDI Parties"). The Company
has developed (i) a testing and compliance program, and (ii) a contingency plan,
in each case regarding Year 2000-related matters pertaining to the Company's
Information Technology and that of the EDI Parties. To the best of the Company's
knowledge, such program and plan, copies of which are attached to Section 3.2.32
of the Company Disclosure Schedule, are adequate to prevent a material adverse
effect upon the Company as a consequence of any Information Technology of the
Company and/or the EDI Parties not being Year 2000 Compliant from and after the
date hereof through March 31, 2001. "Year 2000 Compliant" means (i) with respect
to data that includes date or time information or that is otherwise derived from
or dependent upon date or time information ("Date Data"), that such data is in
proper format and accurate for all dates and times (A) from, into and between
the twentieth and twenty-first centuries, (B) from and into date values
representing September 9, 1999, and (C) for date values representing dates
during leap years, and (ii) with respect to all Information Technology of a
Person, that such Information Technology accurately processes (including,
without limitation, calculating, receiving, comparing, sequencing, storing,
transmitting or displaying) Date Data, including processing such data described
in clauses (A) through (C) of clause (i) hereof, without loss of any
functionality or performance, when used as a stand-alone system or in
combination with other software, hardware, system, component, equipment,
embedded chips or other information technology. "Information Technology" means,
with respect to a Person, all systems, software, hardware, information
technology, microcode, embedded chips, and all electronic or electronically
controlled systems, machinery or components reliant on or included within the
foregoing, which are owned, leased, licensed or used by such Person, including,
without limitation, items of the foregoing description related to the product,
facilities, equipment, manufacturing and order entry processes, quality control
activities, accounting and bookkeeping, records and record-keeping activities of
such Person.
3.2.33 Brokers. No broker, finder, investment banker or
other Person is entitled to a broker's commission, finder's fee, investment
banker's fee or similar payment from the Company in connection with the Merger
or any of the transactions contemplated hereby.
3.2.34 Fairness Opinion. The Company has received the
written opinion of Williamette Management Associates (the "Fairness Opinion") on
the date of this Agreement to the effect that, as of the date of this Agreement,
the Merger Consideration is fair to the Company Stockholders from a financial
point of view. The Company has provided a true and correct copy of the Fairness
Opinion to Purchaser. The Company is authorized by Williamette Management
Associates to include a copy of such opinion in the Proxy Statement.
3.2.35 Voting Requirements. The affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Stockholders' Meeting is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger and the
transactions contemplated hereby (the "Stockholder Approval").
3.2.36 Proxy Statement. None of the information (other
than information provided by Parent and Purchaser) included or incorporated by
reference in the proxy statement relating to the Merger and the transactions
contemplated hereby to be approved at the Stockholders' Meeting will (as amended
or supplemented, the "Proxy Statement"), at the time of the mailing thereof, at
the time of the Stockholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act.
19
3.2.37 State Takeover Statutes; Absence of Stockholder
Rights Plan. The Board of Directors of the Company has irrevocably adopted a
resolution providing that the restrictions on business combinations contained in
Section 203 of the DGCL do not and will not apply with respect to or as a result
of the Merger, this Agreement, the Voting Agreement or the transactions
contemplated hereby or thereby. To the best knowledge of the Company following
consultation with outside counsel, the [NC law] does not apply to the Agreement,
the Merger, the Voting Agreement or the transactions contemplated hereby or
thereby. The Company has not adopted or executed, and is not a party or subject
to, any "Shareholder Rights Plan" or similar instrument, plan or agreement.
3.2.38 Certain Illegal Payments. Neither the Company nor
any of its former or current officers, directors, employees, agents or
representatives has made, directly or indirectly, with respect to the Company or
its business activities, any bribes or kickbacks, illegal political
contributions, payments from corporate funds not recorded on the books and
records of the Company, payments from corporate funds to governmental officials,
in their individual capacities, for the purpose of affecting their action or the
action of the government they represent, to obtain favorable treatment in
securing business or licenses or to obtain special concessions, or illegal
payments from corporate funds to obtain or retain business. Without limiting the
generality of the foregoing, the Company has not directly or indirectly made or
agreed to make (whether or not said payment is lawful) any payment to obtain, or
with respect to, sales other than usual and regular compensation to its
employees and sales representatives with respect to such sales.
3.2.39 Full Disclosure. The representations, warranties
and statements of the Company in this Agreement or contained in any schedule,
list or document delivered pursuant to this Agreement do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which such representations, warranties and statements are made, not misleading.
The copies of all documents furnished by the Company pursuant to or in
connection with this Agreement are true, complete and correct. True, complete
and accurate copies of each document referred to in the Company Disclosure
Schedule are contained therein or have been furnished to Parent or Purchaser
prior to the date hereof.
3.3 Representations and Warranties of Parent and Purchaser. Parent and
Purchaser represent and warrant to the Company that:
3.3.1 Organization and Authority. Each of Parent and
Purchaser is a corporation organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Parent and Purchaser has all
necessary corporate power and authority to conduct its business as now being
conducted.
3.3.2 Authority Relative to this Agreement. Each of Parent
and Purchaser has full corporate power and authority to enter into and perform
this Agreement, the Amended License and the other agreements to be entered into
in connection with this Agreement. The execution and delivery of this Agreement
and the Amended License by Purchaser and Parent and the performance by Purchaser
and Parent of their respective obligations hereunder or thereunder have been
duly authorized by all requisite corporate action. This Agreement and the
Amended License have been duly executed and delivered by duly authorized
officers of Purchaser and Parent and constitute valid and binding obligations of
Purchaser and Parent enforceable against them in accordance with their terms.
3.3.3 Required Filings. No Authorization is required by or
with respect to Purchaser in connection with the execution and delivery of this
Agreement, the Amended License or the consummation by Purchaser of the
transactions contemplated hereby.
20
3.3.4 No Conflicts. Neither the execution and delivery of
this Agreement or the Amended License nor the consummation by Parent or
Purchaser of the transactions contemplated hereby, will (i) conflict with or
result in a breach of any of the terms or provisions of the Certificate of
Incorporation or By-Laws of Parent or Purchaser or of any statute or
administrative regulation, or of any order, writ, injunction, judgment or decree
of any court or governmental authority or of any arbitration award to which
Purchaser is a party or by which Parent or Purchaser is bound; or (ii) violate,
conflict with, breach, constitute a default (or give rise to an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien or other Encumbrance upon any of the
properties or assets of Parent or Purchaser under, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or Purchaser is a party or to which Parent or
Purchaser or any of its properties or assets are subject (the "Purchaser
Obligations"), except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other Encumbrances that do
not and will not, individually or in the aggregate, (x) have a Material Adverse
Effect on Parent or Purchaser or (y) materially impair Parent or Purchaser's
ability to perform its obligations under this Agreement. Without limiting the
generality of the foregoing, Purchaser is not subject to any Purchaser
Obligation pursuant to which timely performance of this Agreement or any of the
transactions contemplated hereby may be prohibited, prevented or materially
delayed.
3.3.5 Financing. Parent has delivered to the Company true
and correct copies of a commitment (the "Commitment") letter from PNC Bank,
National Association (the "Lender"), stating Lender's commitment to providing
the debt financing ("Financing") which, together with equity and funds on hand
or available under an existing credit facility to be obtained by Parent will be
in an amount sufficient to pay the Merger Consideration and consummate the
Merger, pay related transaction expenses, refinance the Company's indebtedness
to First Citizens Bank and the National Bank of Canada/National Business Corp.
(based on amounts outstanding as reflected in the SEC Reports filed prior to the
date hereof) and pay the outstanding balance on the Company's note to Xxxxxxx &
Xxxxxxxx (approximately $198,000 as of September 9, 1999), subject to the
negotiation, preparation and execution of binding documents with respect to the
Financing, and to the fulfillment of the conditions precedent set forth therein.
3.3.6 Proxy Statement. None of the information included in
the Proxy Statement provided by the Parent and Purchaser in writing for use in
the Proxy Statement will, at the time of the mailing thereof, at the time of the
Stockholders' Meeting and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
3.3.7 Financial Statements. True and correct copies of the
balance sheets and statements of income of X. Xxxxxxx Industries L.P. as of and
for the period ending December 31, 1998 have been provided to the Company.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER AND ADDITIONAL COVENANTS
4.1 Obligations of Each of the Parties. From and after the date hereof
and until and including the Effective Time, the following shall apply with equal
force to the Company, on the one hand, and Parent and Purchaser, on the other
hand:
21
4.1.1 Each party shall promptly give the other party
written notice (i) if any representation or warranty made by it or them
contained in this Agreement becomes untrue or incorrect in any respect; (ii) of
the existence or occurrence of any event or condition which would make any
representation or warranty herein contained of either party untrue or which
might reasonably be expected to prevent the consummation of the transactions
contemplated hereby; and (iii) of the failure by it or them to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. The Company agrees to promptly notify Parent and Purchaser
of any material adverse change in its condition (financial or otherwise),
business, properties, assets or liabilities, or of any material governmental
complaints, investigations or hearings adverse to it (or written threats
thereof) which could reasonably be expected to have a Material Adverse Effect;
4.1.2 No party shall intentionally perform any act which,
if performed, or omit to perform any act which, if omitted to be performed,
would prevent or excuse the performance of this Agreement by any party or which
would result in any representation or warranty herein of that party being untrue
in any material respect at any time after the date hereof through and including
the Closing Date as if then originally made.
4.1.3 Subject to the terms and conditions of this
Agreement, each of the parties agrees to use best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as reasonably practicable;
provided, however, that nothing in this Section 4.1.3 shall in any event require
any party to (i) expend funds which are not commercially reasonable in relation
to the transactions contemplated hereby or (ii) take or cause to be taken, any
action which would have a Material Adverse Effect with respect to it.
4.2 Access. Subject to any restrictions under applicable law, the
Company shall continue to give to Parent's and Purchaser's respective officers,
employees, agents, attorneys, consultants and accountants reasonable access for
reasonable purposes in light of the transactions contemplated by this Agreement
during normal business hours to all of the properties, books, contracts,
documents, present and expired insurance policies, records and personnel of or
with respect to the Company and shall furnish to Parent and Purchaser and such
persons as Parent or Purchaser shall designate to the Company such information
as Parent and Purchaser or such persons may at any time and from time to time
reasonably request (it being understood that Parent and Purchaser may not have
access to certain pricing and other competitively sensitive information). Parent
and Purchaser shall have the right to conduct non-intrusive environmental
testing. It is expressly understood and agreed that all information obtained
pursuant to this Section 4.2 is subject to the terms and conditions of that
certain Confidentiality Letter dated December 9, 1998 (the "Confidentiality
Agreement") between X. Xxxxxxx Industries L.P., the ultimate parent of Parent
and Purchaser, and the Company, and Parent and Purchaser expressly reaffirm
their obligations thereunder.
4.3 The Company's Obligations. From and after the date hereof and until
and including the Effective Time:
4.3.1 The Company shall (i) carry on its business in the
ordinary course consistent with past practice; (ii) use its best
efforts to preserve intact its business organization, goodwill and
existing and prospective relations with customers and suppliers and
(iii) keep available the services of its officers and employees.
Without the prior written consent (which consent will not be
unreasonably
22
withheld or delayed except in the case of clauses (a), (b), (c), (e)
and (g)) of Purchaser and without limiting the generality of any other
provision of this Agreement, the Company shall:
(a) not amend its Certificate of Incorporation,
By-Laws or other organizational documents;
(b) not make any change in its authorized capital
stock; adjust, split, combine or reclassify any capital
stock; or issue any shares of stock of any class or issue
or become a party to any subscription, warrant, rights,
options, convertible securities or other agreements or
commitments of any character relating to or measured by
its issued or unissued capital stock, or other equity
securities, or grant any stock appreciation or similar
rights;
(c) other than draws under its existing line of
credit in the ordinary course of business consistent with
past practice, not (1) incur any indebtedness for borrowed
money; (2) assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of
any other individual, corporation or other entity or (3)
encumber any assets;
(d) not sell, transfer, mortgage, encumber or
otherwise dispose of any of its material properties or
assets to any individual, corporation or other entity,
except pursuant to contracts or agreements in force at the
date of this Agreement;
(e) not make or enter any commitment to make any
material (x) investments, either by purchase of stock or
securities, in (y) contributions to capital of, or (z)
other than in the ordinary course of business consistent
with past practice, make any loans to or purchases of any
material property or assets from, any other individual,
corporation or other entity other than regular advances to
employees in the ordinary course of business;
(f) except for transactions in the ordinary course
of business consistent with past practice and those
transactions contemplated by the provisions of this
Agreement, not enter into or terminate any material
contract or agreement, or make any material change in any
of its leases or contracts;
(g) not change its method of accounting in effect
at November 30, 1998, except as may be required by changes
in GAAP upon the advice of its independent accountants;
(h) not increase the compensation payable to any
employee, or enter into any new employment agreements with
new or existing employees which create other than an at
will relationship without any severance obligation;
(i) not make rescind or revoke any express or
deemed Tax election or settle or compromise any Tax
liability;
(j) not fail to maintain its books and records in
accordance with good accounting practices consistently
applied and not change in any material manner any of
23
its methods, principles or practices of accounting in
effect at November 30, 1998, except as may be required by
the SEC, applicable law or GAAP;
(k) not fail to duly and timely file all material
Tax Returns and other documents required to be filed with
federal, state, local and other Tax Authorities, subject
to timely extensions permitted by law;
(l) not acquire, enter into any option to acquire,
or exercise an option or contract to acquire, additional
real or personal property, in excess of $60,000 for
personal property including expenditures under Section
3.2.9(h) hereof;
(m) not (i) authorize, declare, set aside or pay
any dividend or make any other distribution or payment
with respect to any Common Stock or (ii) directly or
indirectly redeem, purchase or otherwise acquire any
shares of capital stock or any option, warrant or right to
acquire, or security convertible into, shares of capital
stock;
(n) not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) which are material to
the Company, other than the payment, discharge or
satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial
statements (or the notes thereto) included in the SEC
Reports filed prior to the date hereof or incurred in the
ordinary course of business consistent with past practice;
(o) not enter into any contractual arrangement
with any officer, director or Affiliate, except for
purchase orders or sales contracts with Affiliates in the
ordinary course of business;
(p) not adopt any new employee benefit plan or
amend or terminate or increase the benefits under any
existing plans or rights, not grant any additional
options, warrants, rights to acquire stock, stock
appreciation rights, phantom stock, dividend equivalents,
performance units or performance stock to any officer,
employee or director, or accelerate vesting with respect
to any grant of Common Stock to employees which are
subject to any risk of forfeiture, except for changes
which are required by law and changes which are not more
favorable to participants than provisions presently in
effect; or
(q) not agree, commit or arrange to take any
actions prohibited under this Section 4.3.
4.3.2 The Company shall furnish to Purchaser the Company's
internal unaudited statement of condition and statement of income for each month
ending after the date of this Agreement. Such monthly statements shall be
prepared in accordance with existing practice and shall fairly present in all
material respects the consolidated financial position and results of operation
for the Company as of and for the periods indicated therein in accordance with
past practice. As reasonably requested by Parent or Purchaser, the Company shall
confer with representatives of Parent or Purchaser to report on material
operational matters.
24
4.4 Proxy Statement; Other Regulatory Matters.
4.4.1 The Company will, as soon as practicable following
the date of this Agreement,
prepare in correct and appropriate form and file with the SEC a preliminary
Proxy Statement and will use its reasonable best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be cleared
by the SEC. The Company will notify Parent of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or any of the transactions
contemplated hereby. The Company shall give Parent and its counsel (who shall
provide any comments thereon as soon as practicable) the opportunity to review
the Proxy Statement prior to its being filed with the SEC and shall give Parent
and its counsel (who shall provide any comments thereon as soon as practicable)
the opportunity to review all amendments and supplements to the Proxy Statement
and all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. The Company and Purchaser
will use its reasonable best efforts, after consultation with Parent and
Purchaser to respond promptly to all such comments of and requests by the SEC.
As promptly as practicable after the Proxy Statement has been cleared by the
SEC, the Company shall mail the Proxy Statement to the stockholders of the
Company.
4.4.2 Each party agrees to notify the other of, and to
correct, any information contained in the Proxy Statement furnished by such
party to the other for inclusion therein, which information shall be, at the
time of furnishing, or become, prior to the Stockholders' Meeting, false or
misleading in any material respect. If at any time prior to the Stockholders'
Meeting or any adjournment thereof there shall occur any event that should be
set forth in an amendment to the Proxy and Information Statement, the Company
will prepare and mail to its stockholders such an amendment or supplement.
4.4.3 The Company shall file all reports, schedules and
definitive proxy statements (including the Proxy Statement) (the "Company
Filings") required to be filed by the Company with the SEC (including, without
limitation, reports required by Section 13(d) or 13(g) of the Exchange Act) and
shall provide copies thereof to Parent promptly upon the filing thereof. As of
its respective date, the Company represents, warrants and covenants that each
Company Filing will comply in all material respects with the requirements of the
Exchange Act and the applicable rules and regulations of the SEC thereunder and
none of the Company Filings will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading. Upon learning of any such false or misleading information,
the Company shall cause all required the Company Filings (including the Proxy
Statement) to be corrected, filed with the SEC and disseminated to holders of
the Common Stock, in each case as and to the extent required by applicable law.
4.5 Stockholders' Meeting.
4.5.1 The Company, through the Board, will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders, such meeting to be held no
sooner than 20 business days nor later than 45 days following the date the Proxy
Statement is mailed to the stockholders of the Company (the "Stockholders'
Meeting") for the purpose of obtaining the Stockholder Approval. The Company
shall be required to hold the Stockholders' Meeting, regardless of whether the
Board has withdrawn, amended or modified its recommendation that its
stockholders adopt this Agreement and approve the Merger and the transactions
contemplated hereby, unless this Agreement has been
25
terminated pursuant to the provisions of Section 6.1. The Company will, through
its Board, recommend that its stockholders adopt this Agreement and approve the
transactions contemplated hereby, including the Merger; provided, that prior to
the Stockholders' Meeting, such recommendation may be withdrawn, modified or
amended only to the extent expressly permitted under Section 4.8.
4.5.2 If on the date for the Stockholders' Meeting
established pursuant to Section 4.5.1 of this Agreement, the Company has not
received duly executed proxies which, when added to the number of votes
represented in person at the meeting by Persons who intend to vote to adopt this
Agreement, will constitute a sufficient number of votes to adopt the Stockholder
Approval, then the Company shall recommend the adjournment of the Stockholders'
Meeting until a date 10 business days after the originally scheduled date of the
Stockholders' Meeting.
4.6 Filings; Other Action. Subject to the terms and conditions herein
provided, each of Parent, Purchaser and the Company shall: (a) to the extent
required to effect the transactions contemplated hereby, promptly make their
respective filings with respect to the Merger; (b) use all reasonable best
efforts to cooperate with one another in (i) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
Effective Time from, Governmental Entities in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and (ii) timely making all such filings, declarations, registrations and
notifications and timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as practicable. The Company
shall use all reasonable efforts to obtain in writing any consents required from
third parties in form reasonably satisfactory to Parent necessary to (i)
effectuate the Merger and the other transactions contemplated hereby and (ii)
avoid defaults, acceleration of rights, and payment of consent or similar fees
to third parties under agreements with the Company as a result of the Merger or
the other transactions contemplated hereby, including the consents listed on
Schedule 4.6 hereto (collectively the "Consents"); provided, however, that
without the written consent of Parent, the Company shall not pay any cash or
other consideration, make any commitment or incur any liability in excess of the
amount set forth on Schedule 4.6 hereto in connection therewith. The Company
shall use reasonable efforts to obtain payoff letters and releases from holders
of its indebtedness to be paid off in connection with the Merger.
4.7 Acquisition Proposals.
4.7.1 The Company represents that it is not currently
engaged in any activities, discussions or negotiations with respect to an
Acquisition Proposal (as defined herein). From and after the date hereof and
until and including the Effective Time (or earlier termination of this
Agreement), the Company shall not, or authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative or agent of the Company, to, directly or
indirectly, (i) solicit, initiate, or encourage (including by way of furnishing
or otherwise providing access to nonpublic information) any Acquisition
Proposal; (ii) participate in substantive discussions or any negotiations
relating to any Acquisition Proposal (or any inquiry relating to an Acquisition
Proposal) or take any other action to facilitate any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal; or (iii) enter into any letter of intent, agreement in
principle or definitive agreement with respect to any Acquisition Proposal;
provided, however, that, prior to the Stockholders' Meeting, nothing contained
in this Section 4.7 shall prohibit the Company or the Board from furnishing
nonpublic information to, or entering into discussions or negotiations with, any
person or entity with respect
26
to any unsolicited Acquisition Proposal if (but only if): (a) the Board
determines reasonably and in good faith after consultation with outside counsel,
that the failure to take such action would be inconsistent with its fiduciary
duties under applicable law; and (b) the Company (x) provides at least two (2)
business days' notice to Parent to the effect that it is taking such action and
(y) prior to any release of any nonpublic information to such person, receives
from such person or entity an executed confidentiality agreement substantially
similar to the Confidentiality Agreement.
4.7.2 Notwithstanding anything in this Agreement to the
contrary, the Company shall promptly advise Parent orally and in writing of the
receipt by it (or by any of the other entities or persons referred to above)
after the date hereof of any Acquisition Proposal or any inquiry which could
reasonably lead to an Acquisition Proposal, the material terms and conditions of
such Acquisition Proposal or inquiry, and the identity of the person or entity
making any such Acquisition Proposal. The Company agrees that it will fully
enforce (including by way of obtaining an injunction), and not waive any
provision of, any confidentiality agreement to which it is a party.
4.7.3 For purposes of this Agreement, an "Acquisition
Proposal" means any proposal or offer, or expression of intent relating to the
Company's willingness or ability to receive or discuss a proposal or offer made
by a third party (other than Parent and Purchaser) to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger, proxy
solicitation, consolidation, business combination, recapitalization,
reorganization, liquidation, dissolution or similar transaction, 15% or more of
the combined voting power, shares or equity interests of the Company, in each
case then outstanding, or 15% or more of the assets of the Company; and a
"Superior Proposal" means a bona fide proposal or offer made by a third party
(A) to acquire the Company pursuant to any tender or exchange offer or any
acquisition of all or substantially all of the assets of the Company or (B) to
enter into a merger, consolidation or other business combination with the
Company, which a majority of the members of the Board determines reasonably and
in good faith is more favorable to the holders of Common Stock than the Merger.
4.8 Board Action. The Board shall not (i) withdraw or modify its
approval or recommendation of this Agreement, the Merger or any of the
transactions contemplated hereby, (ii) approve or recommend or publicly propose
to approve or recommend an Acquisition Proposal, (iii) cause the Company to
enter into any letter agreement, agreement in principle or definitive agreement
providing for an Acquisition Proposal, or (iv) resolve to do any of the
foregoing, unless prior to the Stockholders' Meeting, the Company receives an
unsolicited Acquisition Proposal in accordance with Section 4.7 and the Board
determines reasonably and in good faith, after due investigation, that (a) such
Acquisition Proposal is a Superior Proposal, (b) the Person making such Superior
Proposal is reasonably capable of consummating such Superior Proposal in a
timely fashion and (c) based upon the advice of outside counsel, the failure of
the Board to withdraw or modify its approval or recommendation of this Agreement
or the Merger, or approve or recommend such Superior Proposal would be
inconsistent with its fiduciary duties under applicable law. In such case, the
Board may withdraw or modify its recommendation, and approve and recommend such
Superior Proposal, provided the Board (i) at least five (5) business days prior
to taking such action, provides to Parent and Purchaser written notice of the
Company's intention to accept the Superior Proposal, (ii) during such period,
gives Parent and Purchaser a reasonable opportunity to propose modifications to
the Merger Consideration and negotiates such modifications in good faith with
the objective of allowing Parent and Purchaser to match the Superior Proposal
and (iii) at the end of such period, (A) reasonably and in good faith continues
to believe that such Acquisition Proposal is a Superior Proposal, (B)
simultaneously terminates this Agreement, (C) concurrently causes the Company to
enter into a definitive acquisition agreement with respect to such Superior
Proposal and (D) concurrently pays to Parent and Purchaser the Termination
Payment and Covered Expenses pursuant to Section 6.4.2. Nothing contained in
this Section 4.8 shall prohibit the Company from taking and disclosing to its
27
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act; provided that the Company does not withdraw or modify its position
with respect to the Merger or approve or recommend an Acquisition Proposal,
except under the circumstances described in the immediately preceding sentence
and on five (5) business days' notice to Parent to the effect that it is taking
such action.
4.9 Indemnification and Insurance.
4.9.1 Prior to the Closing, the Company shall procure a
five-year tail policy for its officers' and directors' liability insurance
covering each present and former director, officer, employee and agent of the
Company and each present and former director, officer, employee, agent or
trustee of any employee benefit plan for employees of the Company (individually,
an "Indemnified Person", and collectively, the "Indemnified Persons"), who is
currently covered by the Company's officers' and directors' liability insurance
or will be so covered on the Closing Date with respect to actions and omissions
occurring on or prior to the Closing Date (including, without limitation, any
which arise out of or relate to the transaction contemplated by this Agreement),
which tail policy is no less favorable in the aggregate than such insurance
maintained in effect by the Company on the date hereof in terms of coverage and
amount.
4.9.2 Purchaser and the Surviving Corporation hereby
jointly and severally agree that, for not less than six (6) years after the
Closing Date, the provisions of the Certificate of Incorporation and ByLaws of
the Surviving Corporation shall provide indemnification to the Indemnified
Persons on terms, in a manner, and with respect to matters, which are no less
favorable (in favor of persons indemnified) than the Company's Certificate of
Incorporation and By-Laws, as in effect on the date hereof, and further agree
that such indemnification provisions shall not be modified or amended except as
required by law, unless such modification or amendment expands the rights of the
Indemnified Persons to indemnification.
4.9.3 Nothing contained in this Section 4.9, or elsewhere
in this Agreement, shall limit an Indemnified Person's right (or impose any
obligation upon an Indemnified Person) to pursue (whether separately,
simultaneously or in seriatim) recovery of the obligations of indemnification
provided for in this Section 4.9, and the pursuit of one or more rights of
indemnification by an Indemnified Person shall not be deemed to be a waiver of
the right to pursue any other remedy. Nothing herein contained shall be deemed
or construed as allowing an Indemnified Person to recover an aggregate amount in
excess of the amount for which the Indemnified Person is entitled to
indemnification. Nothing contained in this Section 4.9 shall prevent the Company
from being dissolved prior to the time limits set forth in this Section 4.9.
4.10 Stockholder Claims. The Company shall not settle or compromise any
claim relating to the Merger brought by any current, former or purported holder
of any securities of the Company without the prior written consent of Parent.
4.11 Cooperation with Proposed Financing. At the request of Parent, the
Company will, at the Parent's expense, reasonably cooperate with Parent and
Purchaser in connection with the proposed financing of the Merger by the Parent
and Purchaser provided that such requested actions do not unreasonably interfere
with the ongoing operations of the Company.
4.12 State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation ("State Takeover
Laws") shall become applicable to the transactions contemplated hereby, the
Company and the Board shall use their reasonable best efforts to grant such
approvals and to take such other actions as are necessary so that the
transactions contemplated hereby may be consummated as
28
promptly as practicable on the terms contemplated hereby and shall otherwise use
their reasonable best efforts to eliminate the effects of any such State
Takeover Laws on the transactions contemplated hereby.
ARTICLE V
CONDITIONS TO CLOSING; CLOSING DELIVERIES
5.1 Conditions to Each Party's Obligations. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
5.1.1 The Merger shall have been approved by the requisite
vote of the stockholders of
the Company.
5.1.2 This Agreement and the Merger shall have been
approved by each Governmental
Entity whose approval is required for the consummation of the Merger and such
approvals shall remain in full force and effect.
5.1.3 No Governmental Entity or court of competent
jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
the Merger or any of the transactions contemplated hereby illegal.
5.2 Conditions to the Company's Obligations. The obligation of the
Company to effect the Merger and to consummate the transactions contemplated
hereby is subject to the fulfillment (or waiver) of all of the following
conditions prior to the Effective Time, upon the non-fulfillment (and
non-waiver) of any of which this Agreement may, at the Company's option, be
terminated pursuant to and with the effect set forth in Article VI hereof:
5.2.1 Each and every representation and warranty made by
Parent and Purchaser shall be true and correct when made and as if originally
made on and as of the Closing Date.
5.2.2 All obligations of Parent and Purchaser to be
performed hereunder through, and including on, the Closing Date (including,
without limitation, all obligations which Purchaser would be required to perform
at the Closing if the transaction contemplated hereby was consummated) shall
have been fully performed.
5.2.3 No suit, proceeding or investigation shall have been
commenced (to Parent's or Purchaser's knowledge) by any Governmental Entity on
any grounds to restrain, enjoin or hinder, or seek material damages on account
of, the consummation of the transaction contemplated hereby.
5.2.4 Purchaser shall have delivered to the Company the
written opinion of Altheimer & Xxxx, counsel for Purchaser, dated as of the
Closing Date, in substantially the form of Exhibit B attached hereto.
5.3 Conditions to Obligations of Parent and Purchaser. The obligation
of Parent and Purchaser to effect the Merger and consummate the transactions
contemplated hereby is subject to the fulfillment (or
29
waiver) of all of the following conditions on or prior to the Closing Date, upon
the non-fulfillment (and non-waiver) of any of which this Agreement may, at
Parent's and Purchaser's option, be terminated pursuant to and with the effect
set forth in Article VI:
5.3.1 The representations and warranties made by the
Company shall be true and correct when made and as if originally made on and as
of the Closing Date.
5.3.2 All obligations of the Company to be performed
hereunder through, and including on, the Closing Date (including, without
limitation, all obligations which the Company would be required to perform at
the Closing if the transaction contemplated hereby was consummated) shall have
been fully performed.
5.3.3 No suit, proceeding or investigation shall have been
commenced by any Governmental Entity on any grounds to restrain, enjoin or
hinder, or seek material damages on account of, the consummation of any of the
transaction contemplated hereby.
5.3.4 The Company shall have delivered to Purchaser the
written opinion of Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to the Company, dated
as of the Closing Date, in substantially the form of Exhibit C attached hereto.
5.3.5 Since the date hereof, there shall have been no
change, either individually or in the aggregate, in the results of operations,
condition (financial or otherwise), properties, assets or business of the
Company which has had or would be reasonably likely to have a Material Adverse
Effect on the Company (such term for this purpose shall be deemed to have a
$100,000 threshold).
5.3.6 There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, by any Governmental Entity which is applicable to the Merger and which
imposes any condition or restriction upon Purchaser or the Surviving Corporation
which would in Parent's reasonable judgment be commercially unreasonable from a
financial standpoint relative to the transactions contemplated by this
Agreement.
5.3.7 Purchaser shall have received the proceeds of the
Financing.
5.3.8 The Amended License shall be in full force and
effect and constitute a valid and binding obligation of each of the Company and
Xxxxxxx & Xxxxxxxx and enforceable against each of the Company and Xxxxxxx &
Xxxxxxxx in accordance with its terms.
5.3.9 The Employment Agreement of even date herewith
between the Company and Xxxxx Xxxxxxxxx shall be in full force and effect and
constitute a valid and binding obligation of Xxxxx Xxxxxxxxx enforceable against
him in accordance with its terms.
5.3.10 All Consents listed on Schedule 4.6 hereto and all
Stock Option Consents shall have been obtained, and not subsequently been
revoked, as of the Closing Date.
5.3.11 The total amount of all expenses incurred by the
Company in connection with the transactions contemplated hereby including (i)
investment banking, (ii) legal and accounting, (iii) advisory, consulting and
severance, (iv) printing and SEC filing and (v) other fees and expenses
incurred,
30
paid or accrued by the Company in connection with the transactions contemplated
hereby shall not exceed $250,000. In the event the aggregate of such fees and
expenses exceed $250,000, at the option of Parent, the aggregate consideration
payable to holders of Common Stock in the Merger shall be reduced by the
aggregate amount of such excess, and the Merger Consideration per share shall be
reduced accordingly.
5.4 Closing Deliveries.
5.4.1 At the Closing, the Company shall cause to be
delivered to Parent and Purchaser all of the following:
(a) a closing certificate dated the Closing Date and
executed on behalf of the Company by a duly authorized officer of the
Company to the effect set forth in Sections 5.3.1, 5.3.2 and 5.3.5; and
(b) certified copies of such corporate records of the
Company and copies of such other documents as Purchaser or its counsel
may reasonably have requested in connection with the consummation of
the transactions contemplated hereby.
5.4.2 At the Closing, Parent and Purchaser shall cause to
be delivered to the Company all of the following:
(a) a closing certificate dated the Closing Date and
executed on behalf of Parent and Purchaser by a duly authorized officer
of Parent and Purchaser to the effect set forth in Sections 5.2.1 and
5.2.2; and
(b) certified copies of such corporate records of Parent
and Purchaser and copies of such other documents as the Company or its
counsel may reasonably have requested in connection with the
consummation of the transactions contemplated hereby.
ARTICLE VI
TERMINATION/EFFECT OF TERMINATION
6.1 Right to Terminate. Anything to the contrary herein
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Effective Time by prompt notice given in
accordance with Section 7.4:
6.1.1 by the mutual written consent of Parent and
Purchaser and the Company (with the approval of their respective Boards
of Directors);
6.1.2 by Parent and Purchaser or the Company (with the
approval of the Board) if:
(a) the Effective Time shall not have occurred at
or before 11:59 p.m. on January 31, 2000 (the "Termination Date");
provided, however, that the right to terminate this Agreement under
this Section 6.1.2 shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement in any manner has
proximately contributed to the failure of the Effective Time to have
occurred as of such time; or
31
(b) upon a vote at the Stockholders' Meeting this
Agreement, the Merger and the transactions contemplated hereby shall
fail to be adopted and approved by the requisite vote of the
stockholders of the Company.
6.1.3 by Parent and Purchaser, by giving written notice of
such termination to the Company, if:
(a) there has been a breach of any (i)
representation or warranty, or (ii) covenant, obligation or agreement
on the part of the Company set forth in this Agreement, in either case
such that the conditions set forth in Section 5.3.1 or Section 5.3.2,
as the case may be, are not satisfied or would be incapable of being
satisfied within 20 days after the giving of written notice to the
Company (or sooner, if the date the Closing would otherwise occur);
(b) the Board shall have breached any of its
obligations under the first sentence of Section 4.8 hereof, or the
Board shall withdraw or modify its recommendation, and approve and
recommend a Superior Proposal as permitted by the second sentence of
Section 4.8 hereof;
(c) a tender offer or exchange offer for 30% or
more of the shares of Common Stock of the Company is commenced, and the
Board fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders within the time period required by
Section 14e-2 of the Exchange Act (the taking of no position by the
expiration of such period with respect to the acceptance of such tender
offer or exchange offer by its stockholders constituting such a
failure);
(d) the Company shall have breached any of its
covenants or agreements in Section 4.5 or 4.7 in any material respect;
or
(e) there shall be pending or threatened any
proceeding seeking material damages on account of the Merger, any of
the transactions contemplated hereby which Parent determines in good
faith, after due investigation and consultation with counsel
representing the Company in such proceeding, could reasonably be
expected to result in the Company incurring a material amount of
damages or expenses, after taking into account applicable insurance
coverage; or
(f) Any Significant Stockholder breaches in any
material respect its obligations under the Voting Agreement; or
(g) Parent and Purchaser shall not have received
the proceeds of the Financing on the date the Closing would have
otherwise occured.
6.1.4 by the Company (with the approval of the Board), by
giving written notice of such termination to Parent and Purchaser, if:
(a) there has been a breach of any (i)
representation or warranty, or (ii) covenant obligation or agreement on
the part of Parent or Purchaser set forth in this Agreement, in either
case such that the conditions set forth in Section 5.2.1 or Section
5.2.2, as the case may be, are not satisfied or would be incapable of
being satisfied within 20 days after the giving of written notice to
Parent or Purchaser (or, if sooner, the date the Closing would
otherwise occur);
32
(b) if, prior to the Stockholders' Meeting, the
Board determines to enter into and enters into a definitive agreement
providing for a Superior Proposal which was obtained consistent with
Sections 4.7 and 4.8 hereof; provided, however, that the Company shall
have no right to terminate this Agreement under this Section 6.1.4(b)
unless (i) the Company has provided Purchaser with written notice of
the material terms of the Superior Proposal at least two (2) business
days prior to such termination, and (ii) the Company simultaneously
pays to Purchaser the Termination Payment and Covered Expenses required
under Section 6.4.2.
6.2 Certain Effects of Termination. In the event of the termination of
this Agreement as provided in Section 6.1, each party, if so requested by the
other party, will return promptly every document furnished to it by or on behalf
of the other party in connection with the transaction contemplated hereby,
whether so obtained before or after the execution of this Agreement, and any
copies thereof (except for copies of documents publicly available) which may
have been made, and will use reasonable efforts to cause its representatives and
any representatives of financial institutions and investors and others to whom
such documents were furnished promptly to return such documents and any copies
thereof any of them may have made. The obligation of Purchaser under the
Confidentiality Agreement shall continue notwithstanding any termination of this
Agreement. This Section 6.2 shall survive any termination of this Agreement.
6.3 Remedies. Notwithstanding any termination right granted in Section
6.1, in the event of the nonfulfillment of any condition to a party's closing
obligations, in the alternative, such party may elect to do one of the
following:
(a) proceed to close despite the nonfulfillment of any
closing condition;
(b) decline to close, terminate this Agreement as provided
in Section 6.1, and thereafter seek damages to the extent permitted in
Section 6.4; or
(c) seek specific performance of the obligations of the
other party. Each party hereby agrees that, in the event of any breach
of this Agreement by such party, the remedies available to the other
party at law would be inadequate and that such party's obligations
under this Agreement may be specifically enforced.
6.4 Right to Damages; Expense Reimbursement.
6.4.1 If this Agreement is terminated in accordance with
Section 6.1, neither party shall have any claim against the other, subject to
the following sentence and, if applicable, the remaining provisions of this
Section 6.4. A party terminating this Agreement in accordance with Section 6.1
shall retain any and all of such party's legal and equitable rights and remedies
if, but only if, the circumstances giving rise to such termination were (i)
caused by the other party's willful failure to comply with a material covenant
set forth herein or (ii) that a material representation or warranty of the other
party was materially false when made and that party knew or should have
reasonably known such representation or warranty was materially false when made.
In either of such events, termination shall not be deemed or construed as
limiting or denying any legal or equitable right or remedy of said party, and
said party shall also be entitled to recover its costs and expenses which are
incurred in pursuing its rights and remedies (including reasonable attorneys'
fees).
6.4.2 If (x) the Company terminates this Agreement
pursuant to Section 6.1.4(b) or Section 4.8 or (y) Purchaser and Parent
terminate this Agreement pursuant to 6.1.3(b), (c) or (d), the Company shall (a)
pay Parent $100,000 in cash immediately upon such termination, in same-day funds
(the "Termination
33
Payment"), by wire transfer of same-day funds to an account designated by
Parent, and (b) reimburse Parent and Purchaser for their out-of-pocket costs and
expenses reasonably incurred and due to third parties in connection with this
Agreement and the transactions contemplated hereby (including fees and
disbursements of counsel, accountants, financial advisors and consultants,
commitment fees, due diligence expenses, travel costs, filing fees, and similar
fees, all of which shall be conclusively established by Parent's or Purchaser's
good faith statement therefor) (collectively, "Covered Expenses"), up to a
maximum of $150,000, by wire transfer of same-day funds to an account designated
by Parent, immediately following receipt of Parent's statement evidencing the
Covered Expenses.
6.4.3 If this Agreement is terminated pursuant to Section
6.1.2(b) or 6.1.3(f), the Company shall pay to Parent immediately upon such
termination, Parent and Purchaser's Covered Expenses up to $125,000 if
terminated pursuant to Section 6.1.2(b) or up to $150,000 if terminated pursuant
to Section 6.1.3(f) by wire transfer of same day funds to an account designated
by Parent immediately following receipt of Parent's statement evidencing the
Covered Expenses. If this Agreement is terminated pursuant to Section 6.1.2(b)
or 6.1.3(a), and the Company, within twelve (12) months after such termination,
enters into a written agreement to effect an Acquisition Proposal with, or an
Acquisition Proposal is made by, a party other than Parent, Purchaser or any of
their subsidiaries, and the Acquisition Proposal is thereafter consummated, the
Company shall pay to Purchaser the Termination Payment in addition to the
Covered Expenses paid under the immediately preceding sentence. The Termination
Payment contemplated by the prior sentence shall be paid in same-day funds by
wire transfer to an account designated by Parent on the earlier of the
consummation of such Acquisition Proposal and the first business day following
the meeting at which the stockholders of the Company approve such Acquisition
Proposal.
6.4.4 If any party to the Agreement fails to promptly pay
any amounts owing pursuant to this Section 6.4. when due, such party shall in
addition to paying such amounts pay all costs and expenses (including, fees and
disbursements of counsel) incurred in collecting such amounts, together with
interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received at the
rate of 9% per annum as in effect from time to time during such period. This
Section 6.4 shall survive the termination of this Agreement.
6.4.5 If (x) Parent and Purchaser terminate the Agreement
pursuant to Section 6.1.3(g) or (y) either the Company or Parent or Purchaser
terminate this Agreement pursuant to Section 6.1.2(a) and (1) the Company is not
in breach of any of its obligations under this Agreement and (2) all of the
conditions under Section 5.3 (other than the condition specified in Section
5.3.7 hereof) would otherwise be satisfied if the Closing were to occur on the
date of termination, Parent will reimburse the Company for its Covered Expenses
up to a maximum of $150,000 by wire transfer of same day funds to an account
designated by the Company immediately following receipt of the Company's
statement evidencing its Covered Expenses.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations, Warranties and Agreements. None of the
representations, warranties, or agreements contained in this Agreement or in any
certificate or other document delivered pursuant to this Agreement shall survive
the Merger.
7.2 Amendment. This Agreement may be amended by the parties hereto,
with the approval of their respective Boards of Directors, at any time prior to
the Effective Time, whether before or after approval
34
hereof by the stockholders of the Company, but, after such approval by the
stockholders of the Company, no amendment shall be made without the further
approval of such stockholders if such amendment would violate Section 904 of the
DGCL or Section 251 of the DGCL. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
7.3 Public Announcements. Parent, Purchaser and the Company will
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other written public statements
with respect to the transactions contemplated by this Agreement, and shall not
issue any such press release or make any such written public statement prior to
such consultation, except as may be required by applicable law, court process or
by obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued promptly
upon the signing hereof with respect to the transactions contemplated by this
Agreement will be in the form agreed to by the parties hereto prior to the
execution of this Agreement.
7.4 Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile or by nationally
recognized overnight courier. Notices delivered by hand, by facsimile or by
nationally recognized overnight courier shall be deemed given on the day of
receipt (if such day is a business day or, if such day is not a business day,
the next succeeding business day); provided, however, that a notice delivered by
facsimile shall only be effective if and when confirmation is received of
receipt of the facsimile at the number provided in this Section 7.4. All notices
shall be addressed as follows:
If to the Company:
NDC Automation, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxx, Loop & Xxxxxxxx, LLP
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
If to Parent or Purchaser:
c/o Code Xxxxxxxx & Xxxxxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
35
with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Xxxxx Xxxxx Barros
Fax: (000) 000-0000
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 7.4.
7.5 Expenses; Transfer Taxes. Except as set forth in Section 6.4, each
party hereto shall bear all fees and expenses incurred by such party in
connection with, relating to or arising out of the negotiation, preparation,
execution, delivery and performance of this Agreement and the consummation of
the transaction contemplated hereby, including, without limitation, financial
advisors', attorneys', accountants' and other professional fees and expenses.
Purchaser shall pay the cost of all sales, use, stamp, documentary, excise and
transfer Taxes which may be payable in connection with the purchase of Common
Shares.
7.6 Entire Agreement. This Agreement, the Amended License, the
Confidentiality Agreement and the instruments to be delivered by the parties
pursuant to the provisions hereof constitute the entire agreement between the
parties and shall be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, successors and permitted assigns.
Each Exhibit and Schedule (including the Company Disclosure Schedule), shall be
considered incorporated into this Agreement.
7.7 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
7.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
7.9 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
7.10 Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Delaware applicable to contracts
made in that State.
7.11 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and their successors and permitted
assigns. Except as expressly provided in Article II and Section 4.9 hereof,
nothing in this Agreement, express or implied, shall confer on any person other
than the
36
parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, including, without limitation, third party beneficiary rights.
7.12 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
7.13 Governmental Reporting. Anything to the contrary in this Agreement
notwithstanding, nothing in this Agreement shall be construed to mean that a
party hereto or other person must make or file, or cooperate in the making or
filing of, any return or report to any Governmental Entity in any manner that
such person or such party reasonably believes or reasonably is advised is not in
accordance with law.
7.14 Defined Terms. The following terms are defined in the following
sections of this Agreement:
Defined Term Where Found
------------ -----------
1990 Plan 2.4
1993 Plan 2.4
1997 Plan 2.4
Acquisition Proposal 4.7.3
Affiliate 3.2.12
Agreement Preamble
Amended License Recital D
Authorization 3.2.3
Board 3.2.2
CERCLA 3.2.27(b)
Certificate of Merger 1.2
Certificates 2.2.2
Closing 1.6
Closing Date 1.6
Code 3.2.13(c)
Commitment 3.3.5
Common Stock 2.1.1
Company Preamble
Company Disclosure Schedule 3.1
Company Filings 4.4.3
Company Stockholders 2.2.1
Confidentiality Agreement 4.2
Consents 4.6
Constituent Corporations 1.1
Containers 3.2.27(c)
Contract 3.2.20
Contracts 3.2.20
Covered Expenses 6.4.2
Date Data 3.2.32
DGCL Recital A
Directors 3.2.5
EDI Parties 3.2.32
37
Effective Time 1.2
Employee Benefit Plans 3.2.21(a)
Encumbrances 3.2.4
Environmental Laws 3.2.27(a)
Environmental Permits 3.2.27(a)
ERISA 3.2.21(a)
ERISA Affiliate 3.2.21(a)
Exchange Act 3.2.3
Facility 3.2.27(b)
Fairness Opinion 3.2.34
Financial Statements 3.2.7(a)
Financing 3.3.5
GAAP 3.2.7(a)
Governmental Entity 3.2.3
including 7.16
Indemnified Person 4.9.1
Indemnified Persons 4.9.1
Information Technology 3.2.32
Intellectual Property 3.2.31
Interim Balance Sheet 3.2.8(a)
Inventory 3.2.7(c)
Leased Premises 3.2.29
Lender 3.3.5
Letter of Transmittal 2.2.2
Liabilities 3.2.8
Material Adverse Effect 3.2.4
Merger Recital A
Merger Consideration 2.1.1
Multiemployer Plan 3.2.21(a)
Xxxxxxx & Xxxxxxxx Recital C
Obligation 3.2.4
Offsite Facility 3.2.27(b)
Parent Preamble
Paying Agent 2.2.1
Payment Fund 2.2.1
Permits 3.2.18
Person 3.2.4
Plans 2.4
Preferred Stock 3.2.5
Proxy Statement 3.2.36
Purchaser Preamble
Purchaser Obligations 3.3.4
Real Estate 3.2.28
Related Parties 3.2.12
Related Party 3.2.12
Return 3.2.13(b)
Returns 3.2.13(b)
SEC 3.2.3
38
SEC Reports 3.2.6
Securities Act 3.2.6
Significant Customer 3.2.19
Significant Supplier 3.2.19
Stock Option 2.4
Stockholder Approval 3.2.35
Stockholders' Meeting 4.5.1
Superior Proposal 4.7.3
Surviving Corporation 1.1
Tax 3.2.13(a)
Taxes 3.2.13(a)
Termination Date 6.1.2(a)
Termination Payment 6.4.2
Voting Agreement Recital C
Year 2000 Compliant 3.2.32
7.15 Headings. The headings contained in this Agreement and the
Agreement's Table of Contents are for convenience of reference only and shall
not affect the meaning or interpretation of this Agreement.
7.16 Interpretation. Whenever the term "including" is used in this
Agreement it shall mean "including, without limitation," (whether or not such
language is specifically set forth) and shall not be deemed to limit the range
of possibilities to those items specifically enumerated. All joint obligations
herein shall be deemed to be joint and several whether specifically so
specified.
39
IN WITNESS WHEREOF, the parties have caused to be executed this
Agreement and Plan of Merger on the date first above written.
PARENT:
PORTEC, INC.
By: /S/Xxxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxx
Its: PRESIDENT
PURCHASER:
XXXXXXX ACQUISITION CORP.
By: /s/Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Its: VICE PRESIDENT
THE COMPANY:
NDC AUTOMATION, INC.
By: /s/Xxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxx
Its: PRESIDENT & CEO
40
EXHIBIT "A"
Execution Copy
VOTING AGREEMENT
This Voting Agreement ("Agreement") is entered into this September 13,
1999, by and among Portec, Inc., a Delaware corporation ("Parent"), Xxxxxxx
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Purchaser"), and the persons identified on the signature page hereto
(each individually a "Stockholder" and collectively the "Stockholders") in their
capacity as stockholders of NDC Automation, Inc., a Delaware corporation (the
"Company").
RECITALS
A. The Company, Parent and Purchaser are entering into an Agreement and
Plan of Merger, dated Setember 13, 1999 providing for the merger (the "Merger")
of Purchaser with and into the Company with the Company as the surviving entity
(the "Merger Agreement"). Capitalized terms used without definition herein
having the meanings ascribed thereto in the Merger Agreement;
B. In connection with the Merger Agreement, the Board of Directors of
the Company has approved and recommended adoption of the Merger Agreement to the
stockholders of the Company;
C. Each Stockholder is as of the date hereof the record and beneficial
owner of the number of shares of common stock, $.01 par value, of the Company
set forth below his name on the signature page hereto (collectively, the
"Shares");
D. Approval and adoption of the Merger Agreement by the Company's
stockholders is a condition to the consummation of the Merger; and
E. As a condition to their entering into the Merger Agreement, Parent
and Purchaser have required that each Stockholder agree, and each Stockholder
has agreed, to enter into this Agreement.
AGREEMENTS
Now, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. Agreement to Vote and Restrictions on Dispositions. Each Stockholder
hereby agrees as follows:
(a) Each Stockholder hereby agrees to attend any stockholders' meeting
of the Company, in person or by proxy, and to vote (or cause to be voted) all
Shares, and any other voting securities of the Company, whether issued
heretofore or hereafter, that each Stockholder owns or has the right
to vote, for approval and adoption of the Merger Agreement and the transactions
contemplated thereby, such agreement to vote to apply also to any adjournment of
the stockholders' meeting of the Company. Each Stockholder agrees not to grant
any proxies or enter into any voting agreement or arrangement inconsistent with
this Agreement. Each Stockholder further agrees to waive any dissenters rights,
appraisal rights or similar rights in connection with the Merger.
(b) Each Stockholder hereby agrees that, without the prior written
consent of Parent and Purchaser, each Stockholder shall not, directly or
indirectly, sell, offer to sell, grant any option for the sale of or otherwise
transfer or dispose of, or enter into any agreement to sell, grant an option for
or otherwise transfer or dispose of any Shares and any other voting securities
of the Company that each Stockholder owns beneficially or otherwise. Each
Stockholder agrees that Parent or Purchaser may instruct the Company to enter
stop transfer orders with the transfer agent(s) and the registrar(s) of the
Shares against the transfer of Shares and any other voting securities of the
Company that each Stockholder owns beneficially or otherwise. If requested by
Parent or Purchaser, each Stockholder agrees to surrender or cause to be
surrendered to the transfer agent(s) and registrar(s) of the Shares certificates
representing Shares registered in the name of each Stockholder, in exchange for
certificates representing Shares containing a legend to the effect of the
following:
The shares represented by this certificate are subject to restrictions
on transfer and disposition as set forth in the Voting Agreement dated
September 13, 1999, by and among Parent, Purchaser and Stockholder. A
copy of such agreement may be obtained from the Secretary of the
Company.
Upon the termination of this Agreement pursuant to Section 5 hereof,
each Stockholder shall have the right to unilaterally instruct the transfer
agent(s) and registrar(s) of the Shares to deliver to each Stockholder
certificates representing Shares registered in the name of such Stockholder and
not bearing the foregoing legend in exchange for certificates representing
Shares registered in the name of such Stockholder and bearing such legend.
(c) Each Stockholder agrees to vote (or cause to be voted) all Shares,
and any other voting securities of the Company, owned by such Stockholder
whether issued heretofore or hereafter, that such person owns or has the right
to vote, against (i) any Acquisition Proposal (as defined in the Merger
Agreement) which is not endorsed in writing by Parent and Purchaser and (ii) any
other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or which could result in any of the conditions to
Parent's or Purchaser's obligations under the Merger Agreement not being
fulfilled.
(d) Each Stockholder agrees not to and to cause any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative or agent of such Stockholder not to, directly
or indirectly, or through any person, (i) solicit, initiate, or encourage
(including by way of furnishing or otherwise providing access to nonpublic
information) any Acquisition Proposal or (ii) participate in any substantive
discussions or negotiations relating to any
2
Acquisition Proposal (or any inquiry relating to an Acquisition Proposal) or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal; provided, however, if the Company or the Board takes any action with
respect to an unsolicted Acquisition Proposal as permitted by Section 4.7(a) of
the Merger Agreement, nothing contained herein shall prohibit any Stockholder
from discussing with the person or entity who made such unsolicited Acquisition
Proposal the Stockholder's willingness to consent to a Superior Proposal under
that certain Amended and Restated Master License Agreement dated as of December
1, 1995 between the Company and Xxxxxxx et Xxxxxxxx Xx. XX, a limited liability
Swedish Corporation. Nothing contained herein shall be construed to limit or
otherwise affect any Affiliate or representative of any Stockholder who shall
serve as a director of the Company from taking any action permitted by Section
4.7 or Section 4.8 of the Merger Agreement in his or her capacity as such
director.
(e) Each Stockholder agrees to promptly notify Parent and Purchaser in
writing of the nature and amount of any acquisition by such Stockholder after
the date hereof of any voting securities of the Company.
2. Representations and Warranties of Each Stockholder. Each Stockholder
represents and warrants to Parent and Purchaser as follows:
(a) Each Stockholder has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(b) This Agreement has been duly executed and delivered by each
Stockholder, and assuming the due authorization, execution and delivery of this
Agreement by Parent and Purchaser, this Agreement constitutes the valid and
legally binding obligation of each Stockholder enforceable against each
Stockholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
creditors' rights and general principles of equity.
(c) The Shares are the only voting securities of the Company owned
(beneficially or of record) by each Stockholder and are owned free and clear of
all liens, charges, encumbrances, restrictions and commitments of any kind other
than (i) shares pledged as margin stock and (ii) shares that were granted
pursuant to restricted share awards and have not yet vested. Each Stockholder
has not appointed or granted any irrevocable proxy, which appointment or grant
is still effective, with respect to the Shares.
(d) The execution and delivery of this Agreement by each Stockholder
does not (i) conflict with or violate any agreement, order, judgment or decision
or other instrument binding upon him, nor require any consent, notification,
regulatory filing or approval, (ii) to such Stockholder's knowledge, conflict
with or violate any law, rule or regulation or (ii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default)
3
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the Shares owned by each Stockholder pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Stockholder is a party or by which such
Stockholder or the Shares owned by such Stockholder are bound or affected.
(f) Each Stockholder is not engaged in any activities, discussions or
negotiations with respect to any Acquisition Proposal.
3. Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of their obligations under this Agreement. Without limiting the generality of
the foregoing, neither of the parties hereto shall enter into any agreement or
arrangement (or alter, amend or terminate any existing agreement or arrangement)
if such action would materially impair the ability of either party to
effectuate, carry out or comply with all the terms of this Agreement.
4. Representations and Warranties of Parent and Purchaser. Each of
Parent and Purchaser represents and warrants to the Stockholders as follows:
(a) Each of this Agreement, the Merger Agreement, the Merger and the
other transactions contemplated by the Merger Agreement has been approved by the
Board of Directors of each of Parent and Purchaser.
(b) Each of this Agreement and the Merger Agreement has been duly
executed and delivered by a duly authorized officer of each of Parent and
Purchaser and, assuming the due authorization, execution and delivery of this
Agreement by each Stockholder and the Merger Agreement by the Company, each of
this Agreement and the Merger Agreement constitutes a valid and binding
agreement of each of Parent and Purchaser, enforceable against Parent and
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
creditors' rights generally and general principles of equity.
5. Effectiveness and Termination. It is a condition precedent to the
effectiveness of this Agreement that the Merger Agreement shall have been
executed and delivered and be in full force and effect. This Agreement shall
automatically terminate and be of no further force or effect upon the
termination of the Merger Agreement in accordance with its terms. Upon any
termination of this Agreement, except for any rights either party may have in
respect of any knowing and material breach by either party of its obligations
hereunder hereto, neither party shall have any further obligation or liability
hereunder. The provisions of Section 1 of this Agreement shall terminate and be
of no further force or effect from and after the Effective Time of the Merger.
4
6. Covenants of Stockholder Not to Enter Into Inconsistent Agreements.
Each Stockholder hereby agrees that, except as contemplated by this Agreement
and the Merger Agreement, each Stockholder shall not enter into any voting
agreement or grant an irrevocable proxy or power of attorney with respect to the
Shares which is inconsistent with this Agreement.
7. Miscellaneous.
a. Notices, Etc. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by facsimile or by
nationally recognized overnight courier. Notices delivered by hand, by facsimile
or by nationally recognized overnight courier shall be deemed given on the day
of receipt (if such day is a business day or, if such day is not a business day,
the next succeeding business day); provided, however, that a notice delivered by
facsimile shall only be effective if and when confirmation is received of
receipt of the facsimile at the number provided in this Section 7(a). All
notices shall be addressed as follows:
If to any Stockholder:
Xxxxxxx & Xxxxxxxx Co. AB
XX-000 00 Xxxx
Xxxxxx
Attention: Xx. Xxxxx Xxxxxxx
Fax: 000-00-00-00-00-00
If to Parent or Purchaser:
c/o Code Xxxxxxx & Xxxxxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 7(a).
5
b. Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by Parent, Purchaser and each Stockholder.
c. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns, including without limitation any corporate
successor by merger or otherwise. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
d. Entire Agreement. This Agreement (together with the Merger
Agreement) embodies the entire agreement and understanding among the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement and the Merger Agreement.
e. Severability. If any term of this Agreement or the application
thereof to either party or circumstance shall be held invalid or unenforceable
to any extent, the remainder of this Agreement and the application of such term
to the other parties or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law; provided that in
such event the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
f. Specific Performance. The parties acknowledge that money damages
would not be an adequate remedy for violations of this Agreement and that either
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunction or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
g. Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by either party shall not preclude the simultaneous or
later exercise of any other such rights, power or remedy by such party.
h. No Waiver. The failure of either party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by the other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
6
i. No Third Party Beneficiaries. This Agreement is not intended to be
for the benefit of and shall not be enforceable by any person or entity who or
which is not a party hereto.
j. Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware.
k. Name, Captions, Gender. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
l. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
m. Expenses. Each party shall bear its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
[Signatures Follow]
7
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
/s/XXXXX XXXXXXX /s/JAN JUTANDER
------------------------------------
Name NDC, XXXXXXX & XXXXXXXX CO AB
Number of Shares: 550,000
/s/XXXXX XXXXXXX
------------------------------------
Name XXXXX XXXXXXX
Number of Shares: 200,640
/s/XXXXXX XXXXXXXX
------------------------------------
Name XXXXXX XXXXXXXX
Number of Shares: 200,640
/s/XXXX XXXXXXX
------------------------------------
Name XXXX XXXXXXX
Number of Shares: 200,640
/s/JAN JUTANDER
------------------------------------
Name JAN JUTANDER
Number of Shares: 200,640
8
PARENT:
PORTEC, INC.
By: /s/Xxxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxx
Its: PRESIDENT
PURCHASER:
XXXXXXX ACQUISITION CORP.
By: /s/Xxxxxx Xxxxxx
--------------------------
Name: Xxxxxx Xxxxxx
Its: VICE PRESIDENT
9
EXHIBIT B
PURCHASER'S OPINION
1. Each of Parent and Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Purchaser has all necessary corporate power and authority to
conduct its business as now being conducted.
2. Each of Parent and Purchaser has full corporate power and authority
to enter into and perform the Transaction Documents. The execution and delivery
of the Transaction Documents by Parent and Purchaser and the performance by
Parent and Purchaser of their obligations under the Transaction Documents have
been duly authorized by all requisite corporate action.
3. Each of the Transaction Documents has been duly executed and
delivered by duly authorized officers of Parent and Purchaser and constitutes a
valid and binding obligation of Parent and Purchaser, enforceable against them
in accordance with its terms.
4. Neither the execution and delivery of the Transaction Documents by
Parent or Purchaser, nor the consummation by Parent or Purchaser of the
transactions contemplated by the Transaction Documents, will (i) conflict with
or result in a breach of any of the terms or provisions of the Certificate of
Incorporation or By-Laws of Parent or Purchaser or of any statute or
administrative regulation, or, to our knowledge, of any order, writ, injunction,
judgment or decree of any court or governmental authority or of any arbitration
award to which Parent or Purchaser is a party or by which Purchaser or Parent is
bound or (ii) to our knowledge, violate, conflict with, breach, constitute a
default (or give rise to an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien or
other Encumbrance upon any of the properties or assets of Parent or Purchaser
under, any Purchaser Obligations, except for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens or other
Encumbrances that do not and will not, individually or in the aggregate, (x)
have a Material Adverse Effect on Parent or Purchaser or (y) materially impair
Purchaser's or Parent's ability to perform their obligations under the
Transaction Documents.
5. Except as set forth in the Merger Agreement, no Authorization with
or by any Governmental Entity is required for the execution and delivery by
Purchaser or Parent of the Merger Agreement or the consummation by Purchaser or
Parent of any of the transactions contemplated thereby.
- 1 -
EXHIBIT C
COMPANY'S OPINION
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has
all necessary corporate power and authority to conduct its business as
now being conducted or as proposed to be conducted. The Company is duly
qualified as a foreign corporation and in good standing in each
jurisdiction in which the nature of its business or the nature or
location of its assets require such qualification, except for such
jurisdictions where the failure to so qualify would not have a Material
Adverse Effect on the Company.
2. The Company has full corporate power and authority to enter into and
perform the Merger Agreement, the Amended License and the other
agreements to be entered into in connection with the Merger Agreement
(the "Transaction Documents"). The execution and delivery of the
Transaction Documents by the Company and the performance by the Company
of its respective obligations thereunder have been duly authorized and
approved by all requisite corporate action. The Transaction Documents
have been duly executed and delivered by duly authorized officers of
the Company and constitute valid legal and binding obligations of the
Company enforceable against it in accordance with its terms.
3. The Merger has been duly approved by the Board of Directors and
stockholders of the Company in accordance with the Delaware General
Corporation Law.
4. Neither the execution and delivery of the Transaction Documents by the
Company, nor the consummation by Company of any of the transactions
contemplated thereby, will (i) conflict with or result in a breach of
any of the terms, conditions or provisions of the certificate, articles
or other instrument of incorporation or limited partnership or by-laws
or agreement of limited partnership or other similar instrument, or of
any statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of a Governmental Entity or of any
arbitration award to which the Company is a party or by which the
Company is bound, or (ii) to our knowledge, violate, conflict with,
breach, constitute a default (or give rise to an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required
by, or result in the creation of any Encumbrances upon any of the
properties or assets of the Company under, any Obligation, except for
such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens or other Encumbrances that do not
and could not, individually or in the aggregate, (x) have a Material
Adverse Effect on the Company, or (y) materially impair the ability of
the Company to perform its obligations under the Merger Agreement.
5. Except as set forth in the Merger Agreement or the Company Disclosure
Schedule, no Authorization with or by any Governmental Entity is
required for the execution and delivery by the Company of the Merger
Agreement or the consummation by the Company of any of the transactions
contemplated thereby.
6. Neither the North Carolina Shareholder Protection Act (the "SPA"),
Section 55-9-01 et seq. of the North Carolina Business Corporation Act
(the "NCBCA"), nor the North Carolina Control Share Acquisition Act,
Section 55-9A-01 et seq. of the NCBCA, applies to the Merger Agreement,
the Merger, the Voting Agreement or the transactions contemplated
thereby.
EXHIBIT D
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of this 13th day of September, 1999 by and between NDC Automation, Inc., a
Delaware corporation ("NDCA" or the "Company"), and Xxxxx X. Xxxxxxxxx, an
individual residing at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000(xxx
"Executive").
RECITALS:
A. Portec, Inc., a Delaware corporation ("Portec"), Xxxxxxx Acquisition
Corp., a Delaware corporation ("Purchaser") and NDCA have entered into an
Agreement and Plan of Merger ("Merger Agreement") dated September 13, 1999,
which provides that on the terms and subject to the conditions set forth
therein, Purchaser shall merge with and into NDCA, the separate existence of
Purchaser shall cease (the "Merger") and NDCA, as the surviving entity, shall
become a wholly owned subsidiary of Portec and be operated as the Pathfinder AGV
Systems Division of Portec (the "Division"). Purchaser is a wholly owned
subsidiary of Portec, which is a wholly owned subsidiary of J Xxxxxxx
Industries, L. P., a Delaware limited partnership ("JRichard," and together with
Portec, NDCA and its and their subsidiaries, the "JRichard Group").
B. The Executive has been the President and CEO of NDCA since
September, 1995, and is a key member of the management of NDCA. Portec and
Purchaser would not have entered into the Merger Agreement without the benefit
of this Agreement.
C. Upon consummation of the Merger, the Company desires to continue to
employ the Executive as the President of the Company and the Division, and the
Executive desires to be so employed by the Company, on the terms and conditions
set forth in this Agreement, which shall, except as provided in Section 4.10, be
in lieu of and shall replace all existing employment agreements between NDCA and
the Executive as of the Effective Time (as defined in the Merger Agreement).
D. The Company desires to bind the Executive to certain restrictive
covenants, and the Executive agrees to be so bound, on the terms and conditions
set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the Company and the Executive,
intending to be legally bound, hereby agree as follows:
1. Employment. The Company hereby agrees to employ the
Executive as the President of the Company and the Division as of the Effective
Time, and the Executive hereby
1
accepts such employment and agrees to perform services for the Company and the
Division as described in Section 3 hereof (collectively referred to as the
"Executive Employment Duties").
2. Term. The term of the Executive's employment hereunder
shall be for a period of three (3) years (the "Term"), commencing at the
Effective Time. Unless the parties agree in writing to continue the employment
of the Executive beyond the Term or unless the Executive's employment is earlier
terminated, the Executive's employment shall end at the conclusion of the Term.
3. Position and Duties.
3.1 Service with the Company. The Executive Employment Duties
shall include serving as the President of the Company and the Division and such
other duty as the Chief Executive Office of Portec (the "Portec CEO") shall
designate from time to time consistent with such position. The operations of the
Company and the Division shall be integrated, as directed by the Portec CEO,
within a period of six (6) months after the Effective Time. The Executive agrees
to perform such Executive Employment Duties as the Portec CEO shall assign to
him from time to time, subject always to the oversight and instruction by the
Portec CEO, and subject to any applicable limitations imposed by creditors of
the Company, for the period and upon terms and conditions set forth in this
Agreement.
3.2 Performance of Duties. The Executive agrees to serve the
Company faithfully and to the best of his ability and to devote his full
business time, attention and efforts to the business and affairs of the Company
and the Division during the Term. It is understood and agreed that the Executive
may pursue passive investments not requiring time commitments that conflict with
his obligations to the Company. During the term hereof, the Executive shall not
serve as an officer, director, employee, consultant or advisor to any other
Person (as defined herein) outside the JRichard Group without the prior written
consent of the Board of Directors of the Company (the "Board"). For purposes
hereof, the term "Person" shall mean an individual, partnership, limited
partnership, corporation, limited liability company, association, joint stock
company, trust, joint venture or unincorporated organization, union, or the
United States of America or any other nation, any state, province or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of government.
4. Compensation. As compensation for the services to be
performed and the duties and responsibilities to be assumed by the Executive
during the Term, the Company shall pay to the Executive:
4.1 Base Salary. A salary ("Base Salary") for all services
rendered by the Executive under this Agreement of Eleven Thousand Dollars
($11,000.00) per month, subject to annual review by the Portec CEO. The review
date shall be in July every year (the first such review to take place in July
2000), and any revision of the Base Salary resulting from such reviews shall be
effective as of July 1 the same year. The Base Salary shall be payable in
accordance with Portec's
2
and the Company's ordinary payment practices, but in no event less frequently
than monthly. In no event shall the Executive's salary be made less than the
current salary without the written consent of the Executive.
4.2 Bonus. An annual bonus ("Bonus") of up to Fifty Percent
(50%) of the Base Salary, based upon the achievement of budgeted EBITDA goals
for the Company and the Division as determined in the sole discretion of the
Board. During the first quarter of each calendar year during the Term commencing
in the year 2000, the Board, after discussion with the Executive, will set the
budgeted EBITDA goals for the Division for calendar year 2000, and each year
thereafter. The Bonus will be due and payable as soon as practicably possible,
but in no event later than March 31 of the year following the year to which such
Bonus applies. Portec shall provide the Executive with a memorandum stating the
basic structure of the Bonus calculation within thirty (30) after the execution
hereof.
4.3 Medical and Life Insurance. The Company shall purchase and
maintain in effect during the Term hereof, major medical, health and dental
insurance for the Executive and his immediate family, immediate family being
defined as spouse and dependent children under the age of 19 or until age 26 if
a full time student, and life and long-term disability insurance for the
Executive in such amounts as is available to all other senior executives of
JRichard and at least that which is customary for the same position in other
companies of similar size, locations and type of business. The death benefit of
any life insurance shall be no less than two times Base Salary and no more than
Two Hundred Fifty Thousand Dollars ($250,000.00).
4.4 Pension Plan. The Company shall pay One Thousand Dollars
($1,000.00) per month either to the Company's 401(k) pension plan or to
Employees on-going private pension fund, at the discretion of the Executive,
subject to certain high compensation employee restrictions under the Internal
Revenue Code of 1986, as amended.
4.5 Education of Children Reimbursement. A net amount of up to
Five Thousand Dollars ($5,000.00) per year and per any and all of the
Executive's three children, will be paid by the Company for verified education
expenses (tuition fees, lodging, text books) in the U.S.A., but in no event
beyond June 30, 2000.
4.6 Vacation and Holiday. The Executive shall be entitled to
four (4) weeks annual paid vacation during the term of this Agreement. The
Executive's vacation shall be planned and coordinated with the other executives
of the Company. In addition, the Executive shall be entitled to the same paid
holidays, sick and personal time as are available to all other employees of the
Company pursuant to its then current policies and procedures.
4.7 Equity Participation. The Executive shall be eligible to
participate in equity incentive plans offered by JRichard to similarly situated
executives based on the overall EBITDA growth performance of the JRichard Group.
3
4.8 Expense Reimbursement. The Company shall reimburse the
Executive for all actual and reasonable business related expenses incurred in
the performance of his duties hereunder. Reimbursement shall be pursuant to the
Company's then current policies and procedures and shall require an accounting
by the Executive, including presentation of receipts and vouchers. If the
Company requires the Executive to attend functions at which a presence of a
spouse or guest is expected and appropriate, then the Company shall pay the
expenses of such accompanying person's actual and reasonable expenses.
4.9 Working Facilities. The Executive shall have an adequate
private office in the Company's headquarters building and other facilities and
services appropriate for his position and for the execution of his duties.
4.10 Bonus For 1999. The Company will pay to Executive a bonus
for 1999 in accordance with the terms of that certain letter from the
Compensation Committee to the Executive dated February 12, 1999 based on the
revenue and profitability of NDCA for its fiscal 1999 through the Effective Time
and for that portion of the Company which conducts the NDCA business through
November 30, 1999.
4.11 Automobile. During the Term, the Company shall provide
the Executive, for his use, with an automobile, not older than three years,
comparable in size and/or standard to that which the Company presently provides
the Executive (1998 Volvo 850 Turbo). The Company shall pay for all maintenance
and operating costs, including insurance, gasoline and oil. Upon the expiration
or earlier termination of the Term, the Executive shall surrender promptly such
vehicle to the Company.
4.12 Acknowledgment. The Executive acknowledges that upon the
occurrence of the Effective Time that certain Employment Agreement dated as of
March 1, 1996, as amended, shall terminate and Executive will have no rights to
any payments thereunder other than salary accrued and unpaid through the
Effective Time.
5. Compensation Upon Termination of the Executive's Employment
by the Company.
5.1 In the event that the employment of the Executive is (a)
terminated by the Company pursuant to Section 9.1, or (b) by the Executive, for
any reason whatsoever, then the Executive or the Executive's executor personal
representative, as the case may be, shall not be entitled to any compensation
other than (i) his then current Base Salary which has accrued through the date
of termination and any Bonus not yet paid for prior periods, and (ii) any
reimbursement owed to him by the Company in accordance with Section 4.8 of this
Agreement and incurred up to the date of termination.
5.2 In the event that the employment of the Executive is
terminated by the Company for any reason during the first twelve (12) months of
employment, other than pursuant to
4
the reasons stated in Section 9.1, then the Executive shall not be entitled to
any compensation other than (i) his then current Base Salary which has accrued
through the date of termination and any Bonus not yet paid for prior periods,
(ii) his then current Base Salary for a further period of up to twelve (12)
months to be paid in equal monthly installments (in the event alternative
employment is obtained by the Executive prior to twelve (12) months after
termination, the Company shall not be required to continue severance payments
beyond the time alternative employment is obtained), and (iii) any reimbursement
owed to him by the Company in accordance with Section 4.8 of this Agreement
incurred up to the date of termination. The payment provided in this Section is
in lieu of reasonable notice, shall be subject to the usual deductions and
withholdings required by law, and includes or may be reduced by the amount of
all payments which may be required to be paid to the Executive pursuant to
applicable laws or statutes as a consequence of the termination of his
employment.
5.3 In the event that the employment of the Executive is
terminated by the Company for any reason after the first twelve (12) months of
employment or not renewed after the initial Term, other than pursuant to the
reasons stated in Section 9.1, then the Executive shall not be entitled to any
compensation other than (i) his then current Base Salary which has accrued
through the date of termination and any Bonus not yet paid for prior periods,
(ii) his then current Base Salary for a further period of up to six (6) months
to be paid in equal monthly installments (in the event alternative employment is
obtained by the Executive prior to six (6) months after termination, the Company
shall not be required to continue severance payments beyond the time alternative
employment is obtained), and (iii) any reimbursement owed to him by the Company
in accordance with Section 4.8 of this Agreement incurred up to the date of
termination. The payment provided in this Section is in lieu of reasonable
notice, shall be subject to the usual deductions and withholdings required by
law, and includes or may be reduced by the amount of all payments which may be
required to be paid to the Executive pursuant to applicable laws or statutes as
a consequence of the termination of his employment.
5.4 In the event that the employment of the Executive is
terminated by the Company, or not renewed after the initial Term, without Cause
(as defined in Section 9.1), the Company shall pay verified cost of
transportation of the Executive's personal belongings (40 ft. container maximum)
including economy class transportation of immediate family to Sweden or to
equivalent non-North American location, subject to a maximum limit of
$20,000.00.
5.5 All payments required to be made by the Company to the
Executive pursuant to this Section 5 shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies.
6. Confidential Information.
6.1 Executive's Acknowledgments. The Executive recognizes and
acknowledges that: (a) in the course of the Executive's employment by the
Company it will be necessary for the Executive to acquire information concerning
the JRichard Group's and its members' confidential,
5
proprietary and other sensitive information, including sales, sales volume,
sales methods, sales proposals, customers and prospective customers, services
and service providers, identity of customers and prospective customers, identity
of key personnel in the employ of customers and prospective customers, amount or
kind of customer's purchases from the JRichard Group, the JRichard Group's
sources of supply, technology, computer programs, system documentation, special
hardware, product hardware, related software development, manuals, formulae,
processes, methods, machines, compositions, ideas, improvements, inventions or
other confidential or proprietary information belonging to the JRichard Group or
relating to the JRichard Group's affairs (including the information described in
clause (b) below, collectively referred to herein as the "Confidential
Information"); (b) in the course of his employment with the Company, the
Executive has had access to and developed similar information concerning the
Company; (c) the Confidential Information is the property of the JRichard Group;
(d) the use, misappropriation or disclosure of the Confidential Information
would constitute a breach of trust and could cause irreparable injury to the
JRichard Group; and (e) it is essential to the protection of the Company's
goodwill and to the maintenance of the JRichard Group's competitive position
that the Confidential Information be kept secret and that the Executive not
disclose the Confidential Information to others or use the Confidential
Information to the Executive's own advantage or the advantage of others or in
any way to disadvantage the Company.
6.2 Non-Disclosure of Confidential Information. The Executive
agrees to hold and safeguard the Confidential Information in trust for the
Company, its successors and assigns and agrees that he shall not, without the
prior written consent of the Portec CEO, misappropriate or disclose or make
available to anyone for use outside the JRichard Group at any time, either
during his employment with the Company or subsequent to the termination of his
employment with the Company, for any reason, including, without limitation,
termination by the Company for cause or without cause, any of the Confidential
Information, whether or not developed by the Executive, except (a) as required
in the performance of the Executive Employment Duties to the Company and (b) to
the extent that such information (i) is or becomes generally available to the
public other than as a result of a disclosure by the Executive in violation of
this Agreement, or (ii) is required to be disclosed pursuant to a court order or
other legal process (provided the Executive gives the Company notice of such
obligation when the Executive receives notice of such obligation and prior to
any disclosure pursuant to such obligation affords the Company the opportunity
and cooperates with the Company in any efforts by the Company to limit the scope
of such obligation and/or to obtain confidential treatment of any material
disclosed pursuant to such obligation).
6.3 Disclosure of Works and Inventions/Assignment of Patents.
The Executive shall disclose promptly to the Company any and all works,
inventions, discoveries, ideas and improvements authored, invented, conceived or
made by the Executive during the period of employment, and related to the
business or activities of the Company, which are or may be patentable or subject
to copyright or trademark registration or protectable as a trade secret. The
Executive hereby assigns and agrees to assign all his rights, title and
interests therein to the Company for no consideration in addition to that set
forth herein. Whenever required to do so by the Portec CEO, the Executive shall
execute any and all applications, assignments or other
6
instruments which the Company shall deem necessary to apply for and obtain
letters patent, trademark registrations or copyright registrations in the United
States, Canada, United Kingdom or any other foreign country or to otherwise
protect the Company's interest therein. Such obligations shall continue beyond
the termination of employment with respect to such works, inventions,
discoveries, ideas and improvements authored, invented, conceived or made by the
Executive during the period of employment, and shall be binding upon the
Executive's assigns, executors, administrators, heirs and other legal
representatives.
7. Covenant Not to Compete.
7.1 Non-Competition The Executive agrees that from the date
hereof and continuing for the lesser of (x) one (1) year after the termination
of the Executive's employment with the Company for any reason, except in the
event the Company terminates the Executive's employment without Cause within six
(6) months after the Effective Time, and (y) the longest time permitted by
applicable law, neither the Executive nor any of the Executive's Affiliates (as
defined herein) shall do any one or more of the following, directly or
indirectly:
i. engage or participate, directly or indirectly, anywhere in
North America as an owner, partner, member, shareholder,
director, employee, adviser, consultant, sales representative
or (without limitation by the specific enumeration of the
foregoing) otherwise, in any Competing Business (as defined
herein); or
ii. solicit, or attempt to supply any product or service (in
either case of a Competing Business) to, any customer of any
member of the JRichard Group including NDCA which has been a
customer of any member of the JRichard Group including NDCA
within the three (3) year period immediately preceding the
date hereof.
For the purposes of this Agreement, an "Executive's Affiliate" shall mean and
include any Person controlled directly or indirectly by the Executive and the
Executive's spouse. "Control" shall mean the direct or indirect power to direct
or cause the direction of the management and policies of a Person or entity
through voting securities, contract or otherwise.
7.2 Trademarks In addition to the foregoing, the Executive
agrees that from and after the date hereof and continuing for the longest time
permitted by applicable law, neither the Executive nor any of the Executive's
Affiliates shall, directly or indirectly, use or license, or permit any third
party to use or license, any name, slogan, logo or trademark which is similar to
or deceptively similar to any of the names, slogans, logos or trademarks used in
connection with the business or otherwise by the JRichard Group as of the date
hereof.
7.3 Competing Business For purposes of this Agreement, the
term "Competing Business" means each of any business engaged in supplying
controls hardware, software, engineering services, and other components for
Automated Guided Vehicles ("AGVs") or AGV
7
Systems, and incorporating multiple AGVs, and any business that competes
directly or indirectly with any member of the JRichard Group, including any
business providing such products and/or services to North America regardless of
whether the business is located in North America or exports such products and/or
services to North America.
7.4 Extension of Covenant Period In the event of any breach of
Sections 7.1 or 7.2 above, the time period of the breached covenant shall be
extended for the period of such breach. The Executive and each Affiliate of the
Executive recognizes that the territorial, time and scope limitations set forth
in this Section are reasonable and are required for the protection of the
JRichard Group and in the event that any such territorial, time or scope
limitation is deemed to be unreasonable by a court of competent jurisdiction,
the Company and the Executive agree to the reduction of either or any of such
territorial, time or scope limitations to such an area, period or scope as such
court shall deem reasonable under the circumstances.
7.5 Hiring Away Employees For a period of five (5) years from
the date hereof, the Executive shall not take any action which is calculated or
intended to persuade any salaried, technical, professional or other employees,
representatives or agents of any member of the JRichard Group to terminate their
association with such member of the JRichard Group.
8. Ventures. If, during the term of this Agreement, the
Executive develops or is engaged in or associated with the planning or
implementing of any project, program or venture involving the Company or its
resources and a third party or parties, all rights in the project, program or
venture shall belong to the Company and shall constitute a corporate opportunity
belonging exclusively to the Company. Except as approved by the Portec CEO, the
Executive shall not be entitled to any interest in such project, program or
venture or to any commission, finder's fee or other compensation in connection
therewith other than the Salary to be paid to the Executive as provided in this
Agreement.
9. Termination.
9.1 Grounds for Termination. The employment of the Executive
shall terminate prior to the expiration of the Term set forth in Section 2 or
any extension thereof as contemplated by Section 2 in the event that at any time
during such Term or any extension thereof:
i. the Executive shall die, or
ii. the Board shall determine that any of the following events
or conditions has occurred or exists:
(1) The Executive suffers a Disability (as hereinafter
defined). For purposes of this Agreement, the Executive
will be deemed to have a "Disability" if: (x) (A) the
Executive is adjudged mentally incompetent by a court of
competent jurisdiction or (B) because of ill health,
physical or mental
8
disability or for other causes beyond the control of the
Executive, (y) the Executive is continuously unable to
perform the Executive Employment Duties for one hundred
eighty (180) consecutive days, as determined by the Board
or, (z) if, during any twelve (12) month period, the
Executive was unable to perform the Executive Employment
Duties for a total of one hundred eighty (180) days,
regardless of whether such days are consecutive, as
determined by the Portec CEO, or
(2) Cause exists. "Cause" shall mean any of the
following, determined by the Board in its reasonable
judgment: (A) embezzlement, fraud, misappropriation or
dishonesty by the Executive against or with respect to the
Company or the commission of any felony or other offense
involving dishonesty, disloyalty, fraud or moral turpitude
(or a plea of nolo contendere with respect to any such
offense or felony); (B) the Executive's engaging in gross
negligence or willful misconduct in the performance of the
Executive Employment Duties; (C) the Executive's willful,
knowing or reckless unauthorized dissemination of
Confidential Information; (D) the breach by the Executive
of any provision of this Agreement in any material
respect, which breach or failure is not cured by the
Executive or is not capable of being cured (as determined
in the reasonable discretion of the Board) by the
Executive within fifteen (15) days after written notice of
such breach or failure is delivered to the Executive; or
(E) failure of the Executive to perform the Executive
Employment Duties (unless such failure is not material) or
failure of the Executive to follow any reasonable
direction of the Board;
Notwithstanding any termination of employment pursuant to
this Section 9.1, the Executive, in consideration of his
employment hereunder to the date of such termination,
shall remain bound following any such termination by the
provisions of this Agreement which specifically relate to
periods, activities or obligations upon or subsequent to
the termination of the Executive's employment.
9.2 Termination. It is understood and agreed that the Company
may also terminate this Agreement for any other reason or for no reason, subject
only to the obligation of the Company to make payments under Section 5.
9.3 Surrender of Records and Property. Upon termination of his
employment with the Company, the Executive shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, computer
records, computer disks and files which are the property of the Company and
which relate in any way to the business, products, practices or techniques of
the Company, and all other property, trade secrets and confidential information
which in whole or in part contain any Confidential Information of the Company,
and all other physical property of the Company such as
9
portable computers (even if such property does not include or contain
confidential information), which in any of these cases are in his possession or
under his control.
10. Assignment. This Agreement shall be binding upon the
Company, its successors and assigns, but it may not be assigned by the Company
except as part of a general assignment or conveyance by the Company of
substantially all of its assets or business. The Agreement may not be assigned
by the Executive.
11. Injunctive Relief. The Executive agrees that it would be
difficult to calculate or compensate the Company fully for damages for any
violation of the provisions of this Agreement, including without limitation the
provisions of Sections 6, 7, 8 and 9.3. Accordingly, the Executive specifically
agrees that the Company shall be entitled to temporary and permanent injunctive
relief to enforce the provisions of this Agreement, without the posting of any
bond. This provision with respect to injunctive relief shall not, however,
diminish the right of the Company to claim and recover damages in addition to
injunctive relief.
12. Miscellaneous.
12.1 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of North
Carolina.
12.2 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter, and
the parties hereto have made no agreement, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
12.3 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, provincial, state, city or
other taxes as shall be required pursuant to any law or governmental regulation
or ruling.
12.4 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
12.5 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
12.6 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. The Executive
10
acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement shall be given the construction which renders its provisions
valid and enforceable to the maximum extent (not exceeding its express terms)
possible under applicable law.
12.7 Arbitration. Any claim or controversy arising out of or
related to this Agreement, or its breach (except an action seeking a restraining
order or injunction pursuant to Section 11), shall be finally settled by binding
arbitration in the City of Charlotte, North Carolina, in accordance with the
then governing rules of the American Arbitration Association. Judgment upon the
award rendered may be entered and enforced in any court of competent
jurisdiction. If the Arbitration panel rules in favor of the Executive, all
costs for the arbitration shall be borne by the Company. If the Arbitration
panel rules in favor of the Company, the costs for the arbitration shall be
shared between the two parties on a 50/50 basis. Each side shall, in any event,
bear the cost of its own legal counsel.
12.8 Notice. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if (a)
delivered personally or (b) sent by reputable next-day or overnight mail or
delivery or (c) sent by telecopy:
(i) if to the Executive,
Xx. Xxxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxx,
Xxxxxxxxx, XX 00000
with a copy to:
Thorelli & Associates
Three First National Plaza
00 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(ii) if to the Company,
NDC Automation, Inc.
c/o J Xxxxxxx Industries
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention:
Fax: (000) 000-0000
11
with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxx Barros, Esq.
Fax: (000) 000-0000
and/or, in each case, at such other address and/or to such other addressee as
may be specified in writing to the other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (a) if by personal delivery
on the day after such delivery, or refusal of delivery, (b) if by next-day or
overnight mail or delivery, on the day delivered or day delivery was refused,
(c) if by telecopy, on the next day following the day on which such telecopy was
sent, provided that a copy is also sent by one of the other methods of delivery
set forth in the first paragraph of this Section 12.8 within two (2) business
days of the date such telecopy was sent.
12.9 Executive Acknowledgment. The Executive hereby
acknowledges that (a) the Company has advised him to consult with an attorney
prior to the execution of this Agreement and that he has done so, (b) he has
read this Agreement, (c) he fully understands the terms of this Agreement and
(d) he has executed this Agreement voluntarily and without coercion, whether
express or implied.
12
IN WITNESS WHEREOF, the parties have executed and sealed this
Employment Agreement as of the day and year set forth above.
THE COMPANY
NDC AUTOMATION, INC.
By: /s/Xxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxx
-------------------------------
Title: PRESIDENT & CEO
------------------------------
THE EXECUTIVE
/s/Xxxxx Xxxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxxx
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SCHEDULE 4.6
Consents
Inventory and Accounts Receivable Loan and Security Agreement dated February 28,
1998 between the Company, National Bank of Canada and National Canada Business
Corp., as amended.
Distributorship Agreement dated April 23, 1998 between Schabmuller GmbH and the
Company.
Representation Agreement dated January 27, 1999 between Harcon Engineering Inc.
and the Company.
Letter Agreement between the Company, Apogeum AB and Xxxxxxx & Xxxxxxxx Co AB
dated October 18, 1993.
All Stock Option Consents
Consent from Nations Bank, N.A. to terminate any interest it may have in NDC
Laser + Design (1,878,486) and NDC Capture (1,920,748) and assign all right,
title and interest to the Company.
