EXHIBIT 2
AMENDED AND RESTATED MERGER AGREEMENT
Amended and Restated Merger Agreement (this "Agreement"), dated as of
July 28, 1999, by and between Reunion Industries, Inc., a Delaware corporation
("Reunion"), and Chatwins Group, Inc. a Delaware corporation ("Chatwins").
W I T N E S S E T H:
WHEREAS, Reunion and Chatwins entered into a Merger Agreement, dated
as of March 30, 1999 (the "Merger Agreement"), pursuant to which Reunion and
Chatwins agreed that Reunion would acquire Chatwins on the terms and conditions
set forth in the Merger Agreement;
WHEREAS, the parties to the Merger Agreement now desire to amend and
restate the Merger Agreement as set forth below;
WHEREAS, the Boards of Directors of Chatwins and Reunion have approved
and adopted this Agreement and have authorized the execution hereof; and
WHEREAS, the holders of a majority of Chatwins Common Stock and Series
A Preferred, Series B Preferred and Series C Preferred, each as defined below,
have by written consent voted in favor of the Merger Agreement; and
WHEREAS, the shareholders of Reunion shall vote for or against the
adoption of this Agreement at a meeting thereof to be called as promptly as
possible following the execution of this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the representations, warranties, conditions and promises
hereinafter contained, the parties to this Agreement hereby agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger.
(a) At the Effective Time (as defined in Section 1.1(b)), Chatwins shall
be merged with and into Reunion (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "Delaware GCL"), whereupon the
separate existence of Chatwins shall cease and Reunion shall be the surviving
corporation.
(b) As soon as practicable after satisfaction or waiver of all
conditions to the Merger, Chatwins and Reunion will file a certificate of merger
(which shall be in form and substance reasonably satisfactory to the parties
hereto) with the Secretary of State of the State of
Delaware (the "Secretary of State") in accordance with Section 251(c) of the
Delaware GCL and make all other filings or recordings required by the Delaware
GCL in connection with the Merger. The Merger shall become effective on such
date as the certificate of merger is duly filed with the Secretary of State or
at such later date as is specified in the certificate of merger (the "Effective
Time").
(c) From and after the Effective Time, Reunion shall possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities, liabilities and duties of Chatwins as provided in
the Delaware GCL.
1.2. Conversion of Shares. By virtue of the Merger and without any action
on the part of Reunion or Chatwins:
(a) The aggregate number of shares of the common stock of Chatwins, par
value $.01 per share, issued and outstanding immediately prior to the Effective
Time (the "Chatwins Common Stock") shall be automatically converted into the
right to receive the following consideration in the manner and at the time
described below:
(i) at the Effective Time, 9,500,000 fully-paid and nonassessable
shares of common stock of Reunion, par value $.01 per share ("Reunion Common
Stock"); and
(ii) up to an additional 500,000 shares of Reunion Common Stock (the
"Additional Shares") to be issued within 30 days after the filing by Reunion of
its Annual Report on Form 10-K for the year ending December 31, 2000 (the
"Filing Date") as follows:
(x) no shares of Reunion Common Stock unless EBITDA (as defined
in clause (z) below) earned by the Chatwins Divisions (as defined in
clause (z) below) during the year ending December 31, 2000 ("2000
EBITDA") is at least $19,000,000; and
(y) .5 shares of Reunion Common Stock for each dollar of 2000
EBITDA earned by the Chatwins Divisions in excess of $19,000,000 up to
a maximum of $20,000,000.
(z) For purposes of this Agreement, "EBITDA" shall mean the
earnings before interest, taxes, depreciation and amortization of the
Chatwins Divisions, determined in accordance with GAAP applied on a
consistent basis, without, however, any allocations related to
headquarters overhead or expense, as audited by
PriceWaterhouseCoopers, LLP, and the "Chatwins Divisions" shall mean
the operating divisions of Chatwins known as "CPI", "Alliance",
"Xxxxx", "Steelcraft" and "Auto-Lok", the Kingway material handling
business of Stanwich Acquisition Corp. ("SAC"), which will be merged
into Reunion and operated within the Auto-Lok division and the Naptech
business of NPS Acquisition Corp. ("NPS"), which will be merged into
Reunion and operated within the CPI division.
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(iii) the Reunion Common Stock to be issued in accordance with this
Section 1.2(a) shall be allocated among the holders of the Chatwins Common Stock
of record at the Effective Time pro rata based upon their percentage ownership
of the Chatwins Common Stock at the Effective Time.
(b) (i) The aggregate number of shares of Class D, Series A Preferred
Stock of Chatwins, par value $.01 per share (the "Series A Preferred"), Class D,
Series B Preferred Stock of Chatwins, par value $.01 per share, (the "Series B
Preferred"), and Class D, Series C Preferred Stock of Chatwins, par value $.01
per share (the "Series C Preferred"), issued and outstanding immediately prior
to the Effective Time shall be automatically converted into the right to receive
preferred stock of Reunion (the "Series A Reunion Preferred") with an initial
redemption value (the "Initial Redemption Value") equal to the aggregate
redemption price of such Chatwins preferred stock on the Closing Date (as
defined in Section 1.4) determined as provided in Chatwins's Restated
Certificate of Incorporation. The Series A Reunion Preferred will be redeemable
when no shares of Series B Preferred Stock of Reunion (the "Series B Reunion
Preferred") to be issued in connection with the merger of SAC into Reunion are
outstanding at any time at the option of Reunion at a redemption value (the
"Total Redemption Value") equal to the Initial Redemption Value plus all accrued
but unpaid preferred dividends. The Series A Reunion Preferred will accrue a
cumulative dividend equal to 10% of the Initial Redemption Value per annum,
which will accrue from the Effective Time (the "Series A Preferred Dividend").
The Series A Preferred Dividend will be junior in right of payment to dividends
on the Series B Reunion Preferred, will be payable as and when the Board of
Directors of Reunion determines and will be senior in right of payment to
dividends on shares of Reunion Common Stock. The Series A Reunion Preferred
will not be voting, except as required by law, and will not have any right of
conversion into the Reunion Common Stock or any other securities of Reunion.
Upon a liquidation of Reunion, the holders of the Series A Reunion Preferred
will be entitled to be paid, out of the assets of Reunion available for payment
to the holders of Reunion's capital stock, an amount equal to the Total
Redemption Value on the date of payment. In the event of a liquidation of
Reunion no payments will be made and no assets will be distributed to the
holders of the Reunion Common Stock or any other class of capital stock of
Reunion, including the Series B Reunion Preferred, until the holders of the
Series A Reunion Preferred shall have been paid the Total Redemption Value. The
Series A Reunion Preferred will have such other preferences, privileges,
restrictions and rights as are determined by the Board of Directors of Reunion
prior to the Effective Time.
(ii) The Series A Reunion Preferred shall be allocated among the
holders of the Series A Preferred, Series B Preferred and Series C Preferred of
record at the Effective Time pro rata in accordance with such holders'
applicable Redemption Percentages at the Effective Time. For these purposes, a
particular holder's "Redemption Percentage" shall mean the fraction (expressed
as a percentage) obtained by dividing (y) the aggregate Initial Redemption Value
of the Series A Preferred, Series B Preferred and Series C Preferred held by
such holder immediately prior to the Effective Time by (z) the aggregate Initial
Redemption Value of the shares of Series A Preferred, Series B Preferred and
Series C Preferred issued and outstanding immediately prior to the Effective
Time.
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(c) All shares of Chatwins Common Stock, Series A Preferred, Series B
Preferred and Series C Preferred (collectively, the "Chatwins Capital Stock")
shall automatically be cancelled and retired and shall cease to exist and each
holder of a certificate representing any such Chatwins Capital Stock (a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive consideration (the "Merger Consideration") consisting of the
number of shares of Reunion Common Stock or Series A Reunion Preferred specified
herein, together with any cash in lieu of fractional shares of Reunion Common
Stock to be paid pursuant to Section 1.3(c), upon the surrender of such
Certificate in accordance with Section 1.3(a), without interest.
(d) All shares of Chatwins Capital Stock held by Chatwins as treasury
shares shall be cancelled and retired and shall cease to exist and no shares of
Reunion Common Stock or Series A Reunion Preferred shall be issuable in respect
thereof.
(e) Chatwins agrees that the 1,450,000 shares of Reunion Common Stock
owned by Chatwins as of the date hereof shall be retired by Reunion, and
Chatwins shall thereupon cease to have any rights with respect thereto,
including any right of exchange in connection with the Merger.
1.3. Surrender of Certificates; Payment of Merger Consideration.
(a) Surrender of Certificates. At or after the Closing (as defined in
Section 1.4), upon presentation by the holder thereof, duly endorsed, each
Certificate shall be cancelled and exchanged and, simultaneously with such
cancellation and exchange, (i) in respect of Chatwins Common Stock a new
certificate shall be issued representing the number of shares of Reunion Common
Stock into which the Chatwins Common Stock formerly held by such shareholder
shall have been converted in the Merger in accordance with Section 1.2 (a)(i)
hereof, together with a check payable to such shareholder representing any
payment of cash in lieu of fractional shares determined in accordance with
Section 1.3(c) hereof and (ii) in respect of Series A Preferred, Series B
Preferred and Series C Preferred, a new certificate shall be issued representing
the number of shares of Series A Reunion Preferred determined in accordance with
the applicable Redemption Percentages. Within 30 days following the Filing
Date, a certificate shall be issued representing Additional Shares, if any, into
which the Chatwins Common Stock formerly held by such shareholder shall have
been converted in the Merger in accordance with Section 1.2(a)(ii) hereof,
together with a check payable to such shareholder representing any payment of
cash in lieu of fractional shares determined in accordance with Section 1.3(c)
hereof. All of the shares of Reunion Common Stock and Series A Reunion
Preferred issued in the Merger shall be duly authorized, validly issued, fully
paid and nonassessable and, at the time of issuance, shall be free and clear of
all liens, claims, encumbrances, security interests and rights of redemption
(together, "Liens").
(b) No Further Ownership Rights in Chatwins Capital Stock. The Merger
Consideration issued upon the surrender for exchange of Certificates in
accordance with the terms of this Agreement (including any cash paid pursuant to
Section 1.3(c)) shall be deemed to
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have been issued (or paid, as the case may be) in full satisfaction of all
rights pertaining to the Chatwins Capital Stock represented thereby. From and
after the Closing, the stock transfer books of Chatwins shall be closed and
there shall be no further registration of transfers on the stock transfer books
of Chatwins or Reunion of the Chatwins Capital Stock which was outstanding
immediately prior to the Effective Time. If, after the Closing, Certificates are
presented to Reunion for any reason, they shall be cancelled and exchanged as
provided in this Agreement.
(c) No Fractional Shares. No certificate or scrip representing
fractional shares of Reunion Common Stock will be issued in the Merger upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Reunion. In lieu of any such fractional shares, each holder of Chatwins Common
Stock, who would otherwise have been entitled to a fraction of a share of
Reunion Common Stock in exchange for Certificates pursuant to this Agreement
shall receive from Reunion a cash payment in lieu of such fractional share equal
to the product of the market price of Reunion Common Stock at the close of
business on the Closing Date and the fractional share interest to which such
holder would otherwise be entitled.
1.4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxxxx Ingersoll
Professional Corporation, One Oxford Centre, 000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 at 10:00 a.m. on September 30, 1999, or at such
other place or time as the parties may mutually agree (the "Closing Date").
1.5. Further Assurances. At the Closing and thereafter, each party hereto
will execute such further documents and instruments and take such further
actions as may reasonably be requested by one or more of the others to
consummate the Merger, to vest Reunion with full title to all assets,
properties, rights, approvals, immunities and franchises of Chatwins and to
effect the other purposes of this Agreement.
ARTICLE II
THE SURVIVING CORPORATION
2.1. Certificate of Incorporation. The Certificate of Incorporation of
Reunion in effect at the Effective Time shall be the Certificate of
Incorporation of the surviving corporation until amended in accordance with
applicable law.
2.2. By-Laws. The By-laws of Reunion in effect at the Effective Time shall
be the By-laws of the surviving corporation until amended in accordance with
applicable law.
2.3. Officers. The persons listed on Schedule 2.3 shall serve in the
offices shown opposite their names on Schedule 2.3 at the Effective Time and
shall continue in the
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same offices on behalf of the surviving corporation until their resignation or
removal in accordance with the By-laws.
2.4. Directors. The Directors of Reunion serving on the Reunion Board
of Directors at the Effective Time shall continue to serve as members of the
Board of Directors of the surviving corporation until their resignation or until
their successors are duly elected and qualified. In addition, at the first
meeting of the Board of Directors occurring after the Effective Time, the total
number of persons serving on the Board of Directors shall be increased by two
and two additional persons nominated by Chatwins shall be appointed by the Board
of Directors of Reunion to fill the vacancies, effective at such meeting of the
Board, thereby created.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHATWINS
Chatwins hereby represents and warrants to Reunion on the date hereof
and as of the Effective Time as follows (it being understood that for purposes
of this Section 3, Chatwins shall include each of its subsidiaries):
3.1. Chatwins' Organization and Good Standing. Chatwins is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. Chatwins
is duly qualified to do business and in good standing in each jurisdiction where
the character of property owned or leased by it or the nature of its activities
makes such qualification necessary except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Chatwins Material Adverse Effect. As used herein, a "Chatwins Material Adverse
Effect" means a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of Chatwins or on the
ability of Chatwins to consummate the transactions contemplated by this
Agreement.
3.2. Power and Authority; Execution and Delivery. Chatwins has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement. Except for shareholder approval as required by
the Delaware GCL, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly approved
and authorized by all requisite corporate action of Chatwins. Except for such
shareholder approval and the filing of a certificate of merger in accordance
with Section 1.1(b), no further corporate actions or approvals on the part of
Chatwins are required under applicable law for the consummation of the Merger.
This Agreement has been duly executed and delivered by Chatwins and, subject
only to the approval of its shareholders in accordance with the Delaware GCL,
constitutes the legal, valid and binding obligation of Chatwins, enforceable
against it in accordance with its terms except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally and subject to general principles
of equity (regardless of whether enforcement is sought in a court of law or
equity).
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3.3. Capitalization and Voting Rights.
(a) The authorized capital of Chatwins consists entirely of the
following, the rights, privileges and preferences of which are as stated in the
Certificate of Incorporation of Chatwins:
(i) 3,000 shares of Series A Preferred, of which 2,249 shares are
issued and outstanding as of the date hereof;
(ii) 800 shares of Series B Preferred, of which 800 shares are
issued and outstanding as of the date hereof;
(iii) 2,500 shares of Series C Preferred, of which 1,510 shares
are issued and outstanding as of the date hereof; and
(iv) 400,000 shares of Chatwins Common Stock, of which 289,787.4
shares are issued and outstanding and 41,109 shares are held by Chatwins as
treasury shares.
(b) Except as set forth on Schedule 3.3, Chatwins has no outstanding
subscriptions, options, warrants, calls or other agreements or commitments by
which Chatwins is bound in respect of the capital stock of Chatwins, whether
issued or unissued, and no outstanding rights or securities convertible into or
exchangeable for any such capital stock, and Chatwins is not a party or subject
to any agreement or understanding, and to Chatwins's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
of Chatwins. All shares of Class A, B, C and E Preferred Stock authorized to be
issued by the Certificate of Incorporation of Chatwins have been retired, and no
shares thereof or rights with respect thereto are outstanding.
3.4. Subsidiaries. Except as set forth in Schedule 3.4, Chatwins does not
own or control, directly or indirectly, any interest in any other corporation,
association or other business entity.
3.5. Valid Issuance of Preferred and Common Stock. Except as set forth on
Schedule 3.5, the outstanding shares of Chatwins Capital Stock are duly and
validly authorized and issued, fully paid and nonassessable.
3.6. Reports and Financial Statements. Chatwins has previously furnished to
Reunion a true and complete copy of its (i) Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Chatwins 10-K") as filed with the
Securities and Exchange Commission ("SEC"), (ii) Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999 as filed with the SEC; and (iii) Current
Reports on Form 8-K as filed with the SEC since March 31, 1999. Chatwins will
provide Reunion with a true and complete copy of each Quarterly Report on Form
10-Q and each Current Report on Form 8-K promptly after filing such report with
the SEC. As of their respective dates, the Chatwins 10-K, Quarterly Reports on
Form 10-Q
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and Current Reports on Form 8-K referred to above did not, and will not, when
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements included in such reports or other
filings have been prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and fairly present
the consolidated financial position of Chatwins and its subsidiaries as of the
dates thereof and the consolidated results of operations and changes in cash
flow of Chatwins and its subsidiaries for the periods then ended, subject in the
case of unaudited interim financial statements, to normal year-end adjustments
which are neither individually nor in the aggregate expected to be material.
3.7. Changes. Except as set forth on Schedule 3.7 or in the reports
described in Section 3.6 or in the Registration Statement (as defined in Section
9.8) since March 31, 1999, there has not been:
(a) any adverse change in the assets, condition (financial or
otherwise), affairs, business, operations, properties, or liabilities of
Chatwins from that reflected in the balance sheet as at March 31, 1999, referred
to in Section 3.6 above, except for changes in the ordinary course of business
which do not constitute, either individually or in the aggregate, a Chatwins
Material Adverse Effect;
(b) any material change in the liabilities or obligations of Chatwins,
contingent or otherwise, whether due or to become due, whether by way of
guaranty, endorsement, indemnity, warranty or otherwise, except for the
incurrence of current liabilities in the ordinary course of business, none of
which has had a Chatwins Material Adverse Effect;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, operations or
business of Chatwins;
(d) any waiver by Chatwins of a valuable right or of a material debt
owed to it;
(e) any loans made by Chatwins other than advances of expenses made in
the ordinary course of business;
(f) any declaration or payment of any dividend or other distribution of
the assets of Chatwins or any direct or indirect redemption, purchase or
acquisition of any securities of Chatwins;
(g) any incurrence of indebtedness for money borrowed or any other
liabilities individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of $100,000 in the
aggregate;
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(h) any sale, exchange or other disposition of any of Chatwins's assets,
other than in the ordinary course of business;
(i) to the best of Chatwins's knowledge, any other event or condition of
any character which could reasonably be expected to result in a Chatwins
Material Adverse Effect;
(j) any increase in compensation of any of its existing officers, or the
rate of pay of its employees as a group, except as part of regular compensation
increases in the ordinary course of business;
(k) any resignation or termination of employment of any officer or key
employee of Chatwins; or
(l) any agreements to do or enter into any of the foregoing.
3.8. Governmental Approvals and Filings. Except as set forth in Schedule
3.8 and for the filing of a certificate of merger in accordance with the
Delaware GCL, no approval, authorization, consent, license, clearance or order
of, declaration or notification to, or filing, registration or compliance with,
any governmental or regulatory authority, is required in order to permit
Chatwins to enter into this Agreement or to consummate the transactions
contemplated herein.
3.9. Litigation. Except as set forth in the reports described in Section
3.6 or the Registration Statement, (i) there is no action, suit, proceeding or
investigation pending or, to Chatwins's knowledge, currently threatened in
writing against Chatwins or its property, assets or business which might
reasonably be expected to result, either individually or in the aggregate, in a
Chatwins Material Adverse Effect, including without limitation, actions pending
or threatened involving the prior employment of any of Chatwins's employees,
their use in connection with Chatwins's business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers; and (ii) Chatwins is not
a party or subject to the provisions of any order, writ, injunction, award,
judgment or decree of any court, arbitration panel or government agency or
instrumentality.
3.10. Patents and Trademarks. Chatwins has sufficient title and ownership
of all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted and without any conflict with or infringement of the
rights of others which could reasonably be expected to result in a Chatwins
Material Adverse Effect. Schedule 3.10 contains a complete list of patents and
patent applications owned by Chatwins. Except as set forth in Schedule 3.10,
there are no outstanding options, licenses or agreements of any kind relating to
the foregoing, nor is Chatwins bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes owned by any other person or entity. Chatwins has not
received any communications or claims alleging that Chatwins has violated or, by
conducting its business as currently conducted, would violate any of the
patents, trademarks, service marks, trade names,
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copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. Chatwins is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court of administrative agency, that would interfere with
the use of such employee's best efforts to promote the interests of Chatwins or
that would conflict with Chatwins's business as proposed to be conducted.
Neither the execution and delivery of this Agreement nor the carrying on of
Chatwins's business by the employees of Chatwins will, to Chatwins's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under any contract, covenant or instrument under which any
of such employees is now obligated.
3.11. No Conflict. Except as set forth on Schedule 3.11, neither the
execution, delivery and performance of this Agreement by Chatwins, nor the
consummation by Chatwins of the transactions contemplated hereby will (i)
conflict with, or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of Chatwins, (ii)
conflict with, result in a breach or violation of, give rise to a default under
or result in the acceleration of performance under any mortgage, lease,
agreement, note, bond, indenture, guarantee or any statute, regulation,
ordinance, writ, injunction, order, judgment or decree to which Chatwins may be
subject, which conflict, breach, default, violation or acceleration could
reasonably be expected to have a Chatwins Material Adverse Effect, or (iii) give
rise to an imposition of any Lien of any nature whatsoever upon any of the
assets of Chatwins.
3.12. Agreements.
(a) Except as set forth in Schedule 3.12, there are no agreements,
understandings or transactions between Chatwins and any of its officers or
directors or any affiliate thereof.
(b) Except as set forth in Schedule 3.12, there are no agreements,
understanding or transactions to which Chatwins is a party or by which it is
bound which (i) involve obligations (contingent or otherwise) of, or payments
to, Chatwins in excess of $500,000 other than in the ordinary course of
business, (ii) are material to the conduct and operations of Chatwins's business
or properties (including, without limitation, the license of any patent,
copyright, trade secret or other proprietary rights to or from Chatwins), (iii)
restrict or adversely affect the development, manufacture or distribution of
Chatwins's products or services, (iv) involve any written employment or
consulting arrangement between Chatwins and any person, or (v) involve any
material oral employment or consulting arrangement between Chatwins and any
person.
3.13. Title to Property and Assets. Except as set forth on Schedule 3.13,
Chatwins has good title to its property and assets free and clear of all Liens,
except such Liens which do not materially impair Chatwins's ownership or use of
such property or assets. With respect to the property and assets it leases,
Chatwins is in substantial compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any Liens. All of Chatwins's
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properties and assets are, in all material respects, in good operating
condition, subject to normal wear and tear.
3.14. Labor Agreements and Actions; Employee Benefits. Except as set forth
on Schedule 3.14, Chatwins is not bound by or subject to (and none of its assets
or properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and within
the last two (2) years no labor union has requested or, to the knowledge of
Chatwins, has sought to represent any of the employees, representatives, or
agents of Chatwins; there is no strike or other labor dispute involving Chatwins
pending or, to the knowledge of Chatwins, threatened, which could reasonably be
expected to have a Chatwins Material Adverse Effect, nor is Chatwins aware of
any labor organization activity involving its employees. Except as noted in
Schedule 3.14 hereto, Chatwins does not have any employee benefit plans
presently in force with respect to profit-sharing or pensions.
3.15. Tax Matters. Chatwins (i) has timely filed all tax returns that are
required to have been filed by it with all appropriate governmental agencies
(and all such returns are true and correct and fairly reflect in all material
respects its operations for tax purposes); and (ii) has timely paid all taxes
owed or assessed against it (other than taxes the validity of which are being
contested in good faith by appropriate proceedings). The assessment of any
additional taxes for periods for which returns have been filed is not expected
to exceed the reserves therefor reflected in the Chatwins's publicly-filed
financial statements and, to Chatwins's knowledge, there are no material
unresolved questions or claims concerning Chatwins's tax liability. Chatwins
1995 federal corporate income tax return was audited by the Internal Revenue
Service and all additional tax and interest assessed as a result of such audit
has been paid and all required state tax filings as a result thereof have been
made. Except as provided in the preceding sentence, Chatwins's federal income
tax returns have not been reviewed or audited by any taxing authority. There is
no pending dispute with any taxing authority relating to any of said returns
which, if determined adversely to Chatwins, would result in the assertion by any
taxing authority of any valid material tax deficiency.
3.16. Minute Books. The minute books of Chatwins contain a complete and
accurate record of all meetings of directors and stockholders since the date of
incorporation and all actions by written consent.
3.17. Purchase Method. To the best knowledge of Chatwins, neither Chatwins
nor any of its affiliates has taken or agreed to take any action inconsistent
with Reunion's accounting for the Merger under the "purchase method".
3.18. Disclosure. Neither this Agreement nor any document or information
furnished to Reunion by Chatwins pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements of Chatwins contained herein or therein not misleading.
3.19. S-4 Registration Statement. At the time the Registration Statement
becomes effective and at the Effective Time, the Registration Statement and the
Proxy
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Statement/Prospectus included therein, to the extent that material is prepared
or furnished by Chatwins for inclusion therein, and the Chatwins SEC filings
incorporated by reference therein, will not contain any statement which, at the
time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or shall omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or necessary to correct any statement which
has become false or misleading with respect to the transactions contemplated
hereby and will comply in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act") and the rules and regulations
thereunder (provided that no representation or warranty is made with respect to
the information not prepared or furnished by Chatwins specifically for use
therein or not contained in Chatwins SEC filings incorporated by reference
therein).
3.20. Broker's or Finder's Fees. Except as set forth in Schedule 3.20,
neither Chatwins nor any of its affiliates has authorized any person to act as
broker, finder, banker, consultant, intermediary or in any other similar
capacity which would entitle such person to any investment banking, brokerage,
finder's or similar fee from Chatwins in connection with the transactions
contemplated by this Agreement.
3.21. Permits, Licenses, Authorizations; Compliance with Laws. Chatwins has
all licenses, franchises, certificates of occupancy, permits and other
governmental authorizations which are material and necessary to conduct its
business, and Chatwins is not in violation in any material respect of any such
license, franchise, certificate of occupancy, permit or other governmental
authorization, or any statute, law, ordinance, rule regulation, judgment, order
or decree applicable to it or any of its properties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REUNION
Reunion represents and warrants to Chatwins as of the date hereof and as at
the Effective Time as follows (it being understood that for purposes of this
Section 4, Reunion shall include each of its subsidiaries):
4.1. Organization and Good Standing. Reunion is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. Reunion is
duly qualified to do business and in good standing in each jurisdiction where
the character of property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Reunion Material Adverse Effect. As used herein, the term "Reunion Material
Adverse Effect" means a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of Reunion and its
subsidiaries, taken as a whole, or on the ability of Reunion to consummate the
transactions contemplated by this Agreement.
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4.2. Power and Authority; Execution and Delivery. Reunion has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement. Except for shareholder approval as required by the
Delaware GCL, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved and
authorized by all requisite corporate action of Reunion. Except for such
shareholder approval and the filing of a certificate of merger in accordance
with Section 1.1(b), no further corporate actions or approvals on the part of
Reunion are required under applicable law for the consummation of the Merger.
This Agreement has been duly executed and delivered by Reunion and, subject only
to the approval of its shareholders in accordance with the Delaware GCL,
constitutes the legal, valid and binding obligation of Reunion, enforceable
against Reunion in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity).
4.3. Governmental Approvals and Filings. Except as set forth in Schedule
4.3, and for the filing of a certificate of merger in accordance with the
Delaware GCL, no approval, authorization, consent, license, clearance or order
of, declaration or notification to, or filing, registration or compliance with,
any governmental or regulatory authority, is required in order to permit Reunion
to enter into this Agreement or to consummate the transactions contemplated
herein.
4.4. No Conflict. Except as set forth in Schedule 4.4, neither the
execution, delivery and performance of this Agreement by Reunion, nor the
consummation by Reunion of the transactions contemplated hereby will (i)
conflict with, or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of Reunion, (ii)
conflict with, result in a breach or violation of, give rise to a default under
or result in the acceleration of performance under any mortgage, lease,
agreement, note, bond, indenture, guarantees or any statute, regulation,
ordinance, writ, injunction, order, judgment or decree to which Reunion may be
subject, which conflict, breach, default, violation or acceleration would have a
Reunion Material Adverse Effect, or (iii) give rise to an imposition of any
Lien, charge, security interest or encumbrance of any nature whatsoever upon any
of the assets of Reunion.
4.5. Merger Consideration. When issued, the shares of Reunion Common Stock
and Series A Reunion Preferred to be issued in the Merger will be duly
authorized, validly issued, fully-paid and nonassessable and free and clear of
all Liens and preemptive rights. The certificates or instruments representing
such shares will be in due and proper form.
4.6. Reports and Financial Statements. Reunion has previously furnished to
Chatwins a true and complete copy of its (i) Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Reunion 10-K") as filed with the SEC;
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 as filed
with the SEC; and (iii) Current Reports on Form 8-K as filed with the SEC since
March 31, 1999. Reunion will provide Chatwins with a true and complete copy of
each Quarterly Report on Form 10-Q and each current report on Form
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8-K promptly after filing such report with the SEC. As of their respective
dates, the Reunion 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K referred to above, did not, and will not, when filed, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in such reports or other filings have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the consolidated financial
position of Reunion and its subsidiaries as of the dates thereof and the
consolidated results of operations and changes in cash flow of Reunion and its
subsidiaries for the periods then ended, subject in the case of unaudited
interim financial statements, to normal year-end adjustments which are neither
individually nor in the aggregate expected to be material.
4.7. Absence of Material Adverse Change. Except as set forth on Schedule
4.7 or in the reports described in Section 4.6 or the Registration Statement,
there has not been any Reunion Material Adverse Effect since March 31, 1999.
4.8. Capitalization of Reunion. Reunion's authorized capital stock consists
of (i) 20,000,000 shares of Reunion Common Stock of which 3,940,100 are
outstanding on the date hereof, and (ii) 10,000,000 shares of preferred stock,
par value $.01 per share, none of which are outstanding on the date hereof. All
of the issued and outstanding shares of capital stock of Reunion are duly
authorized and validly issued, fully-paid and nonassessable.
4.9. Certificates of Incorporation and By-laws.
(a) Reunion has delivered to Chatwins copies of its Certificate of
Incorporation and all amendments thereto, which copies are complete and correct.
Reunion is not in default under, or in violation of, any provisions of its
Certificate of Incorporation. Reunion's Certificate of Incorporation has not
been amended since December 31, 1998 and, except as contemplated by this
Agreement or in connection with the Acquisitions (as defined in Section 6.2(c)),
no action has been taken for the purpose of effecting any amendment thereto.
(b) Reunion has delivered to Chatwins copies of its By-laws and all
amendments thereto, which copies are complete and correct. Reunion is not in
default under, or in violation of, any provision of its By-laws. Reunion's By-
laws have not been amended since the date of certification thereof and no action
has been taken for the purpose of effecting any amendment thereto.
4.10. Legal Proceedings. Except as set forth in the reports described in
Section 4.6 or the Registration Statement, (i) there are no suits, actions,
claims, proceedings (including, without limitation, arbitration or
administrative proceedings) or investigations pending or to the knowledge of
Reunion threatened in writing against Reunion or its property, assets or
business which could reasonably be expected, individually or in the aggregate,
to have a Reunion Material Adverse Effect; and (ii) Reunion is not a party or
subject to the provisions of any judgment,
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order, injunction, decree or award of any court, arbitration panel or government
agency or instrumentality.
4.11. Purchase Method. To the best knowledge of Reunion, neither Reunion
nor any of its affiliates has taken or agreed to take any action inconsistent
with the accounting treatment of the Merger under the "purchase method".
4.12. Disclosure. Neither this Agreement nor any document or information
furnished to Chatwins by Reunion pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements of Reunion contained herein or therein not misleading.
4.13. S-4 Registration Statement. At the time the Registration Statement
becomes effective and at the Effective Time, the Registration Statement and the
Proxy Statement/Prospectus included therein and the Reunion SEC filings
incorporated by reference therein, will not contain any statement which, at the
time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or shall omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or necessary to correct any statement which
has become false or misleading with respect to the transactions contemplated
hereby and will comply in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder (provided that no
representation or warranty is made with respect to the information prepared or
furnished by Chatwins to Reunion specifically for use therein or contained in
Chatwins SEC filings incorporated by reference therein).
4.14. Broker's or Finder's Fees. Except for Xxxx Xxxxx Xxxx Xxxxxx, Inc.
and Xxxxxx Xxxx, neither Reunion nor any of its affiliates has authorized any
person to act as broker, finder, banker, consultant, intermediary or in any
other similar capacity which would entitle such person to any investment
banking, brokerage, finder's or similar fee from Reunion in connection with the
transactions contemplated by this Agreement.
4.15. Permits, Licenses, Authorizations; Compliance with Laws. Reunion has
all licenses, franchises, certificates of occupancy, permits and other
governmental authorizations which are material and necessary to conduct its
business, and Reunion is not in violation in any material respect of any such
license, franchise, certificate of occupancy, permit or other governmental
authorization, or any statute, law, ordinance, rule regulation, judgment, order
or decree applicable to it or any of its properties.
ARTICLE V
COVENANTS OF CHATWINS
Chatwins covenants and agrees that:
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5.1. Regular Course of Business. Except as otherwise consented to in
writing by Reunion, prior to the Closing Chatwins will carry on its businesses
only in the ordinary course and substantially in accordance with past practices,
and Chatwins will use commercially reasonable efforts to preserve its present
business organization intact and keep available the services of its present
executive officers.
5.2. Restricted Activities and Transactions. Except as otherwise consented
to in writing by Reunion or contemplated by this Agreement, or as resulting from
the consummation of the transactions contemplated by this Agreement, prior to
the Closing Chatwins will not:
(a) amend its Certificate of Incorporation or By-laws;
(b) except in the ordinary course of business and substantially in
accordance with past practices, (i) borrow or agree to borrow any funds or
mortgage or pledge any of its assets, tangible or intangible, (ii) voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any material obligation or liability (absolute or contingent), (iii)
cancel or agree to cancel any material debts or claims, or (iv) lease, sell,
transfer or encumber, agree to lease, sell, transfer or encumber, or grant or
agree to grant any preferential rights to lease or acquire, any of its assets,
property or rights;
(c) except as set forth on the Schedules hereto, (i) grant any increase
in compensation or benefits, or (ii) make, pay or accrue any bonuses, pension,
profit sharing or similar payment to any director, officer or employee of
Chatwins other than payment of 1998 performance bonuses accrued as of December
31, 1998;
(d) acquire control or ownership of any other corporation, association,
joint venture, partnership, business trust or other business entity, or acquire
control or ownership of all or a substantial portion of the assets of any of the
foregoing, or merge, consolidate or otherwise combine with any other corporation
or enter into any agreement providing for any of the foregoing;
(e) except as set forth on the Schedules hereto or in the ordinary
course of business consistent with past practice, hire any additional
professional personnel or make any change in the responsibilities or office of
any officer of Chatwins;
(f) except as set forth on the Schedules hereto or in the ordinary
course of business consistent with past practice, enter into any material
contract or agreement or materially modify any existing material agreement;
(g) declare, set aside, make or pay any dividend or other distribution
with respect to its capital stock, or retire or redeem any of such capital
stock, or take any action which would have an effect equivalent to any of the
foregoing; or
(h) agree or commit to do any of the foregoing.
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Notwithstanding the foregoing, Chatwins may (i) enter into a purchase
and sale agreement with respect to its Xxxxx Division on substantially the terms
contemplated by the Letter of Intent, dated May 28, 1999, between Chatwins and
Alabama Metal Industries Corporation, as amended on July 12, 1999, and
consummate the transactions contemplated thereby (the "Xxxxx Sale") and (ii)
sell its Shanghai Xxxxx operations at the fair value thereof, as determined in
good faith by the Board of Directors of Chatwins (the "Shanghai Disposition").
5.3. Approval of Shareholders.
(a) Chatwins shall through its Board of Directors duly solicit the
waiver of all rights available to its shareholders who have not already voted in
favor of the Merger Agreement to demand appraisal of their shares of Chatwins
Common Stock under the Delaware GCL, as soon as reasonably practicable after the
date hereof.
(b) Chatwins will provide such shareholders with, or give such
shareholders access to, all material information about the transactions
contemplated by this Agreement. The written information provided to the
Chatwins shareholders will be, when so provided, true and accurate in all
material respects, and such information will not, when so provided, contain any
untrue statement of a material fact or omit to state a material fact with
respect to such written information. Copies of all written information
delivered or to be delivered to the shareholders shall be offered for review and
approval to Reunion prior to its delivery to the Chatwins shareholders.
5.4. Consents, Approvals and Filings. Chatwins will use its best efforts to
obtain on or before the Closing all necessary approvals, authorizations,
registrations, consents, licenses, clearances or orders of governmental and
regulatory authorities referred to in Section 3.8.
5.5. Access to Books, Records and Other Information. Chatwins will afford
to Reunion and its accountants, attorneys and agents such information as Reunion
may reasonably request (including such copies of documents as Reunion may
reasonably request) and reasonable access to the books and records of Chatwins.
5.6. Amended Schedules. Promptly after the consummation of the Xxxxx Sale,
Chatwins shall supplement or amend the schedules to this Agreement to the extent
required to accurately reflect the transactions contemplated by the Xxxxx Sale.
Any representation of Chatwins that is affected by such supplemented or amended
schedules shall be deemed to have been amended accordingly for all purposes of
this Agreement.
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ARTICLE VI
COVENANTS OF REUNION
Reunion covenants and agrees that:
6.1. Regular Course of Business. Except as otherwise consented to in
writing by Chatwins, prior to the Closing, Reunion will carry on its businesses
only in the ordinary course and substantially in accordance with past practices,
and will use commercially reasonable efforts to preserve its present business
organization intact and keep available the services of its present executive
officers.
6.2. Restricted Activities and Transactions. Except as otherwise consented
to in writing by Chatwins or contemplated by this Agreement or as resulting from
the consummation of the transactions contemplated by this Agreement, prior to
the Closing Reunion will not:
(a) amend its Certificate of Incorporation or By-laws except in
connection with the Acquisitions (as defined in Section 6.2(c));
(b) except in the ordinary course of business and substantially in
accordance with past practices, (i) borrow or agree to borrow any funds or
mortgage or pledge any of its assets, tangible or intangible, (ii) voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any material obligation or liability (absolute or contingent), (iii)
cancel or agree to cancel any material debts or claims, or (iv) lease, sell,
transfer or encumber, agree to lease, sell, transfer or encumber, or grant or
agree to grant any preferential rights to lease or acquire, any of its assets,
property or rights;
(c) acquire control or ownership of any other corporation, association,
joint venture, partnership, business trust or other business entity, or acquire
control or ownership of all or a substantial portion of the assets of any of the
foregoing, or merge, consolidate or otherwise combine with any other corporation
or enter into any agreement providing for any of the foregoing; provided that
Reunion, or one of its subsidiaries, may enter into a merger or other
acquisition agreement with each of SAC and NPS (collectively, the
"Acquisitions").
(d) issue or sell any shares of its capital stock or other equity
interests or issue or award any options, warrants or other rights with respect
to its capital stock or other equity interests, except in connection with the
Acquisitions; or
(e) agree or commit to do any of the foregoing.
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6.3. Approval of Shareholders.
(a) Reunion shall through its Board of Directors duly call, give notice
of, convene and hold a meeting of its shareholders for the purpose of voting on
the adoption and approval of this Agreement as soon as reasonably practicable
after the date hereof.
(b) Reunion will provide its shareholders with, or give its shareholders
access to, all material information about the transactions contemplated by this
Agreement. The written information provided to the Reunion shareholders will
be, when so provided, true and accurate in all material respects, and such
information will not, when so provided, contain any untrue statement of a
material fact or omit to state a material fact with respect to such written
information.
6.4. Consents, Approvals and Filings. Reunion will use its best efforts to
obtain on or before the Closing all necessary approvals, authorizations,
registrations, consents, licenses, clearances or orders of governmental and
regulatory authorities referred to in Section 4.3.
6.5. Access to Books, Records and Other Information. Reunion will afford to
Chatwins and its accountants, attorneys and agents such information as Chatwins
may reasonably request (including such copies of documents as Chatwins may
reasonably request) and reasonable access to its books and records.
ARTICLE VII
MUTUAL COVENANTS
7.1. Payment of Expenses. Except for the fees, costs and expenses charged
in connection with any refinancing of Reunion to be consummated in connection
with the Merger, which shall be paid one-half by Reunion and one-half by
Chatwins, and except as otherwise specifically provided elsewhere herein, each
party to this Agreement shall be responsible for its own costs and expenses
incurred in connection with the transactions contemplated by this Agreement, and
in particular, Reunion shall be responsible for the fees and expenses of Xxxx
Xxxxx Xxxx Xxxxxx, Incorporated. All expenses incurred in connection with the
Registration Statement shall be borne by Reunion.
7.2. Public Announcements. Reunion and Chatwins shall to the maximum extent
feasible advise and confer with each other prior to the issuance of any reports,
public statements or releases pertaining to this Agreement or any transaction
contemplated hereby.
7.3. Public Disclosure. None of the information supplied by Reunion and
Chatwins for inclusion or incorporation by reference in the Registration
Statement (as defined below) at the time the Registration Statement is filed
with the SEC and the time such document becomes effective under the Securities
Act, will contain an untrue statement of a material fact or
19
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
7.4. Refinancing. Reunion and Chatwins shall, and shall cause their
respective affiliates, agents and employees to, cooperate and expend all efforts
reasonably necessary to consummate on the Closing Date the currently
contemplated refinancing of the outstanding indebtedness of Reunion and Chatwins
through lenders reasonably acceptable to Chatwins and Reunion, and any
refinancing in lieu or supplemental thereof.
7.5. No Shop. From the date hereof until the Effective Time, except in
connection with the Acquisitions, the Shanghai Disposition and the Xxxxx Sale,
and as otherwise required to comply with applicable law, Reunion and Chatwins
shall not and shall not permit any officer, director or other agent of Reunion
or Chatwins, directly or indirectly, to take any action to seek, initiate,
negotiate or encourage or enter into or participate in any discussions
regarding, any offer from any third party to acquire any shares of capital stock
or other equity interest of such third party, or to sell to such third party any
shares of capital stock or other equity interest of Reunion or Chatwins, to
merge or consolidate with Reunion or Chatwins, or to otherwise acquire any
significant portion of the assets of Reunion or Chatwins or to acquire any
significant portion of the assets of such third party.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF REUNION
The obligation of Reunion to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, on or prior to the Closing,
of the following conditions:
8.1. Representations and Warranties True at the Closing. The
representations and warranties of Chatwins contained in this Agreement shall be
true and correct in all material respects, except to the extent such
representations were made as of a specific date other than the date hereof.
8.2. Performance of Covenants. Chatwins shall have performed in all
material respects all covenants required to be performed by it under this
Agreement prior to the Closing.
8.3. Opinion of Counsel. Chatwins shall have delivered to Reunion an
opinion, dated the Closing Date and addressed to Reunion, of Xxxxxxxx & O'Neil,
LLP in form and substance reasonably satisfactory to Reunion and its counsel.
8.4. Shareholder Approvals. This Agreement shall have been adopted by the
requisite vote of the shareholders of Reunion under the Delaware GCL; and
holders of no more than 5% of Chatwins Common Stock shall have exercised their
rights of appraisal under the Delaware GCL, provided that the Board of Directors
of Reunion may elect to proceed with the
20
Merger in the event that more than 5% of holders of Chatwins Common Stock
exercise such rights of appraisal.
8.5. Other Approvals and Consents. All required approvals and
authorizations of governmental and regulatory authorities, including those
listed on Schedule 3.8 and Schedule 4.3, shall have been obtained.
8.6. No Governmental or Other Proceeding. No order of any court or
administrative agency of competent jurisdiction shall be in effect which
restrains or prohibits any transaction contemplated hereby or which would limit
or otherwise affect in any material respect the Merger.
8.7. No Material Adverse Change. There shall not have been since the date
hereof any occurrence which could reasonably be expected to have a Chatwins
Material Adverse Effect.
8.8. Certificate of Chatwins. Chatwins shall have furnished Reunion with a
Certificate of Chatwins signed by its principal executive officer to the effect
that the representations and warranties of Chatwins contained in this Agreement
are true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made on such date (except as to
representations and warranties which are expressly limited to a state of facts
existing at a time prior to the Closing Date) and that Chatwins has performed or
complied in all material respects with all terms, covenants and provisions of
this Agreement required to be performed or complied with by it prior to or at
the Closing.
8.9. Certificate of Merger. Chatwins shall have executed and delivered to
Reunion the certificate of merger to be filed with the Secretary of State in
connection with the Merger.
8.10. Fairness Opinion. Reunion's Board of Directors shall have received
the opinion of Xxxx Xxxxx Xxxx Xxxxxx, Inc., in a form reasonably satisfactory
to the Board, that the consideration to be paid for Chatwins pursuant to this
Agreement is fair to Reunion and its stockholders, other than Chatwins, from a
financial point of view.
8.11. Refinancing; Chatwins Warrants. Reunion shall have an enforceable
agreement or agreements with one or more lenders, to consummate and/or continue
one or more credit facilities, the proceeds of which will be sufficient to
redeem the $50,000,000 principal amount Senior Notes of Chatwins due 2003 (the
"Senior Notes") and to provide adequate working capital resources to Reunion
after giving effect to the Merger, and all conditions precedent to the amendment
and/or funding of such credit facilities shall have been satisfied other than
the consummation of the Merger. Chatwins shall have issued the requisite "bring
along notice" to its warrantholders and all Chatwins warrants shall have been
exercised or terminated.
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8.12. Xxxxx Sale. Reunion shall have been provided the opportunity to
review and approve the definitive purchase and sale agreement with respect to
the Xxxxx Sale and Chatwins shall have consummated the Xxxxx Sale on such terms.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF CHATWINS
The obligations of Chatwins to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, on or prior to the Closing,
of the following conditions:
9.1. Representations and Warranties True at the Closing Date. The
representations and warranties of Reunion contained in this Agreement shall be
true and correct in all material respects, except for representations and
warranties which were made as of a specified date other than the date hereof.
9.2. Performance of Covenants. Reunion shall have performed in all material
respects all covenants required to be performed by it under this Agreement prior
to the Closing.
9.3. Opinion of Counsel. Reunion shall have delivered to Chatwins an
opinion, dated the Closing Date and addressed to Chatwins, of Xxxxxxxx Xxxxxxxxx
Professional Corporation, in form and substance reasonably satisfactory to
Chatwins and its counsel.
9.4. Shareholder Approvals. This Agreement shall have been adopted by the
requisite vote of the shareholders of Reunion under the Delaware GCL and holders
of no more than 5% of Chatwins Common Stock shall have exercised their rights of
appraisal under the Delaware GCL; provided that the Board of Directors of
Chatwins may elect to proceed with the Merger in the event that more than 5% of
holders of Chatwins Common Stock exercise such rights of appraisal.
9.5. Other Approvals and Consents. All required approvals and
authorizations of governmental and regulatory authorities, including those
listed on Schedule 3.8 and Schedule 4.3, shall have been obtained.
9.6. No Governmental or Other Proceeding. No order of any court or
administrative agency of competent jurisdiction shall be in effect which
restrains or prohibits any transaction contemplated hereby or which would limit
or otherwise affect in any material respect the Merger.
9.7. Certificate of Reunion. Reunion shall have furnished Chatwins with a
Certificate of Reunion signed by its respective President or any Vice President
to the effect that, except for changes thereto agreed to in writing by Chatwins,
the representations and warranties of Reunion contained in this Agreement are
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made on such date (except
22
as to representations and warranties which are expressly limited to a state of
facts existing at a time prior to the Closing) and that Reunion has performed or
complied in all material respects with all terms, covenants and provisions of
this Agreement required to be performed or complied with by it prior to or at
the Closing.
9.8. Registration. Reunion shall have filed with the SEC the Registration
Statement and the Registration Statement shall be effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended (the "Securities Act").
For the purposes of this Agreement, "Registration Statement" shall mean the
registration statement on Form S-4 of Reunion covering the shares of Reunion
Common Stock to be issued to the Chatwins's shareholders upon conversion of the
Chatwins Common Stock in connection with the Merger, including a proxy
statement/prospectus, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated
by reference in such Registration Statement. Reunion shall have complied in all
material respects with all "Blue Sky" obligations applicable to the transactions
contemplated by this Agreement and by the Registration Statement.
9.9. Listing. Reunion shall have taken such actions as are necessary to
cause the shares registered by the Registration Statement to be listed on the
Pacific Exchange and the NASDAQ Small-Cap Market.
9.10. Certificate of Merger. Reunion shall have executed and delivered to
Chatwins the certificate of merger to be filed with the Secretary of State in
connection with the Merger.
9.11. No Material Adverse Change. There shall not have been since the date
hereof any occurrence which could reasonably be expected to have a Reunion
Material Adverse Effect.
9.12. Refinancing. Reunion shall have an enforceable agreement or
agreements with one or more lenders, to consummate and/or continue one or more
credit facilities, the proceeds of which will be sufficient, to redeem the
Senior Notes and to provide adequate working capital resources to Reunion after
giving effect to the Merger, and all conditions precedent to the amendment
and/or funding of such credit facilities shall have been satisfied other than
the consummation of the Merger.
9.13. Reunion Preferred. The Board of Directors of Reunion shall have
approved and Reunion shall have filed with the Secretary of the State and
delivered to Chatwins a Certificate of Designations with respect to the Series A
Reunion Preferred having the terms described in Section 1.2(b) hereof.
9.14. Xxxxx Sale. Reunion shall have been provided the opportunity to
review and approve the definitive purchase and sale agreement with respect to
the Xxxxx Sale and Chatwins shall have consummated the Xxxxx Sale on such terms.
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ARTICLE X
TERMINATION
10.1. Termination. This Agreement may be terminated (i) by the mutual
consent of Reunion and Chatwins; (ii) by Reunion or Chatwins at any time after
120 days after the date hereof if for any reason the Merger shall not by such
date have been consummated and such failure to consummate the Merger is not
caused by a breach of this Agreement by the terminating party; (iii) by Reunion
if there has been a misrepresentation or breach on the part of Chatwins in the
representations, warranties and covenants of Chatwins set forth herein which, if
curable, has not been cured within 10 days of notice thereof by Reunion and
which breach, if not cured, would cause a failure of the conditions set forth in
Section 8.1 or 8.2; (iv) by Chatwins if there has been a misrepresentation or
breach on the part of Reunion in the representations, warranties and covenants
of Reunion set forth herein which, if curable, has not been cured within 10 days
of notice thereof by Chatwins and which breach, if not cured, would cause a
failure of the conditions set forth in Section 9.1 or 9.2; and (v) by Reunion or
Chatwins if any court or administrative agency of competent jurisdiction shall
have issued an order which restrains or prohibits any transaction contemplated
hereby or which would limit or otherwise affect in any material respect the
Merger and such order shall have become final and nonappealable.
10.2. Effect of Termination. If this Agreement is validly terminated by
Reunion or Chatwins pursuant to Section 10.1, this Agreement will forthwith
become null and void and there will be no liability or obligation on the part of
Reunion or Chatwins (or any of their respective subsidiaries, representatives or
affiliates), except (i) that the provisions of Sections 7.1 and 7.2 will
continue to apply following any such termination and (ii) that nothing contained
herein shall relieve any party hereto from liability for breach of its
representations, warranties, covenants or agreements contained in this
Agreement.
10.3. Termination After Shareholder Vote. At any time prior to the
Effective Time this Agreement may be terminated by the Board of Directors of
Reunion or Chatwins pursuant to Section 10.1 hereof notwithstanding the prior
approval of this Agreement and the Merger by their respective stockholders.
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification.
(a) Reunion shall indemnify and hold harmless Chatwins, each of its
directors and officers, and each person or entity, if any, who controls Chatwins
within the meaning of the Securities Act against all losses, claims, damages or
liabilities, joint or several, to which Chatwins or any such director, officer
or controlling person may become subject (i) which arise out of or are caused by
any breach by Reunion of any representation or warranty of Reunion contained in
this Agreement or any related agreement, (ii) which arise out of or are caused
by
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any breach or other failure to perform any covenant, agreement or other
obligation of Reunion contained in this Agreement or any related agreement, or
(iii) under the Securities Act insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and Reunion shall
reimburse Chatwins or any such director, officer or controlling person for any
reasonable legal or other expenses in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
Reunion shall not be required to indemnify and hold harmless or reimburse
Chatwins to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in any document made in reliance upon and in
conformity with written information furnished to Reunion by or on behalf of
Chatwins for use in the preparation of such documents.
(b) Chatwins shall indemnify and hold harmless Reunion, each of its
directors and officers, and each person or entity, if any, who controls Reunion
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities to which Reunion or any such director or officer or controlling
person may become subject (i) which arise out of or are caused by any breach by
Chatwins of any representation or warranty of Chatwins contained in this
Agreement or any related agreement, (ii) which arise out of or are caused by any
breach or other failure to perform any covenant, agreement or other obligation
of Chatwins contained in this Agreement or any related agreement, or (iii) under
the Securities Act insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case only to the extent that such
untrue statement or alleged untrue statement or omission was made in reliance
upon and in conformity with written information furnished to Reunion by or on
behalf of Chatwins; and Chatwins shall reimburse Reunion for any reasonable
legal or other expenses reasonably incurred by Reunion or any such director or
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action.
(c) Promptly after receipt by a party who is, under paragraphs (a) or
(b) of this Section 11.1 an indemnified party, of notice of the commencement of
any action with respect to which indemnification may be sought under this
Section 11.1, such indemnified party shall notify the indemnifying party. Such
notice shall be a condition precedent to any liability of the indemnifying party
for indemnification contained in this Section 11.1; provided, however, that the
rights of the indemnified party to indemnification or compensation hereunder
will only be affected by its failure to give prompt notice to the indemnifying
party of the commencement of such action if and to the extent that such failure
prejudices the indemnifying party in the defense of such action. In case any
such action is being brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party shall be
25
entitled to assume and control the defense of the action at its expense and if
the indemnifying party gives notice to such indemnified party of its election to
assume and control the defense, the indemnifying party will not be liable to
such indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense or investigation of the action,
so long as and to the extent that the indemnifying party continues to diligently
defend the indemnified party.
(d) No action for indemnity under this Article XI may be brought or
maintained by either party after the Effective Time.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Notices, Etc. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, when delivered in person, telegraphed, or when mailed by certified
or registered mail, postage prepaid, or when given by telex or facsimile
transmission (promptly confirmed in writing), as follows:
(a) If to Chatwins:
Chatwins Group, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: President
with copies to:
Xxxxxxxx & O'Neil, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
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(b) If to Reunion:
Reunion Industries, Inc.
One Stamford Landing, 00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: President
with copies to:
Xxxxxxxx Ingersoll Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
or such other person as the person entitled to notice shall designate in
writing, such writing to be delivered to the other parties hereto in the manner
provided in this Section 12.1.
12.2. Survival of Representations and Warranties. The representations and
warranties contained herein and in any certificate delivered pursuant hereto
shall not survive the Closing Date and the consummation of any or all of the
transactions contemplated hereby.
12.3. Entire Agreement; Amendment. This Agreement (including the various
Schedules hereto) sets forth the entire agreement and understanding of the
parties in respect of the transactions contemplated hereby and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. This Agreement may be amended or modified only by a written instrument
executed by Reunion and Chatwins. The Boards of Directors of Chatwins and
Reunion may amend this Agreement at any time prior to the time that this
Agreement (or a certificate in lieu thereof) filed with the Secretary of State
becomes effective in accordance with Section 103 of the Delaware GCL, provided
that an amendment made subsequent to the adoption of this Agreement by the
stockholders of Chatwins or Reunion may not (1) alter or change the amount or
kind of shares, securities, cash, property and/or rights to be received in
exchange for or on conversion of all or any of the shares of any class or series
thereof, (2) alter or change any term of the certificate of incorporation of
Reunion to be effected by the Merger, or (3) alter or change any of the terms
and conditions of this Agreement if such alteration or change would adversely
affect the holders of any class or series of capital stock of Reunion or
Chatwins.
12.4. Individual Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations
27
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (i) such provision will be fully severable, (ii) this
Agreement will be construed and enforced as if such illegal, invalid and
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the legal, invalid or unenforceable provision, and (iv) there
will be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
12.5. General. This Agreement: (i) shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the choice of law principles thereof; (ii) shall inure to the benefit
of the parties hereto and their heirs, personal representatives, successors and
permitted assigns, nothing in this Agreement, expressed or implied, being
intended to confer upon any other person any rights or remedies hereunder; (iii)
may not be assigned by a party without the prior written consent of the other
parties; and (iv) may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument. The Section, Schedule and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
REUNION INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
CHATWINS GROUP, INC.
By: /s/ XXXXXX X. LAWYER
------------------------------------------
Name: Xxxxxx X. Lawyer
Title: President
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