TENDER AND STOCK OPTION AGREEMENT
THIS TENDER AND STOCK OPTION AGREEMENT (this "Agreement") is made as of the
11th day of April, 1997 by and among R-B Capital Corporation, a Delaware
corporation ("Parent"), R-B Acquisition Corporation, a Delaware corporation
("Acquisition"), and the other signatories hereto (each a "Stockholder," and
collectively, the "Stockholders").
RECITALS
A. Parent, Acquisition and Peerless Industrial Group, Inc., a Minnesota
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger (the "Merger Agreement"), providing for the merger of Acquisition with
and into the Company (the "Merger") with the Company surviving the Merger, with
all of the issued and outstanding stock of the Company immediately following the
Merger to be owned by Parent.
B. In furtherance of the Merger, Parent desires that as soon as
practicable (and not later than five business days) after the execution and
delivery of the Merger Agreement, Acquisition shall commence a cash tender offer
(the "Offer") to purchase all outstanding shares of Company Common Stock (as
defined below) not owned by Acquisition.
C. Each Stockholder, together with its Affiliates, Beneficially Owns (as
defined below) (i) the number of outstanding shares of Company Common Stock set
forth opposite its name in the column headed "Existing Shares" in Schedule I
hereto (the "Existing Shares" , and (ii) holds options, warrants or other rights
to acquire the additional number of Shares of Company Common Stock set forth
opposite its name in the column headed "Additional Shares" in Schedule I hereto
(the "Additional Shares"). The Existing Shares and the Additional Shares,
together with any After-Acquired Shares (as defined below), are referred to
herein as the "Shares".
D. As a condition to the willingness of Parent to enter into the Merger
Agreement, Parent has required that each of the Stockholders agrees, and each
such Stockholder has agreed, (i) to tender and sell in the Offer all of the
outstanding Shares (and, if required pursuant to Section 2 hereof, to acquire
and tender and sell in the Offer all or a portion of the Additional Shares, as
specified pursuant to Section 2) Beneficially Owned by such Stockholder and its
Affiliates, and (ii) to grant Acquisition an option to purchase a portion of the
Shares Beneficially Owned by such Stockholder and its Affiliates in certain
circumstances, in
each case, pursuant to and in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" of a Person means a Person that directly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned Person. With respect to a natural person, the term
"Affiliate" also includes any such person's spouse and any person who is a
descendant or ancestor of such person or such person's spouse, and their
respective Affiliates. Notwithstanding the foregoing, the children and
grandchildren of Xxxxxxx Xxxxxxx, and trusts of which Xx. Xxxxxxx is trustee,
shall not be considered Affiliates of Xx. Xxxxxxx.
(b) "After-Acquired Shares" shall mean any shares of Company Common Stock
acquired directly or indirectly, or otherwise Beneficially Owned, by any of the
Stockholders or their respective Affiliates in any capacity after the date
hereof and prior to the termination hereof, whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities or by means of purchase, dividend, distribution, gift,
bequest, inheritance or as a successor in interest in any capacity (including a
fiduciary capacity) or otherwise.
(c) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meanings of Section
13(d)(3) of the Exchange Act.
(d) "Company Common Stock" shall mean at any time the common stock, no par
value per share, and the Class B common stock, no par value per share, of the
Company.
(e) "Control" (including the terms "controlled by" and "under common
control with") shall mean the possession, directly or indirectly or as trustee
or executor, of the power to direct
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or cause the direction of the management policies of a Person, whether through
the ownership of stock, as trustee or executor, by contract or credit agreement
or otherwise.
(f) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(g) "Triggering Event" shall mean a Triggering Event as defined in the
Merger Agreement
2. Tender of Shares. (a) Each Stockholder, severally (and not jointly)
agrees (i) to validly tender (or cause the record owner of any Shares to tender)
pursuant to the Offer all Existing Shares Beneficially Owned by such Stockholder
and its Affiliates, not later than the fifth business day after commencement of
the Offer or, with respect to After-Acquired Shares at any time Beneficially
Owned by such Stockholder or its Affiliates, within one business day following
the acquisition thereof and (ii) to the maximum extent permitted by law, not to
withdraw any Shares so tendered without the prior written consent of
Acquisition. The Stockholders hereby acknowledge and agree that Acquisition's
obligation to accept for payment and pay for the Shares in the Offer is subject
to the terms of the Offer.
(b) If Parent or Acquisition shall notify the Stockholders at any time
after the commencement of the Offer that additional Shares are required to be
tendered so that at least (x) 50% or (y) 90%, as specified by Parent or
Acquisition, of all outstanding shares of Company Common Stock shall have been
validly tendered in the Offer, then each Stockholder shall (and shall cause his,
her or its Affiliates to), exercise such options, warrants and other rights to
acquire Additional Shares in such amounts as may be specified by Parent or
Acquisition in order to cause at least (x) 50% or (y) 90%, as specified by
Parent or Acquisition, of all outstanding shares of Company Common Stock to have
been validly tendered in the Offer, and shall tender or cause to be tendered in
the Offer as described in this Agreement all After-Acquired Shares acquired by
such Stockholder (or his, her or its Affiliates) upon exercise of such options,
warrants and other rights. Parent and Acquisition agree that (i) they shall not
make any such request except to the extent required to cause at least (x) 50% or
(y) 90% of all outstanding shares of Company Common Stock to have been validly
tendered in the Offer, and (ii) to the extent practicable, such request shall be
made to all Stockholders pro rata, on the basis of the Company Common Stock
owned by all Stockholders and their respective Affiliates on a fully-diluted
basis.
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3. Stock Option.
(a) Subject to Section 3(b) below, each Stockholder hereby grants to
Acquisition an irrevocable option (the "Stock Option") to purchase a number of
Existing Shares owned by such Stockholder or its Affiliates as set forth on
Schedule I hereto opposite the name of such Stockholder (such Shares, as
adjusted from time to time pursuant to this Section 3(a), being referred to as
the "Option Shares") at a purchase price equal to $1.67 (the "Exercise Price")
per share in cash net to the seller; provided, that in no event shall the
aggregate number of Option Shares subject to the Stock Options granted by all
Stockholders exceed an amount equal to 19.9% of the outstanding shares of
Company Common Stock, and if the aggregate number of Option Shares subject to
the Stock Options granted by all Stockholders would otherwise exceed 19.9% of
the outstanding shares of Company Common Stock, then the number of Option Shares
subject to the Stock Options granted by all Stockholders shall be reduced, on a
pro rata basis, so that the aggregate number of Option Shares subject to the
Stock Options granted by all Stockholders will not exceed an amount equal to
19.9% of the outstanding shares of Company Common Stock. If at any time
additional shares of Company Common Stock shall be issued so that the aggregate
number of Option Shares subject to the Stock Options granted by all Stockholders
would otherwise be less than 19.9% of the outstanding shares of Company Common
Stock, then each Stockholder (pro rata in accordance with the Option Shares
initially subjected to the Stock Options as set forth in Schedule I) hereby (i)
grants to Acquisition a Stock Option on such further Existing Shares
Beneficially Owned by such Stockholder as may be required to increase the
aggregate number of Option Shares subject to the Stock Options granted by all
Stockholders to an amount equal to 19.9% of the outstanding shares of Company
Common Stock, and (ii) agrees to exercise such options, warrants or rights to
acquire Additional Shares in such amounts as may be requested by Parent or
Acquisition in order to obtain the result described in clause (i) of this
sentence.
(b) Subject to Section 4 hereof, the Stock Option may be exercised by
Acquisition, in whole and for all Stockholders but not in part or for less than
all Stockholders, at any time following the occurrence of, or in connection
with, a "Purchase Event". The term "Purchase Event" means the occurrence of any
of the following: (i) the Company shall have entered into any letter of intent,
memorandum of understanding or agreement relating to or providing for an
Alternative Transaction (as defined in the Merger Agreement), (ii) the Company
or the Stockholders shall have consummated an Alternative Transaction or (iii)
Acquisition shall have purchased any Shares pursuant to the Offer.
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(c) In the event Acquisition wishes to exercise the Stock Option,
Acquisition shall send a written notice (an ("Exercise Notice") to each
Stockholder specifying that Acquisition shall purchase the total number of
Option Shares held by such Stockholder and a date, which shall be a business
day, and a place, which shall be in Minneapolis, Minnesota or Chicago, Illinois,
for the closing of such purchase (the "Stock Option Closing").
(d) Upon receipt of the Exercise Notice, each Stockholder shall be
obligated to deliver to Acquisition a certificate or certificates representing
the number of Option Shares held by such Stockholder and its respective
Affiliates (or to direct the depository for the Offer to so deliver such
certificate or certificates), in accordance with the terms of this Agreement, on
the later of the date specified in such Exercise Notice and the first business
day on which the conditions specified in Section 4 shall be satisfied. The date
specified in such Exercise Notice may be as early as one business day after the
date of such Exercise Notice but shall not be later than the later of (i) thirty
days after the date the Exercise Notice is given, and (ii) the date upon which
any Alternative Transaction is consummated.
(e) At the Stock Option Closing, each Stockholder will deliver to
Acquisition a certificate or certificates evidencing the number of Option Shares
owned by such Stockholder and its respective Affiliates, each such certificate
being duly endorsed in blank and accompanied by such stock powers and such other
documents as may be necessary in Acquisition's judgement to transfer record
ownership of the Option Shares into Acquisition's name on the stock transfer
books of the Company, and Acquisition will purchase the delivered Option Shares
at the Exercise Price. All payments made by Acquisition to the Stockholders
pursuant to the Section 3(e) shall be made by wire transfer of immediately
available funds or by certified bank check payable to the Stockholders, in an
amount for each Stockholder equal to the product of (i) the Exercise Price and
(ii) the number of Option Shares delivered by such Stockholder and its
respective Affiliates in respect of the Stock Option Closing.
(f) In lieu of purchasing Option Shares following the giving of an
Exercise Notice, Acquisition may instruct Stockholder to carry out the
Alternative Transaction (by tender, sale or surrender of the Option Shares or
otherwise as instructed) and upon receipt of such instructions, Stockholder will
so carry out the Alternative Transaction; provided that the Alternative
Transaction provides for the Stockholder to receive at least $1.67 per share in
cash net to the Stockholder within thirty days after receipt of such
instructions. Each Stockholder agrees that Option Shares will be the first
Shares transferred in an Alternative Transaction. Upon receipt of the
consideration
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with respect to Option Shares payable in the Alternative Transaction, each
Stockholder will pay to Acquisition with respect to each Option Share an amount
equal to the per share consideration so received less $1.67 per Share. Any
Option Shares not purchased in the Alternative Transaction shall remain subject
to this Agreement.
(g) In the event of any change in the number of issued and outstanding
shares of Company Common Stock by reason of any stock dividend, subdivision,
merger, recapitalization, combination, conversion or exchange of shares, or any
other change in the corporate or capital structure of the Company (including,
without limitation, the declaration or payment of an extraordinary dividend of
cash or securities) which would have the effect of diluting or otherwise
adversely affecting Acquisition's rights and privileges under this Agreement,
the number and kind of the Option Shares and the consideration payable in
respect of the Option Shares shall be appropriately and equitably adjusted to
restore to Acquisition its rights and privileges under this Agreement. Without
limiting the scope of the foregoing, in any such event, at the option of
Acquisition, the Stock Option shall represent the right to purchase, in addition
to the number and kind of Option Shares which Acquisition would be entitled to
purchase pursuant to the immediately preceding sentence, whatever securities,
cash or other property the Option Shares subject to the Stock Option shall have
been converted into or otherwise exchanged for, together with any securities,
cash or other property which shall have been distributed with respect to such
Option Shares.
4. Conditions to the Delivery of the Option Shares.
(a) The obligations of the parties hereto to consummate the transactions
contemplated by Section 3 hereof are subject to the condition that there shall
be no preliminary or permanent injunction or other order or decree by any court
of competent jurisdiction restricting, preventing or prohibiting the exercise of
the Stock Option or the delivery of the Option Shares in respect of such
exercise.
(b) The obligations of Acquisition to consummate the purchase of any
Option Shares upon the exercise of the Stock Option is subject to the further
conditions that (i) all representations and warranties of the Stockholders shall
be true and correct when made and shall be true and correct in all material
respects at and as of the Closing as though made on and as of the Closing, and
(ii) Acquisition shall be satisfied in its sole discretion that the Alternative
Transaction shall be consummated.
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5. No Purchase. Each Stockholder understands and acknowledges that
Acquisition may allow the Offer to expire without accepting for payment or
paying for any Shares, under the circumstances described in the Offer to
Purchase, and Parent and Acquisition may allow the Stock Option to terminate
without purchasing all or any Shares pursuant to the exercise thereof. If any
Shares are not accepted for payment in accordance with the terms of the Offer or
purchased pursuant to the Offer, they shall be returned to the respective
Stockholder or their respective Affiliates, whereupon they shall continue to be
held by such Stockholder or Affiliate subject to the terms and conditions of
this Agreement.
6. Restriction on Transfer, Proxies and Non-interference; Stop Transfer
Order.
(a) Each Stockholder hereby agrees, while this Agreement is in effect, and
except as specifically contemplated hereby, not to (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of or enter into
any contract, option or other arrangement or understanding with respect to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any of the Shares or any interest therein, (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares, (iii) take any action that
would make any representation or warranty of any Stockholders contained herein
untrue or incorrect or have the effect of preventing or disabling any
Stockholder from performing its obligations under this Agreement; or (iv) take
or cause the Company to take any action that would make any representation or
warranty of the Company in the Merger Agreement untrue or incorrect or have the
effect of preventing or disabling the Company from performing its obligations
thereunder.
(b) In furtherance of the provisions of Section 6(a) hereof, concurrently
herewith the Stockholders shall and hereby do authorize the Company's counsel to
notify the Company's transfer agent that there is a stop transfer order with
respect to all of the Existing Shares and any other Shares acquired by any
Stockholder after the date hereof (and that this Agreement places limits on the
voting and transfer of such Shares).
7. Notice of Additional Shares. Each Stockholder hereby agrees to
promptly notify Parent in writing of the number of After-Acquired Shares that
may be acquired by such Stockholder, if any, after the date hereof.
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8. Other Covenants, Representations and Warranties. Each Stockholder
hereby represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Shares. Each Stockholder and its respective Affiliates
are either (i) the record and Beneficial Owner of, or (ii) the Beneficial Owner
but not the record holder of, the number of outstanding shares of Company Common
Stock set forth in the column headed "Existing Shares" opposite such
Stockholder's name on Schedule I hereto. Each Stockholder and its respective
Affiliates holds options, warrants or other rights to acquire the number of
shares of Company Common Stock set forth in the column headed "Additional
Shares" opposite such Stockholder's name on Schedule I hereto, which options,
warrants or other rights are presently exercisable on the date hereof except as
indicated in a footnote to Schedule I hereto. On the date hereof, the number of
shares of Company Common Stock set forth in the columns headed "Existing Shares"
and "Additional Shares" opposite such Stockholder's name on Schedule I hereto
constitute all of the shares of Company Common Stock owned of record or
Beneficially Owned by such Stockholder or its Affiliates, or which such
Stockholder or any of its Affiliates has any option, warrant or other right to
acquire. Such Stockholder has sole power to agree to all of the matters set
forth in this Agreement, in each case with respect to all of the shares of
Company Common Stock set forth in the columns headed "Existing Shares" and
"Additional Shares" opposite such Stockholder's name on Schedule I hereto, with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the stockholder of the transactions contemplated hereby.
(c) No Conflicts. (i) No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this
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Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by such Stockholder, the consummation by such Stockholder of the
transactions contemplated hereby or compliance by such Stockholder with any of
the provisions hereof shall (A) conflict with or result in any breach of any
applicable organizational documents applicable to such Stockholder, (B) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder's properties or assets may be bound, or
(C) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
(d) No Encumbrances. Except as applicable in connection with the
transactions contemplated hereby, the Stockholder's Shares and the certificates
representing the Stockholders's Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder. There are no options or rights to acquire, or any
agreement to which any Seller is a party relating to, any Stockholder's Shares,
other than this Agreement. Upon registration of such Stockholder's Shares in
Acquisition's name in the stock records of the Company, Acquisition will,
assuming it has purchased such Shares for value in good faith and without notice
of any adverse claim, have acquired all the rights of such Stockholder in such
Shares free of any adverse claim, any lien in favor of the Company, and any
restrictions on transfer imposed by the Company.
(e) No Finder's Fees. No broker, investment banker, financial adviser or
other Person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder.
(f) No Solicitation. Such Stockholder will immediately cease any existing
discussions or negotiations with any third parties conducted prior to the date
hereof with respect to any Acquisition Proposal (as defined below). Such
Stockholder shall
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not, in such Stockholder's capacity as such, directly or indirectly, through any
officer, director, employee, representative or agent, (i) solicit, initiate,
continue or encourage any inquiries, proposals or offers that constitute, or
could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock (including, without limitation, by way of a tender offer),
liquidation, reorganization or similar transactions involving the Company or any
of its subsidiaries or divisions, other than the transactions contemplated by
the Merger Agreement (any of the foregoing inquiries or proposals being referred
to herein as an "Acquisition Proposal"), (ii) solicit, initiate, continue or
engage in negotiations or discussions concerning, or provide any information or
data to any person or entity relating to, or otherwise cooperate in any way
with, or assist or participate in, or facilitate or encourage any Acquisition
Proposal, or (iii) agree to, approve or recommend any Acquisition Proposal. If
such Stockholder receives any such inquiry or proposal, then such Stockholder
shall promptly inform Parent and Acquisition of the existence thereof, and
furnish Parent and Acquisition with a copy of all written material relating
thereto. Nothing herein shall be construed to limit any Stockholder who is
serving as a director of the Company from taking any action permitted by Section
4.1(a) of the Merger Agreement in his or her capacity as such director.
(g) Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
(h) Dissenter's Rights. To the maximum extent permitted by law, each
Stockholder hereby waives all dissenter's rights, appraisal rights and other
similar rights available by law to such Stockholder as a result of the Offer and
the Merger.
9. Representations and Warranties of Parent and Acquisition. Parent and
Acquisition, jointly and severally, represent and warrant as follows:
(a) Each of Parent and Acquisition is a corporation validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated and
has the power to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
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(b) Parent and Acquisition have all right, power and authority to enter
into this Agreement and the Merger Agreement. The execution and delivery of this
Agreement by Parent and Acquisition and the consummation by Parent and
Acquisition of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on behalf of Parent and
Acquisition.
(c) This Agreement has been duly executed and delivered by Parent and
Acquisition and constitutes a valid and binding agreement of each of Parent and
Acquisition enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
10. Board Approval. The Stockholders, jointly and severally, represent
and warrant to Parent and Acquisition that this Agreement, the Merger Agreement
and the transactions contemplated hereby and thereby, including the Offer and
the Merger, have been approved by the Board of Directors of the Company.
11. Termination. This Agreement, to the extent an Exercise Notice has not
previously been given, shall terminate on the earliest of: (a) the termination
of the Merger Agreement in accordance with its terms without the occurrence of a
Triggering Event; (b) if a Triggering Event occurs prior to the termination of
the Merger Agreement, the 180th day after the termination of the Merger
Agreement without a Purchase Event having occurred; and (c) the first
anniversary of the date hereof. No such termination shall relieve any party
from liability for any breach of this Agreement.
12. Confidentiality. The Stockholders recognize that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, such Stockholder hereby agrees
not to disclose or discuss the matters with anyone not a party to this Agreement
(other than such Stockholder's counsel and advisors, if any) without the prior
written consent of Parent, except for filings required pursuant to the Exchange
Act and the rules and regulations thereunder or disclosures such Stockholder's
counsel advises are necessary in order to fulfill such Stockholder's obligations
imposed by law, in which event such Stockholder shall give notice of such
disclosure to Parent as promptly as
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practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.
13. Public Disclosure. Notwithstanding Section 12 hereof, the
Stockholders agree that Parent and Acquisition may publish and disclose their
identity and ownership of the Company Common Stock and the nature of their
commitments, arrangements and understandings under this Agreement in (i) the
Offer Documents, (ii) the Company's proxy or information statement (if approval
of the Company's shareholders is required under applicable law), including all
documents and schedules filed with the Securities and Exchange Commission, (iii)
filings under the Exchange Act and the rules and regulations thereunder, (iv)
connection with the financing of the Offer and (v) disclosures Parent's counsel
advises are necessary in order to fulfill Parent's or Acquisition's obligations
imposed by law.
14. Excess Expenses. The Stockholders jointly and severally agree that if
(a) the Offer and the Merger shall be consummated, and (b) the total transaction
expenses (including, without limitation, legal and accounting expenses and fees
and commissions payable to Coopers & Xxxxxxx Securities, L.L.C. and other
investment bankers and financial advisors to the Company) incurred by the
Company in connection with the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby and not reflected on the Company's audited
balance sheet as at December 31, 1996 shall exceed $502,000.00, then the
Stockholders, jointly and severally, shall reimburse Parent for all such
transaction expenses in excess of $502,000.00 promptly upon demand; provided,
that Parent may not make any such demand more than sixty (60) days after the
Effective Time (as defined in the Merger Agreement) of the Merger. If the
Stockholders fail to so reimburse Parent, and in order to obtain payment Parent
commences enforcement action, the Stockholders, jointly and severally, will
reimburse Parent for its costs of such enforcement, including reasonable
attorneys fees.
15. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any Person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's successors.
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Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other party, provided that
Acquisition may assign, in its sole discretion, its rights and obligations
hereunder to Parent or any Affiliate of Parent, but no such assignment shall
relieve Parent of its obligations hereunder if such assignee does not perform
such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, with respect to any
one or more Stockholders, except upon the execution and delivery of a written
agreement executed by the relevant parties hereto; provided that Schedule I
hereto may be supplemented by Parent by including any After Acquired Shares or
by adding the name and other relevant information concerning any stockholder of
the Company who agrees to be bound by the terms of this Agreement without the
agreement of any other party hereto, and thereafter such added stockholder shall
be treated as a "Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Stockholders: Xxxxxxx Xxxxx
Chief Executive Officer
Peerless Industrial Group
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000
copy to: Xxxxxx and Xxxxxx
0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to Parent: c/o Ridge Capital Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
copy to: Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) 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 of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or
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otherwise available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof, 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.
(j) 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.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Minnesota, without giving effect to the
principles of conflicts of law thereof.
(l) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
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IN WITNESS WHEREOF, Parent, Acquisition and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
R-B CAPITAL CORPORATION
By________________________________
Name:
Title:
R-B ACQUISITION CORPORATION
By________________________________
Name:
Title:
NORTHLAND BUSINESS CAPITAL L.L.P.
By:____________________________,
its general partner
Name:__________________________
Title:_________________________
XXXXXXX CAPITAL MANAGEMENT, INC.
By:____________________________
Name:__________________________
Title:_________________________
_______________________________
Xxxxx X. Xxxxx
_______________________________
Xxxxxxx X. Xxxxx
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________________________________
Xxxxx X. Xxxxxxx
________________________________
Xxxxxxx X. Xxxxxxx
________________________________
Xxxxxxx X. Xxxxxxxx
________________________________
Xxxxxxx X. Xxxxx
-17-
SCHEDULE I
Additional
Name of Stockholder Existing Shares Shares (1) Option Shares
------------------- --------------- ---------- -------------
Xxxxxxx Capital Management, Inc. 1,368,500 ----- 383,747
Northland Business Capital L.L.P. 1,227,273 100,000(2) 344,145
Xxxxxxx X. Xxxxxxxx 620,771(3) 102,000 174,073
Xxxxxxx X. Plan 532,500(4) 50,000 149,321
Xxxxxxx X. Xxxxxxx 397,000(5) 144,000 111,325
Xxxxxxx X. Xxxxx 103,636 415,000 29,061
Xxxxx X. Xxxxx 117,453(6) 144,000 32,935
Xxxxx X. Xxxxxxx 84,181 133,000 23,606
--------- --------- ---------
TOTAL 4,451,314(7) 1,088,000 1,248,213
(1) Includes shares subject to an option or warrant exercisable within 60 days
of March 3, 1997.
(2) Includes 50,000 shares purchasable pursuant to a warrant issued to Xxxxx X.
Xxxxx, a General Partner of Northland Business Capital L.L.P.
(3) Includes: (i) 370,000 shares owned by the X. Xxxxx X. Xxxxxxxx Irrevocable
Trust, of which Xx. Xxxxxxxx is a trustee and a beneficiary and (ii) 771
shares owned by Xx. Xxxxxxxx'x spouse.
(4) Includes 14,000 shares owned by Xx. Xxxxx'x spouse.
(5) Includes: (i) 72,000 shares owned by the Xxxxxxx X. Xxxxxxx Trust dated
6/14/78, (ii) 25,000 owned by the Xxxxxxx Capital Management, Inc. Profit
Sharing Plan & Trust dated 12/15/86, (iii) 50,000 shares owned by Quest
Venture Partners and (iv) 250,000 shares owned by Pyramid Partners, LP.
(6) Includes 18,181 shares owned by the Spell Family Foundation of which Mr.
Spell is a director.
(7) All of the Existing Shares and Additional Shares are subject to the
Agreement.
