1
EXHIBIT 99.1
MERGER AGREEMENT
AMONG
JLK DIRECT DISTRIBUTION INC.
AND
KENNAMETAL INC.
AND
PEGASUS ACQUISITION CORPORATION
DATED SEPTEMBER 8, 2000
Disclosure materials, including a tender offer statement, will be filed with the
Securities and Exchange Commission (SEC) and transmitted to the minority
shareholders of JLK for their careful review. Investors and security holders of
JLK are urged to read these disclosure materials when they become available
because they will contain important information. When these and other documents
are filed with the SEC, they may be obtained for free at the SEC's website at
▇▇▇.▇▇▇.▇▇▇. Copies of these documents, when available, may also be obtained
free of charge from Kennametal and JLK by directing requests to ▇▇▇▇▇ ▇. ▇▇▇▇▇
at the executive headquarters of the companies (724-539-5000).
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TABLE OF CONTENTS
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ARTICLE 1: THE OFFER..............................................................................................2
1.1 The Offer.......................................................................................2
1.2 Company Action..................................................................................3
ARTICLE 2: THE MERGER.............................................................................................3
2.1 Plan of Merger..................................................................................3
2.2 Effectiveness and Effective Time................................................................4
2.3 Closing.........................................................................................4
ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................4
3.1 Opinion of Financial Advisor....................................................................4
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF KENNAMETAL AND ACQUISITION...........................................4
4.1 Organization and Good Standing..................................................................4
4.2 Authority; No Conflict..........................................................................4
ARTICLE 5: CERTAIN COVENANTS......................................................................................5
5.1 Required Approvals..............................................................................5
5.2 No Solicitation of Transactions.................................................................5
5.3 Publicity.......................................................................................6
5.4 Continued Indemnification of the Company's Directors............................................6
ARTICLE 6: CONDITIONS PRECEDENT...................................................................................7
6.1 Conditions to the Company's Obligation to Effect the Merger.....................................7
6.2 Conditions to the Obligation of Acquisition and Kennametal to Effect the Merger.................7
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TABLE OF CONTENTS
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ARTICLE: 7 TERMINATION AND AMENDMENT..............................................................................8
7.1 Termination by Mutual Consent...................................................................8
7.2 Termination by Either Kennametal or the Company.................................................8
7.3 Termination by the Company......................................................................8
7.4 Termination by Kennametal.......................................................................9
7.5 Effect of Termination and Abandonment...........................................................9
7.6 Amendment......................................................................................10
ARTICLE 8: GENERAL PROVISIONS....................................................................................10
8.1 Expenses.......................................................................................10
8.2 Material Adverse Effect........................................................................10
8.3 Survival of Representations and Warranties.....................................................10
8.4 Notices........................................................................................10
8.5 Jurisdiction; Service of Process...............................................................12
8.6 Waiver of Trial by Jury........................................................................12
8.7 Further Assurances.............................................................................12
8.8 Waiver.........................................................................................13
8.9 Entire Agreement and Modification..............................................................13
8.10 Schedules......................................................................................13
8.11 Assignments, Successors, and No Third-Party Rights.............................................13
8.12 Severability...................................................................................14
8.13 Section Headings, Construction.................................................................14
8.14 Time of Essence................................................................................14
8.15 Governing Law..................................................................................14
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TABLE OF CONTENTS
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8.16 Counterparts...................................................................................14
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MERGER AGREEMENT
This Merger Agreement ("Agreement") is made as of September 8, 2000, by
and among Kennametal Inc., a Pennsylvania corporation ("Kennametal"), Pegasus
Acquisition Corporation, a Pennsylvania corporation and a wholly owned indirect
subsidiary of Kennametal ("Acquisition"), and JLK Direct Distribution Inc., a
Pennsylvania corporation (the "Company").
RECITALS
WHEREAS, it is proposed that the Company shall make a tender offer (the
"Offer") to acquire any and all of the outstanding shares of Class A Common
Stock, par value $0.01 per share ("Company Class A Common Stock") of the Company
at a price of $8.75 per share (such amount being hereinafter referred to as the
"Per Share Amount") net to the seller in cash, without interest thereon, in
accordance with the terms and subject to the conditions of this Agreement,
including a condition that at least a majority of the outstanding shares of
Company Class A Common Stock be tendered. The Offer shall not apply to the
outstanding shares of Class B Common Stock, par value $0.01 per share ("Company
Class B Common Stock" and together with the Company Class A Common Stock, the
"Company Common Stock");
WHEREAS, subject to the success of the Offer and certain other
conditions in this Agreement, it is proposed that Acquisition merge with and
into the Company (the "Merger") in accordance with Title 15, Pennsylvania
Consolidated Statutes (the "PBCL") with the Company being the surviving
corporation (the "Surviving Corporation") of the Merger and that the holders of
Class A Common Stock would be entitled to receive the Per Share Amount; and
WHEREAS, the Boards of Directors of Acquisition and Kennametal and the
Board of Directors of the Company upon the recommendation of its special
committee of disinterested members comprised of Messrs. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Special Committee") have unanimously approved, and deem
advisable and in the best interests of their respective shareholders, this
Agreement and the transactions contemplated hereby;
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound, Kennametal, Acquisition and the Company agree as
follows:
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ARTICLE 1:
THE OFFER
1.1 THE OFFER.
(A) Subject to the terms and conditions of this Agreement, the Company
shall commence, within the meaning of Rule 13e-4 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Offer as
promptly as practicable. Company shall accept for payment any and
all shares of Company Class A Common Stock (the "Class A Common
Shares") which have been validly tendered and not withdrawn
pursuant to the Offer at the earliest time following expiration of
the Offer if all conditions to the Offer, as set forth on Annex A
(the "Offer Conditions"), shall have been satisfied. The obligation
of the Company to accept for payment, purchase and pay for Class A
Common Shares tendered pursuant to the Offer shall be subject only
to such Offer Conditions and to the further condition that a number
of Class A Common Shares representing not less than a majority of
the Class A Common Shares then outstanding shall have been validly
tendered and not withdrawn prior to the final expiration date of
the Offer (the "Minimum Condition"). Any of the conditions may be
waived in whole or in part by the Company in its sole discretion,
other than Offer Condition (E) in Annex A and the Minimum
Condition. The Company may waive Offer Condition (E) in Annex A
only with the consent of the Special Committee that it be waived.
The Company may waive the Minimum Condition only with the consent
of Kennametal that it be waived and the Company shall waive the
Minimum Condition if Kennametal and Acquisition waive the section
6.2(C) condition to their obligation to effect the Merger. The
Company expressly reserves the right, subject to compliance with
the Exchange Act, to modify the terms of the Offer, except that no
change in the Offer may be made: (i) which changes the Per Share
Amount payable in the Offer, (ii) which changes the form of
consideration to be paid in the Offer, or (iii) which reduces the
maximum number of Class A Common Shares to be purchased in the
Offer. The Company may: (i) extend the Offer on one or more
occasions for up to ten business days for each such extension
beyond the then scheduled expiration date (the initial scheduled
expiration date being 20 business days following commencement of
the Offer), if at the then scheduled expiration date of the Offer
any of the conditions to the Company's obligation to accept for
payment and pay for the Class A Common Shares shall not be
satisfied or waived, until such time as such conditions are
satisfied or waived (subject to Kennametal's right to terminate
this Agreement pursuant to Article 7) and (ii) extend the Offer for
any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or
the staff thereof applicable to the Offer. Subject to the terms and
conditions of the Offer and this Agreement, the Company shall pay
for all Class A Common Shares validly tendered and not withdrawn
pursuant to the Offer that the Company becomes obligated to
purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer.
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(B) As soon as practicable and no later than the date of commencement
of the Offer, the Company shall file and disseminate an Issuer
Tender Offer Statement on Schedule TO with respect to the Offer and
the Company, Kennametal and Acquisition shall file a Schedule 13e-3
Transaction Statement with the SEC (together with any supplement or
amendments thereto, the "Offer Documents"). Kennametal or
Acquisition and the Company each agree promptly to correct any
information provided by them for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any
material respect and each of Kennametal, Acquisition and the
Company further agree to take all steps necessary to cause the
respective Offer Documents which they have filed as so corrected to
be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal
securities laws. The Company, Kennametal and Acquisition shall
cooperate in responding to any comments received from the SEC with
respect to the Offer Documents and amending the Offer Documents in
response to such comments.
1.2 COMPANY ACTION.
(A) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, upon the recommendation of
the Special Committee of disinterested members, at a meeting duly
called and held, has, subject to the terms and conditions set forth
herein, (i) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the
Merger, (ii) determined that the terms of the Offer and the Merger
are in the best interests of, the Company and fair to its
shareholders and, (iii) resolved to recommend that the shareholders
of the Company accept the Offer and tender their Class A Common
Shares thereunder to the Company pursuant to the Offer. The Company
hereby consents to the inclusion in the Offer Documents of the
recommendations of the Board of Directors described in this Section
1.2(A).
(B) The Company shall disseminate the Offer Documents to the
shareholders of the Company.
ARTICLE 2:
THE MERGER
2.1 PLAN OF MERGER.
As soon as practicable following the satisfaction or waiver of the
conditions set forth in Article 6 of this Agreement, (i) Kennametal's Board of
Directors shall adopt the Plan of Merger in the form of Annex B hereto, which
sets forth the terms of the Merger (the "Plan of Merger"), in accordance with
Title 15 of the PBCL, (ii) articles of merger (the "Articles of Merger") shall
be executed and filed in the Department of State of the Commonwealth of
Pennsylvania in accordance with the relevant provisions of the PBCL, and (iii)
the parties shall make all other filings or recordings required under the PBCL.
At and after the time the parties enter into the Plan of Merger, all references
herein to this "Agreement" shall include a reference to such Plan of Merger.
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2.2 EFFECTIVENESS AND EFFECTIVE TIME.
The Merger shall become effective in accordance with the Plan of
Merger. The time and date when the Merger shall become effective is referred to
as the "Effective Time."
2.3 CLOSING.
The closing of the Merger will take place at the offices of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Professional Corporation, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ at 10:00 a.m. (local time) on the date of the
satisfaction of the conditions set forth in Article 6 of this Agreement or at
such other time and place as the parties may agree (the "Closing Date").
ARTICLE 3:
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Acquisition and Kennametal as
follows:
3.1 OPINION OF FINANCIAL ADVISOR.
The Company has received the opinion of CIBC World Markets Corp., dated
as of September 8, 2000, a copy of which has been provided to Kennametal and
Acquisition, to the effect that, as of such date, the cash consideration to be
received by the shareholders of the Company other than Kennametal pursuant to
the Offer and the Merger is fair to such shareholders from a financial point of
view.
ARTICLE 4:
REPRESENTATIONS AND WARRANTIES
OF KENNAMETAL AND ACQUISITION
Each of Kennametal and Acquisition represents and warrants jointly and
severally to the Company as follows:
4.1 ORGANIZATION AND GOOD STANDING.
Kennametal is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Pennsylvania. Acquisition is a
corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Pennsylvania.
4.2 AUTHORITY; NO CONFLICT.
(A) Each of Kennametal and Acquisition has the requisite corporate
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder to consummate the transactions
contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Kennametal and Acquisition and no other
corporate proceeding on the part of Kennametal or Acquisition are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the adoption of the
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Plan of Merger pursuant to Section 2.1 hereof). This Agreement has
been duly and validly executed and delivered by Kennametal and
Acquisition and, assuming this Agreement constitutes the valid and
binding obligation of the Company, constitutes the valid and
binding obligation of Kennametal and Acquisition.
(B) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Kennametal and
Acquisition will not directly or indirectly:
(i) contravene, conflict with, or result in a violation of (A)
any provision of the charter documents or By-laws of
Kennametal or Acquisition, or (B) any resolution adopted by
the Board of Directors or the stockholders of Kennametal or
Acquisition;
(ii) contravene, conflict with, or result in a violation or breach
of any provision of any agreement, mortgage, debt instrument,
indenture or other instrument, by which Kennametal or
Acquisition is bound, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the
assets of Kennametal or Acquisition, except for matters which
would not in the aggregate have a Material Adverse Effect on
Kennametal or Acquisition, as the case may be; or
(iii) violate any order, writ, injunction, decree or judgment
applicable to Kennametal or Acquisition, except for
violations which would not in the aggregate have a Material
Adverse Effect on Kennametal or Acquisition, as the case may
be.
ARTICLE 5:
CERTAIN COVENANTS
5.1 REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, the
parties will make all filings required by legal requirements to be made by it in
order to consummate this Agreement and the transactions contemplated hereby.
Between the date of this Agreement and the Closing Date, the parties will use
their reasonable best efforts to obtain as promptly as practicable all
governmental and third party authorizations, approvals, consents or waivers
required in order to consummate the Merger.
5.2 NO SOLICITATION OF TRANSACTIONS.
The Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore with
respect to any Takeover Proposal (as hereinafter defined). As used in this
Agreement, "Takeover Proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving the Company
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial
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portion of the assets of, the Company and its subsidiaries other than
transactions contemplated by this Agreement. Except as set forth in this Section
5.2, neither the Company or any of its affiliates, nor any of its or their
respective officers, directors, employees, representatives or agents, shall,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Kennametal
and Acquisition, any affiliate or associate of Kennametal and Acquisition, or
any designees of Kennametal or Acquisition) concerning any Takeover Proposal;
provided, that nothing contained in this Section 5.2 shall prevent the Special
Committee from considering, negotiating, discussing, approving and recommending
to the shareholders of the Company, or providing information to any person in
connection with, a Takeover Proposal if the Special Committee determines in good
faith that it is required to do so in order to discharge properly its fiduciary
duties, or taking any action and making any disclosure which the Special
Committee determines is required to be taken or made under applicable law.
5.3 PUBLICITY.
The parties will consult with each other and will mutually agree upon
any press releases or public announcements pertaining to the transactions
contemplated by this Agreement and shall not issue any such press releases or
make any such public announcements prior to such consultation and agreement,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
its reasonable efforts to consult in good faith with the other party before
issuing any such press releases or making any such public announcements.
5.4 CONTINUED INDEMNIFICATION OF THE COMPANY'S DIRECTORS.
(A) The By-laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in Section 8.2
of the By-laws of the Company on the date of this Agreement with
respect to any person who was a director or officer of the Company
prior to the Effective Time, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective
Time were directors or officers of the Company in respect of
actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law;
provided, that in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until
disposition of any and all such claims.
(B) Kennametal shall continue to maintain in effect for not less than
six years directors' and officers' liability insurance which
provides coverage to the Company's directors with respect to
matters occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this
Agreement) that is substantially the same as the coverage currently
provided under Kennametal's insurance policies to
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directors and officers of its subsidiaries.
(C) This Section 5.4 shall survive the consummation of the Merger, is
intended to benefit the Company, and the present and former
officers and directors of the Company and the Surviving
Corporation, shall be binding on all successors and assigns of the
Surviving Corporation and shall be enforceable by the present and
former officers and directors of the Company and their respective
heirs or representatives, and is in addition to, and not in
substitution for, any other rights to indemnification or
contribution that any such person may have by contract or
otherwise.
ARTICLE 6:
CONDITIONS PRECEDENT
6.1 CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE MERGER.
The obligation of the Company to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any of which may be waived by the Company in writing, in whole or in
part, to the extent permitted by applicable law):
(A) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other
order of a court or governmental or regulatory agency of competent
jurisdiction directing that the transactions contemplated herein
not be consummated; provided, however, that prior to invoking this
condition each party shall use its best efforts to have any such
decree, ruling, injunction or order vacated.
(B) Governmental Filings and Consents. All governmental consents,
orders and approvals legally required for the consummation of the
Merger and the transactions contemplated hereby shall have been
obtained and be in effect at the Effective Time, except where the
failure to obtain any such consent would not reasonably be expected
to have a Material Adverse Effect on Kennametal and its
subsidiaries, considered as whole (assuming the Merger had taken
place).
6.2 CONDITIONS TO THE OBLIGATION OF ACQUISITION AND KENNAMETAL TO EFFECT
THE MERGER.
The obligation of Acquisition and Kennametal to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any of which may be waived by Kennametal and Acquisition
in writing, in whole or in part, to the extent permitted by applicable law):
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(A) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other
order of a court or governmental or regulatory agency of competent
jurisdiction directing that the transactions contemplated herein
not be consummated; provided, however, that prior to invoking this
condition each party shall use its best efforts to have any such
decree, ruling, injunction or order vacated.
(B) Governmental Filings and Consents. All governmental consents,
orders and approvals legally required for the consummation of the
Merger and the transactions contemplated hereby shall have been
obtained and be in effect at the Effective Time, except where the
failure to obtain any such consent would not reasonably be expected
to have a Material Adverse Effect on Kennametal and its
subsidiaries, considered as whole (assuming the Merger had taken
place).
(C) Tender Offer Completed. The Company shall have purchased pursuant
to the Offer at least fifty percent (50%) of the shares of Class A
Common Stock outstanding immediately prior to the Offer.
ARTICLE: 7
TERMINATION AND AMENDMENT
7.1 TERMINATION BY MUTUAL CONSENT.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, by the mutual written consent of Kennametal
and the Company (provided that the consent of the Company shall not be given
unless the Special Committee shall have approved the giving of the consent).
7.2 TERMINATION BY EITHER KENNAMETAL OR THE COMPANY.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, by either Kennametal or the Company, if the
Merger has not been consummated on or prior to March 30, 2001 (the "Outside
Date"); provided, however, that the rights to terminate this Agreement under
this Section 7.2 shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Merger to occur on or prior to such date.
7.3 TERMINATION BY THE COMPANY.
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, by the Company if (i) there has been a breach
by Kennametal or Acquisition of any representation or warranty contained in this
Agreement that is qualified by requiring a Material Adverse Effect or there has
been a breach of any other representation or warranty contained in this
Agreement in any respect that would have a Material Adverse Effect on Kennametal
or Acquisition, in any case that is not curable or, if curable, is not cured by
the Outside Date after written notice of such breach is given by the Company to
Kennametal at least 30 calendar days prior to the Outside Date (or, if the
Company first learns of such breach within
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30 days of the Outside Date, as soon as practicable after the Company first
learns of such breach) or (ii) there has been a material default by Kennametal
or Acquisition in performing any covenant or agreement contained in this
Agreement which shall not have been cured after written notice of such breach is
given by the Company to Kennametal at least 30 calendar days prior to the
Outside Date (or, if the Company first learns of such breach within 30 days of
the Outside Date, as soon as practicable after the Company first learns of such
breach).
7.4 TERMINATION BY KENNAMETAL.
This Agreement may be terminated and the Offer and Merger may be
abandoned at any time prior to the Effective Time by Kennametal:
(A) if the Special Committee or the Board of Directors of the Company
shall have withdrawn, or modified or changed in any manner adverse
to Acquisition or Kennametal its recommendation of the Offer or
approval of this Agreement or the Merger; or
(B) if the Minimum Condition has not been satisfied by the date which
is 20 business days following the initial expiration date of the
Offer.
7.5 EFFECT OF TERMINATION AND ABANDONMENT.
(A) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 7, written notice thereof
shall forthwith be given by the terminating party or parties to the
other party or parties, and this Agreement (other than the
obligations pursuant to this Section 7.5 and Section 8.1) shall
become void and of no effect with no liability on the part of any
party hereto (or of any of its directors, officers, employees,
agents, legal and financial advisors or other representatives),
including without limitation, any liability for any actual,
consequential, direct, special or other damages suffered by the
other party or other parties as a result of a breach of this
Agreement, but excepting the right, if any, to be reimbursed
expenses as provided in this Section 7.5.
(B) In the event that this Agreement is terminated by the Company or
Kennametal pursuant to Section 7.2 or by Kennametal pursuant to
Section 7.4(B) then the parties shall bear their own expenses and
not have any further claim against one another.
(C) In the event that this Agreement is terminated by the Company
pursuant to Section 7.3 then Kennametal shall promptly, but in no
event later than two days after the date of such termination or
event, pay the Company all out-of-pocket expenses incurred by the
Company in connection with this Agreement and the transactions
contemplated hereby, including the fees and expenses of their
printer, consultants, attorneys, accountants, financial advisors
and other advisors.
(D) In the event that this Agreement is terminated by Kennametal
pursuant to Section 7.4(A) then the Company shall promptly, but in
no event later than two days after the date of such termination or
event, pay Kennametal all out-of-pocket expenses
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incurred by Kennametal and Acquisition in connection with this
Agreement and the transactions contemplated hereby, including the
fees and expenses of their printer, consultants, attorneys,
accountants, financial advisors and other advisors.
7.6 AMENDMENT.
This Agreement may be amended in writing by the parties hereto;
provided that any amendment shall have been approved by the Special Committee.
ARTICLE 8:
GENERAL PROVISIONS
8.1 EXPENSES.
Except as contemplated by this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transaction contemplated hereby shall be the obligation of the party incurring
such expenses. All costs and expenses incurred by Acquisition in connection with
this Agreement and the consummation of the transactions contemplated hereby
shall, after the Effective Time, be obligations of the Surviving Corporation.
8.2 MATERIAL ADVERSE EFFECT.
The term "Material Adverse Effect" shall mean any adverse change or
changes in the financial condition, properties, business, results of operations
of the Company or any of its subsidiaries or Kennametal or any of its
subsidiaries, as the case may be, which individually or in the aggregate is or
are material to the Company and its subsidiaries, taken as a whole, or
Kennametal and its subsidiaries, taken as a whole, as the case may be, other
than (i) any change or effect arising out of general economic conditions or (ii)
any change or effect which the Company or Kennametal, as the case may be, has
disclosed in writing, prior to the date hereof, to Kennametal or the Company, as
the case may be, has occurred or is likely to occur.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made herein shall not survive beyond
the earlier of (i) termination of this Agreement or (ii) the Effective Time, in
the case of the representations and warranties of Kennametal or Acquisition.
This Section 8.3 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time. The
provisions of any Confidentiality Agreement between the Company and Kennametal
(the "Confidentiality Agreement") shall apply to all information and material
delivered by any party hereunder.
8.4 NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, (c) sent by facsimile or electronic
mail, or (d) when received by the addressee, if sent by a nationally recognized
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overnight delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
COMPANY: JLK Direct Distribution Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
KENNAMETAL OR ACQUISITION: Kennametal Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional
Corporation
One Oxford Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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8.5 JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the Commonwealth of Pennsylvania, County of
▇▇▇▇▇▇▇▇▇▇▇▇, or, if it has or can acquire jurisdiction, in the United States
District Court for the Western District of Pennsylvania, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
8.6 WAIVER OF TRIAL BY JURY.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.6.
8.7 FURTHER ASSURANCES.
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement.
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8.8 WAIVER.
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
8.9 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (other than any Confidentiality Agreement) and
constitutes (along with the documents referred to in this Agreement and any
Confidentiality Agreement) a complete and exclusive statement of the terms of
the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
8.10 SCHEDULES.
(A) The disclosures in the Schedules must relate only to the
representations and warranties in the Section of the Agreement to
which they expressly relate and not to any other representation or
warranty in this Agreement.
(B) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Schedules (other than an
exception expressly set forth as such in the Schedules with respect
to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
8.11 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without
the prior consent of the other party which will not be unreasonably withheld.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any third party other than the parties to this Agreement
any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
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8.12 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
8.13 SECTION HEADINGS, CONSTRUCTION.
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation. No
party shall be deemed to be the drafting party of this Agreement and the rule of
construction that any ambiguity should be construed against the person who
drafted an agreement shall not apply. All references to "Article" or "Articles"
and "Section" or "Sections" refer to the corresponding Article or Articles and
Section or Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
8.14 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
8.15 GOVERNING LAW.
This Agreement will be governed by the laws of the Commonwealth of
Pennsylvania without regard to conflict of laws principles.
8.16 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
JLK DIRECT DISTRIBUTION INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP, CFO & Treasurer
KENNAMETAL INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President & CEO
PEGASUS ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
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ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and provided that the
Company shall not be obligated to accept for payment any Class A Common Shares
until the Minimum Condition shall have been satisfied or waived, the Company
shall not be required to accept for payment or pay for, or may delay the
acceptance for payment of or payment for, any Class A Common Shares tendered
pursuant to the Offer, or may, subject to the terms of the Agreement, terminate
or amend the Offer if on or after [insert Expiration Date of the Offer], and at
or before the time of payment for any of such Class A Common Shares, any of the
following events shall occur and remain in effect:
(A) any court or any governmental or regulatory authority, agency or
commission, domestic or foreign ("Governmental Entity") shall have
enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, executive order, decree, injunction or other
order which is in effect and which (i) restricts (other than
restrictions which in the aggregate do not have a Material Adverse
Effect on Kennametal and its subsidiaries considered as a whole
after the consummation of the transactions contemplated by the
Offer and the Agreement and which do not materially restrict the
ability to consummate the Offer and the Merger), prevents or
prohibits consummation of the Offer or the Merger, (ii) prohibits
or limits (other than limits which in the aggregate do not
materially limit the ability of Kennametal to own and operate all
of the business and assets of Kennametal and the Company after the
consummation of the transactions contemplated by the Offer and the
Agreement) the ownership or operation by the Company, Kennametal or
any of their subsidiaries of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a
whole, or as a result of the Offer or the Merger compels the
Company, Kennametal or any of their subsidiaries to dispose of or
hold separate all or any material portion of their respective
business or assets, or (iii) otherwise materially adversely affects
the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole;
(B) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made
by the Company, Kennametal or Acquisition with or from any
Governmental Entity in connection with the execution and delivery
of the Agreement, the Offer and the consummation of the
transactions contemplated by the Agreement shall not have been made
or obtained as of the then scheduled expiration date of the Offer
(other than the failure to receive any consent, registration,
approval, permit or authorization or to make any notice, report or
other filing that, in the aggregate, is not reasonably likely to
have a Material Adverse Effect on Kennametal and its subsidiaries
considered as a whole after the consummation of the transactions
contemplated by the Offer and the Agreement );
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(C) any change or development in the financial condition, properties,
business, or results of operations of the Company and its
subsidiaries that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on the Company;
(D) the Agreement shall have been terminated by the Company or
Kennametal in accordance with its terms;
(E) Kennametal shall have reached an agreement or understanding in
writing with the Company providing for termination or amendment of
the Offer or delay in payment for the Class A Common Shares.
The foregoing conditions enumerated above in paragraphs (A) through (E)
are for the sole benefit of Company and may be asserted by Company or may be
waived by Company, in whole or in part at any time and from time to time in its
sole discretion; provided that the condition set forth in paragraph (E) above
may not be waived without the consent of the Special Committee. The failure by
Company at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
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ANNEX B
PLAN OF MERGER
PLAN OF MERGER ("Plan of Merger") by and among Kennametal Inc., a
Pennsylvania corporation ("Kennametal"), Pegasus Acquisition Corporation, a
Pennsylvania corporation and a wholly owned subsidiary of Kennametal
("Acquisition"), and JLK Direct Distribution Inc., a Pennsylvania corporation
(the "Company").
RECITALS
WHEREAS, the Company, Acquisition and Kennametal have entered into a
Merger Agreement, dated as of September 8, 2000 (the "Merger Agreement");
WHEREAS, the parties intend that Acquisition merge with and into the
Company (the "Merger") in accordance with Title 15, Pennsylvania Consolidated
Statutes (the "PBCL"); and
WHEREAS, the Boards of Directors of Acquisition and Kennametal and the
Board of Directors of the Company upon the recommendation of its special
committee of disinterested members have unanimously approved, and deem advisable
and in the best interests of their respective shareholders, this Plan of Merger
and the transactions contemplated hereby;
WHEREAS, the Board of Directors of Kennametal adopted this Plan of
Merger pursuant to Section 1924(b)(3) of the PBCL on the date set forth below;
and
WHEREAS, any terms not defined in this Plan of Merger shall have the
meanings set forth in the Merger Agreement;
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound, Kennametal, Acquisition and the Company agree as
follows:
1. THE MERGER.
At the Effective Time, upon the terms and subject to the conditions set
forth in this Plan of Merger and the Merger Agreement and in accordance with the
PBCL, Acquisition shall be merged with and into the Company, the separate
existence of Acquisition shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). The Merger shall have the
effects as provided by the PBCL and other applicable law.
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2. EFFECTIVE TIME.
The Merger shall become effective at such time as the Articles of
Merger are duly filed in the Department of State of the Commonwealth of
Pennsylvania, or at such other time as is permissible in accordance with the
PBCL and as the parties shall agree and specify in the Articles of Merger (the
time the Merger becomes effective being the "Effective Time").
3. CLOSING.
The closing of the Merger will take place at the offices of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Professional Corporation, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ at 10:00 a.m. (local time) on the date of the
satisfaction of the conditions set forth in Article 6 of the Merger Agreement or
at such other time and place as the parties may agree (the "Closing Date").
4. ARTICLES AND BY-LAWS OF SURVIVING CORPORATION.
The Articles of Incorporation of the Surviving Corporation shall be
amended and restated as set forth on Exhibit A hereto. The By-laws of
Acquisition as in effect immediately prior to the Effective Time shall be the
By-laws of the Surviving Corporation following the Merger.
5. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
The directors of Acquisition immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation and shall hold
office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
6. CONVERSION OF CAPITAL STOCK.
As of the Effective Time, by virtue of the Merger and without any
action on the part of Acquisition, the Company or the holders of any shares of
the Class A Common Stock par value $0.01 per share of the Company (the "Class A
Common Stock") or the Class B Common Stock par value $0.01 per share of the
Company (the "Class B Common Stock" and together with the Class A Common Stock,
the "Company Common Stock"), the following shall occur:
(A) Common Stock of Acquisition. Each share of common stock, par value
$.01 per share, of Acquisition (the "Acquisition Common Stock"),
which is issued and
B-2
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outstanding immediately prior to the Effective Time, shall be
converted into and become one share of common stock, par value $.01
per share, of the Surviving Corporation.
(B) Common Stock of the Company. Subject to Sections 6(A), 6(C), and 9
of this Plan of Merger, each share of Class A Common Stock which is
issued and outstanding immediately prior to the Effective Time
shall be converted by virtue of the Merger into and become a right
to receive $8.75 in cash (the "Merger Consideration") and, when so
converted, shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any
such shares of Class A Common Stock shall, to the extent such
certificate represents such shares, cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration allocable to the shares represented by such
certificate upon surrender of such certificate in accordance with
Section 7 of this Plan of Merger.
(C) Cancellation of Treasury Stock. Any shares of Company Common Stock
that are owned immediately prior to the Effective Time by the
Company or any subsidiary of the Company which constitute treasury
stock in the hands of the holder thereof, shall be canceled and
retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor, and each holder of a certificate
representing any such shares shall cease to have any rights with
respect thereto.
(D) Company Common Stock Held by Acquisition or Kennametal. Any shares
of Company Common Stock that are owned immediately prior to the
Effective Time by Acquisition or Kennametal shall be canceled and
retired and shall cease to exist, and no cash consideration shall
be delivered in exchange therefor. Acquisition and Kennametal each
hereby irrevocably waive any and all rights it may have pursuant to
the terms of this Agreement or under the PBCL (including, without
limitation, any rights to which it may be entitled under Part II,
Chapter 15, Subchapter D of the PBCL) or otherwise to receive
pursuant to the Merger the Merger Consideration or any other
consideration for the shares of Company Common Stock owned or held
by them immediately prior to the Effective Time other than the
Kennametal subsidiary which owns all of Acquisition Common Stock
shall receive all of the outstanding common stock of the Surviving
Corporation by virtue of the conversion in the Merger of the
Acquisition Common Stock into common stock of the Surviving
Corporation.
7. PAYMENT FOR COMPANY COMMON STOCK IN THE MERGER.
(A) Exchange Agent and Deposit Merger Price. ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder
Services, LLC or another bank or trust company selected by the
Company and reasonably satisfactory to Kennametal, shall act as
exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration. At the Effective Time, Kennametal or
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Acquisition shall deposit, or cause to be deposited, in trust with
the Exchange Agent the aggregate Merger Consideration to which
holders of Class A Common Shares shall be entitled at the Effective
Time pursuant to Section 6(B) of this Plan of Merger (the "Exchange
Fund").
(B) Exchange Procedure. Promptly after the Effective Time, the Exchange
Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Class A Common Stock whose shares
were converted into the right to receive cash pursuant to Section
6(B) of this Plan of Merger a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title
to the certificates representing such shares of Class A Common
Stock shall pass, only upon delivery of the certificates
representing such shares of Class A Common Stock to the Exchange
Agent and shall be in such form and have such other provisions as
the Exchange Agent may reasonably specify), and instructions for
use in effecting the surrender of the certificates representing
such shares of Class A Common Stock, in exchange for the Merger
Consideration. Upon surrender to the Exchange Agent of a
certificate or certificates representing shares of Class A Common
Stock and acceptance thereof by the Exchange Agent, the holder
thereof shall be entitled to the amount of cash into which the
number of shares of Class A Common Stock previously represented by
such certificate or certificates surrendered shall have been
converted pursuant to this Agreement. The Exchange Agent shall
accept such certificates upon compliance with such reasonable terms
and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time, there shall be no further
transfer on the records of the Company or its transfer agent of
certificates representing shares of Class A Common Stock and if
such certificates are presented to the Company for transfer, they
shall be canceled against delivery of the Merger Consideration
allocable to the shares of Class A Common Stock represented by such
certificate or certificates. If any Merger Consideration is to be
remitted to a name other than that in which the certificate for the
Class A Common Stock surrendered for exchange is registered, it
shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed, with signature guaranteed,
or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the Company, or its transfer
agent, any transfer or other taxes required by reason of the
payment of the Merger Consideration to a name other than that of
the registered holder of the certificate surrendered, or establish
to the satisfaction of the Company or its transfer agent that such
tax has been paid or is not applicable. Until surrendered, as
contemplated by this Section 7, each certificate for shares of
Class A Common Stock shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender the Merger Consideration allocable to the shares
represented by such certificate as contemplated by Section 6(B) of
this Plan of Merger. No interest will be paid or will accrue on any
amount payable as Merger
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Consideration. Subject to completion of the documentation referred
to above, the Merger Consideration shall be paid at the Effective
Time to holders of Class A Common Stock.
(C) No Further Ownership Rights in Company Stock. The Merger
Consideration paid upon the surrender for exchange of certificates
representing shares of Class A Common Stock in accordance with the
terms of this Section 7 shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Class A
Common Stock represented by such certificates.
(D) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any interest and other income received by the Exchange
Agent in respect of all such funds) which remains undistributed to
the holders of the certificates representing shares of Class A
Common Stock for six months after the Effective Time shall be
delivered to the Surviving Corporation, upon demand, and any
holders of shares of Class A Common Stock prior to the Merger who
have not theretofore complied with this Section 7 shall thereafter
look (subject to applicable abandoned property, escheat and similar
laws) only to the Surviving Corporation and only as general
creditors thereof for payment of their claim for Merger
Consideration, without interest, to which such holders may be
entitled.
(E) Lost Certificates. In the event any certificate or certificates
representing shares of Class A Common Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the holder claiming such certificate or certificates to be lost,
stolen or destroyed, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with
this Section 7; provided that the holder to whom the Merger
Consideration is paid shall, as a condition precedent to the
payment thereof, indemnify the Surviving Corporation in an amount
reasonably satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the certificate
claimed to have been lost, stolen or destroyed.
(F) Withholding Rights. The Surviving Corporation and the Exchange
Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
holder of shares of Class A Common Stock such amounts as the
Surviving Corporation or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the
United States Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving
Corporation or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of the shares of Class A Common Stock in respect of
which such deduction and withholding was made by the Surviving
Corporation or the Exchange Agent.
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8. TREATMENT OF OPTIONS.
Pursuant to the Merger, at the Effective Time, each outstanding option
to purchase shares of Company Class A Common Stock (a "Company Stock Option"),
whether or not vested, will be terminated and, in exchange for each such Company
Stock Option, the holder will be entitled to receive, for each share of Company
Class A Common Stock subject to such Company Stock Option, a cash payment equal
to the excess, if any, of the Merger Consideration over the applicable exercise
price.
9. DISSENTING SHARES.
(A) Notwithstanding anything in this Agreement to the contrary, shares
of Class A Common Stock outstanding immediately prior to the
Effective Time and held by a holder (if any) who has perfected his
rights to dissent from the Merger in accordance with Part I,
Chapter 15, Subchapter D of the PBCL ("Dissenting Shares") shall be
canceled and retired and shall not be converted into a right to
receive the Merger Consideration, unless such holder fails to
perfect or withdraws or otherwise loses such holder's right to
dissent, if any. Such shareholders shall be entitled to receive
payment of the appraised value of such Dissenting Shares in
accordance with the provisions of the PBCL. If, after the Effective
Time, such holder fails to perfect or withdraws or loses any such
right to dissent, each such share of such holder shall be treated
as a share that had been converted as of the Effective Time into
the right to receive the Merger Consideration, without interest, in
accordance with Section 6(B) of this Plan of Merger.
(B) The Company shall give Kennametal prompt notice of any demands
received by the Company for appraisal of Class A Common Stock and,
prior to the Effective Time, Kennametal shall have the right to
participate in all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not,
except with the prior written consent of Kennametal, make any
payment with respect to, or settle or offer to settle, any such
demands.
10. MULTIPLE COUNTERPARTS; TITLES.
For the convenience of the parties hereto and to facilitate the
required filing of documents, any number of counterparts of this Plan of Merger
may be executed, and each such counterpart shall be deemed to be an original
instrument.
The titles of the Sections of this Plan of Merger are inserted for
convenience of reference and shall not affect the meaning of the terms hereof.
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11. TERMINATION.
This Plan of Merger will terminate upon, and be of no further force or
effect following, any termination of the Merger Agreement in accordance with its
terms. This Plan of Merger may be terminated by an agreement in writing executed
by all parties hereto.
12. AMENDMENTS.
Prior to the Effective Time, the Boards of Directors of the parties
hereto may amend this Plan of Merger.
13. ADOPTION BY KENNAMETAL BOARD OF DIRECTORS.
The Board of Directors of Kennametal adopted this Plan of Merger on
____________, 2000 pursuant to Section 1924(b)(3) of the PBCL.
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EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF THE SURVIVING CORPORATION
(JLK DIRECT DISTRIBUTION INC.)
FIRST. The name of the Corporation is JLK Direct Distribution Inc.
SECOND. The address of the Corporation's registered office in the
Commonwealth of Pennsylvania is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇-▇▇▇▇.
THIRD. The Corporation is incorporated under the provisions of the
Business Corporation Law of 1988 (15 Pa.C.S. Sections 1101 et seq.).
FOURTH. The Corporation shall have the authority to issue 1,000 shares
of common stock par value $0.01 per share. The holders of common stock shall
have one vote per share and shall not be entitled to cumulate their votes in the
election of directors.
FIFTH. The name and address of the incorporator is ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
SIXTH. A director of the Corporation shall not be personally liable for
monetary damages for any action taken, or any failure to take any action unless
as set forth in 15 Pa. C.S. Sections 1711-1718 the director has breached or
failed to perform the duties of his or her office referenced thereunder and such
breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness; provided, however, that the foregoing provision shall not
eliminate or limit (i) the responsibility or liability of a director pursuant to
any criminal statute, or (ii) the liability of a director for the payment of
taxes pursuant to local, state or federal law. Any repeal, modification or
adoption of any provision inconsistent with this Article Sixth, shall be
prospective only, and neither the repeal or modification of this Article nor the
adoption of any provision inconsistent with this Article shall adversely affect
any limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification or the adoption of such
inconsistent provision.
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