Exhibit 1
Execution Copy
MERGER AGREEMENT
AMONG
T ACQUISITION L.P., T ACQUISITION CO.
AND
TAB PRODUCTS CO.
As of July 29, 2002
TABLE OF CONTENTS
-----------------
1. Definitions.................................................................................. 1
2. Basic Transaction............................................................................ 7
(a) The Merger............................................................................. 7
(b) The Closing............................................................................ 7
(c) Actions at the Closing................................................................. 7
(d) Effect of Merger....................................................................... 7
(e) Procedure for Payment.................................................................. 8
(f) Stock Option Plans and Warrants........................................................ 9
(g) Closing of Transfer Records............................................................ 10
(h) Dissenting Shares...................................................................... 10
3. Representations And Warranties Of The Company................................................ 11
(a) Organization, Qualification, and Corporate Power....................................... 11
(b) Capitalization......................................................................... 11
(c) Subsidiaries........................................................................... 12
(d) Authorization of Transaction........................................................... 13
(e) SEC Documents; Financial Statements; Undisclosed Liabilities........................... 13
(f) Noncontravention....................................................................... 14
(g) Brokers' Fees; Schedule of Transaction Fees............................................ 15
(h) Title to Assets........................................................................ 15
(i) Events Subsequent to Most Recent Fiscal Year End....................................... 15
(j) Legal Compliance....................................................................... 17
(k) Taxes.................................................................................. 17
(l) Real Property.......................................................................... 18
(m) Intellectual Property.................................................................. 20
(n) Contracts.............................................................................. 21
(o) Insurance.............................................................................. 23
(p) Litigation............................................................................. 23
(q) Employees.............................................................................. 23
(r) Employee Benefits...................................................................... 24
(s) Environmental Matters.................................................................. 25
(t) Certain Business Relationships With Company and Its Subsidiaries....................... 26
(u) Rights Agreement; (S)203 of the Delaware General Corporation Law....................... 26
(v) Disclosure............................................................................. 27
4. Representations And Warranties Of The Buyer And The Transitory Subsidiary.................... 27
(a) Organization........................................................................... 27
(b) Financing.............................................................................. 27
(c) Authorization of Transaction........................................................... 28
(d) Noncontravention....................................................................... 28
(e) Brokers' Fees.......................................................................... 28
i
(f) Disclosure............................................................................. 28
(g) Financial Statements; Undisclosed Liabilities.......................................... 28
(h) Absence of Litigation.................................................................. 29
(i) Transitory Subsidiary.................................................................. 29
5. Covenants.................................................................................... 29
(a) General................................................................................ 29
(b) Notices and Consents................................................................... 29
(c) Regulatory Matters and Approvals....................................................... 29
(d) Fairness Opinion....................................................................... 30
(e) Financing.............................................................................. 30
(f) Operation of Business.................................................................. 31
(g) Access................................................................................. 33
(h) Notice of Developments................................................................. 33
(i) No Solicitation........................................................................ 33
(j) Indemnification and Insurance.......................................................... 34
(k) Employment Matters..................................................................... 35
(l) Guaranties............................................................................. 36
(m) Proxy Solicitations.................................................................... 36
(n) Solvency Opinion....................................................................... 36
(o) Intentionally omitted.................................................................. 36
6. Conditions To Obligation To Close............................................................ 37
(a) Conditions to Obligation of the Buyer and the Transitory Subsidiary.................... 37
(b) Conditions to Obligation of the Company................................................ 38
7. Termination.................................................................................. 39
(a) Termination of Agreement............................................................... 39
(b) Effect of Termination.................................................................. 40
8. Miscellaneous................................................................................ 42
(a) Survival............................................................................... 42
(b) Press Releases and Public Announcements................................................ 42
(c) No Third-Party Beneficiaries........................................................... 42
(d) Entire Agreement....................................................................... 42
(e) Succession and Assignment.............................................................. 42
(f) Counterparts........................................................................... 42
(g) Headings............................................................................... 42
(h) Notices................................................................................ 43
(i) Governing Law.......................................................................... 44
(j) Amendments and Waivers................................................................. 44
(k) Severability........................................................................... 44
(l) Expenses............................................................................... 44
(m) Construction........................................................................... 44
(n) Incorporation of Exhibits and Schedules................................................ 44
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Exhibits and Schedules
Exhibit A - Form of Certificate of Merger
Exhibit B - Form of Certificate of Incorporation
Exhibit C - Form of Bylaws
Exhibit D - Intentionally Omitted
Exhibit E - Permitted Investments
Exhibit F - Comprehensive Schedule of Options
Exhibit G - Form of Opinion of Counsel to the Company
Exhibit H - Form of Opinion of Counsel to the Buyer and the Transitory
Subsidiary
Exhibit I - Form of Guaranties
Exhibit J - Financing Commitments
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MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is entered into as of the 29th day
of July 2002 among T ACQUISITION, L.P., a Delaware limited partnership (the
"Buyer"), T ACQUISITION CO, a Delaware corporation and a wholly-owned Subsidiary
of the Buyer (the "Transitory Subsidiary"), and TAB PRODUCTS CO., a Delaware
corporation (the "Company"). The Buyer, the Transitory Subsidiary and the
Company are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
acquire all of the outstanding capital stock of the Company for cash through a
reverse subsidiary merger of the Transitory Subsidiary with and into the
Company.
In connection herewith, each of the directors of the Company, who are
stockholders of Company, and Steel Partners II, L.P. and certain Affiliates and
Xxxxx Investment Trust, L.P. and certain Affiliates, have simultaneously with
the execution and delivery of this Agreement entered into Voting/Support
Agreements with the Buyer pursuant to which such stockholders have agreed to
vote their respective Company Shares in favor of the transactions contemplated
hereby ("Voting/Support Agreements").
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Acquisition Proposal" means a proposal or offer (including, without
limitation, any proposal or offer to its shareholders) with respect to a merger,
acquisition, tender offer, exchange offer, consolidation, sale of assets or
similar transaction involving all or any significant portion of the assets or
equity securities of the Company or any of the Company's Subsidiaries, other
than the transactions contemplated by this Agreement.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Ampulski Agreement" has the meaning set forth in (S)3(b)(i) below.
"Break-up Fee" has the meaning set forth in (S)7(b)(ii) below.
"Buyer" has the meaning set forth in the preface above.
"Buyer Break-up Fee" has the meaning set forth in (S)7(b)(iii) below.
"Buyer-owned Share" means any Company Share that the Buyer, the
Transitory Subsidiary or any of their Affiliates beneficially owns.
"Capital Expenditure Budget" has the meaning set forth in (S)3(i)(v)
below.
"Certificate of Merger" has the meaning set forth in (S)2(c) below.
"Closing" has the meaning set forth in (S)2(b) below.
"Closing Date" has the meaning set forth in (S)2(b) below.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended. "Company"
has the meaning set forth in the preface above.
"Company Share" means any share of the Common Stock, $.01 par value per
share, of the Company, including the associated Rights.
"Company Stockholder" means any Person who or which holds any Company
Shares.
"Confidentiality Agreement" has the meaning set forth in (S)5(g) below.
"Definitive Financing Agreements" has the meaning set forth in (S)5(e)
below.
"Definitive Proxy Materials" means the definitive proxy materials
relating to the Special Meeting.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in (S)3 below.
"Dissenting Share" means any Company Share which any stockholder who or
which has properly exercised and properly perfected his, her or its appraisal
rights under the Delaware General Corporation Law holds of record.
"Effective Time" has the meaning set forth in (S)2(d)(i) below.
"Employee Benefit Plan" means an Employee Pension Benefit Plan and an
Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" means a plan defined in Section 3(2) of
ERISA.
"Employee Welfare Benefit Plan" means a plan defined in Section 3(1) of
ERISA.
"Environmental Laws" means all applicable federal, state, local and
foreign statutes, regulations and ordinances, all applicable final judicial and
administrative orders and determinations, all contractual obligations and all
applicable common law concerning pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any
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hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
"Equity Incentive Plans" means the Tab Products Co. 2001 Stock Option
Plan, the Tab Products Co. 2001 Nonstatutory Stock Option Plan, the Tab Products
Co. 1996 Outside Directors Stock Option Plan, the Tab Products Co. 1991 Stock
Option Plan, and any other plan, program, agreement or arrangement providing for
the issuance or grant of any interest in respect of capital stock of the Company
and disclosed on the Disclosure Schedule.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA Affiliate" means an entity or trade or business (whether or not
incorporated) that is a member of a "controlled group" of which the Company is a
member or under "common control" with the Company (within the meaning of Section
414(b) and (c) of the Code).
"Facilities" has the meaning set forth in (S)4(b) below. "Fairness
Opinion" has the meaning set forth in (S)3(d) below.
"Financing Commitments" means (a) the financing commitment letter dated
June 6, 2002, between LaSalle Bank National Association and XX Xxxxxx Limited
Partnership, (b) the financing commitment letter dated June 25, 2002, among Banc
One Mezzanine Corporation, XX Xxxxxx L.P., Workstream, Xxxxxxxx Sorter Co., Inc.
and New Maverick Desk, Inc., (c) the Commitment Term Sheet regarding the $3.5
million Senior Note to be issued by XX Xxxxxx Limited Partnership to Workstream,
(d) the letter dated June 25, 2002 from Xxxxxx Xxxxxx & Co. to Workstream
regarding MS TP Limited Partnership, and (e) the letter dated June 26, 2002 from
Workstream to XX Xxxxxx Limited Partnership regarding the repayment of a $3.5
million 10% Junior Subordinated Note, all as attached hereto as Exhibit J.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"Health and Safety Laws" means all federal, state, local and foreign
statutes, regulations and ordinances, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety and workers or occupational health and safety.
"Improvements" has the meaning set forth in (S)3(k)(iv) below.
"Intellectual Property" means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill
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associated therewith and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all mask
works and all applications, registrations and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (f) all computer software
(including source code, executable code, data, databases and related
documentation), other than off-the-shelf computer software, (g) all advertising
and promotional materials, (h) all other proprietary rights, and (i) all copies
and tangible embodiments thereof (in whatever form or medium).
"IRS" means the United States Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable investigation under
the circumstances (a) with respect to Company, of Xxxx Xxxxxxxx and Xxxxxx Xxxx
and (b) with respect to Buyer or Transitory Subsidiary, of any of Xxxxxxxx
Xxxxxxxxxxx, Xxxxxx Ean Xxxxx, and Xxxx Xxxxxxxx.
"Leased Real Property" has the meaning set forth in (S)3(l)(ii) below.
"Liens" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than Permitted Encumbrances.
"Material Adverse Effect" means, with respect to any party, any events,
changes or effects which, individually or in the aggregate, would have, or would
be reasonably likely to have, a material adverse effect on the business,
operations, assets, condition (financial or otherwise), results of operations or
liabilities of such party and its Subsidiaries, taken as a whole; provided,
however, that in determining whether there has been a Material Adverse Effect,
any adverse effect principally attributable to any of the following shall be
disregarded: (i) general economic, business or financial market conditions; (ii)
in the case of determining a Material Adverse Effect on Company, conditions in
the industries in which Company operates, which conditions do not materially
disproportionately affect Company, (iii) the taking of any action required by
this Agreement; (iv) the announcement or pendency of this Agreement and/or the
Merger, including any shareholder "strike" suits, actions or similar proceedings
arising in connection with the Merger; (v) any attrition among the sales
employees or other distribution agents of Company and its Subsidiaries resulting
from the announcement or pendency of this Agreement and/or the Merger and any
resulting effects on sales and other financial results of Company and its
Subsidiaries; (vi) in the case of determining a Material Adverse Effect on
Company, the breach of this Agreement by Buyer or Transitory Subsidiary; (vii)
in the case of determining a Material Adverse Effect on Buyer, the breach of
this Agreement by Company and (viii) in the case of determining a Material
Adverse Effect on the Company, any breach of the Confidentiality Agreement
arising after the date hereof.
"Merger" has the meaning set forth in (S)2(a) below.
"Merger Consideration" has the meaning set forth in (S)2(d)(v) below.
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"Multiemployer Plan" means a plan defined in Section 3(37) or Section
4001(a)(3) of ERISA.
"Non-U.S. Subsidiary" means a Subsidiary organized under the laws of a
jurisdiction located outside of the United States.
"Option" has the meaning set forth in (S)2(f)(i) below.
"Option Consideration" has the meaning set forth in (S)2(f)(i) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Property" has the meaning set forth in (S)3(l)(i) below.
"Party" has the meaning set forth in the preface above.
"Paying Agent" has the meaning set forth in (S)2(e) below.
"Payment Fund" has the meaning set forth in (S)2(e) below.
"PBGC" means the Pension Benefit Guaranty Corporation, described in
ERISA Section 4002.
"Permitted Encumbrances" means (a) mechanic's, materialman's, and
similar liens relating to obligations not yet due and payable; (b) liens for
Taxes, assessments or governmental charges or levies not yet due and payable or
for Taxes, assessments or governmental charges or levies that the taxpayer is
contesting in good faith through appropriate proceedings; (c) purchase money
liens and liens securing rental payments under capital lease arrangements
disclosed on the Disclosure Schedule; (d) recorded easements, restrictive
covenants, rights of way and other similar imperfections of title not materially
adversely affecting the Buyer's or the Surviving Corporation's use of the assets
affected; (e) zoning, building and other similar restrictions; and (f) pledges
or deposits in connection with workers' compensation, unemployment insurance and
other social security legislation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization or a governmental entity (or
any department, agency or political subdivision thereof) or any other entity.
"Prohibited Transaction" means a transaction within the meaning of
Section 4975 of the Code or Section 406 of ERISA.
"Real Property" has the meaning set forth in (S)3(l)(iii) below.
"Real Property Laws" has the meaning set forth in (S)3(l)(vi) below.
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"Requisite Stockholder Approval" means the affirmative vote of the
holders of a majority of the then-outstanding Company Shares in favor of this
Agreement and the Merger.
"Rights" means the Common Stock purchase rights pursuant to the Rights
Agreement.
"Rights Agreement" means the Rights Agreement dated as of October 24,
1996, between Company and Mellon Investor Services, L.L.C. (f/k/a ChaseMellon
Shareholder Services, L.L.C.), as amended.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Special Meeting" has the meaning set forth in (S)5(c)(ii) below.
"Subsidiary" means any Person with respect to which a specified Person
(or a Subsidiary thereof) owns, directly or indirectly, a majority of the common
stock or other equity interests or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Superior Acquisition Proposal" means a bona fide Acquisition Proposal
made by a Person other than Buyer, which a majority of the members of the
Company's Board of Directors determines, after consultation with its financial
advisors and Company's outside legal counsel, in good faith (i) to be more
favorable to the Company Stockholders from a financial point of view than the
Merger; and (ii) to be reasonably capable of being consummated.
"Surviving Corporation" has the meaning set forth in (S)2(a) below.
"Tax" or "Taxes" means all taxes, however, denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or foreign government
or any agency or political subdivision of any such government, which taxes shall
include, but not be limited to, any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Sec. 59A), custom duties, capital stock, franchise, profits, withholding
(employment, backup, foreign, or otherwise), social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
other tax of any kind whatsoever, or other obligations of the same or of a
similar nature to any of the foregoing, which are required to be paid, withheld,
or collected and whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Termination Date" has the meaning set forth in (S)7(ii) below.
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"Transitory Subsidiary" has the meaning set forth in the preface above.
"U.S. Subsidiary" means a Subsidiary organized under the laws of a
jurisdiction located within the United States.
"Voting/Support Agreements" has the meaning set forth in the preface
above.
"Warrant" means the Tab Products Co. Common Stock Purchase Warrant
issued to SpencerStuart and exercisable for the purchase of 13,000 Company
Shares, as amended, a copy of which has been provided to Buyer.
"Workstream Financial Statements" has the meaning set forth in (S)4(g)
below.
"Workstream" means Workstream Inc., a Delaware corporation and an
Affiliate of Buyer and Subsidiary.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement and in accordance with the Delaware General Corporation Law, the
Transitory Subsidiary will merge with and into the Company (the "Merger") at the
Effective Time. The Company shall be the corporation surviving the Merger (in
this capacity, the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Barack Xxxxxxxxxx
Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLC, 000 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the
"Closing Date").
(c) Actions at the Closing. At the Closing: (i) the Company will
deliver to the Buyer and the Transitory Subsidiary the various certificates,
instruments and documents referred to in (S)6(a) below; (ii) the Buyer and the
Transitory Subsidiary will deliver to the Company the various certificates,
instruments and documents referred to in (S)6(b) below; (iii) the Company and
the Transitory Subsidiary will file with the Secretary of State of the State of
Delaware a Certificate of Merger in the form attached hereto as Exhibit A (the
"Certificate of Merger"); and (iv) the Buyer will cause the Surviving
Corporation to deliver the Payment Fund to the Paying Agent in the manner
provided below in this (S)2.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time (the
"Effective Time") the Company and the Transitory Subsidiary file the
Certificate of Merger with the Secretary of State of the State of
Delaware. The Merger shall have the effect set forth in the Delaware
General Corporation Law. The Surviving Corporation may, at any time
after the Effective Time, take any action (including executing and
delivering any
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document) in the name and on behalf of either the Company or the
Transitory Subsidiary in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended in its
entirety at and as of the Effective Time in the form attached hereto as
Exhibit B.
(iii) Bylaws. The Bylaws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time in the form
attached hereto as Exhibit C.
(iv) Directors and Officers. The directors of the Transitory
Subsidiary shall become the directors of the Surviving Corporation at
and as of the Effective Time (retaining their respective positions and
terms of office). Except as otherwise requested in writing by the
Buyer, the officers of the Company shall become the officers of the
Surviving Corporation at and as of the Effective Time (retaining their
respective positions and being subject to removal by action of the
Surviving Corporation's Board of Directors).
(v) Conversion of Company Shares. At and as of the Effective
Time, (A) each Company Share issued and outstanding immediately prior
to the Effective Time (other than any Dissenting Share or Buyer-owned
Share) shall be converted into the right to receive an amount (the
"Merger Consideration") equal to $5.85 in cash (without interest), (B)
each Dissenting Share shall be converted into the right to receive
payment from the Surviving Corporation with respect thereto in
accordance with the provisions of the Delaware General Corporation Law
as provided in (S)2(h) below, (C) each Buyer-owned Share shall be
canceled, and (D) each Company Share owned by Company or any of its
Subsidiaries shall be canceled; provided, however, that the Merger
Consideration shall be subject to equitable adjustment in the event of
any stock split, stock dividend, reverse stock split, or other change
in the number of Company Shares outstanding. No Company Share shall be
deemed to be outstanding or to have any rights other than those set
forth above in this (S)2(d)(v) after the Effective Time.
(vi) Conversion of Capital Stock of the Transitory Subsidiary.
At and as of the Effective Time, each share of Common Stock, $.01 par
value per share, of the Transitory Subsidiary issued and outstanding
immediately prior to the Effective Time shall be converted into one
share of Common Stock, $.01 par value per share, of the Surviving
Corporation.
(e) Procedure for Payment.
(i) Simultaneously with and as a condition to the Effective
Time: (A) the Buyer will furnish, or will cause the Surviving
Corporation to furnish, to a commercial bank or trust company or
similar financial institution mutually acceptable to Buyer and the
Company (the "Paying Agent") a corpus (the "Payment Fund") consisting
of cash sufficient in the aggregate for the Paying Agent to make full
payment of the Merger Consideration to the holders of all of the
outstanding Company Shares (other than any Dissenting Shares and
Buyer-owned Shares); and (B) the Buyer will cause the Paying
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Agent to mail a letter of transmittal (with instructions for its use)
in form reasonably acceptable to each of the Company and the Buyer to
each record holder of outstanding Company Shares for the holder to use
in surrendering the certificates which represented his, her or its
Company Shares against payment of the Merger Consideration. No interest
will accrue or be paid to the holder of any outstanding Company Shares.
(ii) The Paying Agent shall, pursuant to irrevocable
instructions, pay the Merger Consideration out of the Payment Fund as
soon as practicable after the Effective Time. Upon surrender of a
certificate representing Company Shares for cancellation to the Paying
Agent together with a letter of transmittal, duly executed, or an
"agents message" in the case of a book entry transfer, and such other
customary documents as may be required pursuant to such instructions,
the holder of such certificate shall be entitled to receive in respect
thereof cash in an amount equal to the product of (1) the number of
Company Shares formerly represented by such certificate, multiplied by
(2) $5.85. If any holder of a certificate shall be unable to surrender
such holder's certificates because such certificates have been lost,
mutilated or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity bond in form and substance and with surety
reasonably satisfactory to the Surviving Corporation.
(iii) The Buyer may cause the Paying Agent to invest the cash
included in the Payment Fund in one or more of the permitted
investments set forth on Exhibit E attached hereto; provided, however,
that the terms and conditions of the investments shall be such as to
permit the Paying Agent to make prompt payment of the Merger
Consideration as necessary. The Buyer may cause the Paying Agent to pay
over to the Surviving Corporation any net earnings with respect to the
investments, and the Buyer will replace, or will cause the Surviving
Corporation to replace, promptly any portion of the Payment Fund which
the Paying Agent loses through investments.
(iv) The Buyer may cause the Paying Agent to pay over to the
Surviving Corporation any portion of the Payment Fund (including any
earnings thereon) remaining 180 days after the Effective Time, and
thereafter all former stockholders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat, and
other similar laws) as general creditors thereof with respect to the
cash payable upon surrender of their certificates.
(v) The Buyer shall cause the Surviving Corporation to pay all
charges and expenses of the Paying Agent.
(f) Stock Option Plans and Warrants.
(i) The Company shall take all actions necessary to provide
that, immediately prior to the Effective Time, (A) each then
outstanding option (each, an "Option" and collectively, the "Options")
to purchase or acquire Company Shares under any of the Equity Incentive
Plans and pursuant to the Ampulski Agreement, whether or not then
exercisable or vested, shall become fully exercisable and vested (a
correct and complete schedule of all such Options being attached hereto
as Exhibit F), (B) each Option that is then outstanding shall be
canceled as of the Effective Time and (C) in consideration of
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such cancellation, (x) each Option with a per share exercise price of
less than $5.85 shall, as of the Effective Time, represent for all
purposes only the right to receive an amount in cash equal to the
difference between $5.85 and the per share exercise price of such
Option, multiplied by the number of Company Shares subject to such
Option (such amount in cash as described above being hereinafter
referred to as the "Option Consideration"), payable as provided in
(S)2(f)(ii) but in each case net of all applicable federal, state and
local withholding Taxes and similar deductions and (y) each Option with
a per share exercise price of $5.85 or above shall be deemed not to
have any rights after the Effective Time.
(ii) Upon the Effective Time, Buyer shall, or shall cause the
Surviving Corporation to, pay to each holder of an Option the Option
Consideration in respect thereof (net of all applicable withholding
Taxes and similar deductions); provided, however, that with respect to
any Person subject to Section 16(a) of the Securities Exchange Act, any
such Option Consideration shall not be payable until the first date
payment can be made without liability to such Person under Section
16(b) of the Securities Exchange Act, but shall be paid as soon as
practicable thereafter. No interest shall be paid or accrued on the
Option Consideration. Until settled in accordance with the provisions
of this (S)2(f), each Option shall be deemed at any time after the
Effective Time to represent for all purposes only the right to receive
the Option Consideration.
(iii) At the Effective Time, the Warrant, pursuant to the terms
thereof, shall be canceled and in consideration of such cancellation,
the Warrant shall represent for all purposes only the right to receive
an amount in cash equal to the difference between $5.85 and the per
share exercise price of the Warrant multiplied by the number of Company
Shares subject to the Warrant.
(iv) Prior to the Effective Time, the Company shall take all
action necessary (including causing the Board of Directors of the
Company or any Subsidiary (or any respective committees thereof) to
take such actions as are allowed by the Equity Incentive Plans) to
ensure that (A) following the Effective Time, no holder of an Option
nor any party to or participant in any of the Equity Incentive Plans
shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof and (B)
the Equity Incentive Plans shall terminate as of the Effective Time.
The Company represents and warrants that no such action shall require
the vote or consent of the holders of Company Shares.
(g) Closing of Transfer Records. After the close of business on the
Closing Date, transfers of Company Shares outstanding prior to the Effective
Time shall not be made on the stock transfer books of the Surviving Corporation.
(h) Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, Dissenting Shares shall not be converted into or
represent the right to receive the Merger Consideration. Company Stockholders
holding Dissenting Shares instead shall be entitled to receive payment of the
appraised value of such Dissenting Shares held by them in accordance with the
provisions of Section 262 of the Delaware General Corporation Law, except that
all Dissenting Shares held by Company Stockholders who shall have failed to
properly
-10-
perfect or who effectively shall have withdrawn or otherwise lost their rights
to appraisal of such Company Shares under Section 262 of the Delaware General
Corporation Law shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration. The Company shall not take (or permit to be taken) any
action with respect to any holder of Company Shares who or that has demanded
appraisal of his, her or its Company Shares, including (without limitation)
compromising or entering into a settlement with respect to such demand, without
the express prior written consent of the Buyer.
3. Representations And Warranties Of The Company. The Company represents
and warrants to the Buyer and the Transitory Subsidiary that the statements
contained in this (S)3 are true and correct as of the date of this Agreement and
will be true and correct as of the Closing Date (as though made then and as
though the closing date were substituted for the date of this Agreement
throughout this (S)3), except for those representations and warranties that
relate to a particular date, which representations and warranties shall be true
and correct as of such date and except as set forth in the disclosure schedule
accompanying this Agreement and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this (S)3.
(a) Organization, Qualification, and Corporate Power. Each of
Company and its Subsidiaries is a corporation or other entity duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization. Each of Company and its Subsidiaries is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required, other than in such jurisdictions where the failure to
be so authorized or be in good standing would not have a Material Adverse Effect
on Company. Each of Company and its Subsidiaries has full corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. (S)3(a) of the Disclosure Schedule lists
the directors and officers of each of Company and its Subsidiaries.
(b) Capitalization.
(i) As of the date hereof, the authorized shares of
capital stock of Company consist of: (A) 25,000,000 shares of Common
Stock, par value $.01 per share, of which 5,123,915 Company Shares are
issued and outstanding and 2,678,469 Company Shares are held by Company
in its treasury; and (B) 500,000 shares of preferred stock, 200,000 of
which have been designated as Series A Preferred Stock and none of
which are issued and outstanding. As of the date hereof, 927,750
Company Shares were reserved for issuance but not issued under the
Equity Incentive Plans, 13,000 Company Shares were reserved for
issuance but not issued in connection with the Warrant, and 250,000
Company Shares were reserved for issuance but not issued in connection
with options granted to Xxxx Xxxxxxxx effective as of December 14, 2000
pursuant to a Nonqualified Stock Option Agreement (the "Ampulski
Agreement"). As of the date hereof, except as set forth in this
(S)3(b)(i) and except pursuant to the Rights Agreement, no Company
Shares or other securities of Company were issued, reserved for
issuance or outstanding.
-11-
(ii) Exhibit F is a true and complete list as of the date
hereof of each outstanding stock option and warrant of any nature,
incentive, nonqualified or otherwise outstanding under the Equity
Incentive Plans (including the Options), the Warrant and the Ampulski
Agreement and a total thereof, including the exercise prices thereof,
all agreements to issue restricted Company Shares and the amount and
terms of all outstanding restricted Company Shares issued by Company.
(iii) All outstanding Company Shares are duly authorized,
validly issued, fully paid and nonassessable and not subject to, and
were not issued in violation of, any preemptive rights and were not
issued in violation of federal or applicable state securities laws and
regulations. There are no bonds, debentures, notes or other
indebtedness of Company or of any other entity convertible into or
exchangeable for Company Shares.
(iv) Except as set forth in (S)3(b) of the Disclosure
Schedule and other than the Rights Agreement, as of the date of this
Agreement there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which Company or any Company Subsidiary is a party or by
which such entity is bound, obligating Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock, voting securities or other
ownership interests of Company or any Company Subsidiary or obligating
Company or any Company Subsidiary to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking.
(v) Except as set forth in (S)3(b) of the Disclosure
Schedule, all dividends or distributions on Company Shares which have
been authorized or declared prior to the date of this Agreement have
been paid in full.
(vi) Except as set forth in (S)3(b) of the Disclosure
Schedule, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to
Company or any Company Subsidiary. Except as set forth in (S)3(b) of
the Disclosure Schedule, there are no voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital
stock of Company.
(c) Subsidiaries. (S)3(c) of the Disclosure Schedule sets forth or
each Subsidiary of Company: (i) its name and jurisdiction of organization and
(ii) the number of shares of authorized capital stock of each class of its
capital stock or other equity interests. All of the issued and outstanding
shares of capital stock or other equity interests of each Subsidiary of Company
have been duly authorized and are validly issued, fully paid, and nonassessable
and are owned by the Company, except for the issued and outstanding shares of
each of Tab Products Pty Ltd. and Tab Products Australia Pty Limited, all of
which are owned by Tab Products of Canada Limited. Company and/or one or more of
its Subsidiaries holds of record and owns beneficially all of the outstanding
shares of each Subsidiary of Company, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities
laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require
-12-
any of Company and its Subsidiaries to sell, transfer, or otherwise dispose of
any capital stock of any of its Subsidiaries or that could require any
Subsidiary of Company to issue, sell, or otherwise cause to become outstanding
any of its own capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary of Company. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary of Company. None of Company and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of Company. Except for the Subsidiaries
set forth in (S)3(c) of the Disclosure Schedule, neither Company nor any of its
Subsidiaries owns or has any right to acquire, directly or indirectly, any
outstanding capital stock of, or other equity interests in, any Person.
(d) Authorization of Transaction. This Agreement and the Merger
have been approved by the unanimous vote of the Company's Board of Directors,
after receipt of a fairness opinion from the Company's financial adviser (the
"Fairness Opinion"), a copy of which has been provided to Buyer. The Company
Board of Directors have unanimously recommended to the holders of the Company
Shares that they vote in favor of this Agreement and the Merger. The Company has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder;
provided, however, that the Company cannot consummate the Merger unless and
until it receives the Requisite Stockholder Approval. This Agreement constitutes
the valid and legally binding obligation of the Company, enforceable in
accordance with its terms and conditions, subject to bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies.
(e) SEC Documents; Financial Statements; Undisclosed Liabilities.
(i) Company has filed or, as applicable, will file, all
required reports, schedules, forms, statements and other documents with
the SEC since June 1, 2000, (the "Company SEC Documents"). Except as
set forth on (S)3(e)(i) of the Disclosure Schedule, all of the Company
SEC documents (other than preliminary material), as of their respective
filings dates or as of the date of the last amendment thereof (if
amended after filing), and, in the case of any registration statement
under the Securities Act, its effective date, complied or will comply
as to form in all material respects with all applicable requirements of
the Securities Act and the Securities Exchange Act and, in each case,
the rules and regulations promulgated thereunder applicable to such
Company SEC Documents. None of the Company SEC Documents at the time of
filing contained or will contain any untrue statement of a material
fact or omitted or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except to the extent such statements have been modified or superceded
by later Company SEC Documents filed on a non-confidential basis.
(ii) The consolidated financial statements of Company
included in the Company SEC Documents, when filed, complied as to form,
as of their respective filing dates, and the audited consolidated
financial statements of Company for the fiscal year ended May 31, 2002,
when filed, will comply as to form, as of their filing date, in all
-13-
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been or will be prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by the applicable rules and
regulations of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented or will fairly represent, in accordance
with the applicable requirements of GAAP and the applicable rules and
regulations of the SEC in all material respects, the consolidated
financial position of Company and its Subsidiaries, taken as a whole,
as of the dates thereof and the consolidated results of operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments, any other
adjustments described therein and the fact that certain information and
notes have been condensed or omitted in accordance with the Exchange
Act). The audited consolidated financial statements of Company for the
fiscal year ended May 31, 2002 (including the footnotes thereto), when
filed, will not differ in any material respect from the draft unaudited
consolidated financial statements of the Company for the fiscal year
ended May 31, 2002 provided to Buyer and attached hereto as (S)3(e)(ii)
of the Disclosure Schedule. (S)3(e)(ii) of the Disclosure Schedule sets
forth all Company Subsidiaries which are not consolidated for
accounting purposes as of the date hereof.
(iii) Except for liabilities and obligations set forth in
the Company SEC Documents or in (S)3(e)(iii) of the Disclosure
Schedule, neither Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) other than (i) liabilities and obligations
under this Agreement relating to or in connection with the Merger, (ii)
liabilities and obligations incurred in the Ordinary Course of Business
since June 1, 2002 or (iii) liabilities and obligations that would not
reasonably be expected to have a Material Adverse Effect on Company.
(f) Noncontravention. Except as set forth on (S)3(f) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement by
Company, nor the consummation by Company of the transactions contemplated
hereby, will: (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which any of Company and its U.S.
Subsidiaries and, to the Knowledge of Company, its Non-U.S. Subsidiaries, is
subject or any provision of the charter or bylaws of any of Company and its
Subsidiaries; or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
any of Company and its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Liens
upon any of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice or
Liens would not have a Material Adverse Effect on Company. Other than in
connection with the provisions of the Delaware General Corporation Law, the
Securities Exchange Act, the Securities Act and the state securities laws and
the notice required under the Investment Canada Act, none of Company and its
U.S. Subsidiaries and, to the Knowledge of Company, its Non-U.S. Subsidiaries,
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions
-14-
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
Material Adverse Effect on Company.
(g) Brokers' Fees; Schedule of Transaction Fees. Except for fees
payable to TM Capital Corp., pursuant to the letter agreement dated September
27, 2000 between the Company and TM Capital Corp. (a true, complete and correct
copy of which has been provided to the Buyer), none of Company and its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder, or similar agent with respect to the transactions
contemplated by this Agreement. (S)3(g) of the Disclosure Schedule sets forth
the Company's good faith estimate of all fees and expenses incurred or to be
incurred by or on behalf of the Company in connection with the transactions
contemplated by this Agreement.
(h) Title to Assets. Except as set forth on (S)3(h) of the
Disclosure Schedule, Company and its Subsidiaries have good and marketable title
to, or a valid leasehold interest in, the properties and assets used by them,
located on their premises, or shown in the Company SEC Documents or acquired
after the date thereof, free and clear of all Liens, except for properties and
assets disposed of in the Ordinary Course of Business since June 1, 2002.
(i) Events Subsequent to Most Recent Fiscal Year End. Except as
set forth on (S)3(i) of the Disclosure Schedule, and except in connection with
the negotiation and execution and delivery of this Agreement and the
consummation of the Merger, since June 1, 2002 and through the date hereof, (i)
each of the Company and its Subsidiaries has conducted its respective business,
in all material respects, only in the Ordinary Course of Business, and (ii)
there has not been any event or events (whether or not covered by insurance),
that have had, or would be reasonably expected to have, a Material Adverse
Effect on the Company, impair the ability of the Company to perform its
obligations under this Agreement and/or prevent the consummation of the Merger.
Except as set forth on (S)3(i) of the Disclosure Schedule, without limiting the
generality of the foregoing, since June 1, 2002 and through the date hereof,
(i) none of Company and its Subsidiaries has sold,
leased, transferred, or assigned any material assets, tangible or
intangible, outside the Ordinary Course of Business;
(ii) none of Company and its Subsidiaries has entered into
any material agreement, contract, lease, or license outside the
Ordinary Course of Business;
(iii) no party (including any of Company and its
Subsidiaries) has accelerated, terminated, made material modifications
to, or canceled any material agreement, contract, lease, or license to
which any of Company and its Subsidiaries is a party or by which any of
them is bound;
(iv) none of Company and its Subsidiaries has imposed any
Lien upon any of its assets, tangible or intangible;
(v) none of Company and its Subsidiaries has made any
capital expenditures in excess of the capital expenditure budget for
the first fiscal quarter of 2003 as set forth in the capital
expenditure budget for fiscal year 2003 previously provided to the
Buyer and attached hereto as Schedule 3(i)(v) (the "Capital Expenditure
Budget");
-15-
(vi) none of Company and its Subsidiaries has made any
material capital investment in, or any material loan to, any other
Person outside the Ordinary Course of Business;
(vii) Company and its Subsidiaries have not created,
incurred, assumed, or guaranteed more than $25,000 in aggregate
indebtedness for borrowed money and capitalized lease obligations;
(viii) none of Company and its Subsidiaries has transferred,
assigned, or granted any license or sublicense of any material rights
under or with respect to any Intellectual Property;
(ix) there has been no change made or authorized in the
charter or bylaws of any of Company and its Subsidiaries;
(x) none of Company and its Subsidiaries has issued,
sold, or otherwise disposed of any of its capital stock or other
securities, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock or other securities;
(xi) none of Company and its Subsidiaries has declared,
set aside, or paid any dividend or made any distribution with respect
to its capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock (other than
in connection with the TAB Products Co. Tax Deferred Savings Plan in
the Ordinary Course of Business);
(xii) none of Company and its Subsidiaries has experienced
any material damage, destruction, or loss (whether or not covered by
insurance) to its property;
(xiii) none of Company and its Subsidiaries has made any
loan to, or entered into any other transaction with, any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(xiv) none of Company and its Subsidiaries has entered into
any employment contract providing for annual compensation in excess of
$100,000 or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xv) none of Company and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xvi) none of Company and its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
-16-
(xvii) none of Company and its Subsidiaries has made any
other material change in employment terms for any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xviii) none of Company and its Subsidiaries has made any
loans or advances of money in each case in excess of $10,000; and,
(xix) none of Company and its Subsidiaries has committed to
any of the foregoing.
(j) Legal Compliance. Each of Company and its Subsidiaries has
complied in all material respects with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder, including the Foreign Corrupt Practices Act, 15 U.S.C.
78dd-1, et. seq., the Truth in Negotiations Act, 10 U.S.C.(S)2306(a) et seq., 41
U.S.C. (S)254(b) et seq. and other federal and state laws pertaining to
government procurement) of federal, state, local, and foreign governments (and
all agencies thereof), and all Health and Safety Laws, and no material action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any failure so
to comply.
(k) Taxes. Except as set forth in the Company SEC Documents or
on (S)3(k) of the Disclosure Schedule:
(i) Company and its Subsidiaries have, as of the date
hereof, and will prior to the Effective Time have, timely and
accurately filed all Tax Returns required to be filed by them prior to
such dates and have timely paid, or will prior to the Effective Time
timely pay, all Taxes shown on such returns as owed for the periods of
such returns, including all withholding or other payroll related Taxes
shown on such returns. Neither Company nor any Subsidiary is, nor will
any of them become, subject to any material additional Taxes, interest,
penalties or other similar charges with respect to the Tax Returns
referred to in the first sentence of this (S)3(k). No assessments or
notices of deficiency or other communications have been received by
Company, nor, to the Knowledge of Company, have any been threatened,
with respect to any such Tax Return that has not been paid, discharged
or fully reserved for by Company, and no amendments or applications for
refund have been filed or are planned with respect to any such return.
Company does not have any material liabilities for Taxes that have not
been accrued for or reserved for by Company, whether asserted or
unasserted, contingent or otherwise.
(ii) There are no agreements between Company or any
Subsidiary and any taxing authority, including, without limitation, the
IRS, waiving or extending any statute of limitations with respect to
any Tax Return, and neither Company nor any of its Subsidiaries has
filed any consent or election under the Code, including, without
limitation, any election under Section 341(f) of the Code.
(iii) Neither Company nor any of its Subsidiaries has made
any payments and none of them is obligated to make any payments, and
none of them is a party to any agreement that under certain
circumstances could obligate it, or any successor in interest,
-17-
to make any parachute payments that will not be deductible under Section
280G of the Code.
(iv) Company and its Subsidiaries (A) have withheld proper and
accurate amounts in compliance with the tax withholding provisions of all
applicable laws for all compensation paid to the officers and employees of
Company and its Subsidiaries, (B) have correctly and properly prepared and
duly and timely filed all Tax Returns relating to those amounts withheld
from their officers and employees and to their employer liability for
employment Taxes under the Code and applicable state and local laws and (C)
have duly and timely paid and remitted to the appropriate taxing
authorities the amounts withheld from their officers and employees and any
additional amounts that represent their employer liability under applicable
law for employment Taxes.
(v) (S)3(k) of the Disclosure Schedule sets forth a complete and
correct list of all currently ongoing audits and examinations of the Tax
Returns of, and all pending ruling requests by, the Company or any of its
Subsidiaries as well as a complete and correct list of all material,
unresolved Tax-related reports and statements of deficiencies received by
the Company or any of its Subsidiaries since June 1, 1999. The Company has
given the Buyer access to complete and correct copies of all federal
corporate income tax returns filed by the Company or any of its
Subsidiaries with respect to years 1999, 2000 and 2001. The Company has not
changed its Tax-related principles or practices from those reflected in the
federal corporate tax returns filed by the Company and its Subsidiaries
with respect to fiscal year 2001.
(vi) Neither Company nor any of its Subsidiaries is a "United States
real property holding corporation" as defined in Section 897(c)(2) of the
Code.
(l) Real Property.
(i) (S)3(l)(i) of the Disclosure Schedule sets forth the address and
description of each parcel of real property the fee interest in which is
owned by Company or a Company Subsidiary ("Owned Real Property"). With
respect to each parcel of Owned Real Property:
(A) Company or one of its Subsidiaries has fee simple title,
free and clear of all Liens;
(B) except as set forth in (S)3(l)(i)(B) of the Disclosure
Schedule, none of Company or its Subsidiaries currently leases or
otherwise has granted to any Person the right to use or occupy such
Owned Real Property or any portion thereof; and
(C) there are no outstanding options, rights of first offer or
rights of first refusal to purchase such Owned Real Property or any
portion thereof or material interest therein.
(ii) (S)3(l)(ii) of the Disclosure Schedule sets forth the address of
each parcel of real property leased by Company or a Company Subsidiary
("Leased Real Property"),
-18-
and a correct and complete list of all leases for each such Leased Real
Property (including the date and name of the parties to such lease
document). Company has delivered to Buyer a correct and complete copy of
each such lease document, and in the case of any oral lease, a written
summary of the material terms of such lease. Except as set forth in
(S)3(l)(ii) of the Disclosure Schedule, with respect to each of the leases:
(A) such lease is legal, valid, binding and enforceable on
Company or its applicable Subsidiary and is in full force and effect;
(B) the transaction contemplated by this Agreement does not
require the consent of any other party to such lease, will not result
in a breach of or default under such lease, and will not otherwise
cause such lease to cease to be legal, valid, binding and enforceable
on Company or its applicable Subsidiary and in full force and effect
on identical terms following the Closing;
(C) None of Company, its Subsidiaries or, to the Knowledge of
the Company, any other party to the lease is in breach or default
under such lease, and, to the Knowledge of Company, no event has
occurred or circumstance exists which, with the delivery of notice,
the passage of time or both, would constitute such a breach or
default, or permit the termination, modification or acceleration of
rent under such lease;
(iii) The Owned Real Property identified in (S)3(l)(i) of the
Disclosure Schedule, and the Leased Real Property identified in (S)3(l)(ii)
of the Disclosure Schedule (collectively, the "Real Property") comprise all
of the real property used or intended to be used in the business of Company
and its Subsidiaries; and none of Company or its Subsidiaries is a party to
any agreement or option to purchase any real property or interest therein.
(iv) All buildings, structures, fixtures, building systems and
equipment, and all components thereof, included in the Real Property (the
"Improvements") are in good condition and repair and sufficient for the
operation of the business of Company and its Subsidiaries. There are no
facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any material respect with
the use or occupancy of the Improvements or any portion thereof in the
operation of the business of Company and its Subsidiaries as currently
conducted thereon.
(v) None of the Company or its Subsidiaries has received written
notice of any condemnation or other proceeding in eminent domain affecting
any material portion of any parcel of Owned Real Property. There is no
injunction, decree, order, writ or judgment outstanding, nor any material
claims, litigation, administrative actions or similar proceedings, pending
or, to the Knowledge of Company, threatened, relating to the ownership,
lease, use or occupancy of the Owned Real Property or any material portion
thereof, or the operation of the business of Company and its Subsidiaries
as currently conducted thereon.
-19-
(vi) To the Knowledge of Company, the Real Property is in material
compliance with all applicable building, zoning, subdivision, health and
safety and other land use laws, including the Americans with Disabilities
Act of 1990, as amended, affecting the Real Property (collectively the
"Real Property Laws"). None of Company or its Subsidiaries has received any
notice of any material violation of any Real Property Law, and to the
Knowledge of the Company, there is no basis for the issuance of any such
notice.
(vii) To the Knowledge of Company, Company's and its Subsidiaries' use
or occupancy of the Real Property or any portion thereof and the operation
of the business of Company and its Subsidiaries as currently conducted
thereon is not dependent on a "permitted on-conforming use" or "permitted
non-conforming structure" or similar variance, exemption or approval from
any governmental authority.
(m) Intellectual Property.
(i) None of Company and its Subsidiaries has interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of third parties in any material respect, and none of
Company and its Subsidiaries has received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any of Company and
its Subsidiaries must license or refrain from using any Intellectual
Property rights of any third party). Without limiting the generality of the
foregoing, none of the Company or any of the Subsidiaries has failed to
make any required seat license or other license, royalty or other payment
to the owners or licensor of software or other Intellectual Property. To
the Knowledge of Company, no third party has interfered with, infringed
upon, misappropriated, or violated any material Intellectual Property
rights of any of Company and its Subsidiaries in any material respect.
(ii) (S)3(m)(ii) of the Disclosure Schedule identifies each patent or
registration which has been issued to any of Company and its Subsidiaries
with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which any of Company and
its Subsidiaries has made with respect to any of its Intellectual Property,
and identifies each material license, sublicense, agreement, or other
permission which any of Company and its Subsidiaries has granted to any
third party with respect to any of its Intellectual Property (together with
any exceptions). Company has made available to Buyer correct and complete
copies of all such patents, registrations, applications, licenses,
sublicenses, agreements, and permissions (as amended to date). (S)3(m)(ii)
of the Disclosure Schedule also identifies each material trade name or
unregistered trademark, service xxxx, corporate name, Internet domain name,
copyright and material computer software item (other than off-the-shelf
computer software) used by any of Company and its Subsidiaries in
connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in (S)3(m)(ii) of the
Disclosure Schedule:
(A) Company and its Subsidiaries possess all right, title, and
interest in and to the item, free and clear of any Lien, license, or
other restriction;
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(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
Company, is threatened, that challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) except as described on (S)3(m)(ii) of the Disclosure
Schedule, none of Company and its Subsidiaries has ever agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iii) (S)3(m)(iii) of the Disclosure Schedule identifies each material
item of Intellectual Property that any third party owns and that any of
Company and its Subsidiaries uses pursuant to license, sublicense,
agreement, or permission. Company has delivered to Buyer correct and
complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in (S)3(m)(iii) of the Disclosure
Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding and enforceable on Company or its
Subsidiaries, as applicable, and in full force and effect in all
material respects;
(B) neither Company nor any of its Subsidiaries nor, to the
Knowledge of Company, any other party to the license, sublicense,
agreement, or permission, is in material breach or default, and no
event has occurred which with notice or lapse of time would constitute
a material breach or default or permit termination, modification, or
acceleration thereunder;
(C) no party to the license, sublicense, agreement, or
permission has repudiated any material provision thereof;
(D) except as described on (S)3(m)(iii) of the Disclosure
Schedule, none of Company and its Subsidiaries has granted any
sublicense or similar right with respect to the license, sublicense,
agreement, or permission; and
(E) no loss or expiration of any material item is threatened,
pending, or reasonably foreseeable, except for patents expiring at the
end of their statutory terms (and not as a result of any act or
omission by Company or its Subsidiaries, including without limitation,
a failure by Company or its Subsidiaries to pay any required
maintenance fees).
(n) Contracts. (S)3(n) of the Disclosure Schedule lists the following
contracts and other agreements to which any of Company and its Subsidiaries is a
party as of the date hereof:
(i) any agreement entered into since January 1, 1999, for the
purchase or other acquisition by Company of all or any material portion of
the assets or equity
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securities of any Person or for the sale, transfer or other disposition by
Company of all or any material portion of its assets or equity securities;
(ii) any agreement (or group of related agreements or series of
agreements with a common lessor or lessee) for the lease of personal
property to or from any Person providing for lease payments in each case in
excess of $20,000 per annum;
(iii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year;
(iv) other than sales of products, inventory and other personal
property or the furnishing or receipt of services by the Company in the
Ordinary Course of Business and purchases by the Company of raw materials,
commodities, supplies, products or other personal property in the Ordinary
Course of Business not involving performance that will extend over a period
of more than one year, any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services
involving consideration in each case in excess of $25,000;
(v) any agreement concerning a partnership or joint venture;
(vi) any agreement (or group of related agreements or series of
agreements with a common lessor or lender) under which it has created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
other liabilities, or any capitalized lease obligation, in each case in
excess of $25,000 or under which it has imposed a Lien on any of its
assets, tangible or intangible;
(vii) any material agreement primarily concerning confidentiality or
noncompetition;
(viii) any material agreement with any of the Affiliates of Company
(other than Company and its Subsidiaries);
(ix) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(x) any collective bargaining agreement;
(xi) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in each case in excess of $50,000 or providing material
severance benefits;
(xii) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary
Course of Business;
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(xiii) any agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
(xiv) any agreement under which Company or any of its Subsidiaries
has advanced or loaned any other Person amounts currently outstanding in
the aggregate exceeding $20,000;
(xv) any other agreement (or group of related agreements) outside
the Ordinary Course of Business the performance of which involves
consideration in each case in excess of $100,000; or
(xvi) any agreement providing primarily for indemnification by the
Company or any Subsidiary of any director, officer, employee or agent of
the Company, or any Subsidiary.
Except as otherwise indicated on (S)3(n) of the Disclosure Schedule,
Company has made available to Buyer a correct and complete copy of each written
agreement listed in (S)3(n) of the Disclosure Schedule (as amended to date) and
a written summary setting forth the material terms and conditions of each oral
agreement referred to in (S)3(n) of the Disclosure Schedule. With respect to
each such agreement: (A) the agreement is the legal, valid and binding
obligation of Company or a Company Subsidiary, enforceable against Company or
such Subsidiary in accordance with its terms, and in full force and effect in
all material respects; (B) neither the Company nor any of its Subsidiaries nor,
to the Knowledge of Company, any other Party thereto is in material breach or
default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) neither the Company nor any of its
Subsidiaries nor, to the Knowledge of Company, any other Party thereto has
repudiated any material provision of the agreement.
(o) Insurance. Each of Company and its Subsidiaries has insurance
policies in full force and effect for such amounts as are customary for Persons
conducting businesses and owning assets similar in nature and scope to those of
the Company and the Company Subsidiaries. (S)3(o) of the Disclosure Schedule
lists each such insurance policy, the insurer, the policy term and scope and
amount of coverage. The Company will make available to Buyer correct and
complete copies of each such insurance policy promptly upon the Company's
receipt thereof. (S)3(o) of the Disclosure Schedule describes in reasonable
detail any material self-insurance arrangements affecting any of Company and its
Subsidiaries.
(p) Litigation. (S)3(p) of the Disclosure Schedule sets forth each
instance in which any of Company and its Subsidiaries (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge, or (ii) is a
party or, to the Knowledge of Company, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator.
(q) Employees. Except as the result of the announcement of or pendency of
this Agreement, to the Knowledge of Company, no executive, key employee, or
significant group of
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employees plans to terminate employment with any of Company and its Subsidiaries
during the 12 months period following the date hereof. None of Company and its
Subsidiaries is a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strike or material grievance, claim of unfair
labor practices, or other collective bargaining dispute within the past three
years. Company does not have any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of any of Company and its Subsidiaries.
(r) Employee Benefits.
(i) (S)3(r) of the Disclosure Schedule lists each Employee Benefit
Plan that any of Company and its Subsidiaries maintains or to which any of
Company and its Subsidiaries contributes or has any obligation to
contribute.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and
administered in material accordance with the terms of such Employee
Benefit Plan and complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and
other applicable laws.
(B) All required IRS Forms 5500 and all required material
reports and descriptions, summary annual reports, and summary plan
descriptions have been timely filed and/or distributed in accordance
with the applicable requirements of ERISA and the Code with respect to
each such Employee Benefit Plan. The requirements of COBRA have been
met in all material respects with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan subject to
COBRA.
(C) All contributions (including all employer contributions and
employee salary reduction contributions) have been made within the
time periods prescribed by ERISA and the Code to each such Employee
Benefit Plan that is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date that
are not yet due have been made to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and practice of
Company and its Subsidiaries. All premiums or other payments for all
periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan that is an Employee Welfare
Benefit Plan.
(D) Each such Employee Benefit Plan which is intended to meet
the requirements of a "qualified plan" under Code (S)401(a) has
received a determination from the Internal Revenue Service that such
Employee Benefit Plan is so qualified, and the Company is not aware of
any facts or circumstances that could adversely affect the qualified
status of any such Employee Benefit Plan.
(E) Company has delivered to Buyer correct and complete copies
of the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the
most recent annual report
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(IRS Form 5500, with all applicable attachments), and all related
trust agreements, insurance contracts, and other funding arrangements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that any of Company,
its Subsidiaries, and any ERISA Affiliate maintains, to which any of them
contributes, or has any obligation to contribute, or with respect to which
any of them has any material liability or material potential liability:
(A) No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been
instituted or, to the Knowledge of Company, threatened.
(B) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. Neither Company nor any Subsidiaries
have any liability for material breach of fiduciary duty or any other
material failure to act or comply in connection with the
administration or investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing, or investigation
with respect to the administration or the investment of the assets of
any such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of Company and its
Subsidiaries, threatened.
(C) To the Knowledge of Company, no event has occurred which
creates, and no circumstances exist pursuant to which Company or its
Subsidiaries would reasonably be expected to incur, material liability
for a violation by Company of ERISA, the Code, PBGC and COBRA. Company
has not received any notice asserting any such material liability.
(iii) None of Company, its Subsidiaries, and any ERISA Affiliate
contributes to, has any obligation to contribute to, or has any material
liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including
any withdrawal liability (as defined in ERISA (S)4201), under or with
respect to any Multiemployer Plan.
(iv) Except as set forth on (S)3(r) of the Disclosure Schedule, none
of the Company or its Subsidiaries maintains, contributes to or has an
obligation to contribute to, or has any liability or potential liability
with respect to, any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees of the Company or any of its
Subsidiaries (or any spouse or other dependent thereof) other than in
accordance with COBRA.
(s) Environmental Matters.
(i) Each of Company, its Subsidiaries, and their respective
Affiliates has complied and is in compliance, in each case in all material
respects, with all Environmental Laws.
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(ii) Without limiting the generality of the foregoing, each of
Company, its Subsidiaries, and their respective Affiliates, has obtained,
has complied, and is in compliance with, in each case in all material
respects, all material permits, licenses and other authorizations that are
required pursuant to Environmental Laws for the occupation of its
facilities and the operation of its business; a list of all such material
permits, licenses and other authorizations is set forth on (S)3(s) of the
Disclosure Schedule.
(iii) None of Company or its Subsidiaries has received any written or
oral notice, report or other information regarding any actual or alleged
material violation of Environmental Laws, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any material investigatory, remedial
or corrective obligations, relating to any of them or its facilities
arising under Environmental Laws.
(iv) None of Company, its Subsidiaries, or any of their respective
predecessor or Affiliates has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any hazardous
substance regulated under Environmental Laws, or owned or operated any
property or facility in violation of any Environmental Law.
(t) Certain Business Relationships With Company and Its Subsidiaries. None
of Company's and its Subsidiaries' directors, officers, employees, and
shareholders have been involved in any material business arrangement or
relationship with any of Company or its Subsidiaries within the past 12 months,
and none of Company's and its Subsidiaries' directors, officers, employees, and
shareholders owns any material asset, tangible or intangible, which is used in
the business of any of Company or its Subsidiaries.
(u) Rights Agreement; (S)203 of the Delaware General Corporation Law. The
Company has taken all action that may be necessary (including amending the
Rights Agreement, a complete and correct copy of which amendment has been
delivered to the Buyer) so that (i) neither the execution and delivery of this
Agreement and the Voting/Support Agreements, nor any amendments thereto approved
by the Board of Directors of Company prior to the termination of this Agreement,
nor the consummation of the transactions contemplated hereby or thereby,
including the Merger, shall cause (A) Buyer or Transitory Subsidiary to become
an Acquiring Person (as defined in the Rights Agreement), (B) the occurrence of
a Distribution Date (as defined in the Rights Agreement), (C) the occurrence of
a Flip-In Event (as defined in the Rights Agreement) or (D) the occurrence of a
Stock Acquisition Date (as defined in the Rights Agreement); and (ii) the Rights
shall expire upon the Effective Time. The Company has taken all actions that may
be necessary to approve this Agreement and the Voting/Support Agreements and the
transactions contemplated hereby and thereby in accordance with Section
203(a)(1) of the Delaware General Corporation Law. The Company's Continuing
Directors (as defined in the Company's Certificate of Incorporation) have taken
all actions that may be necessary to approve the Business Combination (as
defined in the Company's Certificate of Incorporation) contemplated by this
Agreement in accordance with Article Seventh of the Company's Certificate of
Incorporation.
-26-
(v) Disclosure. The Definitive Proxy Materials will comply as to form with
the Securities Exchange Act in all material respects. None of the information
that the Company will supply specifically for use in the Definitive Proxy
Materials will, at the time supplied, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statement
made therein, in the light of the circumstances under which they will be made,
not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information that the Buyer or the
Transitory Subsidiary will supply specifically for use in the Definitive Proxy
Statement.
4. Representations And Warranties Of The Buyer And The Transitory Subsidiary.
Each of the Buyer and the Transitory Subsidiary represents and warrants to the
Company that the statements contained in this (S)4 are true and correct as of
the date of this Agreement and will be true and correct as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this agreement throughout this (S)4), except for those representations
and warranties that relate to a particular date, which representations and
warranties shall be true and correct as of such date and except as set forth in
the Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this (S)4.
(a) Organization. Buyer is a limited partnership, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation. Transitory Subsidiary is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Buyer and its Subsidiaries, including the Transitory
Subsidiary, is duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required. Each of
Buyer and its Subsidiaries, including Transitory Subsidiary, has full corporate,
partnership or other entity power and authority to carry on the business in
which it is engaged and to own and use the properties owned and used by it.
Immediately prior to the Merger, all of the issued and outstanding capital stock
of Transitory Subsidiary will be owned directly by Buyer free and clear of any
Liens, other than Liens arising in connection with the Definitive Financing
Agreements. A majority of the partnership interests of Buyer will be owned
directly by MS TP Limited Partnership and XX Xxxxxx Limited Partnership free and
clear of any Liens, other than Liens arising in connection with the Definitive
Financing Agreements. Buyer and Transitory Subsidiary have heretofore made
available to the Company true, complete and correct copies of their respective
limited partnership agreement and certificate of incorporation and bylaws.
(b) Financing. The Buyer has furnished to the Company correct and complete
copies of the Financing Commitments committing to provide the Buyer and the
Transitory Subsidiary with the financing (the "Facilities") they will require in
order to consummate the Merger and fund the working capital needs of the
Surviving Corporation and its Subsidiaries after the Closing. Assuming that the
Company and its Subsidiaries possess not less than $8 million in cash accessible
in the United States and Canada at the Closing Date, Buyer, together with such
cash at the Company and its Subsidiaries, will have at the Effective Time,
sufficient cash and available funds to enable it to pay the Merger Consideration
payable hereunder and to pay all fees and expenses in connection therewith.
-27-
(c) Authorization of Transaction. Each of the Buyer and the Transitory
Subsidiary has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of the Buyer and the Transitory Subsidiary, enforceable in accordance
with its terms and conditions, subject to bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either the Buyer or the Transitory
Subsidiary is subject or any provision of the charter or bylaws of either the
Buyer or the Transitory Subsidiary; or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which either the Buyer or the Transitory Subsidiary is a party or
by which it is bound or to which any of its assets is subject, except where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not have a Material Adverse Effect
on Buyer or Transitory Subsidiary or on the ability of the Parties to consummate
the transactions contemplated by this Agreement. Other than in connection with
the provisions of the Delaware General Corporation Law, the Securities Exchange
Act, the Securities Act and the state securities laws, neither the Buyer nor the
Transitory Subsidiary needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement, except where the failure to give notice, to file, or to obtain
any authorization, consent, or approval would not have a Material Adverse Effect
on Buyer or Transitory Subsidiary or the ability of the Parties to consummate
the transactions contemplated by this Agreement.
(e) Brokers' Fees. Neither the Buyer nor Transitory Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
any of the Company and its Subsidiaries could become liable or obligated.
(f) Disclosure. None of the information that the Buyer and the Transitory
Subsidiary will supply specifically for use in the Definitive Proxy Materials
will, at the time supplied, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they will be made, not
misleading. Notwithstanding the foregoing, the Buyer and the Transitory
Subsidiary make no representation or warranty with respect to any information
that the Company will supply specifically for use in the Definitive Proxy
Statement.
(g) Financial Statements; Undisclosed Liabilities. Prior to the date
hereof, Buyer has provided to the Company correct and complete copies of the
audited consolidated financial statements for the years ended March 31, 2002 and
2001 and unaudited financial statements for the quarter ended June 30, 2002 of
Workstream (the "Workstream Financial Statements"). The
-28-
Workstream Financial Statements have been prepared in accordance with GAAP and
fairly present in all material respects the consolidated financial position of
Workstream and its Subsidiaries taken as a whole, as of the dates thereof and
the consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except for liabilities and obligations set forth in the Workstream
Financial Statements, neither Workstream nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) other than (i) liabilities and obligations under this Agreement
relating to or in connection with the Merger, (ii) liabilities and obligations
incurred in the Ordinary Course of Business since March 31, 2002 or (iii)
liabilities and obligations that would not reasonably be expected to have a
Material Adverse Effect on Workstream and its Subsidiaries, taken as a whole.
(h) Absence of Litigation. There are no material claims, actions, suits or
proceedings that have a reasonable likelihood of success on the merits pending
or, to the Knowledge of Buyer, threatened (or to the Knowledge of Buyer, any
governmental or regulatory investigation pending or threatened) against Buyer or
any property or rights of Buyer or any of its Subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, except for those claims, actions, suits or proceedings
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Buyer.
(i) Transitory Subsidiary. Transitory Subsidiary was formed solely for the
purpose of engaging in the Merger and has not engaged in any business activities
or conducted any operations other than in connection with the transactions
contemplated by this Agreement, including the Merger.
5. Covenants. The parties agree as follows with respect to the period from and
after the execution of this Agreement.
(a) General. Each of the Parties will use its best efforts to take all
actions and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement as
expeditiously as possible (including satisfaction, but not waiver, of the
closing conditions set forth in (S)6 below).
(b) Notices and Consents. The Company will give any notices (and will
cause each of its Subsidiaries to give any notices) to third parties, and will
use its reasonable best efforts to obtain (and will cause each of its
Subsidiaries to use its reasonable best efforts to obtain) any third party
consents required in connection with the Merger that the Buyer reasonably may
request.
(c) Regulatory Matters and Approvals. Each of the Parties will (and the
Company will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in (S)5(b) above. Without limiting the generality
of the foregoing:
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(i) Securities Exchange Act and State Securities Laws. The Company
will prepare and file with the SEC preliminary proxy materials under the
Securities Exchange Act relating to the Special Meeting. The Company will
use its reasonable best efforts to respond to the comments of the SEC
thereon and will make any further filings (including amendments and
supplements) in connection therewith that may be necessary, proper, or
advisable. The Buyer will provide the Company, with whatever information
and assistance in connection with the foregoing filings that the Company
reasonably may request. All filings with the SEC and all mailings to the
Company Stockholders prepared by Company in connection with the Merger,
including the proxy statement, shall be subject to the prior review and
comment of the Buyer.
(ii) Stockholders Meeting. Company shall take all action in
accordance with the United States federal securities laws, the Delaware
General Corporate Law and the Company's Certificate of Incorporation and
By-laws necessary to duly call, give notice of, convene and hold a special
meeting of the Company Stockholders (the "Special Meeting") to be held on
the earliest practicable date determined in consultation with Buyer to
consider and vote upon approval of this Agreement. Company shall, except as
provided in this Section 5(c)(ii), through the Board of Directors of
Company, recommend to the Company Stockholders approval of this Agreement
and include such recommendation in the Definitive Proxy Statement, and,
except as expressly permitted by this Agreement, shall not withdraw, amend
or modify in a manner adverse to Buyer its recommendation. However, the
Board of Directors of Company shall be permitted to (i) not recommend to
the Company Stockholders that they approve the Agreement or (ii) withdraw,
modify or change the recommendation of Company's Board in a manner adverse
to Buyer, and, in such event, not solicit votes in favor of such approval,
if the Board of Directors of Company believes in good faith, after
consultation with outside legal counsel, that the failure to so withhold,
withdraw or modify its recommendation would reasonably be expected to cause
a failure to comply with its fiduciary duties under applicable laws. Unless
and until this Agreement is terminated, Company shall ensure that the
Special Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited in connection with the Special Meeting are solicited,
in compliance in all material respects with all applicable laws.
(iii) Buyer-owned Shares. Buyer shall cause the holders of Buyer-owned
Shares to agree to vote all of their respective Buyer-owned Shares in favor
of the Merger at the Special Meeting, and shall obtain the agreement of
such holders of Buyer-owned Shares not to exercise any appraisal rights
under the Delaware General Corporation Law.
(iv) Intentionally omitted.
(d) Fairness Opinion. Buyer and Transitory Subsidiary acknowledge that the
Fairness Opinion has been rendered for the benefit of the Special Committee and
Board of Directors of the Company and may not be relied upon by Buyer,
Transitory Subsidiary or any of their Affiliates.
(e) Financing. The Buyer and the Transitory Subsidiary (and their
Affiliates, as applicable) will enter into definitive agreements (the
"Definitive Financing Agreements") as
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soon as practicable on terms and conditions substantially in accordance with the
Financing Commitments attached hereto as Exhibit J, or with replacement or
alternative financing commitments reasonably acceptable to the Company, but in
any event no later than 50 calendar days from the date hereof. The Buyer will
furnish correct and complete copies of the Definitive Financing Agreements to
the Company. In the event any or all of the Facilities become unavailable for
any reason or alternative financing sources, reasonably acceptable to Company,
become available, the Buyer and the Transitory Subsidiary will obtain
replacement financing on substantially equivalent terms and conditions from
alternative sources, but in any event no later than 50 calendar days from the
date hereof. The Company covenants that it shall (and shall cause its
Subsidiaries to) cooperate and promptly after the Buyer's request take all
actions reasonably necessary or appropriate to assist the Buyer in entering into
the Definitive Financing Agreements no later than 50 calendar days from the date
hereof. Any provision of this Agreement to the contrary notwithstanding, the
Company will not have any obligation to mail the Definitive Proxy Statement to
the Company Stockholders until the Buyer has delivered fully-executed copies of
the Definitive Financing Agreements to the Company.
(f) Operation of Business. During the period from the date of this
Agreement and continuing until the Closing Date or the earlier termination of
this Agreement, the Company will not (and will not cause or permit any of its
Subsidiaries to), except as expressly contemplated or permitted by this
Agreement or to the extent Buyer shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed, engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. For the avoidance of doubt, in the Ordinary Course of Business,
Company will use commercially reasonable efforts to maximize available cash
balances and working capital levels. Without limiting the generality of the
foregoing, except as expressly contemplated or permitted by this Agreement or to
the extent Buyer shall otherwise consent in writing:
(i) none of the Company and its Subsidiaries will authorize or
effect any change in its charter or bylaws, or except as contemplated in
(S)3(u), in the Rights Agreement (including as such a change any redemption
of the rights thereunder);
(ii) none of the Company and its Subsidiaries will grant any options,
warrants, or other rights to purchase or obtain any of its capital stock or
other securities or issue, sell, or otherwise dispose of any of its capital
stock or other securities (except upon the conversion or exercise of
options, warrants, and other rights currently outstanding and disclosed on
Exhibit F);
(iii) none of the Company and its Subsidiaries will declare, set
aside, or pay any dividend or distribution with respect to its capital
stock (whether in cash or in kind), or redeem, repurchase, or otherwise
acquire any of its capital stock (other than acquisitions in connection
with the TAB Products Co. Tax Deferred Savings Plan in the Ordinary Course
of Business);
(iv) except as set forth on (S)5(f)(iv), none of the Company and its
Subsidiaries will issue any note, bond, or other debt security or create,
incur, assume, or guarantee any indebtedness for borrowed money or other
liabilities or capitalized lease obligation;
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(v) none of the Company and its Subsidiaries will: (A) impose any
Lien upon any of its assets or (B) sell, lease, transfer or dispose of any
of its assets outside the Ordinary Course of Business, except as set forth
on (S)5(f)(v) of the Disclosure Schedules;
(vi) except as set forth on (S)5(f)(vi), none of the Company and its
Subsidiaries will make any capital investment in, make any loan to, or
acquire the securities or assets of any other Person;
(vii) except as set forth on (S)5(f)(vii) of the Disclosure Schedule,
none of the Company and its Subsidiaries will alter or modify in any
material respect, any of its dealer agreements, sales commission
structures, agreements with channel partners, territorial arrangements with
dealers or others or product offerings;
(viii) except as set forth on (S)5(f)(viii) of the Disclosure
Schedule, none of the Company and its Subsidiaries will enter into any
employment or consulting agreement that provides for aggregate annual
compensation in excess of $100,000 or any collective bargaining agreement,
or make any material change in employment terms outside of the Ordinary
Course of Business, or will grant, enter into, amend, modify or terminate
any agreements or arrangements for any severance or golden parachute
payments, for any of its directors, officers, and employees.
(ix) other than in connection with the replacement of a material
piece or pieces of equipment necessary to maintain the operation of the
Company's or any of its Subsidiaries' business as a result of the material
damage or destruction of such equipment, none of the Company and its
Subsidiaries will make any capital expenditures in any fiscal quarter that
would be reasonably likely to cause Company to exceed the capital
expenditure budget for such fiscal quarter set forth in the Capital
Expenditure Budget by more than $100,000 in the aggregate, provided,
however, that the total amount of capital expenditures in excess of the
Capital Expenditure Budget for fiscal 2003 shall not exceed $100,000;
(x) none of the Company and its Subsidiaries will cause any
insurance coverage to lapse or terminate unless the coverage is replaced by
substantially similar insurance coverage;
(xi) none of the Company and its Subsidiaries will change or modify
its accounting principles or practices or change or modify its Tax-related
principles or practices other than actions in the Ordinary Course of
Business and as advised by Company's regular independent accountants;
(xii) none of the Company and its Subsidiaries will settle or
compromise any pending or threatened litigation or other proceedings
involving money damages in excess of $25,000, individually or $100,000 in
the aggregate, except for claims asserted by Company or its Subsidiaries;
(xiii) none of the Company and its Subsidiaries will take (or permit
to be taken) any action that would violate or result in a breach of (S)3
hereof in any material respect; and,
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(xiv) none of the Company and its Subsidiaries will commit to any of
the foregoing.
(g) Access. The Company will (and will cause each of its Subsidiaries to)
permit representatives of the Buyer (including, without limitation,
representatives of the institutions providing financing to the Buyer), to have
reasonable access upon reasonable prior notice to Company and during normal
business hours to all premises, properties, executive officers, employees,
dealers, books, records (including tax records), contracts, and documents of or
pertaining to each of the Company and its Subsidiaries; provided, however, that
the Company may restrict the foregoing access to the extent that (i) any law or
governmental order requires Company or its Subsidiaries to restrict or prohibit
access to any such properties or information, (ii) the information is subject to
confidentiality obligations to a third party or (iii) the information is subject
to the attorney-client privilege. Without limiting the generality of the
foregoing, the Company shall, reasonably promptly after the execution of this
Agreement, arrange for meetings of Buyer representatives with each of: (A)
Messrs. Perez, Beattie, Xxxxx and Xxxxxxxx; (B) the Company's dealers; and (C)
the Company's branch employees, sales executives and managers; provided,
however, that with respect to the meetings referred to in clauses (B) and (C),
Buyer shall consult with Xx. Xxxx Xxxxxxxx in advance of the holding of such
meetings and, at the Company's election, a representative of the Company shall
be present at such meetings. Each of the Buyer and the Transitory Subsidiary
will, and will cause its representatives, counsel and agents to, treat and hold
as confidential any information it receives from any of the Company and its
Subsidiaries in the course of the reviews contemplated by this (S)5(g), will not
use any of such information except in connection with this Agreement, and such
information shall otherwise be subject to the provisions of the confidentiality
letter, dated February 14, 2002, between Company and Xxxxxxxx Sorter Co., Inc.
(the "Confidentiality Agreement"), which Confidentiality Agreement shall
continue in full force and effect after the date hereof in accordance with its
terms.
(h) Notice of Developments. Each Party will give prompt written notice to
the others of (i) any material adverse development causing any of its own
representations and warranties in (S)3 and (S)4 above to be untrue or inaccurate
at any time from the date hereof until the Closing Date, and (ii) the failure of
such Party to comply with or satisfy in any material respect any consent,
condition or agreement to be complied with or satisfied by it hereunder. No
disclosure by any Party pursuant to this (S)5(h), however, shall be deemed to
amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(i) No Solicitation. Company agrees that, during the term of this
Agreement, it shall not, and shall not authorize and will use best efforts not
to permit any of its Subsidiaries or any of its or its Subsidiaries' directors,
officers, employees, agents or representatives, directly or indirectly, to
solicit, initiate, encourage or facilitate, or furnish or disclose nonpublic
information in furtherance of, any inquiries with respect to or the making of
any Acquisition Proposal, or negotiate, explore or otherwise engage in
discussions with any person (other than Buyer or its respective directors,
officers, employees, agents and representatives) with respect to any Acquisition
Proposal or enter into any agreement, arrangement or understanding requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided that, at any time prior to the approval
of this Agreement by the
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Company Stockholders, Company may (i) furnish information to, and negotiate or
otherwise engage in discussions with, any person that delivers a written
Acquisition Proposal, or (ii) recommend to the Company Stockholders, an
Acquisition Proposal that was not solicited or encouraged, except to the extent
explicitly permitted by this (S)5(i), after the date of this Agreement if and so
long as the Board of Directors of Company believes in good faith as determined
by a majority vote, after consultation with its outside legal counsel, that
failing to take such action would reasonably be expected to constitute a breach
of its fiduciary duties under applicable laws and believes in good faith, after
consulting with its financial advisors and Company's outside legal counsel, that
such proposal is a Superior Acquisition Proposal; provided, further, that, prior
to furnishing any information to such person, Company shall enter into a
confidentiality agreement that is no less restrictive, in any material respect,
than the Confidentiality Agreement. Company will immediately cease all existing
activities, discussions and negotiations with any persons conducted prior to the
date of this Agreement with respect to any Acquisition Proposal and request the
return of all confidential information regarding Company provided to any such
persons prior to the date of this Agreement pursuant to the terms of any
confidentiality agreements or otherwise. In the event that, prior to the
approval of this Agreement by the Company Stockholders, the Board of Directors
of Company receives a Superior Acquisition Proposal that was not solicited or
encouraged, except to the extent permitted by this (S)5(i), and the Board of
Directors of Company believes in good faith based upon the advice of its outside
legal counsel that failure to take such action would reasonably be expected to
constitute a breach of the fiduciary duties of the Board of Directors of
Company, the Board of Directors of Company may (subject to this (S)5(i) and
(S)5(c)(ii)) withdraw, modify or change, in a manner adverse to Buyer, the
Company's recommendation of the Agreement and/or comply with Rule 14e-2 under
the Exchange Act with respect to such Superior Acquisition Proposal, provided
that Company gives Buyer three days' prior written notice of its intention to do
so (provided that the foregoing shall in no way limit or otherwise affect any
party's right to terminate this Agreement pursuant to (S)7 hereof).
Simultaneously with any termination of this Agreement by the Company pursuant to
(S)7(a)(vi), Company shall pay Buyer the Break-up Fee contemplated by (S)7(b)
hereof. From and after the execution of this Agreement, Company shall promptly
(but in any event within 48 hours) advise Buyer in writing of the receipt,
directly or indirectly, of any inquiries or proposals or the participation by or
on behalf of Company in any discussions or negotiations, relating to an
Acquisition Proposal (including, in each case, the specific terms and status
thereof and the identity of the other person or persons involved) and promptly
furnish to Buyer a copy of any such written proposal in addition to any
information provided to or by any third party relating thereto. The Company will
keep Buyer informed on a current basis of the status of such discussions and
negotiations. In addition, Company shall promptly advise Buyer, in writing, if
the Board of Directors of Company shall make any determination as to any
Acquisition Proposal as contemplated by the proviso to the first sentence of
this (S)5(i).
(j) Indemnification and Insurance.
(i) For six years after the Effective Time, the Surviving Corporation
shall not, and Buyer shall cause the Surviving Corporation not to, (A)
amend or otherwise modify in a manner adverse to the directors and
officers, and the Buyer and the Surviving Corporation shall cause to remain
in full force and effect, Article VIII of the Bylaws of the Surviving
Corporation in the form attached hereto as Exhibit C, with respect to the
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indemnification of, and advancement of expenses to, past and present
directors and officers of the Company and its Subsidiaries and (B) amend or
otherwise modify in a manner adverse to the directors, officers or
employees party thereto any indemnification agreements in effect as of the
date hereof between the Company and any of its directors, officers and
employees.
(ii) For six years after the Effective Time, the Surviving
Corporation shall, and Buyer shall cause the Surviving Corporation to,
maintain in effect the Company's current directors' and officers' liability
insurance or a tail policy covering acts or omissions occurring at or prior
to the Effective Time with respect to those persons who are currently
covered by the Company's directors' and officers' liability insurance
policy on terms with respect to such coverage and amount substantially
similar to those of such policy in effect on the date hereof; provided that
the Surviving Corporation may substitute therefor policies containing terms
with respect to coverage and amount no less favorable to such directors or
officers; provided, further, that in no event shall the Surviving
Corporation be required to pay aggregate annual premiums for insurance
under this (S)5(j) in excess of 200% of the aggregate premiums paid by the
Company in fiscal 2002 for such purpose; provided, further, that if the
annual premiums of such insurance coverage exceed such amount, the
Surviving Corporation shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount. Buyer
agrees, and will cause the Surviving Corporation, not to take any action
that would have the effect of limiting the aggregate amount of insurance
coverage required to be maintained for the individuals referred to in this
(S)5(j).
(iii) The provisions of this (S)5(j) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and are in addition to, and not in
substitution for, any other rights to indemnification or contribution that
any such individuals may have by contract or otherwise. The obligations of
the Surviving Corporation under this (S)5(j) shall not be terminated or
modified in such a manner as to adversely affect any indemnitees to whom
this (S)5(j) applies without the consent of such affected indemnitee.
(iv) In the event that after the Effective Time the Surviving
Corporation (A) consolidates with or merges into any other Person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger or (B) transfers all or substantially all of its
assets to any Person, then, and in each such case, proper provision shall
be made so that any successor or assign of the Surviving Corporation shall
assume the obligations set forth in this (S)5(j).
(k) Employment Matters.
(i) For not less than one year following the Effective Time, the
Surviving Corporation shall, and Buyer shall cause the Surviving
Corporation to, maintain and provide health and welfare benefits, such as
medical, dental and hospitalization insurance, disability benefits and life
insurance, and a 401(k) plan for employees and retired employees of the
Company and its Subsidiaries that, in the aggregate, are reasonably
comparable to the health and welfare benefits and 401(k) plan (other than
any
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matching provisions) generally available to employees and retired employees
of the Company as of the date hereof. For not less than one year following
the Effective Time, employees of the Company or any Subsidiary shall
receive full credit for purposes of eligibility to participate and vesting
(but not for benefit accruals) under any employee benefit plan or
arrangement established or maintained by the Surviving Corporation or any
of its Subsidiaries for service accrued or deemed accrued prior to the
Effective Time with the Company or any Subsidiary; provided, however, that
such crediting of service shall not operate to duplicate any benefit or the
funding of such benefit. In addition, for not less than one year following
the Effective Time, the Surviving Corporation shall waive, or cause to be
waived, any limitations on benefits relating to any pre-existing conditions
to the same extent such limitations are waived under any comparable plan of
Buyer or its Affiliates and recognize, for purposes of annual deductible
and out-of-pocket limits under its medical and dental plans, deductible and
out-of-pocket expenses paid by employees of the Company and its
Subsidiaries in the calendar year in which the Effective Time occurs.
(ii) The Surviving Corporation shall, and Buyer shall cause the
Surviving Corporation to, comply with the terms of any employment agreement
(including, without limitation, with respect to any payments due upon
termination of any such agreement), severance agreement, termination
agreement, change of control agreement or "golden parachute" agreement to
which the Company or any of its Subsidiaries is a party on the date hereof.
(l) Guaranties. Simultaneously with the execution of this Agreement, the
Buyer shall provide to the Company unconditional guaranties from each of MS TP
Limited Partnership and XX Xxxxxx Limited Partnership, of the Buyer's and the
Transitory Subsidiary's obligations under this Agreement in the form attached
hereto as Exhibit I.
(m) Proxy Solicitations. During the term of this Agreement and for a
period of six months following any termination of this Agreement pursuant to
(S)7(a)(iv) Buyer and Transitory Subsidiary shall not, and Buyer and Transitory
Subsidiary shall cause its Affiliates not to, engage in any "solicitation" of
"proxies" (as such terms are used in the proxy rules promulgated under the
Securities Exchange Act) or otherwise engage in any proxy contest or otherwise
seek or propose to influence or control the Board of Directors, management or
policies of Company and its Subsidiaries; provided, however, that during such
six-month period following any such termination of this Agreement pursuant to
Section 7(a)(iv), Buyer and Transitory Subsidiary and their Affiliates may
engage in any such solicitation of proxies or other proxy contest for the
purpose of challenging or competing with any Acquisition Proposal (other than
the Merger). Unless otherwise required by any court of competent jurisdiction,
as long as this Agreement is in effect, Company agrees not to convene its annual
meeting of stockholders.
(n) Solvency Opinion. At the Buyer's request, the Company shall (and shall
cause its Subsidiaries to) cooperate and take all actions reasonably necessary
and appropriate to assist the Buyer in obtaining, on or prior to the Closing
Date, a solvency opinion with respect to the Surviving Corporation.
(o) Intentionally omitted.
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6. Conditions To Obligation To Close.
(a) Conditions to Obligation of the Buyer and the Transitory Subsidiary.
The obligation of each of the Buyer and the Transitory Subsidiary to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the Requisite
Stockholder Approval, and the number of Dissenting Shares excluding any
Buyer-owned Shares that are also Dissenting Shares, shall not exceed ten
percent (10%) of the number of outstanding Company Shares;
(ii) the Company and its Subsidiaries shall have procured all of the
third party consents specified in (S)5(b) above;
(iii) the representations and warranties set forth in (S)3 above
shall be true and correct in all material respects at and as of the Closing
Date, except for those representations and warranties that relate to a
particular date, which representations and warranties shall be true and
correct as of such date;
(iv) the Company shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(v) no Material Adverse Effect shall have occurred from the date of
this Agreement to the Closing Date;
(vi) as of the Closing Date, the Company and its Subsidiaries shall
have cash accessible in the United States and Canada in the amount of
$8 million;
(vii) as of the Closing Date, trade accounts payable days of the
Company and its Subsidiaries (computed as total trade accounts payable at
Closing divided by the latest 12 months' cost of revenues multiplied by
365) shall not exceed 60;
(viii) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other governmental authority or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
(ix) the Company shall have delivered to the Buyer and the
Transitory Subsidiary a certificate to the effect that each of the
conditions specified above in (S)6(a)(i)-(viii) is satisfied in all
respects;
(x) Intentionally omitted.
(xi) the Buyer and the Transitory Subsidiary shall have received
from counsel to the Company an opinion in form and substance as set forth in
Exhibit G attached hereto, addressed to the Buyer and the Transitory Subsidiary,
and dated as of the Closing Date;
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(xii) the Buyer and the Transitory Subsidiary shall have received the
resignations, effective as of the Effective Time, of each director of the
Company and its Subsidiaries and also of each officer of the Company and
its Subsidiaries whom the Buyer shall have specified in writing at least
five business days prior to the Closing, provided that notwithstanding his
or her resignation, each resigning officer shall be paid the amount due
under any employment or change of control agreement that would be paid upon
an involuntary termination immediately following the Closing;
(xiii) None of the following shall have occurred and be continuing (i)
any general suspension of trading in securities on any national securities
exchange or in the over-the-counter market or material adverse decline by
at least 25% over any five consecutive trading days in the value of the Dow
Xxxxx Industrial Average, (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States
(whether or not mandatory) or any material disruption in commercial banking
services or any limit on the extension of credit generally by banks or
other financial institutions, or (iii) the commencement of a war by the
United States, other than the current "war on terrorism", in each case,
where the occurrence of each such event has a material adverse effect on
the Buyer's ability to draw down its financing; and
(xiv) the Company and its Subsidiaries shall not have outstanding,
due or payable more than a total of $900,000 in fees, costs and expenses
from services rendered by or on behalf of any of its brokers, accountants,
investment bankers, attorneys or other representatives retained or used by
the Company and its Subsidiaries in connection with the negotiation of this
Agreement and the consummation of the transaction contemplated hereby.
The Buyer and the Transitory Subsidiary may waive any condition specified
in this (S)6(a) if they execute a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Company. The obligation of the Company
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) Intentionally omitted.
(ii) Buyer and the Transitory Subsidiary (and their Affiliates, as
applicable) shall have entered into the Definitive Financing Agreements and
obtained all of the financing they will require in order to consummate the
Merger and fund the working capital needs of the Surviving Corporation and
its Subsidiaries after the Closing on terms and conditions substantially in
accordance with the Financing Commitments;
(iii) the representations and warranties set forth in (S)4 above
shall be true and correct in all material respects at and as of the Closing
Date, except for those representations and warranties that relate to a
particular date, which representations and warranties shall be true and
correct as of such date;
(iv) each of the Buyer and the Transitory Subsidiary shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;
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(v) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other governmental authority or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
(vi) each of the Buyer and the Transitory Subsidiary shall have
delivered to the Company a certificate to the effect that each of the
conditions specified above in (S)6(b)(i)-(v) is satisfied in all respects;
(vii) this Agreement and the Merger shall have received the Requisite
Stockholder Approval; and
(viii) the Company shall have received from counsel to the Buyer and
the Transitory Subsidiary an opinion in form and substance as set forth in
Exhibit H attached hereto, addressed to the Company, and dated as of the
Closing Date.
The Company may waive any condition specified in this (S)6(b) if it
executes a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Any of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) either the Buyer or the Company may terminate this Agreement by
giving written notice to the other at any time prior to the Effective Time,
if the Effective Time shall not have occurred on or before January 15, 2003
(the "Termination Date"), provided, however, that the right to terminate
this Agreement under this (S)7(a)(ii) shall not be available to any Party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, or primarily contributed to, the failure of the
Effective Time to occur on or before the Termination Date;
(iii) Buyer may terminate this Agreement, if there has been any
inaccuracy in or breach of any of the Company's representations or
warranties, or the Company shall have breached or failed to perform any of
its covenants or other agreements contained in this Agreement, in each case
such that the conditions set forth in (S)6(a) are not capable of being
satisfied on or before the Termination Date; provided, however, that before
Buyer may terminate this Agreement under this (S)7(a)(iii), it shall
deliver written notice to the Company specifying such breach in reasonable
detail and shall give the Company a period of 30 days following receipt of
such notice in which to cure such breach, regardless of whether such 30-day
period extends beyond the Termination Date;
(iv) Company may terminate this Agreement, if (A) there has been any
inaccuracy in or breach of any of Buyer's or Transitory Subsidiary's
representations or
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warranties, (B) Buyer or Transitory Subsidiary shall have breached or
failed to perform any of its covenants or other agreements contained in
this Agreement, in each case such that the conditions set forth in (S)6(b)
are not capable of being satisfied on or before the Termination Date, or
(C) at any time after the 50-day period referenced in (S)5(e), any of the
Definitive Financing Agreements is terminated or any of the financing
available thereunder is otherwise withdrawn; provided, however, that before
the Company may terminate this Agreement under this (S)7(a)(iv), it shall
deliver written notice to Buyer specifying such breach in reasonable detail
and shall give Buyer a period of 30 days following receipt of such notice
in which to cure such breach, regardless of whether such 30-day period
extends beyond the Termination Date; and provided further, however, that
notwithstanding the foregoing, no such 30-day cure period shall apply to,
and the Company may immediately terminate this Agreement upon, any
misrepresentation or omission in the representation set forth in (S)4(b),
the breach of the covenants contained in (S)5(e) or any such termination or
withdrawal described in clause (C) of this (S)7(a)(iv).
(v) either Buyer or Company may terminate this Agreement by giving
written notice to the other at any time after the Special Meeting in the
event this Agreement and the Merger fail to receive the Requisite
Stockholder Approval;
(vi) the Company may terminate this Agreement by giving written
notice to the Buyer prior to the tabulation of votes from the Special
Meeting if the Company's Board of Directors shall have withdrawn or
modified its recommendation of the Merger or this Agreement in accordance
with (S)5(c)(ii) or (S)5(i), or approved, recommended or entered into, a
Superior Acquisition Proposal; or
(vii) Buyer may terminate this Agreement by giving written notice to
the Company if (A) prior to the Special Meeting, the Company's Board of
Directors shall have withdrawn or modified in any manner adverse to Buyer
its recommendation of the Merger or this Agreement or shall have approved,
recommended or entered into, a Superior Acquisition Proposal, or (B) the
Company shall have entered into a definitive agreement with respect to any
Acquisition Proposal.
(b) Effect of Termination.
(i) If the Parties terminate this Agreement pursuant to (S)7(a)
above, all rights and obligations of the Parties hereunder shall terminate
without any liability of any Party to any other Party; provided, however,
that the confidentiality provisions contained in (S)5(g) above and the
provisions of this (S)7(b) and (S)8 shall survive any such termination.
(ii) If the Agreement is terminated pursuant to (S)7(a)(vi) or
(S)7(a)(vii) above, or if the Buyer terminates this Agreement pursuant to
(S)7(a)(iii) and, within six months from the date of such termination, the
Company shall enter into a definitive agreement with respect to an
Acquisition Proposal, or if this Agreement is terminated pursuant to
(S)7(a)(v) and, prior to the Special Meeting, an Acquisition Proposal shall
have been publicly announced, then the Company shall pay the Buyer, as a
termination fee, a sum equal to $1,500,000 (the "Break-up Fee"); provided,
however, that, notwithstanding the
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foregoing, such amount shall not be payable if Buyer or Transitory
Subsidiary is in material breach of this Agreement at the time of such
termination.
(iii) If Company shall terminate this Agreement pursuant to
(S)7(a)(iv) on account of any misrepresentation or omission in the
representation of the Buyer and the Transitory Subsidiary set forth in
(S)4(b), the breach of the covenants of the Buyer and the Transitory
Subsidiary contained in (S)5(e), the failure of the conditions set forth in
(S)6(b)(ii) to be satisfied (while the condition set forth in (S)6(a)(xiii)
is satisfied), or a termination or withdrawal described in (S)7(a)(iv)(C),
then Buyer shall pay to Company, as a termination fee, a sum equal to
$1,500,000 (the "Buyer Break-up Fee"); provided, however, that,
notwithstanding the foregoing, such Buyer Break-up Fee shall not be payable
if the Company is in material breach of this Agreement at the time of such
termination.
(iv) If Buyer shall terminate this Agreement pursuant to
(S)7(a)(iii), Company shall promptly reimburse Buyer for the amount of all
documented out-of-pocket costs, fees and expenses reasonably incurred by
Buyer or Transitory Subsidiary in connection with this Agreement and the
Merger; provided, that, the Company's aggregate reimbursements pursuant to
this (S)7(b)(iv) shall in no event exceed $500,000. If Company shall
terminate this Agreement pursuant to (S)7(a)(iv), unless a Buyer Break-up
Fee is then due, Buyer shall promptly reimburse Company for the amount of
all documented out-of-pocket costs, fees and expenses reasonably incurred
by Company in connection with this Agreement and the Merger; provided,
that, the Buyer's aggregate reimbursements pursuant to this (S)7(b)(iv)
shall in no event exceed $500,000.
(v) The Parties agree that the actual damages accruing from a
termination of the Agreement pursuant to the subsections of (S)7(a) with
respect to which the provisions of (S)7(b) provide for the payment of
damages are incapable of precise estimation and would be difficult to
prove, that the payment to the Buyer of the Break-up Fee and the payment of
the Buyer Break-up Fee to Company shall constitute liquidated damages, that
the rights to the Break-up Fee or the Buyer Break-up Fee, stipulated in
this (S)7(b) bear a reasonable relationship to the potential injury likely
to be sustained in the event of such a termination and that such stipulated
rights to liquidated damages are intended by the Parties to provide just
compensation in the event of such a termination and are not intended to
compel performance or to constitute a penalty for nonperformance. Other
than as set forth herein, payment of the Break-up Fee by Company shall
terminate all of the Buyer's rights and remedies at law or in equity
against Company in respect of a termination of this Agreement pursuant to
the subsections of (S)7(a) with respect to which the provisions of (S)7(b)
provide for the payment of damages. Other than as set forth herein, payment
of the Buyer Break-up Fee by the Buyer shall terminate all of the Company's
rights and remedies at law or in equity against the Buyer or the Transitory
Subsidiary or their Affiliates in respect of a termination of this
Agreement pursuant to the subsections of (S)7(a) with respect to which the
provisions of (S)7(b) provide for the payment of damages. Except as
otherwise provided in (S)5(i), the Break-up Fee shall be paid by Company to
Buyer in immediately available funds within three days after the date of
the event giving rise to the obligation to make such payment occurred and
interest at the prime rate, published in Midwest Edition of The Wall Street
Journal, shall accrue on the Break-up Fee thereafter. The Buyer Break-up
Fee shall be paid by Buyer to
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Company in immediately available funds within three days after the date of
the event giving rise to the obligation to make such payment occurred and
interest at the prime rate, published in Midwest Edition of The Wall Street
Journal, shall accrue on the Buyer Break-up Fee thereafter.
8. Miscellaneous.
(a) Survival. None of the representations, warranties, and covenants of
the Parties (other than the provisions in (S)2 above concerning payment of the
Merger Consideration and the provisions in (S)5(j) above concerning insurance
and indemnification and (S)5(k) concerning employment matters) will survive the
Effective Time.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Parties;
provided, however, that any Party may make, after consultation with the other
Parties to give them a reasonable opportunity to comment on the disclosure, any
public disclosure it believes in good faith after consultation with counsel is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities.
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that (i) the provisions in
(S)2 above concerning payment of the Merger Consideration are intended for the
benefit of the Company Stockholders and (ii) the provisions in (S)5(j) above
concerning insurance and indemnification and (S)5(k)(ii) concerning employment
matters are intended for the benefit of the individuals specified therein and
their respective legal representatives.
(d) Entire Agreement. This Agreement (including the documents referred to
herein and the Exhibits and Schedules attached hereto) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof, other than the Confidentiality
Agreement.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company: With a Required Copy to (which shall not
constitute notice):
Tab Products Co.
000 Xxxxxxxx Xxxxxxx Barack Xxxxxxxxxx Xxxxxxxxxx
Suite 195 Xxxxxxx & Xxxxxxxxx LLC
Xxxxxx Xxxxx, XX 00000 000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx: Xx. Xxxxx X. Xxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000 Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Buyer or the Transitory Subsidiary: With a Required Copy to (which shall not
constitute notice):
Workstream Inc.
608 Mercantile Center Xxxxxx Xxxxxx & Co., Inc.
000 Xxxxxx Xxxxxx 00xx Xxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000 000 Xxxx Xxxxxx
Xxxxxxxxx: Xx. Xxxxxxxx Xxxxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000 Attention: X. Xxxx Xxxxxx, III, Esq.
Telecopy: (000) 000-0000
And
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
And
Xxxxxxx, Xxxxxxxx & Klekamp, PLL
1400 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other
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communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(j) Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of their respective boards of directors; provided, however, that
any amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Delaware General Corporation Law. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Except as otherwise provided in this Agreement, each of the
Parties will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
(m) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(Remainder of page intentionally blank; signature page follows)
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date and year first above written.
T ACQUISITION L.P.
By:______________________________
Title:___________________________
T ACQUISITION CO.
By:______________________________
Title:___________________________
TAB PRODUCTS CO.
By:______________________________
Title:___________________________
Exhibit A
Form of Certificate of Merger
CERTIFICATE OF MERGER
OF
T ACQUISITION CO.
INTO
TAB PRODUCTS CO.
* * * * * *
The undersigned corporation organized and existing under and by virtue
of the General Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
T ACQUISITION CO. Delaware
TAB PRODUCTS CO. Delaware
SECOND: That a Merger Agreement between the parties to the merger has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 251 of
the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is TAB
PRODUCTS CO.
FOURTH: The Certificate of Incorporation of TAB PRODUCTS CO. shall be
amended pursuant to the Merger Agreement to read in its entirety as set forth in
Exhibit A attached hereto and, as amended, shall be the Certificate of
Incorporation of the surviving corporation.
FIFTH: That the executed Merger Agreement is on file at the office of
the surviving corporation at 26th Floor East, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
2
SIXTH: That a copy of the Merger Agreement will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
TAB PRODUCTS CO.
Dated: ______________________
By: _____________________________
Name:
Title:
Exhibit B
Form of Certificate of Incorporation
CERTIFICATE OF INCORPORATION
OF
TAB PRODUCTS CO.
FIRST: The name of the corporation is TAB PRODUCTS CO.
SECOND: The registered office of the Corporation is to be located at 0000
Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxx xx Xxxxxxxx
00000. The name of its registered agent is The Corporation Trust Company, whose
address is Corporation Tower Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law.
FOURTH. The total number of shares of stock the Corporation shall have
authority to issue is (i) ________ shares of Common Stock, $.01 par value per
share ("Common Stock"), and (ii) ________ shares of Preferred Stock, $.01 par
value per share ("Preferred Stock").
The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions in respect of
each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of Common Stock are entitled to one vote for each
share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
3. Dividends. Dividends shall be declared and paid on the Common Stock from
funds lawfully available therefore as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, all of the assets of the Corporation available
for distribution to its stockholders shall be distributed ratably among the
holders of the Preferred Stock, if any, and Common Stock, subject to any
preferential rights of any then outstanding Preferred Stock.
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B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed in this Section B of
Article FOURTH and/or in the resolution or resolutions providing for the issue
of such series adopted by the Board of Directors of the Corporation as
hereinafter provided. Any shares of Preferred Stock which may be redeemed,
purchased or acquired by the Corporation may be reissued except as otherwise
provided by law. Different series of Preferred Stock shall not be construed to
constitute different classes of shares for the purposes of voting by classes
unless expressly provided.
Authority is hereby granted to the Board of Directors from time to time to
issue the Preferred Stock in one or more series, and in connection with the
creation of any such series, by resolution or resolutions providing for the
issuance of the shares thereof, to determine and fix such voting powers, full or
limited, or no voting powers, and such designations, preferences, powers and
relative participating, optional or other special rights and qualifications,
limitations, or restrictions thereof, including without limitation dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be stated and expressed in such votes, all to the full extent now or
hereafter permitted by the General Corporation Law. Without limiting the
generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as provided in this Article FOURTH, no vote of the
holders of the Preferred Stock or Common Stock shall be prerequisite to the
issuance of any shares of any series of Preferred Stock authorized by and
complying with the conditions of the Certificate of Incorporation, the right to
enjoy such vote being expressly waived by all present and future holders of the
capital stock of the Corporation. The resolutions providing for issuance of any
series of Preferred Stock may provide that such resolutions may be amended by
subsequent resolutions adopted in the same manner as the preceding resolutions.
Such resolutions shall be effective upon adoption, without the necessity of any
filing, with the State Secretary of Delaware or otherwise.
FIFTH: The Board of Directors of the Corporation is authorized and
empowered from time to time in its discretion to make, alter, amend or repeal
Bylaws of the Corporation, except as such power may be restricted or limited by
the General Corporation Law.
SIXTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provision of Section 291 of the General Corporation Law, or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under Section 279 of the General Corporation Law, order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value
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of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which said application has
been made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders of the Corporation, as the case may
be, and also on the Corporation.
SEVENTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for any breach of the
director's Duty of Loyalty (as herein defined) to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. For purposes of this provision, Duty of
Loyalty means, and only means, the duty not to profit personally at the expense
of the Corporation and does not include conduct, whether deemed violation of
fiduciary duty or otherwise, that does not involve personal monetary profit.
EIGHTH: Subject to the limitations set forth herein, the Corporation
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by
law, and all rights and powers conferred herein on stockholders, directors and
officers are subject to this reserved power.
NINTH: The Corporation hereby elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware as from time to time in
effect or any successor provision thereto.
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Exhibit C
Form of Bylaws
TAB PRODUCTS CO.
BYLAWS
ARTICLE I.
OFFICES
Section 1.1 Registered Office. The registered office of TAB PRODUCTS CO.
(the "Corporation") in the State of Delaware is located at 0000 Xxxxxx Xxxxxx in
the City of Wilmington, County of New Castle.
Section 1.2 Principal Office. The principal office of the Corporation will
be in the City of Fairfield, Ohio or at such other place as the Board of
Directors may from time to time determine.
Section 1.3 Other Offices. The Corporation may also have offices at such
other places as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 2.1 Place of Meetings. All meetings of stockholders will be held at
the principal office of the Corporation, or at such other place as will be
determined by the Board of Directors and specified in the notice of the meeting.
Section 2.2 Annual Meeting. The annual meeting of stockholders will be held
at such date and time as will be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which meeting the
stockholders will elect a Board of Directors and transact such other business as
may properly be brought before the meeting of stockholders. Failure to hold the
annual meeting at the designated time shall not work a dissolution of the
Corporation nor impair the powers, rights and duties of the Corporation's
officers and Directors. If the election of Directors shall not be held on the
day designated herein for any annual meeting of the stockholders or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the stockholders as soon thereafter as is convenient.
Section 2.3 Notice of Annual Meeting. Written or printed notice of the
annual meeting, stating the place, day, and hour thereof, will be delivered
personally to each stockholder at his residence or usual place of business or
mailed to each stockholder entitled to vote at such address as appears on the
books of the Corporation, not less than ten (10) nor more than sixty (60) days
before the date of the meeting. Without limiting the manner by which notice
otherwise may be given effectively to stockholders, any notice to stockholders
given by the Corporation shall, to the extent permitted by applicable law, be
effective if given by a single written notice to
-1-
stockholders who share an address if consented to by the stockholders at that
address to whom such notice is given. Any such consent shall be revocable by a
stockholder by written notice to the Corporation. Any stockholder sharing an
address who or that fails to object in writing to the Corporation, within sixty
(60) days of having been given written notice by the Corporation of its
intention to send the single notice, shall be deemed to have consented to
receiving such single written notice. Waiver by a stockholder (or his duly
authorized attorney) in writing of notice of a stockholders' meeting, signed by
the stockholder, whether before or after the time of such meeting, shall be
equivalent to the giving of such notice. Attendance by a stockholder, whether in
person or by proxy, at a stockholders' meeting shall constitute a waiver of
notice of such meeting of which the stockholder has had no notice.
Section 2.4 Special Meeting. Special meetings of stockholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the Chief Executive Officer or the Board of Directors, and will be called by the
Chief Executive Officer or Secretary at the request in writing of the
stockholders owning a majority in interest of the outstanding shares of capital
stock of the Corporation entitled to vote at such meeting. Such request will
state the purpose(s) of the proposed meeting, and any purpose so stated will be
conclusively deemed to be a "proper" purpose.
Section 2.5 Notice of Special Meeting. Written or printed notice of a
special meeting stating the place, day, hour and purpose(s) thereof, will,
subject to the shared address notice provisions of Section 2.3, be personally
delivered to each stockholder at his residence or usual place of business or
mailed to each stockholder entitled to vote at such address as appears on the
books of the Corporation, not less than ten (10) nor more than sixty (60) days
before the date of the meeting.
Section 2.6 Adjournment. At any meeting of stockholders of the
Corporation, if less than a quorum be present, a majority of the stockholders
entitled to vote, present in person or by proxy, shall have the power to adjourn
the meeting from time to time without notice other than announcement at the
meeting until a quorum shall be present. Any business may be transacted at the
adjourned meeting which might have been transacted at the meeting originally
noticed. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 2.7 Fixing of Date for Determination of Stockholders of Record.
The Board of Directors may, by resolution, fix in advance a date as the record
date for the purpose of determining stockholders entitled to notice of, or to
vote at, any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend or the allotment of any rights, or
in order to make a determination of stockholders for any other purposes. Such
date, in any case, shall not be more than sixty (60) days and not less than ten
(10) days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, such
date shall be at the close of business on the day on which notice of the meeting
is mailed or the
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date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, and shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this section,
such determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer records
and the stated period of closing has expired.
Section 2.8 Stockholder List. At least ten (10) days before each meeting
of stockholders, a complete list of stockholders entitled to vote at each such
meeting or in any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, will be prepared by the
Secretary or the officer or agent having charge of the stock transfer ledger of
the Corporation. Such list will be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours for such
ten (10) day period either at a place within the city where the meeting is to be
held, or, if not so specified, the place where the meeting is to be held. Such
list will also be produced and kept open at the time and place of the meeting.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to vote in person or by proxy at any meeting of stockholders.
Section 2.9 Quorum. The holders of a majority of the shares of capital
stock issued and outstanding and entitled to vote, represented in person or by
proxy, will constitute a quorum at all meetings of the stockholders for the
transaction of business. The stockholders present may adjourn the meeting
despite the absence of a quorum. When a meeting is adjourned for less than
thirty (30) days in any one adjournment, it will not be necessary to give any
notice of the adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken, and at
the adjourned meeting any business may be transacted which might have been
transacted on the original date of the meeting. When a meeting is adjourned for
thirty (30) days or more, notices of the adjourned meeting will be given as in
the case of an original meeting. The vote of the holders of a majority of the
shares entitled to vote and thus represented at a meeting at which a quorum is
present shall be the act of the stockholders' meeting unless the vote of a
greater number is required by law, the Certificate of Incorporation or these
Bylaws, in which case the vote of such greater number shall be requisite to
constitute the act of the meeting. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 2.10 Proxies and Voting. Stockholders entitled to vote shall have
the number of votes specified in the Certificate of Incorporation for each share
of stock owned by them and a proportionate vote for a fractional share.
Stockholders may vote in person or by written proxy dated not more than six
months before the meeting named therein. Proxies shall be filed with the
secretary of the meeting, or of any adjournment thereof, before being voted.
Except as otherwise limited therein, proxies shall entitle the person named
therein to vote at any meeting or adjournment of such meeting but shall not be
valid after final adjournment of such meeting. A proxy with respect to stock
held in the name of two or more persons shall be valid if executed by any one of
them unless at or prior to its exercise the Corporation receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf
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of a stockholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger.
Section 2.11 Presiding Officer and Conduct of Meetings. The Chairman of
the Board of Directors shall preside at all meetings of the stockholders and
shall automatically serve as Chairman of such meetings. In the absence of the
Chairman of the Board of Directors, or if the Directors neglect or fail to elect
a Chairman, then the President of the Corporation shall preside at the meetings
of the stockholders and shall automatically be the Chairman of such meeting,
unless and until a different person is elected by a majority of the shares
entitled to vote at such meeting. The Secretary of the Corporation shall act as
Secretary at all meetings of the stockholders. In the absence or disability of
the Secretary, the Chairman of the Board of Directors, the Chief Executive
Officer, or the President shall appoint a person to act as Secretary at such
meetings.
Section 2.12 Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act, the chairman of the meeting may, or if inspectors shall not have
been appointed, the Chairman of the meeting shall, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the results, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No directors or candidate for the
office of director shall act as an inspector of an election of directors.
ARTICLE III.
BOARD OF DIRECTORS
Section 3.1 Number of Directors. The number of Directors comprising the
full Board of Directors initially is ___________ (___). The number of Directors
may be increased or decreased (provided such decrease does not shorten the term
of any incumbent Director), from time to time as determined by resolution of the
Board of Directors.
Section 3.2 Election and Term. Except as provided in Section 3.3 of this
Article III, Directors will be elected at the annual meeting of the
stockholders, and each Director will be elected to serve until the next annual
meeting or until his successor will have been elected and qualified, unless
sooner removed in accordance with these Bylaws or until the Corporation has
received a written resignation from a Director. Directors need not be
stockholders of the Corporation.
-4-
Section 3.3 Vacancies and Newly Created Directorships. Vacancies and newly
created directorships resulting from any increase in the authorized number of
Directors may be filled by a majority of the Directors, although less than a
quorum, and the Directors so elected shall hold office for the unexpired term of
their predecessor in office until the next annual meeting and until their
successors are elected and have qualified. Vacancies created by the removal of
Directors by the owners of a majority of the outstanding shares of capital stock
will be filled by the owners of the majority of the outstanding shares of
capital stock. A vacancy shall be deemed to exist by reason of the death,
resignation, or upon the failure of stockholders to elect Directors to fill the
unexpired terms of any Directors removed in accordance with the provisions of
these Bylaws.
Section 3.4 Resignation; Removal. Any Director may resign at any time by
giving written notice thereof to the Board of Directors. Any such resignation
will take effect as of its date unless some other date is specified therein, in
which event it will be effective as of that date. The acceptance of such
resignation will not be necessary to make it effective. The Board of Directors
may, by majority vote of the Directors then in office, remove a Director for
cause. The owners of a majority of the outstanding shares of capital stock may
remove any Director or the entire Board of Directors, with or without cause,
either by a vote at a special meeting or annual meeting, or by written consent.
ARTICLE IV.
MEETINGS OF THE BOARD
Section 4.1 Regular Meetings. The Board of Directors will meet each year
immediately following the annual meeting of the stockholders to appoint the
members of such committees of the Board of Directors as the Board may deem
necessary or advisable, to elect officers for the ensuing year, and to transact
such other business as may properly come before the Board of Directors at such
meeting. No notice of such meeting will be necessary to the newly elected
Directors in order legally to constitute the meeting provided a quorum will be
present. Regular meetings may be held at such other times as shall be designated
by the Board of Directors without notice to the Directors.
Section 4.2 Special Meetings. Special meetings of the Board of Directors
will be held whenever called by the Chairman of the Board, Chief Executive
Officer, Chairman of the Executive Committee or by two or more Directors. Notice
of each meeting will be given at least twenty-four (24) hours prior to the date
of the meeting either personally or by telephone or telecopy to each Director,
and will state the purpose, place, day and hour of the meeting. Waiver by a
Director in writing of notice of a Directors meeting, signed by the Director,
whether before or after the time of said meeting, shall be equivalent to the
giving of such notice. Attendance by a Director, whether in person or by proxy,
at a Directors' meeting shall constitute a waiver of notice of such meeting of
which the Director had no notice.
Section 4.3 Quorum and Voting. At all meetings of the Board of Directors
(except in the case of a meeting convened for the purpose specified in Article
III, Section 3.3 of these Bylaws) a majority of the number of the Directors will
be necessary and sufficient to constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any
-5-
meeting at which there is a quorum will be the act of the Board of Directors. If
a quorum will not be present at any such meeting of Directors, the Directors
present may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum will be present.
Section 4.4 Telephone Meetings. Subject to the provisions of applicable
law and these Bylaws regarding notice of meetings, the Directors may participate
in and hold a meeting using conference telephone or similar communications
equipment by means of which all persons participating in a meeting can hear each
other, and participation in a meeting pursuant to this Section shall constitute
presence in person at such meeting. A Director so attending will be deemed
present at the meeting for all purposes including the determination of whether a
quorum is present except when a person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
the meeting was not lawfully called or convened.
Section 4.5 Attendance Fees. Directors will not receive any stated salary,
as such, for their services, but by resolution of the Board of Directors a fixed
sum and expenses of attendance may be allowed for attendance at each regular or
special meeting of the Board; however, this provision will not preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 4.6 Interest of Directors in Contracts. Any contract or other
transaction between the Corporation and one (1) or more of its Directors, or
between the Corporation and any firm of which one or more of its Directors are
members or employees, or in which they are interested, or between the
Corporation and any corporation or association of which one or more of its
Directors are stockholders, members, directors, officers or employees, or in
which they are interested, shall be valid for all purposes, notwithstanding the
presence of such Director or Directors at the meeting of the Board of Directors
of the Corporation, which acts upon, or in reference to, such contract or
transaction, and notwithstanding their participation in such action, if the fact
of such interest shall be disclosed or known to the Board of Directors and the
Board of Directors shall, nevertheless, authorize, approve, and ratify such
contract or transaction by a vote of a majority of the Directors present, such
interested Director or Directors to be counted in determining whether a quorum
is present, but not to be counted in calculating the majority of such quorum
necessary to carry such vote. This Section shall not be construed to invalidate
any contract or other transaction which would otherwise be valid under the
common and statutory law applicable thereto.
ARTICLE V.
COMMITTEES
Section 5.1 Executive Committee. The Board of Directors by resolution may
designate one or more Directors to constitute an Executive Committee, which
committee, to the extent provided in such resolution, will have and may exercise
all of the powers and authority of the Board of Directors in the management of
the business and affairs of the Company, except where action of the Board of
Directors is required by statute. Unless expressly authorized by resolution of
the Board of Directors, no committee shall have the power or authority to (1)
amend
-6-
the Certificate of Incorporation, (2) adopt an agreement of merger or
consolidation, (3) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Company's property and assets, (4) recommend to
the stockholders a dissolution of the Company or a revocation of a dissolution,
or (5) amend the Bylaws of the Company.
Section 5.2 Other Committees. The Board of Directors may by resolution
create other committees for such terms and with such powers and duties as the
Board shall deem appropriate.
Section 5.3 Organization of Committees. The chairman of each committee of
the Board of Directors will be chosen by the members thereof. Each committee
will elect a Secretary, who will be either a member of the committee or the
secretary of the Corporation. The chairman of each committee will preside at all
meetings of such committee.
Section 5.4 Meetings. Regular meetings of each committee may be held
without the giving of notice if a day of the week, a time, and a place will have
been established by the committee for such meetings. Special meetings (and, if
the requirements of the preceding sentence have not been met, regular meetings)
will be called in the manner provided as respect to notices of special meetings
of the Board of Directors.
Section 5.5 Quorum and Manner of Acting. A majority of the members of each
committee must be present, either in person or by telephone, radio,
teleconferencing equipment, or similar means of communication, at each meeting
of such committee in order to constitute a quorum for the transaction of
business. The act of a majority of the members so present at a meeting at which
a quorum is present will be the act of such committee. The members of each
committee will act only as a committee, and will have no power or authority, as
such, by virtue of their membership on the committee.
Section 5.6 Record of Committee Action; Reports. Each committee will
maintain a record, which need not be in the form of complete minutes, of the
action taken by it at each meeting, which record will include the date, time,
and place of the meeting, the names of the members present and absent, the
action considered, and the number of votes cast for and against the adoption of
the action considered. All action by each committee will be reported to the
Board of Directors at its meeting next succeeding such action, such report to be
in sufficient detail as to enable the Board to be informed of the conduct of the
Company's business and affairs since the last meeting of the Board.
Section 5.7 Removal. Any member of any committee may be removed from such
committee, either with or without cause, at any time, by resolution adopted by a
majority of the whole Board of Directors at any meeting of the board.
Section 5.8 Vacancies. Any vacancy in any committee will be filled by the
Board of Directors in the manner prescribed by these Bylaws for the original
appointment of the members of such committee.
-7-
ARTICLE VI.
OFFICERS
Section 6.1 Appointment and Term of Office. The officers of the Company
may consist of a President, a Secretary, and a Treasurer, and there may be a
Chief Executive Officer, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers as may be
appointed by the Board. One of the Directors may also be chosen Chairman of the
Board. Each of such officers will be chosen annually by the Board of Directors
at its regular meeting immediately following the annual meeting of stockholders
and, subject to any earlier resignation or removal, will hold office until the
next annual meeting of stockholders or until his earlier death, resignation,
retirement, disqualification, or removal from office and until his successor
shall have been duly elected and qualified. Two or more offices may be held by
the same person.
Section 6.2 Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors, with or without
cause, whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal will be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent will not of itself create contract rights.
Section 6.3 Vacancies. Whenever any vacancy shall occur in any office of
any officer by death, resignation, increase in the number of officers of the
Corporation, or otherwise, the same shall be filled by vote of a majority of the
Directors for the unexpired portion of the term.
Section 6.4 Compensation. The compensation of all officers of the
Corporation shall be determined by the Board of Directors and may be altered by
the Board from time to time, except as otherwise provided by contract, and no
officer shall be prevented from receiving such compensation by reason of the
fact such officer is also a Director of the Corporation. All officers shall be
entitled to be paid or reimbursed for all costs and expenditures incurred in the
Corporation's business.
Section 6.5 Powers and Duties. The powers and duties of the officers will
be those usually pertaining to their respective offices, subject to the general
direction and supervision of the Board of Directors.
Section 6.6 Resignations. Any officer may resign at any time by giving
written notice thereof to the Board of Directors. Any such resignation will take
effect as of its date unless some other date is specified therein, in which
event it will be effective as of that date. The acceptance of such resignation
will not be necessary to make it effective.
ARTICLE VII.
SHARES OF STOCK AND THEIR TRANSFER; BOOKS
Section 7.1 Forms of Certificates. Shares of the capital stock of the
Corporation will be represented by certificates in such form, not inconsistent
with law or with the Certificate of
-8-
Incorporation of the Company, as will be approved by the Board of Directors, and
will be signed by the Chairman of the Board or President or a Vice President and
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and sealed with the seal of the Company. Such seal may be facsimile,
engraved, or printed. Where any such certificate is countersigned by a transfer
agent or by a registrar, the signature of such Chairman of the Board, President,
Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer
upon such certificate may be facsimiles, engraved, or printed. Such certificates
shall be delivered representing all shares to which stockholders are entitled.
Section 7.2 Issuance. Shares of stock with par value (both treasury and
authorized but unissued) may be issued for such consideration (not less than par
value) and to such persons as the Board of Directors may determine from time to
time. Shares of stock without par value may be issued for such consideration as
is determined from time to time by the Board of Directors. Shares may not be
issued until the full amount of the consideration, fixed as provided by law, has
been paid.
Section 7.3 Transfer of Shares. Shares of stock of the Corporation will be
transferred only on the stock books of the Corporation by the holder of record
thereof in person, or by a duly authorized attorney, upon the endorsement and
surrender of the certificate therefor.
Section 7.4 Lost, Stolen, or Destroyed Certificates. The Board of
Directors may direct the issuance of new or duplicate stock certificates in
place of lost, stolen, or destroyed certificates, upon being furnished with
evidence satisfactory to it of the loss, theft, or destruction and upon being
furnished with indemnity satisfactory to it. The Board of Directors may delegate
to any officer authority to administer the provisions of this Section.
Section 7.5 Closing of Stock Transfer Books. The Board of Directors will
have power to close the stock transfer books of the Corporation for a period not
exceeding sixty (60) days nor less than ten (10) days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when change or conversion or
exchange of capital stock will go into effect, or for a period not exceeding
sixty (60) days nor less than ten (10) days in connection with obtaining the
consent of stockholders for any purpose; or the Board may, in its discretion,
fix a date, not more than sixty (60) days nor less than ten (10) days before any
stockholders' meeting, or the date for the payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock will go into effect as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting and at any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the rights
in respect of such change, conversion, or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such stockholders as
will be stockholders of record on the date so fixed will be entitled to notice
of and to vote at such meeting and at any adjournment thereof, or to receive
payment of such dividend, or to exercise rights, or to give such consent as the
case may be, notwithstanding any transfer of any stock on the books of the
Corporation after such record date fixed as aforesaid.
-9-
Section 7.6 Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issuance, transfer, and
registration of certificates of stock. The Board of Directors may appoint one or
more transfer agents or registrars, or both, and may require all certificates of
stock to bear the signature of either or both.
Section 7.7 Examination of Books by stockholders. The original or
duplicate stock ledger of the Corporation containing the names and addresses of
the stockholders and the number of shares held by them and the other books and
records of the Corporation will, at all times during the usual hours of
business, be available for inspection at its principal office, and any
stockholder, upon compliance with the conditions set forth in and to the extent
authorized by ` 220 of the Delaware General Corporation Law, will have the right
to inspect such books and records.
ARTICLE VIII.
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
Section 8.1 Right To Indemnification. Each person who was or is made a
party or is threatened to be made party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a director
or officer, employee or agent of another corporation, or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended, (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said Law permitted the
Corporation to provide prior to such amendment) against all expenses, liability
and loss (including attorney's fees, judgment, fines, excise taxes or penalties
under the Employee Retirement Income Security Act of 1974, as amended, amounts
paid or to be paid in settlement and amounts expended in seeking indemnification
granted to such person under applicable law, this By-Law or any agreement with
the Corporation) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except
as provided in Section 2 of this Article VIII, the Corporation shall indemnify
any such person seeking indemnity in connection with an action, suit or
proceeding (or part thereof) initiated by such person only if such action, suit
or proceeding (or part thereof) was authorized by the board of directors of the
Corporation; PROVIDED, FURTHER, HOWEVER, that notwithstanding anything in these
bylaws to the contrary, the Corporation shall only be required to indemnify and
hold harmless an officer, employee or agent of the Corporation in connection
with an action, suit or proceeding (or part thereof) in which there is alleged
gross negligence on the part of such officer, employee or agent if and to the
extent such indemnity is authorized by the Board of Directors in a duly
-10-
adopted resolution. Such right shall be a contract right and shall include the
right to be paid by the Corporation expenses incurred in defending any such
proceeding in advance of its final disposition; PROVIDED, HOWEVER, that, if the
Delaware General Corporation Law then so requires, the payment of such expenses
incurred by a director or officer of the Corporation in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of such proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it should be determined ultimately that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
Section 8.2 Right Of Claimant To Bring Suit. If a claim under Section 8.1
is not paid in full by the Corporation within ninety (90) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to this Corporation) that
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that claimant has not met the applicable standard of
conduct.
Section 8.3 Indemnification of Other Persons. If authorized by the Board
of Directors, the Corporation may indemnify and advance expenses to any other
person who it has the power to indemnify under Section 145 of the Delaware
General Corporation Law to the fullest extent permitted by such statute.
Section 8.4 Nonexclusivity Of Rights. The rights conferred on any person
by Sections 8.1, 8.2 and 8.3 shall not be exclusive of any other right which
such persons may have or hereafter acquired under any statute, provisions of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 8.5 Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit
-11-
plans, providing for indemnification rights equivalent to or, if the Board of
Directors so determines, greater than, those provided for in this Article VIII.
Section 8.6 Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any such director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expenses,
liability or loss under Delaware General Corporation Law.
Section 8.7 Effect of Amendment. Any amendment, repeal or modification of
any provision of this Article VIII by the stockholders or the directors of the
Corporation shall not adversely affect any right or protection of a director or
officer of the corporation existing at the time of such amendment, repeal or
modification.
Section 8.8 Savings Clause. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, officer, employee and
agent of the Corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this Article that shall not
have been invalidated and to the full extent permitted by applicable law.
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Amendments. These Bylaws may be altered, amended or repealed
or new Bylaws may be adopted at any regular meeting of the stockholders or at
any special meeting of the stockholders at which a quorum is present or
represented, provided notice of the proposed alteration or repeal be contained
in the notice of such special meeting, by the affirmative vote of a majority of
the shares entitled to vote at such meeting and present or represented, or by a
majority vote of the Board of Directors at any regular meeting of the Board or
at any special meeting of the Board if notice of proposed alteration or repeal
be contained in the notice of such special meeting, except the Director shall
not alter, amend, or repeal any bylaw, or enact any bylaw in conflict with a
bylaw, adopted by the stockholders after the original adoption of these Bylaws.
-12-
Exhibit D
Intentionally Omitted
Exhibit E
Permitted Investments
EXHIBIT E
The cash included in the Payment Fund shall be invested by the Paying
Agent, as directed by the Buyer, provided such investments shall be limited to
direct obligations with maturities of 30 days or less from the date of purchase
of the United States of America, obligations with maturities of 30 days or less
from the date of purchase for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest, commercial paper rated A-1/P-1 by Xxxxx'x Investors Service, Inc. and
Standard & Poor's Corporation, or certificates of deposit issued by a commercial
bank incorporated under the laws of the United States or any state thereof or
the District of Columbia having at least $10,000,000,000 in assets and its
deposits insured by the Federal Deposit Insurance Corporation.
Exhibit F - Comprehensive Schedule of Options
Tab Products Co. 7/26/02
Option Cash Out
--------------------------------------------------------------------------------
Assumptions:
- Cash out occurs in 2002 at $5.85 per share
- No withholding required on ISOs but gain goes on W-2.
- Withholding required on NSOs including FICA
- Directors will be issued 1099s; no withholding
- Where applicable, highest state rate is withheld
--------------------------------------------------------------------------------
State Plan/ Option Shares Option Shares Total
Name Tax Status State Rate Type Date Granted Price Outstanding Gain at $5.85
---- ---------- ----- ---- ---- ---- ------- ----- ----------- -------------
Xxxxxxxx, Xxxx X. withholding IL 3% Dir/NQ 12/14/2000 10,000 $ 2.12500 10,000 37,250.00
withholding IL 3% Amp1/NQ 12/14/2000 250,000 $ 2.12500 250,000 931,250.00
Account: Xxxxxxxx,
Xxxx X. 260,000 260,000 968,500.00
Xxxxxxx, Xxxxxxx X no tax-foreign n/a n/a 91/ISO 12/23/1998 20,000 $ 5.18750 20,000 13,250.00
no tax-foreign 91/ISO 7/11/2000 20,000 $ 3.50000 20,000 47,000.00
no tax-foreign NSO/NQ 5/30/2001 10,000 $ 3.69000 10,000 21,600.00
Account: Xxxxxxx,
Xxxxxxx X 50,000 50,000 81,850.00
Xxxxxxxx, Xxxxx no tax-foreign n/a n/a 91/ISO 6/9/1995 5,000 $ 6.00000 5,000 -
Account: Xxxxxxxx,
Xxxxx 5,000 5,000 -
Xxxxxx, Xxxxx no withholding - ISO 91/ISO 6/9/1995 4,000 $ 6.00000 4,000 -
no withholding - ISO 91/ISO 6/9/1995 4,000 $ 6.00000 4,000 -
Account: Xxxxxx,
Xxxxx 8,000 8,000 -
Xxxxxx, Xxxxxx X. no withholding - ISO 91/ISO 3/5/2001 20,000 $ 3.50000 20,000 47,000.00
Account: Xxxxxx,
Xxxxxx X. 20,000 20,000 47,000.00
Damask, Xxxxxxxx A withholding IL 3% NSO/NQ 12/20/2001 5,000 $ 4.11000 5,000 8,700.00
Account: Damask,
Xxxxxxxx A 5,000 5,000 8,700.00
Xxxxx, Xxxxxxx X. no tax-foreign n/a n/a 91/ISO 6/9/1995 7,500 $ 6.00000 7,500 -
Account: Xxxxx,
Xxxxxxx X. 7,500 7,500 -
Xxxxxx, Xxxxxxx X. no withholding - not ee n/a n/a Dir/NQ 10/17/1996 10,000 $ 7.00000 10,000 -
no withholding - not ee Dir/NQ 9/21/2000 2,000 $ 4.06250 2,000 3,575.00
no withholding - not ee Dir/NQ 10/16/2001 2,000 $ 4.25000 2,000 3,200.00
no withholding - not ee Dir/NQ 10/7/1999 2,000 $ 6.25000 2,000 -
no withholding - not ee Dir/NQ 11/11/1997 2,000 $11.87500 2,000 -
no withholding - not ee Dir/NQ 10/29/1998 2,000 $ 7.12500 2,000 -
Account: Xxxxxx,
Xxxxxxx X. 20,000 20,000 6,775.00
Xxxxxxxx, Xxxxxxx no withholding - not ee n/a n/a Dir/NQ 5/11/2000 10,000 $ 4.06250 10,000 17,875.00
no withholding - not ee Dir/NQ 10/16/2001 2,000 $ 4.25000 2,000 3,200.00
Account: Xxxxxxxx,
Xxxxxxx 12,000 12,000 21,075.00
28%
Federal State 6.2% 1.45% Total Net Cash
Name Taxes Taxes FICA FICA Taxes Procceds
---- ----- ----- ---- ---- ----- --------
Xxxxxxxx, Xxxx X. 10,430.00 1,117.50 - 540.13 12,087.63 25,162.38
260,750.00 27,937.50 - 13,503.13 302,190.63 629,059.38
271,180.00 29,055.00 - 14,043.25 314,278.25 654,221.75
Xxxxxxx, Xxxxxxx X - - - - - 13,250.00
- - - - - 47,000.00
- - - - - 21,600.00
- - - - - 81,850.00
Xxxxxxxx, Xxxxx - - - - - -
- - - - - -
Xxxxxx, Xxxxx - - - - - -
- - - - - -
- - - - - -
Xxxxxx, Xxxxxx X. - - - - - 47,000.00
- - - - - 47,000.00
Damask, Xxxxxxxx A 2,436.00 261.00 539.40 126.15 3,362.55 5,337.45
2,436.00 261.00 539.40 126.15 3,362.55 5,337.45
Xxxxx, Xxxxxxx X. - - - - - -
- - - - - -
Xxxxxx, Xxxxxxx X. - - - - - -
- - - - - 3,575.00
- - - - - 3,200.00
- - - - - -
- - - - - -
- - - - - -
- - - - - 6,775.00
Xxxxxxxx, Xxxxxxx - - - - - 17,875.00
- - - - - 3,200.00
- - - - - 21,075.00
Tab Products Co. 7/26/02
Option Cash Out
--------------------------------------------------------------------------------
Assumptions:
- Cash out occurs in 2002 at $5.85 per share
- No withholding required on ISOs but gain goes on W-2.
- Withholding required on NSOs including FICA
- Directors will be issued 1099s; no withholding
- Where applicable, highest state rate is withheld
--------------------------------------------------------------------------------
State Plan/ Option Shares Option Shares Total
Name Tax Status State Rate Type Date Granted Price Outstanding Gain at $5.85
---- ---------- ----- ---- ---- ---- ------- ----- ----------- -------------
Xxxxxxx, Xxx withholding IL 3% NSO/NQ 12/6/2001 35,000 $ 4.05000 35,000 63,000.00
Account: Xxxxxxx, Xxx 35,000 35,000 63,000.00
Xxxx, Xxxxxx J withholding IL 3% NSO/NQ 5/10/2001 50,000 $ 3.50000 50,000 117,500.00
Account: Xxxx, Xxxxxx J 50,000 50,000 117,500.00
Xxxxxxx, Xxx no withholding - ISO n/a n/a 91/ISO 6/9/1995 1,000 $ 6.00000 250 -
Account: Xxxxxxx, Xxx 1,000 250 -
Xxxxxxx, Xxx no withholding - ISO n/a n/a 91/ISO 9/21/1999 5,000 $ 6.50000 5,000 -
Account: Xxxxxxx, Xxx 5,000 5,000 -
Xxxxxxxxxxxx, no withholding - not ee n/a n/a Dir/NQ 9/10/2001 10,000 $ 4.25000 10,000 16,000.00
Xxxxxx G
Account: Xxxxxxxxxxxx,
Xxxxxx G 10,000 10,000 16,000.00
Xxxxx, Xxxxx X no withholding - not ee n/a n/a Dir/NQ 10/17/1996 10,000 $ 7.00000 10,000 -
no withholding - not ee Dir/NQ 10/7/1999 2,000 $ 6.25000 2,000 -
no withholding - not ee Dir/NQ 9/21/2000 2,000 $ 4.06250 2,000 3,575.00
no withholding - not ee Dir/NQ 10/16/2001 2,000 $ 4.25000 2,000 3,200.00
no withholding - not ee Dir/NQ 10/29/1998 2,000 $ 7.12500 2,000 -
no withholding - not ee Dir/NQ 11/11/1997 2,000 $11.87500 2,000 -
Account: Xxxxx, Xxxxx X 20,000 20,000 6,775.00
Xxxxx, Xxxxxxx X. no withholding - ISO n/a n/a 91/ISO 3/19/2001 25,000 $ 3.60000 25,000 56,250.00
Account: Xxxxx, Xxxxxxx
X. 25,000 25,000 56,250.00
Pack, Xxxxx no withholding - ISO n/a n/a 91/ISO 8/11/2000 10,000 $ 3.75000 10,000 21,000.00
Account: Pack, Xxxxx 10,000 10,000 21,000.00
Xxxxx, Xxxxxx no withholding - ISO n/a n/a 91/ISO 5/13/1999 5,000 $ 5.00000 5,000 4,250.00
withholding CA 9.3% NSO/NQ 5/10/2001 15,000 $ 3.50000 15,000 35,250.00
no withholding - ISO n/a n/a 91/ISO 7/11/2000 20,000 $ 3.50000 20,000 47,000.00
Account: Xxxxx, Xxxxxx 40,000 40,000 86,500.00
28%
Federal State 6.2% 1.45% Total Net Cash
Name Taxes Taxes FICA FICA Taxes Procceds
---- ----- ----- ---- ---- ----- --------
Xxxxxxx, Xxx 17,640.00 1,890.00 - 913.50 20,443.50 42,556.50
17,640.00 1,890.00 - 913.50 20,443.50 42,556.50
Xxxx, Xxxxxx J 32,900.00 3,525.00 - 1,703.75 38,128.75 79,371.25
32,900.00 3,525.00 - 1,703.75 38,128.75 79,371.25
Xxxxxxx, Xxx - - - - - -
- - - - - -
Xxxxxxx, Xxx - - - - - -
- - - - - -
Xxxxxxxxxxxx, - - - - - 16,000.00
Xxxxxx G
- - - - - 16,000.00
Xxxxx, Xxxxx X - - - - - -
- - - - - -
- - - - - 3,575.00
- - - - - 3,200.00
- - - - - -
- - - - - -
- - - - - 6,775.00
Xxxxx, Xxxxxxx X. - - - - - 56,250.00
- - - - - 56,250.00
Pack, Xxxxx - - - - - 21,000.00
- - - - - 21,000.00
Xxxxx, Xxxxxx - - - - - 4,250.00
9,870.00 3,278.25 - 511.13 13,659.38 21,590.63
- - - - - 47,000.00
9,870.00 3,278.25 - 511.13 13,659.38 72,840.63
Tab Products Co. 7/26/02
Option Cash Out
--------------------------------------------------------------------------------
Assumptions:
- Cash out occurs in 2002 at $5.85 per share
- No withholding required on ISOs but gain goes on W-2.
- Withholding required on NSOs including FICA
- Directors will be issued 1099s; no withholding
- Where applicable, highest state rate is withheld
--------------------------------------------------------------------------------
State Plan/ Option Shares Option Shares Total
Name Tax Status State Rate Type Date Granted Price Outstanding Gain at $5.85
---- ---------- ----- ---- ---- ---- ------- ----- ----------- -------------
Xxxxxxxx, Xxxxxx X. no withholding - ISO n/a n/a 91/ISO 1/18/1996 50,000 $ 6.50000 50,000 -
no withholding - ISO n/a n/a 91/ISO 11/30/2000 40,000 $ 2.62500 40,000 129,000.00
no withholding - ISO n/a n/a 91/ISO 7/11/2000 10,000 $ 3.50000 10,000 23,500.00
no withholding - ISO n/a n/a 91/ISO 7/16/1998 6,411 $12.50000 6,411 -
withholding WI 6.5% 91/NQ 7/16/1998 3,589 $12.50000 3,589 -
Account: Xxxxxxxx,
Xxxxxx X. 110,000 110,000 152,500.00
Xxxxxxxx, Xxxx no withholding - ISO n/a n/a 91/ISO 2/13/1997 5,000 $ 9.50000 3,750 -
Account: Xxxxxxxx,
Xxxx 5,000 3,750 -
Xxxxxx, Xxxxxxx no withholding - not ee n/a n/a Warr/ISO 12/14/2000 13,000 $ 2.12500 13,000 48,425.00
Account: Xxxxxx,
Xxxxxxx 13,000 13,000 48,425.00
Xxxxx, Xxxxxxx no withholding - ISO n/a n/a 91/ISO 8/11/2000 5,000 $ 3.75000 5,000 10,500.00
Account: Xxxxx,
Xxxxxxx 5,000 5,000 10,500.00
Xxxx, Xxxx X. no withholding - not ee n/a n/a Dir/NQ 11/11/1997 2,000 $11.87500 2,000 -
no withholding - not ee n/a n/a Dir/NQ 10/17/1996 10,000 $ 7.00000 7,500 -
no withholding - not ee n/a n/a 91/NQ 4/25/1995 15,000 $ 6.37500 7,500 -
no withholding - not ee n/a n/a Dir/NQ 10/29/1998 2,000 $ 7.12500 2,000 -
no withholding - not ee n/a n/a Dir/NQ 10/7/1999 2,000 $ 6.25000 2,000 -
no withholding - not ee n/a n/a 91/ISO 7/14/2000 20,000 $ 3.12500 20,000 54,500.00
no withholding - not ee n/a n/a 91/ISO 12/14/2000 30,000 $ 2.12500 30,000 111,750.00
no withholding - not ee n/a n/a Dir/NQ 10/16/2001 2,000 $ 4.25000 2,000 3,200.00
Account: Xxxx, Xxxx X. 83,000 73,000 169,450.00
Xxxx, Xxxxx no withholding - ISO n/a n/a 91/ISO 6/9/1995 1,000 $ 6.00000 250 -
Account: Xxxx, Xxxxx 1,000 250 -
Xxxxxx, Xxxxx X no withholding - not ee n/a n/a Dir/NQ 9/10/2001 10,000 $ 4.25000 10,000 16,000.00
Account: Xxxxxx,
Xxxxx X 10,000 10,000 16,000.00
TOTAL 810,500 797,750 1,897,800.00
28%
Federal State 6.2% 1.45% Total Net Cash
Name Taxes Taxes FICA FICA Taxes Procceds
---- ----- ----- ---- ---- ----- --------
Xxxxxxxx, Xxxxxx X. - - - - - -
- - - - - 129,000.00
- - - - - 23,500.00
- - - - - -
- - - - - -
- - - - - 152,500.00
Xxxxxxxx, Xxxx - - - - - -
- - - - - -
Xxxxxx, Xxxxxxx - - - - - 48,425.00
- - - - - 48,425.00
Xxxxx, Xxxxxxx - - - - - 10,500.00
- - - - - 10,500.00
Xxxx, Xxxx X. - - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - 54,500.00
- - - - - 111,750.00
- - - - - 3,200.00
- - - - - 169,450.00
Xxxx, Xxxxx - - - - - -
- - - - - -
Xxxxxx, Xxxxx X - - - - - 16,000.00
- - - - - 16,000.00
334,026.00 38,009.25 539.40 17,297.78 389,872.43 1,507,927.58
EXHIBIT G
FORM OF OPINION FOR COUNSEL TO THE COMPANY
1. Each of Company and its Subsidiaries is a corporation or other
entity duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization. Each of Company and its Subsidiaries is
duly authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required, other than in such
jurisdictions where the failure to be so authorized or be in good standing would
not have a Material Adverse Effect on Company. Each of Company and its
Subsidiaries has full corporate power and authority to carry on the businesses
in which it is engaged and to own and use the properties owned and used by it.
2. As of ________, 2002, the authorized shares of capital stock of
Company consist of: (A) 25,000,000 shares of Common Stock, par value $.01 per
share, of which ________ Company Shares are issued and outstanding and 2,678,469
Company Shares are held by Company in its treasury; and (B) 500,000 shares of
preferred stock, 200,000 of which have been designated as Series A Preferred
Stock and none of which are issued and outstanding. As of _________, 2002,
_________ Company Shares were reserved for issuance but not issued under the
Equity Incentive Plans, 13,000 Company Shares were reserved for issuance but not
issued in connection with the Warrant, and 250,000 Company Shares were reserved
for issuance but not issued in connection with options granted to Xxxx Xxxxxxxx
effective as of December 14, 2000 pursuant to a Nonqualified Stock Option
Agreement. As of ___________, 2002, except as set forth in this paragraph and
except pursuant to the Rights Agreement, to the best of our knowledge after due
inquiry, no Company Shares or other securities of Company were issued, reserved
for issuance or outstanding.
3. The Agreement and the Merger have been approved by the unanimous
vote of the Company's Board of Directors, after receipt of a fairness opinion
from the Company's financial adviser. The Company Board of Directors have
unanimously recommended to the holders of the Company Shares that they vote in
favor of the Agreement and the Merger. The Agreement and the Merger have
received the Requisite Stockholder Approval. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
the Agreement and to perform its obligations hereunder. The Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms and conditions, subject to bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies.
4. Except as set forth on (S)3(f) of the Disclosure Schedule, the
execution and the delivery of the Agreement by Company, and the consummation by
Company of the transactions contemplated thereby, do not and will not: (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which any of Company and its U.S. Subsidiaries
and, to the best of our knowledge after due inquiry, its Non-U.S. Subsidiaries,
is subject or any provision of the charter or bylaws of any of Company and its
Subsidiaries; or (ii) to the best of our knowledge after due inquiry, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which any of Company and its
Subsidiaries is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Liens upon any of its assets),
except: (A) when the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice or Liens would
not have a Material Adverse Effect on Company; or (B) as would not adversely
affect the ability of the Company to execute and deliver the Agreement or to
consummate the transactions contemplated thereby. None of Company and its U.S.
Subsidiaries and, to the best of our knowledge after due inquiry, its Non-U.S.
Subsidiaries, is required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Company to execute and deliver the Agreement or to consummate
the transactions contemplated thereby, except: (X) in connection with the
provisions of the Delaware General Corporation Law, the Securities Exchange Act,
the Securities Act, and the state securities laws and the notice required under
the Investment Canada Act; (Y) when the failure to give notice, to file, or to
obtain any authorization, consent, or approval would not have a Material Adverse
Effect on Company; or (Z) when the failure to give notice, to file, or to obtain
any authorization, consent, or approval would not adversely affect the ability
of the Company to execute and deliver the Agreement or to consummate the
transactions contemplated thereby.
5. To the best of our knowledge, after due inquiry, (S)3(p) of the
Disclosure Schedule sets forth each instance in which any of Company and its
Subsidiaries: (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge; or (ii) is a party or, to the best of our knowledge
after due inquiry, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.
EXHIBIT H
FORM OF OPINION FOR COUNSEL TO THE BUYER AND THE TRANSITORY SUBSIDIARY
1. Buyer is a limited partnership, duly organized, validly existing and
in good standing under the laws of the State of Delaware. Transitory Subsidiary
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Each of Buyer and its Subsidiaries, including
the Transitory Subsidiary, is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. Each of Buyer and its Subsidiaries, including Transitory Subsidiary,
has full corporate, partnership or other entity power and authority to carry on
the business in which it is engaged and to own and use the properties owned and
used by it.
2. Each of the Buyer and the Transitory Subsidiary has full power and
authority (including full corporate, partnership or other power and authority)
to execute and deliver the Agreement and to perform its obligations thereunder.
The Agreement has been duly executed and delivered by each of the Buyer and the
Transitory Subsidiary, and the Agreement constitutes a valid and legally binding
obligation of each of the Buyer and the Transitory Subsidiary, enforceable in
accordance with its terms and conditions, subject to bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies.
3. The execution and the delivery of the Agreement, and the
consummation of the transactions contemplated thereby, do not and will not: (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either the Buyer or the Transitory
Subsidiary is subject or any provision of the charter, bylaws, partnership
agreement, or other organizational document of either the Buyer or the
Transitory Subsidiary; or (ii) to the best of our knowledge after due inquiry,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which either the Buyer or the
Transitory Subsidiary is a party or by which it is bound or to which any of its
assets is subject, except: (A) when the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to give notice
would not have a Material Adverse Effect on Buyer or Transitory Subsidiary; or
(B) as would not adversely affect the ability of the Buyer or Transitory
Subsidiary to execute and deliver the Agreement or to consummate the
transactions contemplated thereby. Neither the Buyer nor the Transitory
Subsidiary is required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Buyer or the Transitory Subsidiary to execute and deliver the
Agreement or to consummate the transactions contemplated thereby, except: (X) in
connection with the provisions of the Delaware General Corporation Law, the
Securities Exchange Act, the Securities Act, and the state securities laws; (Y)
when the failure to give notice, to file, or to obtain any authorization,
consent, or approval would not have a Material Adverse Effect on Buyer or
Transitory Subsidiary; or (Z) when the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not adversely affect the ability of the Buyer or the Transitory
Subsidiary to execute and deliver the Agreement or to consummate the
transactions contemplated thereby.
4. There are no claims, actions, suits or proceedings that have a
reasonable likelihood of success on the merits pending or, to the best of our
knowledge after due inquiry, threatened (or to the best of our knowledge after
due inquiry, any governmental or regulatory investigation pending or threatened)
against Buyer or any of its Subsidiaries (including the Transitory Subsidiary)
or any property or rights of Buyer or any of its Subsidiaries (including the
Transitory Subsidiary), before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, except for
those claims, actions, suits or proceedings which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Buyer.
Exhibit I
Form of Guaranties
GUARANTY
This GUARANTY, dated as of July 29, 2002 ("Guaranty"), is made by XX
Xxxxxx Limited Partnership, a Delaware limited partnership ("Guarantor") for the
benefit and in favor of Tab Products Co., a Delaware corporation ("Company").
WHEREAS, Guarantor and MS TP Limited Partnership, a Delaware limited
partnership, are limited partners of T Acquisition L.P., a Delaware limited
partnership ("Buyer");
WHEREAS, Buyer owns all of the issued and outstanding shares of capital
stock of T Acquisition Co., a Delaware corporation ("Transitory Subsidiary");
WHEREAS, contemporaneously with the execution and delivery of this
Guaranty, Buyer, Transitory Subsidiary, and Company are executing and delivering
a Merger Agreement ("Merger Agreement"), pursuant to which, Transitory
Subsidiary will merge with and into Company, and Company shall be the surviving
corporation ("Merger");
WHEREAS, the parties desire to enter into this Guaranty to formalize
the terms of Guarantor's guaranty of the obligations of Buyer and Transitory
Subsidiary under the Merger Agreement and the documents, agreements, and
instruments executed in connection therewith ("Related Agreements");
WHEREAS, the execution and delivery of this Guaranty is a condition
precedent to the consummation of the transactions contemplated by the Merger
Agreement, and is a material inducement to the Company to execute and deliver
the Merger Agreement;
WHEREAS, Guarantor will derive a material benefit from the execution of
the Merger Agreement and the consummation of the Merger; and
WHEREAS, all capitalized terms used, but not otherwise defined, herein
shall have the meaning ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Guaranty.
A. Guaranty. Guarantor hereby absolutely, without conditions (other
than the conditions to the obligations of the Buyer and the Transitory
Subsidiary contained in the Merger Agreement (collectively, the "Merger
Agreement Conditions")), and irrevocably guarantees to the Company and its
successors and assigns the complete and timely performance of all duties,
obligations, liabilities, responsibilities, agreements, covenants, and promises
of
each of Buyer and Transitory Subsidiary arising under, pursuant to, or in
connection with, the Merger Agreement (subject, however, to the limitations on
such duties, obligations, liabilities and responsibilities set forth in the
Merger Agreement) and the Related Agreements, including the obligations of Buyer
arising in connection with the payment of the Merger Consideration
(collectively, the "Guaranteed Obligations").
B. Assumption. If either Buyer or Transitory Subsidiary does not
comply, in any respect, with any of the Guaranteed Obligations, then, without
the necessity of any notice from the Company to Guarantor, Guarantor hereby
agrees to: (i) assume full responsibility for the performance of, and shall
completely and timely perform, the Guaranteed Obligations; and (ii) indemnify
and hold the Company and its officers, directors, stockholders, employees, and
Affiliates harmless from any and all loss, cost, liability, expense, claim, or
judgment that any such Person may suffer by reason of any such non-compliance by
either Buyer or Transitory Subsidiary; provided, that Guarantor's liability to
the Company or to any party claiming by or through the Company under or in
connection with this Guaranty shall not exceed or be greater than the combined
liability, if any, of the Buyer and the Transitory Subsidiary in such
circumstances under the Merger Agreement.
C. Obligations Unconditional. This Guaranty is an absolute,
unconditional (excepting only the Merger Agreement Conditions), irrevocable, and
continuing guaranty of performance. Guarantor shall be liable and responsible
for the complete and timely performance of all of the Guaranteed Obligations as
a primary obligor and not merely as surety. This Guaranty shall be effective as
a waiver of, and Guarantor hereby expressly waives, any and all rights to which
Guarantor may otherwise have been entitled under any suretyship laws in effect
from time to time, including any right or privilege, whether existing under
statute, at law, or in equity, to require the Company to take prior recourse or
proceedings against any collateral, security, or Person. Without limiting the
generality of any of the foregoing, Guarantor hereby agrees that neither
Company's rights or remedies, nor Guarantor's obligations, under the terms of
this Guaranty shall be released, diminished, impaired, reduced, or affected by
any one or more of the following events, actions, facts, or circumstances, and
the liability of Guarantor under this Guaranty shall be absolute, unconditional,
irrevocable, and continuing, irrespective of:
(i) any lack of genuineness, authorization, legality, validity, or
enforceability, in whole or in part, of any of the Guaranteed
Obligations, this Guaranty, the Merger Agreement, the Related
Agreements, or any term or provision hereof or thereof;
(ii) any modification, supplement, amendment, renewal, extension,
subordination, waiver, release, exchange, or addition to or of any of
the Guaranteed Obligations (either with or without notice to, or
consent of, Guarantor);
2
(iii) any modification, supplement, amendment, renewal, extension,
subordination, waiver, release, exchange, acceptance, substitution, or
addition to or of any other guaranty of, or security or collateral for,
any of the Guaranteed Obligations (either with or without notice to, or
consent of, Guarantor);
(iv) any modification, supplement, amendment, renewal, extension,
subordination, waiver, release, exchange, or addition to or of any
right, privilege, duty, or obligation under, or any term or condition
of, the Merger Agreement or Related Agreements (either with or without
notice to, or consent of, Guarantor);
(v) any failure to exercise any right, remedy, power, or
privilege with respect to this Guaranty or any other guaranty of the
Guaranteed Obligations;
(vi) any bankruptcy, insolvency, dissolution, reorganization,
arrangement, readjustment, liquidation, or similar proceeding with
respect to Buyer, Transitory Subsidiary, or Guarantor, or any of the
properties of Buyer, Transitory Subsidiary, or Guarantor, or any action
taken by any trustee, receiver, or by any court in any such proceeding;
(vii) any merger, consolidation, reorganization, or
recapitalization of Buyer, Transitory Subsidiary, or Guarantor with or
into any other Person, or any sale, license, lease, or transfer of all
or any of the assets of Buyer, Transitory Subsidiary, or Guarantor to
any other Person;
(viii) whether the Company shall have taken or failed to have taken
any steps to collect or enforce any obligation or liability from Buyer
or Transitory Subsidiary, or shall have taken any actions to mitigate
its damages;
(ix) any law, regulation, or decree, now or hereafter in effect,
that might in any manner affect any of the provisions of this Guaranty,
the Merger Agreement, or the Related Agreements, or any of the rights,
powers, or remedies hereunder or thereunder, or that might cause or
permit to be invoked any alteration in the time, amount, or manner of
performance of any of the obligations and liabilities of Guarantor
hereunder or any of the obligations and liabilities of Buyer or
Transitory Subsidiary under the Related Agreements;
(x) any failure on the part of the Buyer, Transitory Subsidiary,
or Guarantor to comply with the requirements of law, regulation, or
order of any governmental authority, political subdivision, or agency
thereof;
(xi) the benefit of all principles or provisions of law, statutory
or otherwise, that may be in conflict with the terms hereof;
3
(xii) any other occurrence, condition, or circumstance whatsoever,
whether similar or dissimilar to the foregoing, that may or might in
any manner or to any extent: (A) vary the risk of Guarantor hereunder;
(B) limit recourse against Guarantor; (C) release or discharge
Guarantor from the performance or observance of any obligation,
covenant, or agreement contained in this Guaranty or any other
agreement; or (D) otherwise constitute a legal or equitable defense or
discharge of the liabilities of a guarantor or surety. The parties
hereby agree that this Guaranty and the obligations and liabilities
hereunder shall be absolute, unconditional (excepting only the Merger
Agreement Conditions), irrevocable, and continuing under any and all
circumstances.
D. Reinstatement. The obligations of Guarantor under this Guaranty
shall be automatically reinstated if and to the extent that for any reason any
performance or action by, or on behalf of, Guarantor, Buyer, or Transitory
Subsidiary is rescinded or is otherwise determined to be incomplete or
unenforceable.
E. Waiver of Demands and Notices. Guarantor hereby unconditionally and
irrevocably waives, to the extent permitted by applicable law: (i) notice of any
of the matters referenced or set forth in this Section 1; (ii) all notices that
may be required by statute, rule, law, or otherwise, now or hereafter in effect,
to preserve any rights against Guarantor hereunder, including, without
limitation, any demand, or proof or notice of non-payment of the Guaranteed
Obligations; (iii) acceptance of this Guaranty, demand, protest, presentment,
notice of default or dishonor, and any requirement of diligence; (iv) any
requirement to exhaust any remedies or to mitigate any damages resulting from a
default or failure to perform by Buyer or Transitory Subsidiary under the Merger
Agreement; (v) any requirement that the Company exhaust any right or take any
action against Buyer, Transitory Subsidiary, Guarantor, any other guarantor of
the Guaranteed Obligations, or any other Person, or any guaranty of any of the
Guaranteed Obligations; and (vi) any other occurrence, condition (other than the
Merger Agreement Conditions), or circumstance whatsoever that may or might
otherwise constitute a legal or equitable discharge, release, or defense of a
guarantor or surety, or that might otherwise limit recourse against Guarantor.
F. Rights and Remedies. Guarantor hereby agrees that the Company may
pursue its rights and remedies (including, the institution of any demand,
action, suit, or proceeding) against Buyer, Transitory Subsidiary, Guarantor,
any other guarantor of the Guaranteed Obligations, or any other Person, or any
guaranty of, or collateral or security for, any of the Guaranteed Obligations,
or against any one or more of them, separately or together, without impairing
the rights of the Company against any party hereto or any other Person.
Guarantor hereby further agrees that the Company shall be entitled to the
complete and timely performance of all Guaranteed Obligations, notwithstanding
the existence of any other guaranty of, or security or collateral for, any of
the Guaranteed Obligations.
Section 2. Representations and Warranties. Guarantor hereby represents
and warrants to the Company as of the date hereof as follows:
4
A. Corporate Existence. Guarantor is a limited partnership, duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of formation set forth in the preamble of this Guaranty. Guarantor
has all requisite partnership power and authority, and has all governmental
licenses, authorizations, consents, and approvals, that are necessary to own its
assets and carry on its business as now being or as proposed to be conducted.
Guarantor is in good standing and is duly-qualified to do or transact business
in all jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify would reasonably be
expected to have a material adverse effect on its consolidated financial
condition or operations.
B. Ownership. Guarantor, together with MS TP Limited Partnership, owns,
legally and beneficially, 100% of the issued and outstanding limited partnership
interests in the Buyer, on a fully-diluted basis. Guarantor has full right and
authority to cause each of the Buyer and the Transitory Subsidiary to perform
fully and promptly their respective obligations under the Merger Agreement and
the Related Agreements.
C. Authorization. The execution and delivery of this Guaranty by
Guarantor, and the performance by Guarantor of its obligations hereunder, have
been duly authorized by Guarantor and its partners. Guarantor has all necessary
partnership power and authority to execute and deliver this Guaranty and to
perform its obligations hereunder. This Guaranty constitutes a valid and binding
obligation of Guarantor, enforceable in accordance with its terms, except as
such enforceability may be limited by: (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws in effect that limit
creditors' rights generally; (ii) equitable limitations on the availability of
specific remedies; and (iii) principles of equity.
D. No Breach. The execution and delivery by Guarantor of this Guaranty,
and the fulfillment of, and compliance with, the terms hereof by Guarantor, do
not and will not conflict with, or result in a breach of, or constitute a
default under, or require any permit, consent, approval, or authorization by or
with any Person, or give to any Person any right of termination, amendment,
acceleration, suspension, revocation, or cancellation of, or result in the
creation of any lien pursuant to: (i) the partnership agreement or formation
documents of Guarantor; (ii) any law, statute, rule, regulation, license,
permit, order, judgment, ruling, writ, or decree to which Guarantor is subject
or by which it or any of its properties, rights, or assets may be bound; or
(iii) any contract, agreement, arrangement, or instrument to which Guarantor is
subject or by which it or any of its properties, rights, or assets may be bound.
E. Litigation. There are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of Guarantor) threatened against Guarantor which,
if adversely determined, could have a material adverse effect on the
consolidated financial condition or operations of Guarantor or the ability of
Guarantor to perform its obligations hereunder.
5
Section 3. Covenants.
A. Compliance with Applicable Laws. From and after the date hereof,
Guarantor will comply with the requirements of all applicable laws, rules,
regulations, permits, and orders of any governmental body or regulatory
authority relating to its activities, a breach of which would reasonably be
expected to have a material adverse effect on the consolidated financial
condition, operations, or business of Guarantor or that would otherwise affect
the ability of Guarantor to perform its obligations hereunder.
B. Records. From and after the date hereof, Guarantor will furnish such
information concerning Guarantor that the Company may reasonably request in
connection with this Guaranty.
C. Further Assurances. Guarantor agrees that, from time to time upon
the written request of the Company, Guarantor will execute and deliver such
further documents and do such other acts and things as the Company may
reasonably request to effect the purposes of this Guaranty.
Section 4. Miscellaneous.
A. No Waiver. No failure on the part of the Company or any of its
agents to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power, or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Company or any of its
agents of any right, power, or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
B. Expenses. Guarantor agrees to pay to the Company all costs and
expenses (including, but not limited to, expenses for legal services of every
kind) of, or incident to, the enforcement of any of the provisions of this
Guaranty.
C. Governing Law. This Guaranty shall be governed by, and construed in
accordance with, the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
D. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
6
if to Guarantor:
XX Xxxxxx Limited Partnership
c/o Workstream Inc.
000 Xxxxxxxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xx. Xxxxxxxx Xxxxxxxxxxx
Facsimile: (000) 000-0000
With a copy (which will not constitute notice) to:
Xxxxxx Xxxxxx & Co., Inc.
00xx Xxxxx Xxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: X. Xxxx Xxxxxx III, Esq.
Facsimile: (000) 000-0000
And
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
And
Xxxxxxx, Xxxxxxxx & Xxxxxxx, PLL
Xxx Xxxx Xxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
7
if to the Company:
TAB Products Co.
000 Xxxxxxxx Xxxxxxx, Xxxxx000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxx Xxxxxxxx and
Mr. Xxxxx Xxxxx
Facsimile: 000-000-0000
With a copy (which will not constitute notice) to:
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLC
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
E. Waivers and Amendments. The terms of this Guaranty may be waived,
altered, or amended only by an instrument in writing duly executed by Guarantor
and the Company. Any such amendment or waiver shall be binding upon Guarantor
and the Company, and their respective successors and permitted assigns. No
waiver of any default on the part of Guarantor or of any breach of any of the
provisions of this Guaranty or of any other document shall be considered a
waiver of any other or subsequent default or breach.
F. Severability. Any term or provision of this Guaranty that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
G. Successors and Assigns. This Guaranty shall be binding upon and
inure to the benefit of the respective successors and assigns of Guarantor and
the Company; provided, however, that Guarantor shall not assign or transfer its
rights hereunder without the prior written consent of the Company.
8
H. Counterparts. This Guaranty may be executed in one or more
counterparts and all of such counterparts taken together shall constitute one
and the same instrument.
I. Headings. The section headings contained in this Guaranty are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Guaranty.
J. Construction. The parties have participated jointly in the
negotiation and drafting of this Guaranty. In the event an ambiguity or question
of intent or interpretation arises, this Guaranty shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Guaranty. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
K. Term. This Guaranty shall terminate, and be of no further force and
effect, only upon: (i) the payment, satisfaction, or expiration of the
Guaranteed Obligations; (ii) the termination of the Merger Agreement pursuant to
Sections 7(a)(i), 7(a)(ii), 7(a)(iii), 7(a)(v), 7(a)(vi) or 7(a)(vii) thereof;
and (iii) a written release and waiver executed by the Company.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
9
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed as of the date first above written.
XX XXXXXX LIMITED PARTNERSHIP,
as Guarantor
By: XX XXXXXX CORP., its sole General Partner
By:________________________________
Name:______________________________
Title:_____________________________
Acknowledged and Agreed:
T ACQUISITION L.P.
By: MSTP, LLC, its General Partner
By:________________________________
Xxxxxxx X. Xxxxxxxxxxx
President
T ACQUISITION CO.
By:____________________________________
Xxxxxxx X. Xxxxxxxxxxx
President
10
GUARANTY
This GUARANTY, dated as of July 29, 2002 ("Guaranty"), is made by MS TP
Limited Partnership, a Delaware limited partnership ("Guarantor") for the
benefit and in favor of Tab Products Co., a Delaware corporation ("Company").
WHEREAS, Guarantor and XX Xxxxxx Limited Partnership, a Delaware
limited partnership, are limited partners of T Acquisition L.P., a Delaware
limited partnership ("Buyer");
WHEREAS, Buyer owns all of the issued and outstanding shares of capital
stock of T Acquisition Co., a Delaware corporation ("Transitory Subsidiary");
WHEREAS, contemporaneously with the execution and delivery of this
Guaranty, Buyer, Transitory Subsidiary, and Company are executing and delivering
a Merger Agreement ("Merger Agreement"), pursuant to which, Transitory
Subsidiary will merge with and into Company, and Company shall be the surviving
corporation ("Merger");
WHEREAS, the parties desire to enter into this Guaranty to formalize
the terms of Guarantor's guaranty of the obligations of Buyer and Transitory
Subsidiary under the Merger Agreement and the documents, agreements, and
instruments executed in connection therewith ("Related Agreements");
WHEREAS, the execution and delivery of this Guaranty is a condition
precedent to the consummation of the transactions contemplated by the Merger
Agreement, and is a material inducement to the Company to execute and deliver
the Merger Agreement;
WHEREAS, Guarantor will derive a material benefit from the execution of
the Merger Agreement and the consummation of the Merger; and
WHEREAS, all capitalized terms used, but not otherwise defined, herein
shall have the meaning ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Guaranty.
A. Guaranty. Guarantor hereby absolutely, without conditions
(other than the conditions to the obligations of the Buyer and the Transitory
Subsidiary contained in the Merger Agreement (collectively, the "Merger
Agreement Conditions")), and irrevocably guarantees to the Company and its
successors and assigns the complete and timely performance of all duties,
obligations, liabilities, responsibilities, agreements, covenants, and promises
of
each of Buyer and Transitory Subsidiary arising under, pursuant to, or in
connection with, the Merger Agreement (subject, however, to the limitations on
such duties, obligations, liabilities and responsibilities set forth in the
Merger Agreement) and the Related Agreements, including the obligations of Buyer
arising in connection with the payment of the Merger Consideration
(collectively, the "Guaranteed Obligations").
B. Assumption. If either Buyer or Transitory Subsidiary does not
comply, in any respect, with any of the Guaranteed Obligations, then, without
the necessity of any notice from the Company to Guarantor, Guarantor hereby
agrees to: (i) assume full responsibility for the performance of, and shall
completely and timely perform, the Guaranteed Obligations; and (ii) indemnify
and hold the Company and its officers, directors, stockholders, employees, and
Affiliates harmless from any and all loss, cost, liability, expense, claim, or
judgment that any such Person may suffer by reason of any such non-compliance by
either Buyer or Transitory Subsidiary; provided, that Guarantor's liability to
the Company or to any party claiming by or through the Company under or in
connection with this Guaranty shall not exceed or be greater than the combined
liability, if any, of the Buyer and the Transitory Subsidiary in such
circumstances under the Merger Agreement.
C. Obligations Unconditional. This Guaranty is an absolute,
unconditional (excepting only the Merger Agreement Conditions), irrevocable, and
continuing guaranty of performance. Guarantor shall be liable and responsible
for the complete and timely performance of all of the Guaranteed Obligations as
a primary obligor and not merely as surety. This Guaranty shall be effective as
a waiver of, and Guarantor hereby expressly waives, any and all rights to which
Guarantor may otherwise have been entitled under any suretyship laws in effect
from time to time, including any right or privilege, whether existing under
statute, at law, or in equity, to require the Company to take prior recourse or
proceedings against any collateral, security, or Person. Without limiting the
generality of any of the foregoing, Guarantor hereby agrees that neither
Company's rights or remedies, nor Guarantor's obligations, under the terms of
this Guaranty shall be released, diminished, impaired, reduced, or affected by
any one or more of the following events, actions, facts, or circumstances, and
the liability of Guarantor under this Guaranty shall be absolute, unconditional,
irrevocable, and continuing, irrespective of:
(i) any lack of genuineness, authorization, legality,
validity, or enforceability, in whole or in part, of any of the
Guaranteed Obligations, this Guaranty, the Merger Agreement, the
Related Agreements, or any term or provision hereof or thereof;
(ii) any modification, supplement, amendment, renewal,
extension, subordination, waiver, release, exchange, or addition to or
of any of the Guaranteed Obligations (either with or without notice to,
or consent of, Guarantor);
2
(iii) any modification, supplement, amendment, renewal,
extension, subordination, waiver, release, exchange, acceptance,
substitution, or addition to or of any other guaranty of, or security
or collateral for, any of the Guaranteed Obligations (either with or
without notice to, or consent of, Guarantor);
(iv) any modification, supplement, amendment, renewal,
extension, subordination, waiver, release, exchange, or addition to or
of any right, privilege, duty, or obligation under, or any term or
condition of, the Merger Agreement or Related Agreements (either with
or without notice to, or consent of, Guarantor);
(v) any failure to exercise any right, remedy, power, or
privilege with respect to this Guaranty or any other guaranty of the
Guaranteed Obligations;
(vi) any bankruptcy, insolvency, dissolution, reorganization,
arrangement, readjustment, liquidation, or similar proceeding with
respect to Buyer, Transitory Subsidiary, or Guarantor, or any of the
properties of Buyer, Transitory Subsidiary, or Guarantor, or any action
taken by any trustee, receiver, or by any court in any such proceeding;
(vii) any merger, consolidation, reorganization, or
recapitalization of Buyer, Transitory Subsidiary, or Guarantor with or
into any other Person, or any sale, license, lease, or transfer of all
or any of the assets of Buyer, Transitory Subsidiary, or Guarantor to
any other Person;
(viii) whether the Company shall have taken or failed to have
taken any steps to collect or enforce any obligation or liability from
Buyer or Transitory Subsidiary, or shall have taken any actions to
mitigate its damages;
(ix) any law, regulation, or decree, now or hereafter in
effect, that might in any manner affect any of the provisions of this
Guaranty, the Merger Agreement, or the Related Agreements, or any of
the rights, powers, or remedies hereunder or thereunder, or that might
cause or permit to be invoked any alteration in the time, amount, or
manner of performance of any of the obligations and liabilities of
Guarantor hereunder or any of the obligations and liabilities of Buyer
or Transitory Subsidiary under the Related Agreements;
(x) any failure on the part of the Buyer, Transitory
Subsidiary, or Guarantor to comply with the requirements of law,
regulation, or order of any governmental authority, political
subdivision, or agency thereof;
(xi) the benefit of all principles or provisions of law,
statutory or otherwise, that may be in conflict with the terms hereof;
3
(xii) any other occurrence, condition, or circumstance
whatsoever, whether similar or dissimilar to the foregoing, that may or
might in any manner or to any extent: (A) vary the risk of Guarantor
hereunder; (B) limit recourse against Guarantor; (C) release or
discharge Guarantor from the performance or observance of any
obligation, covenant, or agreement contained in this Guaranty or any
other agreement; or (D) otherwise constitute a legal or equitable
defense or discharge of the liabilities of a guarantor or surety. The
parties hereby agree that this Guaranty and the obligations and
liabilities hereunder shall be absolute, unconditional (excepting only
the Merger Agreement Conditions), irrevocable, and continuing under any
and all circumstances.
D. Reinstatement. The obligations of Guarantor under this Guaranty
shall be automatically reinstated if and to the extent that for any reason any
performance or action by, or on behalf of, Guarantor, Buyer, or Transitory
Subsidiary is rescinded or is otherwise determined to be incomplete or
unenforceable.
E. Waiver of Demands and Notices. Guarantor hereby unconditionally
and irrevocably waives, to the extent permitted by applicable law: (i) notice of
any of the matters referenced or set forth in this Section 1; (ii) all notices
that may be required by statute, rule, law, or otherwise, now or hereafter in
effect, to preserve any rights against Guarantor hereunder, including, without
limitation, any demand, or proof or notice of non-payment of the Guaranteed
Obligations; (iii) acceptance of this Guaranty, demand, protest, presentment,
notice of default or dishonor, and any requirement of diligence; (iv) any
requirement to exhaust any remedies or to mitigate any damages resulting from a
default or failure to perform by Buyer or Transitory Subsidiary under the Merger
Agreement; (v) any requirement that the Company exhaust any right or take any
action against Buyer, Transitory Subsidiary, Guarantor, any other guarantor of
the Guaranteed Obligations, or any other Person, or any guaranty of any of the
Guaranteed Obligations; and (vi) any other occurrence, condition (other than the
Merger Agreement Conditions), or circumstance whatsoever that may or might
otherwise constitute a legal or equitable discharge, release, or defense of a
guarantor or surety, or that might otherwise limit recourse against Guarantor.
F. Rights and Remedies. Guarantor hereby agrees that the Company
may pursue its rights and remedies (including, the institution of any demand,
action, suit, or proceeding) against Buyer, Transitory Subsidiary, Guarantor,
any other guarantor of the Guaranteed Obligations, or any other Person, or any
guaranty of, or collateral or security for, any of the Guaranteed Obligations,
or against any one or more of them, separately or together, without impairing
the rights of the Company against any party hereto or any other Person.
Guarantor hereby further agrees that the Company shall be entitled to the
complete and timely performance of all Guaranteed Obligations, notwithstanding
the existence of any other guaranty of, or security or collateral for, any of
the Guaranteed Obligations.
Section 2. Representations and Warranties. Guarantor hereby
represents and warrants to the Company as of the date hereof as follows:
4
A. Corporate Existence. Guarantor is a limited partnership, duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of formation set forth in the preamble of this Guaranty. Guarantor
has all requisite partnership power and authority, and has all governmental
licenses, authorizations, consents, and approvals, that are necessary to own its
assets and carry on its business as now being or as proposed to be conducted.
Guarantor is in good standing and is duly-qualified to do or transact business
in all jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify would reasonably be
expected to have a material adverse effect on its consolidated financial
condition or operations.
B. Ownership. Guarantor, together with XX Xxxxxx Limited
Partnership, owns, legally and beneficially, 100% of the issued and outstanding
limited partnership interests in the Buyer, on a fully-diluted basis. Guarantor
has full right and authority to cause each of the Buyer and the Transitory
Subsidiary to perform fully and promptly their respective obligations under the
Merger Agreement and the Related Agreements.
C. Authorization. The execution and delivery of this Guaranty by
Guarantor, and the performance by Guarantor of its obligations hereunder, have
been duly authorized by Guarantor and its partners. Guarantor has all necessary
partnership power and authority to execute and deliver this Guaranty and to
perform its obligations hereunder. This Guaranty constitutes a valid and binding
obligation of Guarantor, enforceable in accordance with its terms, except as
such enforceability may be limited by: (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws in effect that limit
creditors' rights generally; (ii) equitable limitations on the availability of
specific remedies; and (iii) principles of equity.
D. No Breach. The execution and delivery by Guarantor of this
Guaranty, and the fulfillment of, and compliance with, the terms hereof by
Guarantor, do not and will not conflict with, or result in a breach of, or
constitute a default under, or require any permit, consent, approval, or
authorization by or with any Person, or give to any Person any right of
termination, amendment, acceleration, suspension, revocation, or cancellation
of, or result in the creation of any lien pursuant to: (i) the partnership
agreement or formation documents of Guarantor; (ii) any law, statute, rule,
regulation, license, permit, order, judgment, ruling, writ, or decree to which
Guarantor is subject or by which it or any of its properties, rights, or assets
may be bound; or (iii) any contract, agreement, arrangement, or instrument to
which Guarantor is subject or by which it or any of its properties, rights, or
assets may be bound.
E. Litigation. There are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of Guarantor) threatened against Guarantor which,
if adversely determined, could have a material adverse effect on the
consolidated financial condition or operations of Guarantor or the ability of
Guarantor to perform its obligations hereunder.
5
Section 3. Covenants.
A. Compliance with Applicable Laws. From and after the date
hereof, Guarantor will comply with the requirements of all applicable laws,
rules, regulations, permits, and orders of any governmental body or regulatory
authority relating to its activities, a breach of which would reasonably be
expected to have a material adverse effect on the consolidated financial
condition, operations, or business of Guarantor or that would otherwise affect
the ability of Guarantor to perform its obligations hereunder.
B. Records. From and after the date hereof, Guarantor will furnish
such information concerning Guarantor that the Company may reasonably request in
connection with this Guaranty.
C. Further Assurances. Guarantor agrees that, from time to time
upon the written request of the Company, Guarantor will execute and deliver such
further documents and do such other acts and things as the Company may
reasonably request to effect the purposes of this Guaranty.
Section 4. Miscellaneous.
A. No Waiver. No failure on the part of the Company or any of its
agents to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power, or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Company or any of its
agents of any right, power, or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
B. Expenses. Guarantor agrees to pay to the Company all costs and
expenses (including, but not limited to, expenses for legal services of every
kind) of, or incident to, the enforcement of any of the provisions of this
Guaranty.
C. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
D. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
6
if to Guarantor:
MS TP Limited Partnership
c/o Workstream Inc.
000 Xxxxxxxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xx. Xxxxxxxx Xxxxxxxxxxx
Facsimile: (000) 000-0000
With a copy (which will not constitute notice) to:
Xxxxxx Xxxxxx & Co., Inc.
00xx Xxxxx Xxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: X. Xxxx Xxxxxx III, Esq.
Facsimile: (000) 000-0000
And
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
And
Xxxxxxx, Xxxxxxxx & Klekamp, PLL
Xxx Xxxx Xxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
7
if to the Company:
TAB Products Co.
000 Xxxxxxxx Xxxxxxx, Xxxxx000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxx Xxxxxxxx and
Mr. Xxxxx Xxxxx
Facsimile: 000-000-0000
With a copy (which will not constitute notice) to:
Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLC
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
E. Waivers and Amendments. The terms of this Guaranty may be
waived, altered, or amended only by an instrument in writing duly executed by
Guarantor and the Company. Any such amendment or waiver shall be binding upon
Guarantor and the Company, and their respective successors and permitted
assigns. No waiver of any default on the part of Guarantor or of any breach of
any of the provisions of this Guaranty or of any other document shall be
considered a waiver of any other or subsequent default or breach.
F. Severability. Any term or provision of this Guaranty that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
G. Successors and Assigns. This Guaranty shall be binding upon and
inure to the benefit of the respective successors and assigns of Guarantor and
the Company; provided, however, that Guarantor shall not assign or transfer its
rights hereunder without the prior written consent of the Company.
8
H. Counterparts. This Guaranty may be executed in one or more
counterparts and all of such counterparts taken together shall constitute one
and the same instrument.
I. Headings. The section headings contained in this Guaranty are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Guaranty.
J. Construction. The parties have participated jointly in the
negotiation and drafting of this Guaranty. In the event an ambiguity or question
of intent or interpretation arises, this Guaranty shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Guaranty. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
K. Term. This Guaranty shall terminate, and be of no further force
and effect, only upon: (i) the payment, satisfaction, or expiration of the
Guaranteed Obligations; (ii) the termination of the Merger Agreement pursuant to
Sections 7(a)(i), 7(a)(ii), 7(a)(iii), 7(a)(v), 7(a)(vi) or 7(a)(vii) thereof;
and (iii) a written release and waiver executed by the Company.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
9
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed as of the date first above written. MS TP LIMITED PARTNERSHIP, as
Guarantor
By: MSTP, LLC, its sole General Partner
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Acknowledged and Agreed:
T ACQUISITION L.P.
By: MSTP, LLC, its General Partner
By:_______________________________________
Xxxxxxx X. Xxxxxxxxxxx
President
T ACQUISITION CO.
By:_______________________________________
Xxxxxxx X. Xxxxxxxxxxx
President
10
Exhibit J
Financing Commitments
Exhibit J
June 6, 2002
Xx. Xxxxxxxx X. Xxxxxxxxxxx
XX Xxxxxx Limited Partnership
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Dear Xx. Xxxxxxxxxxx:
LaSalle Bank National Association ("Lender") is pleased to
commit to making certain loans and financial accommodations ("Loans") to Tab
Products Corp. ("Tab") and Tab Products of Canada Ltd. ("Tab Canada") (each a
"Company" and collectively "Companies") of up to Twenty-One Million and No/100
Dollars ($21,000,000.00), subject to the terms and conditions specified below
and in the definitive loan documentation.
As we understand the proposed transaction, a portion of the
Loans will be used to (a) allow an affiliate of XX Xxxxxx Limited Partnership
("HSMLP") to acquire the stock of Tab (which will be merged into such affiliate
of HSMLP) and (b) provide the Companies with additional working capital. All
references to the collateral shall mean the assets of Companies and Tab.
REVOLVING LOANS - Lender may, in its sole discretion, advance an amount up to
the sum of the following sublimits (the "Revolving Loan Limit"):
Up to eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to account
debtors in connection therewith in the ordinary course of Companies' business)
of Companies' "Eligible Accounts"; plus
Up to sixty percent (60%) of the lower of the cost or market value of
Companies' "Eligible Inventory" or Three Million and No/100 Dollars
($3,000,000.00), whichever is less; minus
Such reserves as Lender may establish from time to time in its
discretion including, without limitation, a reserve in an amount determined by
Lender to be sufficient to satisfy any obligations to make payments in respect
of the exercise of appraisal rights by any non-tendering shareholders of Tab;
provided, that the Revolving Loan Limit shall in no event exceed
Twenty-One Million and No/100 Dollars ($21,000,000.00) (the "Maximum
Loan Limit").
TERM LOANS - Lender may, in it sole discretion, advance the following amounts:
Up to eighty percent (80%) of the forced liquidation value of
Companies' equipment and up to sixty-one percent (61%) of the fair market value
of those certain real properties described below (in each case, as determined by
an appraiser acceptable to Lender) or Five Million and No/100 Dollars
($5,000,000.00), whichever is less (the "Term Loan"); plus
Up to eighty percent (80%) of the purchase price of the equipment
purchased with such advances (exclusive of sales taxes, delivery charges and
other "soft" costs related to such purchases), to be used by the Companies from
time to time to purchase new equipment, or Two Million and No/100 Dollars
($2,000,000.00), whichever is less (the "CAPEX Loans"); provided, that prior to
any advance under this subparagraph, the Companies shall furnish to Lender an
invoice and acceptance letter for the equipment being purchased and shall have
executed such documents and taken such other actions as Lender shall require to
assure that Lender has a first perfected security interest in such equipment.
TERM LOAN REPAYMENTS
Commencing thirty (30) days from the date of disbursement of the Loans
under the Loan and Security Agreement, the Term Loan shall be repaid by an
amount based upon a schedule of sixty (60) equal monthly payments plus a One
Million and No/100 Dollars ($1,000,000.00) balloon payment on December 31, 2003.
Such repayments shall be due and payable every month thereafter until the
earliest to occur of (i) the date on which the Term Loan shall be repaid in
full, and (ii) the date upon which the Loan and Security Agreement otherwise
terminates pursuant to the provisions thereof on which date the remaining
principal balance shall be due and payable.
The Companies shall repay to Lender monthly an amount sufficient
(assuming a like payment each month) to repay the entire principal amount of
each CAPEX Loans advance above within sixty (60) months following the date of
such advance. Such payments shall be made on the thirtieth (30th) day following
the date of each such advance, and on the corresponding day of each month
thereafter until the earliest to occur of (i) the date upon which each such
advance is repaid in full, and (ii) the date upon which the Loan and Security
Agreement otherwise terminates pursuant to the provisions thereof on which date
the remaining principal balance shall be repaid in full.
LETTERS OF CREDIT - Lender is willing to cause the issuance of and co-sign for,
upon Companies' request, commercial and standby letters of credit, provided,
that the aggregate undrawn face amount of such letters of credit shall not
exceed One Million and No/100 Dollars ($1,000,000), in the aggregate. Companies
shall pay the issuer's normal charges for letters of credit, and in addition
thereto, shall pay to Lender an administrative charge equal to one-fourth of one
percent (1/4 of 1%) per month payable on the outstanding amount of such letters
of credit, which charges shall be payable monthly in arrears on each day that
interest is payable. Lender's contingent liability under the letters of credit
shall automatically reduce, dollar for dollar, the amount which Companies may
borrow pursuant to Paragraph 1 above.
INTEREST RATE - The Loans shall bear interest at the rate of three-quarter of
one percent (0.75%) per annum in excess of Lender's publicly announced prime
rate (which is not intended to be Lender's lowest or most favorable rate in
effect at any time) (the "Prime Rate") in effect from time to time, and shall be
due and payable on the last business day of each month in arrears. Said rate of
interest shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the effective date of each such change
in the Prime Rate. Upon the occurrence of an event of default the Loans shall
bear interest at a rate of two percent (2%) per annum in excess of the interest
rate otherwise payable thereon, which interest shall be payable on demand. All
interest shall be calculated on the basis of a 360-day year.
TERM OF LOAN - The original term of the Loans shall end on August 31, 2005. The
Loan and Security Agreement shall automatically renew itself from year to year
thereafter if neither party terminates it as set forth therein.
ELIGIBILITY CRITERIA - Companies' accounts and inventory shall be subject to
such eligibility criteria and reserves as Lender, in its sole discretion elects
to establish including, without limitation, with respect to Companies' accounts
the following:
Invoices evidencing such accounts shall be due and payable within
ninety (90) days after the date of invoice; provided, however, that if more than
twenty-five percent (25%) of the aggregate dollar amount of invoices owing by a
particular account debtor remain unpaid ninety (90) days after the respective
invoice dates thereof, then all accounts receivable due from that particular
account debtor shall be deemed ineligible.
LOAN COLLATERAL
A first and only lien on all of Companies' assets, tangible or
intangible, whether now owned or hereafter acquired by Companies, and wherever
located, including, but not limited to accounts, inventory, instruments,
investment property, documents, equipment, fixtures, general intangibles, and
any and all proceeds of the foregoing.
A first mortgage, in form and substance satisfactory to the Lender, of
those certain real properties located in Mayville, Wisconsin, and Turlock,
California. Relative thereto, Companies shall execute and cause to be delivered
to Lender such documentation as required by Lender, including but not limited
to, title insurance (which shall contain such endorsements and exceptions as
Lender deems necessary in its sole discretion), survey and environmental audit
in form and substance satisfactory to Lender.
Guaranty of Companies' European and Australian subsidiaries and such
other subsidiaries as determined by Lender in its sole discretion secured by a
first lien on the assets of such subsidiaries.
Stock Pledge regarding Companies' European and Australian subsidiaries
and such other subsidiaries as determined by Lender in its sole discretion.
AUDIT FEES - Companies shall jointly and severally pay the normal audit fees and
out-of-pocket expenses related to any such audit, including, but not limited to,
air fare, lodging, and
meals, to Lender to cover Lender's periodic examinations of the loan collateral,
as well as the Companies' books and records.
OUT-OF-POCKET EXPENSES - Companies shall jointly and severally reimburse Lender
for the costs of the following: Uniform Commercial Code and other public record
searches, lien and security interest filings, surveys, title insurance,
environmental audits, appraisals, reasonable outside attorney's fees, express
mail, messenger or similar delivery charges.
SUBORDINATED INDEBTEDNESS - Prior to Lender's initial disbursement under the
Loan and Security Agreement, Companies shall cause the appropriate individuals
and/or entities to contribute to the Companies as equity or subordinated debt at
least Fifteen Million Nine Hundred Forty-Seven Thousand and No/100 Dollars
($15,947,000.00) on terms and conditions satisfactory to Lender.
RELATED TRANSACTIONS
Prior to disbursement of the Loans proposed herein, an affiliate of
HSMLP shall have (i) acquired or have had tendered to it at least ninety percent
(90%) of the outstanding shares of stock of Tab and (ii) met all other
requirements necessary to complete a short-form merger of Tab with and into such
affiliate immediately upon consummation of the tender offer, in a manner
satisfactory to Lender, or otherwise entered into a merger agreement with Tab
satisfactory to Lender. The Companies shall provide Lender with copies of any
such agreements and all related documentation, and evidence satisfactory to
Lender that any and all approvals of the transaction contemplated therein have
been obtained and all applicable waiting periods have expired.
The purchase price for the stock of Tab shall not exceed Seven and
No/100 Dollars ($7.00) per share with a maximum of Six and No/100 Dollars
($6.00) per share in the form of cash payments.
There shall be no order, injunction or restraining order which would
prevent or delay the consummation of, or impose material adverse conditions on
the tender offer or merger. There shall not exist any pending or threatened
litigation which, in the judgment of Lender, would have a material adverse
effect on the tender offer or merger, or Lender's rights and remedies.
FACILITY FEES - Companies shall jointly and severally pay to Lender an annual
facility fee equal to one-half of one percent (1/2 of 1%) of the Maximum Loan
Limit, which fee shall be fully earned by Lender and payable on the date that
Lender makes its initial disbursement under the Loan and Security Agreement and
on each anniversary of the date of the Loan and Security Agreement during the
original term and any renewal term.
CLOSING FEE - Companies shall jointly and severally pay to Lender a closing fee
of one and one-fourth percent (1-1/4/th/%) of the Maximum Loan Limit, which fee
shall be fully earned by Lender and payable on the date of disbursement under
the Loan and Security Agreement.
COMMITMENT FEE - HSMLP shall pay to Lender a commitment fee of Fifty Thousand
and No/100 Dollars ($50,000.00) upon execution and delivery of this letter,
which fee shall be fully earned and non-refundable upon execution hereof.
LOCK BOX; COLLECTIONS
Payments from all of Companies' customers shall be mailed directly to a
lock box at Lender maintained in Lender's name.
Lender shall, within two (2) business days after Lender receives checks
in Chicago from Companies' customers, apply such collections against Companies'
liabilities to Lender.
PREPAYMENT FEES - In the event that any Company prepays the Loans prior to the
end of the original term or any applicable renewal term and the Loan and
Security Agreement is terminated as a result thereof, Companies shall jointly
and severally pay a prepayment fee equal to (i) three percent (3%) of the
Maximum Loan Limit if such prepayment occurs two (2) years or more prior to the
end of the original term, (ii) two percent (2%) of the Maximum Loan Limit if
such prepayment occurs less than two (2) years, but at least one (1) year prior
to the end of the original term, or (iii) one percent (1%) of the Maximum Loan
Limit if such prepayment occurs less than one (1) year prior to the end of the
original term or any then current renewal term.
ADDITIONAL CONDITIONS
Lender shall have received pro forma financial statements of the
Companies after giving effect to the merger of Tab with an affiliate of HSMLP,
as well as projected monthly income statements, balance sheets and cash flow
statements in form and substance satisfactory to Lender in its sole discretion.
After giving effect to the initial Revolving Loans to be made upon
closing of the transactions described herein, Companies shall have availability
to borrow additional revolving loans of at least Three Million Five Hundred
Thousand and No/100 Dollars ($3,500,000.00).
The transactions contemplated hereby, including disbursement of the
initial Loans described herein shall have been consummated on or before the
close of business on September 30, 2002.
MISCELLANEOUS
Companies shall submit internally-prepared consolidated and
consolidating financial statements to Lender on a monthly basis and certified
consolidated and consolidating financial statements at year end. Companies shall
provide collateral reports no less often than weekly.
Prior to disbursement under the Loan and Security Agreement, Companies
shall provide to Lender certificate(s) of insurance which includes (a) the
dollar amount of the coverage on the items located at each of Companies'
locations, and (b) endorsements indicating Lender's interest as Lender's Loss
Payee and, as appropriate, Mortgagee, on Companies' casualty insurance policies,
additional insured on Companies' liability insurance policies and assignee on
Companies' business interruption insurance policies.
Companies are required to maintain their general checking accounts with
Lender. Normal charges shall be assessed thereon. Although no compensating
balance is required, Companies may keep monthly balances in order to merit
earnings credits which may cover the
Lender's service charges for demand deposit account activities. Additionally,
Companies shall utilize Lender's trust department in connection with any
services necessary to complete a tender offer for the stock of Tab or merger of
Tab into an affiliate of HSMLP.
Within thirty (30) days after the initial Loans are advance, the Companies
shall enter into interest rate hedging agreements for not less than Five Million
and No/100 Dollars ($5,000,000.00) in a manner satisfactory to Lender.
HSMLP acknowledges and agrees that there are no other understandings
between the parties, oral or written, relating to the financing committed to
herewith other than what is set forth in this letter.
Disbursement of the Loans hereunder is contingent upon all documentation
and other legal matters, being in form and substance satisfactory to Lender and
Lender's counsel including, without limitation, (i) with respect to the Loan and
Security Agreement, covenants, financial and otherwise, representations and
warranties, and all other documentation and legal matters relating to the asset
purchase referred to above and (ii) Solvency Opinion from outside third party.
Disbursement of the Loans hereunder is contingent upon no material adverse
change, as determined by Lender, in the condition or operations (financial or
otherwise) of Companies having occurred and no actions or proceedings being
pending or threatened against Companies which might materially adversely affect
Companies during the period commencing on the date of this letter and ending on
the date of disbursement of the Loans.
HSMLP hereby waive any right to a trial by jury in any action to enforce or
defend any matter arising from or related to this letter.
This letter and the transactions contemplated hereby shall be governed by
and interpreted in accordance with the laws of the State of Illinois.
HSMLP hereby submits to the jurisdiction of any state or federal court
located in Xxxx County, Illinois, over any action or proceeding to enforce or
defend any matter arising from or related to this letter. HSMLP hereby
irrevocably waives, to the fullest extent HSMLP may effectively do so, the
defense of an inconvenient forum to the maintenance of any such action or
proceeding. HSMLP agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
If the foregoing commitment is acceptable to you, please execute the
two enclosed copies of this letter and return the same to the Lender along with
the commitment fee no later than 5:00 P.M. on June 15, 2002, the time and date
at which this commitment, if not accepted by Companies expires, unless extended
by Lender in writing.
Very truly yours,
LASALLE BANK NATIONAL ASSOCIATION
By________________________________
Title_____________________________
Accepted and Agreed this 13/th/
day of June, 2002
XX XXXXXX LIMITED PARTNERSHIP
By______________________________
Title___________________________
June 25, 2002
Xx. Xxxxxxxx X. Xxxxxxxxxxx
Chief Executive Officer
Workstream Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Xxx:
Banc One Mezzanine Corporation ("BOMC") is pleased to inform you that our
Investment Committee has approved an investment in a $7.0 million senior
subordinated note to be issued by Workstream Inc. ("WSI" or the "Company") and
its wholly owned subsidiaries, Xxxxxxxx Sorter Co., Inc. ("Xxxxxxxx") and New
Maverick Desk, Inc. ("Maverick"). Based on the information you have provided to
us, the undersigned is pleased to issue its commitment to provide this
financing, on the terms and subject to the conditions set forth herein.
Senior Subordinated Note
Issuers WSI and its wholly owned subsidiaries, Xxxxxxxx and
Maverick
Purchaser Banc One Mezzanine Corporation
Issue Senior Subordinated Note (the "BOMC Note")
Principal Amount $7,000,000
Purpose To fund a recapitalization of WSI by XX Xxxxxx LP
("HSM"), the proceeds of which will be used to
partially finance the acquisition by HSM of Tab
Products Co. ("Tab"), provided that such acquisition
is not opposed by the Board of Directors of Tab
WSI Capitalization WSI's capitalization, upon closing of BOMC's
investment, will be:
(i) approximately $471,000 in capitalized lease
obligations;
(ii) a $1,000,000 unfunded revolver;
(iii) the $7,000,000 BOMC Note;
(iv) the $2,000,000 note to Xxxx Dessy (the "Dessy
Note"); and,
(v) the $3,850,000 investment held by HSM, whether
constituted as debt or equity (the "HSM
Investment").
Xxxxxxxx/Maverick
Capitalization The capitalization of Xxxxxxxx and of Maverick will
consist solely of the equity held by WSI. Neither
Xxxxxxxx nor Maverick will have any debt, either
funded or unfunded, during the term of the BOMC Note.
Commitment Fee 2.0% of the Principal Amount ($140,000), payable upon
delivery of a commitment letter and refundable should
the commitment be revoked in accordance with the
Material Adverse Change clause
Interest Rate Interest will be 14% per annum, payable via ACH
quarterly in arrears, calculated on an actual/360 day
basis.
Maturity The fifth anniversary of closing
Mandatory Repayments Principal will be payable in quarterly installments
as follows:
-------------------------------------
Fiscal Quarterly
Year Amortization
-------------------------------------
2003 $ 0
-------------------------------------
2004 $125,000
-------------------------------------
2005 $187,500
-------------------------------------
2006 $250,000
-------------------------------------
2007 $250,000
-------------------------------------
The balance of $3.75 million will be due at maturity.
Optional Prepayment The Company shall have the right to prepay all
amounts outstanding under the BOMC Note subject to a
prepayment fee calculated as a percentage of the
Principal Amount as detailed in the following table:
---------------------------------------
If Prepayment is Then Prepayment
Made during Year Fee shall be
---------------------------------------
One 5%
---------------------------------------
Two 4%
---------------------------------------
Three 3%
---------------------------------------
Four 2%
---------------------------------------
Thereafter 0%
---------------------------------------
Mandatory Prepayment BOMC will have the right of repayment upon a
liquidation, wind up, change of control, merger, sale
of substantially all of the assets of the Company,
Xxxxxxxx or Maverick, event of default or a qualified
public offering.
Ranking The BOMC Note will rank junior to certain senior
funded indebtedness. At closing, this amount will not
exceed the amounts as stated in "WSI Capitalization".
Thereafter, the amount of senior indebtedness will be
capped at a mutually agreeable amount. This ranking
will be captured in an intercreditor agreement
customary for transactions of this type. The BOMC
Note will be senior to all other financing of the
Company.
Collateral The BOMC Note will be secured by i) a pledge of the
stock of WSI and its subsidiaries, ii) a perfected
first security interest in all assets not claimed by
the revolver, and iii) a first lien on HSM's
investment in Tab, provided however that BOMC will
have no power to vote, or to direct the voting of,
any of the Tab shares held by HSM prior to an event
of default under the BOMC Note.
Key Man Life The Company will be required to purchase a key man
life insurance policy on Xxxxxxxx Xxxxxxxxxxx in the
amount of $3,750,000. The proceeds of this policy
will be payable to the Company, but assigned to BOMC.
Covenants The BOMC Note documentation will contain certain
affirmative and negative covenants and financial
tests customary for this type of financing, including
but not limited to: (1) limitations on indebtedness
including, in certain circumstances, the approval of
BOMC for drawdowns under the revolving credit
facility; (2) limitations on capital expenditures;
(3) minimum EBITDA; (4) maximum ratio of debt to
EBITDA; (5) minimum fixed charge coverage ratio; and
(6) limitations on owners' compensation (including
salary, bonus, rental payments, interest payments and
dividends). Additionally, payments to affiliates of
HSM, including Xxx Xxxxxxxxxxx and Xxxx Xxxxxxxx (the
"WSI administrative expenses"), will be capped at
$200,000 per year and may be reduced to $100,000 per
year upon certain events of default.
Documentation Purchase agreement and other documentation (including
intercreditor agreement, note, warrant, etc.) to be
negotiated, and shall include, among other items: 1)
market terms of subordination for privately placed
debt; 2) standard representations, warranties, events
of default, cross defaults, and covenants (including
financial covenants); 3) the right for BOMC to attend
the Company's board meetings which shall be held at
least quarterly; and 4) standard indemnification
provisions. The covenants associated with the BOMC
Note will remain in effect until the BOMC Note is
repaid in full. Reporting requirements will remain in
effect until the Warrant is exercised or expires.
Warrant
Warrant BOMC shall be issued a detachable and freely transferable
warrant (the "Warrant") exercisable into 26.0% of the fully
diluted equity of the Company at the time of exercise. The
Warrant shall be for non-voting stock, exchangeable into
voting stock under certain circumstances.
Term 10 years
Exercise Price nominal
Equity Rights The Warrant (and any stock issued upon exercise of the
Warrant) shall contain standard anti-dilution protection for
subordinated debt issuances, two demand registration rights
for all of BOMC's equity (with no more than one demand right
to be exercised in any 12-month period), unlimited
piggy-back registration rights, pre-emptive rights and
dollar-for-dollar co-sale rights.
Put Option The Put shall be exercisable at any time beginning on the
earlier of:
(i) repayment of 90% or more of the outstanding
principal due under the BOMC Note;
(ii) a change of control;
(iii) a sale of substantially all of the stock or assets of
the Company;
(iv) an initial public offering;
(v) an event of default; and
(vi) the fifth anniversary of closing.
Put Price The Put on the warrant will be priced at the greater of:
(i) book value;
(ii) 4.5 times the earnings before WSI administrative
expenses, interest, taxes, depreciation and
amortization of the Company for the preceding twelve
month period, less outstanding permitted indebtedness
(defined to include the revolver and the BOMC Note
but exclude the Dessy Note and the HSM Investment),
plus cash and marketable securities using the most
current month-end balances;
(iii) fair market value as determined by a mutually agreed
upon third party appraiser, without giving effect to
WSI administrative expenses, illiquidity or minority
interest discounts; or
(iv) fair market value of the Company as determined by
certain market events such as a merger or sale of the
Company or
based on the publicly traded market value (average
closing price for 20 days immediately prior to the
date of exercise), times the warrant percent.
In each of the cases above, for purposes of calculating the
equity value associated with the warrant/warrant shares, the
Dessy Note and the HSM Investment will be treated as common
equity.
General Items
Contingent Items This commitment remains contingent upon the following items:
1. The closing of the contemplated acquisition of Tab by
HSM not later than December 31, 2002;
2. Documentation of the financing transaction,
including: (i) the negotiation of a satisfactory
revolving credit agreement and related intercreditor
agreement with the senior lender; (ii) subordination
of the Dessy Note and the HSM Investment to the BOMC
Note; (iii) documentation of the structure of the
investment by HSM in Tab, the tax ramifications of
such investment on WSI, and the related security
positions by BOMC; and (iv) documentation of the
detailed terms and conditions of the BOMC Note,
including various representations and warranties to
be made by the Company; in each case, in form and
substance satisfactory to BOMC and its counsel, and,
3. Satisfaction, in BOMC's sole discretion, as to the
absence of any material adverse change in the
business, operations, properties, assets, condition
(financial or otherwise), value and prospects of the
Company.
Material Adverse BOMC in its sole discretion may revoke this commitment upon
Change the occurrence of a Material Adverse Change in the Company's
financial performance. For purposes of clarity, BOMC defines
Material Adverse Change in the Company's financial
performance as meaning performance where EBITDA before WSI
administrative expenses, measured on a year-to-date basis
for the current fiscal year, fails the following cumulative
EBITDA target:
----------------------------------------
YTD Month Cumulative
EBITDA
----------------------------------------
June $ 431,100
----------------------------------------
July $ 613,200
----------------------------------------
August $ 813,200
----------------------------------------
September $1,063,200
----------------------------------------
----------------------------------------
October $1,288,200
----------------------------------------
November $1,513,200
----------------------------------------
December $1,794,500
----------------------------------------
Due Diligence Fee $15,000, payable to BOMC refundable (less Transaction
Expenses) to the extent not used
Transaction Expenses HSM and the Company shall be responsible for the
payment of legal fees and expenses, accountant's
fees, and other expenses incurred by BOMC in
connection with the transaction contemplated herein,
both prior to closing and ongoing, whether or not a
closing occurs. Expenses will encompass costs related
to due diligence, including those expenses related to
the preparation, negotiation and execution of the
documentation necessary to consummate this proposed
transaction, and in connection with any amendments,
waivers or enforcement of rights with respect to such
transaction.
By its acceptance below, HSM, WSI, Xxxxxxxx, and Maverick agree to and
agree to cause any of them to, indemnify and hold harmless BOMC, its affiliates
and all of their respective directors, officers, employees, agents, attorneys
and controlling persons (each an "Indemnified Person") from and against, and
reimburse them for, all losses, claims, damages, judgments, assessments, costs
and other liabilities (collectively "Liabilities") and reasonable legal and
other expenses (collectively "Expenses") incurred by any Indemnified Person,
related to or arising out of this letter, any of the transactions contemplated
hereby, or in investigating, preparing, pursuing, defending or participating in
any claim, action, proceeding or investigation (commenced or threatened),
whether or not any Indemnified Person is a party to any such proceeding
(collectively "Actions"), except to the extent that there is a judicial
determination that any Action is the result of the gross negligence or willful
misconduct of such Indemnified Person.
In addition, HSM and the Company agree to reimburse BOMC, from time to
time upon demand, for all reasonable out-of-pocket expenses (including legal
fees) incurred in connection with this letter and the transactions contemplated
hereby, whether incurred before or after the date hereof. The obligation of HSM
and the Company under this paragraph shall survive any termination of this
letter and shall be effective regardless of whether the transactions
contemplated hereby are consummated or any definitive financing agreements are
executed. The forgoing provision of this paragraph shall be in addition to any
rights that BOMC or any other Indemnified Person may have at common law or
otherwise.
By executing this letter, you agree that this letter is solely for the
benefit of HSM and the Company in connection with the proposed financing and
that it may not be relied upon by any other person or entity for any purpose.
Further, you agree to continue to proceed exclusively with BOMC, and not to seek
or engage in any communication with any alternative source of subordinated
financing in connection with the recapitalization of WSI, without the express
written consent of BOMC.
If you agree with the foregoing, please sign and return to the
undersigned the enclosed copy of this commitment letter no later than 5:00 p.m.,
New York time, on Wednesday, June 26, 2002. Our commitment will terminate at
such time unless the undersigned has received from you such signed commitment
letter; provided, however, that any term or provision hereof to the contrary
notwithstanding, the two immediately preceding paragraphs shall survive any
termination of our commitment.
We look forward to working with you.
Very truly yours,
BANC ONE MEZZANINE CORPORATION
By:__________________________
Xxxxxx X. Xxxxxxxx
ACCEPTED AND AGREED TO
as of this June __, 2002:
XX XXXXXX L.P.
By:________________________
Its:_______________________
WORKSTREAM, INC.
By:________________________
Its:_______________________
XXXXXXXX SORTER CO., INC.
By:________________________
Its:_______________________
NEW MAVERICK DESK, INC.
By:________________________
Its:_______________________
Xxxxxx Xxxxxx & Co., Inc.
000 Xxxx Xxxxxx, 0/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 000-0000
000 000-0000
June 25, 2002
Xx. Xxxxxxxx X. Xxxxxxxxxxx
Chief Executive Officer
Workstream Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Re: MS TP Limited Partnership
Dear Xxx:
You have asked us to report on the private placement of limited partnership
interests by MS TP Limited Partnership ("MSTLP"). Please be informed that to
date, MSTLP has cash, stock and commitments for the purchase of limited
partnership interests that aggregate in excess of $3 million for the purpose of
acquiring all the shares of Tab Products Co. ("Tab") in connection with the
outstanding offer of XX Xxxxxx Limited Partnership. As you know, the 338,900
shares of Tab stock owned by MSTPLP were purchased from Xxxxxxxx Sorter on or
around May 1, 2002 with a portion of the proceeds raised.
All funds of MSTLP are intended to be invested in a partnership to be formed for
the purpose of acquiring all the shares of Tab in conjunction with XX Xxxxxx
Limited Partnership's offer.
Sincerely,
Xxxxx X. Xxxxxxx
President
ve:AME
Workstream Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
June 26, 2002
Xx. Xxxxxxx Ean Xxxxx
XX Xxxxxx Limited Partnership
c/o Xxxxxx Xxxxxx & Co., Inc.
000 Xxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xx. Xxxxx:
Workstream is hereby committing to repay its $3.5 million 10% Junior
Subordinated Note to the XX Xxxxxx Limited Partnership and to lend XX Xxxxxx
Limited Partnership an additional $3.5 million. We understand that these funds
will be used to make an investment in a partnership to be formed to purchase Tab
Products Co. The $3.5 million loan will be made on the terms and conditions of
the term sheet attached hereto.
Sincerely,
Xxxxxxxx X. Xxxxxxxxxxx
Chief Executive Officer
Commitment Term Sheet
Senior Note
Issuer XX Xxxxxx Limited Partnership ("HSMLP").
Lender Workstream Inc.
Issue Senior Note (the "Note")
Principal Amount $3,500,000
Purpose To partially fund the purchase by HSMLP of an
approximately 70% interest in the Tab Acquisition
Partnership. This loan, combined with the repayment
of the 10% Junior Subordinated Note owed by
Workstream to HSMLP will enable HSMLP to invest $7
million in the Tab Acquisition
Commitment Fee 2.0% of the Principal Amount ($70,000), payable upon
closing of the transaction.
Interest Rate Interest will be 12% per annum, payable quarterly in
arrears, calculated on an actual/360 day basis.
Maturity The fifth anniversary of closing
Mandatory Repayments Principal will be payable in equal quarterly
installments as follows:
-------------------------------------
Fiscal Quarterly
Year Amortization
-------------------------------------
2003 $ 0
-------------------------------------
2004 $ 0
-------------------------------------
2005 $ 500,000
-------------------------------------
2006 $1,500,000
-------------------------------------
2007 $1,500,000
-------------------------------------
Optional Prepayment HSMLP shall have the right to prepay all amounts
outstanding under the Note subject at any time,
without a prepayment fee or penalty.
Mandatory Prepayment Workstream will have the right of repayment upon a
liquidation, wind up, change of control, merger, sale
of substantially all of the assets of HSMLP, event of
default or a qualified public offering.
Ranking The Note will be a senior obligation of HSMLP, and
will be senior to all other financing of HSMLP.
Collateral The Note will be secured by i) a pledge of the
HSMLP's interest in the Tab Acquisition Partnership,
and ii) a first lien on all assets of HSMLP.
Key Man Life The Company will be required to purchase key man life
insurance policies on Xxx Xxxxxxxxxxx in the amount
of $3,500,000. The proceeds of these policies will be
payable to the HSMLP, but assigned to Workstream Inc.
Covenants The Note documentation will contain certain
affirmative and negative covenants and financial
tests customary for this type of financing, including
but not limited to: (1) limitations on indebtedness;
and (2) limitations on general partner's compensation
(including salary, bonus, rental payments, interest
payments and dividends).
Documentation Purchase agreement and other documentation (including
intercreditor agreement, note, , etc.) to be
negotiated, and shall include, among other items: 1)
market terms of for privately placed senior debt; 2)
standard representations, warranties, events of
default, cross defaults, and covenants (including
financial covenants); and 3) standard indemnification
provisions. The covenants associated with the Note
will remain in effect until the Note is repaid in
full.
Commitment Term Sheet
Senior Note
Issuer XX Xxxxxx Limited Partnership ("HSMLP").
Lender Workstream Inc.
Issue Senior Note (the "Note")
Principal Amount $3,500,000
Purpose To partially fund the purchase by HSMLP of an
approximately 70% interest in the Tab Acquisition
Partnership. This loan, combined with the repayment of
the 10% Junior Subordinated Note owed by Workstream to
HSMLP will enable HSMLP to invest $7 million in the
Tab Acquisition
Commitment Fee 2.0% of the Principal Amount ($70,000), payable upon
closing of the transaction.
Interest Rate Interest will be 12% per annum, payable quarterly in
arrears, calculated on an actual/360 day basis.
Maturity The fifth anniversary of closing
Mandatory Repayments Principal will be payable in equal quarterly
installments as follows:
-----------------------------------------
Fiscal Quarterly
Year Amortization
-----------------------------------------
2003 $ 0
-----------------------------------------
2004 $ 0
-----------------------------------------
2005 $ 500,000
-----------------------------------------
2006 $1,500,000
-----------------------------------------
2007 $1,500,000
-----------------------------------------
Optional Prepayment HSMLP shall have the right to prepay all amounts
outstanding under the Note subject at any time,
without a prepayment fee or penalty.
Mandatory Prepayment Workstream will have the right of repayment upon a
liquidation, wind up, change of control, merger, sale
of substantially all of the assets of HSMLP, event of
default or a qualified public offering.
Ranking The Note will be a senior obligation of HSMLP, and
will be senior to all other financing of HSMLP.
Collateral The Note will be secured by i) a pledge of the
HSMLP's interest in the Tab Acquisition Partnership,
and ii) a first lien on all assets of HSMLP.
Key Man Life The Company will be required to purchase key man life
insurance policies on Xxx Xxxxxxxxxxx in the amount of
$3,500,000. The proceeds of these policies will be
payable to the HSMLP, but assigned to Workstream Inc.
1
Covenants The Note documentation will contain certain
affirmative and negative covenants and financial tests
customary for this type of financing, including but
not limited to: (1) limitations on indebtedness; and
(2) limitations on general partner's compensation
(including salary, bonus, rental payments, interest
payments and dividends).
Documentation Purchase agreement and other documentation (including
intercreditor agreement, note, , etc.) to be
negotiated, and shall include, among other items: 1)
market terms of for privately placed senior debt; 2)
standard representations, warranties, events of
default, cross defaults, and covenants (including
financial covenants); and 3) standard indemnification
provisions. The covenants associated with the Note
will remain in effect until the Note is repaid in
full.
2
